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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.

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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.

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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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Bitcoin

Crypto Expert Maintains $60,000 Price Target for Bitcoin

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Back in January, cryptocurrency expert Phillip Nunn made two bold predictions: bitcoin will reach a low of $6,000 this year before rebounding to a high of $60,000. With his first prediction proving true, Nunn remains steadfast that the latter price point will also come to fruition in spite of recent market turmoil.

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The Bulls Will Prevail

In a recent interview with BusinessCloud U.K., Nunn said market volatility will ultimately work in favor of bitcoin, leading to an historic rally before year’s end.

Referring to his January forecast, Nunn said “the prediction was based on, first of all, market volatility which we’re experiencing at the moment.”

Nunn, who heads The Blackmore Group and Wealth Chain Group, said his $60,000 price forecast is “absolutely” possible given bitcoin’s long-term trajectory and role in disrupting traditional sectors. However, at present, bitcoin and other digital currencies are at the mercy of market sentiment and price manipulation, given the relatively small size of the industry. Case in point: cryptocurrency trade volumes plummeted to around $9.5 billion this weekend, the lowest in over two months. Such low turnover makes crypto assets prone to extremely wild swings not unlike the price forecasts Nunn put forward in January.

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“All the money that exists in crypto at the moment is from the public, so it’s all about market sentiment,” he said. “A flood of bad news can wobble the market, stuff like regulation. The industry is so small that there’s market manipulation.”

Ultimately, Nunn says bitcoin is helping to create an “internet of value” that will disrupt everything from money to record-keeping.

His view differs markedly from an institution like the Bank for International Settlements (BIS), which on Sunday released a report arguing for bitcoin’s ultimate demise. Although BIS didn’t frame the outcome exactly in those terms, the Swiss institution said the digital currency is ultimately too costly and too prone to manipulation to become a mainstay in traditional finance.

Bitcoin Prices

Bitcoin was little changed on Sunday, as prices consolidated around $6,500. With daily turnover of $3 billion, bitcoin’s trade volumes accounted for more than a third of the crypto market total.

The world’s largest cryptocurrency by market cap is down nearly 5% over the past week. That pales in comparison with some of the leading altcoins, which have fallen double digits over the same period.

Bitcoin has experienced multiple selloffs this year, with some analysts attributing the decline to the launch of bitcoin futures in December. Fundstrat Global Advosrs’ Tom Lee recently argued that bitcoin prices tend to fall into the expiration of the monthly futures contracts. This is likely caused by traders longing actual bitcoin and shorting the futures market.

Like Nunn, Lee maintains a strongly bullish outlook on bitcoin and has called for prices to rebound to $25,000 this year despite recent market dynamics.

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 453 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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Analysis

Crypto Update: Coins Consolidate Above Support but Downtrend Still Intact

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It has been a very quiet weekend for the major cryptocurrencies so far, as the predominantly bearish week ended with range trading and a collapse in volumes across the board. Most of the top coins failed to gain back the ground they lost during the steep selloff, with only Binance Coin and VeChain showing meaningful bullish momentum.

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The relatively strong Ethereum, EOS, and Ripple remained stable, with ETH hovering around the $500 level, EOS trading north of the key $10 support despite the network’s technical issues, and Ripple being stuck in a narrow range just below the widely-watched $0.54 resistance level. The total capitalization of the market has been virtually unchanged at $280 billion, as both Bitcoin and Ethereum flatlined.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin is trading right at the short-term support level near $6500, holding up just above the April low, with the crucial long-term support zone near $5850 that is vital for the whole segment. The coin is clearly in a short-term downtrend, while also being relatively weak on all time frames. The oversold short-term momentum readings are now cleared and that could point to a test of the lows in the coming days.

 

ETH/USD, 4-Hour Chart Analysis

Ethereum also cleared the short-term oversold readings, but it failed to leave the vicinity of the $500 support/resistance level. Despite the coin’s undoubted relative strength, and the still bullish long-term setup, the short-term trend signal remains a sell, and the declining trend is intact. Traders should still not enter new positions here, while investors could add to their holdings on the short-term selloffs. Strong resistance is ahead between $555 and $575, while further support is found at $450, $400, and $380.

Divide Widens between Leaders and Laggards

LTC/USD, 4-Hour Chart Analysis

Although short-term correlations skyrocketed during last week’s decline, the divergence between the relatively strong and weak coins got even more pronounced, with the likes of Litecoin, Dash, and Monero severely lagging the broader market. Litecoin got stuck below the $100 level after the breakdown last week, and it is below the long-term base pattern, as it failed to show relative strength during the weekend. Immediate support is found at $90, but new lows are likely in the coming days, as the short-term downtrend remains dominant. 

BNB/USDT, 4-Hour Chart Analysis

As a positive outlier, Binance Coin remained bullish amid the broad decline, holding on to the relative strength that it has been showing for several weeks. The coin’s stability is encouraging, and it’s nearing its rally highs with today’s surge, while having a good chance of resuming its uptrend, even as another segment-wide selloff could cause a jump in volatility again.

For now, the market is torn between bullish and bearish forces, and investors should focus on the technicals of BTC and ETH, while also keeping an eye on the leaders of the rally for signs of sutained strenght.

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 276 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

Long-Term Cryptocurrency Analysis: Bull Market in Jeopardy

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As the crucial rally attempt that we pointed out in our previous long-term analysis failed, and the major coins sold off heavily afterwards, the segment is now in a difficult situation. While Bitcoin and especially Ethereum are still in bullish setups, the most valuable coin is now close to a major breakdown that could lead to structural bear market as we laid it out back in January.

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Some of the weaker coins are already below the large-scale consolidation patterns that developed after the year-end run-up, and as the divergence between the leaders and the laggards widens, the path of the two dominant coins even more importance.

BTC/USD, Daily Chart Analysis

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Bitcoin failed to trigger a short-term buy signal throughout the Ethereum-led rally in May and early June, and that technical weakness still persists, as BTC is now trading right at the April low, testing the key long-term base pattern.

A break below the strong support zone near $5850 would be the first similar event since the beginning of the bear market in 2014, and it could lead to an extended period of bearish bias for Bitcoin after the spectacular bull run of 2017. For now, the bull market is intact, with support found near between $6000 and $6275, at $5850 and below that at $5500, while resistance is ahead at $6500, $7000, $7350, and $7650.

ETH/USD, Daily Chart Analysis

Although Ethereum is clearly stronger from a technical perspective compared to Bitcoin, the coin is struggling to hold the key $500 level, as it is resumed its short-term downtrend. The April lows are well below the current price level and the long-term setup is bullish, so long-term investors could still add to their positions during the selloffs. Resistance above $500 is ahead between $555 and $575, while strong support is near $450, $400, $380.

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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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4.6 stars on average, based on 276 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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