Bitcoin (BTC) crashes down below $10,000 today

Bitcoin (BTC) crashes down below $10,000 today

After hitting highs approaching $14,000 last week bitcoin (BTC) started off July on a huge downturn as it actually fell through the $10,000 level earlier today according to CoinDesk data.

Rakesh Upadhyay’s analysis in Cointelegraph

Earlier today Upadhyay provided an analysis of the price movements of bitcoin and other prominent cryptocurrencies on Cointelegraph.

Before discussing bitcoin, Upadhyay notes that Adam Back the CEO of BLockstream claimed in a recent panel discussion that developments in the crypto space are occurring at a much faster clip than during the dotcom period. Numerous new ideas and uses are being found for the blockchain technology but Back still thinks we are in the early stages of what can be built using the new technology.

Recent fundamental developments in the use of blockchain technology and the cryptocurrency area have caused some former critics of cryptocurrencies to alter their views and even adopt the new technology. Augustin Carstens, the head of the Bank of International Settlement(BIS) said recently that many central banks are working to launch digital versions of their national currencies The BIS is supporting this move. Only a few months back Carstens was warning of the numerous risks of banks taking such a turn.

On bitcoin (BTC)

After a huge surge recently, every trader is wondering whether the short term top has been reached or if this drop presents a buying opportunity to be used before the uptrend continues. It is difficult to predict which view is correct but charts give a reasonable idea of what can be expected.

BTC hit a wall of resistance back on June 28 and 29th close to the $12,500 level. As the bulls were unable to resume the upward trend profit-taking took place. Currently the price has dipped down to the 20-day Exponential Moving Average(EMA). Wikipedia describes the EMA as follows: “An exponential moving average (EMA) is a type of moving average (MA) that places a greater weight and significance on the most recent data points. The exponential moving average is also referred to as the exponentially weighted moving average. An exponentially weighted moving average reacts more significantly to recent price changes than a simple moving average (SMA), which applies an equal weight to all observations in the period.”

If BTC is to continue upward again, the bulls will need to defend the $10,740.35 to $9,97713 support zone. A break through this zone could lead to a drop in the price to the 50-day simple moving average (SMA). The BTC will be in a bearish grip should the price move down through the 50-day simple moving average. It is thus difficult to know exactly when the price could change direction.

The 20-day EMA has flattened out and the relative strength index (RSI) is now close to a midpoint. A consolidation after a sharp rally would be a positive sign. It would show that traders not exiting the market. However, Upadhyay’s recommends waiting for the correction to end before buying bitcoin again.

Present situation

24 hours ago bitcoin was trading at $11,392. Since then it has hit a low of $9,986 and a high of $11,440. The drop has not taken BTC through the support zone range mentioned by Upadhyay. At 21:14 BTC has recovered somewhat from its low and was trading at $10,319 a drop of $1,073 from its open.All the top twenty altcoins are also down but not as much as bitcoin with none in double digit declines. The present price of bitcoin along with the top twenty altcoins can be found here.

Crypto Markets Are Green Across the Board as Bitcoin Crosses $12,000

Top cryptocurrencies bitcoin (BTC), ether (ETH), and ripple (XRP) are all in the green, a total turnaround from the sea of deep red on Thursday.

Market visualization. Source: Coin360

Bitcoin is currently trading at $12,316 again, around the levels it sank to following the sudden $1,400 flash crash on Wednesday. Bitcoin had continued to sink all the way to $10,380 on Thursday, but is now seeing strong recovery on the day, trending up by around 14%.

Bitcoin 7-day price chart. Source: Coin360

The top altcoin and second largest cryptocurrency by market cap, ether, is seeing moderate gains on the day, up 5% and trading at $308. Ether has for the most part been cruising slightly above the $300 mark since it achieved this new altitude last Friday. 

Ethereum 7-day price chart. Source: Coin360

Ripple is seeing some small gains on the day, up 1.8% at $0.415, after suffering a hard crash on Thursday from around $0.45 to $0.39. 

XRP 7-day price chart. Source: Coin360

As far as other top cryptocurrencies are concerned, Chainlink (LINK), the 19th largest cryptocurrency by market cap, is showing a massive 26% gain on the day. Coinbase Pro announced support for the smart contract token just yesterday, June 27, and has just recently announced full trading support for the LINK/ETH pair. 

