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One Month Later, Which Crypto Is Winning the Bitcoin Cash Split?

One month has officially passed since the bitcoin cash blockchain underwent a hard fork on November 15, resulting in the creation of two distinct networks.

They’re now commonly referred to as Bitcoin Cash ABC and Bitcoin SV. Yet in the weeks that followed the mid-November fracture, there is still no favorite in terms of overall price.

Bitcoin cash is designed in such a way that, every six months, its users must ‘fork’ the blockchain and adopt a software upgrade with changes determined by the project’s open-source software developers.

If the developers and miners reach consensus as to what the upgrades should be, the main chain stays intact and simply adopts the software upgrade known as a ‘soft fork’.

All bitcoin cash forks had fallen under the ‘soft’ category, but circumstances were different with the latest fork. This time around, the upgrades could not be agreed upon and tension grew among developers, so the main chain experienced a divisive hard fork – in other words, it split into two separate chains with their own cryptocurrencies.

Since the fork, both BCHABC and BSV have been trading on public cryptocurrency exchanges like Binance and Coinbase, but after 30 days of wild volatility and drastic swings in hash power, their prices stand just $10 apart.

Where are they now?

Bitcoin cash prices reached a peak of $621 in November but had fallen 32 percent to $421 on Nov. 14, the day before the scheduled fork. according to CoinDesk’s pricing data.

After the split, the two newly created cryptocurrencies bitcoin cash ABC and Bitcoin SV hit the market and began trading at $295 and $90 respectively on the Binance exchange.

It should be noted that multiple exchanges including Poloniex and Bitfinex engaged in ‘pre fork trading’ before the fork took place.

These experimental markets involved the trading of ‘IOU’ token place holders for BCHABC and BSV redeemable post-fork, theoretically allowing exchange users to decide amongst themselves which fork to support.

For much of November, BCHABC was the distinct price leader, at times valued as much as 10 times that of its counterpart.

The difference between the two narrowed as the month elapsed, so much so that Bitcoin SV was able to take a brief price lead on Dec. 6.

Since the fork, the broader cryptocurrency market has witnessed a significant sell-off of more than $80 billion in terms of total capitalization. As a result, the two forks depreciated greatly in price.

At the time of writing, BCHABC (currently trading under the BCH ticker on many exchanges) is valued at just $80, while BSV is $70, according to CoinMarketCap, so it’s clear the public has yet to pick an undisputed favorite.

Looking forward

While the long term success of BCHABC and BSV will likely be dictated by usage and hash power, technical analysis can be applied to their price charts so a more immediate direction of the assets prices can be anticipated.

As can be seen in the BSV/USDT chart above, price began forming a bearish consolidation pattern known as the descending triangle on Nov. 26, which broke down on Dec. 16. 

The break of triangle support at $84 opened the doors for more depreciation with just two notable support levels nearby: $74 and $54. Based on the large size of the triangle pattern, it seems the lower support level is likely to be reached although the oversold conditions seen on the intraday relative strength index (RSI) may slow the fall.

There is less to glean from the BCHABC chart since it has been in a steady, near 80 percent downtrend ever since hitting the market.

With no known support levels nearby, it’s difficult to predict where its price may eventually pick up bid although oversold conditions are evident on the higher time frame charts, so sellers may soon take a breather allowing for a corrective bounce.

Needless to say, it’s unlikely either of the newly forked cryptocurrencies pick up strong big until bitcoin and the broader market does as well.

Disclosure: The author holds BTC, AST, REQ, OMG, FUEL, 1st and AMP at the time of writing.

Locked forks image via Shutterstock; charts by TradingView

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Bitcoin Price Consolidates Sub-$3.5K With Bulls and Bears in Stalemate

Bitcoin (BTC) is consolidating below $3,500 for the third day straight.

The challenge now is to gauge whether the bulls or the bears will win out in the coming days.

As discussed yesterday, the leading cryptocurrency could soon see a corrective rally if prices manage to clear the crucial resistance at $3,633 (the high of an “inverted hammer” candle on the 3-day chart) by Friday’s UTC close.

