A favourite saying of mine is:
“nothing can be said to be certain, except death and taxes”
And to a certain extent this informs my approach to the cryptocurrency markets and also why I picked XRP overall out of the multitude of options available.
One of the reasons I picked XRP to invest in other than say, for instance Bitcoin or one of the various other altcoins is that I believe the future of an cryptocurrency investment really lies in it’s ability to adapt to the evolving regulatory landscape.
What I mean by this is… that any investment in cryptocurrency has to consider the impact of an evolving legal landscape that is slowly adapting to the rise of cryptocurrencies and assimilating them into the legal framework.
Recent news suggests a big rush by national authorities in the western world to regulate the cryptocurrency market in 2018.
Starting with the UK, the government has announced it’s attention to press forward with regulation for cryptocurrencies.
In answering a question in the House of Commons, the City Minister Stephen Barclay stated:
“The UK government is currently negotiating amendments to the 4th Anti-Money Laundering Directive that will bring virtual currency exchange platforms and custodian wallet providers into Anti-Money Laundering and Counter-Terrorist Financing regulation, which will result in these firms’ activities being overseen by national competent authorities for these areas. The government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017/early 2018.”
So in other words, the British government will soon bring forth policy proposals for the regulation of cryptocurrencies.
Likewise, in the USA a recent statement by FINSEC stated that digital cryptocurrency tokens are subject to the requirements of the federal securities law.
Meanwhile Russia is working on it’s own regulatory framework for cryptocurrencies and so are the Chinese and the Japanese governments.
Now this sounds hellish from the point of view of a cryptocurrency advocate. However, I will say that people who did not see it coming were hopelessly naive.
However, rather than panicked about this, I believe that this represents a competitive advantage for XRP and a great opportunity for crypto traders.
Simply put: XRP and Ripple Labs writ-large are focused upon regulatory compliance whereas most other cryptocurrencies simply are not.
As a matter of fact I now consider it a serious possibility that we will have a Q1 or Q2 2018 cryptocurrency bust in some parts of the market driven by state-level regulations being imposed.
Meanwhile XRP and some other cryptocurrencies are working hand-in-hand with the state to not just comply with regulations, but to target already regulated mainstream markets. This in itself grants them serious competitive advantages.
This is what forms my strategy for 2018 in the crypto markets. Short anything which cannot hope to survive after regulations, buy anything which can. Starting with XRP.
I present here a few rough annotations of charts showing the compression wave I’m tracking. I offer a candlestick chart and a somewhat smoothed linear chart as these both have their own specific insights to offer.
Here is the ultra long term chart showing the beginning of the bull run to present and the formation of the compression wave inherent to XRP’s uptrend.
You can see waves 1 – 5 here and can see that we’re clearly at the top of W5.
A zoomed in view shows this in more clarity.
There are two key points here:
- Sellers are losing confidence and moving down (hence why we’ve drifted so far from the old 0.30 resistance zone).
- Buyers offering demand to the support line outlined in in green are gaining confidence and moving forward.
The second point is why I am still ultimately bullish about XRP.
A second point is that we are currently at the top of W5.
In fact we’ve already bounced off the resistance line and so therefore I am expecting a drop down to roughly the 0.22 point as I believe that bedrock support will gain a foothold on this point in the next week or two while sellers shift out and move back down to it.
Thus my strategy right now is to simple wait for this drop and then start buying again as the drop down to 0.22 or thereabouts from the peak of W5 will also herald the beginning of W6 which may be the last sub-wave in the compression wave before it completes.
A close up of the chart reveals that the last selloff at the peak of W5 did indeed bottom out at the 0.22 point so I consider my estimation here to be an accurate one.
So in other words, the current situation calls for patience because a good opportunity to expand your position may be about to arise. Look to buy in around the 0.22 point and support should easy carry us back up from that point onwards.
Be wary though that once the overall grand compression wave completes that there are two possible scenarios:
Breakout or Collapse.
This depends upon whichever force wins out:
Support or Resistance.
So watch your XRP carefully over the next few weeks.
I am expecting a Q1 2018 resolution to the compression wave and more clarity for XRP in 2018. Overall I am still #bullish about Ripple’s prospects here because I believe that a 2018 breakout is simply a much more likely scenario given everything that is happening in the crypto world right now.
As always I make the following disclaimer about my technical analysis: That it cannot prepare for nor override the impact of Black Swan events. So of course keep your eyes on the news for interesting happenings in the cryptocurrency and forex world and of course I’ll be blogging updates regularly.
