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Analysis

Crypto Road Signs: In Conflict

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Prices of major cryptocurrencies continue to fall even amid good stock market news and very solid macro indicators.  So, what gives? These days technical analyst are making all the right calls pointing out the ugly downward sloping chart patterns and failed rallies that have formed over the last few months.  

When looking at the chart, keep in mind that there are human emotions driving prices.  It is important to remember that the bulk of global trading is composed of trend followers. In plain english we are talking a group that notoriously buys heavily in rising markets and sells just as heavily all the way down.  There is little in current behavior patterns that pays attention to fundamental value.

Fading Fundamental Interest

The fact that investors are closing their eyes and selling was clearly illustrated in a recent post at Bitcoin.com. Sighting Google Trends and Insights there is evidence that searches for words like Bitcoin, Ethereum, Ripple and cryptocurrency have fallen as much as 80% from peak fourth quarter 2017 levels.  This closely corresponds with the price action across the broad spectrum of currencies.

This simply confirms the pattern of trend following behavior; when the direction of asset prices changes from positive, investors bury their heads.  

A Few Fundamental Indicators To Ponder

The very fact that you are reading this article and taking the time to sort things out, immediately separates you from the crowd of trend followers.  So here are just a few fundamental indicators to ponder. Will any of these restore the luster to crypto overnight? Probably not but over time, fundamentals always win.  So here are a couple of thoughts.

New Money Is Coming

There is lots of media chatter about the billions being raised by hedge funds.  Bravo, this means new investors coming into the crypto market for the first time accompanied by professional managers that spend lots of dough on analysis that pay attention to fundamental factors.  

If Things Are So Bad Why Are ICOs Doing So Well

If you’ve followed the Initial Coin Offerings over the last year, this is an area that has been thoroughly trashed.  ICOs have been called out as “cash grabs” and criticized by tech experts for being “pre product” in other words nothing more than a “White Paper” and a couple of employees.  There have been cases of outright scams that have caught the attention of the media and earned damaging headlines.

For all this, ICO’s raised approximately $3.7 billion in high risk capital in 2017.  Since the start of the crypto price correction last December, ICOs have raised over more than $3.0 billion a 50%+ increase over prior periods.  This is a clear sign of new capital coming into crypto.

Crypto Conferences:  A Measure Of Interest

Woody Allen, the actor, playwright and comedian once remarked, “Those who can’t do, teach and those who can’t teach — teach Gym.”

Those pearls of wisdom could be updated and applied to the latest form of teaching- the crypto conference.  On the website BNT, I counted no fewer than 43 crypto summits, conferences, workshops in the month of March alone. There aren’t that many days in March. And the seats for these conferences are being filled. There is such a thirst for information on blockchains, smart contracts, ICO, regulation. Trend investors may still be feeling the pinch from the crypto price correction but interest from actual industry members has never been higher.  

Speed And Security: Enter PayPal

One of the good things about all of these gatherings is the focus on real world issues. Lately there has been lots of attention on scalability.  Both Bitcoin (The Lightning Network) and Ethereum (The Raiden Network) have their answers to scalability. Yes, but both propose off blockchain transactions and on top of that the crypto community is uncertain when either network will be ready for prime time.  Slow speeds and shaky security concerns are legitimate concerns. Now there is a new twist coming from PayPal.

Trade reports point to a PayPal patent application recently filed for a virtual (cryptocurrency) transaction system designed to address two major issues: speed and security.  Theoretically this could include creating their own payment channel, wallet and crypto exchange.

PayPal’s reach is one of the things that makes their patent application doubly interesting.  The company serves an audience of over 200 million according to the research firm DMR. The company has an impeccable reputation for security, reliability and customer service.

This is both an important measure of fundamental demand for crypto but a big vote for mainstream adoption.

So if you have been patient and read this article to this point I think you will agree that for the moment the crypto road signs point in different directions: prices falling and fundamentals improving.  In the long run fundamental forces almost always win out.

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 115 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.




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6 Comments

6 Comments

  1. mattslater74

    March 9, 2018 at 8:38 pm

    I agree there will be a new wave of investors. You mention Google searches have dropped but I bet the searches during the peak period were because bitcoin was largely unknown and people were looking for education. Not so much now. Therefore I see little correlatoin between the drop in searches and price. People look at market data before investing not Google search. PayPal is an interesting one. If the patent is approved, PayPal stocks should be a good buy

    • James Waggoner

      March 10, 2018 at 4:32 pm

      I agree, it is all in the interpretation of the data on Google Search. Until AI can show otherwise, the sheer volume of searches may not be the definitive measure. When prices are declining, the negative headlines usually follow. That is where trend followers get their news.

