Bitcoin Consolidation Continues; Technical Indicators Hold Steady – No Clear Indication To Buy Or Sell BTC

Bitcoin maintains a steady course as a breakout from the pennant pattern mid-scale occurs in overnight (US CST) trading. 

The breakout, as shown in yesterday’s Rogue* Analysis, occurred at 6360 to seek out resistance. This is currently shown with the rejection of price at 6400 resistance. 6360 also held well after the rejection at resistance to allow BTC to continue upward once again. 

Resistance will be tested again throughout today’s trading.

The pennant flat top breakout also comes with the fact that the breakout was followed by a minor retrace to test the 6360 level again held less than 1/2 of the previous leg up*(breakout leg).

This allows the continuation of the uptrend to stay intact short term.

Stochastic momentum 0n the hourly remains positive but is in the overbought (>80) region while BTC attempts to re-test resistance. For a breakout entry, this remains a hold but the risk remains high as the BTC overall downtrend on the larger scale is still active. 

This is the case until the long-term upper trend line is once again broken. This line is now at 6460.

MACD is positive, but movement is relatively flat – also giving an indication to a struggle going forward on the mid-to-long scale.

BTC is currently a hold with downside protection at the entry point.

BINANCE REBOOT: Looking Back At A Binance Hack; Are Exchange API’s A Massive Security Vulnerability?

This extraordinary article was constructed shortly after the Binance hack in July, by Anthony Xie, a well known Medium publisher and the founder of HodlBot. That hack saw the extraordinary ‘pump’ of SYS and an enormous amount of BTC essentially disappear into a small number of wallets.

The questions that followed, the explanation given by Binance, and the speed at which it was all forgotten still leave some in the crypto community concerned.

The original article can be found here, or below. It raises compelling questions that have yet to be answered.

**********************

Those of you who follow me know that I’m the founder of HodlBot. We built an easy way to diversify your cryptocurrency portfolio across the top 20 coins by market cap. Right now, our platform works on top of Binance’s API.

So when I read that Binance had been potentially hacked for $45 million last week, I was left feeling uneasy.

Since then, the storm has blown over; Binance announced that funds are safe and they would be covering any losses.

But I still feel unsatisfied. News coverage of the incident was extremely poor, there was little information released, and rumors are spreading like wildfire.

As someone who wants Binance to succeed, I feel conflicted about writing this article. Nevertheless, I have an obligation to my users, and to the community, to investigate this issue thoroughly.

I’m going to do my best to present a well-rounded perspective on the incident and clear up rumors.

What we know

Before we dig into the details, let’s put together a brief timeline of the incident using information released by official sources.

July 3rd at 8:44 PM UTC

The price of SYS shoots up to from 0.0004 BTC to 96 BTC.

July 3rd at ~9:00 PM UTC

Binance shuts down the exchange for unscheduled maintenance.

July 3rd ~ 11:00 PM UTC

Binance resets all API keys as a security precaution.

July 4th ~ 12:00 AM UTC

Binance re-enables API key creation.

July 4th ~ 4:00 AM UTC

Binance completes system maintenance.

July 4th ~ 6:00 AM UTC

Binance releases an official incident recap stating that the incident had been attributed to irregular API trading activity.

What Does Binance Mean by Irregular API Trading Activity?

To understand why API attacks often coincide with coins being pumped to ridiculous heights, we first need to understand how Binance’s API works.

For the layman, Binance’s API allows computers to programmatically interact with the exchange as if they were the user themselves. To enable API access, a user first generates a set of API keys. These keys are credentials that provide permission to interact with the account.

On Binance there are 3 distinct levels of API permissions:

  • Read — ability to get data about holdings, trade history, and the market.
  • Trade — ability to execute trades
  • Withdrawal — ability to withdraw funds

By default, read & trade permissions are enabled. However, withdrawal access is not. Because withdrawal access carries a much higher risk, Binance forces users to set up IP whitelisting and 2-factor authentication beforehand.

Consequently, when attackers steal usernames & passwords or API keys, they tend not to have withdrawal permission. Under this limitation, hackers have to find a way to move funds to accounts that have withdrawal access.

