Various pundits have weighed in on Bitcoin and cryptocurrency being variously a "pyramid", a "ponzi," a "fraud," etc. and I have previously felt like those commentators just didn't understand this new technology. I still think that blockchain and cryptocurrencies could be invaluable, but at this moment, we're on the verge of what could be a serious problem due to the fundamental risk of a market that could be wildly overvalued while the "charts" and "TA" suggest a technical level for a reversal. If nothing bad happens then perhaps this will happen. If the other shoe falls with Bitfinex and Tethers then the ground will open up and swallow us all.
We know from well documented analysis, that Bitcoin prices were heavily manipulated in 2013 and this is discussed in this paper:
as well as here (by the same authors) in less formal terms:
and a more TL; dr version here:
And we know now in 2017 that Bitcoin prices have been heavily manipulated in China and all across exchanges globally. The systemic risks apparently were bad enough in China that they shut down all exchanges. The data on this isn't so great, but we do know that China inspected exchanges for price manipulation prior to shutting them all down.
This piece summarizes the China problem:
which boils down to this: Chinese exchanges are using wash trades and algo bots to pump up and price to attract more users/traders.
And this Redditor cites here one Chinese exchange owner calling out two others as inflating through wash trades:
Naturally, this widespread scheme led to the banning of cryptocurrency in China. Should we see more revelations of such practices the regulatory risk will be extreme. But that's really only the tip of the iceberg.
The problem now is Bitfinex and the degree to which they may have inflated market prices for Bitcoin and due to extreme correlation in the crypto market, everything else including ICOs which were already extremely inflated from speculation.
The problem now is Bitfinex and to what degree they may have inflated market prices. And due to the extreme correlation in the crypto market with Bitcoin, to what extent will all of those cryptoassets be affected by a potential negative sentiment/regulatory risk trigger?
Bitfinex loses funds and creates a ponzi scheme
Bitfinex we know lost $72 M in customer funds in a hack and resorted to seizing 36% of their users balances to continue operating. Then they promised to pay back those funds by creating a token for repayment which they then had their users sell to investors for equity. So essentially new investors in Bitfinex bailed out the old ones when they did not have the funds to repay the old ones (i.e. their customers). This is the exact definition of a ponzi scheme.
In order for Bitfinex to make up the $72 M that they did not have for investors to begin with, they would need to regain trust in their users and the platform by making money which means attracting as much trading activity as possible.
However, what we've seen is many extremely questionable practices that will lead you to question the way the market has valued ALL cryptos.
1) Bitfinex has been aggressive about allowing trading of questionable cryptos, notably Bitcoin Gold. Given that a large Bitcoin holder can very effectively dictate the price on a thinly traded new coin such as BTG that trades only on a handful of exchanges through wash trades with algo bots to attract more traders and inflate volatility, it's highly likely that the main reason Bitfinex chooses to list various altcoins is to inflate their value and attract trading activity without concern for their traders/investors risks.
Given that inflating market valuations for various altcoins appears to be a primary strategy for Bitfinex, that leads us to the problem of Tether.
and the CFTC has subpoenaed Bitfinex and Tether to explain themselves while appearing to evade an audit by firing their auditor.
This all LOOKS VERY BAD. If Bitfinex had any sense of optics, then they would not have fired their auditor. But if the worse outcome would be the revealing of an elaborate scheme to conceal a lack of funds to back Tethers and/or a scheme to use Tethers as a way of inflating various coin values and/or attract volume, then firing the auditor would be a natural and necessary decision.
This article sums up a lot of what's going on with Bitfinex and how they could be orchestrating a very large and complex ponzi scheme:
That being said, it is also possible that they have generated enough income through the massive global crypto bubble to have repaid their debts.
And since I moved a bunch of USDT and XMR over to them recently I still haven't been verified. Maybe I should have just stuck with Bittrex but at this point I think trading only the most liquid pairs makes sense. If we see some adverse market action unpredicted by charts then the coins with the thinnest volume and/or most speculative purpose will have their value sucked out just as quickly as they were pumped up ( for example Ripple, DASH, XLM, NEO).
All across crypto are blatant conflicts of interest that scream red flags... after the Bitcoin Cash fiasco even Coinbase has been tainted by impropriety.
