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Bitcoin Price Analysis: Post-Fork Exuberance Shows No Signs of Pulling Back (Yet)

Bitcoin Price Analysis

Remember that time I said BTC-USD likely won’t see a new all time high (ATH) any time soon? Looks like I was wrong. Shortly after posting my previous BTC-USD analysis, in a matter of one hour, the price of BTC-USD not only broke its record high, but it surpassed it by $200 after ultimately settling in the $3200s. As of this morning, BTC-USD pushed another ATH of $3440 on Bitfinex marking a $600+ in less than a week. Let’s take a look at what these moves can possibly mean for BTC-USD and if these moves are sustainable.

Starting in the $160s, BTC-USD has been on a massive, multi-year bull run:

Figure_1 (3).JPGFigure 1: BTC-USD, 3 Day Candles, Bitfinex, Macro Bull Trend

If we plot the trend using $3440 as the top of this trend, a lot of historic support and resistance levels start to make a lot more sense within the context of the market. Our move to the $1800s marked a test of the 50% retracement line, our battle over the $2600s marked the various tests of the 23.6% retracement line and now our ultimate sudden rush to new highs can be seen as the 100% retracement line.

Keeping the same Fibonacci Retracement Lines and zooming into our daily trend, a few observations immediately pop out:

Figure_2 (3).JPGFigure 2: BTC-USD, 1 Day Candles, Bitfinex, Macro Bull Trend, Zoomed In

  1. There is an obvious price increase on the long-term trend;

  2. Our recent run from $1800, however, has seen decreasing volume on every leg up;

  3. The multi-period MACD and current MACD histogram both show Bearish Divergence; and

  4. The RSI is showing Bearish Divergence.

If we take a closer look to the market post-$1800s, we see a similar trend of divergence even on the smaller timescales:

Figure_3 (4).JPGFigure 3: BTC-USD, 6 Hour Candles, Bitfinex, Current ATH

  1. The uptrend in price is, once again, accompanied on decreasing volume;

  2. The 6HR is strongly diverging bearishly;

  3. The RSI is showing strong bearish divergence; and

  4. The 6HR Bollinger Bands show several candles fully formed outside the upper band (shown in the circle).

For those who are unfamiliar with Bollinger Bands: Simply put, they are a strong tool used to visualize market volatility. Typically, when a market is near the edge of the upper band, it is considered “overbought,” and when it nears the edge of the lower band it is considered “oversold.” When a market punctures a band it will typically yield a pullback to a trend within the bands, and when a candle is completely formed outside the bands it is usually a strong sell or buy signal — a sell signal in our case. You can think of the Bollinger Bands like a set of rubber bands: the tighter you stretch a rubber band, the harder the reaction. Typically, this is the case for markets that puncture the bands and especially for those that fully form candles outside the bands.

Looking at our current Bollinger Band trend, one might be tempted to say, “BTC-USD appears to be pulling back within the 6-Hour Bands — looks like a healthy move upward is still in the cards.” However, if we zoom out and look back through the history of BTC-USD and its interaction with the 1-Day Bollinger Bands, we can see a clear market trend.

Figure_4.JPGFigure 4: BTC-USD, 1 Day Candles, Bitfinex, Bollinger Band Trend

Above are several historic examples of BTC-USDs reaction to a puncturing of the 1-Day Bollinger Bands. More often than not, a puncturing of the bands — whether the lower or upper band — is greeted with a market pullback. The stronger the break of the bands, the stronger the pullback. The strongest breaks of the bands have a very strong tendency to return to the middle line of the Bollinger Bands (the dashed line) before continuing its trend up or down.

If there is so much damning evidence of a pullback, why does the price keep rising? Fear of Missing Out (FOMO) is unpredictable and irrational. FOMO can push markets well beyond what Technical Analysis can predict and often defies market indicator signals. With all the hype surrounding the recent hard fork, and the influx of money coming from people cashing out their Bitcoin Cash where does this leave us? There is a mountain of evidence suggesting this market level is unhealthy and highly overextended; it needs either to consolidate considerably or retrace. BTC-USD is tightly wound and there is very little, if any, sign of health within its most recent market moves.

