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Week in Review

Week in Review: Carnage Engulfs Cryptocurrencies and Stocks; Bitcoin Mining Difficulty Plunges 24%

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From a risk-on perspective, the global financial markets took a beating this week. Digital assets like bitcoin, EOS and bitcoin cash plunged anew while equity prices slid back into the abyss following a strong end to November. Seasonal influences that normally accompany the holiday season have thus far eluded the market, leaving investors with a considerable loss. Market participants with exposure to cryptocurrencies, stocks and ETFs have likely seen their holdings wither away as a result of the bearish trends taking shape.

Crypto Crash Intensifies

The carnage that has engulfed the cryptocurrencies since mid-November intensified on Friday, as bitcoin and the leading altcoins plunged to new yearly lows. The combined value of all cryptoassets bottomed at $106 billion earlier this morning, according to CoinMarketCap. Over the past four weeks, the market cap has lost more than $100 billion.

Since last Friday, losses among the top-ten cryptocurrencies have ranged between 7% and a staggering 40%. Bitcoin cash occupied the latter, as prices fell below $100 for the first time in its history. Bitcoin SV and Tether’s USDT stablecoin were the only two cryptocurrencies to emerge from the weekly rout unscathed. This led bitcoin SV to briefly overtake bitcoin cash and Tether as the world’s fifth-largest blockchain.

Bitcoin Mining Difficulty Falls

Bitcoin on Friday fell below $3,400 for the first time since September 2017, with price action and trading volume signaling that a bigger pullback toward $3,000 is likely. At this rate, mining bitcoin is a money-bleeding endeavor that offers little return on investment. Bitcoin’s mining difficulty peaked in mid-October but has since fallen by a whopping 24%, according to Blockchain.com. The following chart highlights how drastically mining difficulty has fallen in recent months.

The price collapse since mid-November has reportedly caused hundreds of thousands of bitcoin miners to halt operations temporarily. As Hacked previously reported, most mining operations depend on a bitcoin price of around $6,000-$7,000 just to break even.

The month-long crash began on the eve of the bitcoin cash hard fork, accelerated during the ABC/SV hash war and then somewhat stabilized following the official chain split. The selloff re-emerged on Friday as short-sellers continued to strangle the market.

U.S.-China Tensions Rattle Stocks

U.S. stocks on Tuesday experienced one of their worst drops of the year, as trade tensions between the United States and China resurfaced. The major indexes were on track for another brutal decline on Thursday after it came to light that a senior Chinese executive of Huawei Technologies Co was arrested in Canada following a lengthy investigation by U.S. authorities.

Meng Wanzhou, the chief financial officer of the China-based tech giant, was apprehended in Vancouver Dec. 1. According to various news outlets, she risks extradition to the United States amid allegations of money laundering and sanctions violations.

The Dow Jones Industrial Average fell 800 points on Tuesday. It was on track for a more than 500-point drop on Thursday before paring losses in the final hour of trading. U.S. stock markets were closed on Wednesday to mourn the death of former President George H.W. Bush.

OPEC and Russia Come to Terms

On Friday, the Organization of Petroleum Exporting Countries (OPEC) secured an agreement with Russia to slash crude production by 1.2 million barrels per day. According to Bloomberg, the 15-member cartel will shoulder 800,000 barrels of the burden and its partners will be responsible for the remaining balance.

The cuts follow marathon negotiations between OPEC, Russia and their allies on how to best distribute the cuts following two months of bear-market conditions. Oil prices are down more than a third since early October.

U.S. President Donald Trump has criticized OPEC’s production policies and has called on Saudi Arabia and its allies to refrain from manipulating prices. The United States could be well on its way to becoming a stable net exporter of crude by the end of the president’s first term. As Hacked recently reported, the world’s largest economy became a net exporter last week for the first time in 75 years.

The Week Ahead

It’s difficult to imagine a scenario where bitcoin and cryptocurrencies stage a meaningful recovery this month. The digital asset class is expected to remain under pressure for the foreseeable future as short-sellers continue to dominate market flows. That being said, investors can expect an upward consolidation over the next seven days before profit-taking knocks prices back a couple of notches.

