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Technical Analysis: Bitcoin Tumbles Below $9000 as Coins Hit New Lows

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The new correction lows that we have been expecting in the segment arrived today, as the selling pressure of the Asian and European session remained dominant as US markets opened. The most valuable coin is now more than 50% off its all-time high set in December, and the currency traded on the lowest levels since the end of November.

Most of the altcoins are also sporting heavy losses, with double-digit daily declines across the board. Correlations remain very high in the segment, with Ethereum’s continued relative strength being the only major outlier, while to some extent, NEO, Ethereum Classic, and Stellar are also holding up better than average.

Bitcoin is still not oversold from a short-term momentum perspective, but given the more constructive long-term setup, our trend model shifted from sell to neutral thanks to today’s plunge. Although further losses are still likely, a durable bottom could be close in time, and investors could still accumulate the coin near the main support levels at $8200 and $7650. Traders could enter smaller positions near those levels too, but volatility is expected to remain high, so risk management is still critical, as a “flush-out” liquidation event could happen to end the cycle.

BTC/USD, 4-Hour Chart Analysis

Ripple is showing signs of early relative strength today, as it is holding up well above the crash low near $0.85 following today’s breakdown. A test of that level is still likely, and a spike below the lows could even carry the coin back to the next main support level at $0.68, but the long-term setup points to a durable bottom soon, and investors could add to their positions during the current leg lower.

XRP/USDT, 4-Hour Chart Analysis

Ethereum

ETH/USD, 4-Hour Chart Analysis

Ethereum continues to be the strongest major, holding up above $1000 despite the selling pressure, and the still overbought long-term momentum readings. The coin is expected to continue its correction, and the current relative strength could end soon, with a dip below the $740-$750 zone being likely before the end of the current cycle. Above that zone, primary support is at $850, while further levels are found at $625 and $575, with resistance ahead at $1175.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin is trading right at the crash low near $140, as the coin followed BTC closely during the move lower, although it managed to avoid a break below the key level, for now. A move to $125 or even $100 is still likely before the end of the current cycle, but investors should be looking for entry points around those levels, as the long-term picture is getting oversold.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash is hovering around its prior low as well, close to the $600 level, still being among the relatively weaker coins. A strong convergence zone is developing near the $500 level that could serve as an ideal target for the current cycle, and investors could already accumulate the coin.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic still trading above the crash low near the prior all-time high of $23, which level could be in focus in the coming days. Below that, the main support level is at $18, but the current relative strength suggests an earlier reversal, and investors could still accumulate the coin near the main support levels, while traders should still wait for a confirmed trend change.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero is testing the crash lows, as we expected, and a move towards the $200 level is still likely in the coin, and a spike to $150 could also be in the cards in the case of a flush-out crash. Strong resistance zones are ahead at $280, $300, and $330. Long-term investors could add to their holdings near the main levels during the current leg lower.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO is in an earlier phase of its correction similarly to Ethereum, and the long-term setup remains overbought so traders and investors should stay away from entering positions here. A dip below $100 is very likely before the end of the cycle, with further support levels still found at $80, $64, and $56, while key resistance is ahead just above $150.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA is the weakest major today, together with Bitcoin, and after plunging below the crash lows, it is likely headed for a test of the $1.5 level. The long-term picture is now oversold but volatility skyrocketed as we expected and traders could be in for a wild ride, even as a durable bottom should be very close. Long-term investors could accumulate the coin, and below $1.5, the currency could find support near $1.1 in the case of a liquidation event.

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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4.7 stars on average, based on 443 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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Altcoins

Your Guide to Stablecoins 2019

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Stablecoins are cryptocurrencies with a value pegged to a currency or to exchange traded commodities. Many projects today are researching and developing such technology. Issuers distribute stablecoins to customers in exchange for fiat currency such as USD at a 1:1 fixed exchange rate. USD is a desirable medium of exchange and globally accepted unit of account, making it a good choice for a stablecoin. Stablecoins most often take the following shapes.