Here’s how they do it:

  • Before the attack, the culprits will accumulate a large quantity of a coin that has low volume and a small order book.
  • Attackers will use stolen accounts to send a torrent of buy orders via the API at a ridiculously pumped price (often 10,000x the normal price).
  • The attackers make a huge profit by selling the coins they previously bought.
  • Attackers try to withdraw their spoils from Binance. Once it’s off the exchange and onto the blockchain, it becomes almost impossible for anyone to reverse the trades.

What the Data Tells Us

Rather than fumbling around in the dark, we can use Binance’s API to pull historical data on SYS/BTC trades and see exactly what happened.

Price Activity & Volume

1 Day Candles for SYS/BTC from May 24 to July 2

There was nothing peculiar about the price of SYS until July 3rd when prices suspiciously shot up to 96 BTC.

1 Day Candles for SYS/BTC from May 24 to July 10

During the same time period, there was a massive uptick in trading volume and the number of total trades.

Trading volume and the total number of trades spiked for SYS/BTC on July 3

Historical Orders

Things get interesting when we start pulling data from /api/v1/aggTrades

This endpoint GETs a history of completed trades. Trades that fill at the time, from the same order, with the same price will have the quantity aggregated.

Notice how everyone’s talking about the 11 SYS sold at 96 BTC (~$7 million) when they should be talking about the 13,152 SYS sold at 1.1 BTC (~USD $97 million) instead.

By plotting all aggregate trader orders on a bubble chart, we can get a better sense of scale. Every circle is an aggregate trade order. The size of each circle represents the total trading volume in USD.

It’s difficult to identify the exact moment in time when the pump begins. To be conservative, let’s consider our starting point to be the first time we see a 50% price jump from one trade order to the next.

Something is very, very fishy about the 13,152 SYS trade order.

Because we have the aggregate trade ID, we can use it to GET all individual trades that make up the order.

/api/v1/historicalTrades

I’ve linked all the historical trade orders in a google sheets doc.

What we find is 132 separate trade orders all buying 99 SYS for 1.1 BTC each. The last buy order is 84 SYS, capping the total aggregate to 13,512. This is strangely neat.

I’ve reached out to Binance and confirmed that every single individual trade comes from only one individual account.

Therefore, $96 million in trading volume must have come from only 1–133 accounts.

That’s a lot of money per account to keep on an exchange…

Unpacking the 11 SYS buy at 96 BTC

The 11 SYS buy at 96 BTC is even stranger. There is only one trade here. This means somebody must have had a whopping 1,056 BTC ($6,694,406) on their exchange account.

At this point, the simpler explanation would be a system glitch or exploit that allowed these erroneous trades to be placed.

Comparing the data against the VIA coin pump

Let’s compare this to the VIA coin incident, an attack we know that was instigated by hackers phishing API keys.

Price Activity & Volume

Prior to March 6, VIA experienced normal trading volatility.

Then suddenly on March 7, the price exploded.

Just like SYS, the number of trades and trading volume also spiked.

Historical Orders

While VIA’s trading activity chart and candlesticks chart looks similar to SYS, the historical trade data looks very different.

Unlike SYS/BTC where we saw a bunch of massive trade orders, VIA/BTC has a large number of accounts involved in making smaller trades. In my mind, the VIA trades are way more typical of an API phishing attack.

SYS is just weird.

Just look at these aggregate trade orders plotted on top of each other.

It’s difficult to identify the exact moment in time when the pump begins. To be conservative, let’s consider our starting point to be the first time we see a 50% price jump from one trade order to the next.

If the attackers used API keys to make bogus trades for SYS, I’d imagine we’d see a distribution of trading volume similar to the VIA incident.

But they’re not.

If we unpack all of the trades into individual ones and compare the distribution of trading volume between the two, it’s obvious that the SYS trades had much higher trading volume.

Note that we’re using a log scale here, so the differences are actually quite large.

Did we witness an API keys phishing attack? Or did we see something else entirely?

I’ll let you the reader, make up your own mind.

Clearing up the Rumours

~7,000 BTC leaving Binance’s hot wallet

Here is the link to the transactions under scrutiny. Many people are waving this around as evidence that funds were involuntarily withdrawn from Binance’s hot wallet.

So far, Binance has not responded to any of these accusations, which has added more fuel to the fire.

