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No Matter Bitcoin Hardfork or Softfork, Prices Have Already Adjusted

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I believe digital currencies incorporate future events in the same way stocks do, the release of earnings or the introduction of a new product will be reflected in pricing in many stocks 90 to 180 days before earnings are released or a new product generates sales, and the share price will reflect future events. Digital currencies are doing the same thing here anticipating chaos in front of the August 1 decision about a bitcoin hard or soft fork.  The recent sell-off in nearly all DC’s have priced in the results of the August events in advance, and I think prices have already endured the worst and should stabilize after some initial Aug 1 (day of) volatility.  I think the fork is already priced into the market.

The hardfork/softfork issue is attempting to resolve normal growth issues related to slow trade rates.  The only way for this particular problem to be solved is by increasing the dimensions of their present blockchain. Doing this requires modification of this code. This is the point where the Bitcoin fork comes into play.

I want to stay away from describing the debate between developers, in my mind the result of the hard or softfork will be reflected in pricing, and the adoption rate, and I believe nothing can really stop the juggernaut we know as the current digital currency movement, all growing emerging markets experience execution issues, and this is not unique to digital currency. Commodity markets operated in trading pits using “open outcry” before adopting technology fully.  So this is an expected blip, and there will be more.  markets climb the wall of worry, and digital currency volatility is a reflection of uncertainty.

Technical Support and Resistance Tells a Better Story

The recent decline in digital currency (let’s use Ethereum) showed a sharp sell-off that held all technical support levels.  The chart below shows a normal orderly retracement for the price action.  You can see the market moving quickly higher from $18 to $408 and retracing to $170.  This is a normal 62% retrace.  This simple math tells much about the price direction, and traders and investors get lost in the volatility.

The question will be how the support levels hold after the August 1st event, and if the $166 price is violated.  Keep in mind, that this price level violation means you would need multiple closing below that $166, not an intraday spike lower, but a high volume sell-off with a clear busting of the support.

As mentioned I believe the concern about the fork has already tested the market, and we expect on August 1 we will have unusual trading action, but today, as I look at markets, they have the longer-term trend intact and have sorted the confusion about softfork or hardfork for bitcoin, technically analysis of historical price action solves many of these questions.  My thoughts are, that we will look back the anticipation of the August 1 event and realize the digital currency markets have other concerns about adoption.

This Has All Happened Before

Growth fatigue has plagued all markets historically from the commodity markets to equities, and digital currency is experiencing the normal pain that comes with growth.  I believe the juggernaut will continue once this is behind us and the global adoption of digital currency continues its path to higher prices for select coins like Ethereum.

My thoughts are we will look back the anticipation of the August 1 event and realize the digital currency markets have other concerns about adoption.

Featured image from 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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Steve began his career at the Chicago Mercantile Exchange in 1980 and ran Morgan Stanley Derivative Prop Trading for the firm. He continued his career as a Trader/Portfolio Manager for multiple Hedge Funds during the Internet Boom of the 90's. Steve is known as an expert in trading stocks and digital currency and has published thousands of articles and archived video with important market participants related to US Equities, private shares, and crypto currency. He offers a humorous, unique insight related to volatile stocks and the related back stories and drivers. He is a featured speaker on the conference circuit specializing in market volatility, liquidity and emerging market assets.




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6 Comments

6 Comments

  1. gmaytorena

    July 13, 2017 at 11:40 pm

    you ended the last 2 paragraphs with the same sentence… greetings

    • Edward Talliot

      July 13, 2017 at 11:45 pm

      Fixed! Thanks for the heads up.

      • gmaytorena

        July 13, 2017 at 11:46 pm

        thanks to you, nice article btw

  2. thoth

    July 13, 2017 at 11:43 pm

    Does anyone even edit this? You repeat the same paragraph twice, in the last two paragraphs. Awkward…

  3. RealCryptoW

    July 14, 2017 at 5:34 pm

    I could bet any money that ETH will not hold $169 level. Doubt me or not, but all alt coins price is still dictated by BTC. It’s hard to tell where it will fall to, depends on panic level, but my guess is around $100 or even slightly lower. BTC will drop to $1950 till descision day (august 1).

