Bitcoin bounces off $30K amid 'possibility' of exit to mid-$40K range


Cointelegraph 27 June, 2021 - 06:16am 68 views

Why is crypto going up?

Rising inflation and the potential for even more stimulus continues to push people to safe-haven assets. Increased adoption from payment applications like PayPal will give far more people easy access to cryptocurrency. Publicly traded companies purchasing Bitcoin shows a high level of confidence in its appreciation. InvestopediaCrypto News: Why Is Bitcoin's Price Rising?

“We think it’s possible that the selling we’ve seen over the last day or so is related to concerns over leverage and counterparty risk of some lenders,” wrote David Grider, lead digital asset strategist at Fundstrat. Counterparty risk refers to the possibility that a trading partner runs into trouble and is unable to fulfill obligations usually tied to derivatives contracts.

Fundstrat, an independent research shop, co-founded by prominent bitcoin bull Tom Lee, pointed to a Thursday tweet by crypto mogul Barry Silbert, who offered his own words of caution about counterparty risk and leverage in crypto that could potentially translate into further turbulence in digital-asset markets.

Silbert warned that there is a “daisy chain of borrowers and lenders in the crypto space…and warned that it is “important to understand counterparty risk” and where the weak links in the chain are.

See: Here’s how much bitcoin is worth, says JPMorgan, as crypto faces this summer headwind

Bitcoin is down over 50% from its mid-April peak, Ether is off 60% from its all-time high in May and dogecoin is down nearly 70% from its record high achieved early last month.

To be sure, the appeal of those assets is their outsize year-to-date returns, with dogecoin boasting an over 5,000% gain so far in 2021, Ether up more than 140% in the first six months of this year.

Crypto’s recent downtrend has been partly blamed on a crackdown by China on bitcoin mining and trading, but analysts are also warning that the slump may reveal poor positioning by some investors and the dangerous use of leverage, or borrowed money, to amplify returns.

Fundstrat also warned of potential volatility emanating from some popular crypto lending platforms, who promise hefty returns to those depositing digital assets.

“We want to remind clients that crypto lenders are not regulated and insured in the same way as banks are with the [Federal Deposit Insurance Corporation].” The FDIC collects fees from member lenders to provide insurance to depositors in the financial institution runs out of cash.

Read: Dogecoin meme crypto Shiba Inu scores modest fillip from Elon Musk Twitter mention

“Depositors have counterparty risk to the lenders and if they go insolvent, they could lose their funds,” Fundstrat wrote.  

“At very worst, we get a run on the banks that causes asset prices fall too far, otherwise good lenders could go underwater. We are not expecting this…But we don’t think it’s a bad idea to take some risk off the table over the weekend,” Grider wrote.

Check out: Elon Musk and Jack Dorsey plan bitcoin chat at July event, and ARK Invest’s Cathie Wood thinks it’s ‘brilliant’

Transocean, an offshore-drilling contractor, and fracking pioneer Continental Resources have seen shares rocket in 2021. Both have insiders scooping up more stock.

Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre.

Read full article at Cointelegraph

Crypto Is Crashing: Should You Be Worried?

The Motley Fool 27 June, 2021 - 10:19am

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

Cryptocurrencies have taken a beating over the past few weeks, with several of the biggest names in crypto plummeting. The price of Bitcoin (CRYPTO:BTC) is down nearly 50% since April, Ethereum (CRYPTO:ETH) has dropped by around 53% since May, and Dogecoin (CRYPTO:DOGE) has plunged close to 60% over the past six weeks.

Stock market downturns are always nerve-wracking. But even the most volatile stocks don't often fall as fast or hard as cryptocurrencies.

If you've invested (or are considering investing) in the crypto market, should you be worried about the most recent crash? Here's what you need to know.

Cryptocurrencies have always been a volatile investment, and it doesn't take much to trigger a downturn. One contributing factor was Elon Musk's announcement back in May that Tesla would no longer accept Bitcoin as a form of payment.

