Coin News

After a feeble rally on diminishing volume, bitcoin is currently in the middle of its first major pullback in about 2 weeks. Over the last week or so, bitcoin managed to break its sustained downtrend and trend back inside the macro trading range (TR) — both of which are quite bullish market characteristics. However, today’s pullback has us retesting the support of the macro TR (outlined in blue):

Figure 1: BTC-USD, 1-Day Candles, Macro Trading Range

As noted our previous market analysis of bitcoin, the market has been confined by a well-defined trading range. While it is inherently bearish to push below a trading range, there are a couple arguments that can actually put a bullish twist on the deep test of support.

Oftentimes, in accumulation TR, there is a shakeout known as a “spring.” A spring serves not only to trap eager bears but to create liquidity for the more aggressive bulls. One characteristic of a spring is a subsequent retest of the market supply. Typically, the retest will fail to reach the lower low and, ideally, will be tested on decreasing volume.

While we are currently seeing a peak in volume, we will have to keep an eye over the next few days and see if the volume falls off as it tests new lows. Fortunately for the bitcoin bulls, a low volume retest of the spring support would correspond to an inverted head and shoulders reversal pattern setup:

Figure 2: BTC-USD, Daily Candles, Inverted Head-and-Shoulders Setup

Right now, this is nothing more than a potential setup and is not currently an actionable market move. An ideal inverted head-and-shoulders setup would have a lower left shoulder and consolidating volume across the length of the pattern. The consolidating volume is a great indication that free-floating supply has left the market and will likely trigger the more bullish investors to test market demand.

Also, it is important to note that the daily candle has yet to close. It is entirely possible that the daily candle closes with the TR, at which point we will be forced to reevaluate the market. However, given the pop in sell volume that surfaced today, it is likely just a matter of time until we retest the support beneath the TR. If we manage to break beneath the support, volume will give us several clues as to whether a continuation of the downtrend is more or less likely.

If we see a test of the lows and the volume is increasing, that is a great indication that supply is still present in the market and we will likely see a push to new lows. If the support fails, there isn’t a whole of support beneath us:

Figure 3: BTC-USD, Daily Candles, Next Levels of Support

Because bitcoin rose in such an aggressive, parabolic manner, there weren’t many chances to establish support levels on the way toward its all-time high. The figure above shows how we cleared a large price spread in a very short period of time without any pit stops along the way. If we break a new low on convincing volume, we can expect to see a quick 15% move to test the support outlined in green in the figure above.

As it stands, all of this is just conjecture. However, anytime a market breaks and closes below a TR, it’s time to start considering the potential market ramifications. In our case, we have two very different possibilities with two very different outcomes. For now, bitcoin still remains in a no-trade-zone and will remain there until I see how the market reacts to the support tests.

Summary:

1. BTCUSD broke below its TR on a high volume.
   
2. If the daily candle closes below the TR, it is likely we will see a support test as the price will likely drift lower.
   
3. The volume profile will be very important here: If the volume tests support on decreasing volume we have a potential inverted head-and-shoulders setup.
   
4. If we test support on increasing volume, this will be a great indication that we will likely continue lower as supply is present in the market.
   

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

Augur, a blockchain-based predictions platform, has opened to the general public. The platform becomes the “world’s first” decentralized prediction-market platform.

Augur was created by the Forecast Foundation, a not-for-profit corporation whose goal is to build “open-source, public forecasting tools.”

Prediction markets — which are a general type of financial market — have long been dominated by the likes of Paddy Power and DraftKings, which are centrally owned, operated and regulated.  

This centralization causes all kinds of problems, such as restrictions for users in certain regions, higher associated costs to use and limitations on the types of markets that users could create.

A key differentiator for Augur is its global and decentralized nature.

With the launch of the platform, anyone, anywhere, can launch their own events and bet on them. This also allows the platform to create a higher level of liquidity and volume, as well as a diversity of topics not typically covered by traditional prediction markets.

Beyond trading, Augur also solves a key problem by moving “real world information” onto Ethereum’s blockchain in a secure manner where results can’t be altered.

Vitalik Buterin, founder of Ethereum and advisor to the Forecast Foundation, while commenting on the launch of Augur’s decentralized platform said, “I have been excited about the possibility of prediction markets on Ethereum for a long time, and I’m pleased to see Augur being a leader in releasing such a sophisticated system into the wild.”

Furthermore, the platform ensures that events in the markets are accurately reported on. It does this by incentivizing users to report and correct “markets that have been incorrectly reported on” in exchange for “fees from the market” and a chance to earn more Reputation (REP) tokens — which is the cryptocurrency associated with Augur.

Tom Kysar, head of operations at the Forecast Foundation, said, “Today’s launch of Augur represents three years of relentless work to realize the goal of creating the first — and best — decentralized oracle and prediction-market platform.”

Augur raised about $5 million in its initial coin offering (ICO), and its REP token, which launched in October of 2016, now has a $384.1 million market capitalization.

Don’t miss the Fireside Chat at Distributed 2018 in San Francisco on Friday, July 20, when Augur co-founders Joey Krug and Jeremy Gardner will discuss Augur’s journey, as well as the importance of prediction markets. Register here.

The United States Securities and Exchange Commission (SEC) is examining an application from the Chicago Board Options Exchange (CBOE) Global Markets which, if approved, could grant the company a coveted bitcoin ETF license, and bring new waves of institutional investors to the bitcoin arena.

The process began in June 2018, when the SEC recently sought comments from industry professionals regarding the ETF in question, which is being offered through the VanEck SolidX Bitcoin Trust – a joint venture between financial firms VanEck and SolidX. The application is the Trust’s third attempt to garner any such license; the first two attempts were rejected in early 2017, upon which the SEC released the following statement:

“Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated. Therefore, the Commission does not find the proposed rule change to be consistent with the Exchange Act.”

The cryptocurrency space remains largely unmonitored, and the SEC has sought to take a firm stance to ensure consumer protection and safety. After much debate and speculation, however, officials recently decided that both bitcoin and Ethereum – despite its early pre-sale (now ICO) status – were too decentralized to be considered securities, and could not be regulated by the organization.

Regulators of the SEC also announced in late June that they were working on an outline for newer (and less-restrictive) legislation regarding open-ended and low-risk ETFs to increase innovation in the financial space. This could potentially boost the Trust’s chances, along with other ventures seeking to establish bitcoin ETFs in the future.

Granted the VanEck SolidX application moves forward, clients will be able to purchase shares in the Trust, which are worth approximately 25 bitcoins each at press time. Following a period of speculation from interested professionals, the application has now been published for public viewing and commentary, so regulators can better understand if the venture is worth acting on.

“[The ETF], under normal market conditions, will use available offering proceeds to purchase bitcoin primarily in the OTC markets without being leveraged or exceeding relevant position limits,” the Trust’s application reads. It also states that an insurance policy will be set in place, granted theft or cyber attacks occur. Thus, investors can rest assured that their funds will be covered in the event of a loss:

“The insurance policy will carry initial limits of $25 million in primary coverage and $100 million in excess coverage, with the ability to increase coverage depending on the value of the bitcoins held by the Trust.”

Several financial giants have commented that bitcoin-based ETFs are crucial to financial innovation, with companies like JP Morgan calling them the “holy grail for owners and investors” back in February 2018. Should CBOE’s application be passed, client investment options will open in the first quarter of 2019.