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Week in Review

Week in Review: Cryptocurrency Freefall Erases $40 Billion in Market Cap

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Cryptocurrencies headed for their third consecutive down week Friday, with some major coins shedding 10% or more. Bitcoin and the major altcoins fell to their lowest levels in about six weeks as institutional traders awaited regulatory clarification before entering the market.

Geopolitics and strained trade relations between China and the U.S. triggered a flight to safe havens, with gold prices reaching their highest level in ten days. Stocks finished slightly higher after Federal Reserve meeting minutes showed no urgency on the part of policymakers to hasten the pace of interest rate hikes.

Crypto: The Great Unwind Continues

Cryptocurrency prices collapsed this week, with the total market cap bottoming near $326 billion as bitcoin threatened a bearish reversal and altcoins suffered a brisk selloff. By Friday, the market had recovered near $330 billion, having declined more than $55 billion from its recent peak.

Bitcoin bottomed below $7,300, with bounces limited to the mid-$7,500 range. The world’s largest cryptocurrency saw its share of the total market rise above 38% as other coins fell.

Compared with seven days ago, BTC prices are down more than 7%, according to data provider CoinMarketCap.

Cardano was the biggest decliner in the top ten, falling more than 15% week-on-week. Bitcoin cash plunged more than 12% and Ethereum shed 11.5%.

Crypto Bulls Maintain Their Optimism

Bitcoin bull Tom Lee described the recent slide in prices as “typical market volatility” as he held firm to his long-term price forecast. Fundstrat’s head of research still believes bitcoin will reach $25,000 this year as institutional interest heats up and mining remains profitable.

Lee also reminded investors that the vast majority of bitcoin’s yearly gains are concentrated over a ten-day period. Without those days, bitcoin is down about 25% each year.

“So as miserable as it feels holding bitcoin at $8,000, the move from $8,000 to $25,000 will happen in a handful of days,” Lee told CNBC earlier this week.

John McAfee has bet on bitcoin reaching $15,000 by the end of next month, a virtual doubling of today’s prices. The technologist has also predicted huge gains for bitcoin cash and EOS.

Geopolitics Drive Markets

Geopolitical tensions weighed on investors this week after U.S. President Donald Trump cancelled a planned summit with North Korean leader Kim Jong-un.

The mood improved on Friday as Pyongyang expressed its willingness to still go ahead with the meeting, which was scheduled for June 12 in Singapore.

“Very good news to receive the warm and productive statement from North Korea,” Trump tweeted Friday. “We will soon see where it will lead, hopefully to long and enduring prosperity and peace. Only time (and talent) will tell!”

Stocks resumed their slide on Friday as gold prices held near ten-day highs. Meanwhile, oil prices plunged after Russia said it was content with $60 a barrel oil.

“We’re not interested in an endless rise in the price of energy and oil,” Putin told said at the International Economic Forum in St. Petersburg, adding that Russia and OPEC do not plan to extend output cuts. “If you asked me what is a fair price, I would say we’re perfectly happy with $60 a barrel.”

The Week Ahead

After a thunderous rally in April, the month of May is shaping up to be a dud for crypto traders. It remains to be seen whether the downtrend will continue heading into June or whether a bounce back is in order. There are no major events scheduled in the cryptocurrency market next week, although developments concerning regulation and institutional adoption will continue to sway investors.

In terms of economic data, revised U.S. nonfarm payrolls and revised GDP figures will be in the spotlight next week. The Commerce Department will also issue the latest reading of core personal consumption expenditures, the Federal Reserve’s preferred measure of inflation.

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 612 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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Week in Review

Week in Review: XRP’s 115% Power Surge Leads Cryptocurrency Market Higher

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XRP was the standout performer in the cryptocurrency world this week. The so-called banker’s cryptocurrency rebounded more than 115% after a Ripple Labs executive teased an upcoming product release that could streamline XRP adoption.

The broader cryptocurrency market followed XRP higher after the U.S. Securities and Exchange Commission (SEC) announced it would delay a ruling on a keenly awaited bitcoin exchange-traded fund (ETF).

In traditional markets, U.S. stocks resumed their record-setting gains as pro-growth optimism outweighed lingering fears of an all-out trade war with China.

XRP Leads Crypto Uptrend

XRP is coming off its best week since the bull market as investors rallied behind the anticipated launch of the first xRapid product.   Ripple’s Sagar Sarbhai told CNBC this week he’s “confident” that a new cryptocurrency product will be released “in the next month or so.”

The value of XRP rocketed 115% between Tuesday and Friday, reaching its highest level in three-and-a-half months. The broader cryptocurrency market gained $25 billion on Friday to reach $224.3 billion, the highest in over two weeks. Altcoins and tokens led the end-of-week surge, dragging bitcoin’s dominance rate all the way back down to 51.8%.

