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Canary in a China Mine

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In the old day, or possibly still today I’m not sure, coal miners used to carry a live canary in a cage when going into the mines.

The strategy is that if any poisonous gases start to leak, the canary will die first and give the humans enough warning to get out in time.

This proverbial “canary in a coal mine” is now used widely in financial markets to describe a warning sign of possible dangers ahead.

The regulators are coming after crypto. We saw it earlier this month with the announcement in South Korea. Yesterday, Chinese authorities held a closed door meeting to figure out how to stop the flow of electricity into bitcoin.

As we know, most cryptocurrency mining happens in China because power is cheap there. So if that tap were to be cut off abruptly it could potentially deliver a fatal blow to the world’s number one cryptocurrency.

Bitcoin itself is already on borrowed time. Even though blockchain is cutting edge and potentially revolutionary, bitcoin’s protocol has not undergone a major upgrade since it was created in 2009. The transaction log has been seriously backed up for the past month and in the past few days the average transaction time has spiked to a record high of 11.5 hours.

The SegWit solution which was implemented in August allows some of the transaction data to be stored off-chain, which should make things more efficient. Unfortunately, less than 10% of miners are currently using this option.

We hope that bitcoin finds a way to scale quickly, and I personally believe that it will, but if it does not it may die a very gruesome and public death but in death will have given life to this new marvelous industry we call crypto.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Dollar Bites Back

Oil Through the Roof

Ripple Continues

Please note: All data, figures, and Graphs are valid as of January 4th. All trading carries risk. Only risk capital you’re prepared to lose.

Traditional Markets

Yesterday the largest player in the financial markets, the US Federal Reserve, released the minutes from their previous meeting on December 13th, in which they raised the interest rates by 0.25%.

It’s always fun to peer into the minds of the Fed and it can usually give an excellent indication as to what’s happening in the economy.

The main topic of discussion was rather concerning. With all the money that they’ve pumped into the system since 2009, we should be seeing massive inflation at the moment. This should be simple economics, increase the supply of money, should decrease it’s value. But for some reason it’s not.

Despite this, it seems that their path remains steady. They will continue to raise the interest rates in the United States gradually over the next three years.

Though this information is not new, market participants did use it as an opportunity to place some buy orders (yellow circles) on the already soaring stock market as well as the badly beaten buck.

However, the long term trends of the market resumed fairly quickly and by tomorrow these will be tiny blips on the chart.

Oil in Focus

Oil continued to climb yesterday. The protests in Iran continue to gain momentum, which in turn causes speculators to continue the buying pressure on crude.

This afternoon, the EIA in the USA will release their inventories data, which usually has a pretty significant impact on the price.

Ripple Wow!

The price of Ripple has continued its rampage last night, tearing up everything in its path. Over the last month, XRP tokens are up a total of 1343%, making it the fastest gorwth in value of any asset I’ve ever heard of.

Still, the buying pressure continues with many clients asking about this exciting token. I did some number crunching yesterday and it seems that even with XRP at $10 per token, the minimum transfer on the Ripple blockchain would still only cost one hundredth of a cent.

Meaning, in order for the minimum ripple transaction to be $1, the price of XRP would need to be $100,000. Still, in order for that to be super useful, we’d need to see a lot more banks integrating this option and using these tokens. Otherwise, it could be worthless.

Let’s have an awesome day!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

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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Analysis

Crypto Update: Market Remains Weak Despite Ripple’s Surge

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Ripple made headlines today in the cryptocurrency segment, as the third largest coin jumped by more than 15% after trading in a narrow range for several days. Most of the major coins joined the rally, but the gains were muted and the technical setup remained unchanged in most cases, with the long-term outlook still being bearish, while the short-term picture remaining mixed.

Ethereum, which has been in the center of the trends in the segment for weeks rallied back above $200, but stayed below the recent swing high, leaving several questions unanswered concerning the short-term trend. Bitcoin also got stuck near the $6275 level yet again, and the total value of the market is still below the $200 billion mark, with still no clear signs of major capital inflows in the segment.

ETH/USD, 4-Hour Chart Analysis

Ethereum quickly recovered above $200 after dipping below the weekend lows yesterday in late trading, retaining the short-term buy signal in our trend model. That said the coin still needs to show stronger bullish momentum to avoid a resumption of the clearly declining long-term trend. As sustained dip below $200 would still warn of a move to last week’s lows, while a move above $235 would open up the way towards $260 and the confluence resistance near $275.

BTC/USD, 4-Hour Chart Analysis

Bitcoin has been showing weakness in the last couple of days, and although the coin is still on a short-term buy signal, similarly to Ethereum, a quick recovery above $6500 would be needed to avoid a bearish turn.

Traders should hold on to their positions here, but given the still bearish segment-wide trends, we still don’t advise full positions even in the stronger coins. Below $6275, weaker support is found at $6000, close to the key long-term zone near $5850, while resistance is ahead at $6500, $6750, and $7000.

Ripple Needs Follow Through For a Buy Signal

XRP/USDT, 4-Hour Chart Analysis

While today’s spike in Ripple is encouraging, the coin needs to show further signs of strength, as the recent sudden spikes in the majors were quickly sold as the bearish trend remained dominant in the segment.

With that in mind, despite the broken resistance levels, XRP remains on a neutral short-term signal in our trend model, while still being bearish from a long-term perspective. The coin is currently trading right at the $0.32 level, with support found at $0.3130, $0.30 and near $0.30, while strong resistance is ahead at $0.35.