And given how lacking in responsiveness EVERY exchange I've used has been, you literally have no options. I applied for an institutional account with GDAX in September and still have not heard anything. I CANNOT get "re-verified" with Poloniex because either their system doesn't work or they have some serious problem that requires them to restrict withdrawals through a ruse. Let's say I'm getting my coins out of there one day at a time. And then Kraken says their tier 3 verification takes "a few days" but it's been a few days and still nothing.
Bittrex was actually the best at verifying me. And HitBTC was pretty sketchy so I never got verified. But the point is these are all SO immature that one falling domino could wipe out the whole ecosystem.
Given that rampant algo bot price manipulation still appears to be affecting crypto markets as of this past week the systemic risk is this:
1) Bitcoin and subsequently ALL crypto markets have been severely overvalued due to rampant manipulation in exchanges. The study of the 2013 trading bots showed a cost of $1000 per $1 M in volume traded. I haven't done the math but you could freely manipulate prices with most coins on most exchanges.
2) These exchanges collude tacitly since a crackdown on algo bots, wash trading, and other bad practices could significantly affect their income. So most exchanges are likely contributing to this problem and allowing it to fester.
3) While current charts APPEAR to reflect a "bottom", the strong likelihood of manipulation in the exchanges suggests that the market could be reasonably 4X overvalued (or more).
If we take out the price manipulation in the market and consider a market top of $5k then current valuations seem less and less like a "bottom" than another level of a downward trending market that is reversing a trend of algo bot price manipulation that goes back to at least early 2017 if not sometime in 2016 when Bitfinex lost their funds.
The systemic risk is this:
1) Bitfinex and/or Tether fails or gets a serious regulatory assessment/inquiry that panics the market.
2) A mad rush for the exits in Bitcoin alone would trigger a global collapse in crypto valuations due to extreme correlation. While some coins can withstand correlation for a period of time after a Bitcoin price move, eventually the large arbitrage opportunity forces the market to "catch up" since some coins become relatively cheaper (i.e. more coins for less Bitcoin/ETH)
3) While we could see a lot of volatility much like we did between Nov. 2013 and 2016 the risk is that crypto users lose trust in the system and it all falls apart as pyramic / ponzi schemes do.
If a large number of market participants leave the market, then large coin holders could become even more concentrated in their leverage over the network since they can buy back in at lower prices and manipulate it even more.
Essentially, this game could last a VERY long time until some individual or group controls so many coins that every "pump" results in a collapse to zero.
As described in this great piece that talks also about how a group of self-described math geniuses strongly resemble the story of Isaac Newton, discoverer of gravity and victim of the South Sea Bubble:
This last piece was written 3 years ago so that tells you how "conservative" a 4X multiple overvaluation might be.
You don't think of a price like $8845.90 to sell 0.001 Bitcoin.
So far volume has stayed relatively higher than after the last several dips, but I would be surprised to see a definitive reversal so soon. We're still likely to see another big dip unless we get a breakout above $9500.
This is changing the way the cryptocurrencies perform. In the past 90-days, the correlation between the S&P 500 and cryptocurrencies has risen sharply to 33 percent, which is way above the previous high reading of 19 percent, according to Nick Colas, co-founder of DataTrek Research. The long-term average is way lower at 1 percent.
WHAT A FUCKING JOKE.
Just as I predicted "Spoofy" has come out to trade on Saturday morning in the middle of the night...
There's almost no buy volume above $8700 except for a suspicious group of orders between $8700 and $8705.
It seems like quite a bit of spoofing is happening right now just from unusual fluctuations in order volume at price levels nowhere near the market price.
Given that so much of the order book consists of fake volume you either need to place bets based on TA or use a higher probability price target.
Looking at TA I would presume we're more likely to see $6700 again than $9000 if this order book is filled with fake orders, but I can see the price bouncing off $8500 unless a lot of stops are getting triggered.
The order volume above $7900 looks fake to me.
A as order volume showing
order volume of A will generate 0.X*A of actual orders based on how effective the market regards order volume A in affecting price.
X would be the percentage of the actual order book that is "real".
Using a distribution of realistic probabilities (making some guesses basically) based on some assumptions about the economic power of the groups that are influencing the market you could could up with a reasonable guess to the "real" size of the order book at some specified percentage below or above the market price.
Given sufficient volume this tactic can generate large price movements that build up over time as some network effects start to kick in...
So then as long as the bots have a cumulative size of some ratio between what they throw up and what's showing in the "ask" then the market will be have some high probability of moving in the intended direction.
