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The Trading World Loves the Action in Digital Currencies

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I believe all markets behave in a similar way, and I do not think it matters if you are trading a digital currency, a stock or an option.  I started out my career trading futures contracts on currency before all global currency rolled into the Euro.  We would trade futures contracts on the Swiss Franc, the Japanese Yen or the German Mark which were side by side on the floor of the Chicago Mercantile Exchange (NYSE: CME), making it easy to trade them against one another. Eventually, they rolled all of these into the Euro we know today, but in the 1980’s these futures contracts were the stepping stones to derivative markets.

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Soon to follow these currency contracts were Stock Index Futures, which changed the game in terms of leverage and hedging.  The S&P 500 futures contract became the benchmark for any portfolio manager who wanted another instrument to enhance his/her performance.  The introduction of the Stock Index contracts at the CME in the 80’s had perfect timing as the stock market was making a turn higher and this added instrument allowed a new entrant in equities markets, and brought commodity speculators into the mix who were used to leverage.  I think adding these contracts contributed greatly to the rally in global markets and gave managers other tools to manage risks.

One of the most important lessons in trading and investing has to do with patience.  Markets spend 85% of the time preparing to move, and 15% of the time moving, so the tendency is to over trade versus picking your spots and executing your investing plan. The lesson I learned (the hard way) was to never short quiet markets which are trending higher.  They seem to tempt you to sell them because they appear heavy, and before you know it you are in a melt up chasing them higher covering your short position competing with other buyers trying to fit through a small door.  It is a painful experience, and one you never forget. It is like touching a hot stovetop, and the burn stays with you every time you touch something.

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All Traders Love Keeping Score 

I was motivated to write this as I watch digital currency settle down after this week’s volatility, and I know the drill about random selling or shorting.  The volatility in digital currency like Bitcoin, Ethereum or Ripple is 100x the stock market volatility.  The common stock market volatility indicator is the VIX contract, which has languished for so long it has become irrelevant. Volatility in digital currencies is nearly unmeasurable in its current form with 30% moves in price in a week, so there is really no comparison to stocks. You can have a single stock risk, but for the most part, investing in macro volatility contracts is a fools journey.

I think the trading world is excited by volatility and this is contributing to the attention digital currency is getting today.  The world loves keeping score, and most investors love the action.  The just need to be wary of touching the hot stove and shorting quiet markets.  It is a lesson everyone learns in their trading career and they wear it forever like a market tattoo.

Photos attributed to the CME, 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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Steve began his career at the Chicago Mercantile Exchange in 1980 and ran Morgan Stanley Derivative Prop Trading for the firm. He continued his career as a Trader/Portfolio Manager for multiple Hedge Funds during the Internet Boom of the 90's. Steve is known as an expert in trading stocks and digital currency and has published thousands of articles and archived video with important market participants related to US Equities, private shares, and crypto currency. He offers a humorous, unique insight related to volatile stocks and the related back stories and drivers. He is a featured speaker on the conference circuit specializing in market volatility, liquidity and emerging market assets.




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  1. teotihihi

    July 13, 2017 at 3:25 am

    . The lesson I learned (the hard way) was to never short quiet markets which are trending higher. They seem to tempt you to sell them because they appear heavy, and before you know it you are in a melt up chasing them higher covering your short position competing with other buyers trying to fit through a small door. .. Please , Explain more for me about that . i am beginer, young and not good at English , Can you be more specific , please !

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Analysis

Crypto Update: Coins Lose Ground as Range Trading Continues

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While the weekend rally got bulls hope up that the consolidation phase might have ended, the technical setup hasn’t changed much in the segment, and today all of the major coins are lower again. The losses, which range from 2-5%, are not significant from a long-term standpoint, and most of the top coins are still clearly above the crucial support levels that mark the lower boundaries of the short-term trading ranges.

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With that in mind, traders still shouldn’t change their neutral stance, as there is no clear momentum present that would justify new positions here. Bitcoin continues to slightly outperform most altcoins today, but the divergence is not significant from a technical standpoint. Trading volumes continue to be well below the levels of the recent weeks, and that reinforces the bullish consolidation scenario.

