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Bitcoin’s Plunge Has Not Shaken Tom Lee

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Bitcoin’s latest technical breakdown hasn’t affected Tom Lee’s bullish outlook on the digital currency. The head of research at Fundstrat Global Advisors is standing by his target of $25,000 by year’s end.

Typical Volatility

In an email conversation with CNBC, Lee said the latest drop in market prices can be attributed to “typical market volatility” rather than any new underlying risks facing digital assets. He also identified three factors that will lead bitcoin to $25,000.

The first factor is cost of production, which Lee identified as anywhere between $6,000 and $8,000 during the most recent slide. This means bitcoin is still worth more than its cost of production.

Growing interest from institutional traders will also keep the market rallying for the foreseeable future. Banks and other financial institutions are still feeling their way into the crypto market and are looking for regulatory guidance on how to move forward.

In a Tuesday interview with CNBC’s “Futures Now,” Lee issued the following statement:

“I think institutional investors have gained a lot of interest, and they haven’t really come into crypto yet because there is still some regulatory uncertainty. But that sort of ultimate allocation into crypto as an asset class is going to be a powerful reason why bitcoin rallies.”

Lee also reminded investors just how quickly the crypto market can change. A historical analysis reveals that the entirety of bitcoin’s gains in any given year can be attributed to ten days. Without those days, bitcoin values are down 25% annually.

“So as miserable as it feels holding bitcoin at $8,000, the move from $8,000 to $25,000 will happen in a handful of days,” he said.

BTC/USD Price Levels

Bitcoin prices bottomed at $7,289.35 on Thursday, their lowest in about six weeks. The cryptocurrency has declined nearly 10% over the past week.

At last check, BTC/USD had recovered around $7,508 for a total market cap of $128.3 billion. Selling pressure brought more volume to the market, with total turnover in bitcoin approaching $7 billion.

With the latest skid, bitcoin is down more than 40% this year.

The market cap for all cryptocurrencies bottomed at $318.8 billion on Thursday but has since recovered to around $333 billion. The market is down nearly $60 billion from its Sunday high.

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.

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4.6 stars on average, based on 648 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Bitcoin

Bitcoin Price Showing Little Upside as Trade Volumes Approach Yearly Lows

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Bitcoin resumed its sideways action on Saturday, as declining trade volumes kept price action subdued following a minor dip during the previous session. The leading digital currency is showing little signs of recovery after bouncing off a psychological support on Friday.

BTC/USD Update

Bitcoin is currently changing hands at $6,483, according to CoinMarketCap. Prices were little changed compared with the previous session. BTC fluctuated within a $50 range on most exchanges, though Bitfinex was reporting a $100 range from peak-to-trough. The digital currency continues to trade at a $100+ premium on Bitfinex.

The bitcoin price briefly fell below $6,400 on Friday before rebounding later in the session. It has held above that psychological threshold for the past 24 hours.

Trade volumes are down another 5% on Saturday, a continuation of a pattern first observed on Tuesday. Bitcoin’s price and trade volume skyrocketed on Monday as traders liquidated their holdings of USDT, a controversial stablecoin used to buy digital assets. BTC trade volumes averaged $3.5 billion on Saturday, according to latest available data.

Bitcoin and Stocks

Widely regarded as an emerging haven asset, bitcoin has been unable to capitalize on the recent collapse in global stock prices. This has led many in the investment community to temper their expectations that BTC offers a risk-off alternative to equities. Although bitcoin and U.S. stocks have shown some signs of correlation recently, this isn’t enough to justify the claim that investors are hedging their bets with cryptocurrency. At the same time, gold prices have risen sharply amid the selloff, with the December futures contract hitting fresh three-month highs.

Investors often mistaken bitcoin’s status as non-correlated asset with inverse correlation – meaning, they expect BTC to rise when stocks fall and vice versa. This isn’t generally what we mean by “non-correlated asset.”

When we say bitcoin is non-correlated, we mean its price does not move in lockstep with the broader market nor is it influenced by the same technical and fundamental factors that drive stocks, bonds, currencies and so on. This lack of correlation has been promoted as a safe haven for investors looking to diversify away from traditional market risks, but that doesn’t mean they’ve taken up the offer.

This also doesn’t mean that cryptos like bitcoin aren’t influenced by investor sentiment or fundamental drivers – they most certainly are. However, bitcoin’s fundamental drivers have proven to be different from those that drive equities. For example, BTC does not react to economic data or central bank decisions, whereas stocks and currencies certainly do.

Understanding the difference between non-correlation and inverse correlation becomes more important as stock markets enter a more volatile stage in their development. While U.S. stocks have managed to bounce back after multiple selloffs this year, China remains a major source of risk. The benchmark Shanghai Composite Index is down 12% this month and 23% since Jan. 1.

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.

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4.6 stars on average, based on 648 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Is BTC Still the Real Bitcoin? Not According to Roger Ver

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Anyone familiar with Roger Ver may have already heard him proclaim the benefits of Bitcoin Cash (BCH), while deriding the development path taken by Bitcoin (BTC).

That development path has been largely guided by the overseeing hand of Blockstream – a privately funded company which has itself provided much of the funding for Bitcoin’s development.