If higher sell volume comes along then this strategy would require more funds to throw up more volume. At some point if there's too much volume then the bots can't dictate price as effectively.
I could see sell walls being an effective way of controlling upwards price movements from getting too out of control as both panic and mania could result in less efficient trading outcomes based on a price manipulation game strategy since the bots would have less control over outcomes if the market grows too big.
This is totally speculative and requires some math to confirm so I'm not so sure about this.
Given that game theory has documented this as a prisoner's dilemma outcome that can only be resolved with information symmetry the natural solution would be full transparency. So if all members of a cartel can very clearly see that no one is cheating or is cheating and can respond swiftly then the incentive to cheat will be low. Or there will perhaps be an incentive to rig the transparency or cheat on the system used to show transparency by creating some false information that could then be used by the perpetrator to make some arbitrage trade prior to the event (i.e. insider trading).
This would seem to be a potentially revolutionary blockchain "solution" to a big problem. Assuming blockchain doesn't have some systemic defect that we've yet to understand.
Zcash showed resilience in a recent decline because some ridiculous pump analysis came out projecting Zcash to have some hypothetical valuation that was completely absurd.
Zcash very strongly has the organizational structure of a security with distributions to investors so I can see their leadership getting in trouble for fraud should crypto start to attract lawyers that smell blood.
Ripple had a huge gain and loss prior to Bitcoin's rapid decline and that seems to have given them some support since they had already lost the equivalent degree of value prior to Bitcoin's big decline.
Bitcoin Cash more or less has been highly correlated except they experienced a strong gain earlier than the other coins. This was likely the result of easy price manipulation due to the relatively high concentration of wealth in the network.
I'm not sure why ETC didn't dip as hard as the others but otherwise they've been highly correlated. Perhaps there was some positive news.
When looking at these 7 day charts all lined up together it's comical how little distinction there is in value between one cryptocurrency and the next. If Bitcoin goes down they all lose value until the market can determine another meaningful gauge of relative value which apparently isn't that persistent if Bitcoin is failing.
So maybe picking the "winner" between bot strategies reveals more about optimal trades than trying to understand the order book. But based on what I'm seeing there is more "real" sell volume than buy volume where spoofy looking fluctuations are happening.
Notably, Coinbase has yet to make any announcements about the "insider trading" that happened when Bitcoin Cash came out. Obviously, those were algo bots going wild, and they don't know exactly how to handle the PR fiasco that will be.
The bulk of the market seems to be betting around $6k but assuming these orders between $7k and $8k are too far away from the market price to influence the price then this would suggest strong support between $8k and $7k.
Given a lack of major price triggers we could see a symmetrical triangle forming that would suggest a near term bottom of $6700 with the heaviest support/resistance around $7.5k Taking small positions to minimize risk between $6.7k and $7.5k should generate a return unless there is a major negative sentiment trigger.
The above chart (prices as per Coinbase) shows:
The retreat from $9,090 to $8,750 has established the Jan. 17 low of $9,017.41 as strong resistance (marked by a circle).
Further, the descending trendline is intact.
A daily close (as per UTC) above the trendline would confirm bearish-to-bullish trend change and could yield rally to $11,695 (Jan. 28 high). A violation there would expose resistance at $12,500 (Dec. 30 low).
Bearish scenario: Rejection at trendline followed by a 4-hour close below $7,540 (Feb. 2 low) would shift attention to $5,873 (Feb. 6 low).
Combined with seriously declining on-chain transaction volume the market appears to be contracting very sharply. This doesn't seem like something that will magically reverse without some organic factors such as a large new market (aka China) re-opening its doors.
I'm just going to say that I don't see price getting very far above $10k anytime soon without some very big changes. That might mean some kind of adverse scenario where some bad actors are outed and punished. This will scare people off for a while but if it improves competitive conditions in the market then people will come back eventually.
This suggests optimizing entries for $5k-$5.75k but allows for smaller trades up to $7.5k.
Preferably trading should happen during non-business hours (or weekends) when negative news/sentiment is less likely to significantly affect prices. While you might get regulatory risk out of Asia it might not be heavily traded upon until early hours in America/Europe. For example, when India had some public official commenting on cryptocurrency in a negative way the fears from India banning crypto did not snowball for quite some time because the news came out in the middle of the night.
