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23.03.2018 Friday round-up

With the looming Death Crossin the bitcoin markets, there was always going to be some kind of reaction when the price approached the 200 daily moving average. If it had pushed through, we would have expected another surge upwards. As it was, BTC touched the 200 MA and promptly plunged around $800. We’ve said before that we don’t rate the Death Cross (daily 50 MA crossing 200 MA) as a meaningful signal, except that ‘conventional’ traders use it and there has been a lot of talk about it in the news, which means it might be self-fulfilling – at least in the short term.

Unless BTC pushes above about $9,200 in the next week, we’re highly likely to see another reaction to that event, but various factors make the picture rather more complicated… a few items of note over the past week have been:

This overall positive news might offset some of the negative sentiment around the bitcoin markets. However, there is one over-riding factor that traders must take into account: Tether.

For the first time since news of their subpoena became public, Tether has fired up their printing press – creating an unprecedented300 millionmore USDT. This did not coincide with a rise in price, as it often has before. It appears that those USDT have not yet been deployed into the market. Which leaves the question: when will they be used?

It’s all speculation, but if Bitfinex/Tether are expecting a Death Cross to feed into general negative market sentiment, they may be anticipating a massive buying opportunity – perhaps somewhere around the $6,000 zone, or perhaps around the more recent low of $7,300. Either way, be very, very wary of short-term movements downwards. Someone has a lot of firepower ready to buy BTC. Whichever way the market goes, up or down, it will be very easy to get caught on the wrong side of this one.

Inferno market overview

TL;DR Watch that all-important $12,000 zone, and for sneaky market manipulators.

It has been a turbulent week so far for bitcoin. The market showed significant fluctuations over the weekend and on Monday, after coming off a recent low of $8,366 (Bitstamp). A rapid recovery looked set to breach the all-important $10,000 mark, but the rally stalled and bitcoin almost immediately crashed down into the $8,000 range, shedding $1,000 in a matter of a few hours.

That promising lift in price followed by an unusually sharp crash may have signalled market manipulation, as some critics have suggested. Equally it may simply be traders panic-selling after the market moved too far, too fast yet again.

Right now the indicators are giving a broadly neutral picture. Some point to BTC being oversold, others that the selling is likely to continue – or, as telling, that traders have not taken advantage of what might be considered buying opportunities. Put simply, there is indecision in the air. Assuming we break $10,000 once again, the $11,500 level is key and pushing above this to $12,000 would confirm the uptrend is back in play. Otherwise, we may be looking at a period of sideways and downwards.

All we can say at this point is be careful: the markets are very, very choppy, and sentiment seems to switch from bullish to bearish and back again at a moment’s notice. Trade with extreme caution.

Friday Inferno roundup – 9 March 2018

TL;DR It’s been a spectacular week of news, FUD and price action.

What a week! Just some of the things that have rocked the crypto world include:

– Binance denied it had been hacked, explaining that a third-party bot had gone rogue, selling some users’ bitcoin balances and aggressively buying Via instead. The exchange has since reversed the ‘irregular’ trades.

– The SEC stated that most crypto exchanges would need to register with them.

– FinCEN stated that AML/KYC regulations apply to ICO participants, and that issuers should register as a money transmitter.

– Japan’s financial regulators served a month-long suspension on two exchanges, Bit Station and FSHO, and instructed a total of 7 exchanges to improve their security.

– A trustee for MtGox has been unloading coins since December, and has a lot more left.

This last point has been a hot and controversial topic for the crypto community. Nobuaki Kobayashi, the trustee in question, was given custody of the 200,000 BTC left in the exchange’s control after it imploded four years ago. To reimburse the exchange users who lost money, Kobayashi has been selling these BTC (the court has determined creditors must be paid the USD value of their holdings at the time Gox went bankrupt, so a fraction of the value of 200,000 BTC).

Between December 2017 and February 2018, Kobayashi sold 36,000 bitcoins and 34,000 BCH for what he claims was ‘the best possible price’. However, these were not sold at auction or OTC but simply dropped on exchanges at market price. A chart of price over this period shows that the movements from the Gox coins’ address occurred at the start of significant falls in price. His last sale appears to have taken place early in February, on the day the market crashed to $6,000. Kobayashi is not a trader and seems to have succumbed to typical crypto panic behaviour, selling the bottom – shooting himself, MtGox’s creditors and the crypto community in the foot in the process. A further 166,000 BTC remain in his control, and may be sold in the coming weeks and months.