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Altcoins

Crypto Markets: Bloodied But Not Broken

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As legend has it, prize fighter Jake Lamotta returns to his corner at the end of round four of one of his early boxing matches with blood all over and his face was a mess.  Trying his best, his trainer tells Jake, you’re doing great kid, they haven’t laid a glove on you. To which Lamotta replies, well you better keep an eye on the referee because somebody is beating the crap out of me.

Lately, those of us who have a passion for the world of cryptocurrencies are feeling that somebody is beating the crap out of us. Trouble is, it is hard to figure out why.  Just as we are about to land a punch with the SEC declaring that bitcoin and Ethereum are not securities, ditto that for ICOs that do not convey an equity interest in the issuer, whamo prices drop to 2018 lows.  

The Other Side Of The Coin

We read of the recent hack of a tiny South Korean crypto exchange and pundits blame this for helping to push prices lower.  However, the market seemed to completely ignore this week’s progress in the Mt. Gox litigation. There is actually a decent prospect that investors that held $450 million in bitcoin at 2014 prices will be compensated in nitcoin.  If my arithmetic is working right, this is good news considering the 2014 Blbitcoin price was less than $2.00.

Institutionalizing Crypto

While most eyes last week were fixated on falling prices, exchange giant Coinbase let it be known that it was preparing a crypto custody service.  This may appear as a boring administrative step but that is hardly the case. This move is being heralded as the final step in opening crypto to institutional buyers.

Before Coinbase’s solution the problem has been that, despite the highly secure nature of bitcoin and other cryptocurrencies, the wallets where they are stored are a regular target for hackers.

For investors, making cryptos more accessible to institutional investors is every bit as important as adding retail merchants that accept crypto for goods and services.  

Finding Crypto Support From Unexpected Places

Last Friday various media outlets point out how The U.S. Supreme Court mentioned bitcoin and cryptocurrency while issuing a ruling on a seemingly unrelated case. Here is what the U.S. Supreme Court had to say on June 21st in the case of Wisconsin Central LTD v. United States:

“What we view as money has changed over time. Cowrie shells once were such a medium but no longer are, our currency originally included gold coins and bullion, but, after 1934, gold could not be used as a medium of exchange, perhaps one day employees will be paid in Bitcoin or some other type of cryptocurrency.”

In spite of the current oversupply of naysayers, the legacy of crypto is increasing daily. Now even the Federal Reserve Bank of St. Louis is collecting and publishing prices of bitcoin, bitcoin cash, Ethereum and Litecoin. A year ago at this time, such a notion would have been absurd.    

Suspension Of Efficient Market Thinking

For those who have been kind to follow these ramblings know that I am a big believer in the theory of efficient markets.  The key to this theory is that people have all the available information about a particular investment asset and act upon is rationally.  Of course, this is not to say that everybody reads the information in the same way. That is what makes for buyers and sellers.

Lately, there has been a complete suspension of an efficient market for crypto. All coins and tokens have been dumped without regard for fundamentally positive events, some of which we mentioned above.  Since the vast majority of crypto is owned by individuals, the wisdom of the crowd (or in this case mob) psychology prevails. The last time this was the case it was bitcoin alone that lost some 80% of it’s value starting late in 2013.  But that took more than a year to play out. Since the infamous $19,000+ peak, bitcoin has lost 68% so history is getting close to repeating itself.

It may also be a sign that a bottom in prices may be getting closer. The values are clearly there to be had. Now if only those of us who have a longer term view can find other who share a similar view.

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 82 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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Cryptocurrency Market Update: Correction Deepens as Coin Values Approach 2018 Lows

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The cryptocurrency market approached its lowest level of the year Saturday in a continuation of yesterday’s flash crash that wiped more than $30 billion off coin values.

Market Update

Cryptocurrencies saw their combined market capitalization plunge to a low of $250.6 billion late Friday, according to CoinMarketCap. With the decline, coin values came within $2 billion of their bear-market low for the year.

At the time of writing, the total market cap was $255.9 billion on trade volumes of nearly $14 billion.

It became apparent early Saturday that bitcoin and Ethereum had found support near their Friday swing lows. Both coins are down less than 1% compared to 24 hours earlier.