Against this backdrop, it’s important to remember that the fundamental picture on bitcoin has not changed as drastically as the price suggests. If anything, market developments have been overwhelmingly positive now that derivatives and custody solutions have taken center stage. 2019 is shaping up to be a big year for bitcoin; new futures products, regulated exchanges and the push for the first U.S.-based ETF product will likely shape the outlook moving forward.

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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4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Week in Review

Jamie Dimon Gets Crypto Fever as JPMorgan Develops Stablecoin; Bitcoin Fundamental Improve

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JPMorgan Chase & Co, America’s largest bank by a significant margin, shocked the crypto landscape this week by unveiling a new stablecoin project designed to enhance its $6 trillion payment market. For CEO Jamie Dimon, the launch of ‘JPM Coin’ is a significant departure from the anti-crypto tirades of 2017-18. While JPM Coin may not be a cryptocurrency by the traditional sense of the term, its creation comes on the heels of a blockchain revolution that started ten years ago with the launch of bitcoin – the same asset Dimon derided as a “fraud.”

Introducing JPM Coin

On Thursday, JPMorgan Chase unveiled a new stablecoin geared toward enhancing its multi-trillion-dollar payments business. JPM Coin will help clients reduce the cost, risk and processing time associated with cross-border payments. In doing so, it takes a playbook out of Ripple Labs, whose institutional clients are leveraging XRP technology to streamline global payment networks.

As a stablecoin, JPM Coin has a fixed value pegged to the U.S. dollar. The bank said it will support other major currencies in the future. No further details were provided.

In an official press release, the bank said: “We have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated.”

More on this story: Morgan Chase’s JPM Coin: A Banker’s Intranet, or the First Major Attack on Bitcoin?

Bitcoin Volatility Drops, Transactions Rise

Although bitcoin’s price failed to attract bids this week, the network’s underlying fundamentals continued to improve. As Hacked reported on Thursday, bitcoin’s January transactions reached their highest level in a year and were nearing levels not seen since the bull market in 2017. At the same time, median fees plunged to their lowest levels since 2015.

The data were presented in a weekly cryptocurrency publication by Diar.

On the price front, bitcoin continued to find support near $3,600. Trade volumes remained elevated throughout the week, only falling below $6 billion on Friday. Average volatility over the past 30 days has fallen to the lowest level in three months, according to data from bitvol.info. Volatility has been in firm retreat since mid-December, right around the time bitcoin established new lows near $3,100.

After surging by $10 billion last Friday, the total cryptocurrency market was little changed this week. At last check, the combined market capitalization was $120.5 billion.

Trump to Declare National Emergency

U.S. President Donald Trump is expected to approve a new budget deal on Friday that avoids a second government shutdown, but will only do so after declaring a national emergency over border funding. By declaring a national emergency, the president can divert funds from the Department of Defence toward the construction of a new border-security fence along the U.S.-Mexico border.

Republicans and Democrats in Congress reached a tentative budget deal late Monday that included $1.38 billion in additional funding for border security. That’s only enough to fund an additional 55 miles of border protection and does not include appropriations for the steel barrier the president proposed. Trump wants $5.7 billion for a steel barrier that extends for 234 miles.

Senate Majority Leader Mitch McConnell, who broke the news on Thursday, said he supports the declaration. However, the plan has been met with criticism from both parties, with Democrats vowing to challenge any efforts to move money without congressional approval.

The Week Ahead

Crypto winter is in a deep freeze at the moment. The landscape has grown colder in recent months as traders continue to discount major fundamental developments centered on adoption and institutional investment. This is further evidenced by the lack of response to JPM Coin, whose creation may usher a new era of legitimacy for crypto projects – at least, in the eyes of traditional finance.

While things are pretty much status quo in crypto and, traditional markets will be forced to contend with the fallout from President Trump’s national emergency as well as ongoing trade negotiations between the U.S. and China. These factors could present new risks for Wall Street’s bullish revival since Boxing Day.