DASH/USD, 4-Hour Chart Analysis

Dash is among the stronger coins from a short-term technical standpoint, trading in a bullish consolidation pattern just below the key $200 level. That said, the coin failed to show strength today amid Ripple’s rally, and that still points to a dominant bearish trend in the segment. With that in mind, traders should wait for further positive signs before entering new positions, especially since a bullish leadership still hasn’t developed.

IOT/USD, 4-Hour Chart Analysis

IOTA is still weaker than average, together with NEO, EOS, and ETC, and the coin is still just above the August lows, clearly being in a broad downtrend, despite holding up above the lower boundary of its short-term range. A test of the lows is likely in the coming weeks, and the coin remains on sell signals on both time-frames, with support found between $0.455 and $0.475, and near $0.405, and with key resistance ahead near $0.57 and $0.64.

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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4.6 stars on average, based on 347 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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Altcoins

Bitcoin, Ether and Ripple Up in the Air as SEC Delivers a Sobering Reminder

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The U.S Securities and Exchange Commission just delivered a sobering reminder to the crypto community regarding the legal status of Bitcoin and Ethereum. SEC Director of the Division Corporation Finance William Hinman originally told a San Francisco conference in June that:

“…based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value.”

SEC Clarifies Crypto Security Stance

Today the SEC Chairman Jay Clayton released this official statement in which he reminded everyone that media statements made by SEC personnel should not be taken as legal pronouncements. Clayton stated:

“The Commission’s longstanding position is that all staff statements are nonbinding and create no enforceable legal rights or obligations of the Commission or other parties.”

In a particular sentence that may have been included specifically to cool the enthusiasm generated from his colleague Hinman’s original statement, Clayton states:

“…our divisions and offices, including but not limited to the Division of Corporation Finance, the Division of Investment Management and the Division of Trading and Markets, have been and will continue to review whether prior staff statements and staff documents should be modified, rescinded or supplemented in light of market or other developments.”

The last part about ‘modifying, rescinding or supplementing’ future documents suggests that the SEC are starting to worry about the effects their own words have on the very market they’re attempting to regulate.

When the original statement by Hinman hit the headlines in June, Bitcoin immediately surged by around 6%. Ethereum benefitted even more from the news and spiked 10% within the space of an hour.

Consequences for Bitcoin, Ether and Alts

The reminder from the SEC is unlikely to affect the average bag-holder, who in all likelihood disregards much of what comes out of such traditional institutions as the SEC. The news is more likely to strike hesitation into the minds of large-scale, corporate investors who thought all of this uncertainty was already behind them.

It could also spell either good or bad news for Ripple, which is currently fighting five lawsuits – including two federal lawsuits – against claims that its token sale represents a security issuance.

Director Hinman’s original statement back in June suggested that decentralization was key to avoiding being classed as a security. He suggested that coins and tokens from centralized blockchains would have a harder time with the SEC:

“Over time, there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required. And of course there will continue to be systems that rely on central actors whose efforts are a key to the success of the enterprise. In those cases, application of the securities laws protects the investors who purchase the tokens or coins.”

With XRP being the third largest capped coin in existence, its prominence has made it a prime target for those suspicious of the currency’s relationship to the Ripple company. As the lawsuits began to pile up, many began to question what Hinman’s words would mean for XRP.

Today’s clarification by Chairman Clayton could be seen as a reprieve for XRP, as it essentially shelves the decentralization issue for the time being. On the other hand, it could mean that even if XRP is proved to be wholly decentralized, it may have even larger requirements to fill before gaining a positive classification – as could the rest of the entire crypto market.

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 58 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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Altcoins

FunFair’s Value Expands 20% in a Week amid Catalysts

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FunFair (FUN) has taken investors on a wild ride in the last month along with the broader cryptocurrency market. Most recently, however, the FUN has hit a stride, increasing its value by approximately 20% over the last week. For the month, the coin remains lower by 14% as most ETH-based tokens have been following the lead of the No. 2 cryptocurrency Ethereum, which has similarly posted gains for the week, up 14%, but a loss for the month at 30%.

Source: Trading View

FunFair’s relative strength remains in neutral territory at 47.4, while the MACD level is bullish. Most of the moving averages, however, are signaling sell, with the exception of the EMA and SMA. Meanwhile, despite the fact that ETH isn’t out of the woods yet, if FUN is going to continue to follow its larger peer’s path, it could be in for more gains in the final quarter of the year with a couple of potential catalysts ahead.

Catalysts Ahead

The ETH drivers include the upcoming launch of the Ethereum hard fork on the test network, which brings them one step closer to unveiling Constantinople, which in turn will lead to the integration of scaling technology like Casper. This is what the community is waiting for but whether it can overcome the massive wave of ICO selling remains to be seen.

FunFair has a couple of developments of its own to drive the price higher. When a blockchain project sticks to its roadmap, it’s a reason to celebrate the coin, and FunFair has been moving forward. FunFair just announced that the completion of the first phase of beta testing in which “community testers” tested the mettle of the games with thousands of hands of blackjack and spins of the roulette wheel.

The mainnet testing coincided with the launch of its first casino. FunFair secured an operating license in the Dutch island of Curacao and expects for the maiden FunFair-fueled casino to go live in September. Ethereum Co-Founder Joseph Lubin has identified gaming as a major driver of the network.

Bitcoin’s dominance is currently hovering at 55%, and the combined value of the crypto market is once again perched above $200 billion. If market strategists and technical signals are right, the next couple of months could be a game changer for crypto prices. ICE’s regulated exchange Bakkt will likely launch in November, while Fidelity is reportedly moving deeper into crypto. It’s just a matter of time for prices respond to the blockchain industry advancements and catch up.

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 60 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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