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Is the Pullback Over Yet?

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This communications tool that we call the internet is very powerful but it can also be dangerous.

Those of you who’ve been reading my updates for a while know that I love getting messages from people, especially when people send me information and links to sources. Don’t be surprised though if I ask you what’s in the link before clicking.

One of the most common ways for hackers to seize control of your device is by getting you to click on a malicious link. A malware attack known as Digmine was recently discovered on Facebook Messanger. Unsuspecting users who click on the link expecting to watch a video from their friend, inadvertently download a bit of software that runs in the background and uses the victim’s computer to mine currencies.

Though, I’m not sure what’s scarier, instant messenger mining this Dutch company who recently had success mining cryptocurrencies by harnessing the power of the human body. Even though inefficient compared to solar energy, it seems with these new devices body energy can in fact be harvested.

These type of images instantly bring up memories of the Matrix movies and give me the heebeegeebeez. I mean, if robots are eventually going to farm humans, why are we doing the work for them?

Happy boxing day!!
@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Ridiculous Spikes

Crypto for Garbage

Are we out of the woods yet?

Please note: All data, figures & graphs are valid as of December 26th. All trading carries risk. Only risk capital you’re prepared to lose.

Liquid Example for Crypto

Most of the markets are back online already but it’s still a holiday in Europe and many investors simply take the entire week off. So liquidity is still thin. In fact, for those of you who are new in the market and joining due to the recent excitement in crypto, we actually have an excellent example of what low liquidity can do.

In eToro, as with many brokers, we too the decision to close the currency markets yesterday for Christmas. Some brokers however, decided to remain open despite the lack of customers.

The conventional currency markets are usually pretty fluid and the prices are quite stable. However, when there are no regular order flows, a small group of people or even a single player can move the market in leaps and bounds.

Yesterday, we saw this type of ridiculous price spikes all over the currency markets. Here lets take a look at the chart of the Euro/Dollar from Bloomberg’s pricing…

Notice, how the price per Euro suddenly dropped from about $1.19 to around $1.165 in the span of about 20 minutes. This is not a normal movement, especially on a day that there is no special news happening.

As we can see, the prices remained erratic for a total of six hours before returning to normal. Of course, any trader who might have had their stop loss anywhere within the line of fire would certainly have been shot and killed.

Here you can see eToro’s chart where the prices were simply closed for the long weekend and opened back up last night with little change from Friday’s close. Had we been open, prices would have spiked all the way down to that red X on the chart below.

What this means for Crypto

In the cryptocurrency market prices are always illiquid. During a regular day, if you want €100 Million you can usually get it from the top tier financial institutions literally faster than you can say “Jack Robinson.” Automated systems have been built over the last few decades that can produce the liquidity within milliseconds.

In the Crypto-market no such systems exist and when there are a large number of orders in a single direction, buy or sell, it can sometimes be difficult to execute those orders.

Note: This is also why the price moves so darned fast in this market.

Is the pullback over???

Short answer: It is in Asia.

Bitcoin is back at $18,500 in Japan, and almost $19,000 in South Korea. The price of Ethereum broke through 1,000,000 KRW (S Korean Won), which is about $955. In this holiday themed chart from cryptowat.ch we can see a clean breakout of the round number, with high volume.

The price level has been tested as a support but if the West manages to use the momentum from Eastern Cryptotraders over the next few hours, the pullback might just be over.

However, as we noticed over the last few days, the West has been driving this sell-off so we should soon see if they’ve gotten it out of their system.

Over the course of the year, we’ve noticed the different types of pullbacks. Sometimes it has taken a few days or even weeks for the market to recover and gain confidence, and sometimes it’s snapped back instantaneously.

For Bitcoin, the recent pullback has been the largest bitcoin has ever seen in terms of Dollar amount and largest this year in percentage terms. The decline has taken us from high of $20,155 on December 17th to a low of $10,720 on December 22nd, a total retracement of 46%.

I would assume that this type of blow might take a while to recover from and it’s possible we’ll see some gigantic range trading opportunities in the next few weeks.

Of course, a breakout in either direction above $21,000 or below $9,000 could also have serious psychological implications on the market in the long term.

For today, Bitcoin is leading the market with her 10% gains. 😉

Happy holidays!!

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. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

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 128 rated postsSenior Market Analyst at Etoro.com.