A word on derivatives…
Over the past few weeks a group we run for XRP speculators on facebook (link is here for interested peoples: https://www.facebook.com/groups/650669645138617/ ) has seen a lot of people enter this group having bought a derivative for Xrp from a broker.
Needless to say you really do need to learn what derivatives are before you go buying them because this area is a minefield and there are certain aspects of derivatives which apply to stocks and commodities which do not apply to cryptocurrency and therefore dilute the advantage of trading utilising derivatives.
The Ripple markets are facing a huge showdown between buyers and sellers in a very uncertain time. It’s not entirely clear who’ll win here but I’ll try to describe what is happening and offer some useful advice and of course lots of supporting evidence.
Here is the long term chart from xrpcharts.ripple.com.
Now this is a useful chart because it includes a more complete history of XRP’s price development. From obscurity, to lift off, to present.
On first glance you can see that the recent uptrend has been in place since the end of the bear market in July which ended with some deep-reaching selloffs heading all the way down to 0.12.
You might also see a nice looking upmove since the bear market ended.
However things aren’t really that simple. There is a lot more to this image than meets the eye.
First you’ll notice the healthy looking uptrend.
This looks good from an investors point of view and of course this is one reason why Ripple has been a great performer with myself making 54% on a position in just a few months.
You’ll notice that the uptrend appears to be made up of a series of waves. We can number these from 1 through to the most recent at 5.
Now I noticed that the waves seem to be getting more compact even though the dips were still moving upwards. This got me thinking that there was more to this than meets the eye.
In fact what you may not notice notice is that the uptrend is bring matched by an equally resilient downward moving wave of resistance from the top of the first big peak.
This got me suspicious that what I was seeing was a compression wave comprised of a downward moving wave of sellers and an upwards shifting wave of buyers and that the clash between the two is forming sub-waves as it develops.
This compression wave is gigantic and is formed over many months. The upcoming clash of support and resistance is one of the most important moments in recent xrp price history and it got me thinking about the strength of the resistance and support on show in the Ripple markets.
Lots of Xrp holders right now are concerned about waves of lurking sellers between now and the 0.30 mark. 0.30 is a traditional strong point of resistance in XRP/USD and we’ve seen this again and again.
Unfortunately many of the sellers waiting at 0.30 are not represented the order books at the moment.
What we can see however is by examining the order book visualiser that sellers are amassing at the 0.25 onwards. Particularly at points 0.25, 0.26 and 0.28.
By 0.28 the resistance is over 1,000,000 XRP strong and of course the evidence suggests that this resistance gets stronger and reaches much further up out to 0.30
Moreover, these points correspond to bars of resistance on the XRP/USD chart.
The total strength of resistance on show is something in the region of 6,000,000,000 Xrp waiting to be sold and this does not include orders that are off exchange or hidden from the orderbook by design.
Going back to our previous chart, if you recall we’d numbered each wave of the trend 1-5
You’ll see from this that subwave 6 is likely to meet the resistance point of the compression wave right at some point between 0.25 or 0.26.
If the trend plays out as it has so far, XRP will then correct back down to a point that would roughly correspond to 0.22 on the support line which would complete W5 and then and will then move back up to begin W6 which could be the final subwave before the resistance line and the support line meet to complete the grand compression wave.
What will happen when the two forces meet? Ultimately we’ll have a conflagration that ends in either a solid rise, or a solid fall as either the uptrend or the downtrend will be broken and XRP’s price point will move beyond whichever line or support or resistance breaks.
What sort of timeframe are we talking about?
I personally believe that subwave W6 will not form properly until late December/Early January and that this situation is ultimately a long term projection.
If you look at the close up to the left then you will see that each sub-wave has taken about 4 weeks to a month to rise and fall, and so, with it being so late in this year already, then I consider that, we’re looking at a resolution to the macro-compression wave sometime in in Q1 2018.
Something else you may notice is that XRP has successfully formed 4 green candlesticks in succession over the past few weeks on the 3day interval chart.
It’s worth noting that anything to parallel this has only ever occurred twice before on XRP/USD and both times they led to corrections back down to support line of the compression wave.
This is another statistic which makes me consider that a correction down to support is imminent before W6 begins which may mark a conflagration between support and resistance which marks the completion of of the compression wave.
What we need to look out for here is signs of impasse. At the moment, XRP has been climbing for about 2 weeks straight and the overall gains have been solid. As we near the end of the compression wave then we should see support and resistance become closer together which will lead to less dramatic looking candlesticks and patterns.
What do I advise doing? Certain people know I’ve already made my decision, but my priorities and strategy is certainly different to most peoples’ and I will make no prescriptions here. In no way do I advise either selling or buying at this stage because the situation is uncertain and nobody can honestly predict which way it will go.