  2. MinerMatt17

    March 9, 2018 at 9:49 pm

    I do see a correlation, as people just want to bury their heads during these times, ad do something else to take their minds off the daily crashes. I know I do this. With that being said, I think we are very close to capitulation, and therefore the bottom, with the all weak hands being removed from the market.

    • James Waggoner

      March 10, 2018 at 4:34 pm

      It may be early to call it capitulation, but somewhere close to that point. That is for sure.

  3. ChookBunny

    March 9, 2018 at 9:49 pm

    When we talk of new money it is always in relation to Hedge Funds, large financial institutions and whales. Is there any understanding of what the opposite end of the economic spectrum is doing. Is there adoption by the worlds 2.5 billion unbanked. Are people in developing, or dictatorship based countries interested, trying or even buying into crypto?

    • James Waggoner

      March 10, 2018 at 4:37 pm

      Sure there are lots of developing countries where payments innovations are taking place. Recently we wrote about QPAGO in Mexico and then there are new systems in Africa. These may not exactly be crypto but they are quite similar.

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Analysis

XRP/USD Price Analysis: Israel’s Largest Financial Services Company GMT Partnering with Ripple

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  • Ripple has another large financial firm leveraging its technology, as the list keeps on growing.
  • XRP/USD will search for buyers within $0.3000-$0.2500 range initially, ahead of possible $0.2000 return.
  • XRP/BTC looks surprisingly encouraging, subject to a potential breakout to the upside.

XRP in line with the rest of its peers across the cryptocurrency market remains firmly on the back foot. XRP/USD is running at its third consecutive session of losses. At the time of writing, the pair has dropped 7% over this mentioned period. A renewed wave of selling pressure hit the market after the price was allowed some time to consolidate. The market was very much within range-bound mode, before the bears struck again. As a result, XRP has firmly given up the $0.3000 mark.

Israel’s GMT to Utilize Ripple Technology

The largest financial services organization in Israel, GMT, has announced a partnership with Ripple. They will be utilizing Ripple’s technology for their cross-boarder payments.

GMT said via their latest blog update: “GMT is joining companies like MoneyGram, AmericanExpress, CIBC, Earthport, AKBANK and many more, who are already authorized to use Ripple’s platform. This partnership is establishing GMT’s place in the forefront of the Israeli Fintech industry, also allowing us to work side by side with some of the leading companies in the world.”

GMT are the largest and leading financial services organization in Israel. They have an outreach of  250 branches spanning across the country. GMT specialize in local and international remittance services, among many other financial offerings.

In terms of which technology of Ripple’s they will exactly be leveraging, it does not appear to have been stated for now. Whether GMT will be using either xCurrent or xRapid is still subject to debate. Hacked will be sure to provide further details upon those being announced.

Technical Review – XRP/USD

XRP/USD 4-hour chart

Price behavior seems to be quite readable of late. XRP/USD is going through periods of hard selling, which is then followed by some range-bound trading. Once again, bears breakout from this consolidation mode to ignite more downside pressure. Between the 7th and 14th December, XRP/USD had formed a range-block. The sellers came piling in on the 14th December, and as a result the recent range was broken with $0.3000 giving way.

XRP/USD weekly chart

XRP/USD is now moving within a critical area. This is seen running from $0.3000 to $0.2500.  A very well-known area for big buyers coming in, as proven on occasions this year. Any failure of this initial range holding could see a free-fall down to $0.2000.

XRP/BTC daily chart

Finally, looking the daily chart of XRP/BTC, it remains somewhat encouraging. XRP is holding its ground again BTC, in comparison to many of its peers. The price is ranging for now, looking possible to see a chunky breakout to the upside. It remains trading around levels seen during the explosive run in December 2017.

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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4.5 stars on average, based on 86 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Stellar Price Analysis: XLM/USD Bears Break Big $0.10 Level

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  • Fear and panic spreads as XLM takes out another big psychological level, $0.10.
  • Support of XLM continues to take place, as AlphaPoint and CoinField announce support.

Stellar’s native token XLM has been a real victim of this heavy market selling pressure. The downward trend is very much stubborn and showing lack of a shift in sentiment anytime soon. Market hopes have been dashed on numerous occasions, when the price has looked like bottoming. Each small bounce and sign of possible recovery from the bulls continues to be sold with force by the bears.

Like several of XLM’s peers, fundamental developments remain strong. There is still much in terms of positive developments surrounding the Stellar foundation. However, with the pressing lower and breaking of these key psychological levels, it only sparks more panic and fear with market participants.

XLM Support Spreads

XLM continues to be added by exchanges globally. There is certainly no shortage with the supporting developments for Stellar Lumens. This week, AlphaPoint, a white label cryptocurrency exchange platform, announced their collaboration with the Stellar foundation. They will now be supporting Lumens for their clients, covering; deposits, withdrawals, custody, and trading.

