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Cryptocurrencies Have Shown Rare Stability Recently, but the Bulls are Coming

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Cryptocurrencies have exhibited unusual stability over the past three weeks, as investors continue to feel their way through a complex system of regulations, technical data and sentiment indicators. Though not nearly as exciting as the first six weeks of the year, the relative calm can only be viewed as a net positive for a market that is still in its infancy, but pushing forward nonetheless. That being said, recent price action has given us enough evidence to conclude that the bulls are making their comeback.

Narrow Trading Range

We’ll preface this discussion by reminding investors that the cryptocurrency market is held to a different standard of volatility. As an example, the market peaked above $830 billion in early January; one month later, it was worth $276 billion.

By comparison, the past two weeks have been much calmer, with a total market fluctuation of just $80 billion. This may seem like a selective time period to prove our point, but it isn’t; the crypto market hit its most recent peak on Feb. 17 with a total value of $518.4 billion. Since then, it has touched a low of around $420.1 billion and spent the majority of its time hovering between $440 and $460 billion.

The Coming Rally

Despite the relative calm we are witnessing, the bulls may be ready to flip things around sooner rather than later. Most of us have absorbed bullish recommendations on bitcoin showing prices destined to reach $22,000 (or is it $25,000, $50,000?), but far fewer have looked into the coin’s bearish cycle in recent years.

As it turns out, bitcoin’s last seven bear-market cycles have averaged 71 days, according to Dan Morehead of Pantera Capital. We crossed the 71-day mark about a week ago. How have prices performed over that period? Very well.

Since the Feb. 26 swing low around $9,500, bitcoin has rebounded 20%. (In stocks, a bull market is usually described as a period where equities have gained at least 20%.)

For more evidence of an uptrend materializing, consider the following chart, which depicts bitcoin’s price crossing the 50-day moving average for the first time since January.

A clean break above this critical level could ignite renewed buying interest in the world’s most active cryptocurrency. And as we’ve seen repeatedly, where bitcoin goes, the market follows. This observation was less apparent at the start of the year, a period that saw unprecedented speculation in altcoins. But recently, bitcoin has regained its dominance of the market to account for roughly 42% of its total capitalization. The cryptocurrency also accounts for over 40% of daily trade volumes.

Big Risks are Still Out There

That being said, there are real risks underpinning the market that extend far beyond the regulatory FUD making its way through the media. (At this stage, regulation is just as much an opportunity as it is a risk.)

In the author’s view, one of the biggest risks barreling down the market is Tether. We still aren’t sure if the currency is what it says it is. Neither is the Commodity Futures Trading Commission (CFTC), which has subpoenaed the company along with Bitfinex – an exchange that just so happens to share the same executive.

We’ve warned investors in the past about FUD, so it’s not our intent to fill your mind with unnecessary fear. However, Tether’s USDT token is the second-most active cryptocurrency by trading volume, which makes the outcome of the investigation especially critical. As the trade data clearly show, Tether is a significant source of liquidity for the half-trillion-dollar crypto market. If rumors are true that it is circulating more tokens than its dollar-denominated banking account actually owns, we could be in for trouble. (At this stage, these are more than just rumors: read up on the massive spike in USDT circulation in recent months.)

Though always risky, cryptocurrencies appear to be forging higher. Of course, predicting the precise nature of the rally or when it will materialize is notoriously difficult. Even with this uncertainty in mind, there’s enough reason to be chipper if you are a long-term holder.

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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4.7 stars on average, based on 741 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’s Year of Accumulation

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Although bitcoin looks poised to extend its January losing streak to five consecutive years, 2019 will be a year of slow accumulation for the virtual currency, according to Eric Thies, a well-known technical analyst. In the meantime, traders can expect the bear market to reach its climax once a new yearly bottom is breached.

Accumulation Year

In promoting the view that 2019 will be an accumulation year for bitcoin, Thies directed our attention to the major bear trend that emerged in 2015. That was the year bitcoin exhibited significant volatility, albeit in a lower range. Following the latest breakdown in price, bitcoin could be in for a similar trading pattern this year.

“Similar to 2015, 2019 may be the year of accumulation,” Thies said, according to CCN. This means bitcoin is likely to be an attractive investment in $2,000-$4,000 range – even with wild swings priced in.