Clearing up a common misconception

I thought Binance’s maximum withdraw was 50 BTC, how could 2,000 BTC leave the hot wallet?

When the output of a transaction is used as the input of another transaction, it must be spent in its entirety.

Sometimes the coin value of the output is higher than what the user wishes to pay. In this case, the client generates a new Bitcoin address and sends the difference back. This is known as change.

Just like when you spend $20 to buy a $2 ice cream cone

Binance intelligently batches a bunch of withdrawals and sends all of them out in one transaction. However, it is not uncommon for there to be large amounts of change sent back to Binance’s change address.

I used the Blockexplorer API to pull a list of transaction outputs from April 30th to July 6th. Then I sorted them by transaction output in descending order.

As you can see, there a number of large transaction outputs above 2,000 BTC. This is because change is being sent back to the return address.

I’ve uploaded all 77,374 transactions from this wallet here. You can look up the transaction hash on BlockExplorer to confirm it is real.

I’m not saying I know for sure that the withdrawal was authorized by Binance, but high output transactions above 2,000 BTC are not out of the ordinary and is certainly not evidence of theft.

51% attack on SYS

I won’t cover this topic in much detail because the SYS dev team has released a full debrief on the situation. Long story short, they claim this incident was a strange coincidence. SYS was not hacked.

Between an update to SYS 3.0.6, many miners set the fee they were requesting to be higher than the default rate. As such, many transactions with fees below this rate were left unmined.

With fewer active miners, transactions that would normally take a minute to clear were waiting in the mempool for hours. When this happened, many transactions were lumped into a single block. This caused huge block outputs, some over 1 billion SYS, and a build-up of unconfirmed transactions

Among the unconfirmed transactions, the SYS team saw a bunch of attempted withdrawals from the richest SYS account suspected to be an exchange hot wallet. At first, the SYS team thought it was suspicious activity and alerted the exchanges. Since then, they have confirmed the transactions were not the product of an attack.

What we think about Centralized Exchanges

In times like this, you can hear the crowd calling for change.

Do you hear the people sing? Singing the songs of angry men?

And I agree, decentralized exchanges are the future.

But before we completely bash centralization. We should ask ourselves:

Are we not too idealistic about decentralization and the immutability of the blockchain?

After all, centralizing power in the face of disaster is standard protocol for most organizations because it is fast and efficient.

Take Binance for instance. Binance does not process trades on the blockchain but instead records them on an internal ledger. Because they do this, they are able to roll back all malicious trades.

So far, Binance has done a great job spotting irregular trading activity early enough to take preventative action. They averted disaster not once, but twice with VIA & SYS. Should we not give them credit for it?

They take responsibility for attacks that are not their fault. They have extremely deep pockets that allow them to cover any user losses during an attack. They are even putting 10% of all transaction fees into an insurance fund to protect against future mishaps.

Compare this to mistakes that happen on the blockchain.

Remember the DAO blunder which caused $60 million ETH to be lost? What do you do? Some argued that code was law, while others wanted to roll back the mistakes. The argument was so severe that it caused a hard fork and the birth of ETH classic.

I don’t know what the answer is to all of this, but it’s definitely not that all centralized exchanges should go to hell. We’re a long ways away from being able to throw away centralized exchanges altogether.

This is what Jesse Powell, the CEO of Kraken, had to say about Vitalik’s comment that “centralized exchanges should go burn in hell as much as possible”. He echoes my thoughts well.

I can assure you that we are already burning in hell quite a bit. Not as much as possible, thankfully, but it’s far from comfortable here in the 6th circle. The heretic’s plight is an eon of dealing with regulators, banks, hackers and confused newbies.

I don’t take Vitalik’s comments personally. The dream is getting to a point where decentralized exchanges are so great that centralized exchanges no longer have any advantages. Today, that point is a very long way off, and we’ll need centralized exchanges to get there.

You have to build the bridge before you can burn it.

SHORT IT! Ethereum Price Action Points To Short-Term Downward Pressure

**This analysis is brought to you by one of our preferred technical analyst partners: @SatoshiiHeavy

As Ethereum gave way to yet another support in the overnight session and can be seen trying to swing back over. 

