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Happy Fork Day

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Hi Everybody,

As many of you know, today the Bitcoin scaling debate will run up against a critical deadline.

This is sure to be the most uncertain time in the world of digital currencies and after the astonishing surge in pricing since the beginning of the year and positive legislation for digital assets from several countries, the world is watching.

As it stands, 100% of the mining community is signaling to implement the Segwit protocol and 87% are voting for SegWit2x. Another option that has been gaining momentum is bitcoin cash, which will be attempting to hard fork the network today.

Bitcoin cash is said to have a newer and stronger code than even SegWit2x but the support for it in the mining community is still extremely small. Of course, since bitcoin cash is offering to give 1 BCC for every BTC held in a “supported wallet” the excitement from users has been overwhelming.

Now, nobody really knows how this is all going to play out. What we do know is that many brokers and exchanges including eToro will be halting all transactions within the next few hours for an undetermined period of time until everything is sorted out.

eToro’s downtime will begin today at 11:00 GMT and will last until our experts feel that the network has stabilized.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Any reaction to N Korea?

USDollar holding support

Forking Brexit (EURGBP)

Please note: All data, figures & graphs are valid as of July 31st. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

With earnings season well under way, traders on Friday have propelled the Dow Jones to a brand new all time record high.

A shakeup in the Trump administration, failed healthcare reform bill, new Russian sanctions, nor a successful missile test from North Korea could bring the stocks down.

There does seem to be a bit of a safety play in the markets this morning though. We can see in the currency markets that the three main safe haven currencies are leading the day so far.

Even the U.S. Dollar, which has been falling nonstop lately, seems to have found some temporary support.

As well, the ultimate safe haven, gold is extending its gains from the past few weeks and is on track for a very strong July.

One thing that may be causing investor optimism is the price of oil, which has reluctantly crossed the $50 mark in the last few minutes.

Soft Brexit Fork

While we wait to see if there will be a hard fork or soft fork in bitcoin, we can see in the U.K. parliament that the notion of a soft Brexit is now in danger of a hard fork.

Prime Minister May’s Tory party is splitting itself in two over what immigration to the U.K. will look like immediately after the Brexit. Chancellor Philip Hammond and his allies are very happy to keep the borders relatively loose, while his opponents argue that an immigrant free Britain was the main driver behind the decision to leave the EU in the first place.

So far, no word from the Prime Minister on this critical issue.

Meanwhile, the Euro strength is overtaking the British Pound and some analysts are forecasting that parity (1.0000) might be in striking distance for the EURGBP.

As always, let me know if you have any questions, comments, or other feedback. Wishing you an amazing week ahead.

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.

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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: Coins Lower in Choppy Trading

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Summer conditions have been dominating the cryptocurrency segment in recent days as the majors failed to gather bullish momentum after the oversold bounce of the second half of last week. The technical setup didn’t change much in the top coins, although the consolidation cleared the short-term oversold momentum readings.

Ripple remains the strongest altcoin from a short-term perspective after its strong oversold rally, while Bitcoin is the most stable in the whole segment. That said, as Ripple is still in a declining broader trend, well below the structural break-down level from two weeks ago, traders should be cautious with new positions. Also, Bitcoin failed to move above the $6500 level, so the largest coin didn’t trigger a short-term buy signal, leaving the overall picture overwhelmingly bearish.

ETH/USDT, 4-Hour Chart Analysis

Ethereum is still among the weakest majors, and as it failed to stay above $300, and spiked below $275, a renewed short-term sell signal is very close, while the long-term sell signal is clearly in place. ETH cleared the short-term oversold momentum readings, and now a test of the lows near seems likely even as from a longer-term perspective the coin is still stretched on the downside. Above $300 strong resistance is at $335, while the next level of support is near $235.

BTC/USD, 4-Hour Chart Analysis

Bitcoin has been trading in a narrow range in the last few days, as the market settled down near the $6500 level. The coin spiked below the short-term resistance near $6275 in late trading, but with no clear momentum in the market, BTC remains neutral from a short-term standpoint. As the long-term support level near $5850 is still standing, Bitcoin also avoided a long-term sell signal so far, but traders still shouldn’t enter new positions.

Still No Leadership Present as Coins Fail to Join Rally

LTC/USD, 4-Hour Chart Analysis

While correlations broke down somewhat during the bounce, the conditions for a broader trend change are still not met, as despite Ripple’s strength and Bitcoin’ stability there is no strong evidence of accumulation among the majors. Litecoin and Monero failed to build on the early signs of strength that they showed during the latest leg lower, and the other relatively weak coin, like NEO, Dash, and IOTA continue to show vulnerability.

XRP/USDT, 4-Hour Chart Analysis

With all those in mind, the rally in Ripple remains suspicious, despite the spike up to $0.375. The coin is currently trading in a choppy consolidation pattern, stuck between the $0.30-$0.32 zone and the $0.35 resistance level. While the short-term buy signal remains intact for now, a dip below $0.30 would warn of a test of the lows near $0.26.