All this has spooked the markets, pushing the price of BTC way down below that critical $10,000 zone we have discussed in our analysis posts and back towards $8,000. Many in the bitcoin community are furious that Kobayashi took such a naive, lazy and impatient approach to selling MtGox’s BTC, when he could have secured a far better price and had far less of a negative impact on the markets. We’ll be keeping a close eye on developments in the coming weeks.

02.03.2018 Friday Inferno roundup

TL;DR we’re long on crypto and leveraged long on popcorn 

At the end of last week BTC was struggling below the all-important $10,000 mark. That changed abruptly on Monday with a jump of $500. BTC hasn’t returned below $10k since then.

The increase was unexpected and had the feel of a Bitfinex-led Tether pump about it. On this occasion, it wasn’t preceded by the creation of $100 million in USDT, as other such moves have been – though it may simply be that Tether has taken to printing its tokens in advance to avoid obviously telegraphing such buying sprees. Whatever the reason, the move was sudden and caught many traders unaware – one shorter was liquidated to the tune of $28 million. We’re now sat above $11,000, with the same bands of support and resistance we discussed last time. $12,000 is a key barrier to breach on the upside, with $11,000 and $10,000 to watch on the downside.

A lot has been happening in the broader crypto-related news this week. US exchange Kraken has lost its relationship with its Japanese bank, which shuts off SWIFT transfers for USD, EUR and GBP. Cryptocurrency and SEPA EUR funding is still permitted. In contrast, life is looking up for Poloniex, which was just acquired by Goldman Sachs-backed mobile payment platform Circle for a reported $400 million. A leaked document suggests that the move means Poloniex will avoid any regulatory problems arising from past behaviour. With the slate wiped clean, Circle can now work on bringing crypto to mass-market consumers without fear of skeletons in Polo’s closet ruining the party.

Vitalik Buterin, creator of the Ethereum blockchain, has claimed the governance mechanism is ‘not that bad’ as the debate rages about the best way to address the problem of the hundreds of millions of dollars lost on the platform through smart contract exploits – hardly a resounding endorsement. And, on a lighter note, Craig Wright – the man who claimed to be bitcoin creator Satoshi Nakamoto back in 2016 – is being sued for $10 billion. Ira Kleiman – the brother of Dave Kleiman, who died in 2013 and whom Wright said he collaborated with on the bitcoin white paper and code – is taking at face value the evidence provided by Wright to back up his claim (which was swiftly and forcefully debunked by cryptographers and the crypto community). He states that the documents shows that Wright forged contracts to enable him to claim 1.1 million BTC rightfully owned by Dave Kleiman’s estate.

All in all, it’s been an eventful week, and the drama looks set to continue for a while. So sit back, break out the popcorn and don’t forget to check back with Crypto Inferno next week.

23.02.18 The week in Crypto

Having pushed into the $11,000-$12,000 zone earlier this week, bitcoin broke down through support on Wednesday and dropped towards the critical $10,000 mark. As we noted in Tuesday’s market update, $10,000 is a key level to maintain for traders’ confidence. Although we have dipped briefly below it, there has been relatively strong interest around this area, with traders unwilling to let the price fall much further. (In terms of levels to watch, it’s always smart to think of it as zones rather than lines. For anyone interested, the forex trading site BabyPips has a great overview: https://www.babypips.com/learn/forex/support-and-resistance.) Suffice to say that at this point, we’re back above $10,000 and that’s reason for some confidence right now.

Why did it fall in the first place? Firstly, we’ve had a pretty impressive run-up since the crash to $6,000, and it was probably time the market re-tested a key level just to confirm the new trend. When the price of bitcoin doubles in two weeks, you can expect profit-takers to appear at some point.

The immediate catalyst for the drop may have been the ‘glitch’ on the Zaif crypto exchange in Japan that briefly allowed traders to pick up bitcoins for $0. Seven traders took advantage of this, with one in particular backing up the truck to the tune of $20 trillion in non-existent BTC, before trying to cash out as much as he could.

In other news, Governor of the Bank of England Mark Carney has called bitcoin a ‘failed currency’, arguing it does not work well as a store of value and is not used to buy anything much. Fortunately, help has arrived in the form of martial arts movie star Steven Seagal, who is throwing his weight behind ‘Bitcoiin’, billed as a ‘more advanced’ version of the original bitcoin. It’s hosted on Ethereum, by the way.

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