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The $700 Billion Question

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As losses in the crypto universe continue to mount, U.S. regulators are once again asking whether last year’s bull market was artificially inflated. According to Bloomberg, the federal probe is intensifying now that bitcoin’s price floor has been severely breached.

Tangled Web

As Hacked previously reported, federal prosecutors have uncovered a suspicious relationship between Bitfinex, Tether and bitcoin. To recap: Bitfinex is one of the world’s largest cryptocurrency exchanges and Tether is the company behind the controversial USDT stablecoin. Both companies share the same executives and were part of a federal subpoena last year.

The U.S. Department of Justice suspects that Bitfinex and USDT may have been used to inflate bitcoin’s price, which peaked north of $19,500 last December. Since USDT is the quote currency on a large volume of bitcoin trades, Tether may have printed and released more units of the token on Bitfinex at crucial moments throughout 2017. Tether’s lack of transparency fueled suspicion that the company didn’t have the reserves to back up the number of tokens it had in circulation. (As a dollar-backed stablecoin, Tether claims to have a dollar-USDT ratio of one-to-one.)

Tether allayed those concerns earlier this month by announcing a new banking relationship with Deltec Bank & Trust, a Bahamas-based financial institution. However, from the perspective of investor sentiment, the damage may have already been done.

Recently, the U.S. Securities and Exchange Commission (SEC) slapped civil penalties on two cryptocurrency companies that failed to register their initial coin offerings as securities. The SEC’s regulatory clampdown, combined with the year-long downturn in market prices, has put the ICO market on ice over the past four months.

U.S. regulators, including the Commodity Futures Trading Commission (CFTC), are also reportedly investigating the impact of spoofing on digital currency trades. The illegal practice involves flooding the market into fake orders to trick other traders into buying or selling a particular asset.

Futures Trading Spikes

Bets against bitcoin have skyrocketed over the past week, as evidenced by the open interest in futures contracts. According to Bloomberg, the combined open interest in bitcoin futures operated by CME Group and CBOE reached an equivalent of 22,266 bitcoin on Monday, the highest on record.

BitMEX, a popular cryptocurrency derivatives platform, has seen an upsurge in trading volume amid the market downturn. As of Tuesday, the platform processed more than 41% of bitcoin trades placed on virtual currency exchanges, according to CoinMarketCap. That’s equivalent to roughly $3.6 billion, based on today’s volumes. As Hacked previously mentioned, trading in over-the-counter markets is likely equivalent to the orders placed on virtual currency exchanges. This means there’s a lot going on behind the scenes that data feeds like CoinMarketCap do not reveal.

The bitcoin price plunged below $4,300 on Tuesday, setting a new 13-month low. This has contributed to a much wider selloff in the crypto universe, with the total market capitalization of all coins reaching a low of $140 billion earlier in the day. That represents a decline $71 billion over seven days.

Since peaking above $840 billion in January, the crypto market cap has lost a staggering $700 billion. Gains and losses of this magnitude will continue to fuel speculation that manipulation is at least partly responsible for the shake-up in prices.

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 704 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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  1. AK

    November 20, 2018 at 5:47 pm

    I think mining itself is partly to blame. While most people who bought bitcoin before or during the 2017 buildup, the mining has put out 300.000 bitcoin since then. Even though all the original buyers are die hard hodlers, miners are pouring out new bitcoin. Like an ongoing emmision in a company that doesnt need one.

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Bitcoin

Bitcoin Price Showcases Resilience Following Anniversary Rally

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Bitcoin held on to most of its gains Tuesday, as the market consolidated higher following an early-week rally that coincided with the one-year anniversary of its last record high. The bulls aren’t out of the woods yet, and price action over the next 24-48 hours could dictate whether the newfound strength is here to stay.

BTC/USD Update

The bitcoin price reached a session high of $3,684.40 on Bitfinex, which was a considerable premium compared with other exchanges. At the time of writing, BTC/USD was trading hands at $3,594. The leading digital currency was valued anywhere between $3,470-$3,522 on other leading exchanges including Coinbase, Bitstamp, Gemini and CEX.io.

