Connect with us

Bitcoin

Bitcoin Whales to the Rescue?

Published

on

Last month, we asked whether a whale had sunk bitcoin following a sharp and sudden decline for the world’s leading digital currency. As it turns out, these oversized holders could be playing a vital role in stabilizing the market.

Not-So-Killer Whales

New research by Chainanalysis purports to show that bitcoin whales have a stabilizing role in the market and that fear over lop-sized control of transactions is likely overblown. Although large stakeholders can influence price action by buying or selling bitcoin in large amounts, most of them aren’t active traders anyway. Those who do trade are more likely to play against the herd by purchasing bitcoin on price declines.

The conclusions drawn by Chainanalysis follow a careful examination of bitcoin’s 32 biggest wallets.

“Our data demonstrates that Bitcoin whales are a diverse group, and only about a third of them are active traders,” the group said in a new report. “They appear, in aggregate, to have stabilized the market during recent price declines, rather than exacerbating price movements. This makes sense since these trading whales are professionals with no vested interest in abruptly tanking the market. When they require liquidity, traders are likely to use OTC trading platforms equipped to manage large transactions with minimal market disruption.”

Whale Taxonomy

In August, the 32 wallets in question were collectively valued at $6.3 billion. Nine of these wallets belong to new market entrants who control 332,000 BTC, or $2 billion in market cap at the time. Another 15 wallets holding the same amount of BTC belonged to miners – another group with no vested interest in toppling the market. (As Hacked previously reported, miners typically require a price-per-coin of $6,000 just to break even.).

“Lost whales,” as Chainanalysis describes, accounted for roughly 212,000 BTC, or $1.3 billion. This group has no transactions going all the way back to 2011. In other words, their owners lost their private keys.

The last and smallest group in the taxonomy are criminals, who comprise just three wallets collectively valued at 125,000 BTC or nearly $790 million. Two of the three have been linked to Silk Road, a former dark net portal involved in money laundering and other illicit behavior.

Bitcoin Volatility

The findings presented by Chainanalysis suggest bitcoin whales are more likely to stabilize the market than sink it. After all, less than a third of these oversized holders are actively trading bitcoin, which means the rest have had a minimal impact on price action. That most whales are “hodling” bitcoin (whether deliberately or not) is a clear sign that they are not influencing the market as much as previously expected.

However, this doesn’t mean that whales haven’t contributed to bitcoin’s volatile trading patterns. It’s conceivable that an oversized sale of BTC on a major exchange could lead other traders to offload their positions over fear of further declines. A fire sale by any of the above wallets could lead to a noticeable drop in bitcoin’s price, which may invite further downward pressure, especially if a technical support is breached.

It’s important to note that bitcoin’s overall volatility has been in steady decline all year long – a phenomenon that may have been catalyzed by the introduction of futures trading last December. In fact, bitcoin’s volatility index, which tracks daily price fluctuations of BTC, has been routinely hitting fresh yearly lows. The 30-day volatility tracker earlier this week reached a low of 1.56%, the lowest since May 2017, according to bitvol.info.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
3 votes, average: 5.00 out of 53 votes, average: 5.00 out of 53 votes, average: 5.00 out of 53 votes, average: 5.00 out of 53 votes, average: 5.00 out of 5 (3 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 643 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




Feedback or Requests?

Analysis

Crypto Update: Coins Fall After a Quiet Weekend

Published

on

The cryptocurrency segment stabilized this weekend after a technically important breakdown that shifted the short-term outlook to clearly bearish. While the stability was a small plus for bulls, the lack of bullish momentum and the fact that the majors remained below key resistance levels meant that most of the coins remained on sell signals in our trend model. As for the long-term signals, Monero, Ripple, and Bitcoin are the only majors on neutral signals in the still overwhelmingly bearish market.

XMR/USDT, 4-Hour Chart Analysis

Bitcoin continued to fare better than the largest altcoins, but although the most valuable coin made the most technical progress, briefly reclaiming the $6275 level, it also remained in a bearish short-term setup. The total value of the market is stuck near the $200 billion mark, and with Ethereum still being in a steep long-term downtrend and with Ripple giving back a large chunk of its recent gains, sellers are still clearly in control of the market.

