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Are Most Cryptocurrencies Headed for Zero? Goldman Sachs Believes So

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Extreme volatility, high correlation and a lack of intrinsic value all spell trouble for the cryptocurrency market, according to Goldman Sachs. In a carefully worded research note on Wednesday, the Wall Street behemoth warned that most of the world’s 1,500+ cryptocurrencies were headed for zero.

Grim Future for Most Coins

Investors should expect the vast majority of cryptocurrencies to fall to zero, with only a small handful dominating the market, Goldman analyst Steve Strongin said in a Feb. 5 report. Although Strongin didn’t speculate about a timeframe, he said massive price swings in the digital asset class are a clear sign the market is in a bubble.

“The high correlation between the different cryptocurrencies worries me,” the analyst said, according to Bloomberg. “Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”

The cryptocurrency markets have experienced a chaotic selloff this week, with the total market cap falling some $550 billion from its peak.

In the research note, Strongin added the following:

“Are any of today’s cryptocurrencies going to be an Amazon or a Google, or will they end up like many of the now-defunct search engines? Just because we are in a speculative bubble does not mean current prices can’t increase for a handful of survivors. At the same time, it probably does mean that most, if not all, will never see their recent peaks again.”

Strongin’s firm has  expressed keen interest in cryptocurrencies. Goldman is expected to launch its own bitcoin trading desk as early as June, making it the first Wall Street bank to make markets in the highly controversial asset class.

Paradigm Shift

The views expressed by Goldman are in line with previous comments made by Vitalik Biturin, the founder of Ethereum. About four months ago, Buterin told a crowd at ETHWaterloo that 90% of initial coin offerings (ICOs) built on the ether protocol will fail. This paradigm, referred by Buterin as “Tokens 1.0,” could experience a cataclysmic end before the market transitions to higher quality projects. This era is referred to as “Tokens 2.0,” and could be here sooner than most realize.

Whereas Tokens 1.0 was characterized by hasty projects, bad ideas and even scams, the second generation of token sales will build off the previous era’s mistakes. Buterin said he believes this market will begin mobilizing as early as this year. That could be just in time for his new DAICO fundraising model, which combines the current ICO template with a Decentralized Autonomous Organization. DAOs rely on smart contracts to implement rules, a feature that many believe will be an integral part of future crowdraises.

Buterin’s outlook is clear: cryptocurrencies will need to evolve to remain feasible both as an investment asset and unit of transaction. It is the latter that presents the biggest challenge.

That being said, the era of Tokens 1.0 is still generating record revenues, with recent data showing $1.2 billion flowing into ICOs during the month of January.

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 661 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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2 Comments

2 Comments

  1. ridge195

    February 8, 2018 at 4:17 am

    So all the ones that don’t succeed will fail. Except no time frame so that could be 10 years from now. Thanks Goldman. Your research is mind blowing.

  2. ronaldo18

    February 8, 2018 at 11:17 am

    Yeah actually no info. I suppose Sam has no idea either, since he gives us no hint.

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Analysis

Ethereum Price Analysis: ETH/USD Subject to an Extended Breakout Higher

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  • ETH/USD price action has formed a bullish pennant via the 4-hour chart view.
  • Ethereum network hard fork scheduled for January 16th 2019, but still subject to potential change.

ETH/USD price action has cooled since the recent bull run. This isn’t too surprising given the fast gains seen initially and the touted profit-taking following the explosive move north. A technical move appears to be the case across much of the market. Price action looking ready to breakout again.

Ethereum News Flow

The developers at Ethereum have now set a new date of January 16th, 2019, for their scheduled hard fork of the Ethereum network. This came at the back end of last week, on their bi-weekly call, where they discuss anything relating to the blockchain technology.

It was detailed that this agreement made via the call was non-binding verbal, leaving room for that date to still be moved, should any issues or problems come to light. Hacked’s Sam Bourgi covered in a recent crypto market update.

As covered in October via Hacked, Ethereum’s software upgrade saw a failure. The hard fork that they had been working on did not activate on their test network Ropson. This was largely anticipated to have been activated in November. As a result, they were forced to delay.

Technical Review – ETH/USD

ETH/USD daily chart

ETH/USD price action has been cooling, after failing to break above vital resistance seen around $220-225. This is in proximity to the 61.8% Fibonacci. Over 6% has been lost after the decent advances seen from 30th October, breaking out from pennant pattern.

The price was initially contained within the mentioned pattern since September. Bulls however gained some upside momentum at the back-end of October, seeing a breakout to the upside. ETH/USD had gained over 15%, up to the high print on 7th November, just above $225.

At present ETH/USD is somewhat magnetized to the 50% Fibonacci, hovering around the $210 price area. Clearly it has re-entered consolidation mode after the surge higher last week. This type of behavior is typically seen following on from explosive moves.

4-hour Chart View

ETH/USD 4-hour chart

Looking via the 4-hour chart breakdown, given as mentioned above, the current consolidation state, a bullish set up has formed. A bullish pennant pattern, as a result of the cooling from the high area on 7th November has formed.

Near-term resistance is eyed between $214-215, the upper trend line of the pennant. A breach above, will likely see a retest of the 7th November high. Further north, a strong area of supply can be seen running from $230-235.

ETH/USD faltered in the above supply area on several occasions, from 27th September up until 10th October. Lastly, in terms of upside, $250 would be a target for the bulls. The price hasn’t been up at these heights since 21st September, where it encountered strong sellers.

To the downside, immediate support is eyed around $210-208, the lower trend line of the pennant pattern. Any breach here, could very well see a fast move back down sub $200, buyers are seen around $195.

