Bitcoin Price Is Showing All 3 Crucial Signs of a Classic Bull Trap

Bitcoin price surged by 10 percent in 24 hours, but three factors suggest that the rally itself may be a fakeout.

Image courtesy of CoinTelegraph

              APRIL 24, 2020

The Bitcoin price increased by more than 10% in a 24-hour span, rising from $7,020 to $7,770 on both spot and futures exchanges. But, BTC is showing all three signs that the upsurge was a bull trap.

Negative futures funding rate before the rally, altcoins failing to front-run Bitcoin, and the BTC price running into a multi-year resistance level all point toward the recent price spike being a fakeout.

Futures funding rate was negative before Bitcoin rally

On Binance Futures, the funding rate of Bitcoin dropped to as low as -0.03% prior to the abrupt increase in price.

Bitcoin funding rate chart across all futures exchanges. Source: Skew

Futures exchanges like BitMEX and Binance Futures use a system called funding to provide balance in the market for both long and short contract holders. If there are more short contracts in the market, then the funding rate turns negative and traders shorting BTC have to compensate long contract holders with a portion of their positions.

As an example, if a trader places a $50,000 short on Bitcoin and the funding rate is -0.03%, then the trader has to pay $15 every eight hours, so $45 in total per day to long contract holders.

When the Bitcoin price started to increase and the funding rate remained negative on April 23, it created an unfavorable environment for sellers, as they were paying a part of their positions while the value of their trades was swiftly declining.

That forced short holders to close or adjust their positions, adding to the already rising buying demand in a short period of time. It ultimately converted into a short squeeze, liquidating $79 million worth of shorts on BitMEX alone.

A short squeeze was expected due to the negative funding rate, but the momentum of the rally dwindled quickly, raising skepticism towards the strength of the upside move.

Altcoins are not rallying in tandem

Typically, in an extended and sustainable Bitcoin rally, major alternative cryptocurrencies in the likes of Ether (ETH) and XRP tend to rise in tandem with BTC, front running it at times.

During the time the Bitcoin price increased by seven percent, the price of Ether rallied by around seven percent, underperforming against BTC.

The lack of high volatility in the altcoin market amidst a Bitcoin uptrend indicates that there are not many buyers in the cryptocurrency market willing to take additional risks in the short-term.

BTC finds itself at a multi-year resistance area

The spike in the Bitcoin price came to a halt at $7,770, a level that has acted as a resistance level since early 2018.

BTCUSD weekly chart. Source: Tradingview

The $7,700 to $8,300 range has served as one of the heaviest resistance areas alongside the $10,500 to $11,000 range since January of 2018.

With $7,900 and $8,000 being historically important simple moving average (SMA) resistance levels, it is highly improbable that BTC breaks both levels at once without any rejection, which may cause a steep downtrend following the halving in mid-May.

One variable, however, is that April through July have consistently been strong months for Bitcoin throughout the past several years and the upcoming halving falls into the three-month range.

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Original article posted on the CoinTelegraph.com site, by Joseph Young.

Article re-posted on Markethive by Jeffrey Sloe

Deutsche Bank: Cryptocurrencies Won’t Replace Cash ‘Anytime Soon’

Image courtesy of CoinTelegraph

            JAN 27, 2020

Deutsche Bank’s research arm issued a report predicting that cash will be around for a long time despite the surge of digital currencies.

Cash is unlikely to disappear anytime soon despite the decline of its use as a payment method and the surge of digital currencies, Germany’s largest bank believes

Cash is unlikely to disappear anytime soon despite declining use as a payment method and the surge of digital currencies, Germany’s largest bank says.

Deutsche Bank, a German multinational investment bank that previously predicted that cryptocurrencies will replace fiat by 2030, now claims that cash “will be around for a long time” as a preferred method of payment.

Deutsche Bank Research issues three reports on the future of payments

The bank has forecast a tentative future for cash in one of its recent “The Future of Payments” reports carried out by Deutsche Bank’s research arm Deutsche Bank Research. Titled “Cash: the Dinosaur Will Survive … For Now,” the report was issued on Jan. 21 and represents the first part of a series of reports on the future of payments. The second part, called “Moving to Digital Wallets and the Extinction of Plastic Cards,” was published on Jan. 23, while the third and final part of the series, “Digital Currencies: the Ultimate Hard Power Tool,” was issued on Jan. 27.

Despite expressing its confidence that cash will remain a major payment method in the near future, Deutsche Bank admits to a growing role for the ongoing digital payment revolution. The bank wrote in its “Cash” report:

“In this report, we argue that cash is unlikely to disappear anytime soon. However, a real digital payment revolution has been underway for the past ten years. Cash is losing ground as a payment method. Several countries have recently removed large notes worth $100 or more and implemented policies to replace traditional payment methods with digital solutions. In the midst of these changes, non-sovereign cryptocurrencies pose a threat to political and financial stability.”

Over 50% of people in developed countries believe that cash will always be around

As part of the cash-focused report, Deutsche Bank Research conducted a survey indicating that a third of people in developed countries consider cash to be their favorite, while more than 50% are sure that cash will always be around. Additionally, the bank found out that Germans hold the highest average rate of cash among advanced economies, which accounts for 52 euro or about $57 at press time. According to Deutsche Bank, Germany plans to use even more cash in the coming six months.

