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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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Crypto: Is Relative Value Investing Time Finally Here?

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For at least the past six months you have been kind enough to listen while the topic of relative value in cryptocurrencies has repeated more than once.  Could it finally be happening? Things are certainly in place. It seems to show every time the price of Bitcoin or any of the altcoins suddenly spikes for no apparent reason.

That is the time when investors buy crypto simply because there is no better value in things like stocks, bonds, real estate, gold or currencies.  So far this has not happened all that often, but things could finally be changing. The fact that crypto prices remain near 2018 lows, and with certain exceptions, the news has been pretty good, helps set the stage.

Until now investors in conventional assets have been simply too content.  And why not, the economy in the US is humming at a 4.2% annual rate. The S&P 500 has tacked on another 8.5% so far and seems to be cruising through the traditionally volatile month of September to reach new records.  

And here is the real tattle tale, the CBOE VIX is near 2018 lows around 11. Without going into all the details, the VIX is Wall Street’s traditional measure of investor fear.  During the 2008 financial crisis, the VIX hit 60. Back in February it was at 37. That was about the time the S&P 500 fell 10%. So get the idea: today, investors are too content.  That needs to change before crypto’s relative value shines through. Here is something to focus on.

The key to the above average S&P performance has been the contribution of the tech sector. When you take out the near 22% increase from the market cap weighted S&P, well, you cut well over half of that performance down to only about 3%.  That still not bad, but it indicates a far more narrow market than smart investors should be comfortable with. What would happen to the VIX if the tech sector suddenly took a dive of 10%?

Sound crazy? Hardly, a 10%+ correction in tech stocks has taken place three times just since 2016, so this isn’t a far fetched idea.  In fact Barbara Kollmeyer at MarketWatch just penned an article titled: Bad news is building for this once-hot tech sector.  If her views prove out, this could be the key to driving investors to some of the values offered by crypto.

It all starts with the social media companies that form the backbone of the FANG stocks. Here is a sample. She opens with the thoughts of Tony Greer who heads TG Macro and who has a sour message on Twitter (TWTR) and Facebook (FB). According to Tony: “It’s finally time to be short social media” pointing out a “massive topping pattern.”

While the stock market generally may not be experiencing traditional levels of volatility, lately tech stocks have charted a different course.  In referring to that change, Greer identifies September as a time of big change.

“That period of volatility put in a big top and a double top in the social media ETF. Now it has broken its steepest ascending trend line, it’s broken down below all the major moving averages and they’re starting to curl over on top of it, which to me is going to cause another leg of a waterfall.”

The final proof of technical weakness is shown in the Global X Social Media ETF that contains a handful of social media names from Facebook, Twitter and Alphabet. This little gauge is actually down around 3% this year.

In addition to his technical observations, he points the negativity surrounding the Cambridge Analytica scandal, subsequent upbeat earnings, then news that the platform was losing users.

Technology Is More Than Social Media

Lest we look for just any reason to be buying crypto it is only fair to mention the obvious. So far this year the tech sector has managed to add 22% even with the substantial underperformance of social media.  Any notion of painting the world coming to an end would be misleading.

However, technology has many interrelated links and sometimes when one sector is under pressure it can spread.  In the meantime the gap between overvalued stocks and depressed crypto prices is setting the stage for the search for value to have its day in the sun. So keep one eye on the VIX.

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 105 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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Crypto Update: Coins Settle Down After End-Of-The-Day Bitcoin Madness

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While the short-term technical setup has been little changed in the cryptocurrency segment in the past 24 hours, a volatile dump&pump period made headlines in Bitcoin. The most valuable coin got smashed lower right before the futures market close, violating the $6275 support and plunging as low as $6100, triggering a downgrade in our trend model to neutral. BTC than surged higher a few minutes later and shot up to the $6500 resistance before settling down near $6400, where it stands today in European trading as well.

The possible manipulation event (or simply a closing imbalance in the futures market) dragged the rest of the market with it, although the moves were less pronounced in altcoins, and today, the market has been calm across the board, with most of the majors sporting modest gains amid the improving sentiment. On a positive note, Ripple is holding on to its gains from Tuesday, and today’s new swing high triggered a buy signal, which is a much-needed positive sign for the still generally bearish segment.

