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Seeing the Good

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If we celebrate every piece of good news, then we must also listen to the bad. However, when listening to bad news we can always find some good. 🙂

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Recently, the Polish government has issued a strong warning against Bitcoin and the entire cryptocurrency industry. Some of the things they’ve said are already known to those in the Crypto-world. Like, this is an extremely high risk market and that it is largely unregulated, as well as saying that online exchanges are dangerous and prone to hack attacks.

The good news is that they haven’t squashed the thought entirely. Two weeks ago, the largest website in the country for ordering food online called Pyszne.pl announced that they will be accepting digital gold as one of their payment methods for the 5062 locations they are partnered with.

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The two main events affecting bitcoin at the moment are the pending decision on cryptos from the Indian government and the bitcoin scaling debate, wich we’ll explore below.

@MatiGreenspan
eToro, Senior Market Analyst

 

Please note: All data, figures, and graphs below are valid as of July 11th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview


(Click here for the full post from @NestorArmstrong)

Today is Amazon Prime day in the United States. This new All-American holiday was invented by the online retailer to cross-sell their products and put their $99 Prime service right down the throats of the public consumer.

The timing in the market couldn’t be better. Tech stocks and the Nasdaq are coming off a very shaky June and as Nestor pointed out, the summer months are critical.

In this chart, we can see Amazon shares since the beginning of the year. Circled are yesterday’s gains. The green line is the fragile Nasdaq 100.

Indeed, investors seem to be repricing everything at the moment. In fact, the recently made public company behind Snapchat just fell to it’s lowest price ever.

I even overheard on one news station that “investors feel that the company has a smaller chance of survival now that tech stocks are volatile.” Still trying to work out the correlation in my head. Seriously, what does the long-term survival of a chat messenger app for teens have to do with the stock market?

Fed Talk

I know this stuff can be quite boring but these guys are in charge of the money so if the goal is to make money, we should listen up.

Yesterday Williams said that we can expect another rate hike by the end of the year. This is more or less in line with expectations. The market is currently putting the odds of a rate hike by December at about 52%.

Today, we’ll hear from Lael Brainard. As one of the Feds largest doves, she’s likely to advocate the other half expectations and tout that inflation and wage growth is not strong enough to support another hike.

Of course, the market is far more interested in what the Head Honcho has to say. Janet Yellen will be testifying before Congress tomorrow and Thursday. Rate hikes are not interesting. We know that the Fed is on a slow but steady path to higher rates. Whether it comes in December or March is really beside the point.

What is at the top of investors minds is the $4.5 Trillion worth of financial assets that the Fed has purchased over the past decade and how they plan to unwind that mountain of money.

Scaling the Bitcoin

This is by now by far the largest pullback the cryptomarket has ever seen. If not by percentage than certainly by market cap.

The total market cap of all (812) digital assets, as reported coinmarketcap.com has come from a peak of $116.5 Billion in mid-June all the way down to less than $78 Billion today.

Forefront on the minds of alternative investors is the scaling debate that is currently playing out largely behind the scenes in the bitcoin world.

See, as the popularity of the bitcoin network grows, so does the number of transactions that need to be processed. By design, each block of the blockchain is big enough to handle about 3000 transactions. Over the past few months, thanks to popularity in Japan and other countries, we’ve seen times when this was simply not enough.

So, a decision needs to be made. Do we improve the code and make transactions smoother, or do we make the blocks bigger?

At the moment, the community is divided but the clock is winding down. On August first a solution known as BIP 148 will start to take effect. This represents the first solution, to improve the transaction protocol.

However, a solution called segwit2x is quickly gaining in popularity. This represents the second solution to make the blocks bigger, but will also improve the protocol like the first option.

At the moment, about 85% of miners are signaling that they like the segwit2x solution.

If that number goes up to 95% over the next two weeks then we will likely go to a hard fork. Meaning, that bitcoin will branch out into two different coins.

It’s almost like a stock split. So each person holding one bitcoin will keep the original coin and will be credited with an equal amount of the new coin. However, in theory, the old coin should lose its value while the new one should replace it.

The issue is that this stuff is quite complicated and most people even after explaining it, fail to understand how it works. Certainly, making the network stronger is a positive thing but getting to that point is very likely to get painful.

Let’s have an awesome day ahead!

This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.

Past performance is not an indication of future results. All trading carries risk. Only risk capital you’re prepared to lose.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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2 Comments

2 Comments

  1. [email protected]

    July 12, 2017 at 12:42 am

    Thank you for the article. So if a hard fork happens, then it’s likely Bitcoin will go down. What will happen with Altcoins? We can assume that they follow Bitcoin? Is it safe to keep altcoins on exchanges during a hard fork? Thank you!

