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SEC Meeting and Aftermath: My Thoughts

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On Feb. 6, the U.S. Senate Banking Committee met with the SEC and CFTC on how to regulate cryptocurrency. The meeting was surprisingly better than expected from where I am sitting. They are going to be letting the free markets dictate a significant amount of the outcomes of these coins, but regulate in the places where they think they can help investors not get screwed over. The two initiatives that they seemed to be interested in were primary offerings and secondary market monitoring.

Primary Offerings

If you were thinking of offering a coin any time soon, things got a lot trickier. The key point in the meeting was that any token/coin that comes out should be classified as a security. Don’t be fooled by vague language on utility tokens vs. security tokens. You can still raise the GDP of small countries with these instruments, which means they want you to classify them based on what they are capable of doing. This is a big issue.

When you classify something as a security, you have to go through an advanced offering just like any other non-blockchain company. You need buyer personal information, tax information, and you need to begin reporting your inflows/outflows to the government so they can tax you properly. The way you offer the coins will be through something called a “Regulation D” offering, which gives you the ability to solicit accredited (another word for somewhat-wealthy) investors. In other words, the government has put a “you must be this tall to ride this ride” sign up for all offerings. This limits the amount of buying parties in an offering, and will most likely affect the scale of fundraising compared to what we have seen in the past.

The days of someone opening up a website and asking for ether in exchange for ICO tokens is all but gone. I am very nervous about security ICOs for one verifiable reason. In order to get on an exchange, you need to have legal proof you are not a security. Ask CZ at Binance if you don’t believe me. So, if you’re an ICO investor, you have to perform extreme due diligence on how the coin is being offered, and where it is being offered from.

If the coin is being offered from the Caymen Islands and you don’t need to do any paperwork to get in, you probably should go ahead and skip it right now. The SEC has already started calling out companies that are doing this, and there is no reason to give away precious ether for such a large risk of intervention.

Buying a coin as a security is not much better. A Regulation D offering is to ensure that anyone who bought the coin understands the risks. But how does the investor sell when no exchange in town is willing to touch them with a 10 foot pole? Perhaps we may see a Robinhood or Coinbase offering security tokens/coins on their exchange. No one knows just yet, and I am not betting on the outcome.

Secondary Market Monitoring

Regulators’ mention of secondary market monitoring was something I viewed as positive. There is wide scale market manipulation by people who have large amounts of bitcoin, and wield it like a sword whenever there is volatility in an exchange. There is also a significant amount of hacking, as we saw with NEM getting taken for more than $400 million. The sooner we can get identify bad actors and get them out, the sooner we can get mom and pop to invest portions of their IRAs in cryptocurrency ETFs. It will not happen until the playing field has been leveled, and the government feels that they have made a good marketplace for all investors, not just accredited ones.

What was purposely left vague in this meeting is how the coins that are already out going to be classified. These Asian marketplaces would be all but shuttered if the U.S. government holistically reclassified all coins as securities. Their businesses would be instantly in violation of the law for running unlicensed securities marketplaces, which means your money is now in jeopardy. This is where my strong suggestion will come in handy.

My To-do List for All Investors

I have mentioned on Twitter many, many times the importance of cold storage. There is absolutely no reason to have any money on an exchange right now. We just saw Binance shut down for “technical reasons” and I can assure you that this will not be the last time it happens. If you buy a Ledger Nano S/Trezor (Ledgers were sold out last time I checked their website… a good sign), you can store your coins via USB and never worry about anything having to do with hacks, exchange technical difficulties, and of course, it helps you hodl that much better when the opportunity arises.

Get out of short term plays. If you are trying to make a quick buck on the new privacy coin either in an ICO or secondary market trade, it just is too risky right now. We have bitcoin still under $10,000 with fantastic news, so why not just let the storm die down a little bit? We can wait for bitcoin to dust itself off, and then take a look at what deals we can get on certain coins.

Set alerts on Ethereum. The only thing I would ever buy right now is Ethereum at a good price. That price for me is $500 (okay maybe $550). If I see a price in that range, I will be buying. The Ethereum blockchain has so many people/companies working on it, that I think it’s place in blockchain is probably the least vulnerable right now. About 70-80% of all market cap in tokens is Ethereum-based tokens. Solidity, the coding language of Ethereum, seems to be very popular on job boards. People are looking for people to help them with Ethereum projects. To me, this means great things, and I will buy at good prices. No need to buy at $900. If it goes to $1,500 in a couple days, I will not feel bad. The risk will not match the reward.

 

None of what I am saying is financial advice. I am giving you life advice in saying that a cold storage wallet is vital. We may see some shady characters trying to make money from shutting down their exchanges and taking money with them. I think the next time I need to sell my coins will be when I can go to a regulated trading desk and ask them to slowly sell my holdings, and do carry forward losses so I am not destroyed with a 40% tax bill at the end of the year. It’s time to start thinking strategically, not financially.

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 27 rated postsMythological God of Lightning. Cryptocurrency/Blockchain writer, evangelist, and friend. May the odds be ever in our favor.




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Altcoins

Dash Price Analysis: DASH/USDT Downside Risks Linger Despite Trust Wallet Support Announcement

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  • DASH/USDT price action is moving within a narrowing range formation, subject to further downside risks.
  • Trust Wallet, Binance-owed crypto wallet provider, announces support of DASH.