The goal of the buy wall is to create an illusion of demand, which would result in more buy volume to increase support / keep the price from falling.
The goal of the sell wall could be to suggest a target for others to place their sale orders given the existing order book. By repeatedly moving the sell wall higher you encourage sale orders to consistently stay above market price even as the market shifts higher. This creates thinner sale volume and makes it easier for the whalebots to exit in front of the sale wall or limit actual selling volume to allow the price to be manipulated higher with the bid spoofing and layering strategy. At some point, it becomes necessary to reverse the arbitrage to unwind positions.
Presumably, the ideal scenario would not be high volatility as that level of volume would lead to challenges in controlling the market. One would think having these whalebots participating in the market does increase liquidity and tends to attract more market participants looking to profit off of the volatility. So maybe there's some Goldilocks type of equilibrium where these bots stir the market on nights and weekends when there's relatively low probability of things spiraling out of control.
And around $2.6 M to clear out the ask orders $50-$60 deep. I don't see how this could be profitable so nobody would ever do it.
If the SEC announced enforcement action against Tezos that will be bad for Ethereum.
Here is a letter issued Feb. 7, 2018 from the New York Department of Financial Services detailing "Guidance on Prevention of Market Manipulation and Other Wrongful Activity". It would seem that a GRAMA request could potentially uncover details about market manipulation that Coinbase and Gemini have discovered and reported (as required in this letter) to the New York DFS.
On cryptocurrencies, I want to emphasize two points. First, while there are cryptocurrencies that do not appear to be securities, simply calling something a “currency” or a currency-based product does not mean that it is not a security. Before launching a cryptocurrency or a product with its value tied to one or more cryptocurrencies, its promoters must either (1) be able to demonstrate that the currency or product is not a security or (2) comply with applicable registration and other requirements under our securities laws.
Due to Ripple's highly centralized nature and what appears to be insider trading and/or knowledge this is a coin that I consider extremely dangerous to hold, not much different from say Bitconnect tokens.
I found this part very interesting:
If CCs survive the next few years and remain part of the global market, then they will likely have exited their current speculative phase and would then have more normal returns, volatilities (both much lower) and correlations (more like that of other zero-return assets such as gold and JPY). Based on its historical performance, CCs can be 10 times more volatile than core assets like stocks, or than portfolio hedges, like commodities. Liquidity is also well below most other potential hedges. Extraordinary returns can be generated in the price discovery phase, only to be followed by several years of mean-reversion toward the eventual, long-term average level. In the current market conditions, we do not believe that an allocation to Cryptocurrencies as insurance should be a portfolio’s main or only hedge. Note that even though CCs have improved risk-adjusted returns over the past several years, they have not prevented portfolio drawdown during periods of acute market stress, like the equity flash crashes of August 2015 and February 2018.
Cryptocorrelation with other asset classes: virtually nil, i.e., a perfect diversifier.
This doesn't say a lot about Bitcoin liquidity or network value. Clearly, the valuation is being held up by a very small concentration of colluders.
I think it's going to take a miracle to get past $9k, but it totally makes sense to pump the market overnight so it doesn't look so terrible if it sells off a bit during the day.
Maybe this will become a prominent strategy. We're now going on a one week rally now though volume has been declining every day, which makes this all look even more suspicious.
Recently, two of the largest CFTC-regulated exchanges listed bitcoin futures products. Although the exchanges are permitted to “self-certify” and commence trading futures products without CFTC approval, for bitcoin futures they spent significant time engaging with CFTC staff and agreed to implement risk-mitigation and oversight measures, including heightened margin requirements and a requirement that the exchanges have information-sharing agreements in place with underlying bitcoin trading platforms. As a result, the CFTC gained oversight over the U.S. bitcoin futures market and access to data that can facilitate the detection and pursuit of bad actors in underlying spot markets.
So they supposedly have data to detect bad actors and they've subpoened Bitfinex/Tether. These investigations don't happen that quickly, but presumably bad actors know they're being scrutinized and likely want to minimize exposure, another reason to trade during "off-peak" hours. Going into the market open there's noticeably no buy walls, spoofing, or any of the stuff that you see on weekends and overnight. If the market can push towards $9k that should clear out a lot of sell volume and open the door to another magical "overnight rally" despite what appears to be very low demand and huge resistance at 9k and 10k.
Sell volume is heavily biased below $10k so we'll see where this goes but it's hard to see a move up from here without some magical buying that comes out of nowhere.
