Bitcoin Advances
One of the world’s biggest cryptocurrency exchanges is going on the offensive to deter hacking attempts that have been plaguing the industry.
Binance, founded by Zhao Changpeng, is offering the equivalent of $250,000 (paid in cryptocurrency) for information that leads to the arrest of hackers who targeted the venue last week, it said in a statement on Sunday. The exchange has set aside $10 million for future bounties and is encouraging other platforms to do the same.
Might this be the fundamental reason for Bitcoin's 8.6 percent advance yesterday to close at $9,528, or its 12.75 percent rebound from its $8,429 low? Today Bitcoin tacked on another 3.1 percent advance from yesterday’s close, or 4.8 rebound from the day’s $9,359.3 low.
Binance is fighting the good fight and rallying other exchanges to follow its example for the cause.
Can Bitcoin Be Tamed? Globally, Regulators Try
Then, there's the plan by regulators to 'tame' Bitcoin. After decades of increasing forex regulation and years of binary options upregulation, the 60-fold increase in the value of Bitcoin during the past three years alerted regulators earlier than in the past. Illegal ICOs, money laundering, tax evasion, cyberthefts, exchange outages and excessive speculation make up the list which concerns regulators.
The US's Securities and Exchange Commission (SEC) is focused on ICOs and are tough on approving crypto-related mutual and exchange traded funds. On March 7 they said for the first time that platforms serving as venues listing digital assets that are securities will need to register as national exchanges or qualify for an exemption. The Commodity Futures Trading Commission allowed two of the world’s biggest exchanges to list Bitcoin futures in December, arguing that the move would help it gain insight into markets where the cryptocurrency is traded. That same month, the CFTC is said to have subpoenaed one of the largest spot trading venues.
China has gone all out, banning outright both ICOs and cryptocurrency exchanges, as well as recently targeting platforms that provide domestic trades on overseas venues.
South Korea is working on comprehensive legislation. Meanwhile, though, it tightened existing rules.
Japan is more accommodating, introducing a law that resulted in 16 licensed trading venues. Still, it cracked down in early March, penalizing six exchanges and forcing another to restructure its management.
The Autorite des Marches Financiers, France’s top markets regulation, said on Thursday that online trading platforms for currency derivates fall under the EU’s MiFID II Regulations and face tough new reporting and business conduct standards. The platforms will also be barred from advertising the products electronically, a common practice in the industry.
Perhaps the most surprisingly unsurprising approach is that of Switzerland, whose economy minister wants to create a “crypto nation." While it may sound surprising that a government wouldn’t just be okay with cryptos but want to embrace it, the surprise fizzles when remembering the many years in which Swiss bankers and regulators resisted efforts of foreign tax regulation, including the US IRS, to acquire information about secret Swiss bank accounts. It was only after the DOJ and IRS Criminal Investigations Division shut down the oldest private bank and fined the largest, most prestigious Swiss banks for billions did the old appeal of Swiss banking lose…well, its appeal.
Embracing cryptos with “cutting edge” regulations, Switzerland may be regaining its former glory, emerging as one of “the world’s leading ecosystems for crypto, Blockchain and distributed ledger technologies,” according to Crypto Valley Association founder Oliver Bussmann. The country is flourishing with ICOs.
Meanwhile, Bitcoin is rising a second day, back above the neckline of a small double top, potentially blowing out the pattern and its bearish implications. Note that the rebound occurs on top of the falling channel, further increasing the potential for a further advance.
For now, the price is still beneath the key psychological $10K level. However, an advance over $11K may complete a H&S bottom, two-months in the making. Finally, a rise above $12K would post a peak higher than the one on February 20, with the high price $11,776, completing a reversal, with two rising peaks and troughs.
On the other hand, the bullishness of the crypto leader doesn’t seem to be spilling over to Ethereum. While, it has advanced 5.3 percent yesterday and another 3 percent today, it is still bearish for the following reasons:
- It's very much still within its falling channel.
- The pattern may be forming a Pennant continuation pattern, a pause in the downtrend for profit taking and trend-soul searching.
- Momentum weakened along with the price, via the RSI.
- The MACD provides a sell signal, as the shorter MA is below the longer MA, even as the price advanced in the last two days for a total of 8 percent.
- While the price trades between the 100 dma (blue), providing a resistance, and the 200 dma (red), providing a support, the 50 dma (green) is falling toward the 100 dma, demonstrating that overall prices have been going down. Should the 50 cross below the 100, it would create a Dead Cross, named ominously for its negative outlook.
- The ADX, which measures the strength of a trend (up or down) is the highest since the beginning of the falling channel, when prices collapsed more than 46 percent in just four days. And this extremely high read, measuring the last leg in the decline since March 5, is so despite the 8 percent rise of the last two days.
Trading Strategies – Short Position Setup
Conservative traders would wait for a trough to post lower than the February 6, $566 low, to affirm the downtrend. Note that the 200 dma (red) lined up to support it, revealing the importance of this price level.
Moderate traders may be content with a downside breakout of the pennant to risk a short.
Aggressive traders may short now, relying on the resistance of the pennant top.
Equity Management
Stop-Losses (Above provided parameters):
- $738.17, day’s high
- $745, Saturday’s high
- $770, Thursday’s – and Pennant’s – high
- $800, psychological-round number and falling channel top.
Targets (Above provided parameters):
- $673, Pennant bottom
- $590, 200 dma
- $566, February 6 trough
- $495, November-December support/resistance level
- $443, implied Pennant’s target, measuring the decline from the top of March 5 to the March 9 hammer low.
There are many trading strategies available for the same instrument in the same time. A trader must establish a plan, which would include his resources and temperament. This is crucial and determines success or failure.
Pair entries and exits should provide a minimum 1:3 risk-reward ratio. They should suit your time frame, with the understanding that the further the prices, the longer it will take to achieve them. Finally, understand that these guidelines are probability-based, which means by definition they include losses on individual trades, with the aim of profits on overall trades.