I’m not saying the market won’t continue to the pump even higher than it is currently — Goldman Sachs has a price target of $3600, after all. However, with each hike in the BTC-USD price, we are increasing the likelihood of a strong pullback and ultimately a return to the center of the Bollinger Bands.

Summary:

  1. On all relevant timescales, BTC-USD is showing strong signs of an overextended market.

  2. The Bollinger Bands have several candles fully formed outside the upper bands on the 6 HR, 12 HR and 1 Day Candles.

  3. Historically, when the 1 Day Bollinger Bands are punctured, there is a market pullback.

Trading and investing in digital assets like bitcoin, bitcoin cash and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

The post Bitcoin Price Analysis: Post-Fork Exuberance Shows No Signs of Pulling Back (Yet) appeared first on Bitcoin Magazine.

Bitcoin Price Analysis

Remember that time I said BTC-USD likely won’t see a new all time high (ATH) any time soon? Looks like I was wrong. Shortly after posting my previous BTC-USD analysis, in a matter of one hour, the price of BTC-USD not only broke its record high, but it surpassed it by $200 after ultimately settling in the $3200s. As of this morning, BTC-USD pushed another ATH of $3440 on Bitfinex marking a $600+ in less than a week. Let’s take a look at what these moves can possibly mean for BTC-USD and if these moves are sustainable.

Starting in the $160s, BTC-USD has been on a massive, multi-year bull run:

Figure_1 (3).JPGFigure 1: BTC-USD, 3 Day Candles, Bitfinex, Macro Bull Trend

If we plot the trend using $3440 as the top of this trend, a lot of historic support and resistance levels start to make a lot more sense within the context of the market. Our move to the $1800s marked a test of the 50% retracement line, our battle over the $2600s marked the various tests of the 23.6% retracement line and now our ultimate sudden rush to new highs can be seen as the 100% retracement line.

Keeping the same Fibonacci Retracement Lines and zooming into our daily trend, a few observations immediately pop out:

Figure_2 (3).JPGFigure 2: BTC-USD, 1 Day Candles, Bitfinex, Macro Bull Trend, Zoomed In

  1. There is an obvious price increase on the long-term trend;

  2. Our recent run from $1800, however, has seen decreasing volume on every leg up;

  3. The multi-period MACD and current MACD histogram both show Bearish Divergence; and

  4. The RSI is showing Bearish Divergence.

If we take a closer look to the market post-$1800s, we see a similar trend of divergence even on the smaller timescales:

Figure_3 (4).JPGFigure 3: BTC-USD, 6 Hour Candles, Bitfinex, Current ATH

  1. The uptrend in price is, once again, accompanied on decreasing volume;

  2. The 6HR is strongly diverging bearishly;

  3. The RSI is showing strong bearish divergence; and

  4. The 6HR Bollinger Bands show several candles fully formed outside the upper band (shown in the circle).

For those who are unfamiliar with Bollinger Bands: Simply put, they are a strong tool used to visualize market volatility. Typically, when a market is near the edge of the upper band, it is considered “overbought,” and when it nears the edge of the lower band it is considered “oversold.” When a market punctures a band it will typically yield a pullback to a trend within the bands, and when a candle is completely formed outside the bands it is usually a strong sell or buy signal — a sell signal in our case. You can think of the Bollinger Bands like a set of rubber bands: the tighter you stretch a rubber band, the harder the reaction. Typically, this is the case for markets that puncture the bands and especially for those that fully form candles outside the bands.

Looking at our current Bollinger Band trend, one might be tempted to say, “BTC-USD appears to be pulling back within the 6-Hour Bands — looks like a healthy move upward is still in the cards.” However, if we zoom out and look back through the history of BTC-USD and its interaction with the 1-Day Bollinger Bands, we can see a clear market trend.

Figure_4.JPGFigure 4: BTC-USD, 1 Day Candles, Bitfinex, Bollinger Band Trend

Above are several historic examples of BTC-USDs reaction to a puncturing of the 1-Day Bollinger Bands. More often than not, a puncturing of the bands — whether the lower or upper band — is greeted with a market pullback. The stronger the break of the bands, the stronger the pullback. The strongest breaks of the bands have a very strong tendency to return to the middle line of the Bollinger Bands (the dashed line) before continuing its trend up or down.