Total market cap of the top 100 cryptocurrencies is currently $311.7 billion, according to the data on Coin360’s summary table.

Regarding the overall state of the cryptocurrency market, analysts have suggested that the recent correction in the crypto market is still consistent with forecasts of a so-called parabolic bull run. Robert Sluymer, managing director and technical strategist at Fundstrat Global Advisors, is quoted as telling clients:

“A 20%-30% pullback would not be surprising and very consistent with bitcoin’s recent bull-market pullbacks.”

Meanwhile in traditional markets, gold is trending up slightly after seeing a major crash on Wednesday and Thursday, like bitcoin, according to data provided by MarketWatch. In a recent turn of events, Steve Forbes, of Forbes Media fame, wrote an open letter to Mark Zuckerberg to back Libra with gold and instead call it “Mark.”

Why are people buying bitcoin and cryptocurrency?

Why are people buying bitcoin and cryptocurrency? One may think that bitcoin is just a bubble that has no value at all, and other cryptocurrencies are just scams. This accusation may be correct in some way, but do not forget that it is human who determines the value of a good or service. For example, people think that a $2,000 Louis Vuitton bag is justifiable because they think the design or quality is superior. Same goes to Bitcoin. People believe it’s unique offering worth $9,000 per bitcoin (as of this writing). Bitcoin is immensely useful and has never been seen before in a way. Regardless, here goes the three factors for investing in Bitcoin: utility, scarcity, and demand.

Utility

You might hear some critics say that it has no fundamental value, no real utility, and it’s just a Ponzi scheme. These are not actually true. Bitcoin has immense utility as a censorship-resistant store of value. No bank, government, and company can control your wealth and how to transact with it. People do not realize how limited the conventional financial system is. If you try to wire transfer to certain countries, say to Madagascar, it is practically impossible. You can also have your bank accounts closed at any time for whatever reason. Banks have every right in the will to close an account if they see fit.

Essentially Bitcoin offers a way to store your money that it is yours only, not in the bank and get used by them however they want (remember Lehman Brothers that went bankrupt in 2008?). As long as you take security precautions, the money you have in cryptocurrency is yours.

Bitcoin is considered as digital gold, so let us talk about gold here. Gold is immune to inflation and good as a store of value, but you can not send a chunk of gold from here to somewhere like Canada. Bitcoin is the first-ever way that is immune to inflation that can also be utilized as digital cash. With the scaling solutions like Lightning Network, Bitcoin could be the first-ever store of value that is immune to inflation and also services a true peer-to-peer digital cash. It will allow very cheap and instantaneous transactions.

I have not even mentioned other cryptocurrencies like Etheurem and Zcash that are committed to providing utilities in their cases. This is a whole other topic, and we will discuss the utility of other cryptocurrencies in the upcoming weeks.

Scarcity

Bitcoin is one of the most provably and reliably scarce commodities ever to be discovered or created in human history. It has a 21 million hard cap into the code itself. Unlike the traditional fiat currencies, Bitcoin will be a deflationarycurrency meaning there will never be more than 21 million bitcoins ever. Currently, Bitcoin is a disinflationary currency because all the Bitcoins haven’t been mined yet. Disinflationary currency means that there is an inflation rate and an issuance rate. Right now, Bitcoin has an insurance rate of around 3.8 percent, which means every ten minutes a block is created which releases 12.5 bitcoins. Every four years the issuance reduces by 50% until all the Bitcoins are mined, which is estimated to be around 2140. The reason why this is significant is that this leads bitcoins to have excellent stock to flow ratio. What this means is that you have a very low issuance or low creation of a new inventory of bitcoin relative to the existing supply. Stock to flow ratio is partly the reason why gold historically has been a fantastic store of value with about 2 percent of new creation every year. Low stock to flow ratio makes gold an excellent investment, but unlike Bitcoin, there is actually a pile of gold waiting to be released. For Bitcoin, the issuance amount is hardwired into the code. There will never be more bitcoin created outside of the current issuance rate, and this inelastic supply of Bitcoin makes it potentially an incredible investment. You can see why this potential for the price and the value of Bitcoin to skyrocket.

