Is the weakness of Bitcoin after the ‘Elon Musk pump’ hinting at a bull trap?

Is the weakness of Bitcoin after the ‘Elon Musk pump’ hinting at a bull trap?

Is the weakness of Bitcoin after the ‘Elon Musk pump’ hinting at a bull trap?

The price of Bitcoin (BTC) is showing overall weakness as it struggles to establish $34,000 as a support level. Overall, BTC appears to be stagnating without signs of a short-term relief rally, leading traders to be cautious.

One concerning trend is that the volume of Bitcoin has been stagnating along with its price, apart from the “Elon pump” on Jan. 29. This trend indicates that there is an overall drop in buyer demand since the $42,000 top despite BTC hovering in the low $30,000 region.

BTC/USDT 4-hour price chart (Binance). Source: TradingView.com

Bitcoin gets choppy after revisiting $38,000

On Jan. 29, the price of Bitcoin rose to as high as $38,461 on Binance after Tesla CEO and the world’s richest man, Elon Musk, ostensibly showed support for Bitcoin.

However, before this rally, on-chain analysts were already warning that the momentum of Bitcoin was slowing.

Ki Young Ju, the CEO of CryptoQuant, for example, pinpointed the high selling pressure from Bitcoin miners as a sign of a short-term bearish scenario.

Although the price of Bitcoin briefly surged 14%, it snapped back down to sub-$34,000 within 24 hours. Hence, weakening on-chain indicators were likely a warning that BTC would retrace most of its “Elon pump” gains. 

Ki wrote before the rally:

“Exchange Whale Ratio hit the eight-month high, meaning $BTC might have a large red candle if the price drops. It’s supposed to be below 85% if this bull-run is legit. Otherwise, it’s likely to be a bull trap.”

Whales likely sold as the price of Bitcoin abruptly surged to the $38,000 resistance level, causing a sharp correction.

With shaky on-chain indicators and some selling pressure coming from miners, traders are also showing caution about longing BTC/USD in the near term. 

A pseudonymous trader known as “Salsa Tekila” said that he is not using leverage until Bitcoin breaks out or drops back to $30,000. He said:

“We’re at that point where $BTC is far enough from the 30k for me not to be comfortable longing with any form of leverage but at the same time I wouldn’t short. Therefore being spot long until a big down / legacy open / probably Monday morning is best. NO LEVERAGE”

Meanwhile, another popular pseudonymous trader known as “Byzantine General” argues that the rally is broken. Hence, even if Bitcoin is bullish in the macro picture, more downside is possible until it sees a convincing breakout on lower time frames. He noted:

“The bull run is still on IMO, but the rally is broken. If we re-claim the yearly TWAP we can continue ze pump, but until then it looks kinda meh.”

Bitcoin price chart with TWAP level. Source: TradingView.com, Byzantine General

What to watch out for

Traders and technical analysts are closely observing Bitcoin’s reaction to the $34,500 to $35,000 range.

If Bitcoin breaks out of it with strength, momentum, and high volume, then the probability of a short-term trend reversal rises.

However, if Bitcoin struggles to retest the $34,500 resistance level and continues to stagnate in the $33,000 region, the risk of a further breakdown to the $33,000 support remains.

Crypto Fear and Green Index (78 or “extreme greed”). Source: Digital Assets Data 

Additional signs that BTC price could see another pullback include the Crypto Fear and Greed index remaining at “extreme greed” levels and Google searches for “Bitcoin” dropping by 50% since multi-year highs seen earlier this month. 

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View the original article here on Magnewspress.com Is the weakness of Bitcoin after the ‘Elon Musk pump’ hinting at a bull trap?

Is the weakness of Bitcoin after the ‘Elon Musk pump’ hinting at a bull trap? was originally published here https://magnewspress.wordpress.com/2021/01/31/is-the-weakness-of-bitcoin-after-the-elon-musk-pump-hinting-at-a-bull-trap/

FTX Token (FTT) rallies 105% as interest in derivatives trading grows

FTX Token (FTT) rallies 105% as interest in derivatives trading grows

FTX Token (FTT) rallies 105% as interest in derivatives trading grows

FTX is a cryptocurrency derivatives exchange backed by Alameda Research, a quantitative trading firm and crypto liquidity provider. 

The exchange launched in April 2019 and offered the usual spot trading, inverse swaps and futures contracts that can be found at other major platforms. By early 2020, the exchange launched its daily and weekly binary BTC options markets.