If there is so much damning evidence of a pullback, why does the price keep rising? Fear of Missing Out (FOMO) is unpredictable and irrational. FOMO can push markets well beyond what Technical Analysis can predict and often defies market indicator signals. With all the hype surrounding the recent hard fork, and the influx of money coming from people cashing out their Bitcoin Cash where does this leave us? There is a mountain of evidence suggesting this market level is unhealthy and highly overextended; it needs either to consolidate considerably or retrace. BTC-USD is tightly wound and there is very little, if any, sign of health within its most recent market moves.

I’m not saying the market won’t continue to the pump even higher than it is currently — Goldman Sachs has a price target of $3600, after all. However, with each hike in the BTC-USD price, we are increasing the likelihood of a strong pullback and ultimately a return to the center of the Bollinger Bands.

Summary:

  1. On all relevant timescales, BTC-USD is showing strong signs of an overextended market.

  2. The Bollinger Bands have several candles fully formed outside the upper bands on the 6 HR, 12 HR and 1 Day Candles.

  3. Historically, when the 1 Day Bollinger Bands are punctured, there is a market pullback.

Trading and investing in digital assets like bitcoin, bitcoin cash and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

The post Bitcoin Price Analysis: Post-Fork Exuberance Shows No Signs of Pulling Back (Yet) appeared first on Bitcoin Magazine.

Bitcoin extends record climb, as digital currencies on the rise – MarketWatch

MarketWatchBitcoin extends record climb, as digital currencies on the riseMarketWatchA single bitcoin BTCUSD, +0.07% was up 3.5% at $3,369.82, after enjoying a weekend ascent that has taken the cryptocurrency to its highest level since being created ba…


MarketWatch

Bitcoin extends record climb, as digital currencies on the rise
MarketWatch
A single bitcoin BTCUSD, +0.07% was up 3.5% at $3,369.82, after enjoying a weekend ascent that has taken the cryptocurrency to its highest level since being created back in 2009. The total market value of bitcoin was nearly $55 billion, its highest on ...
Bitcoin Revolutionizing the Art Market?HuffPost
Bitcoin cash: challenger, child or just chatter?Livemint

all 13 news articles »

Bitcoin Cash Eases Mining Difficulty as Blockchain Adjusts

CoinDesk contributor Jimmy Song gives an update on changes in Bitcoin Cash’s mining ecosystem and why they might be of note for investors.

CoinDesk contributor Jimmy Song gives an update on changes in Bitcoin Cash’s mining ecosystem and why they might be of note for investors.

Major Japanese Retail Chain Marui Now Accepts Bitcoin Payments – CoinTelegraph

CoinTelegraphMajor Japanese Retail Chain Marui Now Accepts Bitcoin PaymentsCoinTelegraphMajor Japanese retail store chain Marui has signed a partnership agreement with Bitcoin exchange Bitflyer that will enable it to accept Bitcoin payments in stores s…


CoinTelegraph

Major Japanese Retail Chain Marui Now Accepts Bitcoin Payments
CoinTelegraph
Major Japanese retail store chain Marui has signed a partnership agreement with Bitcoin exchange Bitflyer that will enable it to accept Bitcoin payments in stores starting August 7. With this move, Marui becomes the first large department store chain ...

OSTK to HODL: Overstock to Keep 50% of All Bitcoin Payments as Investments – CoinDesk


CoinDesk

OSTK to HODL: Overstock to Keep 50% of All Bitcoin Payments as Investments
CoinDesk
In an accompanying earnings call, CEO Patrick Byrne was asked about the recent price increases in bitcoin markets and whether Overstock – which has traditionally kept 10 percent of its bitcoin earnings and converted the rest to dollars – had “changed

and more »


CoinDesk

OSTK to HODL: Overstock to Keep 50% of All Bitcoin Payments as Investments
CoinDesk
In an accompanying earnings call, CEO Patrick Byrne was asked about the recent price increases in bitcoin markets and whether Overstock – which has traditionally kept 10 percent of its bitcoin earnings and converted the rest to dollars – had "changed ...

and more »

Major Japanese Retail Chain Marui Now Accepts Bitcoin Payments

Major Japanese retail chain Marui has signed a partnership agreement with Bitcoin exchange Bitflyer to accept Bitcoin payments in its stores starting August 7.