BTC/USD, 4-Hour Chart Analysis

Bitcoin’s relative stability continues to be the most encouraging sign in the segment, but the coin is clearly below the previously dominant broad triangle pattern following last week’s breakdown. The technical deterioration means that a test of the key long-term zone near $5850 is increasingly likely, especially as the weak bounce ran out of steam near the $6275 level.

While a weaker support zone is found near $6000, the short-term sell signal is in place in our trend model, and traders shouldn’t enter new positions here. Further resistance is ahead at $6500, $6750, and $7000, while the next major support zone is found between $5100 and $5100.

Ripple Tests $0.42, Ethereum Capped by the $200 Level

XRP/USDT, 4-Hour Chart Analysis

Ripple got back up to the key $0.42 level after plunging below $0.38, but the resistance level halted the bounce and, and the coin is still close to falling back to the previously dominant broad declining trend. XRP is trading right at the declining trendline of the triangle consolidation pattern that developed after the September rally, and bulls would need a sustained break-out above the pattern for a renewed buy signal.

Support levels are found at $0.375 and $0.35, while resistance is ahead in the $0.42-$0.46 and near $0.51 and $0.54, and traders shouldn’t enter new positions here.

ETH/USD, 4-Hour Chart Analysis

Ethereum is still among the weakest majors, and it couldn’t get back above the $200 level during the weekend. ETH remains on sell signals on both time-frames, since the declining trendlines are clearly intact, despite the recent lengthy consolidation period.

Primary support is found at $180, with further zones near $170 and $160, while resistance above $200 is ahead at $235 and $260, and traders and investors should still stay away from the coin.

LTC/USD, 4-Hour Chart Analysis

Litecoin also only managed a weal bounce after the key breakdown below the $56 support, and although it initially respected the $51 level, another test is very likely, and odds favor a break below support given the strong bearish pressures.

A break below the primary support level would warn of the test of the $47 low from August, with the next level of interest being the $44 support, while further resistance above $56 is found at $59 and $64. The coin is on sell signals on both time-frames and traders and investors shouldn’t enter new positions here.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
2 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 5 (2 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 374 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




Feedback or Requests?

Continue Reading

Altcoins

A Few Lessons From Last Week

Published

on

There is an adage on Wall Street.  It is quite old. It was passed down to me from my grandfather last Wednesday.  It goes something like this. When the cops raid the brothel, they take everybody including the piano player.  

No matter when the notion originated, it applies directly, and painfully, to last week’s experience with stocks, bonds and crypto assets. Between early Wednesday and Thursdays New York closing, most major US indices dropped a fast five percent.  Friday showed a tepid rebound with the tech heavy NASDAQ posting a 2.3% one day recovery followed by the S&P 500 with a meager 1.2% upward move. Otherwise there wasn’t much good happening.

The story in crypto land wasn’t any better.  In truth it was worse. Taking just the two big guys during the same Wednesday/Thursday time period, things were dismal.  Bitcoin lost 6% in price before staging a weak 1.1% recovery on Friday. Ether dropped 15.6% on Wednesday, then managed a 3.2% Friday bounce.

Nobody escaped untouched unless you were a short seller in which case, congrats! Having lots of company is hardly any consolation for having to deal with investment losses, even if there are only accounting losses.  Nevertheless, everyone who had the ability to read understood the stock market was on a record breaking binge and thus vulnerable.

The only binge connected to crypto prices was a 10 month long hangover from the record levels of late last year.  So should the Wall Street adage be applied here making crypto take on the role of piano player? Or to present the question in a different way, is the piano player merely an innocent victim of being in the wrong place at the wrong time?

The Stock Market Correction Is Not Over

Stock market corrections are never pleasant but many veteran strategist consider them to be a necessary and even healthy part of the investment process.  Last week’s 5% drop was not even pronounced enough to qualify as a bona fide correction. That requires something even more than the 8%+ drop that took place back in February.  

In the very short term, there is little in economic news that is likely to upset the market this coming week but that doesn’t change the fact that interest rates are putting pressure in bond prices and $80 oil prices aren’t helping the inflation picture either.  Finally, there is the uncertainty created by the midterm elections. Making short run market predictions is a fools game, but this one is an exception.

What Does This Say About Crypto Values?

