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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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Bitcoin

Bitcoin Price Clings to $3,600 as the Search for a Bottom Continues

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Bitcoin’s price continued to drift sideways on Thursday, as a lack of trading catalysts kept markets subdued following an active start to the week.

Stuck in a Range

After breaking out to the upside at the start of the week, bitcoin has managed to trade within a narrow range over the past 48 hours. The leading digital currency by market cap is currently valued at $3,628.23, down 1.3% from the previous day. Trading volumes remain elevated near $5.2 billion despite a sharp drop off in volatility.

Bitcoin’s 30-day volatility index, courtesy of bitvol.info, declined to 4.25% on Wednesday. Volatility has been in firm retreat since December, when it peaked at nine-month highs.

That being said, bitcoin’s narrow trading range reflects a lack of direction in the market as opposed to newfound stability. A failure to break above $3,700 in the short term could put BTC on the backfoot and vulnerable to fresh waves of selling. This is fairly consistent with the trading patterns we’ve observed since the onset of the bear market last year.

At current values, bitcoin has an overall market capitalization of $63.4 billion. Its dominance rate has strengthened to 52.4%, which reflects broad pressures on altcoins and tokens.

Read: Bitcoin’s Year of Accumulation

Search for a Bottom Continues

Although some analysts have already called bitcoin’s bottom, others are convinced that new lows are likely before the market makes a definitive turn. Jani Ziedans, an analyst at Cracked Market, believes bitcoin is demonstrating a lethargic base, which signals weak underlying demand. This continues to be the case insofar as bitcoin struggles in the mid-$3,000 range.

Morgan Creek Digital’s Anthony Pompliano has also stated that bitcoin will probably fall below $3,000 before the bottoming process finally concludes. This comes despite a more than 30% bounce from the December low near $3,100. Read more: Crypto Markets Search for Catalysts as Bitcoin Lightning Network Sees a Surge in Capacity.

Nevertheless, 2019 looks to be a year of accumulation for bitcoin as prices consolidate in the $2,000-$4,000 range. The anticipated influx of institutional investors, combined with the sharp rise in circulation on virtual exchanges, means trading in BTC is likely to grow as the year progresses. According to analyst Willy Woo, these and other factors may put bitcoin on the path to recovery by the third quarter.

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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4.7 stars on average, based on 738 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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Crypto Update: Sideways Drift Continues but Sellers Still in Control

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While the bounce on Monday gave some hope to crypto bulls that last week’s plunge was just a correction in an ongoing broader counter-trend move, so far, we haven’t seen meaningful follow-through. That means that the bearish short- and long-term trends are still dominant in the segment and sellers are clearly in control of every major top coin.

Also, while volatility is relatively low, correlations are still elevated, and volume patterns are bearish as well, so our trend model remains on sell signals with regards to the overwhelming majority of coin on all time-frames. Traders and investors are still advised to stay away from entering new positions, as we have no evidence the bear market is over, and at least the test of the lows is likely in the coming months.

That said, a quick recovery above the primary resistance levels would be a positive sign here, but until we see signs of technical strength, the defensive approach is warranted as bearish risks remain very high here.

BTC/USD, 4-Hour Chart Analysis

Bitcoin’s relative stability is still the only positive sign among the top coins, but BTC also lacks bullish momentum and it failed to leave the close vicinity of the key $3600 support level. The $3850 resistance is out of reach, for now, and given the clearly bearish long-term setup, traders and investors shouldn’t enter positions here.

A move above that level would be a positive sign for bulls, with further zones between $4000 and $4050, and near $4450, but we still expect a move towards the support levels near $3250 and $3000 in the coming weeks, even if a broader bottoming process might already be underway.

ETH/USD, 4-Hour Chart Analysis

While Ethereum spiked higher again towards the $130 resistance level today, the move failed again and bulls failed to make technical progress, with the recent low still being in danger. A sustained push above $130 could still signal a failed break-down pattern, but the lack of bullish momentum points to a continuation of the decline.  Key support is found near $120 and between $95 and $100, while further resistance is ahead at $145, $160, and near $180.

Altcoins Unchanged and Bearish After Choppy Day

LTC/USD, 4-Hour Chart Analysis

The volatility compression continued in all of the major altcoins as well, but the broad selling pressure is still apparent in the segment. Litecoin failed to get close to the primary resistance zone near $34.50 despite the early-week rally attempt, and it continues to threaten with a move below the key $30-$30.50 support zone.