BTC/USD, 4-Hour Chart Analysis

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BTC drifted back below the key $8400-$8600 zone, and it remains stuck the lower boundary of the range today, despite its slight relative strength. As the short-term MACD indicator is neutral, and our trend model is also on a neutral signal, further choppy trading is likely ahead.  Short-term support is found near the intraday low, at $8150, with a stronger zone between $7650-$7800, with further resistance ahead between $9000 and $9200, $10,000, and $10,500.

ETH/USD, 4-Hour Chart Analysis

Ethereum is trading right at the center of the short-term range, as the coin gave back most of its weekend gains, while losing its relative strength in the process as well. The coin remains on a neutral short-term trend signal similarly to the broader market, with the price action still being consistent with an orderly correction. Resistance is ahead between $735 and $780, at $845 and $900, while support is found between $625 and $645 and between $555 and $575.

Tron Still Outperforms as Correlations Remain High

TRX/USD, 4-Hour Chart Analysis

Tron made the most progress among the op coins since bottoming out after the correction, and the coin remains bullish from a short-term perspective despite the current pullback. The $0.075 support/resistance level is in the center of attention, while the late-April high at $0.010 is the next target for the move. As the broader market remains in a corrective phase, but the coin is one of the prime candidates to hit a new high in the coming weeks.

Dash, Monero, Ripple, and Litecoin are still weaker than segment average, while the recently lagging IOTA held the key $1.7 level. For now, there is still no sign of a developing robust leadership, as EOS failed to regain its bullish momentum, and no major joined Tron in the rally.

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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4.5 stars on average, based on 255 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

Five Low Market-Cap Altcoins With Huge Potential

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With more than 1,600 altcoins in circulation, finding the appropriate balance between risk and reward isn’t always easy. Making matters more challenging is the fact that hundreds of projects have already been labelled duds by researchers who have tracked the life cycle of digital currencies beyond their initial coin offering.

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While many investors are perfectly content sticking with bitcoin, Ethereum and a couple of others, those of us in search of the next ‘diamond in the rough’ must venture beyond the ten largest cryptocurrenices by market capitalization.

Below, we look at five low market cap altcoins with significant upside potential. It’s difficult to say whether these coins will generate 100 times ROI or anything that mirrors the rapid rise of bitcoin and Ethereum. However, the project specifications suggest they are a good place to start.

DragonChain (DRGN)

The DragonChain project emerged out of Disney in 2016 and was later developed as an open source platform. In its modern form, DragonChain is a business platform that allows for the creation of a secure and scalable blockchain. Part incubator, part marketplace, DragonChain provides smart contract infrastructure with a focus on security, development and scalability.

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DRGN, the currency powering the DragonChain platform, has a total market capitalization of $185 million and a price-per-coin of less than $0.80. When measured in terms of market cap, DRGN is a top-100 cryptocurrency project. Given its potential to transform small business adoption of blockchain technology, DRGN may be considered undervalued due to its limited exchange listings. The coin has yet to make its way onto the major exchanges but can still be found on platforms such as Kucoin, IDEX and EtherDelta.

Ark (ARK)

Those of us familiar with ICON know there is huge potential in connected networks. The Ark platform is a smaller-cap alternative that connects every single cryptocurrency through a “virtual spider web of endless use cases.”

Ark employs a Delegated Proof-of-Stake (DPoS) consensus protocol that promotes decentralization and universally accessible programming language in support of wider adoption. Ark falls within the broader category of platform coins, which means it is best served as a buy-and-hold strategy.

ARK token is currently ranked 62nd in terms of market cap with a price per coin of less than $3. Its primary markets include Binance, Bittrex and Upbit.

Vertcoin (VTC)

The next cryptocurrency on our list is ranked all the way down at 153rd in terms of market cap. Vertcoin captured our attention for its outstanding development team, transparency and ASIC-resistant standard (the latter makes VTC one of the most decentralized cryptocurrencies on the market). Proponents of decentralization will therefore find plenty of upside with this coin.