The entire cryptocurrency market is on its heels as we are ‘oh so close’ to breaking pivotal supports that may turn the entire market into turmoil, as once strong support now can be resistance.  

As anxiety builds for bag holders and traders alike we turn to the charts to give us clarity.

Diving into the H2 chart we can see us coming to a climax and we are bound for more action soon. In my opinion, if we cannot swing over 40 RSI within the next 6 hours we will seek my 170-175 target zone for shorts. 

We broke below an H4 order block which is also home to a very strong and important RSI floor point, which I have labeled in gold. 

A close on a D1 chart would spell disaster and further aid my 170 targets. A close above of that and we can get into a long and set aim to the red and gold box above where we will again short because I do not think we break back over that huge consolidation block. 

Too many trapped orders, too much time spent, we need to drift away to reload and then come back to crush it with more force and volume.

No trades should be placed yet unless you are hedged as volatility is looking and you do not want to get trapped o the wrong side. 

Remember to always practice good risk management by abiding by strict stop loss rules and proper position sizing.

 

BITCOIN BEAR OR BULL: “There is no indication that we are seeking new lows…”

Bitcoin trades with low volatility as yesterday’s trading brought extremely quick downside movement to break support at 6400. This move was also followed by the firm test of the major pivot area at 6250. 

This range has served as an important area for BTC as this marked a higher low* on the longer term scale for BTC to hold. This remains in effect until broken. One thought process that must be accounted for is the fact that what goes up must come down. 

Although BTC did break down fast, there is no indication of price point seeking new lows until this level is broken and the major support at 6k is reached.

At the moment, BTC struggles to maintain any sort of meaningful retracement. After 6250 held firm by candle open/close*(body), there has been about 100 points worth of upside in the last day or so. This will need to be watched as 6400, currently acting as resistance, must be re-tested. The most bearish news thus far remains with BTC breaking below the long-term upper trend line marked in orange. This line has remained active for the entire year.

BTC now remains in a high-risk category as the downtrend is still intact on the short and mid-term. A higher low* must be achieved in order to sustain the consideration period to move back into an uptrend of some sort.

Stochastic readings continue to seek higher levels hourly, while the mid-term and larger scale remains negative. There is an opportunity to play the retrace, however, the risk here also remains high as there is no confirmation of the trend short term until a higher* low is registered.

MACD momentum looks to cross to the upside midterm, a sign that BTC may seek out the 6400 resistance test again.

BTC is currently a No Play.

Futures Traders – trade the trend. The short-term trend is sideways – No Play unless catching retrace longs on the 15-minute scale.

CRYPTO ON WALL STREET: Wall Street Infrastructure And Trading Strategies Will Transform The Crypto Landscape In 2019

With Bitcoin prices down almost 70% and some alt-coins faring worse, the crypto space is doing surprisingly well. The number of wallets is increasing, there are new projects starting all over the world and while volume on the exchanges has tempered, OTC trading is exploding.

The proverbial cat is out of the beg, cryptocurrencies are creating alternative business models and alternative payment options all over the world. Forcing governments with their national currencies to compete for capital and the transactions of their citizens. That is a beautiful thing. 

To me, this is the real mission of cryptocurrencies, to create alternatives, offering people all over the world options. In many places in the world, people have no political power, votes mean very little, but people vote every day with their capital, it is a lot easier to vote with the money in your pocket.

With that said, as the market expands, how will cryptocurrency trading evolve going forward? Is it different this time? How will crypto instruments trade as more and more participants join the market? 

The short answer it isn’t inherently different than other markets. Cryptocurrencies are just another asset class, another market. Investors and traders are looking at it with the same set of tools. From the fundamental standpoint it is not easy to figure out what the fair market value of Bitcoin should be, but from a technical analysis standpoint, traders are looking at the same charts, same candlesticks, moving average, etc., using the same order types to execute trades. 

To that end, the crypto market is just another financial market, another asset class, it will follow the evolution of every other electronic market — fees will be reduced, numerous exchanges will disappear (some will close doors, some will be bought out) institutional grade tools, pre, and post-trade mechanisms will be developed. 

Institutional trading will be decoupled from retail and participants are looking for credit and leverage so the market will provide it. Institutional investors are looking for settlement with very limited and quantifiable counter-party risk, so institutional clearing solutions that exist in other markets will be adapted (look at CLS functionality as a model). 

