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SEC Warning Rattles Crypto Market as Bitcoin Plunges Below $10,000

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Bitcoin was back on the defensive Thursday, as prices dropped below $10,000 after the U.S. Securities and Exchange Commission (SEC) said digital asset exchanges must register with the agency to trade so-called security tokens.

SEC Issues Stern Warning

The SEC issued the decree in a statement that was published on its website on Wednesday:

“If a platform offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.”

Regulators have drawn a clear line in the sand in how they deal with security tokens, warning startups that they will scrutinize any token offering that is deemed to fall in line with federal security laws. In other words, classifying a digital asset as a “utility” token instead of a “security” token isn’t enough to circumvent the scrutiny of regulators.

Regulators also said they were concerned that many online exchanges appear to investors as regulated when they are not:

“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not. Many platforms refer to themselves as “exchanges,” which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.”

It remains to be seen how the major exchanges will react to the SEC’s warning. Currently, cryptocurrency exchanges must obtain state licenses to operate legally.

Crypto Market Falters

Regulatory unrest triggered a broad retreat in the market on Thursday, with the combined value of cryptocurrencies falling by as much as 8.5% from their session high. At the time of writing, the combined market cap for all coins was $382 billion, according to CoinMarketCap.

Bitcoin fell back below $10,000 for the second time in as many days, hitting a session low of $9,121. It would later recover at $9,395 for a loss of around 5.5%.

Every coin in the top ten traded lower on Thursday, with bitcoin cash, Monero and Cardano experiencing the biggest percentage drops.

In terms of overall dominance, bitcoin continued to make up around 42% the total market share. The cryptocurrency has taken a bigger piece of the pie in recent weeks as investors cut speculative bets on altcoins.

The SEC notice wasn’t the only bearish signal for markets this week. On Wednesday, crypto assets plunged double digits on speculation that Binance may have been subject to an orchestrated cyberattack targeting altcoins. After a thorough investigation, Binance assured users it had not been hacked.

Negative headlines concerning regulation and cyber security have deflated a market that was slowly regaining its poise. Prior to the recent reversal, bitcoin had tested highs near $11,700.

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 551 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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Bitcoin

‘Bitcoin Is Better than Gold’, Says Venture Capitalist

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The bitcoin price is trading above $6,500 again and technical indicators like RSI appear more stable, all of which bodes well for market sentiment heading into the weekend.  The improving outlook for the BTC price has silenced the naysayers for now and reinvigorated the case for bitcoin and its applications as both a store of value and payment method.

Lou Kerner of CryptoOracle, a crypto advisory and VC fund startup, on CNBC made the case for bitcoin overtaking gold as a store of value, pointing to gold’s “awesome run” as a “global store of value for a couple thousand years.”

“We now have something that we think is functionally much, much better. So we would expect over time — not in a day, not in a week, not in even five years — but we would expect over time for some of the people using gold as a store of value to switch to bitcoin,” Kerner told CNBC.

Precious metals investors have in fact been switching from gold, as evidenced by a decline in the gold price to an 18-month low this week. The price of gold is currently trading below $1,200 an ounce. Take a look at the declining performance in this popular gold ETF. And while billions of dollars have poured into crypto over the past week, bolstering the total value of the market to $214 billion, there hasn’t been much evidence of investors redirecting assets from gold to bitcoin in 2018 until now.

Source: Trading View

Kerner went on to compare the emergence of the new technology that is Bitcoin to the junk bonds of Michael Milken’s era, pointing to when junk bonds were similarly volatile and viewed as a scam decades ago but today are offered alongside the most traditional of investment products.

“We think bitcoin is going in that same trajectory. Any new assets in its early days are extremely volatile. Nobody knows how to price it. And that’s exactly what we’re seeing with bitcoin,” he said.

Kerner cut his teeth on Wall Street as an equity analyst at Goldman Sachs and Merrill Lynch, according to his LinkedIn profile. Now his career as a venture capitalist dedicated to crypto, which he says is the “biggest thing to happen in the history of mankind.”

Coinbase Payments

Meanwhile, leading U.S. cryptocurrency exchange Coinbase wants to bolster the security of bitcoin payments for its customers, as evidenced by a new payment-fueled patent that was published in recent days. The invention is comprised of features like a “key ceremony” involving a custodian, master key, bundle and encryption “during a checkout”.

Source: U.S. Patent and Trademark Office

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 39 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Analysis

Crypto Update: Ripple Leads Oversold Bounce

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The major cryptocurrencies are holding on to their recent short-term gains, as the oversold bounce that followed the early-week liquidation continues. One of the most oversold top coins, Ripple is leading the way higher as it broke out above the $0.30 resistance and rallied to $0.32 in early trading. The total value of the market reached $215 billion, but as Bitcoin and Ethereum are still capped by the $6500 and $300 levels respectively a broad short-term trend change is not confirmed in the segment.