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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4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Week in Review

Weekly Recap: Crypto Markets Get a Shake-Up as Litecoin Ascends; Bitcoin ETF Has Another Backer at the SEC

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Cryptocurrencies were on the path to recovery Friday, as Litecoin’s sudden ascendancy propelled markets higher. This had a domino effect on the top 10 coins, whose rankings shifted following Litecoin’s explosive move north. The market’s performance on Friday helped offset a lackluster start to the week that saw coin values plunge to new yearly lows.

Proponents of the VanEck SolidX Bitcoin Trust reignited the debate over crypto ETFs last week after they resubmitted their application with the U.S. Securities and Exchange Commission (SEC). According to an unpublished interview with the Commission’s lone Democrat, it’s only a matter of time before the regulator approves its first bitcoin exchange-traded fund.

Litecoin Surge

Litecoin caused quite the stir on Friday after prices surged 16% in a matter of hours. This allowed LTC to scale three spots in the crypto rankings, overtaking bitcoin cash, EOS and Tether for fourth spot by market capitalization. At the time of writing, Litecoin is nurturing gains of 13% to trade at $37.74, the highest in nearly a month.

While there was no immediate catalyst for the sudden surge, the market appears to be benefiting from news that the Litecoin Foundation is looking to implement new privacy features through the MimbleWimble protocol. This was confirmed by Charlie Lee, Litecoin’s founder.

Market participants also pointed to an upcoming Litecoin halving event as a potential early catalyst for the rally. If that’s the case, investors can expect interest in LTC to gather pace for months to come. The next halving event is projected to occur around Aug. 5, 2019.

Binance Coin: Biggest Weekly Gainer

Binance Coin (BNB) entered the top-ten crypto index for the first time this week, as traders rallied behind a bevy of fundamental news surrounding the exchange.

BNB has been riding a wave of momentum tied to Binance Launchpad, a new platform for token sales. On Jan. 28, BitTorrent Token (BTT) became the first cryptocurrency to be sold on the platform. In the BNB session, all 23.76 billion BTT were sold to participants in less than 14 minutes. The Tron session sold all of its 35.64 billion BTT in less than 15 minutes.

More on the BTT sale: 100% Completed: The BitTorrent ICO is a 15-Minute Sellout.

The market cap for BNB has surpassed $1.1 billion following a 23% weekly surge. The cryptocurrency has gained 31% since the start of 2019.

Bitcoin ETF: Only a Matter of Time

It’s only a matter of time before the U.S. Securities and Exchange Commission approves the first bitcoin ETF, according to Robert J. Jackson, Jr., the agency’s lone Democratic Commissioner. In a soon to be released interview with Congressional Quarterly, Jackson said it probably won’t be long before someone satisfies the SEC’s standards for a crypto-backed fund.

“Eventually, do I think someone will satisfy the standards that we’ve laid out there? I hope so, yes, and I think so,” he said, according to Drew Hinkes, an Adjunct Professor at New York University.

Jackson added: “Getting the stamp of approval from the deepest and most liquid capital markets in the world is hard, and it should be. Once we make it available to everyday mom and pop investors, we are taking risks that Americans can get hurt.”

The Commissioner didn’t elaborate on when a bitcoin ETF could be approved or whether the recently re-submitted VanEck-SolidX application could satisfy the SEC’s criteria. However, Jackson did dispute the SEC’s decision to turn down the Winklevoss application last year. More on this story: Crypto Markets See Modest Gains as SEC Commissioner Hints at Bitcoin ETF Approval.

The Week Ahead

The crypto rally on Friday has done little to alleviate concerns that a more protracted bear market is looming. That’s because bitcoin is coming dangerously close to its December 2018 low, having given back a majority of its post-crisis recovery. Where bitcoin goes, the broader market will follow. This remains true with very few exceptions.

This alone doesn’t preclude the possibility of range-bound trading continuing next week. However, prolonged periods of lateral moves have been detrimental for bitcoin, as they are almost always followed by deeper moves south (at least, this has been the case during the last half of the bear market). For now, day trading should be relegated to those willing to assume significant risk. The value proposition for long-term holders remains intact.

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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4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Week in Review

Weekly Recap: Crypto Winter Continues as NEM Foundation Crumbles, Bitcoin Falls 7.6% in January

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Crypto winter shows no signs of abating anytime soon. In the past week, bitcoin rounded out its sixth consecutive month in the red while the NEM Foundation suspended all projects and partnerships due to the sinking XEM price.