After events of the last week where already depressed crypto values get beaten down even further than stocks and bonds, that is not a good sign.  One of the reasons for this had to be last weeks report from Diar Ltd. showing how Coinbase’s active customers have dropped 80% from record levels of $24 billion in the fourth quarter of last year to $3 billion in the third quarter of 2018.  News of this study was reported by Bloomberg on Wednesday. So this could well have been the fundamental culprit. If so, the timing could not have been better for the short sellers.

No Longer Trending?

The folks at Diar Ltd. are spot on in their analysis but does this mean the end for crypto? Don’t count on it.  In fact there is a positive side to their findings. The most important point is the crypto prices (except for Wednesday) have become increasingly stable.  This stability will serve long term investors well as it will calm the nerves of regulators and merchants inclined to use crypto as a medium of exchange.

The drop off in activity at Coinbase is not surprising.  Speculators have lost interest. Recently we wrote an article about the competition for investor attention between crypto and cannabis.  There is loads of anecdotal evidence suggesting that this is contributing to crypto interest declining.

Here is just two points to remember.  This week on October 17, cannabis becomes legal for the first time throughout Canada. Investors are acutely aware of this bonanza.  During one of the worst weeks in the stock market, US listed cannabis stocks like Medmen Enterprises (MMNFF: $5.84) gained 35% while APHRIA (APHQF: $14.65) added over 13%.  Both stocks experienced greatly accelerated volume. This is an example of just two of many cannabis opportunities that are challenging crypto for investment capital. So the piano player may not be so innocent: he could just be smoking a little ganja.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
1 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 5 (1 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.4 stars on average, based on 112 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




Feedback or Requests?

Continue Reading

Bitcoin

Bitcoin Price Treads Water as Market Eyes Maturity

Published

on

Bitcoin’s price hovered within a narrow range on Sunday, as plunging trade volumes kept rally caps in check following a rocky end to the previous week.

BTC/USD Update

The bitcoin price fluctuated within a $70 range on Sunday, reaching a high of $6,3399.30 on Bitfinex. At the time of writing, BTC/USD was valued at $6,368 for a gain of 0.6%.

Narrow price action was accompanied by a sharp drop in trading volumes, with market turnover approaching the lowest level of the year. Over the last 24 hours, bitcoin’s trade volume on exchanges has declined by 25% to $3 billion, according to CoinMarketCap. That represents roughly one-third of total market turnover. BitMEX, a derivatives market, processed 16% on bitcoin’s trade volumes on Sunday. Bithumb saw nearly 5% of the daily turnover.

Since falling to the low $6,200 range on Thursday, bitcoin’s price has been slowly tracking upwards. A firm price bottom near $6,000 suggests that the path of least resistance is higher in the short term.

At current prices, bitcoin has a total capitalization of $109.2 billion, accounting for 54% of the entire market. The combined market value of all digital currencies is holding steady above $202 billion, based on latest available data.

Bitcoin Market Maturing

Despite the recent bout of selling pressure, bitcoin has established a fundamentally sound price floor and is exhibiting significantly less volatility than previous market cycles. This is not only corroborated by the bitcoin volatility index, which is currently tracking near yearly lows, but in earlier research published in a high-profile journal called Chaos: An Interdisciplinary Journal of Nonlinear Science.

In a study titled “Bitcoin market route to maturity? Evidence from return fluctuations, temporal correlations, and multiscaling effects,” Polish researchers examined bitcoin’s price action over a six-year period. Although they spotted irregularities early on, the researchers concluded that bitcoin’s “rates of return fluctuated according to the inverse cubic law,” which is a method of analyzing a market’s maturity. This means cryptoassets like bitcoin are increasingly behaving like mature markets such as stocks, commodities and fiat currency.

Bitcoin’s maturity was “particularly evident in the last six months of the examined period” between November 2017 and April 2018. As Hacked previously reported, the launch of bitcoin futures last December has had a stabilizing impact on the market despite arguments to the contrary by the Atlanta Federal Reserve and others.

Against this backdrop, it is reasonable to assume that bitcoin’s price action will show a greater tendency of following established technical patterns now that the market has a longer historical precedent. While this could mean lower prices for longer, a maturing and stabilizing market is positive in the long run.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
2 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 5 (2 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 643 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




Feedback or Requests?

Continue Reading

Recent Comments

Recent Posts

A part of CCN

Hacked.com is Neutral and Unbiased

Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

Trending