Bitcoin is Taking a Beating, but Traders Can Still Make a Profit

October 18, 2019
“Success is not final; failure is not fatal: It is the courage to continue that counts”
― Winston S. Churchill

5-Day Change

  • Bitcoin $7,931
  • Ethereum $172
  • Ripple $0.29
  • Litecoin $53

Bad News is Pushing Bitcoin Down

Bitcoin has dipped below $8,000, and it seems like more drops are in sight...thanks to a raft of bad news to hit crypto as a whole. Libra, Facebook’s much-hyped, not-a-crypto project looks to be stalled on regulatory issues while losing some of the biggest partners in its Libra Association. Meanwhile, Telegram’s TON coin launch by the end of the month is looking pretty shaky also, as the SEC filed an emergency restraining order against the messaging app.

How does that affect Bitcoin? It doesn’t help at the very least. Bitcoin looks like it’s going to have a price correction sometime soon, and even more bad news – even if they’re only tangentially crypto-related, like Libra – will serve to dampen enthusiasm even more.

Any culprits beyond bad press? Guessing motives for price movements is more an art than a science, but there are some theories –  like short-sellers taking advantage of low volumes compared to the summer to offload until they hit resistance. That, along with the worsening global economy as a whole, maybe pushing investors into less-risky asset classes.

Is there any good news at all? The Relative Strength Index (RSI) does have some encouraging factors. A bullish divergence has been confirmed and may play out over the next few weeks, while the key support at $7,770 hasn’t been broken yet.

Wut We Think: It might be doom and gloom for Bitcoin’s price, but wise traders know that getting attached to a particular price movement direction is a loser’s game. Without any good news on the horizon for at least a few weeks, betting that Bitcoin will continue to depreciate is a smart play, while paying attention to the $7,700 support will dictate how the price moves forward.

Libra Loses Big Names but Finds New Partners

Libra, Facebook’s new private currency project, has seen some big names exit the initiative...but it is far from dead, despite pressure from world governments. The Libra Association Agreement has finally been signed, with 21 founding partners, along with inaugurating its first governing board. This agreement shows that even with governmental skepticism, Zuckerberg and Facebook are determined to see this through.

So who left? Unfortunately for Facebook, some of the biggest partners in terms of reach and technical know-how are among the exiles, including Mastercard, Visa, and Stripe. The common link that connects them is that most of them are global payment processors – precisely the kind of partners you’d want if you were launching a global currency.

Why did they leave? A big factor seems to be a letter from the U.S. Congress signed by two senators, who framed Libra as not only a threat to the global financial system but to the payment processors themselves. And another U.S. lawmaker has pushed for replacing Libra with Bitcoin.

And who stayed? Big names like Uber and Spotify are still in it, along with smaller payment processors and venture capital firms like Andreessen Horowitz. And besides, there seems to be no shortage of interesting faces, with the Libra Association saying that over a thousand more companies are looking to join. 

Wut We Think: Even with Libra’s full-steam-ahead attitude, it’s difficult to imagine a world where the fears of policymakers and regulators are assuaged enough for Libra to exist. Nearly every official, governmental, banking, regulatory, or even law enforcement, across the world, have voiced their fears about Libra, calling it anything from a risk to an unacceptable threat. If Facebook wants Libra to launch, they’re going to need to convince a lot of very antagonistic actors.

Trading Spotlight: Initial Coin Offering

A lot of discussion around crypto-currency often involves the term initial coin offering or ICO. Regulatory focus is often on ICOs, and not the cryptocurrency per se. But ICOs are often conflated or confused with other methods of obtaining coins for new cryptos, like airdropping or pre-mining, despite being a bit different. It is also radically different from the more well-known Initial Public Offering, or IPO.

Initial Coin Offering (ICO): An ICO refers to a crypto foundation or company’s first attempt to raise funding for a new cryptocurrency, or decentralized App launch, by allowing investors to buy tokens before they are listed on an exchange. These coins are sold at a price set by the offering party, and investors typically expect the price of the coins to rise after the listing. This rise allows them to make a profit while the offering party obtains the funds needed to develop or continue operations. To learn more, check out our Monfex Crypto Knowledgebase.

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