Bitcoin back at $4,000, BCHSV 80% higher – another dead cat bounce for crypto?

There has been a recovery of sorts in the crypto market after BTC fell below $4,000. The strength of the bounce off $3,500 is encouraging but not a confirmation of a bottom.

The broad nature of the advance is also a hopeful sign, with BCH powering 24% higher to break above $209 and its unwanted competitor BCHSV 82% higher at $122 over the past 24 hours, according to coinmarketcap.

Ripple’s XRP is back in second spot in the market cap rankings and is 10% higher at $0.37.

Weiss Ratings is a big fan of XRP and they are also tipping ADA and EOS for great things, while a fair chunk of the rest of the market will end being marked to zero.

Check out the XRP chart below and see that the price has gone above the 50-day moving average and sis holding for now, well-positioned for further progress.

XRPUSD 1-hour chart

XRP price chart

And of course the favourite game of the hour is trying to answer the question: where’s the bottom? That seems more and more like a fools errand in a market dominated by retail investors.

For this to be a recovery that gains traction there needs to be much greater volumes but that’s sort of beside the point.

Capitulation, adoption and regulation needed to turn market

For a downturn like this to end there needs to be something moving in the real world, that’s to say adoption news flow. Regulatory clarity and investor protection is the other biggie.

The Wall Street Journal reported yesterday that the US state of Ohio is allowing residents to pay their taxes with bitcoin is the kind of stuff we need more of to turn the tide.

There is only so far we can go with technical analysis in a market such as crypto. And there is only so far you can go with wishful thinking.

But before any recovery can really get started there need to be some more systemic level failures that clear out the old and allow renewed growth from a firmer base.

Capitulation is the new watchword, but that has been applied to the markets. What we need to see now is capitulation (bankruptcies) among industry players itself and that means among the miners where the mission critical work of maintaining network fundamentals is done.

CoinDesk has an interview with the founder of the F2Pool Mao Shixing who reckons as many as 600,000 miners have left the business.

Those number are borne out in the falling hash rate on the network we remade on last week.

The big daddy of the mining world is of course Bitmain. Rumours are circulating (as they always do) that the Chinese mining giant is going bust as the BTC price crash combines with the unfortunately timed Bitcoin Cash hashwar.

Competitor miner Canaan has just abandoned its initial public offering of share to the investing public. Now it looks like Bitmain may be following suit.

On the regulatory front, The UK’s Daily Telegraph newspaper reports that 50 cryptocurrency firms are being investigated. That might be bad news fr the companies concerned but it is a positive for the sector as a whole. The Financial Conduct Authority (FCA) is investigating the firms to see whether they have been operating in financial services without permission, accoring to the Telegraph report.

The newspaper made a Freedom of Information request to get the information. The FCA is thought to be responding to mounting complaints from consumers, many of whom will have lost substantial sums, assuming they realised their losses by selling out.

Since May this year the FCA has doubled the number of firms it is investigating.

 

 

About the Author

Gary McFarlane
Gary has been writing about cryptocurrencies since 2013 and currently works as the cryptocurrency analyst at interactive investor, the UK's second-largest online investment platform. Gary contributes for Coin Intelligence News in a personal capacity and none of his commentary should be considered investment advice. Gary is the winner of the ADVFN International Financial Awards 2018 Cryptocurrency Writer of the Year. Contact Gary on twitter at: @gary_mcfarlane

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