A Departure from the BTC Vision

While Roger Ver’s constant assault on Blockstream and BTC on Twitter may prove irksome to some – it does appear to be founded on genuine reasons. Ver believes that features like the Lightning Network and Liquid Network detract from the original ideals set forth by Satoshi Nakamoto in the original Bitcoin whitepaper.

Furthermore, Ver and many others maintain that Blockstream purposely derailed the development of Bitcoin, purely so that they could then step in and get rich selling a product that was never needed in the first place.

As Ver recently told his Twitter followers:

“Supporters of lightning network intentionally crippled the world’s best working and most popular cryptocurrency (Bitcoin) in an attempt to push people onto something that doesn’t work, isn’t ready yet, and may never be able to work!”

The crippling of Bitcoin Ver refers to is the refusal by Blockstream to increase block sizes in order to increase scalability. What many believe should have been a straightforward issue – and one that was even touted by Satoshi Nakamoto himself – eventually became a farce.

Rather than increase block sizes on the Bitcoin blockchain to hold more transactions, Blockstream instead decided to create and sell their own products, such as sidechains and the Liquid Network, in order to solve the (self-sustained) scalability problem.

Earlier this week, Ver tweeted:

“BTC is the only coin in existence with intentionally limited on-chain capacity.”

Conflict of Interest?

As for Blockstream, they have made no secret of their intentions to make money from their Bitcoin activities. The company plans to provide sidechain services for investors using the newly created Liquid Network – a system which sees Bitcoin swapped out for a pegged sidechain token.

Some people may see a conflict of interest here. But even if we put conspiracies and speculation aside, this tweet by Blockstream CEO Adam Back suggests they aren’t too interested in maintaining the Bitcoin mainchain:

“I bet they’d pay $100/tx for digital gold, and mid-sized international remittance, I would. Still be really good if fees were much lower.”

The tweet refers to speculation on what the future price of a Bitcoin transaction would be, and seems to confirm that Blockstream see Bitcoin as a remittance tool for large-scale investors, rather than cheap, efficient P2P digital cash.

When Bitcoin started it was supposed to be a decentralized, permission-less, trust-less, immutable and therefore uncensorable alternative to the existing financial hierarchies and centralized infrastructures.

Even if you like the idea of Lightning Network hubs, block producers, and state channels, one thing you can’t say about them is that they’re decentralized, permission-less or trust-less.

Bitcoin Cash (BCH) was forked from Bitcoin in 2017 after many in the BTC community became dissatisfied with the blockchain’s direction. Bitcoin Cash essentially acts as the pre-Blockstream version of Bitcoin.

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.

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4.4 stars on average, based on 81 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Bitcoin Price Resumes Slide as Volumes Dip, China Tariffs Weigh on Bitmain

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Bitcoin’s price declined on Friday, as tepid trade volumes kept the bulls in check following a stalled recovery attempt earlier in the week. On the news front, President Trump’s massive import duties on Chinese goods is beginning to take its toll on Bitmain, the nation’s largest mining harder manufacturer.

BTC/USD Update

After holding above $6,500 for most of the week, bitcoin’s price fell 1.3% on Friday to $6,452. Over the last 24 hours, BTC fluctuated between $6,549 and $6,450, according to CoinMarketCap.

The bitcoin price was still trading at a hefty premium on Bitfinex following an early-week implosion of Tether, a controversial stablecoin that lost its peg to the U.S. dollar. On Bitfinex, BTC/USD is trading around $6,578.

Bitcoin’s trade volume has declined sharply throughout the week. Over the last 24 hours, BTC turnover on virtual currency exchanges amounted to $3.8 billion. BitMEX, a popular derivatives platform, continues to be the largest market for BTC trades.

Even with the slump, bitcoin’s share of the overall cryptocurrency market capitalization remained close to 54%. Bitcoin’s dominance rate has increased in recent weeks as altcoins and tokens failed to make traction. At current prices, bitcoin has an overall capitalization of $111.9 billion. At the time of writing, the combined market cap of all digital assets was $207.5 billion. More than $11 billion in daily volumes were recorded for all assets combined.

Tariff War Takes Its Toll

The Trump administration’s imposed tariff war on Chinese producers is beginning to affect the nation’s bitcoin mining manufacturers. As the South China Morning Post recently reported, Bitmain has been dealing with new tariffs since Aug. 23. Two months prior, the company’s Antminer S9 product was reclassified by the U.S. Trade Representative as “electrical machinery apparatus,” which makes it subject to new taxes.

The import duties will exacerbate an already harsher outlook for the blockchain conglomerate. Bitmain has seen a sharp drop in mining rig demand caused by the yearlong slump in cryptocurrency prices. As a result, analysts foresee sizable losses in the company’s second-quarter earnings report.

Bitmain isn’t the only China-based blockchain company feeling the pinch of a new tariff war. Canaan and Ebang – China’s other major bitcoin mining manufacturers – could see a decline in shipments and profitability in the coming months. All three companies have announced plans to issue an initial public offering (IPO) in the not-too-distant future.

President Trump has imposed tariffs on more than $250 billion of Chinese goods. While Beijing has responded with countermeasures of its own, it will not be able to match the U.S. dollar-for-dollar given its large surplus with the country.

On Friday, the Chinese government reported annual GDP growth of 6.5% in the third quarter, the slowest since 2009.

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.

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4.6 stars on average, based on 648 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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