Major Japanese retail chain Marui has signed a partnership agreement with Bitcoin exchange Bitflyer to accept Bitcoin payments in its stores starting August 7.

Bitcoin can get to $100000 if it keeps following one of tech’s golden rules – Business Insider


Business Insider

Bitcoin can get to $100000 if it keeps following one of tech’s golden rules
Business Insider
Bitcoin is trading at record highs on Monday, but the cryptocurrency may still be far from hitting its ceiling. It’s rallied 16.19% since July 31, despite last week’s fork that split it in two. It’s up 465% since last year. According to analysis by

and more »


Business Insider

Bitcoin can get to $100000 if it keeps following one of tech's golden rules
Business Insider
Bitcoin is trading at record highs on Monday, but the cryptocurrency may still be far from hitting its ceiling. It's rallied 16.19% since July 31, despite last week's fork that split it in two. It's up 465% since last year. According to analysis by ...

and more »

Major Improvements Are Coming Soon to the Tor Browser

TheMerkle Tor UpgradesThe Tor software is a common tool among consumers who prefer to enjoy more privacy while accessing the internet on a regular basis. However, we also know the Tor software is not without its flaws. The developer of this browser has acknowledged that further improvements need to be made. A batch of new features was announced earlier this week. All of these improvements should make Tor a much safer tool. Tor Will See Some Major Changes Soon There are a lot of misconceptions about the Tor software and the people who use it. Some automatically assume that anyone using Tor must be frequenting the darknet.

TheMerkle Tor Upgrades

The Tor software is a common tool among consumers who prefer to enjoy more privacy while accessing the internet on a regular basis. However, we also know the Tor software is not without its flaws. The developer of this browser has acknowledged that further improvements need to be made. A batch of new features was announced earlier this week. All of these improvements should make Tor a much safer tool.

Tor Will See Some Major Changes Soon

There are a lot of misconceptions about the Tor software and the people who use it. Some automatically assume that anyone using Tor must be frequenting the darknet. However, the vast majority of people utilizing Tor do so to access regular websites. The browser provides more privacy and anonymity features than any other browsing software in the world today. It is no surprise that a lot of people would prefer this software for regular internet usage.

Tor’s developer has clarified another myth surrounding the usage of this software. The NSA does not run half the relays used by the network by any means. With over 8,000 relays on a global scale, that would require a ton of resources to pull off. Some intelligence agencies do set up temporary relays every now and then. The vast majority, however, are run by independent users with no political agenda whatsoever.

The biggest announcement concerned some new features coming to a Tor browser near you. The team has partnered with Privacy Enhancing Technologies Symposium to improve traffic analysis resistance. This method is often used to identify Tor users with relative ease. Stepping up countermeasure efforts should result in making it a lot more difficult to de-anonymize onion services in the future. 

The Tor protocol will switch to a new cryptosystem using elliptic curve cryptography keys such as Ed25519. At present, the protocol continues to rely on the first 80 bits of the SHA-1 of a 1024-bit RSA key. Although this has worked quite well so far, the system has gotten a bit outdated. Especially considering the progress made in quantum computing, the time is now to come up with improved solutions which guarantee additional privacy for all users. One always has to prepare for whatever the future may hold.

Further changes include making it more difficult to set up relays to target particular onion services. This will be done through an improved hidden service directory design functioning similarly to DNS for the regular internet. The current use of HSDir relays is too predictable in the minds of the developers. Tackling this problem will not be an easy feat, but it should be feasible to improve upon this feature in the coming months and years.

Perhaps the most intriguing new features come in the form of different deployment models. Tor users can now sacrifice location privacy for performance and scalability if they wish to do so. This method has been used by services such as Facebook already to improve load times and so forth, and it makes sense to integrate different deployment models. Making Tor the new standard among Internet browsers will not be easy, but all of these steps pave the way toward achieving that goal.

144,000 Free Spins up for grabs montly in BitStarz’s new Slot Battles!

Monday, Aug 07, 2017 – Massive amount of spins up for grabs every day! If you’re familiar with BitStarz, we’re sure you’ve noticed they love tournaments. I mean, they already have immensely popular ones such as Extra Wars, Slot Wars and Table Wars. Don’t let the names fool you though, you don’t really have to … Continue reading 144,000 Free Spins up for grabs montly in BitStarz’s new Slot Battles!

