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Should Crypto Investors Fear after Yesterday’s Selloff

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If there was one thing common between Crypto markets and stock markets, then that was a sell-off. Crypto investors lost $13 billion in the latest selloff.

If there was one thing common between Crypto markets and stock markets, then that was a sell-off. Crypto investors lost $13 billion in the latest selloff.

The cryptocurrency market has plunged in Asian markets on Thursday led by the most valuable digital coin, bitcoin. Significantly, all the top ten virtual assets are trading in the red with considerable losses. As a result, the overall market has shed a valuation of approximately $13 billion in a span of a few hours. Interestingly, this came on the back of a sharp plunge in stock markets after an overnight drop in stock values in Wall Street.

 

Negative Factors

The question which is lingering in everyone’s mind is whether there is a correlation between Cryptocurrency markets and stock markets?

Well, the answer to that is a big “No.”

 

However, the most common problem plaguing both markets is lack of liquidity. The fact that Bitcoin price dropped down below $6,300 level price whereas the second-placed Ethereum witnessed 10.8 percent fall to about $200. As far as the third-placed XRP is concerned, the virtual asset price plunged 24 percent. In the same way, prices of bitcoin cash dropped 14.38 percent whereas EOS fell 6 percent. Following this, the overall cryptocurrency market has seen its value erosion of close to $13 billion.

The key point here is that the drop in digital coins comes at a time when financial authorities have issued a fresh warning. They were more concerned about the increasing growth and the potential threats it could pose to the general economy. Only recently, the International Monetary Fund viewed, “Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system.”

 

No Positive Catalysts

The cryptocurrency market dropping like this is not new in the current year though it was opposite to the trend seen in the previous years. The year 2017 witnessed a whopping and unimaginable gain from digital currency market and reached the peak towards the Christmas season in December. However, the current year is witnessing more sell-off since regulators have entered the space in full swing to put it straight. Also, there were no positive catalysts to reverse the trend, and there have been only unfavorable factors or events that are only hurting the market. At the same time, the regulators are cautious and do not want to curb innovation.

The entry of regulators has raised the hope that they will come out with measures to professionalize the sector and encourage virtual assets-linked exchange-traded funds (ETFs). However, that did not happen and on the contrary, the United States SEC has rejected ETFs based on cryptocurrencies. They did not spare the popular Winklevoss brothers supported ETFs too. Aside from these, the current year has seen some of the high-profile cyber attacks on cryptocurrency exchanges, and they have to bear the brunt of it. Similarly, fraudsters have tried to take advantage of the emerging asset class and tried to raise money through initial coin offerings (ICOs). These events or factors have continuously posed threats to the stability of digital coin prices.

#Bitcoin Price Analysis

BTC Daily Trading Signals: 24 October

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Dominant bias for Bitcoin (BTC)- Ranging

Resistance Levels- $6800, $6900, $7000

Support Levels- $6000, $5900. $5800

 

BTC continues in a range-bound market. The strong bearish pressure within ensures BTC made a new low of $6524.3 on 23rd October as against the low of $6535 on 22nd October at the support area. Exhaustion sets in as the candle close with a wick. The bulls gradually stage a return within the range with the bullish railroad formation at $6540.2. BTC was up at $6580 in the resistance area before the session ended. Temporary rejection against further upward price movement occurred at the 50-EMA.

 

BTC 4-hour chart

BTC 4-hour chart

 

Price is hovering around the two EMAS but the stochastic oscillator is at 26% and its signal points up which implies upward price movement within the range may occur.

BTC is in consolidation and trading between $6800 in the upper resistance area and at $6300 in the lower support area of the range. Traders are advised to be patient at this critical period for a breakout at the upper resistance area or a breakdown at the lower support area before taking a position.

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#Bitcoin Price Analysis

BTC Daily Trading Signals: 23 October

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BTC was down to $6538 in the support area while the bulls show sign of gradual return within the range as bullish candles were been formed.

Dominant bias for Bitcoin (BTC)–Ranging

Resistance Levels- $6800, $6900, $7000

Support Levels- $6000, $5900. $5800

 

BTC continues in a range-bound market. The strong bearish pressure within the range was lost on 20th October after the formation of a bullish spinning top at $6524. The bulls manage a push of BTCUSD to $6660 in the resistance area before exhaustion sets in as the candle closes with a wick on  21st October. The bears’ takeover s further confirmed by the bearish railroad form at $6642 same day.

 

BTC 4-hourchart

BTC 4-hour chart

 

BTCUSD was down to $6538 in the support area on 22nd October while the bulls show sign of gradual return within the range as bullish candles were been formed.

The stochastic oscillator is in the oversold region at 23% but its signal points up which implies upward price movement within the range may occur.

BTCUSD is in consolidation and trading between $6800 in the upper resistance area and at $6300 in the lower support area of the range. A breakout at the upper area will be good for a long while a breakdown at the lower area suggests shorting the cryptocurrency, but it will be a good strategy to wait for either to occur before taking a position.

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#Bitcoin

Can Cryptocurrencies be the solution for the 2020 predicted US Recession?

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JPMorgan Chase has predicted a 60 percent chance for the next US recession to happen by 2020. Can crypto be a viable solution to existing stores of value?

JPMorgan Chase has predicted a 60 percent chance for the next US recession to happen by 2020. In a global market crash, can crypto be a viable solution to existing stores of value?

“The probability of a U.S. recession inside one year is right around 28 percent, and rises to more than 60 percent over the next two years, researchers wrote in a note this week. Over the next three years, the odds are higher than 80 percent, as indicated by the note,” Bloomberg reported.

 

Why Do Experts predict a Recession?

As indicated by the Federal Reserve Bank of New York, there exists a mere 14.5 percent chance of a recession happening before the end of 2019.

Stephen Stanley, the chief economist at Amherst Pierpont, suggested that 2020 could be considered as a premature period for the next US recession to happen yet he echoed a comparative sentiment to JPMorgan in that while the US economy remains solid with low unemployment rate and a bull market, the danger of a recession in the years to come exists.

Generally, the larger part of economists in the US forecast a recession to happen in the next a few years. David Altig, Federal Reserve Bank of Atlanta research director and NABE’s survey chair, disclosed that 66% of business economists in the US expect the market to crash before the end of 2020, for the most part, due to trade issues.

“Trade issues are clearly influencing panelists’ views,” Altig stated, expressing that trade issues and high-interest rates imposed by the Fed leave US markets vulnerable to a mid-term crash.

 

Is Crypto the solution?

Amid a period in which numerous economists forecast a market crash and a noteworthy recession in the next two years, the demand for crypto has increased quickly.

While not portrayed by the prices of significant cryptocurrencies, financial institutions, for example, Fidelity, Goldman Sachs, and Citigroup have established the infrastructure to target institutional investors intending to invest in the advanced asset market.

Banks and investment firms have prevented from establishing businesses in the cryptocurrency sector due to the absence of regulatory certainty in the market. Experts have stated that the suddenly emerging trend of major financial institutions entering the crypto market suggests the demand for crypto from investors in the traditional finance sector has increased quickly in the previous several months.

As Jim Hamel, portfolio manager at Craftsman Global Opportunities Fund explained, the computerized payments industry has experienced exponential development in recent years, which could normally lead investors to cryptocurrencies.

“There are a number of tailwinds adding to this trend. In the first place, we’re seeing fast development in e-commerce, which requires that customers be able to make secure advanced payments. The development in cross-border transactions and the general effect of an increasingly globalized marketplace are helping accelerate this trend.”

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