The world’s two most populous countries encouraging greater use of digital currencies

Deutsche Bank further outlined that the future of cash will greatly depend on further developments in China and India, which are the world’s two most populous countries. Specifically, the bank emphasized that both countries have been encouraging greater use of digital currencies and blockchain. As such, China’s President called for the country to accelerate its blockchain adoption in late 2019, while India’s securities regulator recently urged on Jan. 23 that exploration of the best possible usage of blockchain in securities markets.

As China has reportedly seen progress with its government-backed digital currency, Deutsche Bank warned that the adoption of such a currency poses a serious threat to the United States dollar:

“China is working on a digital currency backed by its central bank that could be used as a soft- or hard-power tool. In fact, if companies doing business in China are forced to adopt a digital yuan, it will certainly erode the dollar’s primacy in the global financial market.”

As to the growing trend of crypto and blockchain industry, Deutsche Bank has also been actively working in the developments in this area. In September 2019, Deutsche Bank joined JPMorgan’s blockchain-based network, the Interbank Information Network to reduce the cost of processing difficult payments and offer better client services.

Original article posted on the CoinTelegraph.com site, by Helen Partz.

Article re-posted on Markethive by Jeffrey Sloe

Texas Regulator Lists Cryptocurrencies Among Top Threats To Investors

By RTTNews Staff Writer | Published: 1/23/2020 10:32 AM ET

The Texas State Securities Board or TSSB listed cryptocurrencies to be among the top threats to investors. This was revealed in the 10th anniversary edition of the Texas Investor Guide published by the TSSB under the title “Strategies for Investing Wisely and Avoiding Financial Fraud.”

The regulator lists cryptocurrency offerings as a threat to investors as they are extraordinarily volatile or risky and almost impossible for a layperson to understand. Cryptocurrency prices continue to be in a constant cycle of boom and bust.

Cryptocurrencies became popular at a time when bitcoin reached a record high of $19,891 in December 2017, an increase of 1,800 percent for the year. However, the price had dropped to $6,846 in less than two months later.

Investors began looking at virtual currencies as a quick path to wealth. Even seniors and retirees got easily persuaded to invest in initial coin offerings and cryptocurrency mining pools.

This has resulted in a huge number of cryptocurrency-related cases that have and are being investigated by the TSSB. In fiscal year 2019, 30 percent of the investigations opened by the Enforcement Division involved cryptocurrency offerings.

The TSSB has been one of the most active state regulators with regard to cryptocurrencies for the well-being of investors in Texas. It was the first to enter an order against a cryptocurrency firm and has reportedly entered the most orders of any state regulator.

Since April 2018, the Texas state regulator found widespread violations of the Texas Securities Act in cryptocurrency offerings during an investigation of investment offerings that were tied to virtual currencies.

In the current publication, the regulator warned investors not to invest in cryptocurrency offerings unless they can determine some basic facts about the company, primarily the identity of principals and its physical location. Otherwise, the investor will end up transferring funds to anonymous third parties at undisclosed locations.

Additionally, the TSSB urges the potential investors to see audited records or other financial information to back up any claims of high profits. Most important, it urges investors to deal with registered parties.

The regulator states that the state of Texas’ rigorous registration requirements applies equally to traditional securities and emerging securities, including products tied to cryptocurrencies. It warns that the investor will have little or no recourse if their money is stolen.

For comments and feedback contact: editorial@rttnews.com

Article written by an RTT News Staff Writer, and posted on the RTT News.com website.

Article reposted on Markethive by Jeffrey Sloe

Bitstop To Install Bitcoin ATMs At Simon-operated Malls

By RTTNews Staff Writer | Published: 11/29/2019 9:08 AM ET

Miami-based Bitcoin ATM operator Bitstop is in deal with Simon Malls, the largest shopping mall operator in the U.S., to install Bitcoin ATMs across the U.S. at Simon Mall locations. The installations come in time as holiday season is on.

Bitstop, a licensed and regulated company, has already installed five Bitcoin ATMs recently at Simon operated malls in California, Florida and Georgia. They are Carlsbad Premium Outlets, Miami International Mall, Sawgrass Mills, The Avenues and Mall of Georgia.

In October, Bitstop had installed the Miami International Airport first Bitcoin ATM. It is the third-busiest airport in the U.S., in terms of international passenger traffic, and will help customers conveniently exchange their dollars for Bitcoin and vice versa while on domestic or international travel.

Bitstop said it has a total Bitcoin ATM count of more than 130 machines across the U.S. and is on track to expand the Bitstop network to more than 500 Bitcoin ATM installations by the end of 2020.

Automated kiosks for buying bitcoin are becoming increasingly popular in the U.S. More than half of the world's Bitcoin ATMs are installed in the United States.

There are a total of 3963 Bitcoin ATMs currently installed in United States out of a total of 6055 Bitcoin ATMs globally, according to data from Coin ATM Radar. The total count is expected to reach 10,000 by the end of 2020, with the recent average daily installation rate of more than 10 machines.

In July, Bitcoin ATM operator LibertyX had entered into a deal with traditional ATM operator Desert ATM to convert cash-dispensing ATM machines into those dispensing cryptocurrencies as well. LibertyX will load its software on 90 Desert ATMs, specifically the ones manufactured by Genmega, in Arizona and Nevada.

For comments and feedback contact: editorial@rttnews.com

Article written by an RTT News Staff Writer, and posted on the RTT News.com website.

Article reposted on Markethive by Jeffrey Sloe