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People are Awesome: USDJPY Trade Idea, Bitcoin’s Network Situation, Ripple Taking Off

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We made it around the sun again. I for one am very proud of the human race for not destroying our planet.

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Even though the Doomsday Clock has been showing Two and a Half Minutes to Midnight since January, somehow we’ve managed to survive.

I for one will be spending the weekend on YouTube watch People Are Awesome videos, and partying of course. ūüėČ

Happy New Year!!

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@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Dollar Sinking
  • Bitcoin is Flooded
  • Crypto Money Flows

Please note: All data, figures & graphs are valid as of December 29th. All trading carries risk. Only risk capital you’re prepared to lose.

Traditional Markets

The currency markets have seen more action in the last few hours then they have all year.

It looks like the US Dollar is showing some serious signs of deterioration.

We mentioned the Dollar weakness in yesterday’s update but the rate of decay has seriously accelerated this morning.

The British Pound seems to be the biggest gainer but critical technical levels are being broken across the board.


Unfortunately, I can’t really explain this move as it’s Christmas week and most of the UK is on Holiday. Yet, all brokers are online so there should be plenty of liquidity in the market.

Trade Idea (USDJPY)

One of my favorite opportunities on Dollar weakness at the moment is against the Japanese Yen. Here’s a chart showing the range of the USDJPY for most of the year from 108 to 114.50.

It would be difficult to imagine the Bank of Japan getting more aggressive to try and weaken the Yen, so if the Dollar continues to drop we could find ourselves near the bottom blue line pretty quickly.

The risk/reward scenario on this trade is pretty good too. If you enter a sell position at the moment with a stop loss at 115 and take profit at 108. You lose 250 pips at the stop loss but gain 450 pips at the take profit.

Bitcoin Concerns

The technicals of bitcoin look fine. From the pre-Christmas pullback to today, the chart is forming a classic wedge pattern on the chart. In this case, the line on the bottom (support) is a bit stronger than the line on the top (resistance). However, a breakout is possible in either direction.

What concerns me is the state of the network. The number of transactions per second has come down significantly in the last week…

However, the average time to confirm a transaction has increased dramatically…

This as the mining power (hashrate) of the network has only declined slightly this week.

Even if we do see another exponential boom in the price of bitcoin and even more YOLO FOMO buyers coming online I don’t think the network would be able to handle much more than it’s already doing. The network is flooded.

The number of unconfirmed transactions in the blockchain’s queue (mempool) has been at a critical level for most of this month.

Let’s hope the Chinese bitcoin miners work hard this weekend to clear the cache while the rest of us party.

Ripple is Flying

Along with Bitcoin, most of the altcoins are looking pretty tame, except ripple, which has been on a binge lately.

Though volumes of XRP are nowhere near what they were in the middle of the month, the liquidity in the market seems to be ample.

Many traders on eToro now have their sights firmly on $2.

South Korea

Despite the new law in South Korea, it seems that volumes there have not been hampered there too much as of yet. As well, the spread between the prices of bitcoin on the Korean exchanges Vs the price of bitcoin on western exchanges seems to be holding.

The price of BTC on the Korean exchange Bithumb is now roughly 19% above the price in eToro. So not much different from where it was a week ago.

We’ll need to continue to monitor the situation and see if there are any further updates from the Korean regulators.

Wishing you an amazing weekend and a spectacular 2018!!

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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Altcoins

Fears of Regulatory Crackdown Flush $190 Billion Out of Crypto Market

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Bitcoin, Ethereum and every other major cryptocurrency collapsed on Tuesday, as fears of regulatory clampdown in South Korea triggered a mass exodus from the digital asset class. The collapse comes as mainstream media reports continue to push the idea of an imminent ban on cryptocurrency exchanges even as lawmakers cautioned no decision had been reached.

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Cryptocurrency Market in Free Fall

The cryptocurrency market declined rog $190 billion on Tuesday, marking one of the biggest single-day drops on record. At its lowest, the market was valued at $510 billion,  which was than $200 billion below its peak earlier this month.

The top 20 coins were each down in excess of 17%, according to data provider CoinMarketCap. Nearly $49 billion worth of cryptocurrency exchanged hands over the past 24 hours.

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Bitcoin plunged below $12,000, reaching its lowest level since early December. Ethereum, its biggest rival, fell back toward $1,000, while Ripple bottomed out at $1.23 after peaking above $3 just a few weeks ago.

