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Let’s Fight Back Against the Bitcoin Trading Bots

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I trade on Kraken, and I have noticed that the order book is increasingly controlled, it seems, by the trading bots. I imagine that is the case on most exchanges.  There are a myriad of very small orders relatively close to the strike price, but the first significant order (to buy or sell) is usually a fair distance away.  Then, after you execute a market order, before you have time to refresh the screen the small orders you just took out are replaced with new mini orders.

Therefore, I know that if I place a market order the bots will make me pay more dearly than real live humans would.  But if I place a limit order, particularly if it’s a relatively large limit order, the bots will fill the book with small orders in front of mine within seconds.  It’s called front-running when the exchanges themselves do this. If it’s not illegal for exchanges to do this, it should be.  But for other traders, I guess these are the rules of a knife fight.

How to defeat these bots?

My strategy is to take a half-taker half-maker approach when I want to fill an order quickly.  In other words, suppose I want to fill an order quickly, buy or sell doesn’t matter, but I don’t want to give too much to the bots.  If I want to buy 100 coins, for example, I will find the limit price that will buy me 40-50 coins. I enter the limit order at that price.  What usually happens (not always, particularly not if a fast market) is the entire order is filled at my limit price within moments, as the bots kick in.

I share this info because I know the bots are eating you alive too.  Maybe together we can take away some of the bots’ unearned profits.

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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5 stars on average, based on 2 rated postsJim has an MBA from the University of Southern California. He has had a long career in both Corporate Finance and IT. Along the way he discovered that trading was a vehicle with great promise, but struggled for a long time without a mentor. After having been knocked down many times and having struggled to get back up, he had an epiphany and realized that geometry was a solution. He shares his experience here. If you do well as a result of suggestions made here, feel free to say thank you :) BTC: 1FUq3GB1Q8zz2JpuBr7YHzVBKnaWoxgmya Follow him on Twitter (@jimfred1276) or email him at jimfred1276 at gmail.




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  1. thoth

    May 18, 2017 at 6:11 am

    I gave up trading the bigger markets due to bots, it’s a nightmare, you always get the raw end of the deal. Though someones bot selling newly mined coins is easy enough to trick the price down to better levels but coins like ETH and so on are impossible.

    • Jim Fredrickson

      May 18, 2017 at 9:50 am

      One solution is for exchanges to allow people to place an order to 5-8 decimal places, but only display the 1st three digits after the decimal. Then it would be nigh impossible to edge out orders by .0000001, as you would not know “exactly” where the orders are. If an exchange does that, I will switch to that exchange.

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Bitcoin

The $700 Billion Question

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As losses in the crypto universe continue to mount, U.S. regulators are once again asking whether last year’s bull market was artificially inflated. According to Bloomberg, the federal probe is intensifying now that bitcoin’s price floor has been severely breached.

Tangled Web

As Hacked previously reported, federal prosecutors have uncovered a suspicious relationship between Bitfinex, Tether and bitcoin. To recap: Bitfinex is one of the world’s largest cryptocurrency exchanges and Tether is the company behind the controversial USDT stablecoin. Both companies share the same executives and were part of a federal subpoena last year.

The U.S. Department of Justice suspects that Bitfinex and USDT may have been used to inflate bitcoin’s price, which peaked north of $19,500 last December. Since USDT is the quote currency on a large volume of bitcoin trades, Tether may have printed and released more units of the token on Bitfinex at crucial moments throughout 2017. Tether’s lack of transparency fueled suspicion that the company didn’t have the reserves to back up the number of tokens it had in circulation. (As a dollar-backed stablecoin, Tether claims to have a dollar-USDT ratio of one-to-one.)

Tether allayed those concerns last month by announcing a new banking relationship with Deltec Bank & Trust, a Bahamas-based financial institution. However, from the perspective of investor sentiment, the damage may have already been done.

Recently, the U.S. Securities and Exchange Commission (SEC) slapped civil penalties on two cryptocurrency companies that failed to register their initial coin offerings as securities. The SEC’s regulatory clampdown, combined with the year-long downturn in market prices, has put the ICO market on ice over the past four months.

U.S. regulators, including the Commodity Futures Trading Commission (CFTC), are also reportedly investigating the impact of spoofing on digital currency trades. The illegal practice involves flooding the market into fake orders to trick other traders into buying or selling a particular asset.