Then China began cracking down on cryptocurrency mining, resulting in crypto prices plummeting even further. The IRS then revealed that it was getting more stringent about collecting taxes on cryptocurrencies, which may have contributed to the crypto crash, as well.

Cryptocurrencies are also volatile, simply because they're highly speculative and many investors are still on the fence about them. Nobody knows whether cryptocurrency will still exist in a few decades, and when prices start to fall, nervous investors are more likely to panic-sell -- causing prices to drop even more.

Although this most recent crash can be intimidating, the good news is that this is nothing new for cryptocurrencies. Bitcoin has lost more than 80% of its value on multiple occasions, and it's always bounced back. Ethereum even lost nearly 95% of its value back in 2018, yet it was able to recover.

While past performance doesn't predict future returns, history has shown that the biggest names in the crypto space -- namely Bitcoin and Ethereum -- have been able to withstand volatility. Again, this doesn't guarantee they'll always recover, but both of these cryptocurrencies have seen worse and were still able to survive.

As with any investment, the key to building wealth is to hold your investments for the long term. Cryptocurrency is still finding its footing, and if it does succeed, it could take years or even decades to become mainstream.

The best reason to invest in cryptocurrency is if you truly believe in its long-term potential. If you think it has a bright future, you should be willing to hold onto your investments for as long as possible -- regardless of whatever volatility they may experience in the short term.

Cryptocurrency will likely experience many more crashes over the years. As long as you stay focused on its long-term potential, it doesn't necessarily matter how it's performing right now.

If you do invest in cryptocurrency, it's important to make sure you're investing wisely. Cryptocurrency is so speculative and risky right now, there's a chance you could lose any money you invest.

For that reason, only invest money you can afford to lose. Think about how much you're comfortable losing, too. Even if you can afford to invest thousands of dollars, for example, if you know you'd lose sleep over losing that much money, you may want to scale back your investments. If you're not comfortable losing any money, it's probably best to avoid cryptocurrency altogether.

Cryptocurrency isn't the right investment for everyone, and it's best suited to those with a higher tolerance for risk. Volatility comes with the territory when investing in cryptocurrency. But if you believe in its potential and are willing to hold your investments for years or even decades, it could pay off down the road.

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Strategists Flag Near-Term Risks for Bitcoin Price Outlook

Yahoo Finance 27 June, 2021 - 01:34am

The near-term setup is “challenging,” a JPMorgan Chase & Co. team including Josh Younger and Veronica Mejia Bustamante wrote in a note Friday, while Fundstrat Global Advisors LLC’s David Grider recommended reducing risk or buying some protection.

The JPMorgan team said blockchain data suggests recent cryptocurrency sales were made to cover losses and that “there is likely still an overhang of underwater positions which need to be cleared through the market.”

Bitcoin has roughly halved from a peak near $65,000 in April, hurt by a cryptocurrency clampdown in China, tightening regulatory scrutiny elsewhere and concerns that the servers underpinning the virtual coin consume too much energy. The prospect of reduced emergency stimulus amid the recovery from the pandemic may also be an obstacle for the most speculative investments.

Still, the JPMorgan strategists pointed to stability in the Bitcoin futures market as a positive factor, alongside the possibility of increased production costs as China’s crackdown pushes Bitcoin mining abroad. Some researchers argue the marginal production cost plays an important role in Bitcoin prices.

So while the “cryptocurrency market shows signs that it is not yet healthy, it does also appear to be beginning the process of healing,” they wrote.

The largest cryptocurrency rose as much as 6.5% to $33,329 on Sunday, snapping a two-day drop. Other coins rallied too, with Ether up more than 5%. Some chart watchers view the $30,000 level as key for Bitcoin, contending a decline below it could open the way to retreat to $20,000.

Grider, lead digital asset strategist at Fundstrat, noted that a large short position has been building again on the crypto exchange Bitfinex -- and said the last time there was a similar situation, negative news out of China took prices lower.