  • Fiat-collateralized: Reserves in a national currency collateralize the creation and issuance of such tokens. The goal is price stability by pegging a token’s value to a reserved fiat value.
  • Crypto-collateralized: Cryptocurrencies backing cryptocurrencies. That might sound far fetched or futuristic, but it is possible in the present day. Forget the Gold Standard. Now you can hold a cryptocurrency backed by a basket of cryptocurrencies.
  • Seigniorage: These tokens are not-collateralized. Software maintains the price stability.
  • Hybrid: When you blend the three basic approaches above – or some assortment thereof – you get a hybrid stablecoin.

Let’s go deeper.

Fiat-backed

Fully-backed by fiat money at a 1:1 ratio, you might receive $1 of fiat-backed stablecoins in exchange for $1 of fiat money. Custodians (third-parties) typically manage the fiat in such an arrangement. In order to maintain a stable price, fiat-backed tokens may be issued or destroyed as needed. When holders redeem cash with tokens, for instance, the company might wire money to a bank account, then destroy or otherwise remove the tokens from circulation so as to maintain the fiat currency peg.

Tether (USDT)

Tether’s daily volume on January 18 was $189,134,405. Traders use tether as a way to hedge and to convert holdings into the equivalent USD value without having to cash-out. Detractors argue that Tether lacks transparency when it comes to reserves, though the company claims all issued USDT tokens are backed on a one-to-one basis. The CEO of Bitfinex is also the CEO for Tether Limited, which issues Tether.

TrueUSD (TUSD)

TrueUSD claims to be more transparent than Tether, while still enabling TUSD customers to exchange USD through an escrow account over which the TUSD team claims to have no control. The company uses smart contracts to ensure the 1:1 parity between real USD reserves in the escrow accounts and the TUSD tokens issued.

Gemini

Gemini took a different approach than most stablecoins, receiving permission from the New York Department of Financial Services (NYDFS) before creating its USD-pegged stablecoin. Designed to provide traders and institutions with a “regulated” version of tether (USDT), Gemini claims their stablecoin establishes trust through cryptographic proof and regulatory oversight.

Gemini’s ERC20 stablecoin includes an “upgrade feature, an offline approval mechanism for high-risk actions, and a hybrid online-offline approval mechanism for high-risk actions and token issuance that provides the desired level of security and flexibility.”

Gemini links licensed financial institutions and examiners. They form a network of trust that backs the Gemini dollar. This regulated stablecoin is to serve as a medium of exchange and unit of account for centralized and decentralized applications. Gemini has pledged to create a network of trusted and licensed financial institutions and examiners. These implementations combined form the Gemini dollar, a regulated stablecoin that can serve as a viable medium of exchange and unit of account for centralized and decentralized applications.

Gemini’s proof-of-solvency is also a unique selling point requires a trusted third party. It plans to have the audit committee of the board of directors of Gemini engage an independent registered public accounting firm to attest to the underlying US dollar balance.

Paxos Standard

Paxos Standard is built upon the Ethereum blockchain as an ERC-20 token. Rather than issuing new money to maintain price stability, as past coins have attempted, Paxos Standard provides a more stable representation of existing money with accepted and trusted value. The company posits early use cases for the technology as a payment means; hedge against volatility; contracts for more complicated transactions, and more. Longer term use cases include asset mobility and settlement and ecosystem development.
Centre

CENTRE is creating a network scheme to manage the creation, redemption and mechanisms enabling issuing members to mint and burn/redeem asset-backed fiat tokens, ensuring price stability. CENTRE’s fiat-collateralized approach entails a unit of tokenized fiat currency being backed by one unit of reserved fiat. According to CENTRE, Circle will become a “licensed member of the CENTRE network”, but an independent entity will govern and develop CENTRE protocols separate from Circle.
Commodity-Backed

Commodity-backed stablecoins are pegged to a specific value of, say, gold. One token, for instance, might represent one gram of gold. Physical gold is often claimed to be stored in a trusted third party vault. BitShares was one of the first projects to introduce a commodity-backed stablecoin. Backed by real assets and redeemable at the conversion rate of the real asset, commodity-backed stablecoins try to maintain the stable value of gold, while being easily transferred.