Futures Trading Spikes

Bets against bitcoin have skyrocketed over the past week, as evidenced by the open interest in futures contracts. According to Bloomberg, he combined open interest in bitcoin futures operated by CME Group and CBOE reached an equivalent of 22,266 bitcoin on Monday, the highest on record.

BitMEX, a popular cryptocurrency derivatives platform, has seen an upsurge in trading volume amid the downturn. As of Tuesday, the platform processed more than 41% of bitcoin trades placed on virtual currency exchanges, according to CoinMarketCap. That’s equivalent to roughly $3.6 billion, based on today’s volumes.

The bitcoin price plunged below $4,300 on Tuesday, setting a new 13-month low. This has contributed to a much wider selloff in the crypto universe, with the total market capitalization of all coins reaching a low of $140 billion earlier in the day. That represents a decline $71 billion over seven days.

Since peaking above $840 billion in January, the crypto market cap has lost a staggering $700 billion.

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 670 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Price Prediction for Bitcoin, Ripple, Ethereum: Crypto Bloody Tuesday Sees Falls that Shake Convictions

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  • The BTC/USD hits a low of $4,212 and eyes $3,500 in the next few days.
  • The XRP/USD panics below $0.41 but recovers $0.45 amid high uncertainty.
  • The ETH/USD marks a trough at $125 and could move below $100.

If Hollywood creates the script of what’s happening on the Crypto Board, they wouldn’t have done any better. When it seemed that the story had a hero called Ripple, untouchable and immutable to his environment, the scene begins where the saving hero on which the civilization of Cryptocurrencies depended falls and exposes its weaknesses.

After a first attempt by the BTC/USD to the $5,000 price level through the American session was rejected, a new attempt hours later has broken forcefully that level and reached $4,600.

We saw the same with ETH/USD, once drilled at the psychological level of $150, it reached $137 in the Asian session.

In the short term, the indicators that we will see in the detailed analysis invite us to think about a possible short-term rebound in the next 24-36 hours. This rebound would initiate the process of rotating the charts in the daily range. However, we are going to see new lows, levels unthinkable two weeks ago.

My personal opinion is that at that point, with practically all hands weak and empty, the strong hands will enter the market with full steam, buying a selection of assets that will probably leave some cryptocurrencies in the mud and lift others’ heads. However, the Crypto board will have changed hands, or whales, forever.

BTC/USD 240-Minutes

The BTC/USD is currently trading at the $4,432 price level, drawing a chart that looks very scary. The drop is extreme and except for a slight recovery after piercing $5,000 yesterday, the comeback didn’t last long, and sellers have come back strongly.

The plummet takes away any level of buying if there is anyone still in the market trying to catch falling knives. With this violence, it is most likely that any rise is merely a closing of short positions than a movement of real accumulation. The price reductions are in their early hours, and there are still a few days left until Black Friday.

Below the current price, the first support for the BTC/USD is at the price level of $3,930 (support for price congestion). The second support awaits at $3,250 (price congestion support) and the third support level at $2,900 (price congestion support). These are levels that represent wild drops in percentage terms and that, if they occur, would raise a whole series of comments about the very survival of this market.

Above the current price, the first resistance to consolidate at the current price level is $4,400 (price congestion resistance). If the BTC/USD manages to hold and close above this level, it will begin to consider it as a support point for the first considerable pull-back of the current bear storm. The second resistance level is $4,918 (price congestion resistance) and it may stop the brief bullish attempt done yesterday. The third resistance level at $5,381, is a confluence of the long-term down channel baseline, a price congestion resistance and a few dollars above the EMA50.

The MACD at 240-Minutes shows a profile of strong bearish inclination and with lines very separated. Momentum continues to be strongly bearish, and it may still take quite some time to see a rebound of some intensity.

The 240-Minute DMI shows how bears have absolute control of the situation. They mark levels above the 50th level of the indicator, a level considered as a healthy trend. On the other hand, the bulls give up and move for minimum standards that, if only for extremes should react to the rise. The ADX responds to downturns by increasing its trend level to levels not seen since December 2018.

XRP/USD 240-Minutes

Ripple is the hope that holds firm the conviction that there is a future in Cryptocurrencies at this time, and seeing it plummet has raised doubts throughout the Crypto ecosystem.