Looking at the aggregate pricing data, bitcoin was last valued at $3,523, having gained 4% over the past 24 hours, according to CoinMarketCap. Over the same period, trade volumes have surged by $1.7 billion to $5.8 billion, signaling a strong bullish shift in market sentiment.

Bitcoin approached $3,700 on Monday following a double-digit rally that reverberated across the virtual currency market. The rally came exactly one year after bitcoin notched its last record high, the now famous $20,000 bull run.

The spike pushed BTC into overbought territory, according to the Relative Strength Index (RSI). The RSI has since moderated back to the mid-50 region, according to the latest monthly chart.

The total cryptocurrency market cap was last spotted just below $113 billion. The market peaked above $115 billion on Monday. Market-wide trade volumes surged to $17.3 billion, according to latest available data.

Spencer Bogart Remains Bullish

One of bitcoin’s strongest backers believes 2018 has been a fantastic year for the leading digital currency – that is, if one looks past the price action.

In a new interview with CNBC, Blockchain Capital partner Spencer Bogart said there doesn’t appear to be an imminent ceiling to bitcoin’s market cap, arguing that the value limitations usually associated with early-stage tech startups do not apply to bitcoin.

“Bitcoin does not make a kind of price-to-earnings or price-to-value revenue that normally puts an upper bound or a ceiling on a typical kind of early-stage technology company,” Bogart said, according to CCN. “Bitcoin can surely reach that high. But how long will it take – we are not sure yet.”

From the perspective of institutional adoption and business development, 2018 has been a positive year for bitcoin. That value metrics have skewed the outlook to the downside isn’t at all surprising given last year’s crypto euphoria, which generated massively inflated prices in a short period of time. According to several analysts, the end of ‘crypto craze’ is a positive step toward establishing stability and predictability in the nascent asset class.

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 704 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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Analysis

Crypto Update: Ripple and Litecoin Lead Another Rally Attempt

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The last 48 hours saw a nice bounce in the cryptocurrency segment, which led to improvements in the short-term technical setup of some of the most oversold coins. While the rally, which is being spearheaded by Litecoin and Ripple, hasn’t changed the still overwhelmingly bearish long-term picture, it could be the start of a larger scale counter-trend move. We will take a closer look at the broader picture in our long-term cryptocurrency analysis, which will be released tomorrow.

The deeply oversold long-term momentum readings and the horrible sentiment in the segment could fuel a more sustained move, but until we have confirmation that the short-term trend change in the key coins, traders and investors should remain defensive even towards the relatively stronger coins.

The strongest coins should form a pattern of higher highs and higher lows before entering new positions, and for now, our trend model only shows neutral short-term readings even in the case of the leaders, and most of the coins are still on sell signals on both time-frames.

BTC/USD, 4-Hour Chart Analysis

Bitcoin hit marginal new bear market lows before bouncing higher yesterday, and although the coin got close to the $3600 level, it remains in a bearish technical setup, and our trend model is still on sell signals on both time-frames.

That said, a move above primary resistance could set up a failed breakdown pattern, which could trigger a larger scale correction, but for now, traders and investors shouldn’t enter positions here. Further strong resistance is ahead between $4000 and $4050, while support is found near $3250 and $3000.

ETH/USD, 4-Hour Chart Analysis

Ethereum also remains on sell signals on both time-frames despite the rally attempt, as it continues to be stuck below the key $95-$100 resistance zone. The coin is still deeply oversold from a long-term standpoint, but until a confirmed short-term trend change, odds still favor new lows in the coming weeks, and traders should stay away from Ethereum here. Further strong resistance is ahead near $120 and $120, while the next major support zone is found between $73 and $75.

Bullish Leadership Finally Forming Among Altcoins?