Transaction fees? Exchanges make money on volume, and when there are hoards of new participants joining the market, exchanges can charge whatever they want. But if there are 10 venues offering the same services and competing for the same customer, the only way to steal market share is to reduce transaction fees. Once the first exchange does that, others will follow. They have no choice, otherwise, their volume will disappear. 

Before Binance opened its doors the average fee was ridiculous; so it is no wonder Binance stole market share from others by offering deep discounts on the average crypto trade commission. Of course, another way to increase trading volume is to buy out your competitors. I think we will start seeing these transactions later this year. Look at how online stock brokers fared over the last 20 years. Does anyone even remember “full service” brokers, or that online brokers used to be called “discount brokers”? Transaction fees went down about 10x over the last two decades. 

And now you can even trade for free. Crypto exchanges, will follow the same trajectory. 

**Btw, as a side note, I have a hard time calling these trading houses exchanges. They really are very much like retail FX brokers. They hold your deposit, you trade on their platform, they provide leverage and credit and settle your transactions but you really have no idea if they take the other side of your trades, and what other market manipulations they engage in.**

Credit and leverage. In traditional financial markets, these concepts are related, you need credit to obtain leverage. professional traders need leverage to generate desired returns. To some extent, the volatility of the crypto market reduces the need for leverage and with current volatility, trades can generate enough juice without much leverage to make it interesting. 

But volatility has been coming down and will continue to come down as more and more participants enter the market. So credit and leverage are needed. Currently, some exchanges started offering leverage or ability to short coins. Thus these venues are offering credit to some of their customers.

Offering credit puts these exchanges at risk and since they also handle customer deposits (that is how they offer credit) they put all their customers at risk. None of the exchanges in traditional finance offer credit and take this kind of risk. Crypto trading will move to use credit intermediaries, using the same model that exists on Wall St. thus reducing the risk of crypto exchanges but also reducing their revenue.

Clearing and settlement. This is probably the biggest change that crypto trading will see as it evolves to support institutional clients. From Wall Street’s standpoint, both centralized and decentralized exchanges are bad options (see more on this below) and Wall Street has a very hard time using either model. 

Institutional investors, first and foremost, are concerned with two things: Is my capital safe? And can I trade where I want to trade? Not surprisingly these questions have been addressed very well by traditional financial infrastructure. We don’t have to look much further than the Spot FX market to see how billions, no scratch that, trillions of dollars traded every day on numerous venues with very little counter-party risk. Security of the client funds and settlement risk are addressed. The FX trading venues catering to the institutional investors all trade on credit. Credit is provided by the custodians or by Prime Brokers, and all major banks offer prime brokerage services.

Opening a PB account would be daunting for a small investor. Google ISDA agreement and read one for fun, but for any institutional investor, or fund, this is a must have to operate properly. But once the PB account is established, to trade on a particular platform all a client would need to do is ask the PB, say Citi, to set up a trading account on that platform. 

The platform only knows that Citi asked to set up an account. with specified trading credit, i.e. 10 million USD. Many times, the platform may not even know who the actual customer trading is, it could be just a numbered account. Every time that account (Account A) trades, the trade is reported by the platform to both counterparties. So if Account A traded with Account B and Account B has credit provided by Barclays. The Platform is sending the trade confirmation to Citibank that their Account A made a trade with Barclays and the Platform sends the trade confirmation to Barclays that their account B made a trade with Citi. That is it! 

Now banks book the trades to the client’s accounts and settle among themselves. There is more to it but this is the basic process. As a consequence of that structure, a fund could ask their PB to provide credit to trade on two platforms, so if it bought Euros on one platform and sold it on another, at the end of the day both trades will be reported to the prime broker and PB will see that the fund is flat and will credit or debit p&l into the account, no money or coins have to be sent around. That’s it. 

All the funds stay in one place, clients trade where they want to trade and all can go home every night knowing that all the trades were netted out and settled.