The news wasn’t all bad, however. XRP received a major boost on Wednesday after Swift, the international payments network, announced it had partnered with a crypto startup to test new GPI payments. This was a significant development for the so-called ‘banker’s cryptocurrency,’ which seeks to disrupt the Swift network’s grip on $200 billion in daily transactions.

Bitcoin Continues to Sink

The end of January marked bitcoin’s sixth consecutive month in the red, highlighting the severity of the bear market. Over that stretch, the leading digital currency has tumbled 55%. Bitcoin fell another 7.6% in January, with the bulk of the declines concentrated in the early part of this week.

On Monday, bitcoin fell by as much as 4% to reach fresh six-week lows. The pullback dragged BTC below a vital long-term support that will likely pave the way for further downward pressure in the near term. Read: Bitcoin Risks Bigger Pullback as Prices Fall to Six-Week Low.

The sudden selloff weighed heavily on the broader cryptocurrency market. The combined value of all cryptocurrencies reached a low of $111 billion. Bitcoin cash, Ethereum, Stellar and bitcoin SV were among the hardest hit.

CBOE Resubmits Bitcoin ETF Application

The Chicago Board Options Exchange (CBOE) has resubmitted a joint application with VanEck and SolidX to list a bitcoin exchange-traded fund (ETF), reigniting a long-standing debate over crypto securitization and its impact on the market. The submittal was confirmed on Thursday by Gabor Gurbacs, VanEck’s chief digital asset strategist.

Just a week earlier, Gurbacs and his partners said they had pulled their application for the VanEck-SolidX Bitcoin Trust. At the time, the proponents felt their application risked immediate dismissal due to the prolonged government shutdown. By re-starting the process from scratch, VanEck and its partners are buying themselves a lot more time to convince the U.S. Securities and Exchange Commission (SEC) to approve their fund.

NEM Foundation Crumbles

The NEM Foundation announced earlier this week that it was edging closer to bankruptcy in the wake of a devastating bear market that first began in early 2018. Despite organizational restructuring and a prior agreement to cut spending by 60%, the nonprofit foundation said it wouldn’t’ survive more than a month without support from the NEM community.

The foundation has appealed to its community for 160 million XEM tokens to help cover operational expenses. At current values, that’s equivalent to $6.57 million. The NEM community will vote on the matter later this month. Layoffs are expected to be announced later this month unless the full funding request is approved, according to Alex Tinsman, the foundation’s newly-appointed president.

Read more: Crypto Winter’s First Victim; NEM Foundation Crumbles as XEM Coin Price Sinks.

XEM is currently valued at $0.0411 for a total market cap of $370.6 million. It ranks 18th among active cryptocurrency projects.

Wall Street Receives an Earnings Boost

U.S. stocks extended their relief rally this week, with the S&P 500 Index clinching its best January returns since 1987. The large-cap index rallied almost 8% during the month, extending its post-Christmas recovery to almost 15%.

Positive earnings surprises from Facebook Inc. (FB), Apple Inc. (FB) and others have underscored the month-long recovery. As of Jan. 25, the fourth-quarter earnings growth rate for S&P 500 companies was 10.9%, according to FactSet. More than two-thirds of companies have reported positive earnings surprises and more than half said their revenues were higher than expected.

The Week Ahead

With a bitcoin ETF application back on the table, the debate over crypto securitization will likely intensify in the coming weeks and months. However, this debate could be put to rest again if Democrats and Republicans don’t agree to a permanent funding solution. The stopgap spending bill announced last Friday covers the affected government agencies for up to three weeks. President Trump has warned that he will declare a national emergency if Democrats don’t approve his proposed border-security funding.

The fallout from the NEM Foundation’s monumental restructuring will also be on investors’ radar next week. As large-cap coins continue to crumble, the long-term sustainability of the market as a whole will come into question. As we’ve speculated before, the long-awaited altcoin extinction event is growing nearer the longer the bear market persists.

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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2 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 5 (2 votes, average: 5.00 out of 5)
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4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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