A breach of support would likely trigger a move towards the $26 level, with the oversold short-term momentum readings now being cleared in the market of LTC. Further strong resistance is ahead near $38 and $44 and with support found near $23, and traders and investors still shouldn’t enter positions here.

XRP/USDT, 4-Hour Chart Analysis

Ripple has been showing signs of relative weakness again today, after the brief period of stability and the technical picture continues to be negative on all time-frames, and our trend model is also on short- and long-term sell signals. The $0.32 price level is still in focus, and we still expect a move below $0.30, with strong support found near the $0.26 level, with resistance ahead near $0.3550 and $0.3750.

DASH/USD, 4-Hour Chart Analysis

Dash remained among the relatively weaker majors as well, and it still hovering around the $70 price level after bottoming out close to $67.50. A test of the bear market low near $56 seems very likely in the coming weeks, and only a move above the strong resistance zone between $76.50 and $80 would change the short-term outlook for the coin.

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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4.7 stars on average, based on 443 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’s Year of Accumulation

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Although bitcoin looks poised to extend its January losing streak to five consecutive years, 2019 will be a year of slow accumulation for the virtual currency, according to Eric Thies, a well-known technical analyst. In the meantime, traders can expect the bear market to reach its climax once a new yearly bottom is breached.

Accumulation Year

In promoting the view that 2019 will be an accumulation year for bitcoin, Thies directed our attention to the major bear trend that emerged in 2015. That was the year bitcoin exhibited significant volatility, albeit in a lower range. Following the latest breakdown in price, bitcoin could be in for a similar trading pattern this year.

“Similar to 2015, 2019 may be the year of accumulation,” Thies said, according to CCN. This means bitcoin is likely to be an attractive investment in $2,000-$4,000 range – even with wild swings priced in.

Bitcoin’s volatility regime has changed dramatically in the last two months. Following a period of unprecedented calm, volatility surged to nine-month highs in the back end of December. Volatility will likely remain a factor for the foreseeable future as the technical tug-of-war continues. More on this: Bitcoin Maintains Narrow Trading Range as Recovery Faces More Resistance.

Circulation Grows

That bitcoin will remain highly volatile is supported by the recent influx of digital currency into circulation. Anonymous owners of dormant bitcoin wallets have been trading with greater frequency since October, which means their activity may have predated the November price collapse.

Data from Flipside Crypto recently showed that long-dormant bitcoin wallets have accounted for about 60% of the market’s circulating supply in the last 30 days alone. What’s more, active bitcoin supply has increased by a whopping 40% since the summer. This, of course, feeds into higher expected volatility.

If that’s not enough, consider that 1,000 addresses hold 85% of available bitcoin. As Bloomberg recently noted, many of these holders remained on the sidelines during the 2017 bull run and its subsequent collapse. If dormant accounts are becoming active again, there’s good reason to suggest that the whales are looking to re-enter the market.

Not Overnight

It’s reasonable to expect that bitcoin will become more attractive at lower prices, especially as more institutional investors access the crypto market in the coming year. But that doesn’t mean the accumulation will happen overnight. Previous bear cycles have taught us that downtrends can stretch for 1-2 years before any noticeable accumulation takes place. The only difference this time is there are more people involved, and more eyeballs on the price.

Additional reading: Crypto Winter and the Fed?

To demonstrate bitcoin’s potential at current levels, and why 2019 will be an attractive year to boost one’s holdings, it’s worthwhile to reflect on the cryptocurrency’s yearly lows rather than its highs. Below is a quick snapshot of bitcoin’s yearly bottoms stretching all the way back to 2012:

  • 2012: $4
  • 2013: $65
  • 2014: $200
  • 2015: $185
  • 2016: $365
  • 2017: $780
  • 2018: $3,200

Traders tend to focus on bitcoin’s lack of new all-time highs as evidence that the market is going nowhere, but these figures clearly show that BTC is a solid investment at almost any period in the last seven years (of course, this isn’t the case if you bought during the peak of 2018).

Make no mistake: technical analysis and market sentiment clearly show there is more pain ahead for bitcoin and the broader cryptocurrency market. But as the long-term value proposition continues to hold, there’s strong reason to believe we haven’t seen the last bull market. In the meantime, 2019 prices could represent a unique buying opportunity for those who missed the boat two years ago.

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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4.7 stars on average, based on 738 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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