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Analysis

Crypto Update: Monday Selloff Drags Majors Lower

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The cryptocurrency continues to show mixed short-term signs following last week’s Ethereum-led bounce, and the subsequent consolidation. Today, all of the majors sold off after the US open, triggering downgrades in our trend model, but the two largest coins, barely, retained their short-term buy signals, holding up above key support levels.

Ethereum remained north of $200, while Bitcoin is still above the $6275 level, but the total value of the market is back at $195 billion as BTC failed to gain ground during last week’s rebound, and as several coins failed to join the move. The odds of a failed rally got higher after today’s selloff, and the move still only qualifies as a counter-trend one, with the long-term downtrends being in no danger in most cases.

XMR/USD, 4-Hour Chart Analysis

Monro, which has been the third major on a short-term buy signal, is also still positive in our model, despite bouncing lower off the $120-$125 resistance zone and getting close to testing the $108 support level. The coin is now trading slightly below the rising short-term trendline and it would need to show strength quickly to retain stay on a buy signal. Further support is found near $100, while key long-term resistance is ahead at $150.

ETH/USD, 4-Hour Chart Analysis

Ethereum fell back to the $200-$205 support zone today, and the coin is trying to establish a swing low, following the initial rally of its 15-month low. Despite the pullback, ETH is still on a short-term buy signal, but given the segment-wide long-term weakness, traders should still not enter full positions. A sustained move below $200 would warn of a test of the lows and a possible new leg lower, with strong resistance still ahead at $235 and $260 and with further support found at $180.

Market Still Lacking Sustained Strength

BTC/USD, 4-Hour Chart Analysis

Bitcoin fell back to $6275 again after failing to show bullish momentum last week, and although BTC is still trading with relatively low volatility, well above the crucial support zone near $5850, the recent days are not positive for crypto-bulls. A sustained move below primary support would warn of a test of the weaker support near $6000 and a likely move to the key long-term zone, with resistance levels now ahead at $6500, $6750, and $7000.

XRP/USDT, 4-Hour Chart Analysis

Ripple’s weakness is also a warning sign for bulls, as the third largest coin not just failed to join the rally last week, but it turned lower today, threatening with another move towards the August lows. XRP is still trading within its short-term range, and it remains on a neutral short-term signal, but further weakness could quickly trigger a sell signal. Support below $0.26 is found near $0.23, while resistance is ahead at $0.30, $0.3130, and $0.32.

EOS/USD, 4-Hour Chart Analysis

EOS also remained weak during the recent altcoin bounce and now it is back on a short-term sell signal after dipping lower together with the broader market, plunging below $5 yet again. Now, a test of the August lows and a move to $4 is once again the most likely, with only the support between $4.55 and $4.65 found above the August low, while strong resistance is ahead between $5.35 and $5.55.

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 347 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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Bitcoin

Bitcoin Price Stable Near $6,500; Path of Least Resistance Higher

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Bitcoin’s price traded within a narrow range on Monday after failing to make new highs over the weekend, a sign that the bulls were dialing back their optimism of an imminent breakout. However, the technical charts suggest that slow and steady upside is the path of least resistance in the short term, barring any new cases of market manipulation.

BTC/USD Update

Bitcoin is currently trading at $6,477 on Bitfinex, where it was virtually unchanged compared with 24 hours ago. The price reached a high of $6,543.30 earlier in the session. Trading volumes on Bitfinex and all exchanges have declined sharply over the weekend. As of Monday, bitcoin’s 24-hour volumes were $3.4 billion.

A look at the moving averages suggests bitcoin is poised to continue higher in the short term. BTC crossed the 50-day moving average last week and is now targeting the longer-term MAs. What’s more, the 100-day moving average is fast approaching the longer-term 200-day MA.

At current values, bitcoin is capitalized at $112.2 billion, according to CoinMarketCap.

Trading in the broader cryptocurrency market was equally tepid on Monday. Total trade volumes across all cryptocurrencies and exchanges reached $10.5 billion, according to latest available data. The total market is currently valued at $202.8 billion. The majority of coins in the top-ten have posted narrow gains compared with Sunday.

