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Bitcoin hammer blow as JPMorgan analysts back rival crypto to ‘outperform BTC’

Bill Gates discusses Bitcoin in 2018

Last year, Ethereum (ETH) crashed below $ 100 (£72) in spectacular style having reached a peak of nearly $ 1,200 (£863) in early 2018. But over the last 12 months, the tide has turned and the cryptocurrency has risen beyond its previous peak to hit a series of all-time highs – including a record yesterday of $ 3,456 (£2,487). Its gains are impressive when compared to Bitcoin (BTC), which too has hit all-time highs this year, but ETH has “outperformed” BTC by a factor of three-to-one – with a market cap roughly one third its size.
Last week, JPMorgan published a report entitled ‘Why is ETH outperforming?’ where analysts at the firm’s Fixed Income Strategy for the US predicted more of the same.

They wrote: “In recent days, one of the more interesting developments in cryptocurrency markets has been the outperformance of ETH relative to other tokens.”

Noting that Bitcoin is “more of a crypto commodity than a currency,” experts stated that “ETH is the backbone of the crypto-native economy and therefore functions more as a medium of exchange”.

Many investors, including billionaire Mark Cuban, claim that Ethereum’s decentralised, open-source blockchain with smart contract functionality will trump Bitcoin because it is “easier to use”.

The price of Ethereum has hit all-time highs recently

The price of Ethereum has hit all-time highs recently (Image: GETTY)

Cryptocurrencies continue to interest investors

Cryptocurrencies continue to interest investors (Image: GETTY)

Blockchain technology enables the existence of cryptocurrency and a smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code.

This allows for trusted transactions and agreements to be carried out without the need for a central authority, legal system, or external enforcement mechanism.

Bitcoin – the largest and most widely used cryptocurrency – does not currently offer support for complex smart contracts.

Analysts at JPMorgan asserted that “owning a share” of this technology “is more valuable” and therefore “ETH should outperform BTC over the long run”.

The report adds: “Both BTC and ETH markets experienced a comparable liquidity shock earlier this month which triggered a comparable de-levering of their perspective derivatives market in subsequent days.

READ MORE: Bitcoin warning: Elon Musk’s Dogecoin ‘control’ will ‘not be tolerated’ as DOGE surges

Mark Cuban has backed Ethereum

Mark Cuban has backed Ethereum (Image: GETTY)

“But ETH spot market depth has recovered quicker and if anything liquidity conditions on some exchanges is better than prior to the event.

“High-frequency cash basis pricing reveals a much smaller impact in ETH markets despite optically comparable net liquidations.

“Open interest data also suggests that the other side of these trades was easier to source.”

And they expect much of the same in the future.

The report continues: “Higher turnover on the public ETH blockchain means a noticeably higher fraction of those tokens can be considered highly liquid, further blunting the impact of futures liquidations.

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Ethereum has unique features

Ethereum has unique features (Image: GETTY)

“In the case of Ether versus Bitcoin, there is evidence of more resilient liquidity, less reliance on derivatives markets to transfer and warehouse risk, and more durable underlying demand base – for now at least.

“In combination with the continued growth of decentralised finance and other components of the Ethereum-based economy, this suggests some technical but occasionally important bullish tailwinds versus bitcoin.

“ETH valuations may be less dependent on levered demand than BTC, a technical but occasionally important tailwind going forward.”

Britain’s Financial Conduct Authority (FCA) has previously warned against investing in crypto.

Bitcoin continues to be worth more

Bitcoin continues to be worth more (Image: GETTY)

It stated: “If consumers invest, they should be prepared to lose all their money.

“Some investments advertising high returns from crypto assets may not be subject to regulation beyond anti-money laundering.

“Significant price volatility, combined with the difficulties valuing [Bitcoin] reliably, place consumers at a high risk of losses.”

Express.co.uk does not give financial advice. The journalists who worked on this article do not own cryptocurrency.

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This post originally appeared on Daily Express :: Finance Feed

Analysts suggest Dogecoin traders are rotating profits into large-cap altcoins

Every cryptocurrency bull market has at least one surprise catalyst that comes out of nowhere to excite traders and spark massive trading volumes that lift the total market capitalization to new highs. 

The 2021 bull market is no exception to this rule, and one of the biggest catalysts for growth this year has been the explosive popularity of Dogecoin (DOGE), which has made headlines in traditional and alternative financial circles as its price surge to new all-time highs over the past few months.

Analysts suggest Dogecoin traders are rotating profits into large-cap altcoins
DOGE/USDT 4-hour chart. Source: TradingView

With such tremendous growth happening in just a few short months, it’s only natural for traders to make moves that help lock in gains and then search for the next potential mover to invest in.

The price action for DOGE even caught the eye of Jon Bollinger, inventor of Bollinger Bands, who on May 3 tweeted “$ Dogeusd put in a top, fell by 65%, and is now knocking on the door again while $ dogebtc is breaking out. Simply amazing price action.”

Dogecoin was trading near $ 0.40 at the time of the tweet but has since skyrocketed 80% to a new all-time high at $ 0.69. After today’s strong rally, Bollinger to posted the following tweet as a word of advice to DOGE traders:

And it appears that some traders had similar thoughts or took Bollinger’s words to heart on May 5, as the price of DOGE experienced a pullback of 25% before recovering near the $ 0.60 level.

Large-cap altcoins benefit from Dogecoin’s momentum

Several observant traders, including Digital Currency Group founder Barry Silbert, pointed out that a lot of DOGE’s trading activity has happened on the Robinhood trading app and that the other cryptocurrencies available on the platform could benefit from traders rolling profits over from DOGE into slower performing cryptocurrencies.

This turned out to be a prescient viewpoint, as all the major cryptocurrencies available on Robinhood have seen double-digit gains on May 5, while the price of DOGE has experienced a 25% pullback.

Ethereum Classic (ETC) has been one of the biggest beneficiaries of the shift in funds, which helped the Ethereum fork blast to a new record high of $ 100 on May 5. In the same period, Bitcoin Cash (BCH) and Bitcoin SV (BSV) have seen gains in the 25%–30% range.

While the percentage growth seen in the price of Litecoin (LTC) is less than that of the other tokens listed on Robinhood, LTC’s 15% rally pushed the altcoin to a new multiyear high of $ 351. This puts LTC price less than 7% below its previous all-time high at $ 375.

Analysts suggest Dogecoin traders are rotating profits into large-cap altcoins
LTC/USDT 4-hour chart. Source: TradingView

According to data from Cointelegraph Markets Pro, market conditions for LTC have been favorable for some time. 

The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

Analysts suggest Dogecoin traders are rotating profits into large-cap altcoins
VORTECS™ Score (green) vs. LTC price. Source: Cointelegraph Markets Pro

As seen on the chart above, the VORTECS™ Score for LTC began to pick up on April 29 and maintained an elevated level over the next four days before hitting a high of 68 on May 2, around 11 hours before the price increased 35% over the next three days.

With DOGE still trading above $ 0.58 at the time of writing and hype is continuing to build ahead of Elon Musk’s appearance on the comedy sketch show Saturday Night Live, the bullish price action for LTC and the other cryptocurrencies available on Robinhood could continue as retail traders new to the crypto market flock to the popular meme coin.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should conduct your own research when making a decision.