I advise to simply do what I’m doing: Wait to see what the situation brings, watch the charts and orderbook visualizers and adapt to the situation as it unfolds. I will likely blog updates as we go.
As of this point in the Ripple markets key resistance lives at pretty much every round number. We have resistance at 0.24, 0.25, 0.26 and so forth.
I was curious why this was so neat and orderly and figured, only humans planning way in advance are unimaginative enough to sell out at nice near round numbers like that.
This correlates very nicely to points on the orderbook visualiser.. Notice the nice, neat, tidy step pattern?
This is because we have walls of sell orders lined up to auto-execute when XRP attempts to breach them.
Rather than outright market rigging, I’m more inclined to think that the nice, neat numbers involved here suggest that these are waves of traders – lots of traders – taking profit after sitting on their investment for a long time.
As we see from the orderbook visualiser from https://xrpcharts.ripple.com then these resistance points are… gigantic. In fact they are millions of XRP in sum and millions of USD in value.
I also think some of these sell points gathered strength and were picked by the sellers because every short-termer looking to quit the market knows that they have to get out before XRP reaches its ultimate resistance point of 0.30. So they are picking sell points which are close, but not too close, to quit the markets.
This represents an enormous obstacle to further progress and it’s one that we need to watch out for before XRP will break out of what I believe is going to be a very unexciting phase for it as we move into this patch of heavy resistance. The key to breaking out on XRP’s price is the dissolution of this sell wall and moreover, this is going to take a lot of patience so if you are staying then make sure you are ready to HODL for a good year or so if not more and watch the order books more than the price charts.
The total volume on display here at the sell points is equal to more than $6,000,000 USD. This means that we need positive interest and positive purchasing volume equal to this in order to effect a breakout.
Since last week’s SWELL event – the XRP price saw a decline due to large sell offs from speculators. Unfortunately much of the hype surrounding the event didn’t really impress traders who went on to dump XRP on masse over the 3 days after the event, or rather that’s what I initially thought. A closer look at the overall market paints a different picture.
Looking at the charts for the entire crypto market during the same time frame you can see all of the top market cap coins ALSO plummeted. Que charts…
This was down to news of a new Bitcoin fork proposal due for release called BitcoinGold that was scheduled to take effect on October 25th. This announced hardfork came out of nowhere and it became apparent that the market started to dump altcoins to move into Bitcoin creating the market phenomenon called a “Vortex”. A Vortex is where Bitcoin attracts and sucks in the market cap of all the other altcoins on the assumption that Bitcoins value will rise a lot higher than the rest of the market in the same time frame. On this occasion it was the prospect of getting another batch of coins from any potential split in the network.
This can be very problematic for traders, considering the market clout that Bitcoin still holds for quick market gains as we saw at the creation of BCASH . As soon as the block height/or time of fork was released, the market began to dump Bitcoin and instantly started to pump all the alts including XRP. Que more charts…
It’s crucial to understand the roadmaps of Bitcoin and Ethereum in order to be able to predict when these “vortexs” can happen as the volatility can create excellent buying & selling opportunities.
Market price currently for XRP is 0.1972 USD as at 25/10/2017. Still a little a choppy but I personally think we are at a bottom and should expect at least a little upside from this point onwards (hopefully!)
I’m expecting the latest compression wave on the uptrend to converge upon the fundamental rising support tonight. If the established behaviour patterns of this trend continues then it will touch support and then we’ll have a spaff jump and a short bear market thereafter and retain a certain x% gains of the initial spaff jump.
A good way to trade Ripple seems to be to follow the fundamental uptrend rather than the whims of the bulls and bears.
If you chart a line through XRP’s big lows (the ones where it’s hit rock bottom after bottoming out after a bear market), then you come up with a nice neat uptrend (here represented by the bright green dash line).
What you’ll notice here is that this is part of a repeating cycle.
Add in some rough trend lines for the respective big jumps and heavy bear markets and you get the following chart.
Okay, a little rough and ready and somewhat tenacious, but still… the pattern seems relatively clear.
You see, the big jumps and nasty downtrends are actually a sideshow to the main event: The steady consolidation and advance of fundamental support.
Every time a bear market has clashed with this fundamental advancing layer of support (as shown in the red circles) we get a spaff jump, a huge flood of positive volume, a spike… then a bit of a meandering period and then…
…another damned bear market.
HOWEVER… every bear market so far has bottomed out at higher lows.
And this, in my opinion, is due to the consolidation of fundamental support.
So all the big jumps and wild downtrends are just supporting roles to a greater and more important role here: The advance of a strong wave of underlying support which has gained about 3 cents per month so far
And as an XRP investor, this is really what YOU should be focused on.