If a fund needs leverage the PB will provide it, trading platforms don’t even need to know if the fund has leverage or not, how the credit is secure is a different issue, it could be secured by some collateral or just on the strength of the balance sheet. It doesn’t matter to the trading venue or exchange. All they know is that Citibank guarantees the trading account, full stop. So you can see, that spot FX trading is way ahead of crypto “exchanges”; exchanges are decentralized, and settlement is also decentralized. 

Clients can trade anywhere and don’t have to worry about who is on the other side of that trade. Client’s only link is the prime broker and the PB lets the client trade anywhere where the PB’s credit is accepted. With that said, not all trading will move to these credit-based institutional platforms, some retail trading will stay with existing exchanges, some exchanges will become regulated and therefore will offer more transparency and security to their clients, but exchanges that would want to cater to the institutional investors will have to change, will have to offer trading on credit and separate trading and custody.

So why are the current crypto trading solutions both centralized and decentralized bad? In short, neither can handle the volume and are open to abuse and unsafe. Centralized exchanges have to deal with too much risk, both by holding customers deposits and by offering leverage.

Decentralized exchanges fragment the order books, open to abuses such as order front-running, limited to trading the coins/tokens that the settlement smart contract could handle.

And both don’t offer what institutional market participants are looking for: custody, credit, settlement, trade netting, etc.

To be fair, cryptocurrencies are not built for HFT and institutional trading, and existing exchanges do not help it. Recording trades in blocks where both first and last trades in the block are confirmed at the same time, slow forming consensus by independent nodes, all slow by design. It may be counter-intuitive but the immediate settlement of all the coin trades is detrimental to institutional settlement. 

Why should my buy transaction go through settlement when I know I will sell it back in 30 seconds or less? And if I do a few hundred trades a day can I just settle my net exposure before I go home?

Both centralized and decentralized exchanges are bad options, traditional Wall St. options are much better addressing the needs and concerns of institutional investors — there should be a separation between trading (aggregating orders, managing risk) and holding the assets. 

Traditional trading venues, exchanges handle order aggregation, order matching and manage trading risk. Independent clearing firms handle settlement and settlement is really just a utility, it is rarely is a big money maker. Credit, leverage, product landing is provided by independent third parties, banks, brokers, etc.

And finally there are tons of services pre and post-trade professional traders are looking for: order averaging and allocation, TCA, tax reporting. All these services are needed and will be available in short order.

Here’s my final thought – cryptocurrencies and blockchain are major innovations, it opens the door to new business models, tokenomics, new ways to deploy capital, but from the trading standpoint, it’s just another asset class. Show a Bitcoin chart to any professional trader and they see candlesticks and moving averages just like they would see with any other instrument. They are looking for the traditional trading tools, credit and platforms they use every day. 

Follow these traders and you will see the future of cryptocurrency trading.

**This article was written by Dan Raykhman, CEO of RFO Capital.

Full disclosure, my firm RFO Capital is offering algorithmic selling services, for more information click here: http://consignment.rfocapital.com

 

DEMON DROP: Bitcoin Rides 4-Hour Candle To Weekly Lows; ‘Caution’ Is The Word Of The Day

Bitcoin overnight (US CST) trading broke down with high velocity, as a downside break finally occurred. 

Downside protection kicked in to stop at a recommended 6520, saving even more losses from the carnage to those who follow Rogue Analysis.

Price action held the long-term bearish upper trend line well, with a hard bounce using it as support yesterday, however, failed to do so in the overnight session. 

BTC downside broke this trend line in only one 4-hour candle and closed almost 300 points down. This downdraft included two key items, one of which is still active. 

The next support level down at 6400 was broken before BTC made it’s way to 6250, a major pivotal area that has held the higher low for BTC in the longer term picture.

Now testing that same area, 6250 is the key level to watch. So far, BTC has maintained it well with a zero break (measured by candle open/close*). Additionally, a break of this level will likely follow with BTC seeking out the 5200 level which coincides with the bearish trend bottom side.

Stochastic mid-term now seeks the oversold region with added volatility while the daily scale is absolutely negative. MACD momentum remains negative and gives sell signals across the board.

BTC is currently a Sell/No Play (6520 was last stop point).

Futures Traders – trade the trend. The short-term trend is currently Short.