Bitcoin’s volatility regime has changed dramatically in the last two months. Following a period of unprecedented calm, volatility surged to nine-month highs in the back end of December. Volatility will likely remain a factor for the foreseeable future as the technical tug-of-war continues. More on this: Bitcoin Maintains Narrow Trading Range as Recovery Faces More Resistance.

Circulation Grows

That bitcoin will remain highly volatile is supported by the recent influx of digital currency into circulation. Anonymous owners of dormant bitcoin wallets have been trading with greater frequency since October, which means their activity may have predated the November price collapse.

Data from Flipside Crypto recently showed that long-dormant bitcoin wallets have accounted for about 60% of the market’s circulating supply in the last 30 days alone. What’s more, active bitcoin supply has increased by a whopping 40% since the summer. This, of course, feeds into higher expected volatility.

If that’s not enough, consider that 1,000 addresses hold 85% of available bitcoin. As Bloomberg recently noted, many of these holders remained on the sidelines during the 2017 bull run and its subsequent collapse. If dormant accounts are becoming active again, there’s good reason to suggest that the whales are looking to re-enter the market.

Not Overnight

It’s reasonable to expect that bitcoin will become more attractive at lower prices, especially as more institutional investors access the crypto market in the coming year. But that doesn’t mean the accumulation will happen overnight. Previous bear cycles have taught us that downtrends can stretch for 1-2 years before any noticeable accumulation takes place. The only difference this time is there are more people involved, and more eyeballs on the price.

Additional reading: Crypto Winter and the Fed?

To demonstrate bitcoin’s potential at current levels, and why 2019 will be an attractive year to boost one’s holdings, it’s worthwhile to reflect on the cryptocurrency’s yearly lows rather than its highs. Below is a quick snapshot of bitcoin’s yearly bottoms stretching all the way back to 2012:

  • 2012: $4
  • 2013: $65
  • 2014: $200
  • 2015: $185
  • 2016: $365
  • 2017: $780
  • 2018: $3,200

Traders tend to focus on bitcoin’s lack of new all-time highs as evidence that the market is going nowhere, but these figures clearly show that BTC is a solid investment at almost any period in the last seven years (of course, this isn’t the case if you bought during the peak of 2018).

Make no mistake: technical analysis and market sentiment clearly show there is more pain ahead for bitcoin and the broader cryptocurrency market. But as the long-term value proposition continues to hold, there’s strong reason to believe we haven’t seen the last bull market. In the meantime, 2019 prices could represent a unique buying opportunity for those who missed the boat two years ago.

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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4.7 stars on average, based on 741 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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Altcoins

Lite.IM Surpasses Facebook In Race To Support Cryptocurrency Compatible Messenger

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Since the early part of 2018, crypto traders have been bombarded with bad news.  Hacks, broken promises, and overall lack of enthusiasm have resulted in huge losses.  But more than that, some promising cryptocurrencies just haven’t survived.  As traders look to the future, they should begin looking at projects that have the potential to disrupt industries and take them to the next level.  One company that has the potential to accomplish that is Zulu Republic (ZTX).

Zulu Republic is an ecosystem of blockchain tools and platforms, designed as a place where people, businesses, and organizations can thrive on their own terms.  The company’s stated mission is to advance the development of decentralized technologies, to promote human rights and empowerment around the globe, and to reduce the global digital divide.

Well the company is off to a great start with the development of Lite.IM.

What is Lite.IM? 

Lite.IM is a project aimed at expanding global cryptocurrency adoption.  With Lite.IM, users can send, receive, and manage Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and the company’s native currency (ZTX), on Facebook Messenger, Telegram, and SMS (in the USA and Canada).  To get started managing these cryptocurrencies on the aforementioned platforms, users simply need to send a text-based command to the Lite.IM bot.  The commands are as follows:

Telegram:  @LiteIM_bot

Facebook Messenger:  @lite.im

SMS (USA and Canada only):  760-LITEIM-0

Competition with Facebook

On December 21st, 2018, Facebook announced that it was developing its own stable cryptocurrency that users would be allowed to exchange through its popular chat service, WhatsApp.  But while Facebook’s initial approach will target users based in India, Lite.IM is open to everyone in the world.  Further, Zulu Republic has previously mentioned that they expect to announce support for WhatsApp in the next few weeks.  It certainly appears as though Lite.IM has the upper hand here.  And that is before even addressing Facebook’s obvious privacy concerns.