Maybe this is just a boring Tuesday, but to me it seems like the novelty of crypto has worn off and rather than the "inverse head and shoulders" some TA people are talking about we could be seeing more of a descending triangle where the $5900 level will serve as the bottom.
Last time we had a very noticeable H&S pattern it broke the neckline but reversed and broke out the other way. So in terms of being a reliable signal of anything, it's basically meaningless if a much bigger trigger pushes demand the other way.
I would give this current pattern a less than 50% probability of making the market do anything considering its very weak formation but the market seems surprisingly bullish above $8k but I think a lot of buyers are positioning themselves expecting a bounce off that level but given the weak momentum I would project the upside toward the upper channel line at about $8500, or 6.25%, which doesn't provide great risk:reward given the current suspicions about market transparency.
But if we see heavy support around $7.8k-$7.9k I could see a small descending triangle forming that bounces back to $8500. At about 9% that improves the risk:reward quite a bit more unless there's some negative sentiment trigger and you could target $7900 entry and $8200 exit depending on market conditions with a small position.
We're only about 7% off that price level but if the market starts moving down there could be quite a bit more volatility since this bear flag seems to suggest another dip back to under $6k.
Overall the market seems pretty positive but I would definitely not call it "anti-fragile" as someone recently said. Most social media and mainstream media seem aware of the potential for major problems due to exchanges being untrustworthy so I'm sure a lot of those potential panic sellers not reflected in the order book are tracking sentiment and news on a daily basis.
Bot action is still there, but it seems like there's more sell pressure than buying pressure based on the activity that I'm seeing and volume is much lower than over the weekend.
Now that Bitcoin isn't even the biggest network in terms of on-chain transactions, how do potential buyers or users of cryptocurrencies choose what coin to use or invest in? With the idea of elasticity of substitution a buyer/user of crypto will consider the marginal returns of a coin purchase at a given price for a specific duration. So if you're comparing Bitcoin versus Ethereum, the marginal return for Ethereum might be expected to be higher given that Ethereum is newer, bigger, growing faster, generating more users through ICOs, etc. etc. So this would be in real numbers like saying (as an example): Bitcoin has an expected marginal return of 2%/mo. over the next 6 months but Ethereum has an expected marginal return of 4%/mo. over the next 6 months. Given this perception Bitcoin will lose overall crypto market share to Ethereum. And this appears to be what has happened over the last year or so as Bitcoin has lost market share to other coins.
Around the same time Bitcoin started to increase by huge percentages Ethereum, the second largest coin, was increasing at an even faster rate. This would strongly suggest that the market preferences were fairly elastic in substituting Ethereum for Bitcoin given the relative expectations for growth between the two.
It seems with the recent boom and bust with XRP that this elasticity of substitution was again in effect as traders flocked to XRP with expectations of higher marginal returns than BTC or ETH.
Given a longer duration timeframe for investment and evaluation of cryptocurrencies I think you will see this effect continuously as a distribution of risk preferences will show a strong substitution effect between larger coins and less developed coins (XLM, ADA, and NEO being other good examples) due to expectations of relative growth.
However, perhaps because the overall crypto market is so small and almost nothing of "real" economic value has yet to be created, the ultimate substitution effect could be with fiat currency or a less volatile asset class depending on various macro considerations.
Given this basic concept I can see Bitcoin stabilizing in value over time as it matures with better policed institutions and less volatility. However, this will likely take a long time and a lot of things can go wrong in between. And given quantum computing and other new technologies it's highly probable another system will emerge that will prove to be superior to Bitcoin.
This generally deflates the idea that Bitcoin will be $1 M a coin some day. Given the strong elasticity of substitution and the ease in creating competing coins/networks I think the overall crypto market would have to grow to a level that doesn't seem realistic given problematic utilty and centralization concerns.
This could be Satoshi Nakamoto or the Winklevoss Twins. But by adopting this role there would be an implied failure of the idea of Bitcoin, which is that it is decentralized, permissionless, and censorship-resistant. Also, the government essentially plays this role but they are essentially the very institutions cryptocurrencies were designed to avoid being controlled by.
Unfortunately, computer scientists aren't better trained in economic concepts otherwise many of these things would have already been discussed and considered.