(Updates markets in the seventh paragraph.)

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Fundstrat Global Advisors has issued a word of caution to its bitcoin and crypto investing clients, advising them to take some risk off the table, or hedge their bets, over the weekend, due to brewing concerns about mounting leverage in the nascent market.

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Following a mixed day for the broader market on Saturday, a Bitcoin move back through to $33,000 levels would deliver support.

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In February, the now-bearish Minerd said BTC could climb as high as $600,000.

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Aspiring Bitcoin Millionaire? These 2 Things Need to Happen First | The Motley Fool

The Motley Fool 26 June, 2021 - 07:00am

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

No matter what type of investor you are, Bitcoin (CRYPTO:BTC) has probably caught your attention, thanks to its rapid ascent to over $60,000 a coin in just a few years. It's natural to wonder if you should add it to your portfolio, especially as some optimistic investors claim its value could one day exceed $100,000 per coin. 

But if you're hoping to become a Bitcoin millionaire, you can't put your cart before your horse. Two things need to happen before you can make a fortune off Bitcoin or any other cryptocurrency.

Let's start with the obvious: You're never going to make any money off of Bitcoin if you don't own any tokens. If you're just interested in purchasing a small amount of Bitcoin, that's not too difficult to do. Most cryptocurrency exchanges enable you to purchase partial coins, so you don't need thousands of dollars to get started. And you can still make a handsome little profit, even if you don't own a whole coin.

Let's say you invest $5,000 in Bitcoin right now. At the time of writing, that would buy you about 0.13 of a Bitcoin. If Bitcoin makes it back to $60,000 a coin and you sell it, you'd pocket about $2,800 in profits. That's not bad, but it's not going to make you a millionaire.

A single Bitcoin is trading for just under $39,000 while I write this. Even if you had a whole coin, you'd only make about $61,000 should Bitcoin make it to $100,000 a coin. You'd need to buy over 16 Bitcoins in order to make a $1 million profit if Bitcoin hits $100,000, and that means coughing up over $620,000 right now. That's not an easy feat for a lot of people.

You may be able to make a million-dollar profit with less Bitcoin if it ends up worth more than $100,000 a coin, but now we're running into our second problem.

Bitcoin's current value is largely driven by speculation. Few companies currently allow customers to pay for products with Bitcoin or any other cryptocurrency, so its practical value is limited. That could change if cryptocurrency sees more widespread adoption over the coming years, but there's no way to know if that will actually happen.

There are some legitimate concerns about widespread cryptocurrency adoption, including:

These are some significant hurdles to overcome, and if Bitcoin isn't able to do it, all those coins people are currently buying for $39,000 a pop could become worthless. It's not impossible that Bitcoin could someday be worth $100,000 or more, but it's far from a sure bet.

If all this is making you a little leery of investing in Bitcoin, that's OK. It's not for everyone. If you have some extra cash and you'd like to invest a little money in the cryptocurrency just to see what happens, that's fine. But if you're not willing to take that risk, there are other, safer paths to millionaire status.

You could invest in cryptocurrency stocks rather than cryptocurrencies themselves. These are stocks in companies that stand to benefit if cryptocurrencies become more widely accepted. But they're also strong companies in their own right, so they have the potential to make you money even if Bitcoin never takes off.

Or you could opt for an index fund instead. These instantly give you ownership in hundreds of stocks at once, so you can diversify your portfolio without spending a fortune. There are many index funds out there, but some of the most popular are the S&P 500 index funds. These contain stocks in all 500 companies in the S&P 500, and they tend to generate returns very similar to the index itself.

No one knows what the future holds for Bitcoin. But even if it does live up to people's wildest expectations, you don't want all your eggs in one basket. Cryptocurrency prices fluctuate wildly, and that's problematic if you need to sell your coins at a certain time. It's best to spread your money around between several of the investments discussed above to give yourself the best chance of becoming -- and staying -- rich.

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