total cryptocurrency market cap is at $190 billion, after dropping from $194
billion yesterday to even $189 billion earlier today most likely due to two
major news stories that happened today. Total trading volume is still very low
at $11.4 billion which is just about the same as yesterday. Bitcoin’s market
dominance however continues to rise at 56.7% and it seems every day that its
market dominance is creating a new high (which it has).
live stream earlier this morning, two major news stories broke out. The first
story is about OKEx’s and OKCoin’s founder Star Xu being arrested in China for
alleged fraud by being a shareholder in WFEE coin. Whether or not he will be
found guilty on sufficient evidence is still up in there but the fact of the
matter is that OKEx is arguably one the highest traded exchanges in the world
being either #1, #2, #3 consistently. Since the news broke out, there was 3%
less trading volume throughout the exchange. This might not be a big deal in
the end but more of an indication that China is continuing to crack down on
every element of cryptocurrencies. What should also be noted is that even
though China is desperately trying to clamp down on cryptocurrencies, people
are just finding different alternatives to trade, by either moving to jurisdiction
friendly zones like Malta or just going through VPN. Unless China bans VPN
altogether, I find it difficult for all of cryptocurrencies to be banned.
The second news
story that was undoubtedly massive was that a New York judge who ruled over a
case involving the sale of a token security, has ruled that cryptocurrencies may
fall under securities law. The actual case involved
someone dealing investment contracts for real estate and diamonds in which he
did not actually have any assets to back it up with. Now, in this
particular instance, the judge is ruling in terms of the case but this case may
set precedence for future rulings pertaining to cryptocurrencies and obviously
initial coin offerings. To decide this, the barometer that is used is the Howey
Test. If you aren’t familiar with the Howey Test, it’s basically four parameters that deciphers whether or not something is an investment contract.
Here are the four criteria:
It is an investment of money
There is an expectation of profits from the investment.
The investment of money is in a common enterprise.
Any profit comes from the efforts of a promoter or third
If an investment contract satisfies these four requirements then
they are classified as securities and should be under SEC jurisdiction. So, as
you can see, most ICOs are securities. Personally, I’m a fan of true
decentralization where there is no government intervention or possibility of
censorship. However, most people may disagree with that sentiment and argue
that we need regulation. At this point with cryptocurrencies being so low in
prices this may be the necessary compromise that will be needed. Some may be
worried about ICOs being regulated under securities law, but trust me, this
will be a good thing for everyone in cryptocurrency. Once this case has set the
tone for how ICOs will be treated, I believe some investor confidence can
ICOs have just survived their second worst month in funding in
August, only behind July’s amount raised which was just under $1 billion
dollars after raising $16 billion in the first 6 months of the year. What could
be happening is a shift into security token offerings, that in which we should
be expecting. Raising capital in the future with tokens is still something I
believe in that will change the world, but the fact of the matter is this: we might need more regulation if we ever
want progress with a tokenized economy.
Currently, Bitcoin is trading at $6298. Bitcoin hit $6400
but then is now consolidating here. My prediction still stands, I believe we
going to go down to $6000-$6100 before bouncing back up and the consistent
trend line rejection is confirming my intuitions. Still, the amounts of short
positions is almost 50% more than the long positions still, so I would like to
remind you all again: a short squeeze
will come causing sharp volatility in price upwards briefly. Daily RSI is
confirming this too, with a rejection at the 40 RSI, we are technically still
bearish so I know that $6400 is going to be a point of resistance. My stance remains:
buy between $6000-$6100, stop loss at $5750, take profits at $6450. The risk to
reward ratio is about 1.08 with 5.76% risk for 6.25% gain.
Ethereum continues to take a hit and I’m not surprised.
When I drew my Fibonacci levels days ago, I had said two major support levels
were between $205 and $133. Because it broke $205, it is very likely we are
going to retest $133. From a fundamentals perspective, Ethereum is very bearish
due to lack of utility and functionality not being used. Most of the network is
being used by CryptoKitties which is hardly the best use case for its
blockchain technology. Ether is currently at $184 with its RSI showing very
oversold, meaning that a reversal may happen soon; being that it’s at 21 RSI
right now. I would not want to enter this nor any other altcoins confidently yet until Bitcoin starts its movement upwards.