XBT Issuer Doubles Down on Cryptos

The yearlong downturn in bitcoin has not deterred Sweden’s leading crypto issuer from doubling down on the market. The Stockholm-based XBT Provider AB is planning to launch a new exchange-traded product (ETP) that tracks a basket of up to ten cryptocurrencies. The product, which will be available this year, will provide blended exposure to some of the world’s leading cryptocurrencies.

In an interview with Bloomberg, company CEO Laurent Kssis said a blended ETP is “something that the market is looking for. They are telling us ‘I’d just like blended exposure to 5 or 10’ cryptocurrencies.”

XBT has been offering crypto exchange-traded products since 2015. After finding initial success in Sweden, XBT’s products entered the U.S. market last month. However, the Securities and Exchange Commission (SEC) quickly suspended trading of the Bitcoin Tracker One (CXBTF) and Ether Tracker One (CETHF) over investor confusion.

In a statement after the SEC’s decision, the company said the suspension “relates only to trading in the Unites States, does not apply to trading on the listing market – Nasdaq Stockholm, and does not relate to any action taken or failed to be taken by XBT Provider AB.”

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 601 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Altcoins

Good Crypto News: What It All Means

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It was another one of those weeks.  Crypto prices hit rock bottom around $186 billion. Goldman Sachs backs away from it plans to offer a crypto trading desk.  Vitalik Buterin tells Bloomberg how little he thinks of Ethereum. Technical analysts give us little hope for getting bullish anytime soon.

But that was before The New York Department of Financial Services approved Gemini and Paxo cryptocurrency exchanges. Both GUSD and PAX are based on the Ethereum ERC-20 token and backed by physical dollars custodied in FDIC-insured U.S. bank accounts. This insulates investors for whatever else may be rocking the wider crypto market. This development alone is a step forward for investors and regulators.

The most negative news of the week appeared in a Forbes article, written by Pawel Kuskowski titled: “How To Stop Ether Going To Zero: Defusing The ‘Difficulty Bomb’.  The negative slant of the title alone reflects the mindset of the crypto market these days.  It hard to expect anything else with the market having lost a tidy $600 billion in value this year.

Pawel’s strength is his ability to spell out a core unknown to Ethereum’s immediate future. That is if ETH developers will solve the much talked about Difficulty Bomb with modifying Proof of Work or moving to Proof of Stake.  This is hardly a new issue but Pawel does a solid job explaining how either choice still produces uncertainty. As for the price of ETH, uncertainty is no friend.

So the question becomes simply this.  If Vitalik Buterin and his group fail to solve the Difficulty Bomb and ETH goes to zero, won’t this produce a similar result on virtually every other ERC-20 token built on the Ethereum platform?  The answer is so apparent that is makes you want to liquidate your investment position even at current depressed levels.

Unfortunately, there is no immediate answer to this riddle. That doesn’t mean that we should cut and run from crypto. Let’s take some of this week’s developments and apply the principles of a reasonable person.

The Sun Still Shines

And now for something that lends hope that the crypto world is not coming to and end.

On a purely technical note, Hacked.com’s Greg Thomson documented a $1 billion trade influx in the five days up to September 13th producing a tidy little bump of 23% in the price of ETH.

On a more fundamental point comes the word that the big Wall Street investment bank, Morgan Stanley is building a Bitcoin swap trading product.  The key feature here is that the new product will create so called synthetic exposure to the price of Bitcoin.

Just how this will function remains to be seen but the implications both for individual and institutional investors is promising.  The ability to create a security that addresses the custody issue for institutions and protects parties from loss from hackers is a real value added proposition.

According to CCN, Morgan Stanley is one of several major Wall Street firms that even includes Jamie Dimon CEO of JP Morgan Chase.

So what does all this focus on Bitcoin have to do with the rest of the crypto market? Moreover, what does any of this have to do with solving the Difficulty Bomb? Simply put, the answer is money or more precisely, the expected return on investment.

Each of these Wall Street firms has some serious money behind these decision to commit capital and human resources to crypto currencies. Their initial interest may be in Bitcoin, but it would be foolish to assume that it is limited to a single coin in a multi billion asset class.

So it is important to assume that these folks have done their homework and have gotten comfortable with the many short term uncertainties of the current crypto marketplace.  Apparently their crystal ball can read beyond some of the recent negative price action.  This may not entirely remove the uncertainty, but it is good to be in the company of smart money.

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 104 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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