BINANCE REKT: BCN Delisted; Breeds Discussion Around Algorithmic Selling To Avoid Complete ‘Low Liquidity’ Disasters

Binance, the world ’s largest crypto exchange delisted 4 crypto tokens today. This is an interesting development and there are two ways to look at it. 

These tokens were listed on Binance about six months ago and as everybody in the industry knows listing fees have been a major source of revenue for the exchanges. There were rumors that in the spring of 2018 companies were being charged up to a million dollars per listing.

So Binance has been paid upfront for these services and one can say that 6 months ago these projects were not necessarily world beaters, yet they were listed for no other consideration but the listing fee. 

Consumer protection does not seem like it was a factor and now delisting these tokens seems strange in a way. “We will take your money but will kick you out anyway. Thanks for playing along.” 

I am curious if the listing agreements for these tokens had clauses or clawbacks connected that 6-month duration?

I can certainly see people looking at this news from that standpoint, but I see it differently. To me, it is a sign of how quickly this industry is moving forward and maturing. 

Yes, 6 months ago, the listing game was all the rage and many tokens that had no business to be listed anywhere let alone offered to the public were traded on multiple exchanges.  

Today the industry is increasingly legitimizing and Binance is leading the change by taking on the task of reviewing the products they list and trying to protect their customers by making the listing process more transparent. Donating all listing fees to a charity is just a proactive way of dealing with the delisting of these 4 unfortunate coins. 

It wouldn’t surprise me if Binance reverses that policy in the future and starts taking the listing revenue in again at some point. The point is that the listing process will be more disciplined and coin due diligence will be more rigorous and transparent. This is the sign of a quickly maturing market.

Some additional important questions: what can investors do in this situation and what can investors do if they are holding a portfolio of thinly trading tokens? 

First of all, I hate to say this but buyer beware; investors should be doing a much better job analyzing tokens, and it doesn’t matter if these are utility or security token as these are investment instruments. So investors need to dig in, these are at best very risky startups, so check out the teams, market opportunity, product fit, etc, etc, etc. 

But beyond that, if people are holding a thinly traded instrument the selling of these tokens is often hard as it is too easy to move the market by “crossing the spread” and not in a good direction. 

Leaving large limit orders is also not a good idea. That order becomes visible to other market participants and people will move the market away from your order in a heartbeat. 

One option is to use traditional Wall St. algorithmic trading methods to camouflage bigger sales by blading your orders into all outstanding orders.  Algorithmic selling services can help to provide relief to some of these coin holders. These practices have been successfully leveraged in the FX markets for years and are a safe and discreet way to reduce risk.

**This article was written by Dan Raykhman, CEO of RFO Capital.

Full disclosure, my firm RFO Capital is offering algorithmic selling services, for more information click here: http://consignment.rfocapital.com

TICK BY TICK: Bitcoin Technicals Show Decreased Volatility, Yet Bullish Channel Emerges For Opportunistic Traders

Bitcoin overnight (US CST) trading brings slightly low volatility with about an 80 point range and keeps higher price levels. Yesterday’s trading broke the upside boundary at 6640 in addition to breaking several pattern boundaries.

– The short-term channel was broken at 6620.

– Although unbroken completely, the mid-scale expanding megaphone pattern lower tend line held firmly at 6520.

– A higher low was also registered at precisely 6525.

– Most importantly: The long-term bearish upper trend line(sloping dotted line across the chart) was finally broken for 2018 at 6620.

BTC now trades within a bullish channel that saw closed* candle resistance at 6700 but did manage to come close to the next true resistance level at 6800. 

As expected, retrace levels came close to the Rogue* analysis point of 6620 once again with a low at 6642 which is only 2 points away from guidance shown for over a week now. This higher low additionally created a retrace that took back 1/3 of the previous breakout leg up.

Analytics now show that a continuance of the uptrend would seek 6800 on the next leg up. This also coincides with the next true resistance point, which brings yet another test of this key level if BTC can maintain course without the continued downside.

Stochastic readings hourly point to higher levels as a pivot now occurs in the oversold(<20) region.

MACD remains negative but does so with slow negative growth. Mid Scale (4-hour) and daily shows positive momentum at the moment.

BTC is currently a buy short term to seek resistance and a hold mid-to-long term with downside protection remaining at 6520.