XRP does risk a pullback at some point in the foreseeable future as markets contend with overbought levels. Traders also routinely “buy the rumor and sell the fact,” which explains price declines that occur after an anticipated positive event has occurred.

SEC Weighs Bitcoin ETF Decision

Washington’s securities regulator has announced it will seek further comments on a highly touted bitcoin ETF, a sign that officials were still grappling with a proposed rule change that would make it easier for issuers to securitize cryptoassets. The ETF in question – the VanEck SolidX Bitcoin Trust – was initially filed on June 6.

In a notice published on Thursday, the SEC outlined 18 key issues that require more input from the public. In particular, regulators are weighing the assertion that physically-backed bitcoin is less susceptible to manipulation than other commodities available in exchange-traded products.

From the notice:

“The Commission is instituting proceedings to allow for additional analysis of the proposed rule change’s consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,’ and ‘to protect investors and the public interest’.”

U.S. Stocks at Record Highs

The Dow Jones Industrial Average and S&P 500 Index notched record highs this week, as investors shrugged off an escalating trade war between China and the United States. Gains were largely driven by a rebound in technology shares as well as optimism that the U.S. economy is on solid footing.

Labor market data confirmed that outlook on Thursday as initial jobless claims fell to nearly five-decade lows. Last week, the Department of Labor reported a stronger than expected jump in hourly wages, a sign that plentiful jobs and declining unemployment was leading to higher pay.

The U.S. economy is coming off its best quarter of growth since 2014. Unlike 2014, the Q2 upsurge didn’t follow a ‘polar vortex,’ which had temporarily disrupted economic activity four years ago. According to the Atlanta Federal Reserve, the economy is forecast to grow at an even faster rate in the third quarter. Current estimates peg Q3 growth at 4.4% year-over-year.

The Week Ahead

Is this the end of the dreaded crypto market downtrend? It’s too early to be sure but the latest rebound in XRP and bitcoin suggests that the bears have relinquished their grip on the market, at least in the short term. Stepping back, however, bitcoin remains in a protracted bear market that could continue for the foreseeable future. For investors, this means lateral moves and tighter trading ranges are to be expected.

Monetary policy is back on the agenda next week as the Federal Reserve meets in Washington. The Federal Open Market Committee (FOMC) is widely expected to raise interest rates on Wednesday and may signal for one additional hike this year. The FOMC policy statement will be accompanied by quarterly projections for GDP, unemployment and inflation, as well as the ‘dot-plot’ summary of interest rate expectations.

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 612 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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Week in Review

Week in Review: Ethereum Returns from the Abyss

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The cryptocurrency Ethereum took a steep dive this week, culminating in a fresh 16-month low on Wednesday. Concerns over scalability, ICO cash-outs and future growth of the sector all fueled the declines. The selloff, which mirrored a wider slump in the cryptocurrency market, was eventually picked up by bargain hunters, triggering a 22% rebound in ether’s price over two days.

Bitcoin’s trajectory has been much more predictable relative to its peers. The leading digital currency by market capitalization has virtually broken even for the week, with the technical charts showing the potential for bigger upside in the near future.

Ethereum Crashes

It has been a rollercoaster week for Ethereum. On Wednesday, the developer’s cryptocurrency dived below $170 for the first time since May 2017 amid signs that initial coin offerings are offloading their raised funds. Ether-based tokens spent 157,700 ETH over a seven-day stretch in what was the biggest selloff since March. Presumably, startups are cashing out their ether for fiat money after a large-scale transfer to digital currency exchanges during the month of August.

Ether’s price experienced a sharp reversal on Thursday as traders swept up oversold tokens at a discount rate. The cryptocurrency would soon return above $200, eventually hitting a high of $223. The rebound helped ether pare its weekly decline to just under 6%.

ERC-20 tokens also recovered significant losses but double-digit declines weren’t uncommon. Vechain, ICON, Zilliqa and several others reported weekly declines of at least 10%.

Bitcoin Holds Steady

With altcoins and tokens in meltdown mode, bitcoin charted an entirely different path this week, as prices returned tot heir stable and predictable trading range. BTC is virtually unchanged compared with seven days ago, with prices returning to the $6,500 range. By Friday, bitcoin’s trade volume had returned above $4 billion on global exchanges, a sign that capital was flowing back into the market.

Bitcoin’s dominance rate swelled to 58.1% during the height of the Ethereum/token crash, according to CoinMarketCap. That was the highest since December. By Friday, bitcoin’s share of the overall market was roughly 56%.

Bitcoin’s technical indicators suggest that a short-term uptrend is likely. Prices have moved above the 50-period moving average and are fast approaching the longer-term average.