The post 144,000 Free Spins up for grabs montly in BitStarz’s new Slot Battles! appeared first on NEWSBTC.

Monday, Aug 07, 2017 – Massive amount of spins up for grabs every day! If you’re familiar with BitStarz, we’re sure you’ve noticed they love tournaments. I mean, they already have immensely popular ones such as Extra Wars, Slot Wars and Table Wars. Don’t let the names fool you though, you don’t really have to … Continue reading 144,000 Free Spins up for grabs montly in BitStarz’s new Slot Battles!

The post 144,000 Free Spins up for grabs montly in BitStarz’s new Slot Battles! appeared first on NEWSBTC.

REcoin Announces Token Pre-Sale and ICO Launch on August 7, 2017

REcoin is the first cryptocurrency that is backed by Real Estate. REcoin Group is the real estate-backed start up that has recently announced its pre-sale and ICO launch to be started from August 7, 2017. The dates have long been awaited by the potential investors in real estate market and by blockchain community members. What … Continue reading REcoin Announces Token Pre-Sale and ICO Launch on August 7, 2017

The post REcoin Announces Token Pre-Sale and ICO Launch on August 7, 2017 appeared first on NEWSBTC.

REcoin is the first cryptocurrency that is backed by Real Estate. REcoin Group is the real estate-backed start up that has recently announced its pre-sale and ICO launch to be started from August 7, 2017. The dates have long been awaited by the potential investors in real estate market and by blockchain community members. What … Continue reading REcoin Announces Token Pre-Sale and ICO Launch on August 7, 2017

The post REcoin Announces Token Pre-Sale and ICO Launch on August 7, 2017 appeared first on NEWSBTC.

Despite the FUD, SEC-Compliant ICOs are Just Around The Corner

ICO FUD may soon become a thing of the past as big name law firms and financiers enter the arena to advise and protect both investors and creators of token sales.

ICO FUD may soon become a thing of the past as big name law firms and financiers enter the arena to advise and protect both investors and creators of token sales.

The Role of Trading Bots in the Cryptocurrency Market

Op Ed: The Role of Trading Bots in the Cryptocurrency Market

Similar to Wall Street and stock trading, bitcoin and cryptocurrency trading is a form of income for many. Due to the nature of the medium, however, many bitcoin traders do it as a side project, focusing their energy on a main job or alternate work.

But to generate passive — or active — income in these industries, you must be paying attention to current market trends and activity. Market shifts happen so fast, you can lose a lot of money if you don’t act soon enough, or don’t have time to trade when it’s opportune. That’s exactly why chat and trading bots have exploded on the scene.

Bots are automated systems that share information, answer queries and even perform actions — like trading bitcoin for money and vice versa. For example, Haasbot, a popular trading bot among cryptocurrency enthusiasts, will do most of the work for its users. It watches prices and exchange rates, handles trading and more. They are so efficient, it’s possible you’ve interacted with a bot and never even knew it.

Many of these tools require a subscription or monthly fee to continue using them. A handful allow you to pay in bitcoin.

Bots Are a Unique Form of AI

Bots use machine learning and data to improve themselves over time. As people interact with them and use them for more tasks, the bots learn, so to speak. Extensive analytics and software that is capable of creating trend-based algorithms make this possible. In time, they can even learn to invent their own languages to communicate with one another more efficiently.

In many ways, you can draw parallels between the development that chatbots go through to that of human beings. Regarding potential uses, capabilities and size, they start small and then grow into something more mature. Take, for instance, modern AI systems like Google Assistant, Apple’s Siri, Microsoft’s Cortana or Amazon’s Alexa. Sure, those platforms are all consumer-based, but they started out a lot less accurate and useful and grew gradually into what they are today.

You can now ask Alexa queries, have her read books and news snippets, get weather updates and even go shopping all via voice commands. Want to play some tunes from your music library or stream from Spotify? She can do that, too, and more.

From the moment you place an AI assistant (like Alexa or Siri) in your home, you can tell how advanced and useful it is. The same applies to chatbots, which are designed to do many things through the power of one-to-one messaging. They wouldn’t exist without modern AI technologies, nor would they be able to interact with you fully as they do now.