One strategy for coin investment could be targeting less developed coins with relatively higher expected marginal rate of return. But given the total immaturity in the market, extreme correlation, and possible price manipulation all across the board, one would need to take a conservative approach and wait for ideal conditions to enter the market (which could be soon) and be wary of the many coins and ICOs that will be the wreckage left behind by the bursting of the crypto bubble.
but now, reconsidering what I was going on about recently about elasticity of substitution it seems more reasonable to think of Bitcoin as having income effects that drive substitution.
I'm going to come back to this when I'm more awake.
Pretty much any of the coins in the top 20 are pumpable, even Bitcoin.
Looking at these volume numbers I would expect Bitcoin Cash to get pumped again soon. But a lot of this will likely depend on Bitcoin breaking $9k and making it back to the 50 EMA which will have to continue declining sharply to even hit $10k so this probably won't happen anytime soon because of massive resistance above $9k. But maybe if overall crypto sentiment is improving this won't play out.
We're only seeing the tip of the iceberg right now and from what I've seen of the market, this is going to blow up in a lot of peoples faces.
It seems like more recently there has been hardly any spread at all between major exchanges so it's entirely possible that as soon as one bot operator realized what was going on they modified their algorithm to better capitalize on this activity. Given bot competition for arbitrage opportunities maybe this strategy isn't "winning" anymore.
During the annual Puerto Rico Investment Summit, Prouty confirmed the truth of the claim about the lack of a bank reserve, noting the bank Tether officials were working with opted to back out of the deal to avoid liability.
He said Tether officials needed to purchase a bank to obtain “the capital infusion from a sovereign wealth fund to create the initial reserve. It will begin banking crypto soon. After speaking with these guys, it should take about a year before this bank can replace some lenders as a large financing entity for the Puerto Rican market.”
Traders who follow us are carrying long positions that triggered on Feb. 15. We had recommended booking 50 percent profits at the 50-day SMA, and most traders should have sold when Bitcoin rallied to an intraday high of $11,348.99, yesterday, Feb.18.
We had also recommended trailing the remaining positions with a suitable stop loss. As every trader has a different trading strategy, we did not provide any specific trailing stop loss.
BTC/USDThe BTC/USD pair is trading inside an ascending channel. As long as it trades above the support line of the channel, it can reach $12,000 levels.
In case of a fall, the support line of the ascending channel and the 20-day EMA will be acting as strong support. If these two levels break, the price might fall to $8,400. Therefore, traders who are still left with 50 percent positions should keep the stop loss at $9,800.
We did not recommend closing the complete position because Bitcoin will become positive once it sustains above the descending channel.
This could be due to either 1) some trigger in Asian markets or 2) price manipulation bots becoming active.
I'm still not sold on an overall market reversal due to 1) Google Search Trends for "cryptocurrency" and "Bitcoin" have reached relative lows and have not reversed 2) on-chain transactions for Bitcoin have yet to clear 200k after hitting a low not seen since March 2016 3) equities markets haven't fully "settled" down 4) regulatory risk remains extremely high
Overnight and weekend trades remain a very viable strategy as a trade entered into LTC last night at $220 with a $240 exit would have generated 9% gains...
Wyoming now is looking to be the first state to 1) deregulate ICO utility tokens from being classified as a security (as opposed to non-utility tokens) and 2) have zero state income taxes on virtual currency gains (which doesn't really mean as much due to federal tax events)
Overall, this is a positive sign for crypto.
A bot that I found called LunarSatoshi also coordinates the bots "signals" with a Discord group that you pay $50 to be part of. Given low volume and a bot "signal" pumped on Twitter I can see how there would be serious confirmation bias. Wait until the signal to sell and everyone will be losing money racing to exit the market. Or maybe this bot only tells you when to buy.
You can see a few things going on right now:
1) Look at Google Search Trends for "litecoin" and "litecoin cash". There's clear speculation in the market with Litecoin Cash and this has driven a big price movement. I don't think this is going to hold for a few major reasons: 1) Litecoin Cash has very poor support and is not being marketed very well 2) There isn't even a clear path for miner adoption 3) no exchanges are announcing that they will trade it This means the Litecoin price move will likely reverse very rapidly and Litecoin Cash will probably be a lot cheaper than what the market is pricing it at right now (~$4.50 based on the $180 to $225 movement @ 10 coins / LTC). I was wrong about Bitcoin Cash (because I did very little research then) but even comparing this to Bitcoin Gold or any other fork this seems like one of the worst forks in recent memory.