Price Behavior

DASH/USDT has been trading within a $6 range for the tenth session in a row, at the time of writing. The upper part of this range should be noted at $73. Looking to the downside, the lower support of the formation is seen at $67. The price, like many of its peers within the cryptocurrency market, is stuck within a narrowing range block. They are all currently demonstrating strong downside vulnerabilities, given the current behaviour.

This trading range came after a steep fall in the market last Thursday, 10th January. Double-digit losses were seen across the board after moving within a prior narrowing range formation. DASH/USDT had a strong run from 15th – 24th December, gaining as much as 81% within that time frame. Following the high print towards the latter part of that period, at $102.50, price cooling was seen and then begun to trade sideways.

Between 26th December 2018 – 9th January 2019, DASH/USDT was moving between a narrow $86 at the high and $73 at the low. This led to the explosive breakout to the downside, where the price dropped around 20% on 10th January.

Trust Wallet Supports Dash (DASH)

Trust Wallet, a mobile crypto wallet owned by Binance, announced earlier this week that it has added support for Dash. The announcement followed after just a week ago, when the wallet provider revealed the support of Litecoin (LTC), Bitcoin (BTC), and Bitcoin Cash (BCH). In addition, the app also supports Ethereum (ETH), Ethereum Classic (ETC), Tron (TRX) and others.

The team at Trust Wallet, upon their DASH support update, also left users somewhat excited about further announcements lined up. They stated, “Going forward, we will monitor the performance and stability of our Dash release very closely, and if everything works well, hopefully, we can surprise you with more new coins in the coming weeks!”

Technical Review – DASH/USDT

DASH/USDT daily chart.

A breakout of the key mentioned levels that make up either side of the range, $72 and $67, will likely determine the next committed trend. Firstly, in terms of the next major area of support south, eyes will be on the December low area, $58. To the north, drop supply remains heading into and just above the psychological $100 mark.

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 112 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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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 743 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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Altcoins

Lite.IM Surpasses Facebook In Race To Support Cryptocurrency Compatible Messenger

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Since the early part of 2018, crypto traders have been bombarded with bad news.  Hacks, broken promises, and overall lack of enthusiasm have resulted in huge losses.  But more than that, some promising cryptocurrencies just haven’t survived.  As traders look to the future, they should begin looking at projects that have the potential to disrupt industries and take them to the next level.  One company that has the potential to accomplish that is Zulu Republic (ZTX).

Zulu Republic is an ecosystem of blockchain tools and platforms, designed as a place where people, businesses, and organizations can thrive on their own terms.  The company’s stated mission is to advance the development of decentralized technologies, to promote human rights and empowerment around the globe, and to reduce the global digital divide.

Well the company is off to a great start with the development of Lite.IM.

What is Lite.IM? 

Lite.IM is a project aimed at expanding global cryptocurrency adoption.  With Lite.IM, users can send, receive, and manage Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and the company’s native currency (ZTX), on Facebook Messenger, Telegram, and SMS (in the USA and Canada).  To get started managing these cryptocurrencies on the aforementioned platforms, users simply need to send a text-based command to the Lite.IM bot.  The commands are as follows:

Telegram:  @LiteIM_bot

Facebook Messenger:  @lite.im

SMS (USA and Canada only):  760-LITEIM-0

Competition with Facebook

On December 21st, 2018, Facebook announced that it was developing its own stable cryptocurrency that users would be allowed to exchange through its popular chat service, WhatsApp.  But while Facebook’s initial approach will target users based in India, Lite.IM is open to everyone in the world.  Further, Zulu Republic has previously mentioned that they expect to announce support for WhatsApp in the next few weeks.  It certainly appears as though Lite.IM has the upper hand here.  And that is before even addressing Facebook’s obvious privacy concerns.

When it comes to cryptocurrency, privacy and security have always been two issues at the forefront.  Given the rough year that Facebook has had in that regard, users must certainly be forgiven if they have trouble trusting the social media giant.  In September, 2018, Facebook announced that an attack on its computer network had exposed the personal information of nearly 50 million users.  Apparently, the hackers were able to exploit a feature in Facebook’s code to gain access to user accounts.  Even prior to this announcement, Facebook was already under Congressional scrutiny over revelations that a British analytics firm obtained access to private information from nearly 87 million Facebook users.  Not to mention Facebook’s rumored involvement with Russian election meddling.  Suffice it to say, it has been a tumultuous year for Facebook.

And while users may have concerns trusting Facebook’s ability to handle cryptocurrency data, they shouldn’t have those same concerns with Lite.IM.  Private keys are RSA encrypted with the user’s password.  Lite.IM will never ask for that information nor will it be stored.  Because of this, no third party will ever have access to that valuable information.

Conclusion

The truth of the matter is that Facebook is an absolute giant and has grown at an extraordinary rate since its initial public offering.  Facebook has hired some incredible talent, from executive positions to marketing to development.  And while one should never count them out, I simply wouldn’t be able to trust them with all of the recent issues.  Perhaps in time, after regaining the public’s trust, users could once again look to Facebook as a leader.

Fortunately, users have another strong and dependable option.  Lite.IM will allow users all over the world to manage popular cryptocurrencies via their favorite messenger platform.  Users should continue to stay tuned for future developments.

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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