BTC/USD, 4-Hour Chart Analysis

Bitcoin’s long-term outlook is unchanged but the quick recovery from yesterday’s spike lower is a plus for bulls, even as the $6275 level is still in focus and the coin still haven’t shown strong bullish momentum.

With that in mind, traders should still be cautious with new positions, since the short-term outlook for the segment remains mixed, and BTC continues to trade dangerously close to the key long-term zone near $5850. Below $6275 further support is found at $6000, while resistance is ahead at $6500, $6750, and $7000.

ETH/USD, 4-Hour Chart Analysis

Ethereum continues to trade at a very important technical juncture, trying to establish a short-term uptrend after last week’s rally and avoid a re-test of the bear market lows. The fact that Ethereum remained stable amid yesterday’s Bitcoin move, and recovered to its short-term trading range is positive, but the coin has to show bullish momentum soon to remain on a short-term buy signal.

A sustained move below $200 would warn of a re-test of the lows but a new swing high could open up the way towards $235 and $260, with further strong resistance ahead between $275 and $280. Traders could still enter new short-term positions, but full positions are still not recommended given the bearish long-term trend.

Ripple Hits 1-Month High Above $0.35

XRP/USDT, 4-Hour Chart Analysis

Ripple is rallying again today, scoring a new high above the key resistance zone near $0.35 and triggering a buy signal in our trend model with the bullish swing. The next major resistance zone is found near the $0.42 price level, close to the dominant broad declining trendline, with a weaker short-term resistance level at $0.3750, the August spike high, and found at $0.32, $0.313, and $0.30. The coin is still on a long-term sell signal, despite the current move, and traders shouldn’t enter full positions here.

LTC/USD, 4-Hour Chart Analysis

Litecoin is trading in a very narrow range today, and volatility declined progressively in since the selloff two weeks ago, which will likely lead to a strong momentum move as early as the coming days. A bullish move would be important for the whole segment, as it could point to a developing leadership, with Monero, Stellar, and Dash also being in possibly bullish setups. Primary resistance is ahead at $56, while support is found near $51.

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 349 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 Price in a Holding Pattern Following $60 Million Zaif Heist

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Bitcoin’s price stabilized on Thursday, recovering from a sharp but brief selloff that dragged values to their lowest in over a month. Meanwhile, markets awaited the fallout from yet another security breach of a Japanese cryptocurrency exchange,

BTC/USD Update

Bitcoin edged up 0.4% on Thursday to hit $6,415.30. The leading digital currency has bounced back sharply from five-week lows after prices briefly touched $6,100 on Bitfinex at around 18:00 UTC on Wednesday. The sharp selloff appears to have been short lived and not indicative of the wider market trend.

Bitcoin’s trading range narrowed significantly on Thursday, with prices fluctuating within a $62 band. Total trade volumes over the last 24 hours amounted to $4.2 billion, according to CoinMarketCap,

With the exception of yesterday’s sudden and short-lived reversal, bitcoin has been in a holding pattern for most of the week. Neither the bulls nor the bears have shown signs of stepping up to push the market significantly in either direction.

The value of all cryptocurrencies edged up slightly on Thursday, reaching $202.5 billion, according to latest available figures. XRP was the biggest gainer percentage-wise, rising 11% to $0.355.

Hackers Target Zaif

Zaif, a licensed Japanese cryptocurrency exchange, announced Thursday it had suffered a security breach that compromised as much as $60 million, mostly in bitcoin. The exchange first noticed suspicious activity on Sept. 14, prompting the sudden closure of asset deposit and withdrawal services. It received confirmation that the outflows were a coordinated cyber theft three days later.

In addition to bitcoin, the attackers successfully targeted bitcoin cash and Monacoin in their theft.

The exchange has announced that efforts to re-enable deposits and withdrawals are already underway and that it has already reported the incident to the Japanese Treasury Department.

Zaif currently has roughly 2.2 billion yen ($20 million) in reserves. To cover the losses, it has reached an agreement with another Japanese cryptocurrency exchange by the name of Fisco. According to various reports, Fisco will hand over $44.5 million Zaif in exchange for an ownership stake in the company.

Japan continues to be the epicenter of cyber attacks targeting cryptocurrency exchanges. The attacks have been so severe as to prompt local authorities to hasten new legislation to govern domestic exchanges.

The biggest attack to inflict a Japanese exchange occurred in January when Coincheck was taken for $530 million.

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 604 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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