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Bitcoin’s Stalled Recovery Keeps the Bulls in Check

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The bitcoin recovery engine stalled on Monday, setting the stage for a possible price reversal that mirrors last week’s 70-day low. With the total market cap so low, a decline in bitcoin would almost assuredly lead to a similar correction for other cryptocurrencies.

Bitcoin Price Levels

Bitcoin prices reached a low of $6,335.77 on Monday, as bearish pressure continued to undermine last week’s modest recovery. Bitcoin rallied to a high around $6,700 last Thursday shortly after bottoming near $6,100.

The cryptocurrency later recovered around $6,660A7 but remains in a bearish pattern going all the way back to June 9. BTC/USD is down roughly $1,000 over that stretch. Price action over the past 24 hours suggests that a further breakdown is probable.

The cryptocurrency market cap reached a high of $284 billion on Monday. Bitcoin and altcoins exhibited price stability over the weekend as trading volumes continued to plummet.

Depressed Market

As we reported this weekend, cryptocurrencies have witnessed a steady decline in trading volume that could make the market more prone to volatility. Daily trade volumes bottomed near $9.5 billion Sunday, the lowest in over two months. Volumes are down a staggering 80% since the market peaked in early January.

The absence of new money paints the picture of a depressed market in need of direction. With organic searches for “bitcoin” and “cryptocurrency” the lowest in around nine months, a large influx of new retail traders is highly unlikely.

Exchanges such as Coinbase are betting big that the next major catalyst will come not from retail traders, but large institutions. To help make that a reality, Coinbase has launched a new crypto-custody service targeting bitcoin whales. According to crypto hedge fund manager Kyle Samani, regulated custody services are the game changer that will attract institutional-scale capital.

“There are a lot of investors where custodianship was the final barrier,” Samani told Bloomberg in a phone interview. “Over the next year, the market will come to recognize that custodianship is a solved problem. This will unlock a big wave of capital.”

Coinbase isn’t the only organization vying to become a qualified custodian. Goldman-backed Circle and BitGo have also been in negotiation with regulators on the matter. Earlier this year, investment bank Nomura Holdings joined forces with two cryptocurrency firms to create a custody consortium. Bloomberg reports that at least three Wall Street custodians – Bank of New York Mellon Corp., JPMorgan Chase & Co. and Northern Trust Corp. – are exploring cryptocurrency custody services.

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 666 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 Sees Biggest Volatility Spike of the Year; Should Long-Term Holders Be Worried?

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Bitcoin’s precipitous drop over the past 48 hours has rendered the virtual currency highly susceptible to new bear-market lows. According to one indicator, the sudden and dramatic downshift disrupted a period of calm not seen  disrupted a period of calm not seen in over two years.

Bitcoin Volatility Surges

In the span of just 24 hours, bitcoin’s 30-day volatility index more than doubled, reaching the highest level since early October. The doubling was not only the quickest surge in expected volatility exhibited this year, but also the largest in terms of percentage growth.

According to bitvol.info, the volatility index surged to to 2.16% on Wednesday compared with just 1.05% on Tuesday. Just one day prior, the volatility tracker reached its lowest level since 2016.

To provide a comparison of just how quickly fortunes changed, the volatility index jumped 0.87 percentage point between July 22 and Aug. 13. The 30-day tracker also climbed 1.1 percentage point over a four-week stretch ending July 2. Despite those gains, the volatility regime has been in a firm downtrend since the beginning of the year thanks in large part to the arrival of bitcoin futures trading on CBOE and CME.

To recap: the bitcoin volatility index measures how much the price of BTC varies over time. The 30-day reading is calculated using the standard deviation of the daily open price over the previous month. The volatility index is also reported at 60-day, 120-day and 252-day windows. In all cases, the figures have skyrocketed over the course of the week.

In the fast-moving crypto markets, volatility is a double-edged sword. Periods of heightened uncertainty bring about substantial changes to the underlying price of digital assets. This can go both ways: it can produce unprecedented gains like we saw in 2017 or relentless crashes like we’ve observed on at least three occasions this year.

Where’s the Bottom?

Bitcoin’s outlook turned bleak on Wednesday after prices crashed below the $6,000 floor, opening the door to fresh yearly lows that pierced below $5,200. With fundamental support ($6,000) blown out of the water, market participants are bracing for a more protracted downturn in the weeks and months ahead.

Aggregate data via CoinMarketCap show an average bitcoin price of around $5,545 as of Saturday afternoon. Should bearish sentiment prevail, a test of the $5,000 support could be on the horizon. This level is consistent with forecasts put forward by leading crypto analysts Willy Woo and Crypto Rand.

As reported by Hacked three weeks ago, bitcoin’s NVT Ratio leaves little doubt about the intensity and longevity of the current bear market. The ratio, which divides bitcoin’s market cap by its average daily volume, suggests we are about halfway through a long-term bear trend. Declining trade volumes, the absence of retail interest and a deep schism in the bitcoin cash community all play into this narrative. Market manipulation also cannot be ruled out when analyzing sharp and sudden movements in the bitcoin price, especially with no fundamental catalyst present.

These factors should have very little impact on long-term holders of bitcoin. For starters, BTC is gaining widespread acceptance in institutional circles. Although this has not yet resulted in a commensurate uptake in actual trading, bitcoin and digital assets more generally have enjoyed wider recognition as a legitimate asset class. Secondly, bitcoin’s fundamental picture has changed very little from peak-to-trough, which suggests that the downturn has less to do with bitcoin’s perceived value as an asset class/future payment platform and more to do with market sentiment, speculation and technical re-positioning.

Thirdly, bitcoin whales appear to have played no part in the latest price collapse. If anything, whales have contributed to bitcoin’s continued stability over the past year. So long as the largest wallets aren’t actively unloading their positions, there’s little reason to fear that big investors have a vested interest in tanking the market.