The bull case is also bolstered by bitcoin’s 14-week relative strength index, which is reporting oversold conditions for the first time since January 2015. A corrective rally, therefore, looks overdue.

The odds of a move above $3,633 would rise if BTC’s five-day-long narrowing price range ends with a bullish breakout. As of writing, the upper edge of the price range is located at $3,456 and the lower edge is seen at $3,360.

However, it’s worth remembering that BTC has repeatedly struggled to score a significant and lasting rally in recent weeks, despite the very oversold conditions.

BTC is currently trading at $3,400 on Bitstamp, representing a 0.75 percent drop on a 24-hour basis.

Hourly Chart

BTC has created a symmetrical triangle (narrowing price range) on the hourly chart. A bull breakout would validate the argument put forward by the 3-day inverted hammer candle that bargain hunters are beginning to challenge the bears’ resolve to push prices lower.

As a result, the triangle breakout, if confirmed, could yield a quick move higher to $3,633.

BTC, however, risks falling to the 200-week moving average (MA) of $3,179 if prices pierce the triangle support of $3,360. That long-term MA support will likely hold ground, as the 14-week RSI is reporting extreme oversold conditions.

6-hour chart

Many market technicians believe that a break of an RSI trendline often precedes the break of a trendline in price.

Going by that logic, the falling channel breakout in the 6-hour chart RSI could be considered an advance warning of an impending bullish price move.

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  • Bitcoin could see a stronger recovery rally if prices close above $3,633 on Friday.
  • A symmetrical triangle breakout on the hourly chart would boost the probability of BTC finding acceptance above $3,633.
  • A symmetrical triangle breakdown would be a bearish development, although downside could be restricted around the 200-week MA of $3,179.
  • That said, the bullish scenario looks more likely to play out, as the 14-week RSI is signaling extreme oversold conditions and the 6-hour RSI is biased toward bulls.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View

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Romper Room to White Linen: Saying Goodbye to Crypto’s Infant Anarchy

Sheila Bair is an advisor to Omniex, a technology company providing services to institutional investors, and a board member of the Paxos Trust, a regulated trust company developing blockchain technology.

She does not own crypto assets. The views expressed are her own. The following is an exclusive contribution to CoinDesk’s 2018 Year in Review

When our children were small, we would take them to a local Mexican restaurant that had an upstairs dining room specially reserved for families with young kids. Entering that dining room was entering a cacophony of crying babies and screaming toddlers, with 40-inch tall humans running amok, perilously circumventing waiters and hiding under tables to evade parental clutches.

Given that our own daughter liked to drink salsa right out of the dipping bowl, while our son typically landed more guacamole on the floor than in his mouth — we loved it. It was meant to be anarchy.

No one cared if our kids failed to follow proper dining etiquette. But as the kids matured and acquired proper table manners, we moved downstairs to the main dining room, where the grown-ups demanded a higher level of service, and behaved accordingly. The proprietors even dared to use white table cloths, which remarkably stayed salsa-stain free.

In their early years, the cryptocurrency trading markets were a bit like that upstairs dining room.

Dominated by adventurous, risk-seeking technology buffs (and some crooks), anarchy prevailed as there were no clear rules around trading, know-your-customer or security standards. Every trader looked out for him or herself.

But as these markets have matured, a few exchanges have now sought regulated status as trust companies, subject to annual examinations by bank regulators, capital requirements and the full panoply of anti-money laundering and cyber security rules.

The recent launch of bitcoin futures products on exchanges regulated by the CFTC have reinforced this trend, prompting the adoption of anti-manipulation policies, better market surveillance, and information-sharing agreements between the crypto spot markets and regulated futures exchanges.

As crypto trading has survived and matured, we now we see institutional investor interest picking up (bitcoin prices notwithstanding). Regardless of which cryptocurrencies ultimately succeed (I tend to think bitcoin will survive as a store of value), the smart money has come to accept crypto as a new, legitimate asset class and is seeking well-regulated venues to invest.

