Market Report: 15th August 2018 — Subscribe to our newsletter.
Join our Telegram community.
CRYPTO NOTE
The daily view from our desk
One shot. One opportunity. One frenzy. One cult-like craze. One of the most minutely documented foods in Japan. One of the greatest metaphors in crypto. R-a-m-e-n 🍜. After last night’s sweet and sour dips, we would like to request the ability to have our portfolio denoted in packs of ramen. Tell us how #BullishOnRamen you are here — you’ll be r(amen)embered for ever. Shout out to @Ramen for the right reasons!
ONE BOUNCE DOES NOT A BOTTOM MAKE
Why a short squeeze is providing some short-term solace
As crypto markets finally take a deep breath — with the top 100 alternative and offbeat projects managing to recover 7.6% on average over the past 24 hours, following bitcoin’s 5.5% bounce to £4.95k ($6.3k) and a special token’s 24% jump — what can be anticipated? As usual, not much. But CNBC continues to be a curious and reliable contra-indicator.
Yesterday, they aired that one of their contributors was “desperate to be short” and shared his trade idea live. By this time, ether was still hanging around £200 ($255) and bitcoin was scraping £4.7k ($6k). Crypto Twitter jokingly picked up the news — as previously the TV channel tended to promote the opposite of what ended up happening.
From telling viewers how to long XRP when it hit its all-time high to several other infamous advice, one always needs to be careful when listening to those with skewed incentives, as TraderScarface notes. Still, it’s likely this is just a meme indicator for crowded trades, which tend to have a low success rate. Meanwhile, as fear of capitulation kicked in, bets against bitcoin and ether piled up, and many anticipated a short squeeze.
ROME DIDN’T CAPITULATE IN A DAY
Cats had a profound role in Egypt. Dead cat bounces should have one now
However, both bitcoin and ether appreciated over night. Why? Short squeezes may occur when there are significant bets against an asset. These require traders to borrow such assets — when they expect price to fall — so they can then pay back the loan at a lower value. Hence, if that happens they can realise a profit. In the event that price moves up, they can be forced to close their position, losing the collateral used to place the bet.
As of now, the ratio of shorts vs. longs on Bitfinex, a major exchange, has reached its 2018 high. It’s so obvious even CNBC itself picked it up. Even though bitcoin has moved up over night, the traditional explosive move following the ‘cascade of liquidations’ characteristic of a short squeeze hasn’t happened yet. Likely because even though a third of the short sellers are underwater they are still able to protect their positions.
For the time being, keep your ways on the charts and feeds. DonAlt, a seasoner trader, believes the squeeze might happen if bitcoin can stay above £5k ($6.4k), moving price upwards to £5.3k ($6.7k). However, if that plays out, remember it doesn’t mean the bottom is in. As for ether, even though yesterday’s volume hints at capitulation, as Alex Krüger reiterates, the uncertainty regarding bitcoin makes any trade extremely risky.
WHAT TO LOOK OUT FOR
Filter the noise and stay ahead of the pack
▪ Today is Ethereum London’s August meetup at Imperial College. Take a break from the virtual markets and meet the real buyers and sellers from 7pm BST onwards.
▪ Crypto investors are realising that buying without a plan is not a rational strategy. As Tracy Alloway remarks, it seems that “#HODL is dying, at least on Google Trends”.
▪ Learn more about Ripple’s litigation concerning XRP’s security status — explained by Jake Chervinsky — and about an SEC administrative order that claims airdropped tokens are also securities, by Drew Hinkes.
WHAT TO READ TODAY
An insight a day could give you more profits to play
▪ The most important thing to read today is Arthur Hayes’ reflection on the bear market. The traditional monthly newsletter from BitMEX’s CEO got two issues in four days just to explain what is happening with ether and alts, and what can happen to bitcoin.
▪ To be fair with CNBC, they recently interviewed Meltem Demirors, one of the few crypto VCs that criticises alts. Here’s her additional take on the TV show remarks.
▪ To conclude, the ETF narrative continues to cause confusion among crypto investors. Jordan Clifford, from Scalar Capital, concisely explains “the road to a Bitcoin ETF”.
FOUNDATIONAL TRIVIA
Because the building blocks of crypto needn’t be irrelevant
BitMEX was recently lauded as one of the three main causes of this bearish trend. The cryptosphere’s largest derivatives exchange has the most traded bitcoin and ether markets and also the highest fees. They get paid in BTC and sell it for USD, creating a lot of pressure on buyers. it’s also famous for helping new traders lose all their money.
Disclaimer: Any information, opinions, news or research shared by the sales or trading staff of London Block Exchange is not intended to be investment advice, and should not be treated as such. You must not rely on the information in the report as an alternative to financial advice. If you have any specific questions about investing your money you should consult a qualified professional. Without prejudice, we do not represent, warrant, undertake or guarantee: that the information shared in this channel as correct, accurate, complete or non-misleading; or that the use of guidance in the report will lead to any particular outcome or result.