South Korea Jolts Market

It was mainly regulatory issues that jolted cryptocurrencies on Tuesday, with South Korea mulling new legislation to stamp out excessive risk from the market.

South Korea‚Äôs finance minister Kim Dong-yeon reportedly told local radio that an all-out ban on cryptocurrency trading was a ‚Äúlive option, but that government officials still need to ‚Äúseriously review it.‚ÄĚ Seoul‚Äôs biggest issue with cryptocurrency trading is the level of speculation in the market and the role of anonymous accounts in spurring volatility. New regulations have already banned anonymous trading on domestic exchanges and barred foreigners from participating in the market.

Last week, some of South Korea’s busiest crypto exchanges were raided by police and tax agents over alleged tax evasion. The raids were confirmed by an employee at Coinone, who spoke to Reuters anonymously.

Seoul’s financial authorities had previously indicated they were investigating six banks that offer cryptocurrency accounts. In addition to speculative risks, authorities are also concerned about the link between cryptocurrency trading and organized crime.

South Korea is a major center for cryptocurrency and is home to some of the largest exchanges. Local traders have been the main catalysts behind some of the crypto market’s biggest gainers, including Ripple.

Some analysts believe that further regulatory crackdown will be ineffective given the borderless nature of cryptocurrencies. When China banned cryptocurrencies, traders there migrated their accounts offshore to Hong Kong or Korea. This suggests that a regulatory crackdown can only succeed with broad international cooperation, which does not exist at the time.

Chinese regulators know that their measures have done very little to limit virtual capital flight from the country. That’s why they are moving to block domestic access to offshore exchanges, according to a recent Bloomberg report.

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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Analysis

Long-Term Cryptocurrency Analysis: Broad Correction Enters Next Phase

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The overbought BTC-led correction that has been the dominating technical process in the cryptocurrency segment in the last month or so continued in earnest today, amid the intensifying regulatory steps concerning the sector. The three-week-long consolidation that followed the initial mini-crash concluded with a sharp sell-off overnight rearranging the long-term charts, while likely kicking off another volatile period.

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While most of the crash lows held up today in early trading in the majors, especially in the case of the late leaders like Ethereum and NEO, some of the relatively weaker coins are already trading below the December minimums. We expect most of the majors to follow Dash and LTC, the weakest of the largest coins, lower and trade below the previous lows, as sentiment will likely swing to a bearish extreme.

The $11,300 level has been in the center of attention throughout the session today and the most valuable coin experienced heavy trading around the level as expected. As the daily MACD is still in neutral territory, the coin could be in for another leg lower, but after the 40% correction and the rather lengthy consolidation, investors could be looking for entry points during the move near the key support levels at $10,000, $9000, and the stronger levels at $8200 and $7700.

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BTC/USD, Daily Chart Analysis

As Ethereum is in a different part of its cycle the long-term momentum readings are still overbought, and that could mean a more protracted correction for the second largest coin. That said, following a multi-month consolidation like the one in Ethereum before, we still expect the token to outperform BTC from a long-term technical standpoint. ETH is now below the short-term trendline, and it’s likely to dip below $1000, and the prior top at $850. Further key levels are found at $740, $625, $575, and near $500.

ETH/USD, Daily Chart Analysis

Let’s see the outlook for the other major altcoins after today’s bloodbath.

(more…)

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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Analysis

Crypto Update: Chinese Crackdown Triggers Next Leg of Correction

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The cryptocurrency segment is crashing again, with double-digit losses across the board, and with several coins shedding around 30% in one day amid the widespread and heavy selling. The sell-off was triggered by reports on a new set of measures by the Chinese authorities limiting crypto trading, which added to the still looming South Korea related regulation worries. Bitcoin tested the mini-crash lows at $11,300 today in early trading, dipping slightly below that level before a strong bounce started.

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The most valuable coin is now between two crucial support/resistance lines, with the other ahead at $13,000, and as the downtrend is entering its more mature phase the $10,000 and $9,200 levels could come in play, with a possible dip to the support zone near $7,650.

BTC/USD, Daily Chart Analysis

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Interestingly, the coin is still hovering within the daily range of the crash of December 22nd, and that points to a very active and volatile period ahead near the low at $11,300, as automatic orders will likely get triggered on both sides of the market.

The short-term setup is bearish, and although it’s possible that the primary support level will hold, odds still favor another leg lower, following the exponential run-up at the end of last year that pushed sentiment into bullish extremes.

BTC/USD, 4-Hour Chart Analysis

Altcoins

(more…)

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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