Elsewhere, CoinField, a Canadian cryptocurrency exchange, detailed via Twitter that they are launching Stellar Lumens on their platform, as an XRP based pair. They noted that the XLM/XRP pair will be available with other fiat pairings, including; USD, CAD, EUR, GBP, JPY, and AED.

Technical Review – XLM/USD

XLM/USD 4-hour chart

The bears most recently pressed for a devastating technical development as the $0.10 mark was broken to the downside, which was previously anticipated via the last article posted on Hacked. Sideways trading had initially been observed, for seven sessions, as XLM/USD formed a range-block. This technically was vulnerable to an extensive breakout south.

A bottom area was eyed at the low of 7th December at $0.1010. This was breached after sellers were penetrating the supporting area during the session of 14th December. As a result, this forced the low of the 7th December to be exposed. In addition, it caused a drop below the psychological $0.10 level.

XLM/BTC Vital Demand Zone

XLM/BTC daily chart

XLM/BTC at the time of writing is trading within a vital demand zone. This can be seen tracking from 0.00003000 to 0.00002800. Previously, the area has proven to see chunky buyers come into play in driven the price back north. As already seen this year, on two occasions, in July and also September, both going on to see around 45% bull rallies.

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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4.5 stars on average, based on 86 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Forex Update: Dismal Chinese Data Causes Turmoil in Markets

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Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1302 -0.47%
GBP/USD 1.2571 -0.68%
USD/JPY 113.35 -0.21%
AUD/USD 0.7179 -0.66%
GOLD 1,243 -0.20%
WTI Crude Oil 51.16 -3.18%
BTC/USD 3,180 -2.54%

We continue to have an unusually active December in traditional financial markets, as the recent bearish shift, the continued Brexit woes and the slowing global economy add up to a very nervous trading environment. Volatility is especially high in stock markets compared to seasonal averages but currencies are also having very active days, with the Dollar clearly being in focus.

Today we had negative headlines in China with both industrial production and retail sales missing the consensus estimates by a mile, and the history of manufactured economic releases from the country makes that even scarier.

It’s no surprise that the Chinese stock market is leading the way lower globally, while the Chinese Yuan is also among the weakest currencies globally, even amid the improving trade-related sentiment. Risk-on currencies got it hard today, and the Dollar is defying its bearish seasonality, trading very close to its recent lows, confirming the broad risk-off shift.

Technical Analysis

GBP/USD, 4-Hour Chart Analysis

The Great British Pound continues to trade with pronounced relative weakness, and as Prime Minister Theresa May was sent home empty-handed from Brussels, with the leaders of the EU refusing to renegotiate the draft Brexit plan, the currency’s position just got even shakier.

From a technical standpoint, the Cable confirmed the key breakdown with a failed pullback in the past couple of days, and with no major support found above the generational lows near 1.20, long-term odds now favor a test of that zone, and bulls shouldn’t enter positions below the key 1.27 level.

EUR/USD, 4-Hour Chart Analysis

The EUR/USD pair dipped below the 1.13 level after yesterday’s the dovish growth and inflation forecast by the European Central Bank and today’s strong US Retail Sales report. The US economy continues to perform relatively well compared to its global peers, and although we think that the slowdown will eventually reach the US, the fiscal stimulus and the labor momentum could keep the engines going for a while.

That only adds to the buying pressure which is pushing the USD higher, and the troubles in the European financial system are also mounting, which could lead to another leg lower in the common currency next year. The main technical levels to watch are still the 1.12 support and the 1.1440 resistance, and with the broader downtrend clearly being intact in the most traded currency pair.

AUD/USD, 4-Hour Chart Analysis

The AUD/USD pair fell below the bearish wedge pattern on the negative Chinese news as we expected, and it’s now testing the 0.7165 support zone. A move towards the 0.70 level is likely in the coming weeks, should the pair violate the support zone, and the short-term trend change is close to being confirmed, while the broader downtrend is clearly intact, with strong resistance ahead near 0.7250 and 0.74.

WTI Crude Oil, 4-Hour Chart Analysis

Another rally attempt faded away today in crude oil, and the crucial commodity continues to trade in a bearish consolidation range following the series of dead-cat-bounces. The top of the range is found near the $54.25 per barrel price level, while strong support is found in the $49.50-$50 per barrel range.

Given the deeply oversold long-term momentum readings, bulls can open speculative long positions near the bottom of the range, despite the clearly intact long-term downtrend, while bears should wait for a larger scale bounce to reenter the market.

Key Economic Events on Monday

ChartBook

Forex

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

EUR/JPY, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

USD/CNH, 4-Hour Chart Analysis

Commodities

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

Featured image from 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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4.7 stars on average, based on 416 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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