Monero is also among the relatively stronger coins today, extending its bounce above the $90 level, and getting close to the key $100 zone in the process. Litecoin, which has been also showing early signs of strength, failed to build on the rally, and as the leadership is still weak, correlations are high, and the downtrends are intact with regards to most of the coins, traders should remain defensive until further signs of strength in the segment emerge.

XRP/USDT, 4-Hour Chart Analysis

Ripple is trading in the strong $0.30-$0.32 zone, after the overnight rally, being the only major that triggered a short-term buy signal. Despite the signal, the long-term bearish setup is still clearly in place, and the coin continues to face strong resistance at $0.32, with a weaker level also ahead near $0.35, and traders should only treat the current move as a counter-trend rally. Support below $0.30 is found near $0.28, with a stronger long-term level at $0.26, and the coin already cleared the oversold short-term momentum readings.

ETH/USD, 4-Hour Chart Analysis

We are still looking at Ethereum as the most important gauge of the state of the market, as ETH has been in the epicenter of the recent steep selloff, and now it is trying to gain ground above the key $300 level.

Despite the relative stability of the coin, it failed to follow Ripple higher, and also failed to trigger a short-term buy signal, as the declining trend clearly remained intact, even as the steepest trendline has been broken. The coin faces strong resistance just above the current price level and near $335, while support is found between $275 and $280 and near $260.

Bitcoin Still Stuck Below Resistance

BTC/USD, 4-Hour Chart Analysis

BTC has been trading in a narrow range below the $6500 level as altcoins attempted to rally, but the relatively strong coin still failed to show bullish meaningful momentum. The coin remains on a neutral short-term trend signal, and with the key long-term $5850 level not being in danger, the long-term outlook is also neutral.

A move above $6500 could still trigger a short-term buy signal, but the rest of the segment will likely need further consolidation for a trend change, and further strong resistance is ahead at $6750 and $7000, while support is found at $6275 and $6000.

EOS/USDT, 4-Hour Chart Analysis

While a few coins are showing promising short-term signs, most of the majors remain deeply wounded from a technical perspective, with the likes of NEO, IOTA, DASH, and EOS all managing only a weak bounce, despite the clearly oversold momentum readings. With that in mind, the odds of a re-test of the lows are still high, and volatility might increase again in the coming days.

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 321 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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A Bullish Bitcoin Mining Hashrate Prevails Despite Price Uncertainty

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With Beijing-domiciled Bitmain reportedly readying a blockbuster $3 billion IPO, cryptocurrency mining has been thrust into the spotlight once again. Bitmain, which boasts more than three-quarters of the market for mining equipment like ASICs, plans a September regulatory filing in Hong Kong, which based on some market predictions could coincide with when the real market recovery begins.

Bitcoin miners, meanwhile, are a loyal bunch and haven’t abandoned ship in the midst of the cryptocurrency storm, which bodes well for Bitmain’s upcoming listing as well as the outlook for the broader crypto market. This is apparent because the hashrate, which reflects the amount of computing power dedicated to the process of creating new coins, has been on the rise, according to Bloomberg.

Source: Bloomberg

The bullish trend suggests that bitcoin miners continue to generate a profit and have remained committed to the process while more skittish investors have abandoned ship. Bloomberg suggests that there is a lag between the price of bitcoin and the hashrate, but in some instances miners are “willing to run at a loss,” at least for a while.

Which brings us to the breakeven level for bitcoin mining, for which there are various estimates cited by Bloomberg:

  • Fundstrat says $8,000
  • Morgan Stanley says $8,600
  • CoinShares says $6,400

With the bitcoin price hovering at $6,359, miners are about profitable based on CoinShares research. But that doesn’t mean there hasn’t been any collateral damage, as consolidation has left the smaller mining shops out in the cold as the largest miners run the leanest and most efficient operations.

Genesis Mining’s Outlook

Genesis Mining, which is a cloud-fueled bitcoin mining company, is among the firms increasing capacity, with Marco Streng, mathematician, an early bitcoin investor and CEO of Genesis Mining, telling Bloomberg: “There are still major expansions happening, especially from more efficient miners. The expansion is so big that it compensated for the drop-out of not-so-efficient miners.” Indeed, it’s those firms with a grip not only on mining pools but also mining equipment, like Bitmain, that have the most control.

But even Genesis Mining has its limits. The company stated in a blog post today that “miners around the globe are struggling to stay in the game,” pointing to “declining rewards,” which the company has no control over.

Genesis in the blog pointed to a perfect storm of a falling bitcoin price since January, a “rising difficulty” surrounding the mining process, which increases computing power requirements, and subsequent weak mining output by some users. As a result, these miners are in jeopardy of having their accounts closed once a grace period expires unless they upgrade to a different contract.

So in a sense, “it is the best of times, it is the worst of times” for crypto miners in a script whose next act has yet to unfold.

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 39 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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