Digix Gold Tokens (DGX)

Digix has two tokens. Digix Gold Tokens (DGX) and DigixDAO Tokens (DGD). DGD tokens are used for DigixDAO’s governance model. DGX tokens are used as collateral and a trading pair by other crypto projects like MakerDAO, Kryptono Exchange, Kyber Network, WeTrust, Monolith, and others.

A Digix customer might buy gold through the Digix platform. The vendor then supplies gold and a custodian stores the customer’s gold. Relevant details (vendor, custodian, customer, etc.) are stored on a digital card, and sent to smart contracts so new, gold-backed coins can be minted.

DGX, created by DigixGlobal, is an ERC-20 token backed by physical gold. Fully-audited and stored in a vault in Singapore, the Safe House, each token’s value is fully redeemable and pegged to price of gold. Digix’s Proof-of-Provenance algorithm ensures that each gold bar’s custodianship status is tracked on the Ethereum blockchain. Reserves are audited each quarter.

Cryptocurrency-Backed Stablecoin

Backed by other cryptocurrencies, crypto-collateralized cryptocoins can be less stable than fiat and commodity-backed stablecoins because the underlying asset is less stable. Cryptocurrency-backed stablecoins might sometimes be over-collateralized to account for the volatility. While a US-backed stablecoin might be pegged 1:1, an Ethereum-backed stablecoin might be worth 2:1. (US $2 worth of ethereum for US$1 worth of stablecoin).  Still, cryptocurrency backed stablecoins are more volatile than stablecoins backed by other assets like commodities and fiat money.

Usually backed by a basket of cryptocurrencies instead of a lone currency, some such stablecoins require users to stake and lock cryptocurrency via a smart contract to create a fixed ratio of stablecoins. Considered a more decentralized alternative to fiat and commodity-backed stablecoin, cryptocurrency backed stablecoins offer quick liquidation from one cryptocurrency to another.

MakerDAO (DAI)

Maker, a smart contract platform based on the Ethereum platform, stabilizes the value of Dai, a collateral-backed cryptocurrency, through a dynamic system of Collateralized Debt Positions (CDPs), autonomous feedback mechanisms, and appropriately incentivized external actors.

Collateralized debt position are smart contracts on the Maker system. CDPs keep track of assets deposited by users so that users can generate Dai. The value of an active CDPs collateral is higher than the value of the debt. Ether is used as collateral for new coins, and must be sent to a CDP, which locks the staked ETH so new DAIs are minted. Dai is designed to be sent to others, used as payments for goods and services and held as savings. MakerDAO also issues MKR token.

Seigniorage-Style Stablecoin

Seigniorage-Style stablecoins are uncollateralized and stabilized by algorithms. Algorithms might maintain the value and stability of a coin by controlling the supply of the uncollateralized stablecoin, shrinking and growing it based on certain indicators.

Seignoriage-style coins’ algorithmically governed approach to expanding and contracting a stablecoin’s money supply. New stablecoins are minted to maintain stable prices, when, say, demand increases or decreases.

Conclusion

Technologists claim that stability offered in stablecoins would be a boon to cryptocurrency by minimizing fluctuations of value. A stablecoin theoretically represents a stable means of payment and trade, making it appealing for daily use, and perhaps more palatable for the general public. Yet, stablecoin technology is still nascent, and questions such as how to manage supply and demand in such a way as to create stable value have yet to be fully answered and understood. Of the coins listed here, Digix, Gemini, MakerDAO and Paxos represent under-publicized products on which to keep an eye.

Image: Artem Beli

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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5 stars on average, based on 1 rated postsJustin O'Connell is the founder of financial technology focused CryptographicAsset.com. Justin organized the launch of the largest Bitcoin ATM hardware and software provider in the world at the historical Hotel del Coronado in southern California. His works appear in the U.S.'s third largest weekly, the San Diego Reader, VICE and elsewhere.




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Altcoins

Tron Price Analysis: TRX/USD Constructing a Head and Shoulders Pattern

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  • TRX/USD remains vulnerable to further downside, with eyes on the possible head and shoulders technical structure.
  • TRX/BTC bulls are having much difficulty breaking down huge area of supply.

TRX/USD Price Action

TRX/USD daily chart.