FTT/USDT daily chart. Source: TradingView

FTT is the exchange’s native token and it’s issued on the Ethereum blockchain. FTT stakers are granted a trading fee discount based on a tiered system and other benefits include bonus votes in their polls and increased airdrop rewards.

The first airdrop took place in August 2020 when 500 million Serum (SRM) tokens were distributed to FTT holders. To differentiate itself from competitors, the users’ collateral is shared in one universal stablecoin wallet.

This means traders can reduce their margin requirements drastically. Numerous leveraged tokens mimicking leveraged ETF stocks have also been listed, including 3x Long Bitcoin and 3x Short Litecoin.

Leveraged tokens are derived from the exchange’s perpetual swap contracts and operate as tradeable ERC-20 tokens that can be withdrawn and traded. These innovative products have made the FTX a popular exchange among investors, as reflected by its rising futures contracts open interest.

Global markets aggregate open interest. Source: coinalyze.net

As shown above, the figure grew by 340% over the past six months, surpassing the $2 billion mark to vastly outperform more established exchanges.

In November 2020, the exchange ventured into tokenized equity trading, albeit not available for its U.S. citizens. Its partner CM-Equity custody the tokens redeemable for the underlying stocks. Interestingly, it’s allowed its users to buy less than one share, which is particularly useful for high-priced stocks like Amazon ($AMZN) and Google ($GOOG).

In December, FTX continued to innovate by launching pre-IPO futures contracts for AirBNB and Coinbase. These contracts allow traders to speculate on what price those companies will list on a stock exchange. The exchange also offers trading for thematic products, including a basket of cannabis-related listed stocks.

By creating multiple markets with enough liquidity provided by its market-making structure, the exchange was able to gather attention from a new client base. More recently, a Wall Street Bets index was launched, including GameStop ($GME), Dogecoin (DOGE), and iShares Silver Trust ($SLV).

Backed by these popular offerings, FTX Token (FTT) price has doubled since the beginning of 2021.

FTX Token (FTT) token price at Binance. Source: TradingView

To further incentivize holding the token, FTX repurchases and burns 33% of all fees generated from the exchange and 10% of its insurance fund net additions. This process will continue until half of the initial 350 million supply are destroyed.

While this may appear like a deflationary schedule, there are 31.25 million tokens allocated to the team, representing at least 17.8% of the targeted 175 million circulating supply. Regardless, considering the current $11.70 token price, its market capitalization after the burn process is completed surpasses $2 billion.

This number represents a 45% discount to Binance Coin’s (BNB) projected 2031 market capitalization, according to data from Messari. This is also roughly in line with the exchanges’ aggregate open interest $4.26 billion to $2.0 billion difference .

Interestingly, Binance has an undisclosed investment in FTX, and this may be creating fewer incentives for direct competition.

Currently, it seems that the market is pricing both tokens at the same valuation. Binance appears to be expanding its ecosystem via its Binance Smart Chain decentralized exchange, their blockchain projects incubator and a successful token launchpad platform.

FTX, on the other hand, is focused on being the market-leader of derivatives products innovation.

Currently all of these projects are producing value for token holders and with the burn schedule and rising popularity among derivatives exchanges it’s possible that FTT will continue to see further price appreciation.

author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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XRP price gains 86% after Wall Street Bets’ crypto wing says ‘pump it’

XRP price gains 86% after Wall Street Bets’ crypto wing says ‘pump it’

XRP price gains 86% after Wall Street Bets’ crypto wing says ‘pump it’

XRP price underwent a strong 86% breakout in the early trading hours on Jan. 30 as the fourth-ranked cryptocurrency by market cap became the new coin of focus in the r/Wallstreetbets cryptocurrency-focused off-shoot r/Satoshistreetbets. 

Data from Cointelegraph Markets and TradingView shows that XRP rose from $0.28 to a peak at $0.51 before profit selling pulled the price back to $0.41.

XRP/USDT 15 minute chart. Source: TradingView

It appears that the antics of the past week which saw r/Wallstreetbets pump GameStop, AMC and Dogecoin (DOGE), have carried over into the weekend as Stellar (XLM) also saw its price pump in tandem with XRP.

After rallying more than 800%, DOGE price is now down 71% from its recent all-time high of $0.078 on Jan. 29. Data from TheTIE also shows that the rally in XRP price coincided with a drastic jump in tweet volume.

