Market report

DO THE CRYPTO MARKETS MAKE SENSE?

London Block Exchange

8th March 2018

The reality of the markets made the past 24 hours a tough time for many, even more so than they faced on February 6th.

DO THE CRYPTO MARKETS MAKE SENSE?

The reality of the markets made the past 24 hours a tough time for many, even more so than they faced on February 6th — which is when bitcoin briefly touched £4.3k ($6k). This was, however, the same day that the SEC’s Chairman made an optimistic testimony on cryptoassets before the US Senate, so back then they got some respite.

Even then though, no one can say that those remarks were the sole driver for the high buying volume that followed. This goes to show that markets are not supposed to make sense — this is highlighted by the efficient-market hypothesis debate, which sheds the myth of the rational market.

It’s quite unfortunate then to see the mainstream media — from Bloomberg to CNBC — optimizing for clicks by deriving shallow sense of yesterday’s drop, reporting content such as “bitcoin is falling after SEC says crypto platforms must be registered”.

Although it may not make sense, this does not mean that one cannot beat the market. It’s not easy, but it’s possible — so long as you look below the surface and make your own judgements. Another tip is that if you are actively trading, follow these simple price action signs and cut your losses.

Finally, as reported yesterday, the bullish continuation is no longer on the table, so we can now say that this looks like a consolidation phase. If bitcoin drops below £6.6k ($9.2k), then watch out for the next support levels — maybe your alt holdings will find some room to breathe!

A SERIES OF UNFORTUNATE EVENTS

What really happened on one of the most erratic days of the year

Nevertheless, for the long-term investors and for the crypto-curious, let’s look at what happened. Firstly, the US’ SEC did state that they will push unregistered exchanges that offer any cryptoasset that can be deemed a security to register with them. Fortunately, some believe that “of all crypto assets, bitcoin seems least likely to be deemed a security — by a long shot”.

We also saw Japan reviving their regulatory plans and Mt. Gox’s trustee announcing that they sold 18% of the hacked exchange holdings to meet their obligations over the past few months.

Some are speculating that the latter caused the recent bear market due to the dates the funds were transferred to exchanges, but it’s likely that they were selling slowly so as to not influence the price as much as people may think. So what else is to blame for the drop?

We believe that a combination of bearish sentiment since the beginning of the year, accentuated by the last days’ trend reversal, made traders (and bots) panic when they saw the result of what was falsely addressed as a Binance hack.

Shortly before 15:00 GMT, a large-scale manipulation took place. In brief, hackers stole users’ account credentials via trading APIs over “a long period of time” and decided to then pump Viacoin — a low liquidity asset — and sell it at the ‘artificial’ top for BTC. This in-turn triggered other exchanges’ bots to sell. Thankfully, all funds are now safe and irregular trades have been reversed.

WHAT TO LOOK OUT FOR

Filter the noise and stay ahead of the pack

To further add to the bearish view, did you notice that the NVT ratios of the major cryptoassets look disconnected from their prices?

To follow the last day of the DC Blockchain Summit, just follow the Twitter hashtag. Be sure to also check out yesterday’s ‘central banking’ talk from Jihan Wu, Bitmain’s co-CEO.

To lighten up the mood from all the FUD, check out this theory that suggests that Nintendo created Bitcoin following Super Mario’s teasers — you know, smashing blocks to get coins.

WHAT TO READ TODAY

An insight a day could give you more profits to play

Wired reports that the famous UK Bitcoin developer who fought ISIS in Syria is looking for five, preferably female, “monk hackers” to — among other projects — “revive Bitcoin’s vision”.

CoinCentral profiles McAfee’s divisive figure in a balanced way. The man himself even thinks it’s “one of the few articles that captures what he feels he is — sometimes”.

CCN covered some old news that deserves to be highlighted. “Some 1,200 news stands in Australia will be equipped to resell bitcoin and ether”, which is a bullish sign of adoption.

  • CNBC
  • SEC
  • Binance
  • VIA
  • NVT