Futures Traders – trade the trend. The short-term trend is currently long as a higher low has been registered hourly. A break of the 6640 level will call for a pattern change upon candle close* below this point.

And this from yesterday afternoon, to round out the analysis…

Bitcoin overnight (US CST) finally sees a break of two out of three patterns at play, one of which is a major form. The lower trend line of the expanding megaphone(circled) at 6520 held firmly while BTC had 6600 in its sights. 

The convergence of patterns as discussed in previous Rogue* Analysis showed the uptrend still intact although struggling with consolidation. That consolidation came to completion in recent trading as price action broke the upside at the 6640 mark. 

This break also happens to make one major difference for BTC: the breaking of the long-term bearish trend line. This line now stands at 6624. Price currently remains trading near 6700 – roughly 50 points above the line at the moment.

The next test for BTC will come with the third hard test of 6800 if BTC can manage to remain in an uptrend short term. This will get a boost from the MA line mid-scale as well, which has managed to push BTC price point over the bearish threshold. 

The only reason for concern will come shorter scale with the hourly setup looking to retrace some. However, as discussed yesterday, a retrace move has some room to stay on top of the long-term upper trend line and additionally remains quite far from the next support level down at 6400. 

The current leg up has officially taken back more than 1/2 of the previous leg down(consolidation).

Stochastic readings continue to seek overbought(>80) levels. MACD remains positive as breakout volatility brings more buying power to push for a new recent high with the first stop at 6800 resistance. This is a key* level to obtain at this time.

BTC is currently a buy/hold with downside protection at roughly 6540 or lower, depending on risk tolerance.

Futures Traders – trade the trend. The short-term trend is long – watch for retrace pivot.

Bitcoin Trading Action Builds Within ‘Pressure Cooker’; Breakout Will Be Ultra Volatile

Bitcoin tests the bottom trend line of the expanding megaphone in overnight (US CST) and early morning trading with a low of 6525. Today’s price action also comes close to testing the long-term upper trend line of the bear market which now stands at 6640 – exactly the breakout point for the upside. 

This projection has been active now for several days. With price action holding higher lows and lower highs* BTC remains in sideways consolidation in what may be the biggest pressure point in trading history. This also increases risk as the breakout will be quick and ultra volatile.

Technically, BTC has formed a pennant which is bullish mid-term, however, the fact that the long-term upper trend line has yet to be broken in conjunction with resistance at 6800 giving price rejection twice already(almost three times – the third was a soft test*) adds another layer of downside risk.

Stochastic now pivots mid-scale, but daily remains seeking oversold (<20) levels as well. MACD remains slight negative but more or less flat with consolidation at bay.

BTC is currently a No Play for entry to hold. Short term play risk remains high – if entry now made for daily trade, downside protection must be tight near 6520.

“The overall bear market remains active unless the upside is broken…”

Saturday crypto markets now prepare to react to the crossroad Bitcoin comes to in the next 48 hours of trading.

BTC overnight trading (US CST) once again bring very little price movement as volatility remains low, although an early evening spike briefly came close to resistance at 6800. Current price action is now boiling down to a breakpoint as several patterns at play draw dangerously near completion.

There is a microchannel active, as shown on the mid-scale (4-hour chart) which almost looks like an expanding megaphone. Then there is the actual expanding megaphone(white lines) which have consistently allowed BTC to hold higher lows. 

Finally, the long-term bear market upper trend line draws near.

Yesterday’s analysis gave two breakout points which remain active: 6460 on the downside, and 6640 on the upside. Along with the upside breakpoint, the microchannel which price trades in currently and the long-term trend line also converge today.

There are several risk factors to consider concerning the downside. The overall bear market remains active unless the upside is broken. This comes with the break of 6640 and also 6800 to become new support. 

However, this level was challenged twice previously and rejected(two circles). Additionally, the last 24 hours of trading looks to have brought a lower high as the spike in price eventually was rejected by resistance again at 6800 and closed below the long-term upper trend line – all in one candle.

MACD momentum remains negative and is set to cross to the downside.

Stochastic readings continue to seek oversold (<20) territory.

BTC is currently a No Play until breakout confirmation of the trend. Risk remains High.

Short Term: Sideways price action is to be expected as patterns ready to finish.