XRP price vs. Tweet volume. Source: TheTIE

Stellar (XLM) has also received some attention from r/Satoshistreetbets, resulting in a price spike of 64% on Jan. 27 which saw the price of XLM reach as high as $0.38 before correcting to its current value of $0.318.

XRP’s legal woes may place a damper on the rally

In the past few months, XRP price has been hard hit due to a lawsuit filed against Ripple by the U.S. Securities Exchange Commission (SEC). The SEC alleges that the company is conducting an ongoing illegal securities offering as Ripple still periodically sells XRP tokens out of the treasury.

Ripple recently filed a Freedom of Information Act request with the SEC seeking documents pertaining to Ethereum co-founders.

The company is demanding to know why Ether (ETH) isn’t considered a security and said that the government body “clearly picked two winners and ignored a growing and robust industry that is much larger than Bitcoin and Ether.”

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GameStop mayhem, Robinhood scandal, Musk tweets, DOGE explodes: Hodler’s Digest, Jan. 24–30

GameStop mayhem, Robinhood scandal, Musk tweets, DOGE explodes: Hodler’s Digest, Jan. 24–30

GameStop mayhem, Robinhood scandal, Musk tweets, DOGE explodes: Hodler’s Digest, Jan. 24–30

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View the original article here on Magnewspress.com GameStop mayhem, Robinhood scandal, Musk tweets, DOGE explodes: Hodler’s Digest, Jan. 24–30

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BTC billionaire Tim Draper to Elon Musk: I’d buy the Tesla Cybertruck with Bitcoin

BTC billionaire Tim Draper to Elon Musk: I’d buy the Tesla Cybertruck with Bitcoin

BTC billionaire Tim Draper to Elon Musk: I’d buy the Tesla Cybertruck with Bitcoin

Tim Draper, the billionaire Bitcoin (BTC) investor who also invested early in Tesla, reacted to the company’s CEO and world’s richest man, Elon Musk, adding #Bitcoin to his Twitter bio to join the likes of Twitter CEO Jack Dorsey and Reddit co-founder Alexis Ohanian.

Draper, who holds around 30,000 BTC according to reports, told Musk that he would like to pay for the Tesla cybertruck with BTC while promoting his Bitcoin payment processor portfolio company OpenNode. He said:

“Hi Elon Musk, I would like to buy a Tesla cybertruck. Although I personally would rather keep my own #bitcoin, you can accept #bitcoin through our Draper VC company OpenNode.”

Why now?

On Jan. 29, Bitcoin proceeded to rally by 14% in merely 30 minutes shortly after Elon Musk’s Bitcoin support began circulating on social media. 

Many speculated that Musk could have been the high-net-worth investor behind the massive Bitcoin accumulation on Coinbase in the past week.

In the past several days, the premium on Coinbase skyrocketed to around $200, compared to Binance. This usually indicates significant buying activity from U.S. investors.

However, Musk did not follow up on the bio change, and overnight, the rally reversed. Bitcoin rose from $33,000 to over $38,000, and dropped back down to $33,000.

Draper likely tweeted at Musk due the interest in Bitcoin from Musk and the positive market sentiment around BTC.

In a recent interview with CNBC, Draper said that he is actually buying more Bitcoin. Draper also said that he does not intend to sell BTC in the future, expressing his strong belief in Bitcoin as a “currency of the future.” He said:

“I’m actually just buying more [Bitcoin]… I have no interest in ever selling my #Bitcoin for dollars. Why would I take the currency of the future and sell it for the currency of the past?”

On-chain data shows that Draper isn’t the only one focused on long term gains.  In fact, “HODLing” activity, which indicates the intent of Bitcoin investors to hold BTC for a long time, is at record highs.

Bitcoin 1-year HODL wave. Source: Lookintobitcoin

Will Bitcoin ever be used as a currency?

Bitcoin is increasingly becoming considered as a store of value and an alternative to gold as a safe-haven asset. In recent months, though, the correlation and inverse correlation between Bitcoin, gold and stocks have been decreasing. 

Bitcoin correlation vs. S&P500,VIX, DXY, Gold. Source: Digital Assets Data

In addition to the massive price gains, the fear of inflation and the large injection of liquidity by central banks have stirred massive interest among institutional and high-net-worth investors.

But while accepting BTC is becoming increasingly common, the question remains whether Bitcoin would ever be used as a currency and a medium of exchange like the dollar today.

Ironically, when the price of Bitcoin is in a clear uptrend, investors are less likely to sell or spend their BTC. Draper himself is suggesting that he will probably pay the $40,000 for the Cybertruck with dollars rather than the “currency of the future.”