LTC/USD, 4-Hour Chart Analysis

Litecoin spiked as high as the $30-$30.50 support/resistance zone on Monday after breaking out above the $26 resistance level and it also broke the steep short-term downtrend line. Should the coin form a higher swing while remaining above $26, a short-term trend change would be confirmed, but for now, given the clearly bearish long-term picture, traders should wait before entering the coin’s market. Below $26, key support is found between $23 and $23.50 while the next major resistance level is ahead at $34.50.

XRP/USDT, 4-Hour Chart Analysis

Ripple is on a similar technical position to Litecoin, as although the sharp bounce took the coin above both the $0.30 and $0.32 resistance levels after hitting marginal new lows, a short-term trend change is not yet confirmed.

The coin needs to form a higher swing low and stay durably above $0.32 for an upgrade to buy in our trend model, and for now the long-term sell signal remains clearly in place, with the next major resistance zone is found near $0.3550.

XMR/USDT, 4-Hour Chart Analysis

On a negative note, only a few coins show clear technical improvements thanks to the rally attempt, and the likes of Monero, DASH, Stellar, NEO, and ETC only registered weak bounces and even in the case of the surging EOS and IOTA, the gains were only enough to regain a fraction of the recent losses.

So, while a short-term trend change could be ahead after the rout, traders should remain cautious until a clear bullish leadership is established in the segment.

Featured image from 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 421 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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Bitcoin

Bitcoin Price Jumps 5% on One-Year Anniversary of $20,000 Bull Run

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The value of bitcoin rebounded sharply on Monday, shaking off a volatile weekend that dragged prices to new yearly lows. The broader cryptocurrency market quickly followed suit, as altcoins and tokens generated sizable gains over the last 24 hours.

BTC/USD Update

The bitcoin price reached a high of $3,600 on Bitfinex, where it traded at a significant premium relative to other well-known exchanges. At the time of writing, BTC/USD was trading hands at $3,515, having gained 6.5%. The cryptocurrency was valued at less than $3,400 on Coinbase, Bitstamp, Bittrex and Gemini.

Aggregate data courtesy of CoinMarketCap show an average price of $3,436 for a gain of 5%. Volumes in the last 24 hours reached $4.4 billion after falling sharply throughout the weekend.

Bitcoin is now testing the high from Dec. 12, which is situated near $3,550. That level represents the latest in a series of lower highs stretching all the way back to the end of November.

At current values, bitcoin has a total market capitalization of $59.9 billion. The broader cryptocurrency market was worth $109.1 billion, having defended the $100 billion level over the weekend.

$20,000

It was one year ago today that bitcoin reached its latest and most famous all-time high near $20,000. At this time last year, the cryptocurrency market was surging on expectations of rising institutional adoption and an ICO gold rush that attracted millions of dollars to blockchain startups. The market would go on to set new record highs in January, this time without bitcoin, as altcoins and tokens generated the bulk of bullish activity. The total market capitalization peaked near $840 billion before the euphoria faced and bearish forces took over.

The fallout from bitcoin’s record run has led to concern about the future of cryptocurrencies. Hacked previously covered the prospect of a long-awaited mass extinction event of altcoins and tokens, many of which entered the market with nothing more than a whitepaper. During the height of the bullish fervor, Ethereum’s Vitalik Buterin acknowledged that 90% of the projects currently listed on CoinMarketCap would eventually go to zero. In his view, this would lead to a consolidation of sorts, with the next wave of ICOs churning out higher quality projects.

One of the major themes of 2019 will be the evolution of security token offerings and the exchanges that list them. Progress on platforms like tZero could serve as a bellwether for the growth and viability of this market.

For bitcoin, the major question mark heading into the new year is whether the U.S. Securities and Exchange Commission will grant fund issuers the right to launch a crypto-backed exchange traded fund (ETF). The regulator is expected to rule on the VanEck SolidX Bitcoin Fund, a highly-touted ETF, by the end of February.

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 704 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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