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 321 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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Cryptocurrencies

Hard Forks and Crypto Prices

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Right now, there is no measure of “intrinsic value” in the crypto world. And even if there is a measure for a specific protocol, investor sentiment tends to overshadow it by a significant amount. The lack of certainty in this space creates a high level of volatility that naturally plays out in the prices and makes it difficult to determine a fair value for cryptocurrencies. By understanding hard forks better, you can properly make a decision ahead of time in order to protect your investment.

Past Forks

First thing’s first: let’s get the definitions straight. A hard fork is a change to a cryptocurrency’s protocol that creates two different versions of a cryptocurrency. Soft forks, on the other hand, stick to just one cryptocurrency (and one blockchain). Segwit was an example of a soft fork, and Bitcoin Cash is the most well-known example of a hard fork.

Hard forks can signify upgrades to security or new functionality, or they can be designed with the express purpose of reversing past transactions. However, the most well-known function of a hard fork is to split a cryptocurrency into two. A new version and old version result, and it turns into somewhat of a battle between the two for dominance of the aggregate community.

We have seen this play out most notably with Bitcoin Cash, but Bitcoin Gold and Setwit2x were also cases where this occurred.

Likely Outcomes

There are three outcomes that can occur when a hard fork is executed. Either one blockchain becomes dominant and the other one fades into obscurity, both achieve similar adoption and are able to act independently of each other, or both remain successful with one outshining the other. The third case is the most common, as network effects often lead to compounding success within a single domain.

With Bitcoin Cash, we have seen a very active community attempt to push the cryptocurrency to dominance over Bitcoin, but BTC is so entrenched that this is nearly impossible. When a cryptocurrency forks into two separate coins, there end up being two ledgers and two sets of code, all with the same original blockchain.

Secondary Concerns

Even if you’re not worried about the future of the space, hard forks have created some question of how the overall ecosystem can adapt to them. The complications involved in managing a hard fork and distributing the private keys to the newly minted cryptocurrency can be significant. Generally, issues arise from the fact there is no “standard” method of handling an event such as this, and it becomes a question of each exchange’s policy. As we have seen with lawsuits such as OKCoin’s, sometimes the lack of clear guidelines and announcements can create confusion in the space.

An additional reason why investor confidence comes into play are the intense debates that ensue during a hard fork. Nodes are forced to choose between upgrading to the new version of the protocol software or maintaining the old one. This sort of divisive choice can be seen as “democratic”, but it also foments instability in the way that unrest within a country would hurt its currency.

From an investing perspective, the value of your cryptocurrency pre-hard fork should be the same as the aggregate value of your cryptocurrencies post-hard fork. This would be the case in an ideal world, however things seldom work out this perfectly. What it does do is create a betting-type market where you can sell the cryptocurrency you think is most likely to disappear, and still maintain your investment in the other cryptocurrency.

The key point here is that hard forks create additional volatility in an already volatile market. Whenever a hard fork is on the horizon, it helps to have a plan and know whether you are going to “make a bet” on one currency or the other, or sell before the hard fork occurs.

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

Ethereum Price Bucks Positive Sentiment with Another 5.6% Dip

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Ethereum’s relative stability around the $300 range over the last three days was enough to trigger proclamations of a full recovery, with many prominent publications going so far as to forecast an imminent breakout.

Ethereum Price Down 5.6% in 18 Hours

The analysis here at Hacked was a little more cautious, and it turned out to be warranted as Ethereum has fallen 5.6% against the dollar over the past eighteen hours, to a coin price of $287.06 at 21:30 UTC on Monday, August 20th.

As you can see, the sell-off came in steps, and each was followed by a subsequent short-lived rebound. The good news is that the $280 range has been something of a safety net for the last six days, with each dip stopping at $280 going back to August 14th. At the time of writing the coin has just jumped by close to a dollar in value in the last few minutes, which could signal an imminent return to $300 – however ETH has been fluctuating to that extent all day, so no predictions can be based on that at the moment.

At this price Ethereum is still cheap enough to attract investors, but at what volumes? For those who are playing with big enough bankrolls, what’s to stop them buying up $100,000 worth of Ethereum at $280 and then taking a swift profit two days later when it inevitably recovers to $300?

Playing that game could earn you $7,139 every couple of days as the coin fluctuates by around 6-7%, and if enough people are playing then it could ultimately leave Ethereum in a kind of stasis. Nobody wants to hodl, and nobody wants to cash out completely.

Positive Sentiment Diminished

Ethereum had been pretty close to the $300 range for the last three days, with only a brief dip down to the $280s occurring on Saturday, August 18th. However, once again we saw the market save Ethereum $280 and within less than a day the coin had returned to its psychologically significant $300 valuation.

Daily trade volumes have been falling all week and are down 33% from the weekly high of $2.1 billion. Today’s volume of $1.4 billion has only been lower on two occasions during the last month – on July 23rd, and on August 7th, shortly before the dip which saw Ethereum lose close to 40% of its value over the following seven days.

A quick glance at total global trade volumes shows a worryingly low number. The $10.8 billion daily total is a low last seen in the run up to August 7th’s crash, and while not a conclusive indicator, does spell trouble for altcoins as Bitcoin’s dominance has climbed almost 2% in the last 48 hours.

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 38 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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