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Ethereum: Building A Lead In The Marathon

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A lot of what is written these days on cryptocurrencies fits into one of three categories. The first is a description of the latest price moves up and down.  We all know how much drama there is and that makes good headlines.  

Let’s call the second category the SegWit syndrome where we receive a description of the latest breakthrough in blockchain technology written from a developer viewpoint: hard to read and nearly impossible to understand.

In the third category is all of the other highly qualified writers and journalists that I have not already insulted.  Apologies to all.

For more than 30 years as a Wall Street analyst, hedge fund manager and Director of Research, my approach is to access things from an analytical perspective.  Technology is constantly changing the world but the things that make for long term business success pretty much stay the same.  That is why our bias tends to favor the crypto giants Bitcoin and Ethereum.

Focus On Ethereum

By now it is probably no longer necessary to describe Ethereum’s open source blockchain platform that features self executing smart contracts.  Everybody knows that by now, right?

As a business person and investor, I am drawn to the leadership already created by Ethereum founders.  Say what you will about Initial Coin Offerings, but Ethereum accounts for over 80% of that market.  But that is just surface stuff because if ICO were to stop overnight, the demand for Ether would not end.

One of the forces behind this prediction is the Enterprise Ethereum Alliance which is now just over a year old.  Membership totals somewhere near 300 companies from JP Morgan and MicroSoft down to much more modest enterprises.  The mission of EEA is to bring together Fortune 500 companies with blockchain experts.  This is a great selling tool for Ethereum and as the list grows, so does their competitive strength.

Capital And Competition

To be successful, it is critical to always keep an eye out for what is going on around your business.  It is a well turned phrase that if a business doesn’t disrupt itself, someone else will. That takes capital. These days capital is flowing into crypto in many different ways.

The Weird Journey of Algorand

Venture Capital are dying to find a way of tapping into the cryptocurrency wave.  As we pointed out in a recent article, VC’s have been wounded by things like crowdfunding and ICOs and looking for about any action.  That is when I came across MIT’s Algorand blockchain project.  It raised $4 million in seed money from two VC’s.  Now $4 million is chump change but still it made me ask, what were they thinking?

Here is how CoinDesk described the project.  Algorand constitutes a digital currency and transaction platform.  It represents the latest effort to build a wholly new blockchain aimed at tackling some of the perceived governance issues associated with distributed systems.

The Professor Speaks

The head of the Algorand is MIT professor,  Silvio Micali. In addition to spending 30 years in cryptography he is also a Turing Award winner.  So obviously he is no slouch.  But apparently all these years in academia has depleted his appreciation for Econ 101 which states that everyone behaves in a way to optimize profits.  Professor Micali and the Algorand platform appears to be forgetting the value incentives for crypto mining.

At a recent conference Macali explained his attitude and the Algorand approach in this way. “We must use incentives as a last resort.” “ When you put incentives out there, people learn how to use those incentives for making money in ways that are nearly impossible to predict.”  Wow, that sounds a lot like creative capitalism.

Crypto Socialism

Micali believes that miners who have invested lots of dough in expensive equipment are dealing in trivial computations and do not need to be rewarded.  Instead the Algorand platform uses “validators” who in return for doing trivial computations will not have to invest in expensive equipment.  

Coindesk describes Algorand as the latest effort to build a wholly new blockchain system. The best guess on a release date is sometime in the next year. Taking that statement at face value out of respect for the author, at this time,  investors in Ethereum have little to be worried about from competition.  In the meantime Ethereum founder Vitalik Buterin is working on something call a DAICO.  It is intended as an improvement on the current Ethereum ICO process.  As we suggested earlier, when a tech company disrupts itself, it reduces the chances of being overtaken by others.

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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Analysis

Crypto Update: Majors Testing Lows Following Broad Selloff

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The major cryptocurrencies have been once again under pressure in the past 24 hours and most of the coins got very close to their recent lows, even as the losses are limited for now. While the top coins avoided a breakdown, given the overwhelmingly bearish long-term picture and the steep short-term trend, odds continue to favor new lows in the coming weeks, so traders and investors should still remain defensive.