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 666 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 Consolidates After Steep Loss as Market Cap Holds Below $100 Billion

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Bitcoin’s market capitalization remains firmly capped below $100 billion on Friday, as prices struggled to regain momentum following a catastrophic selloff earlier in the week. Although bitcoin remains firmly in the grip of the bears, price action over the last 24 hours suggests the worst of the downshift had passed.

BTC/USD Update

The bitcoin price is currently trading at $5,555.00 on Coinbase, having gained 2.6% over the previous 24 hours. The leading digital currency is still trading at a premium on Bitfinex, though the price spread has narrowed to around $120. BTC printed a low of $5,530.90 on Bitfinex but has since recovered near $5,674.

Aggregate pricing data provided by CoinMarketCap show a 24-hour return of 2.3% for BTC. Based on those metrics, the digital currency is averaging a price-per-coin of $5,616. That gives bitcoin a total market capitalization of $97.6 billion, down from $111 billion earlier in the week.

Bitcoin suffered a double-digit loss on Wednesday, with prices eventually piercing below $5,200 in the following session. That marked the lowest level in well over a year. At the same time, the broader cryptocurrency market plummeted to a low of around $176 billion as altcoins and tokens lost nearly $30 billion in value in less than two days.

At the time of writing, the combined crypto market cap had recovered to around $184.8 billion, though trade volumes had declined by roughly a quarter to $18.8 billion.

Virtual currency exchanges processed more than $6.3 billion worth of bitcoin trades in the last 24 hours. BitMEX, a leading derivatives platform, processed a whopping 29.3% of all bitcoin trades. No other exchange even came close in terms of daily turnover.

Recovery Likely

Bitcoin’s steep and sudden reversal followed a period of unprecedented calm for the virtual currency. As of Monday, bitcoin’s volatility index had fallen to the lowest level in over two years. The 30-day volatility index has since more than doubled to 2.15%, according to bitvol.info.

The sudden rush to liquidate BTC and other crypto holdings occurred on the eve of the bitcoin cash hard fork. The fork, which was initiated Thursday, has divided the bitcoin cash community into two camps with an ensuing tug of war over hash rate and user support. At the time of writing, the bitcoin ABC implementation was in the lead in terms of blocs mined.

Bitcoin’s massive decline, which has pushed prices deeply into oversold levels, is likely to be scooped up by bargain hunters in the coming days. The means a return to $6,000 – a level commonly associated with mining costs – shouldn’t be ruled out. If history is any indication, the market has a vested interest in keeping prices above that level.

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 666 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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Analysis

Crypto Update: Coins Consolidate After Key Breakdown

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The cryptocurrency segment is still under the influence of this week’s key technical breakdown that carried several majors below crucial support levels. Bitcoin’s moves have been dominating the market in recent days, and as the most valuable coin formed a short-term bottom, the top coins entered a choppy consolidation phase, retracing some of their steep losses.

Ripple and Stellar continue to outperform the broader market from a technical perspective, and some other coins, like Ethereum and Monero are also holding up above their previous bear market lows, but the overall picture is still overwhelmingly bearish in the market. The total value of the coins is slightly above the $180 billion mark, but further losses are likely in the coming weeks, with all of the majors being well below the breakdown levels, confirming the move.                

BTC/USDT, 4-Hour Chart Analysis

Bitcoin found support near the $5350 price level even though it spiked as low as $5200 during the rout, while the bounce carried the coin up to $5650. The breakdown is clearly intact in BTC and our trend model remains on sell signals an all time-frames, with a test of the $5000-$5100 zone still being likely in the coming period.

Bitcoin faces strong resistance in the long-term zone near $5850, with further key levels at $6000, $6275, and traders and investors shouldn’t open new positions here, with the long-term downtrend clearly being intact.

XRP/USDT, 4-Hour Chart Analysis

Ripple overtook Ethereum in terms of market capitalization again, thanks to its relative strength this week, and the coin is still clearly holding up above the long-term support zone between $0.42 and $0.46.

That said, our trend model is still on a short-term sell signal, and given the bearish segment-wide trends traders shouldn’t enter new positions here, even as the coin will likely be among the leaders of the future rally attempts. Further support levels are found near $0.375 and $0.355, while resistance is still ahead at $0.51, $0.54, and $0.57.

Ethereum Holding Its Ground above Bear Market Low

ETH/USD, 4-Hour Chart Analysis

While Ethereum failed to recapture the $180 resistance level during the bounce, it also avoided a sustained move below the previous bear market low near $170, despite the spikes towards the $160 support. Ethereum short-term stability is a slightly positive sign, but without further signs of strength, the coin remains in a clearly bearish technical setup. With that in mind, traders and investors should still stay away from the coin, as odds still favor the continuation of the broader downtrend.

LTC/USD, 4-Hour Chart Analysis

Litecoin continues to trade below the $44 support/resistance level after the clear break to new bar market lows, and it remains one of the weakest major from a technical perspective. A move towards the next major support zone near $38 is likely in the coming weeks, even if a bounce up to the $47 level is in the cards. Litecoin is on sell signals on both time-frames in our trend model as well, with further strong resistance levels ahead at $51 and $56.

EOS/USD, 4-Hour Chart Analysis

EOS is hovering around the key support zone near $4.50 since a spike towards the bear market low near $4.30 during the steep selloff. The weak bounce didn’t change the technical setup, and the coin is still likely to fall below the previous low, as the declining long-term trend is clearly intact. Our trend model is on sell short-, and long-term trend signals, with strong resistance levels ahead at $5 and $5.35.

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.

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4.7 stars on average, based on 396 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.




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