Below the current price, the first support is in the long-term trend line coming mid-September at $0.44. The second support at $0.429 (price congestion support) would take the XRP/USD out of its bullish scenario and into the same bearish chaos scenario as Bitcoin and Ethereum. The third support at $0.413 (price congestion support) would be the last hope for a fall to $0.367 (price congestion support).

Above the current price, the first resistance is at the price level of $0.48 (trend line leading the movement from lows). If the XRP/USD can exceed this level, the second resistance at $0.505 (price congestion resistance). The third resistance level is at $0.584 (price congestion resistance) holds the key to a strongly bullish scenario that would aim to exceed $1 quite easily.

The MACD at 240-Minutes has cut down the zero line, currently losing that important support and forcing to consider bearish movements in the near future. The opening between lines is minimal for now. If the price were to rise it would leave a divergent formation of a strong bullish component. On the contrary, price declines would deepen the bearish side and we could see really strong declines.

The 240-Minute DMI shows us that bears are taking advantage of the ADX line, which would indicate a continuation of the price decline. The bulls decrease their activity but far from the minimum levels. The ADX reacts to the recent declines but in trend levels considered as moderate.

ETH/USD 240-Minutes

The ETH/USD is currently trading at the $132 price level after leaving the minimum fall in support of the $125 price level indicated a few days ago. I don’t consider that the drop is going to stay here, but it is possible that from this level there will be a small rebound in the next 24-36 hours.

Below the current price, the first support in the already commented level is at $125 (support for price congestion). The second support at $94 (price congestion support), would break the mythical barrier of $100 and would cause the headlines of the best horror movies. However, this could only be the headline since terror would be in the third level of support at $80 (price congestion support). In the edited FXStreet Chart you can see more levels.

Above the current price, the first resistance is at $155 (price congestion resistance). The second resistance is at $170 (price congestion resistance). Finally, as a third resistance, the EMA50 at $178 meets the fourth resistance at $180 (price congestion resistance).

The MACD at 240-Minutes shows a very downwardly inclined profile with very open lines. This structure protects the continuity of the descents at least for today.

The 240-Minute DMI shows us a situation similar to that seen in the BTC/USD. The bears go to maximum levels while the bulls retire and show us no intention to enter the game. For its part, the ADX reaches levels not seen since December 2018 and support the continuity of direction and strength of the movement.

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 Price Carves Out New Lows as Crypto Carnage Intensifies

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Bitcoin’s price plunged anew on Tuesday, reaching the lowest in over 13 months and signaling no end to the downtrend that began early last week.

BTC/USD Update

The leading digital currency dropped below $4,300 on Coinbase for the first time since early October 2017. At the time of writing, bitcoin was trading at $4,380, down a whopping 14.4% compared with Monday.

As is usually the case, bitcoin was trading higher on Bitfinex, which processes a large volume of BTC/USDT transactions. Bitcoin was last seen trading hands at $4,587 on the exchange.

Aggregate data provided by CoinMarketCap shows an average price-per-coin of $4,489. Over the past seven days, bitcoin has lost nearly a third of its value. The bulk of the declines have been concentrated in the last few days.

Volumes spiked above $8 billion on Tuesday for the first time in four months, with derivatives trading accounting for a growing share of the total turnover. BitMEX, the most popular crypto derivatives platform, processed more than 41% of bitcoin transactions on Tuesday. No other exchange even came close in terms of volume.

At current values, bitcoin has a total market capitalization of $77.9 billion.

Search for a Bottom Continues

The extent of the recent selloff has largely negated the need for technical analysis in predicting future price movements, as bitcoin is clearly in a panic-induced selloff that could intensify in the near term should higher volumes come into play.

Following last week’s skid, analysts at Bloomberg predicted that bitcoin’s price could fall to $1,500 – levels not seen since May 2017. The analysts said that the hard fork of bitcoin cash could be partly responsible for the selloff by “sucking investment and miners away from the largest cryptocurrency.”

Craig Steven Wright, one of the main backers of the bitcoin SV chain, has threatened to sink bitcoin if existing BTC miners switch over to mine bitcoin ABC. The so-called hash war between the competing chains has intensified in recent days with Wright’s camp vowing to play the long game to ensure their protocol succeeds.

While it’s not entirely clear just how deep bitcoin’s correction can go, investors are cautioned against playing the long game at this time. The $4,000 level is the next major inflection point being eyed by market participants.

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 670 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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