Dash/USD, 4-Hour Chart Analysis

The continued technical weakness in the lagging coins, like Dash, and the lack of a relatively strong leadership is still apparent, and it reinforces the bearish overall picture. That is true even as the long-term momentum indicators are showing deeply oversold readings and investors sentiment remains very negative which could lead to a larger scale correction after a short-term trend change. That said, traders shouldn’t enter new positions here until we see meaningful short-term technical improvements.

BTC/USD, 4-Hour Chart Analysis

Bitcoin failed to regain momentum despite the weekend bounce and the coin is back near its recent low trading near the $3250 level today. The key $3600 level is out of reach for the most valuable coin, and with that in mind, our trend model remains on clear short- and long-term sell signals.

The current weakness of BTC is a negative sign for the whole segment, and a test of the key long-term $3000 level is more and more likely. Further string resistance is ahead between $4000 and $4050, and traders and investors shouldn’t enter positions here.

ETH/USD, 4-Hour Chart Analysis

Ethereum has been trading in a very narrow range in recent days, and the coin is still stuck below the key $95-$100 zone, as it failed to show relative strength despite being among the most oversold majors. ETH also faces strong resistance near $120 and $120, with the next major support zone found between $73 and $75, and traders and investors should still stay away from the coin.

Litecoin Breaking Down Again?

LTC/USD, 4-Hour Chart Analysis

Litecoin is threatening with another break below support today, with the $23 support level looking very weak now, and the steep short-term downtrend remains clearly intact in the coin. LTC continues to be relatively weak from a short-term standpoint, and traders shouldn’t consider even ultra-short term positions here, despite the deeply oversold broader picture.

The next major support zone is found between $20 and $20.50 and odds favor a test of that zone as soon as in the coming days, with strong resistance found near $26 and $30.

XRP/USDT, 4-Hour Chart Analysis

Ripple continues to hover around the $0.30 level, still being very weak on the short-term time-frame, and being on sell singles both short- and long-term in our trend model. XRP faces strong resistance near $0.32, $0.3550, and $0.3750, while primary support is found at $0.28, with the prior bear market low being at $0.26. We expect at least a test of the lows in the coming weeks, despite the still relatively strong long-term technical setup and new low bear market lows are also likely in Ripple.

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 417 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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Analysis

Crypto Update: Bear Market Lows in Jeopardy After Latest Failed Bounce

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The cryptocurrency segment switched directions yet again, as, after a weak bounce on Wednesday, the major coins are headed back towards their recent bear market lows today. While the losses are not significant, for now, given the bearish long-term picture and the vicinity of the lows, another leg lower in the downtrend could soon begin, despite the deeply oversold long-term momentum readings.

The majors are all in the red amid the broad selloff and only a few of the battered altcoins are showing some relative strength in the face of the apparent selling pressure. The total value of the market is back below $110 billion, and a dip below the $100 billion mark is possible as soon as the coming days, with Bitcoin being among the weakest top coins in the past few days.

Volatility has been steadily decreasing ever since last week’s breakdown, but we expect trading activity to pick up somewhat ahead of the weekend, and traders should remain cautious here given the still broadly negative technicals.

BTC/USD, 4-Hour Chart Analysis

Bitcoin is trading just above its recent lows despite yesterday’s rally attempt, and the coin is showing relative weakness hinting on an imminent test of the lows. That said, with the long-term momentum readings clearly being oversold, we could still be in for a larger scale bounce in the coming weeks, but traders should wait for signs of short-term strength before entering new positions.

Our trend model remains on sell signals on both time-frames, with strong resistance levels zones ahead near $3600 and between $4000 and $4050, and with key long-term support found near the $3000 level.

ETH/USD, 4-Hour Chart Analysis

Ethereum is still stuck below the key $95-$100 zone as yesterday’s bounce faded but the coin is trading above its bear market low, performing in line with Bitcoin and the majority of the segment. ETH is still in short- and long-term downtrends, and our trend model is on sell signals on both time-frames as well, despite eh oversold long-term picture.

Odds still favor a move towards the next key support zone between $73 and $75, and traders and investors shouldn’t enter positions here, with further strong resistance zones ahead near $120 and $130.