So we know that Litecoin and Litecoin Cash have had noticeably higher search volumes. This is a positive trend indicator but that price movement has happened already.
We know cryptocurrency and Bitcoin still haven't reversed their downward trends in search, which suggests declining sentiment rather than increasing sentiment, which has driven big bullish pushes in the past.
Bitcoin prices seem to have been pulled up by the Litecoin pump and while we're at the 200 EMA there's quite a ways to go to reverse the downward trend.
ADX (up to date ADX not visible in this chart for obvious reasons) signals a reversal by moving decidedly downwards but usually ADX needs to hit 60 before indicating a strong enough trend in the first place to reverse. So this seems to me a false positive that will likely resume the original trend. We can see that ADX hit 80+ when BTC went to $20k before solidly reversing. To me this Litecoin pump is drawing in a small wave of new investors that will likely get burned when Litecoin gets dumped following Feb. 18 and that Litecoin pump has enabled the overall market to move in synchrony due to the high correlation between crypto assets.
I could be wrong here but I don't see the justification in buying overpriced Litecoin just to get a worthless Litecoin Cash that I can 1) mine or 2) can't trade or 3) buy at a cheaper price.
I'm definitely all in favor of higher prices because I have a large mining investment, but I just don't see the market moving in that direction for the reasons I've given.
For me, the risk:reward doesn't make sense but I already have mining investments and get crypto payments everyday so it doesn't make sense for me. For others it will depend on your portfolio and whether you have any exposure at all so this is not a one size fits all recommendation.
I still see fundamental weakness in this market and every time I go looking for smart people with similar views I'm finding a lot of interesting insights into the market. I "get" crypto, but I think that while I lucked out by not getting freaked out by this a lot earlier like some others the market has decidedly entered a state of strong uncertainty and that is reflected in equities markets as well with the very strong volatility we've seen lately, especially regarding the Mueller indictments. In a perfect world we would just use wishful thinking and everything would be better and this recent bullishness has been probably the best case outcome that I could have projected which says a lot about sticking to what charts can tell you. The market could fundamentally change literally overnight but given the patterns I'm seeing in the ADX, search trends, and regulatory environment I think we're likely headed for a bear market in the longer term much like the dot com bubble led to a period of consolidation where good tech "won" and made useful things while the crap was left behind.
The block sizes and the high fees make btc a pure speculation product, and a transfer is good for big amount of money only (but most wallets have under 1btc). The lightning network is going against the decentralisation, and is not a practical thing. It is just like banks. The security in those extra chains is not a certain thing too. I think that going in lightning network might kill this coin, but who knows.. Sorry for my english!
So I think some people probably tested the waters, got burned, and we're not likely to see any organic moves in price other than from pump and dumps.
BTC volume is plummeting right now and BCH is right around $40 M in the last 24 hours which is pretty sad for all the pumping they do.
Until crypto stops being a playground for pump and dumps and scammers I don't see a lot of people rushing back. The last bear market crushed miners. Practically every mining company went out of business which is why Bitmain has ended up where they are. In some ways, Bitmain could be part of the reason prices have dipped due to their large mining and crypto investments. With at least one Japanese hardware company lined up, Samsung supposedly making chips, and numerous global outfits wanting to get in on mining there's a huge saturation of interest and a big dip to shake some of them out could very easily be coordinated by a whale like Bitmain. The last time around the "organic" growth in the market never happened, and this time around there's been organic growth, but I have a hard time seeing a justification for $9k Bitcoin given the conditions. This is still the denial stage of a bubble and capitulation is where the market really stays down for a while due to a loss of faith by participants. Not everyone is going to want to lose 50+% of their investment knowing that some analysts like on Bloomberg today, are saying that prices will trend back towards $900.
Given the unregulated nature of these markets crypto is more for gambling than real investment. That being said it's much easier to make money when prices are falling so at some point soon I think we'll get more clarity on what's going on exactly with Bitfinex/Tether as well as the numerous ICOs that are likely to be shut down by the SECs new crypto task force. All of these things will provide some triggers for the market to reprice risk which I don't think is reflected in the market.
Bitcoin Cash maybe about $700.
Bitcoin maybe between $5000 and $6300 with some fairly strong support below $6k.
Litecoin looks pretty bullish but the market seems to think it will come back to around $100. Just a nudge could drive it over $190.