How Are Chatbots Influencing the Cryptocurrency Scene?

In the past, if you didn’t have the time, knowledge or skill set to invest in part- or full-time trading, you couldn’t participate. Sure, like stock trading, you can earn money, but it will never be substantial unless you’re present and active on a regular basis.

Chatbots allow you to be involved in the cryptocurrency marketplace while focusing on other responsibilities. But not just in an omnipresent way, they’re clued in to industry trends, know the necessary data and patterns and exactly when to trade — and when not to. Technically, you could say it’s cheating a little.

Of course, there are bots that make the process easier and provide up-to-date information during a query too. These bots are for convenience and to help traders stay in the loop. Think of them as sort of an RSS or news feed for cryptocurrency updates.

Some offer additional tools and functions. For instance, you can use a bitcoin calculator with a standard financial calculator to do conversions, simply by interacting with a bot. You can look up recent trends to make informed predictions and see what others have been trading and how much.

Essentially, bots can provide all the necessary resources to be a successful and active trader. But how is this influencing the industry and the market?

The answer is quite simple. It’s making the entire space more competitive, and it’s also helping the cryptocurrency industry boom. Arbitrage trading — the act of buying and selling commodities in one market and selling them for higher in another — is now possible with chatbots and automated systems. Another possibility is called market making, which involves generating profits based on long-term activity via sales and orders.

As chatbots and similar automated systems are opening up new avenues and opportunities for traders, they, in turn, are helping the industry grow and become more substantial. In the first quarter of 2017, the aggregate cryptocurrency market cap reached an all-time high of $25 billion for every top 10 asset rallies. Blockchain, the backbone of cryptocurrency, and the currency are growing — and fast.

What Bots Are Available?

There are too many bots and automated systems to list fully here, but we can explore some of the most popular systems available to traders.

  • Haasbot — We already discussed this bot, which costs about 0.12 BTC and 0.32 BTC every three months.

  • Tradewave — While not a conventional bot, this platform allows traders to come up with their own strategies and algorithms. You create “strategies” which are then used to control and influence the systems decisions and actions. You can download crowdsource strategies, too, if you don’t want to make your own. An entry-level subscription is $14 a month.

  • Zenbot — This open-source system is a full-scale, lightweight trading bot. It can handle multiple assets at once, and high-frequency trading, as well. This is important because it’s rare in the bot market. Plus, the open-source nature allows anyone to modify and update the code.

  • Cryptotrader — This automated system takes advantage of cloud computing. You don’t have to install any software or programs, and it allows anyone to get involved. It’s relatively young, however, so it doesn’t have the same track record as the other bots mentioned here.

  • Gekko — Yet another open-source platform, this one can be found on GitHub. It’s quite basic and cannot handle high-frequency trading or arbitrage trading, but that’s okay. It’s meant to be a minimal solution for those interested in cutting through the noise.

  • BTCRobot — Considered to be one of the original bots on the scene, BTC Robot is hit-or-miss for many. It does all basic trading and everything you’d expect it to, and there is a 60-day full refund policy if you want to try it out.

But There Are Risks

While there are many benefits and rewards to speak of, there are risks as well and it’s important to keep them in mind for many reasons.

For starters, bots are more of a tool than a guaranteed solution. You’d be forgiven for thinking otherwise, especially since they simplify the entire trading process through automation. But they don’t help you choose trades. That is something you, as an experienced professional, will have to do on your own. This creates risk for error because, ultimately, you’re the one deciding what trades and transactions the bot will focus on. Choose the wrong ones, and you will lose money.

Bots are extremely useful for taking advantage of market inefficiencies, a perk that many traders will take advantage of. Over time there will be a massive influx of traders using bots in this way, which will contribute to inefficiencies slowly disappearing. When that happens, no one will be able to claim an advantage, at least not in the same ways.

Finally, bots are generally designed to do something specific or carry out a specific set of instructions. Like most industry-exclusive tools, they require working knowledge not just of the process in question, but the market too. To operate heavy machinery, for instance, you get specialized training and learn to use the equipment for varying tasks, all of which are often within the same industry or market. By nature, tools are specialized, and cryptocurrency trading bots are no different.