Even Boston Brahmin Fidelity is entering the space, recently announcing the launch of a separate company to handle custody and trade execution for institutional customers.

Hurdle ahead

Still, many institutional investors are reluctant to take the plunge.

It is a testament to the strength of the Security and Exchange Commission’s investor protections that they want a way to take a position in crypto through a product on a regulated securities exchange. Yet, recently the SEC disapproved nine applications it received to list a crypto exchange traded product (ETP).

Still pending is the CboeBZX Exchange’s application to list and trade SolidX Bitcoin Shares issued by the VanEck SolidX Bitcoin Trust. Many viewed this application as having the best chance of getting a nod from the regulator.

However, in recent remarks before the Consensus Invest conference, SEC Chair Jay Clayton seemed to pour cold water on SEC approval of any ETP as he re-iterated SEC concerns about the strength of market surveillance in crypto spot markets as well as protections against “theft or disappearance” of crypto assets.

The SEC is right to focus on protecting investors against market manipulation and the security of their crypto assets. These are core to the SEC’s mission. However, there is not an asset class on the planet where absolute guarantees can be made against cyber-attacks or attempted manipulations. The real question is whether the proposed ETP offers protections that are as strong as those afforded investors for other types of exchanged-traded products that have been approved by the SEC.

With regard to protections against investor loss from criminal activity or operational error, the VanEck trust is providing significant protections. Unlike other ETP applications, when an investor buys the VanEck shares, the fund will buy an equivalent amount of real bitcoins. It will secure the bitcoin by using industry best practice: multi-signature cold storage wallets with backups in geographically diverse locations for disaster recovery purposes.

Adding a belt to these suspenders, it will maintain comprehensive insurance to protect investors against loss.

Striking a balance

However, the strength of market surveillance and anti-manipulation policies varies widely across the many crypto trading markets, and this is a cause for concern. On the plus side, the large number of venues in which bitcoin trades arguably makes it less susceptible to manipulation than spot markets for other assets where trading is more concentrated.

Active arbitrage between the OTC and spot exchanges should also reduce manipulation risk. In addition, there are no insiders or material non-public information on which to trade, and it would be difficult to disseminate false or misleading information about bitcoin because aggregate supply is determined by a public, straightforward algorithm.

But on the negative side, the bitcoin spot market’s thin liquidity and domination by individual investors increases manipulation risk. The conundrum here is that increased institutional participation in these markets – which would be facilitated by the SEC’s approval of the ETP – is probably necessary to achieve greater liquidity.

More generally, the entry of more demanding institutional traders would have a disciplining effect on crypto exchanges to tighten surveillance. The fact that the initial per-share price of the ETP is 25 bitcoins means shares will be traded by institutional and other substantial investors who are better equipped than retail investors to drive greater transparency and anti-manipulation safeguards.

Yet, the SEC has a difficult task in ensuring appropriate investor protections without setting impossibly high standards. By accommodating greater institutional participation in crypto assets, the SEC could force improved standards in the spot markets where retail investors dominate – sometimes at their peril.

Testing an ETP with an institutional investor base could inform future work on a retail product giving individual investors venues to trade under the watchful eye of the SEC. Crypto assets are ready for the white linen treatment of a fully regulated securities exchange.

Let’s hope the SEC can find a careful path forward.

Have an opinionated take on 2018? CoinDesk is seeking submissions for our 2018 in Review. Email news [at] coindesk.com to learn how to get involved. 

Glasses image via CoinDesk archives 

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Bitcoin Price Charts Indicate Glimmer of Hope for Corrective Rally

Bitcoin’s (BTC) struggle to build a notable bounce could end if prices beat key resistance above $3,600.

The leading cryptocurrency by market value fell to 15-month lows near $3,200 last week, pushing the 14-week relative strength index (RSI) below 30.00 for the first time since 2015.

So, with bitcoin so extremely oversold, a recovery rally cannot be ruled out – more so because there is evidence of bargain hunters challenging the bears’ resolve to push prices lower.