However, if Bitcoin price stabilizes in the future at a high enough price level and sees lower volatility, then BTC could become more compelling for everyday payments.

Meanwhile, as the network gains more users and must scale, the Bitcoin blockchain network may ultimately become inefficient to use for everyday payments on the first layer. 

At that point, second-layer scaling solutions, like Lightning Network and sidechains like Liquid, for example, may become the blockchain “apps” for processing small payments instantly. Such interoperable platforms will likely have their own tradeoffs with varying degrees of trustlessness, privacy and decentralization.

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View the original article here on Magnewspress.com BTC billionaire Tim Draper to Elon Musk: I’d buy the Tesla Cybertruck with Bitcoin

BTC billionaire Tim Draper to Elon Musk: I’d buy the Tesla Cybertruck with Bitcoin was originally published here https://magnewspress.wordpress.com/2021/01/31/btc-billionaire-tim-draper-to-elon-musk-id-buy-the-tesla-cybertruck-with-bitcoin/

BTC billionaire Tim Draper to Elon Musk: I’d buy the Tesla Cybertruck with Bitcoin

BTC billionaire Tim Draper to Elon Musk: I’d buy the Tesla Cybertruck with Bitcoin

BTC billionaire Tim Draper to Elon Musk: I’d buy the Tesla Cybertruck with Bitcoin

Tim Draper, the billionaire Bitcoin (BTC) investor who also invested early in Tesla, reacted to the company’s CEO and world’s richest man, Elon Musk, adding #Bitcoin to his Twitter bio to join the likes of Twitter CEO Jack Dorsey and Reddit co-founder Alexis Ohanian.

Draper, who holds around 30,000 BTC according to reports, told Musk that he would like to pay for the Tesla cybertruck with BTC while promoting his Bitcoin payment processor portfolio company OpenNode. He said:

“Hi Elon Musk, I would like to buy a Tesla cybertruck. Although I personally would rather keep my own #bitcoin, you can accept #bitcoin through our Draper VC company OpenNode.”

Why now?

On Jan. 29, Bitcoin proceeded to rally by 14% in merely 30 minutes shortly after Elon Musk’s Bitcoin support began circulating on social media. 

Many speculated that Musk could have been the high-net-worth investor behind the massive Bitcoin accumulation on Coinbase in the past week.

In the past several days, the premium on Coinbase skyrocketed to around $200, compared to Binance. This usually indicates significant buying activity from U.S. investors.

However, Musk did not follow up on the bio change, and overnight, the rally reversed. Bitcoin rose from $33,000 to over $38,000, and dropped back down to $33,000.

Draper likely tweeted at Musk due the interest in Bitcoin from Musk and the positive market sentiment around BTC.

In a recent interview with CNBC, Draper said that he is actually buying more Bitcoin. Draper also said that he does not intend to sell BTC in the future, expressing his strong belief in Bitcoin as a “currency of the future.” He said:

“I’m actually just buying more [Bitcoin]… I have no interest in ever selling my #Bitcoin for dollars. Why would I take the currency of the future and sell it for the currency of the past?”

On-chain data shows that Draper isn’t the only one focused on long term gains.  In fact, “HODLing” activity, which indicates the intent of Bitcoin investors to hold BTC for a long time, is at record highs.

Bitcoin 1-year HODL wave. Source: Lookintobitcoin

Will Bitcoin ever be used as a currency?

Bitcoin is increasingly becoming considered as a store of value and an alternative to gold as a safe-haven asset. In recent months, though, the correlation and inverse correlation between Bitcoin, gold and stocks have been decreasing. 

Bitcoin correlation vs. S&P500,VIX, DXY, Gold. Source: Digital Assets Data

In addition to the massive price gains, the fear of inflation and the large injection of liquidity by central banks have stirred massive interest among institutional and high-net-worth investors.

But while accepting BTC is becoming increasingly common, the question remains whether Bitcoin would ever be used as a currency and a medium of exchange like the dollar today.

Ironically, when the price of Bitcoin is in a clear uptrend, investors are less likely to sell or spend their BTC. Draper himself is suggesting that he will probably pay the $40,000 for the Cybertruck with dollars rather than the “currency of the future.”

However, if Bitcoin price stabilizes in the future at a high enough price level and sees lower volatility, then BTC could become more compelling for everyday payments.