Altcoins Drift Lower Across the Board

IOTA/USD, 4-Hour Chart Analysis

We are still not seeing signs of meaningful relative strength even among the smaller altcoins, as although some of the most oversold currencies are, in fact, holding up well above their recent lows. IOTA is still a prime example of the long-term weakness, as it got stuck below the resistance zone surrounding the $0.24 price level despite the recent bounce attempts, while also remaining in a clear broader downtrend. For now, the prior low just above $0.20 is safe, but new lows are still likely in the coming weeks.

XRP/USDT, 4-Hour Chart Analysis

Ripple has been trading with very low volatility in the last couple of days, hovering around the $0.30 level. The coin failed to show relative strength amid the bounce attempts, and break below last week’s lows and a test of the bear market low near $0.26 still seems likely, with the sell signals being in place in our trend model on both time-frames.  XRP faces strong resistance near $0.32, $0.3550, and $0.3750, while primary support is found at $0.28

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 417 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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Analysis

Crypto Update: Another Rally Attempt in Crypto-Land

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The major cryptocurrencies are all trading slightly higher today, following two bearish days that brought them back to last week lows, and for now, another breakdown has been avoided, despite the overwhelmingly bearish broader picture. The modest bounce left our trend model on sell signals across the board, and odds continue to favor new lows in the coming period, so traders and investors should remain defensive here.

The top coins are trading well below the weekend bounce-highs and without new swing highs, the short-term trend also remains clearly bearish, even considering the deeply oversold long-term momentum readings and the abysmal sentiment. So while a larger scale bounce remains possible in the coming weeks, perhaps following a failed breakdown pattern, bulls should still be patient until we sell clear technical improvements in the segment.

With that in mind, traders and investors shouldn’t enter positions even in the slightly stronger coins, and odds still favor the continuation of the bear market, with new lows likely in the coming days. That said, a successful test or a failed breakdown could trigger a larger scale correction, with the broader picture still being deeply oversold and with investor sentiment still being very negative. For now, there is no sign of an imminent rally, with all eyes on the $3000 in Bitcoin.

BTC/USD, 4-Hour Chart Analysis

Bitcoin rallied as high as $3450 today, but it failed to get close to the $3600 resistance and the weekend high, so the short-term downtrend remains intact despite the bounce. For now, our trend model is still on sell signals on both time-frames, and traders should stay away from entering new positions here, with the long-term picture also being clearly bearish.  Further resistance is ahead in the $4000-$4050 zone, while key long-term support is found near the $3000 price level.

ETH/USD, 4-Hour Chart Analysis

Ethereum is stuck below the key $95-$100 zone even following today’s bounce, keeping the coin on a short-term sell signal in our trend model. Odds still favor a move towards the next major support zone between $73 and $75, and only a quick recovery above the primary resistance zone could change the short-term trend.

The steep long-term downtrend is clearly intact in the coin, and traders and investors should still not enter new positions here, with further strong resistance zones ahead near $120 and $130.

Altcoins Avoid Breakdown but Strong Resistance Zones Lie Ahead

Dash/USDT, 4-Hour Chart Analysis

Despite yesterday’s weakness, last week’s lows held up even in the relatively weaker majors, and although that’s an early sign of stability, it’s not enough to warrant upgrades in our trend model. With still no bullish leadership present in the segment the continued technical weakness in the lagging coins, such as Dash reinforces our bearish long-term view.

XRP/USDT, 4-Hour Chart Analysis

Ripple only experienced a weak bounce, and although it continues to trade near the $0.30 level, the coin is still among the relatively weak coins from a short-term perspective and the renewed long-term sell signal is also in place.

We still expect a move towards the prior bear market low near $0.26, with a weaker support level found above that near $0.28, and traders and investors shouldn’t enter positions here, with resistance levels above $0.30 ahead at $0.32, $0.3550, and $0.3750.

Litecoin/USD, 4-Hour Chart Analysis

While Litecoin managed to hold up above its recent swing low and the $23 support level, it remains in steep short- and long-term downtrends, and we would need to see significant technical strength for even a short-term trend change.

Our trend model is on sell signals on both time-frames, and below $23, the next major support zone is found between $20 and $20.50 with strong resistance ahead near $26 and between $30 and $30.50.

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 417 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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