Interestingly, Vertcoin is also one of the oldest cryptos on the market. Founded in 2014 as an alternative to bitcoin and Litecoin, VTC aims to become the utility coin of the future. The project is on the forefront of Lightning Network development and was even mentioned in Litecoin’s whitepaper as a candidate for cross-chain atomic swaps.

At the time of writing, VTC token is valued at over $2. It has not been immune from the recent market downturn but its long-term prospectus is as solid as they come.

Power Ledger (POWR)

The POWR token is also ranked outside the top-100 in terms of market cap, putting it alongside some of the more obscure cryptocurrencies. However, the platform’s value proposition is as tangible as it gets.

Power Ledger is headed by Jemma Green, who recently became the major of Perth, Australia. The platform allows consumers to trade electricity with one another in exchange for real-time payments facilitated through the blockchain. The company calls itself the “peer-to-peer marketplace for renewable energy” because it allows consumers to select clean energy sources and receive more money for excess power using low-cost settlement technology.

PWR experienced explosive growth during the height of the bull market. Tokens are currently valued at around $0.40.

Deepbrain Chain (DPC)

Hacked reviewed Deepbrain Chain during the ICO stage back in December. Though the results were underwhelming at the time, much of the concern stemmed from KYC implementation issues and unusual token metrics.

Valued at less than $1 a coin, Deepbrain Chain can be considered a bargain for its role in using artificial intelligence (AI) to lower the cost of computing. Deepbrain Chain is operating in one of the fastest-growing markets (AI), which partly explains its undervalued status. As the company rightly explains in its whitepaper, 5,000 AI startups came into existence between 2012 and 2016, collectively raising over $22 billion. However, unlike those companies, DPC has already established a firm partnership with Neo and is widely considered one of the leading AI projects in the blockchain space.

Deepbrain Chain has a total value of $139 million, placing it in 113th spot by market cap.

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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4.5 stars on average, based on 410 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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Altcoins

Cryptocurrency Bull Brian Kelly Rallies Behind Bitcoin Cash

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Bitcoin vs. bitcoin cash

Cryptocurrency investor Brian Kelly believes bitcoin cash is an essential buy for digital currency holders in the wake of an important meeting of BCH miners over the weekend.

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Bitcoin Cash: A Must-Have

In a Monday interview with CNBC‘s “Fast Money,” Kelly cited the development of a new bitcoin cash development fund as the principle catalyst for the forthcoming rally.

Miners are “going to take some of the rewards they get from mining and put it in a fund to build stuff on top of bitcoin cash,” Kelly, who heads BKCM investment firm, said of the fund. “That’s how blockchains gain value.”

He added: “You’re going to be getting more use cases to the extent that usefulness translates into value. That could be a positive for bitcoin cash.”

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Bitcoin cash was among the worst performers last week following a hard fork upgrade that gave it 32MB blocks and smart contract capability. The upgrade was intended to bring new functionality to the blockchain but instead left a huge chunk of the BCH community behind. As of Friday, nearly one-in-five bitcoin cash nodes were running old software. In other words, they missed consensus.

The market’s reaction to the hard fork last week was relatively muted, which some say reflects general apathy toward bitcoin cash. Kelly’s bullish outlook shined the spotlight back on the digital currency, which continues to be one of the market’s best performers since early April in spite of its recent skid.

BCH/USD Price Levels

The value of bitcoin cash fell on Tuesday, mirroring a general decline in the cryptocurrency market. At press time, BCH was down 4% at $1,191.

Bitcoin cash has shed more than 16% over the past seven days, dragging its market cap all the way down to $26 billion. By comparison, bitcoin values have declined less than 5% over the same period.

Despite its recent skid, bitcoin cash is trading well above its April low of $608.23.

More than $617 million worth of BCH exchanged hands on Tuesday, according to data provider CoinMarkeCap. Overall trade volumes for all cryptocurrencies was roughly $16 billion.

OKEx was the largest market for BCH transactions, accounting for roughly 20% of daily turnover. LBank facilitated 12% of daily transactions and HitBTC 9%.

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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4.5 stars on average, based on 410 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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