Today Bitcoin is trading around $6090 USD. Down over 7% from yesterday’s slight rally. The current 24 HR volume for Bitcoin is $4.1 Billion USD. Over a total market volume of $12 Billion. Clearly, the bulls were not able to defend yesterday’s rally and short traders are eating bitcoin’s lunch. It’s important to note that Bitcoin shorts are stacking up right now, reaching a new high not seen since June 18, 2018. Often times, when short interest stacks up this high, there is an ensuing short squeeze which causes bitcoin price to spike rapidly, an event we witnessed in mid-July during bitcoins brief bull-run from $6250 to $8500. With that being said, this was a critical period for Bitcoin’s short term price outlook, and thing’s continue to look bleak.
BTC Shorts Vs. Longs
Low volume and a lack of certainty around bitcoin has been impacting most altcoins very negatively recently. All most all alts on Binance are bottoming out and reaching critical support levels. This could provide opportunities for short term swing trades, although we are sitting on the sidelines until there is better confirmation surrounding Bitcoin’s Price. For reference, here are a few interesting setups on Binance we noticed today. All of these charts are in 6HR time frames.
These are just a few of the notable ones. The story is the same for almost all ALTS on Binance. The exceptions are (BNB) which has been a top performer of 2018, and the coins mentioned by Coinbase as potential new listings (ETC, BAT, ZRX, ZEC, XLM) except for ADA which has been getting pummeled but was included in the potential listings from Coinbase. In short, If you did not take profits on these coins during “alt-season” now is likely not the time to capitulate. Most of these coins have completely retraced. Smart money is likely to start accumulating around these levels.
About a month ago, Coinbase tweeted out a few coins that could potentially list on Coinbase Pro and Coinbase consumer soon. We hope to give you a brief analysis and insight on the two most promising upcoming potential picks for Coinbase, both of which exist in the top 50 market capitalization.
0X protocol (ZRX):
The 0x protocol is a P2P decentralized exchange that is based on the Ethereum’s blockchain. Decentralized exchanges (DEX) seem to be the hype nowadays, fueled by fact that users have total control of their funds rather than a centralized exchange. All orders and trades are placed within the DEX’s smart contract, which makes it virtually impossible for anyone to tap into its users wallets. DEX’s stellar security performance has gotten massive adoption, most recently being the announcement of Binance’s DEX that will launch in 2019. However DEX’s fall behind in operations costs as well as user accessibility. Users on the exchange must use gas for essentially every deposit, withdraw, as well as placing, ordering and cancelling trades. Users of DEX’s also know of the problem of poor liquidity and lack of presence with market makers. Needless to say this is both inefficient and expensive to the user. The 0x protocol allows its users to submit an order that is off-chain that can be filled by another user not on the 0x exchange. This means transactions are only enacted on-chain when trades are actually achieved. This will severely decrease the fees on the network. The ZRX token is the governing token on the 0x protocol which gives its stakeholders voting rights for its blockchain decisions, whether that be wallet integrations or network upgrades.
So, why is Coinbase interested in listing ZRX? One explanation could be the fact the founding team of 0x are actually former employees of Coinbase. Fred Ersham (co-founder of Coinbase), Linda Xie (former product manager at Coinbase) and Olaf Carlson-Wee (1st official employee at Coinbase) can be instrumental on the decision to list ZRX before the other tokens. 0x protocol also falls right into Coinbase’s specifications for its Digital Asset Framework, as it meets the requirements for decentralization, economic freedom and legal compliance. As if that isn’t enough incentive to list, take the fact that Coinbase acquired Paradex, a platform that allows users to trade digital assets from their wallets. A platform that is also entirely built off of the 0x protocol.
ZRX is currently trading at $0.84 against the dollar and valued at 13829 satoshis. Its market capitalization is roughly $455 million with daily trading volume at $15 million. Circulating supply is at 537,294,775 with a max supply of 1,000,000,000. ZRX is down (-8.13%) from August 9th.
Below is a 9-month chart for BTC/ZRX (6HR):
Basic Attention Token (BAT)
Basic Attention Token is an Ethereum based utility token that is mainly utilized within the BAT digital advertising and attention platform. The platform of BAT has several features to it, including ad matching algorithms, attention measurement systems, analytics, and a digital ad exchange. That means content creators across many different industries will earn income and contributions by BAT. Users can also benefit and earn BAT for proper attention to ad engagement. Advertisement users receive 70% of ad revenue for user ads as well as 15% for publishing ads, a fairly enticing offer. Another fascinating feature to BAT is its privacy oriented web browser called Brave. The Brave browser is open-source, private, browser that mainly blocks advertisements, trackers and scripts. While the Brave browser is solely dependent on BAT, the token utility can extend far beyond Brave’s web browser. The current vision right now is to see BAT extend to a multitude of web browsers as well as third party messaging applications, video games and other attention applications. BAT is important because it wipes away traditional thinking of online-based advertisements. There currently is a supply-chain that ranges from third-party tracking companies to middlemen who have no place in the digital advertising market.
BAT seems like another perfect candidate for the next potential Coinbase listing. For one thing, Coinbase and Brave headquarters are within 20 miles of each other. BAT also has been the subject of several Coinbase employees tweets, all with complimentary tone. Product Manager of Coinbase, Ankur Nandwani also serves as an advisor to Brave. Lastly and most importantly, BAT is classified as a utility and NOT a security. This is massive for Coinbase as it has not registered as a brokerage firm or trading venue with the SEC. Given that Coinbase wants to get on the SEC’s good side, this would mean that BAT would be the top pick for sooner-rather-than-later listing. We imagine that Coinbase has taken precautionary steps in this process and will certainly list a token with utility property rather than a security.
Below is the 9 month chart for Basic Attention Token. BAT is currently trading at $0.21 against the USD and is valued at 3556 satoshis. Its total market cap is roughly $220 million with daily volume at $3.3 million. Circulating token supply is 1 billion with a total supply capped off at 1.5 billion.
BAT 9 month Chart (BTC/BAT):
In summary, This week has been very negative for long traders in the cryptocurrency markets. Volume levels look bleak and there is not much action from alts. In our opinion most coins are in the “no trade zone”, although we will be closely monitoring Bitcoin over the next few days with intentions to achieve better clarity about its short term trajectory. From there, we may begin to open up positions in some of the coins previously mentioned. For now, keep your head up and stay positive. These are just short term price movements and there’s no reason to lose bullish sentiment on bitcoin from a long term perspective. The weekend is upon us, and many traders are closing positions and setting aside trading for a few days, so don’t expect much action or volume over the next few days. Watch Bitcoin short levels closely, as a short squeeze seems eminent.
For more market updates and analysis similar to this one, check out our website: www.westheimercapital.com