There has been little in terms of committed market direction. It appears that after the huge bull run, which was observed from mid-December until 10th January, the price is trying to find its feet again. The gains of that push higher were a chunky 180%, before quickly becoming unstable and losing some of that ground.

Head and Shoulders Pattern

TRX/USD head and shoulders formation, via daily chart.

A near-term ascending trend line can be observed via the daily chart. This could be forming a head and shoulders formation. The left shoulder and head have already been constructed, with attention on this possible right shoulder. It is currently moving back towards the trend line, acting as a neckline for the technical pattern. A breach could see a fast fall below the $0.020000 mark.

The next major area of support is seen at a demand zone, which tracks from $0.017500 down to $0.016000. TRX/USD last traded here on 20th December, when the bulls ran through this range, which at the time was acting as supply. At a worse case scenario, a failure of this zone holding will shift attention to the December low area, $0.011150.

TRX/BTC Bulls Cannot Break Down Big Supply Zone

TRX/BTC daily chart.

This trading week, the TRX/BTC bulls attempted on a few occasions,to break down heavy area of supply. It can be seen tracking from 0.00000700 up to 0.000007500. The price has not been convincingly breached since June 2018, a strong sign of the bearish trend gripping the market. Briefly on 10th January, an aggressive spike to the upside was observed, pushing above for a very short-time before the sellers piled in.

Weekly Chart

TRX/BTC weekly chart.

Looking via the weekly chart view, TRX/BTC has been pushing higher for the past three consecutive weeks, at the time of writing. Despite this run of gains, the technical picture does still somewhat express some vulnerabilities. The large upper wick produced during the week which commenced 7th January appears to be a bearish pin bar formation.

If this week fails to close in the green, it could suggest that a larger wave of selling pressure may materialize. Typically, the types of candlesticks described above tend to come ahead of downside pressure. In addition, then numerous rejections seen within the earlier detailed supply zone, stacks favorably for the bears.

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 110 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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Altcoins

Monero Price Analysis: Stronger Malware to Mine Monero; XMR/USD Has Room for Another Potential Squeeze South

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  • Researchers: a stronger malware has been uncovered, which can mine Monero.
  • XMR/USD price action remains stuck in a narrowing range, subject to an imminent breakout.

The XMR/USD price has seen some upside on Saturday, holding gains of around 3% towards the latter stages of the day. Despite the press higher from the bulls, a move which has been observed across the cryptocurrency market, vulnerabilities remain. Price action has been ranging for the past nine sessions. Once again, this isn’t specifically just XMR, as this type of behavior is witnessed across the board. The narrowing in play came after the steep drop that rippled across the market on 10th January.

Price action was initially well-supported to the upside by an ascending trend line, which was in play from 15th December. This at the time was a very promising recovery, as XMR/USD had gained as much as 55%. Unfortunately, however, the bulls were unable to break down supply heading into the $60 region and were eventually dealt a big hammer blow. On 10th January, the market bears forced a heavy breach to the downside, smashing through this support. The price had dropped a big double-digits, some 20%.

Stronger Malware Mining Monero (XMR)

There is a dangerous form of malware that can bypass being detected and mine Monero (XMR) on cloud-based servers. A recent notice was put out by Palo Alto Networks’ Unit 42, an intelligence team that specializes in cyber threats, regarding a Linux mining malware. This was detailed to have been developed by Rocke group, which has the ability uninstall cloud security products. It can do this to the likes of Alibaba Cloud and Tencent Cloud, to then illegally mine Monero on compromised machines.

The two researchers from Palo Alto Networks, Xingyu Jin and Claud Xiao, detailed the findings of their studies. Once the malware is downloaded, it takes administrative control to initially uninstall all cloud security products. Shortly after, it will then then transmit code that will mine the Monero (XMR). Further within their press release, they said, “To the best of our knowledge, this is the first malware family that developed the unique capability to target and remove cloud security products.”

Technical Review – XMR/USD

XMR/USD daily chart.

Given the current range block formation, eyes should be on the key near-term technical areas. Firstly, to the downside, $43, which is the lower part of the range. A breach here will likely see a retest of the December low, $38. To the upside, resistance be observed at around the mid $46 level. Should a breakout be observed here, then a potential retest of the broken trend line will be watched.

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 110 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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