  2. Mati Greenspan

    July 12, 2017 at 11:31 am

    Thanks for the compliment and thanks for the question. Of course, nobody knows how this will play out. Nobody really knows how it will affect the price of bitcoin or even what bitcoin will look like in a month from now. Certainly, nobody knows how this will affect the overall industry.

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Analysis

Cryptocurrency Analysis: Ripple Continues Rampage as Litecoin and Ethereum Enter Correction

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Ripple remained in the center of attention in the segment after breaking out to a new all-time high yesterday, and the coin almost doubled in value, climbing above the $0.80 level. The currency concluded a 6-month long consolidation pattern with the move after being the only major on a long-term buy signal in our trend model.

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XRP gave a short-term sell signal today, while turning neutral regarding the long-term setup. Investors now shouldn’t add to their positions, although further gains are still possible, and reducing holdings somewhat is a good idea here. Major support is still found at the prior high near $0.4250 and in the $0.30-$0.32 range.

XRP/USDT, 4-Hour Chart Analysis

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While Bitcoin stagnated, and Bitcoin Cash jumped, Ethereum, Litecoin, Dash, and IOTA has been drifting slightly lower, although the recent gains are still mostly intact, and the basic setup in the segment is unchanged.

Litecoin fell below the $300 level after yesterday’s consolidation, and the coin faced strong selling pressure in the latter half of the session. The currency remains extremely stretched regarding the long-term momentum indicators, and although the short-term uptrend is still intact, a deeper correction is likely in the coming weeks, with key support levels found at $125 and $100, and weaker levels at $260 and $170.

LTC/USD, 4-Hour Chart Analysis

(more…)

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Altcoins

Trade Recommendation: XMR/BTC Pair Throwback

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The XMR/BTC market (Monero) has been in downtrend on the hourly chart after posting a high of 0.0225 on December 6 and failing to hold critical support at 0.02. It went to as low as 0.0145 on December 8 before respecting RSI at 32 where it established support. The market used the new support level to rally and generate one higher low after the other. It recently attempted to reclaim support at 0.02 but was repelled by bears. Currently, the market is trading around 0.019 levels where it appears to have created another higher low.

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Technical analysis shows a large reversal pattern in the hourly chart that can take the XMR/BTC pair to 0.025. Even though the market failed to breach resistance at 0.02, investors should not see it as a failed breakout. What we’re seeing is a throwback which is a temporary retreat in price. Throwbacks are common in breakout plays and are often seen as a bullish signal. The next time the market attempts to breach 0.02 resistance, it has a much better chance of breaking it with conviction.

The strategy is to buy breakout at 0.02 with immediate stop at 0.0189.

Hourly XMR/BTC Chart on Poloniex

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As of this writing, XMR/BTC is trading at 0.018714 on Poloniex.

Summary of Strategy

Buy: breakout at 0.02

Target: 0.025

Stop: move below 0.0189 after buying breakout at 0.02.

Disclaimer: The writer 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 money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Altcoins

Trade Recommendation: FCT/BTC Bullish Reversal

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The market reach its all-time high back in June this year when FTC/BTC (Factom) reached 0.01463162. Unfortunately, the pair wasn’t able to sustain its momentum. It created a lower high several days later at 0.01066744 which signalled investors to take profits or cut their losses. As a result, the market tumbled and lost 93.17% in value from its all-time high. Such a tremendous loss would have created an atmosphere of despair in the market. Usually, that’s when the savviest traders come in.

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Technical analysis reveals that the worst is behind the pair. FCT/BTC touched support at 0.001 on the daily chart twice and respected it on both occasions. This is a good indication that the market has found a reliable support level. In addition, hourly chart shows that a large reversal pattern is underway. The pair may have retreated when it nearly touched 0.002, but it generated a new higher low in the process at 0.00156566. The throwback is a bullish signal that enables the pair to gather momentum to break resistance at 0.002.

The strategy is buy on breakout at 0.002. Breach that level and the market reclaims 0.003. Sell that level because it is a strong resistance.

Hourly FCT/BTC Chart on Poloniex

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As of this writing, FCT/BTC is trading at 0.001738 on Poloniex.

Summary of Strategy

Buy: breakout at 0.002

Target: 0.003

Stop: move below 0.0018 after buying breakout at 0.002.  

 

Disclaimer: The writer 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 money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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