ICOs are Securities, Says Federal Judge

A U.S. federal judge has ruled that ICOs may be treated as securities following a criminal case involving a former cryptocurrency promoter. The decision, which was handed down Tuesday by U.S. District Judge Raymond Dearie, affirms the SEC’s position that it has authority over token offerings.

The ruling was delivered against Maksim Zaslavskiy, a fraudulent ICO promoter accused of raising money for assets that never existed. The Brooklyn-based businessman was charged with conspiracy and two counts of securities fraud related to ICOs purportedly backed by investments in diamonds and real estate.

“Per the indictment, no diamonds or real estate, or any coins, tokens, or currency of any imaginable sort, ever existed — despite promises made to investors to the contrary,” Dearie said. “Simply labeling an investment opportunity as a ‘virtual currency’ or ‘cryptocurrency’ does not transform an investment contract – a security – into a currency.”

The Week Ahead

The cryptocurrency market appears to have reached rock bottom, though it’s unwise to rule out further declines in the near future. Ethereum’s protracted selloff has raised red flags about the future of ICOs and whether the long-awaited token mass extinction event is nearing.

Bitcoin, on the other hand, is charting an entirely different path as prices appear to have formed a solid bottom near $6,000. This is an encouraging sign for the bulls and the broader mining industry.

For traditional markets, monetary policy and trade negotiations top the agenda next week. The Federal Reserve on Wednesday is expected to raise interest rates for the third time this year. Meanwhile, China and the United States will likely provide greater clarity on upcoming trade negotiations after Beijing accepted the Trump administration’s offer to resume talks.

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 612 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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Week in Review

Week in Review: From Economic Abstraction to Fake News, Cryptocurrencies Plunge $35 Billion

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The cryptocurrency market declined suddenly and sharply on Wednesday, with Ethereum and its ERC-20 contingency leading the decline after a prominent crypto investor cast serious doubts about the protocol’s future. Meanwhile, bitcoin plunged by as much as 14% from its recent high after Business Insider reported that Goldman Sachs is abandoning its plans to open a cryptocurrency trading desk. This is nothing but fake news, according to a top Goldman executive.

Bitcoin Falls $1,000

After reaching its highest level in a month, bitcoin suffered a fresh selloff in the latter half of the week as negative headlines and profit-taking spurred a mass exodus from the cryptocurrency market. The bitcoin price bottomed near $6,300 on Thursday after reaching a high above $7,400 earlier in the week.

Prior to the latest skid, bitcoin had exhibited newfound stability defined by narrower trading ranges and incrementally higher prices.

The selloff wiped $16 billion off bitcoin’s market cap, bringing its total value to around $111 billion. However, BTC now accounts for 54.7% of the cryptocurrency market’s total value. Bitcoin’s dominance rate peaked at 55.3% on Wednesday, according to CoinMarketCap.

Goldman Sachs Responds to “Fake News”

Bitcoin’s sudden reversal this week was accompanied by a report from Business Insider suggesting that Goldman Sachs has decided to ditch its forthcoming crypto trading business. Cryptocurrencies shed a combined $35 billion in market capitalization within 24 hours of the report being released.

Shortly after the report went viral, a Goldman Sachs executive sought to clear the air about the bank’s bitcoin ambitions.

“I never thought I would hear myself use this term but I really have to describe that news as fake news,” Goldman Sachs Chief Financial Officer Martin Chavez said on stage at the TechCrunch Disrupt Conference, as quoted by CNBC.

“The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they’re settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges,” Chavez said.

Economic Abstraction

Ethereum was this week’s biggest loser as prices fell 20% to new yearly lows. Ether’s collapse was accompanied by a rapid selloff of ERC-20 tokens, which mirrored last month’s cash-out.

Ethereum is the center of a growing debate over economic abstraction, a term used by some members of the community to describe gas payments in a non-ETH asset. Simply put, economic abstraction is basically paying smart contract fees through an ERC-token rather than Ethereum. According to cryptocurrency entrepreneur Jeremy Rubin, abstraction will eventually render Ethereum obsolete and drive its price down to zero.

According to Vitalik Buterin, Rubin’s claim is partially correct if one assumes that economic abstraction is going to happen. However, developers are currently tendering two proposals – modified fee market and storage maintenance fees – that would make ether-based gas fees mandatory. This means block proposers will need to “cough up” ETH regardless of what happens at the user level.

The Week Ahead

As the events of the past week demonstrated, crypto prices can rise and fall on the turn of a speculative dime. The latest selloff has pushed major assets into oversold territory, making a short-term recovery likely. However, with the long-term bull market negated, cryptocurrencies will struggle to regain their footing as debates over regulation and ETFs continue.

Emerging markets will remain in the spotlight next week as Turkey and Argentina battle a brewing currency crisis and South Africa contends with a new economic recession. These factors will likely keep emerging-market stocks under pressure for the foreseeable future.

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 612 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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