Bitcoin touched a new yearly low of $5,938 on Saturday but has since consolidated above $6,100 on major exchanges. The largest cryptocurrency by market cap suffered a major reversal on Friday after failing to breach the all-important $6,800 threshold. The coin quickly broke down below $6,500 and has since tested multiple new lows. In terms of immediate support, BTC/USD is now eyeing $5,850.

Ethereum prices bottomed at $450.34 on Saturday, their lowest since mid-April. Ether values were last seen hovering around $470.

Elsewhere in the top-ten, EOS was down another 5% compared to yesterday and was last seen trading at $8.33. The EOS network is battling through a PR nightmare amid multiple delays and controversies.

Bottoming Process Continues

There doesn’t appear to be an immediate catalyst for the latest selloff. As Hacked reported earlier, attributing the declines to the Bithumb hack is misguided given that the market quickly recovered from the negative headlines. (The initial decline was also limited.) Bithumb has already announced plans to compensate users affected by the $30 million heist. The exchange also disclosed that the theft accounted for no more than 6% of its proven reserves.

Cryptocurrencies remain trapped in a long-term bearish cycle that emerged early this year after markets reached their highest level on record. According to Bill Baruch, President of Blue Line Futures, the six-month correction represents a bottoming process that has yet to conclude.

In a recent interview with CNBC, Baruch said that repeated selloffs over the past four months have “wiped out most, if not all, of the over-enthusiasm” and FOMO speculators from the market. While initially bad from the perspective of prices, this means speculative positions are declining. Hacked first noted the decline in speculative positions more than three months ago following the April Fool’s Day selloff.

Analysts have noted that the recent six-month correction mirrors bitcoin’s 2014 retreat, which highlights the boom-and-bust nature of the digital asset class. Against this backdrop, bitcoin and its altcoin counterparts likely need to demonstrate several months of consolidation and stability before the bull market re-emerges.

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 464 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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CNBC Holds Funeral For Bitcoin

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CNBC show “Fast Money” held a supposed funeral for Bitcoin on their show this evening. The tongue-in-cheek ceremony occurred due to the hosts citing the BitThumb hack and today’s corresponding big drop in crypto asset prices across the board.

This is not the first time CNBC, or “Fast Money” in particular has made controversial statements about the original cryptocurrency Bitcoin.

Brian Kelly, for instance, has previously compared cryptocurrency to the “Internet in the 1980s,” emphasizing that Bitcoin is still in its early stages in an April 13 interview on CNBC’s Trading Block.

Also in April, Kelly mentioned a report by analysts at Barclays which referred to cryptocurrency as a “virus” and an infectious disease that would never hit another high again.

In tonight’s episode of “Fast Money”, Kelly noted that the moment right after negative articles are published is exactly when he “wants to buy any asset, whether it’s Bitcoin or not.” Kelly also stated recently that he supports Tim Draper’s assessment that Bitcoin could hit $250,000 by 2022.

So the “funeral” is really a mockery of Bitcoin critics who have a tendency to proclaim the death of Bitcoin every time a negative story hits the press.

The best example of this was obviously when Jamie Dimon of Chase Bank called Bitcoin, “a fraud.” When prices subsequently dropped, Chase was one of the largest buyers of Bitcoin.

During tonight’s “funeral”, Kelly gave four main reasons for why he’s bullish on Bitcoin.

1. Bitcoin is approaching historic lows in terms of both sentiment and prices for the year 2018.

2. He views a recent Japanese government statement ordering exchanges too, “improve business conditions”, while rough in the short term due to a temporary freezing on the creation of new accounts, will actually contribute to a more vibrant market in the long term.

He further clarified that this action by the Japanese government was tantamount to, “cleaning up the system.”

3. Mt. Gox announced that they are going to distribute the rest of the over 1 million in Bitcoin they still have to victims of the 2014 hack. Notably, however, this would not occur until Q1 of 2019 at the earliest. This in Kelly’s view creates a sleeping bull market event waiting to happen.

4. There are not enough Bitcoin futures trades shorting Bitcoin to affect the price negatively in a significant way.

Kelly concluded the segment by making the argument that Bitcoin is due to have a huge price spike. He elaborated on this by noting the similarity in trading charts to a previous spike a couple years ago.

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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