Demand

You may think that the demand for bitcoin is not there yet, which partly caused its price to reduce for more than 80 percent in December 2017. Aside from utility and scarcity that could boost the demand for Bitcoin, many countries suffer from economic distress and rapid inflation. For instance, in Argentina, the nation’s sovereign currency is losing considerable value, and the purchasing power is getting diluted. Due to this factor, people usually switch to more stable foreign currencies to hedge against rapid inflation. Bitcoin represents an opt-out. The price of bitcoin (BTC) in Argentina has even spiked considerably, even surpassing the all-time high in 2017.

We also have the world debt problem. Governments around the world are racking up enormous national debts. Even the major of economies like the USA, UK, and Japan have substantial national debts.

Currently, there is no feasible way to be paid off without breaking the economy. Central banks are reluctant to raise interest rates because they know if they were to raise interest rates, the economy would implode. The government could print more money to reduce the debt by inflating and diluting those debts but could lead to hyperinflation. Japan’s high debt to GDP ratio is caused by many reasons like quantitative easing and such, but the aging population is another factor for the major deficit. There is no way to pay for all of the elderly people who aren’t working anymore. To some extent, Bitcoin is immune to all those national debts and is one of the ways to prevent your wealth to get affected by this issue.

Another significant potential demand, which ties with the utility of Bitcoin, is to open up the world of finance to billions of people around the world who do not own a bank account. Many people in this world do not have access to a bank and own a bank account. Bitcoin could be the answer. As long as there are internet and a smart device like a smartphone, people can get hold of a crypto wallet. Moreover, people can send money from country to another directly, without the need to do money exchange. In the current system, intermediaries charge hefty fees to exchange the money or wire the fund. Heading into the future, we could even travel around the world with just bitcoin.

As I already mentioned, I am not a financial advisor; all of these are NOT meant to be financial advises. Please judge for yourself the case to invest in Bitcoin and cryptocurrency, and take responsibility for it

2018 vs 2019. How to invest in crypto without a huge risk?

After many investors lost their money last year, the market was devastated, and many people did not believe in the growth of Bitcoin until it sharply jumped up to $ 8,000.

At that time, while the newcomers of the last year were actively selling their crypto, whales came to the market. Their purchases continued almost until the end of the crypto of winter and now they own a significant amount of bitcoins.

For example, the Grayscale fund is actively investing in cryptocurrencies; during this time, it managed to increase a rather large amount in Bitcoins.

At the same time, statistics show that the total number of Bitcoin addresses has increased and is steadily increasing. Of course, the higher the number of addresses, the more people are interested in cryptocurrency.

End of ICO

That ended the era of failed startups and those who wanted a quick profit “got it in full.” The market is now self-cleaning, new major players are coming: Gram (Telegram), GlobalCoin (Facebook), etc.

Investors become more careful with cryptocurrencies. They prefer to learn more about founders, what the team did before crypto, etc. And of course, if you are a crypto startup and want to get investment, it will be more difficult.

The growing interest in IEO (Initial Exchange Offering) also demanded that the exchanges study the projects before listing. After all, exchanges act as guarantors, and they have something to lose (at least their reputation).

Crypto market 2k18 vs 2k19

2018 was marked the next funeral of Bitcoin and other cryptocurrencies. Many ICO’s quickly sold Ethereum in the hope of getting at least something …

As you can see on the graphs, after the fall of interest in the ICO, the price of Ethereum went down. Moreover, Ethereum now has an excellent competitor — BNB.

Crypto Marketing

I would also like to note how marketing has changed. It is no longer possible to make fast some crypto channel/website and immediately sell advertising…no it doesn’t work anymore.

All marketing ICO agencies disappeared?‍♂️. Many crypto YouTube bloggers and other celebrities of the industry disappeared too, but as soon as the price went up, everyone remembered Bitcoin.

Bans…Large advertisers such as Google, Facebook, Twitter have banned the mention of cryptocurrency in their advertisements…however

New Tools for newbie and professionals

And of course, professional investors brought tools from the stock market such as:

  • Crypto indexes — CIX100 and Huobi10.
  • ETF(Exchange Trading Funds)
  • Trading bots(Be careful when you chose a trading bot).

Conclusion

In 2019, the new trend will be the professional tools of major players, because now the game will go according to their rules. It is possible to make considerable manipulation from their side to discriminate a new market again.

Do not forget to diversify your crypto portfolio. Good luck!

Thank you for your attention!