Meanwhile, as the network gains more users and must scale, the Bitcoin blockchain network may ultimately become inefficient to use for everyday payments on the first layer. 

At that point, second-layer scaling solutions, like Lightning Network and sidechains like Liquid, for example, may become the blockchain “apps” for processing small payments instantly. Such interoperable platforms will likely have their own tradeoffs with varying degrees of trustlessness, privacy and decentralization.

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View the original article here on Magnewspress.com BTC billionaire Tim Draper to Elon Musk: I’d buy the Tesla Cybertruck with Bitcoin

BTC billionaire Tim Draper to Elon Musk: I’d buy the Tesla Cybertruck with Bitcoin was originally published here https://magnewspress.wordpress.com/2021/01/31/btc-billionaire-tim-draper-to-elon-musk-id-buy-the-tesla-cybertruck-with-bitcoin/

Bitcoin price chart shows ‘Elon Musk’ pump was an outlier — So what happens now?

Bitcoin price chart shows ‘Elon Musk’ pump was an outlier — So what happens now?

Bitcoin price chart shows ‘Elon Musk’ pump was an outlier — So what happens now?

Bitcoin (BTC) has seen a very volatile week, as the price of Bitcoin jumped around from $32,000 to $38,500 and back toward $33,000 in a matter of 24 hours. 

The initial spike to $38,500 happened in minutes after Elon Musk added #Bitcoin to his Twitter profile.

However, no follow-up of that price movement was seen on the charts as Bitcoin dropped substantially in the following hours. Currently, the $34,500 area is a significant resistance zone to break through if the market wants to sustain the bullish momentum.

Failure to break $38,000 causing dropdown

XBT/USD 4-hour chart. Source: TradingView

The levels that are critical to watch are highlighted in the chart above. Simply put, $38,000 must break for the rally to continue. Flipping this level for support opens the door to new all-time highs.

However, the surge couldn’t be sustained yesterday. After the $38,000 level’s failure, the $34,000 level couldn’t provide the heavily needed support for further upward momentum.

Therefore, the “Elon Musk pump” can be considered an outlier, and the general trend continues. This is a downtrend since the peak high at $42,000 that most likely will continue unless Bitcoin’s price can break through $34,500 and flip it into support.

Dollar showing strength is bad news for Bitcoin

U.S. Dollar Currency Index 1-day chart. Source: TradingView

One of the primary arguments for more Bitcoin downside would be the recovering U.S. Dollar Currency Index (DXY). This index shows a potential bottoming formation as a bullish divergence is seen at the significant 90-point level.

After this, the bullish divergence will be confirmed through a higher low, indicating that more upside is likely. 

Remarkably, the previous relief rally on the DXY Index in September caused a 20% correction for Bitcoin. However, since that relief rally, the DXY Index has shown massive weakness, one of the significant variables for the enormous increase of Bitcoin’s price to $42,000.

However, February isn’t the best month for equities. The same can be concluded about Bitcoin, as February 2018 was when Bitcoin crashed to $6,000 after hitting its previous all-time high.

Therefore, a rebounding DXY could add to the bearish sentiment for Bitcoin in February as well.

Bitcoin Dominance Index eyes relief rally

BTC Dominance 1-week chart. Source: TradingView

Historical charts show previous market behavior with many patterns being cyclical. 

When Bitcoin’s dominance topped out in December, massive surges were seen across the altcoin market. However, after such an enormous rally, a healthy correction would not come as a surprise to test previous resistance levels.

Those tests would mean a bounce for Bitcoin dominance in February, which may open the door for a huge run for the entire crypto market from March onwards.

Critical levels to watch for Bitcoin

XBT/USD 3-hour chart. Source: TradingView

The critical levels to watch are easy to see in the chart above. First, Bitcoin’s price has to reclaim the $34,500 level as support to sustain bullish momentum. If that happens, the level at $38,000 will be retested. Most likely, that test will result in a breakout above $38,000 toward the all-time high. 

However, if Bitcoin’s price can’t break through $34,500, further downward momentum is likely, as the chart shows. In that perspective, the critical level to watch is the $30,000 region. If that fails to sustain support (after numerous tests already), I expect a drop toward $25,000 and the 21-Week MA.

author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Bitcoin price chart shows ‘Elon Musk’ pump was an outlier — So what happens now? was originally published here https://magnewspress.wordpress.com/2021/01/30/bitcoin-price-chart-shows-elon-musk-pump-was-an-outlier-so-what-happens-now/