In summary? HODL and focus on the long term gains.
For all that have been following, the recent XRP uptrend was largely instigated by a burst of USD weakness.
However, today we’ve seen a huge burst of USD strength threaten the uptrend.
Stay tuned for updates and don’t forget, HODL.
So much has happened in the last few months that it’s difficult to priorities in a single post. Firstly, recent news from the Chinese government’s actions to stop all Bitcoin trading across multiple exchanges sent shock waves around the entire market causing the total Crypto market cap to plummet to $120 billion from a previous $164 billion all time high. It only took 4 days for the market to gain back $24 billion.
Jamie Dimon, the notorious CEO of the notorious bank JP Morgan, also for a second time demonised Bitcoin calling it a “fraud” during a conference with Barclays on the 12th Sept. He went on to state he would fire his own traders if they traded Bitcoin. Yet screen shots have surfaced that JP Morgan subsidiaries are openly trading Bitcoin securities. The internet is in uproar with speculation.
Ripple also announced their keynote speakers for the upcoming SWELL conference in Toronto on the 16th – 18th Oct. Dr Ben Bernanke and Timer Berners Lee, 2 titans of both the financial and internet age, take keynote sessions along with a full line up . The SWELL conference is pegged to be the main stage in which Ripple plans to launch as a rival against SWIFT as the intermediary for settlement with overseas transactions. SWIFT is running a competing event called SIBOS at the same time in Toronto.
Finally, rumours were abound on reddit regarding Alibaba test firing its own Ripple node. Alibaba has a massive market of potentially 80 milllion Chinese mobile users thanks to its online infrastructure portfolio and multiple subsidiaries specialising in digital mobile payments. Later Ripple denied the claims , but this kind of intel whether objectively true or not, will effect the behavior of traders. Some technical analysis showed some interesting price activity over the time the news broke.
So how is all this effecting Ripple’s price overall?
Purely from a technical perspective, BTC/USD pairs appear to be the driving force of the market sentiment at the moment, given the volatility caused from the Chinese & JP Morgan this is not surprising and should be expected. When USD leaves the BTC market, USD also leaves the rest of the crypto market at the same time(including XRP). Que Chart BTCUSDIDX overlay with XRP/USD….
The light blue line represents the value of BTC in USD pegged against the USD INDEX market. The USD Index is a basket of other currencies pegged against USD and is used to determine global strength or weakness versus the rest of the world’s top traded currencies. Whats interesting here is that if you follow the peaks and troughs on both these 2 markets, you can see some correlation between XRP/USD(Green and red candles) & USDINDEX(thin blue line) value of Bitcoin. This would suggest any USD weakness in the global market increases the Crypto market cap, could this mean crypto currencies are being considered as a hedge against USD by real world traders?
A total of 15 hedge funds are now in play dedicated to the crypto currency markets, 4 of those include XRP as their underlying asset for their portfolios.
If any of these hedge or asset funds are registered in the US they will have to follow SEC regulation and hold a considerable of amount of XRP (including all other respected coins that these funds are targeting). This is a legal requirement under US regulation. Some of these funds are managed in other places globally including places like Panama & Switzerland. They too would have similar requirements in the laws for their respected jurisdictions. This can only be bullish for the XRP/USD token value. With increasing uncertainty from China on Bitcoin and Ripple’s “warmer” reception with the Chinese State, we may see some upside on both XRP/USD & XRP/BTC markets in the coming months.
That being said XRP is still failing to make any upside on day to day technicals, even with recent record volumes being traded there has been a failure to get passed resistance lines and progress upwards. It’s still not popular with day traders as the market price has shown. Even with increasing positive PR in recent weeks large buy market orders are immediately being countered with equally large sell orders, gradually over the same time period.
With upcoming investor interest and continued penetration into banking giants globally, it will be only a matter of time until some of those large corporate’s will put their hands into the fishing bowl of XRP tokens floating around in the global market, and take fist full of tokens to trial out. Thanks to the network transparency that crypto currencies like Ripple can offer, it will be easy to see when that moment comes, as the discovery of the contested Alibaba node soon revealed.
Until then expect continued volatility downwards in the short term. Smart contract lock is expected by the end of the year(more to come about this…) and any resulting announcements from SWELL may see some spaff movements up. XRP is still struggling to shake off the reputation of “oh yeah, that centralised bank coin”, and “scammy premine” that comes from comments in the places like reddit and bitcoin investment forums.
In the mean time XRP may well continue to suffer its bad rep as the “ugly duckling” despite hovering 3rd and 4th places in the market cap rank. Only time will tell, hold strong and HODL!
