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Hot Crypto Topics For 2018

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It is pretty hard to understate what 2017 has meant for investors. The S&P 500 had one of it best years in more than five appreciating 20% to a record near 2700. The global economy continued to recover from the last vestige of the 2008 financial crisis. Everybody has the right to feel financially more secure.

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But if you were for fortunate to be a crypto investor, you have cause to celebrate like never before. Bitcoin rewarded you with a 1660%+ price appreciation, Ethereum gained a monster 10,200%+ while Litecoin turned in a 6,500%+ price increase.

And these are just the majors. Returns with some of the successful ICOs were even more spectacular. Of course not every ICO paid off and some fell victim unscrupulous operators. Nevertheless, 2017 was a golden year.

When prices increase as much as they have it is easy to get fixated solely on price alone and forget about the underlying forces that represent true value.

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So what will be the fundamental forced in 2018? It is hard to know the future so far out because it is evolving so quickly, but here are some thoughts on several very important issues.

 The Need For Speed

 Turning away from the ton of good things that happened in 2017, there are the twin issues of slow speed and high transaction fees. It is a thorny situation. Each of us can appreciate the need to any system to be successful has to be capable of scaling. Appreciating the higher energy consumed can be a bit more obtuse but it a big deal.

The promise of cryptocurrencies like bitcoin going back to the beginning was “fast and free” As the table below illustrates, transaction speeds are stalling and falling short of the promise.

The high transaction costs for all cryptocurrencies is presently a major deterrent to broader acceptance. Depending on how you work the math, performing a transfer in bitcoin can be more the using a fiat currency and using the traditional banking system.

Presumably the solution to faster transaction speeds would be less energy consumed which in turn would allow competition to drive down fees.

At present even 10-15 transactions per second is not nearly enough to meet projected demand in the future. Finding a solution is important to everyone from the major currencies like bitcoin, Ethereum and Litecoin down to companies linked to each.

Some help for Ethereum may be on the way in 2018 when Casper is fully in action.

Casper changes the Ethereum verification process from “Proof of Work” to “Proof of Stake”. One of the issues Casper addresses is high-energy consumption.

Part of the issue spills over into security. In order to maintain adequate security of Ethereum POW protocol involves very high operating costs. Casper dramatically lowers these costs.

Experts who have deep knowledge of Casper claim that honest miners will be able to cheaply validate while attackers somehow will still face extremely high costs.

Casper addresses this problem. In doing so, Casper puts Ethereum in a much stronger position to serve the world. The more users, the more demand for Ether and that, of course means even more upward Ether price pressure.

And then there is the Ethereum Raiden Network. This is Ethereum’s version of bitcoins Lightning Network. The technical definition of Raiden is allowing off-chain scaling solutions for performing so called ERC20-compliant token transfers

Raiden supposedly enables near-instant, low fee, scalable transactions. The operative words here are off-chain scaling and privacy preserving. This is an option to watch closely in 2018 to see if Raiden can live up to some big promises.

Could Terabyte Blocks Be The Big Solution

 It is only a research paper but the founder of Lokad Joannes Vermorel has come up with a possible answer by creating terabyte size blocks. His idea has only focused on transactions for bitcoin cash but if it works there you can bet that adaptations for other currencies will follow.

 Joannes argues that terabyte blocks could not only be fast but economical. He explains how terabyte blocks could scale to far more than the current 1MB blocks size or about 3-4 transactions per second.

According to his research paper a terabyte block could contain around 7 million transactions per second. That relates to 50 daily transactions for virtually every human on planet earth. That promise alone is what makes Vermorel’s idea worth keeping an eye on.

How difficult it will be to translate Joannes idea into a real world application and then be adapt to cryptocurrencies beyond bitcoin cash is anybody’s guess. One thing is certain, transaction speed and costs are likely to be hot topics in the New Year.

Remember, one of the original selling points of bitcoin was that transactions were fast and free. At present neither of these two promises are being consistently met. Even so, the possibilities are so fascinating that it keeps our attention glued to events that will shape the future. Whatever 2018 brings we will share our views and hope your prosperity continues.

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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Altcoins

Fears of Regulatory Crackdown Flush $190 Billion Out of Crypto Market

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Bitcoin, Ethereum and every other major cryptocurrency collapsed on Tuesday, as fears of regulatory clampdown in South Korea triggered a mass exodus from the digital asset class. The collapse comes as mainstream media reports continue to push the idea of an imminent ban on cryptocurrency exchanges even as lawmakers cautioned no decision had been reached.

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Cryptocurrency Market in Free Fall

The cryptocurrency market declined rog $190 billion on Tuesday, marking one of the biggest single-day drops on record. At its lowest, the market was valued at $510 billion,  which was than $200 billion below its peak earlier this month.

