The cryptocurrency market started declining last week, mainly due to the US SEC’s action against blockchain companies. Nearly 80 companies have so far received subpoenas from the regulator. Further, a hacking attempt on Binance, one of the largest cryptocurrency exchanges, also turned the mood bearish. The pace of decline increased this week after Google announced a blanket ban on cryptocurrencies, ICOs, and binary trading advertisements.
Still, considering the long-term growth prospects, Binance has announced the launch of a decentralized exchange based on blockchain technology. The present exchange will continue to function as usual. BNB, the Binance token, will be upgraded as the native currency of the Binance ecosystem. The decentralized exchange will also run on its own mainnet. Read more here and here.
As usual, let us look at the major developments related to the important coins:
Bitcoin (BTC)
The fall in the price of Bitcoin to about $8,200 has made life tough for miners. Bitcoin mining is no longer as profitable as it was two months before. Apart from the block reward, a miner also earns from transaction fees. The arrival of SegWit had resulted in a decline in the transaction fees to about 30 Satoshis per byte, from 1,200 Satoshis per byte in December. Crypto experts believe that several nodes may be switched off if Bitcoin declines below $4,000. Another major development related to Bitcoin is the release of lightning mainnet beta, which facilitates “Lightning Transactions.” Scalability is one of the main issues faced by Bitcoin. The arrival of the Lightning Network is expected to resolve the scalability issue. More details about mining and the Lightning Network can be read here.
Ethereum (ETH)
Ethereum developers are working to build Casper and Plasma protocol upgrades. These upgrades are expected to resolve the scalability issues faced by the Ethereum network. However, it may take months, if not years, for the issues to get sorted out. Separately, another company named Loom Network has successfully deployed the scaling network for dapps, in addition to a test site-Delegate call. Similar to Lightning Network, Loom creates sidechains attached to the Ethereum mainnet. Each dapp will have its own sidechain, while still remaining bonded to the security of the Ethereum network.
Ripple (XRP)
A few days ago, there was news that Tencent, a large business group that operates the WeChat app in China, is planning to invest $2 billion in Ripple. However, it has turned out to be a rumor. Ripple got another direct blow when it lost a case against R3 Holdco, a Canadian company and previous partner, in California court. The dispute started as R3 accused Ripple of failing to provide 5 billion XRP tokens agreed to be paid under the partnership agreement. Ripple retaliated saying R3 has entered into a partnership under the wrong pretenses. The value of 5 billion XRP tokens is about $3.5 billion as of writing this.
Our Forex Trading Plan
Ethereum. Ethereum has turned weak against Bitcoin in the chart. The native currency of the smart contract platform is moving along the descending trend line. Further, the momentum indicator has fallen below the reading of 100. Therefore, we are expecting Ethereum (ETH) to decline further against Bitcoin.
To trade the downtrend, we are planning to go short in the ETHBTC pair near 0.072, with a stop-loss order above 0.077. We would also place an order to book profit near 0.052.
Our Binary Options Trading Plan
Bitcoin Cash. BCH has turned weak against Bitcoin (BTC) in the past ten days. The implementation of SegWit by several wallet providers has made Bitcoin transactions incredibly cheaper. Furthermore, the launch of the lightning mainnet beta has increased the hopes of solving scalability issues of Bitcoin. Therefore, Bitcoin is gaining strength against altcoins that were forked out of its network. The BCHBTC pair is facing strong resistance at 0.138. On the downside, support exists only at 0.096. The money flow index is also below the reading of 50. Therefore, we are expecting the BCHBTC pair to decline further.
From one of the reliable binary brokers, we may acquire a put option contract, which is valid for a period of one week. We may enter the trade only if BCHBTC trades near 0.12 in the cryptocurrency market.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