More to follow….Stay tuned.
“Everything has beauty, but not everyone see’s it.” ~ Confucius
*Market Cap image courtesy of https://coinmarketcap.com
So the scaling deadline to implement Bitcoin’s SegWit upgrade is only a few weeks away (Aug 1st). Bitcoin is down and testing key support lines vs USD along with the rest of the alt coin market. Volumes haven’t dropped so there is a lot of probability for further downside. This is obviously a time of serious volatility across the whole crypto market while everyone watches to see what happens next on the future of Bitcoin’s Block size.
What’s interesting here is that XRP is rising in value against Bitcoin and de accelerating in its drop against the USD(see charts below). It’s the same case with the other top market cap coins like Zcash (ZEC) & Ethereum (ETH). This is a sign that the “decoupling” has begun. If people are dumping Bitcoin for Ripple and other alts, and if this sell off on BTC/USD continues, than it will be only a matter time until the USD catches up with the rest of the alt coin market. It’s clear that traders are now mitigating risks and moving into alts, we should see a lot of market cap getting “stolen” by Ripple and the other alts, this could be quite dramatic.
XRP/USD – 15 Mins – Kraken
BTC/USD – 4 hour
The Bank of England last month released an update on progress with its Blueprint for a new RTGS system strategy. RTGS (Real Time Gross Settlement) is basically the UK’s central banks mechanism for regulating £500 billion’s worth of “settlement” payments internally between banks.
It’s come up with a roadmap for implementing and regulating a new system and has committed to allow more private companies to join in and become what the central bank calls “Payment Service Providers (PSP’s)”. You can read all about the specifics and timeframes from the BoE’s website and Ripple Labs news announcement here.
This is excellent news as not only is the bank physically testing Ripple as a Proof of Concept, in a test network simulating real settlement payments, it’s also opening up settlement & the remittance market for new entrants at the same time.
“..As the Governor has announced, the Chancellor has committed to make the necessary legislative changes to ensure that these new entrants can access RTGS safely and efficiently.” Quoted from the report
The central bank here is making a concerted effort to bring in more investment to the market for “Payment Solutions Provider’s”. This is excellent news for potential market growth and adoption for new companies to start using XRP’s . Ripple Labs also opened an office in London early last year to target specifically European banks and institutions and employed ex SWIFT veteran Patricia Pittomvils as a Sales Director, imagine the contacts she has with 10 year’s experience under her belt!
Here is where the XRP token comes into play
Not all banks/institutions whether global, national or local will share the same internal databases with each other. The ones who do can just use Ripple’s “Interledger Protocol” to swap currency pairs in real time without needing any XRP’s. It’s the “Payment Solution Provider’s” who will need a separate token of exchange to settle any transactions OUTSIDE of any banking organisations using internal shared “Interledger’s”. This is where XRP tokens come in, each new service provider will need to purchase and hold XRP’s to provide liquidity or to directly deal with other banks who they don’t share internal ledgers with. The XRP token is designed to bridge that gap between these institutions regardless of their market size. You can read an example here of how XRP was used to facilitate transactions across multiple currencies and multiple blockchains with multiple institutions here.
Given the fact that new Ripple Gateways or potential “payment solution providers” will have to keep a float of XRP on site to facilitate transactions. They will also have to keep an additional stock of XRP’s just to activate new addresses for users to start or create new “trustlines”. Each new Ripple wallet requires a balance of 20 XRP’s to become “activated”, its only afterwards that the wallet can then send XRPs to other addresses. This is going to promote hoarding of XRPs as new market actors enter the stage. More about the process of this will be explained later on in this blog, but from looking from this recent news, it’s looking very bullish for Ripple on the long term scale of 2 -3 years(maybe sooner!)
Ripple and in fact ALL cryptocurrencies were in a state of crisis today after a huge crash took prices as low as 0.15 cents and still dropping.
People ask what to do in this situation. Personally, I will be using it as an opportunity to further grow my own position.
The reason I am not particularly worried about this crash is because it is not anything that is inherently confined to Ripple as it involves all major cryptocurrencies. This suggests a broader reaction against the wider market rather than a collapse of confidence in a single currency and could actually be related to the prospect of a chain split in Bitcoin as the SEGWIT adoption date looms.
For all of us who missed the boat at 0.15 and under then this is the best opportunity we’ll have in a while to make up ground on consolidating our market positions.
I’m going to suggest a drop to about 0.14182 since there is an old support point here on the long term charts from an earlier bear market which may still provide support for a bounce point as shown on the screenshot below.
Updates as they come.