For instance, BTC posted a three-day candle on Dec. 8 that closed below support at $3,463 (low of multiple three-day candles in September 2017), bolstering the already bearish technical setup. Despite that, BTC not only avoided a drop to $3,000 in the last 72 hours but also hit a high of $3,633, if briefly.

Nevertheless, the fact that prices were able to defy the bearish setup indicates that the bulls are beginning to flex a little muscle.

Therefore, a stronger rally could unfold if prices manage to cross the newfound resistance of $3,633 in the next 48 hours or so.

As of writing, BTC is trading at $3,414 on Bitstamp, having clocked a low of $3,325 earlier today.

3-day chart

As seen above, bitcoin has charted an “inverted hammer” candle, which occurs when prices see a brief rally during a downtrend. It is widely considered a sign of potential trend reversal.

The bullish reversal, however, would be confirmed if the follow-through is positive, that is, the current 3-day candle needs to close above $3,633 on Friday.

That could see prices open up upside toward the psychological resistance of $4,000.

Daily chart

On the daily chart, the 14-day RSI has posted a higher low as opposed to the lower low on price, meaning the indicator is diverging in favor of the bulls.

However, again, a high-volume move above $3,633 is needed to confirm a short-term bullish reversal.

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  • A convincing move above $3,633 would validate the inverted hammer candle seen in the 3-day chart and open the doors for a stronger corrective rally to $4,000.
  • A break above $3,633 would also confirm a bullish divergence of the 14-day RSI and open up upside on the daily chart toward $4,400 (Nov. 29 high).
  • A break below the recent low of $3,210 would reinforce the overall bearish view, although oversold conditions on the 14-week RSI could limit the downside around $3,000.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View

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Ether Price Now Down 94% from January’s Record High

The price of ether fell to 19-month lows just over $80 today and is now down 94% from its January peak.

Ether’s dollar-denominated exchange rate (ETH/USD) slipped to $81.30 at 02:15 UTC – the lowest level since May 2, 2017 – according to CoinDesk’s Ethereum Price Index (EPI).

As of writing, ETH is trading at $83.00, representing a 17.8 percent drop on a 24-hour basis. Just three weeks ago, it was teasing a short-term bullish reversal above $200.

That key support (now resistance), however, was breached on Nov. 14, as bitcoin’s drop below the crucial support of $6,000 dashed hopes of a major bullish reversal, leading to broad-based risk aversion in the cryptomarkets.

Ether prices have dropped close to 60 percent in the time since and are currently down a staggering 94 percent from the record high of $1,431 hit in January.

So, it is not surprising that bearish sentiment has reached extremes, as seen in the chart below.

ETH/USD shorts at record high

Notably, ETH/USD short positions on cryptocurrency exchange Bitfinex rose to a record high above 340,000 soon before press time – up 183 percent in the last three weeks. Meanwhile, long positions have dropped to the lowest since Sept. 12, as seen in the chart above.

Such extreme positioning is usually a sign of oversold conditions and presages market bottoms. However, calling a bullish reversal with that information alone could prove costly.

The outlook, therefore, remains bearish until a more credible evidence of trend reversal emerges.

Weekly chart

As seen above, ETH created a small doji candle last week, implying bearish exhaustion. That pattern, however, has been invalidated with the drop to 19-month lows.

Moreover, ether has found acceptance below $102.20 (low of the doji candle), meaning the sell-off from $200 has resumed.

The chart also shows that 5- and 10-week simple moving averages (SMAs) are trending south.

As a result of all these bear indicators, ETH may extend the decline toward the next major support lined up at $59.00 (March 2017 low).

We can, though, expect the momentum may weaken somewhat, as the 14-week relative strength index (RSI) is reporting oversold conditions for the first time December 2016.

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  • ETH may test crucial support at $59.00 (March 2017 low) in the near-term.
  • With oversold readings on the weekly RSI and bearish sentiment at record highs, there is always a risk of a sudden corrective rally. The outlook, however, would turn bullish only if ETH violates the recent bearish lower-high pattern with a daily close above $128.00 (Nov. 28 high).

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Ether image via Shutterstock; charts by Trading View