Bitcoin Dominance Crest 72% As Longs Build on Bitfinex - Market Analysis

The Bitcoin (BTC) market is pretty quiet today, after being rejected a couple of days ago at a downtrend resistance line and returning to a state of slow consolidation. The leading crypto has been in this consolidation and accumulation phase since early July, and volatility is continuously waning as price is squeezed into its apex.

We see this illustrated below. Consolidation is signaled by falling trade volume, and this pattern does not terminate until the middle of October. Price is likely to break up or down out of this region between now and then.

A consolidation reaching its terminusBTC chart by TradingView

Obviously, predicting which way price will break is not advisable. Generally, Bitcoin is still within a broad uptrend, and bulls generally seem serious about keeping the leading crypto above $10,000. But it remains to be seen whether we have a new, multi-year uptrend on our hands similar to 2016-17’s bull market; or whether we have a unprecedentedly long bear market.

One tool we can use to gauge market sentiment is the ratio of long/short futures contracts open on exchanges. And Bitfinex, a popular margin exchange for which data is available on contract positions, is definitely leaning with a bullish bias.

Bitfinex longs and shortsBTC chart by TradingView

We can see above the same 2-day chart positioned above a long/short ratio chart of futures contracts held on Bitfinex. More than twice as many bitcoin-denominated long contracts are held versus shorts - about 28,000 to 12,000 - showing that Bitfinex traders clearly expect a break up.

However, on the competing Bitmex bitcoin-derivatives exchange, the mood is much more ambivalent. Thanks to data from Coinfarm.online, we can see that the split between longs and shorts as almost exactly 50/50. Almost $3 billion of leveraged contracts have accumulated on Bitmex, split almost perfectly down the middle.

bitmexratio.png(source: Coinfarm.online)

Within the broader cryptoasset market, these days Bitcoin has been pretty much the only game in town. Bitcoin’s dominance of the crypto market share has grown to levels not seen in years, now containing about 72% of crypto investments.

BTC dominance weekly approaching critical levelsBTC Dominance chart by TradingView

Although many claim that trading indicators are not useful on this chart, we can see on the RSI for the weekly dominance chart (above) that Bitcoin is very overbought versus other cryptos historically speaking. A number of bear divergences are also visible on lower timeframes like the 2-day (below).

Several signs of weakness (?)BTC dominance chart by TradingView

By the looks of it, we are trending at the very edge of what the cryptoasset market is capable of accommodating, in some sense. For years, the market has been one of Bitcoin + altcoins, after altcoins really took off at the beginning of 2017. If Bitcoin dominance continues to grow, however, the necessary result would seem to be a return to a Bitcoin + almost nothing crypto ecosystem - a Bitcoin maximalist ecosystem. The reader can judge for themselves how likely this is to transpire.

At any rate, Q4 2019 should be a good deal more exciting than Q3 was, which has been a period of recovery from the parabolic gains of H1. Bitcoin will likely break hard one way or the other, when its consolidation period wraps up and price coalesces around $10,000.

The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.

Featured Image Credit: Photo via Pixabay.com

$3.1 million: Crypto Exchange Cashaa Hacked for 336 BTC

London-based cryptocurrency exchange Cashaa revealed it lost 336 bitcoin, at press time worth $3.1 million, to hackers who managed to access one of its cryptocurrency wallets.

According to a tweet the exchange published on July 11, the attackers managed to access one of its Blockchain.com wallets, and quickly transferred the funds to an address they control. From the address they went to the BTC has been through a series of hops, suggesting the use of coin mixing software to limit traceability and throw off blockchain sleuths.

Cashaa believes that the attacker may have managed to infect one of its computers with malware, and then waited for an employee to access its machine. As soon as that happened, the funds were moved out of its wallet. Reacting to the security breach, the exchange halted withdrawals and deposits and “called the board meeting to decide whether the company will bear all the losses.”

The exchange suspects the hacker is from east Delhi, India, and filed a report with the Delhi police cybercrimes department.

Cashaa also reached out to other cryptocurrency exchanges and businesses informing them of the address, in a bid to stop the hacker from cashing out. In statements provided to industry media Kumar Gaurav, Cashaa’s CEO, seemingly lashed out at trading platforms that allow hackers to cash out.

Gaurav was quoted as saying:

As of today, hackers are very confident to hack crypto addresses and move it through exchanges that are facilitating such laundering through their systems. Exchanges like these must be shut down and owners of these exchanges should be charged with money laundering facilitation crime.

CryptoCompare’s Exchange Benchmark report, as recently reported, revealed that 38% of crypto exchanges interact with high-risk entities in 25% or more of their transactions. High-risk entities are those associated with darknet markets and vendors, criminals, gambling projects, malware operators, and others.

Featured image by Kevin Ku on Unsplash