When it comes to cryptocurrency, privacy and security have always been two issues at the forefront.  Given the rough year that Facebook has had in that regard, users must certainly be forgiven if they have trouble trusting the social media giant.  In September, 2018, Facebook announced that an attack on its computer network had exposed the personal information of nearly 50 million users.  Apparently, the hackers were able to exploit a feature in Facebook’s code to gain access to user accounts.  Even prior to this announcement, Facebook was already under Congressional scrutiny over revelations that a British analytics firm obtained access to private information from nearly 87 million Facebook users.  Not to mention Facebook’s rumored involvement with Russian election meddling.  Suffice it to say, it has been a tumultuous year for Facebook.

And while users may have concerns trusting Facebook’s ability to handle cryptocurrency data, they shouldn’t have those same concerns with Lite.IM.  Private keys are RSA encrypted with the user’s password.  Lite.IM will never ask for that information nor will it be stored.  Because of this, no third party will ever have access to that valuable information.

Conclusion

The truth of the matter is that Facebook is an absolute giant and has grown at an extraordinary rate since its initial public offering.  Facebook has hired some incredible talent, from executive positions to marketing to development.  And while one should never count them out, I simply wouldn’t be able to trust them with all of the recent issues.  Perhaps in time, after regaining the public’s trust, users could once again look to Facebook as a leader.

Fortunately, users have another strong and dependable option.  Lite.IM will allow users all over the world to manage popular cryptocurrencies via their favorite messenger platform.  Users should continue to stay tuned for future developments.

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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Cryptocurrencies

Why Investors Should Be Paying Attention to Dotcoin

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I remember one of the first terms I learned in economics class was “complementary goods”. If one thing was bought that meant that the other would be in higher demand as well. In terms of investing, this tells you that investing in breathalyzers which can detect marijuana would be a smart move, or any other “cottage industry” to the medical marijuana rush.

But in terms of blockchain, it helps to figure out a way to make money on the trading industry, without becoming a trader yourself. One way to do this is to find a token that is tied to a trading exchange.

Cryptopia’s Utility Token

As a budding cryptocurrency exchange, Cryptopia has a lot of work to do. It also has clearly not been a good year for the cryptocurrency industry. However, Dotcoin (DOT) functions as the utility token to Cryptopia and could prove to be a good way to benefit from a comeback in cryptocurrencies. If the comeback occurs, trading would likely increase, as would the demand for DOT.

DOT is used to pay for coin listing fees and is how Cryptopia covers referral fees to traders. The requirement for listing fees to be paid means that during a crypto boom, when there are projects aplenty, something like DOT would be in high demand. The same thing applies to referral fees. Nobody is referring friends to join exchanges in a down period, so this is more likely to change when crypto hits the news again.

With over 2 million users as of the time of writing this, Cryptopia is a mid-sized exchange with not a lot setting it apart. To put it in perspective, I have only ever used Cryptopia to purchase DOT. That isn’t a “red flag in itself, but as a trader, you can actually use past experience to decide how likely it is that many traders will move to a different exchange.

In the end, so many companies (and especially trading exchanges) depend on network effects for their growth. For each new customer, it becomes slightly easier to attract another one. This applies to all exchanges though, and some of the biggest exchanges have been able to lower fees or offer deeper liquidity pools as a result of their larger user base.

What Your Investment Means

As an internal utility token, you are essentially making a bet on the platform. Currently trading around 150 satoshis, DOT has been running flat for a while. This makes it a low volatility bet with high potential upside. Previous resistance levels have been around 300 satoshis (with an all-time high at 650-ish).

As a utility token that is inextricably tied to a single exchange, it is almost for sure that it will spike again in the future. This is because a certain “price floor” exists on these sort of tokens which is hard to escape. That isn’t to say a return is guaranteed (this is a low market capitalization coin, after all), but more that there is more upside potential than downside risk.

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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