In short, this means that not everyone can take advantage of or profit from this technology, even if it’s marketed in that way. Remember you’re still choosing the parameters of trades, so you need a working knowledge of the industry. You also need to be able to understand cryptocurrency values compared to real-world values. There’s a lot to manage, and it’s not something that everyone can succeed at without the proper training and knowledge, even if they’re using a bot.

Are Bots Necessary for Successful Trading?

While bots do help automate the process and make it easier and faster-paced, that doesn’t change the fact that you need working knowledge of cryptocurrency and the market. As with stock trading, you cannot hope to blindly jump in and make a huge profit. Of course, beginner’s luck is possible, but luck will only carry you so far.

Before you consider working with these platforms and deploying a bot of your own, you’ll want to make sure you understand the full breadth of the industry and how the market operates.

This is a guest post by Kayla Matthews. Views expressed are her own and do not necessarily reflect those of Bitcoin Magazine. Trading and investing in digital assets and cryptocurrencies is highly speculative and comes with many risks. This opinion piece is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media. 

The post The Role of Trading Bots in the Cryptocurrency Market appeared first on Bitcoin Magazine.

Op Ed: The Role of Trading Bots in the Cryptocurrency Market

Similar to Wall Street and stock trading, bitcoin and cryptocurrency trading is a form of income for many. Due to the nature of the medium, however, many bitcoin traders do it as a side project, focusing their energy on a main job or alternate work.

But to generate passive — or active — income in these industries, you must be paying attention to current market trends and activity. Market shifts happen so fast, you can lose a lot of money if you don’t act soon enough, or don’t have time to trade when it’s opportune. That’s exactly why chat and trading bots have exploded on the scene.

Bots are automated systems that share information, answer queries and even perform actions — like trading bitcoin for money and vice versa. For example, Haasbot, a popular trading bot among cryptocurrency enthusiasts, will do most of the work for its users. It watches prices and exchange rates, handles trading and more. They are so efficient, it’s possible you’ve interacted with a bot and never even knew it.

Many of these tools require a subscription or monthly fee to continue using them. A handful allow you to pay in bitcoin.

Bots Are a Unique Form of AI

Bots use machine learning and data to improve themselves over time. As people interact with them and use them for more tasks, the bots learn, so to speak. Extensive analytics and software that is capable of creating trend-based algorithms make this possible. In time, they can even learn to invent their own languages to communicate with one another more efficiently.

In many ways, you can draw parallels between the development that chatbots go through to that of human beings. Regarding potential uses, capabilities and size, they start small and then grow into something more mature. Take, for instance, modern AI systems like Google Assistant, Apple’s Siri, Microsoft’s Cortana or Amazon’s Alexa. Sure, those platforms are all consumer-based, but they started out a lot less accurate and useful and grew gradually into what they are today.

You can now ask Alexa queries, have her read books and news snippets, get weather updates and even go shopping all via voice commands. Want to play some tunes from your music library or stream from Spotify? She can do that, too, and more.

From the moment you place an AI assistant (like Alexa or Siri) in your home, you can tell how advanced and useful it is. The same applies to chatbots, which are designed to do many things through the power of one-to-one messaging. They wouldn’t exist without modern AI technologies, nor would they be able to interact with you fully as they do now.

How Are Chatbots Influencing the Cryptocurrency Scene?

In the past, if you didn’t have the time, knowledge or skill set to invest in part- or full-time trading, you couldn’t participate. Sure, like stock trading, you can earn money, but it will never be substantial unless you’re present and active on a regular basis.

Chatbots allow you to be involved in the cryptocurrency marketplace while focusing on other responsibilities. But not just in an omnipresent way, they’re clued in to industry trends, know the necessary data and patterns and exactly when to trade — and when not to. Technically, you could say it’s cheating a little.

Of course, there are bots that make the process easier and provide up-to-date information during a query too. These bots are for convenience and to help traders stay in the loop. Think of them as sort of an RSS or news feed for cryptocurrency updates.

Some offer additional tools and functions. For instance, you can use a bitcoin calculator with a standard financial calculator to do conversions, simply by interacting with a bot. You can look up recent trends to make informed predictions and see what others have been trading and how much.