The top 20 coins were each down in excess of 17%, according to data provider CoinMarketCap. Nearly $49 billion worth of cryptocurrency exchanged hands over the past 24 hours.

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Bitcoin plunged below $12,000, reaching its lowest level since early December. Ethereum, its biggest rival, fell back toward $1,000, while Ripple bottomed out at $1.23 after peaking above $3 just a few weeks ago.

South Korea Jolts Market

It was mainly regulatory issues that jolted cryptocurrencies on Tuesday, with South Korea mulling new legislation to stamp out excessive risk from the market.

South Korea’s finance minister Kim Dong-yeon reportedly told local radio that an all-out ban on cryptocurrency trading was a “live option, but that government officials still need to “seriously review it.” Seoul’s biggest issue with cryptocurrency trading is the level of speculation in the market and the role of anonymous accounts in spurring volatility. New regulations have already banned anonymous trading on domestic exchanges and barred foreigners from participating in the market.

Last week, some of South Korea’s busiest crypto exchanges were raided by police and tax agents over alleged tax evasion. The raids were confirmed by an employee at Coinone, who spoke to Reuters anonymously.

Seoul’s financial authorities had previously indicated they were investigating six banks that offer cryptocurrency accounts. In addition to speculative risks, authorities are also concerned about the link between cryptocurrency trading and organized crime.

South Korea is a major center for cryptocurrency and is home to some of the largest exchanges. Local traders have been the main catalysts behind some of the crypto market’s biggest gainers, including Ripple.

Some analysts believe that further regulatory crackdown will be ineffective given the borderless nature of cryptocurrencies. When China banned cryptocurrencies, traders there migrated their accounts offshore to Hong Kong or Korea. This suggests that a regulatory crackdown can only succeed with broad international cooperation, which does not exist at the time.

Chinese regulators know that their measures have done very little to limit virtual capital flight from the country. That’s why they are moving to block domestic access to offshore exchanges, according to a recent Bloomberg report.

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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Analysis

Long-Term Cryptocurrency Analysis: Broad Correction Enters Next Phase

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The overbought BTC-led correction that has been the dominating technical process in the cryptocurrency segment in the last month or so continued in earnest today, amid the intensifying regulatory steps concerning the sector. The three-week-long consolidation that followed the initial mini-crash concluded with a sharp sell-off overnight rearranging the long-term charts, while likely kicking off another volatile period.

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While most of the crash lows held up today in early trading in the majors, especially in the case of the late leaders like Ethereum and NEO, some of the relatively weaker coins are already trading below the December minimums. We expect most of the majors to follow Dash and LTC, the weakest of the largest coins, lower and trade below the previous lows, as sentiment will likely swing to a bearish extreme.

The $11,300 level has been in the center of attention throughout the session today and the most valuable coin experienced heavy trading around the level as expected. As the daily MACD is still in neutral territory, the coin could be in for another leg lower, but after the 40% correction and the rather lengthy consolidation, investors could be looking for entry points during the move near the key support levels at $10,000, $9000, and the stronger levels at $8200 and $7700.

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BTC/USD, Daily Chart Analysis

As Ethereum is in a different part of its cycle the long-term momentum readings are still overbought, and that could mean a more protracted correction for the second largest coin. That said, following a multi-month consolidation like the one in Ethereum before, we still expect the token to outperform BTC from a long-term technical standpoint. ETH is now below the short-term trendline, and it’s likely to dip below $1000, and the prior top at $850. Further key levels are found at $740, $625, $575, and near $500.

ETH/USD, Daily Chart Analysis

Let’s see the outlook for the other major altcoins after today’s bloodbath.

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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: Chinese Crackdown Triggers Next Leg of Correction

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The cryptocurrency segment is crashing again, with double-digit losses across the board, and with several coins shedding around 30% in one day amid the widespread and heavy selling. The sell-off was triggered by reports on a new set of measures by the Chinese authorities limiting crypto trading, which added to the still looming South Korea related regulation worries. Bitcoin tested the mini-crash lows at $11,300 today in early trading, dipping slightly below that level before a strong bounce started.

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The most valuable coin is now between two crucial support/resistance lines, with the other ahead at $13,000, and as the downtrend is entering its more mature phase the $10,000 and $9,200 levels could come in play, with a possible dip to the support zone near $7,650.

BTC/USD, Daily Chart Analysis

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Interestingly, the coin is still hovering within the daily range of the crash of December 22nd, and that points to a very active and volatile period ahead near the low at $11,300, as automatic orders will likely get triggered on both sides of the market.

The short-term setup is bearish, and although it’s possible that the primary support level will hold, odds still favor another leg lower, following the exponential run-up at the end of last year that pushed sentiment into bullish extremes.

BTC/USD, 4-Hour Chart Analysis

Altcoins

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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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