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 49 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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Stellar Price Analysis: XLM/USD Continues to Head for the Stars

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  • XLM/USD bulls resume upward trend, having gained another 8% over the past two sessions.
  • Cryptocurrency wallet provider Blockchain is to host Stellar Lumens (XLM) airdrop worth $125 million.

Stellar’s native token Lumens is notablly outperforming several of its peers. XLM/USD has seen its firm move north has continued, with the price gunning towards the $0.3000 mark. As a recap, the bulls exerted pressure to the upside, which forced a firm breakout from a triangular pattern formation. This resulted XLM/USD moving into an explosive short-term bullish trend.

The price ran higher between 4-6 November, gaining over 16%. For the next three sessions after this, the price cooled, between 7-9 November. This was a move which was very much in line with the rest of the market. It appeared profit-taking kicked in, given the fast and explosive gains. The bulls are back on the move within the past two sessions.

Recent Stellar News Flow

Cryptocurrency wallet provider, Blockchain, will be hosting what they say is the “largest crypto giveaway in history.” They will be dispersing $125 million worth of the Stellar Lumens, to Blockchain wallet holders, that choose to sign up for the airdrop. It is offering $25 of Stellar Lumens (XLM) for free to its 30 million users, a move to encourage new users and ever so slightly assist towards the greater goal of mass adoption.

The Blockchain CEO had reported that the company is working with the Stellar foundation partly because he believes it represents a superior blockchain capable of massive transaction volumes. He added that the airdrop is designed to “put users first” and allow them “to test, try, trade and transact with new, trusted crypto-assets in a safe and easy way.”

Technical Review – XLM/USD

XLM/USD daily chart

XLM/USD over the past two sessions now is running at consecutive daily gains. Bulls having gained over 8% at the time of writing, between 10-11 November. This demonstrates the strength of the current bullish trend, which had commenced on 31st October. Technically, the market accommodated a small pullback, as mentioned in the prior article before resuming its move north.

Upside Targets

There was some sticky resistance seen around the 50% Fibonacci, but the bulls having made a firm clearance of that now in latest move. The next near-term challenge is seen at the 61.8% Fibonacci, around $0.2830. This was the high area for 21st, 23rd and 24th October, where the price faltered on each of those occasions. A breakdown will likely open the door for the $0.3000 return.

Should XLM/USD bulls manage to firmly conquer the $0.3000 price region, there doesn’t appear to be too much in the way of $0.5000. During the chunky market sell-off seen in April, XLM/USD ran straight through from $0.5000 down to the $0.3000 territory, leaving little in the way of technical observation within the $0.4000 region.

Overbought Dangers

Despite all noted above, it is worth considering the RSI’s behavior. On the daily time frame, the RSI is again approaching the 70 territory. At the back end of July and September XLM/USD saw a steep sell-off. Given the recent surge in price action higher within a short time period, it still leaves XLM/USD vulnerable.

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 49 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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XRP Price Analysis: Largest Bank in Japan, MUFG Bank, Set to Utilize Ripple Technology

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  • Japan’s largest bank MUFG will be collaborating with Brazilian bank, Banco Bradesco, leveraging Ripple technology for payments between Japan and Brazil.
  • XRP/USD technical bullish formation eyed (a pennant pattern on the daily chart view) subject to a breakout.

It was reported last Friday that the largest bank in Japan, MUFG Bank, will be utilizing Ripple’s technology. MUFG Bank and one of the largest banks in Brazil, Banco Bradesco, announced signing a Memorandum of Understanding. They will be collaborating to develop a new cross-boarder payment service, which will leverage Ripple’s technology between Japan and Brazil. It is anticipated that they will be using Ripple’s xRapid, which requires the use of XRP,  to facilitate with the transactions overseas between the two countries.

Ripple announced via their Twitter account“@Bradesco and @btmu_official are leveraging Ripple’s #blockchain technology to create a new cross-border payment service between Japan and Brazil.”

Ripple continue to add large financial players to their ever-growing list of users on their network.  It was only reported at the back-end of last month that the National Bank of Kuwait (NBK), one of the largest banks in the Middle East, is actively testing and readying to go live with Ripple’s xCurrent payment solution.

Technical Review – XRP/USD

XRP/USD daily chart

XRP/USD over the past two sessions is moving back higher, after a chunky cooling in the price was seen. On 6th November, XRP/USD ran up to its highest level that was seen in around 6 weeks, moving just above $0.5700 mark. This was part of a 30% gain, which commenced after bouncing off support on 31st October. The bulls then ran into some near-term resistance, an upper trend line, that has formed a bullish pennant pattern. As a result, then price eased lower for two sessions, dropping just over 10%, during that period.

Upside Targets

Looking to the upside, should the bulls continue this pick seen going on two sessions now, a retest of the pennant will likely be seen. The above descending trend line is now currently tracking at $0.5500. A breach here could see a fresh wave of bull buying, initially with a firm move above 6th November high at $0.5705. Ultimately, a breakout from this mentioned pattern, could see a fast move back into the $0.6000 territory. XRP/USD last traded here on 1st October, before running into sellers.

Support Levels

If the technical set up as described above fails to play out, then there are key areas of support that must be looked at. Firstly, the lower part of the pennant pattern, which is observed at $0.4700. This is also in proximity to a demand area, running down to $0.4400. Any failure to provide comfort at the mentioned, then it could be disastrous. XRP/USD could be forced to free-fall back down below the $0.3000 territory. The price was last traded down here on 18th September, when it had entered into a strong bull run.

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 49 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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