Essentially, bots can provide all the necessary resources to be a successful and active trader. But how is this influencing the industry and the market?

The answer is quite simple. It’s making the entire space more competitive, and it’s also helping the cryptocurrency industry boom. Arbitrage trading — the act of buying and selling commodities in one market and selling them for higher in another — is now possible with chatbots and automated systems. Another possibility is called market making, which involves generating profits based on long-term activity via sales and orders.

As chatbots and similar automated systems are opening up new avenues and opportunities for traders, they, in turn, are helping the industry grow and become more substantial. In the first quarter of 2017, the aggregate cryptocurrency market cap reached an all-time high of $25 billion for every top 10 asset rallies. Blockchain, the backbone of cryptocurrency, and the currency are growing — and fast.

What Bots Are Available?

There are too many bots and automated systems to list fully here, but we can explore some of the most popular systems available to traders.

  • Haasbot — We already discussed this bot, which costs about 0.12 BTC and 0.32 BTC every three months.

  • Tradewave — While not a conventional bot, this platform allows traders to come up with their own strategies and algorithms. You create “strategies” which are then used to control and influence the systems decisions and actions. You can download crowdsource strategies, too, if you don’t want to make your own. An entry-level subscription is $14 a month.

  • Zenbot — This open-source system is a full-scale, lightweight trading bot. It can handle multiple assets at once, and high-frequency trading, as well. This is important because it’s rare in the bot market. Plus, the open-source nature allows anyone to modify and update the code.

  • Cryptotrader — This automated system takes advantage of cloud computing. You don’t have to install any software or programs, and it allows anyone to get involved. It’s relatively young, however, so it doesn’t have the same track record as the other bots mentioned here.

  • Gekko — Yet another open-source platform, this one can be found on GitHub. It’s quite basic and cannot handle high-frequency trading or arbitrage trading, but that’s okay. It’s meant to be a minimal solution for those interested in cutting through the noise.

  • BTCRobot — Considered to be one of the original bots on the scene, BTC Robot is hit-or-miss for many. It does all basic trading and everything you’d expect it to, and there is a 60-day full refund policy if you want to try it out.

But There Are Risks

While there are many benefits and rewards to speak of, there are risks as well and it’s important to keep them in mind for many reasons.

For starters, bots are more of a tool than a guaranteed solution. You’d be forgiven for thinking otherwise, especially since they simplify the entire trading process through automation. But they don’t help you choose trades. That is something you, as an experienced professional, will have to do on your own. This creates risk for error because, ultimately, you’re the one deciding what trades and transactions the bot will focus on. Choose the wrong ones, and you will lose money.

Bots are extremely useful for taking advantage of market inefficiencies, a perk that many traders will take advantage of. Over time there will be a massive influx of traders using bots in this way, which will contribute to inefficiencies slowly disappearing. When that happens, no one will be able to claim an advantage, at least not in the same ways.

Finally, bots are generally designed to do something specific or carry out a specific set of instructions. Like most industry-exclusive tools, they require working knowledge not just of the process in question, but the market too. To operate heavy machinery, for instance, you get specialized training and learn to use the equipment for varying tasks, all of which are often within the same industry or market. By nature, tools are specialized, and cryptocurrency trading bots are no different.

In short, this means that not everyone can take advantage of or profit from this technology, even if it’s marketed in that way. Remember you’re still choosing the parameters of trades, so you need a working knowledge of the industry. You also need to be able to understand cryptocurrency values compared to real-world values. There’s a lot to manage, and it’s not something that everyone can succeed at without the proper training and knowledge, even if they’re using a bot.

Are Bots Necessary for Successful Trading?

While bots do help automate the process and make it easier and faster-paced, that doesn’t change the fact that you need working knowledge of cryptocurrency and the market. As with stock trading, you cannot hope to blindly jump in and make a huge profit. Of course, beginner’s luck is possible, but luck will only carry you so far.

Before you consider working with these platforms and deploying a bot of your own, you’ll want to make sure you understand the full breadth of the industry and how the market operates.

This is a guest post by Kayla Matthews. Views expressed are her own and do not necessarily reflect those of Bitcoin Magazine. Trading and investing in digital assets and cryptocurrencies is highly speculative and comes with many risks. This opinion piece is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media. 

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