Market Commentary: Coinbase Launches Security Ratings, Binance Passes Sentence

This weekend has been more tumultuous than usual. Bitcoin briefly crashed back below $8000, touching a low of $7700 before recovering back today.

The other coins find themselves following Bitcoin through varying degrees of correlation, with the notable exceptions of XRP and Algorand.

 

Cryptocurrency market dynamics since September 27. Source: Coin360 U.S. Exchanges Anticipate The SEC

A new consortium of U.S.-based exchanges and companies was announced today. The Crypto Rating Council, led by Coinbase, Kraken and Bittrex, was formed to develop a functional rating system to determine if any given token is a security.

The idea originates from Coinbase, as reported in its announcement, and serves to provide a factual and straightforward classification algorithm for any cryptocurrency. Despite the release of SEC guidance, classifying tokens still requires a “fact-intensive analysis by knowledgeable technical and securities law experts.”

Coinbase elaborated further on the problems deriving from the general lack of clarity and standardized tests. “This analysis is difficult and expensive to operationalize consistently, may involve judgment calls, and can lead to disagreement among legal experts (and even government officials).”

CRC’s rating system is designed around a set of several dozen, precise yes/no questions. Each answer then contributes to a final score ranging from 1 to 5, which is expected to be standard despite the many kinds of variation in token economics and other parameters. The primary users of this system will be its creators, as it will primarily guide the decision-making process of those who are affected by securities laws – the exchanges themselves.

Some of the ratings can already be consulted on cryptoratingcouncil.com. Among the top-coins surveyed, XRP, Polymath and Maker scored the highest with 4, 4.5 and 4.5 respectively. Reasons for such high scores include “Marketing of the token suggesting an opportunity to make profits” and “Usage of securities-like language.” Traditional PoW coins such as Bitcoin, Litecoin and Monero have all scored 1.

It should be noted that a high score represents a higher likelihood of being a security under U.S. law.

Binance’s love-hate relationship with TRON

Justin Sun and his projects are back in the spotlight today, and it’s all thanks to Binance.

While the exchange announced support for staking late last week, not all coins were included. An announcement today specifically added TRX to the set of projects which will begin staking tomorrow, and the token’s price bumped almost +8%.

In order to do this, Binance had to stake more than 12 billion TRX of user deposits,  making it the leading Super Representative on the network. While some are seeing the positive aspect freezing over 1/6 of the TRX supply, others are raising doubts on the governance aspect of this decision. In TRON and many other staking projects, tokens give voting rights for network decisions, meaning that Binance will be able to vote on behalf of its users.

But what Binance giveth, it also taketh away. The BitTorrent project was hit hard today due to a mass delisting of 30 pairs, removing BTT / BTC in addition to pairings for several Binance Launchpad projects.

 

BitTorrent Token Price by TradingView

BTT immediately crashed more than 10%, though two pairs still remain for trading on the platform. Holders of the token can still trade it for BNB and USDT.

Bitcoin Commentary By Nathan Batchelor

Bitcoin appears vulnerable to more downside losses below the $8,000 level as we head into the U.S trading session, after bulls failed to rally the cryptocurrency above its 200-day moving average over the weekend.

At current trading levels Bitcoin is on course to suffer its worst monthly decline of 2019 and its third consecutive month of losses. Bitcoin’s overall market dominance is also poised to decline on a monthly basis for the first-time since April this year.

With Bitcoin bulls failing to materialize from the $8,000 level, it certainly appears that buyers are looking at lower levels before entering into the BTC / USD for the long-term.

The weekly time frame chart best highlights the key support areas at which longer-term Bitcoin buyers may attempt to enter into the market if the cryptocurrency extends its losses below the $7,730 level.

 

Via TradingView

 

The $7,500 level is the first key area to watch, as it represents the June 4th swing-low, which was the final technical pullback before the BTC / USD pair’s rally towards the $14,000 level.

The $7,500 level is also the bearish target of an invalidated inverted head and shoulders pattern on the four-hour time frame, and a potential area where traders could book profits.

Bitcoin’s 52-week moving average is the next key technical area where buyers may be looking to initiate BTC / USD long positions. The 52-week moving average is currently found at the $6,670 level.

Should we see the 52-week moving average broken, then the BTC / USD pair’s 200-week moving average is the strongest form of technical support below.

This key technical area managed to cap the decline towards the end of 2018 and is probably the strongest form of technical support on the weekly chart. Bitcoin’s 200-week moving average is currently located at the $4,700 level.

* Continued weakness below the $8,300 level is likely to put the $7,500 support level into focus. *

SENTIMENT
Intraday bullish sentiment for Bitcoin is still bearish, at 39.00%, according to the latest data from TheTIE.io. Long-term sentiment for the cryptocurrency remains largely unchanged, at 63.40%, but still remains positive.

UPSIDE POTENTIAL
Any short-term bullish patterns have largely been eroded, making it difficult to project the near-term upside in the BTC / USD pair if a recovery does occur.

The lower time frames still suggest the $8,600 and $9,000 levels could be achieved if the $8,300 level is broken. The four-hour time frame shows that the BTC / USD pair will need to move above the $9,700 resistance level to reclaim its short-term bullish status.

DOWNSIDE POTENTIAL
Sellers failed to break below the $7,730 support level earlier today, further encouraging the BTC / USD pair to test back towards the $8,000 level.

Key technical support below the $7,730 is located at the $7,500 and $7,000 levels, while the $6,600 level is the strongest form of weekly support below the $7,000 level.

A full version of Nathan Batchelor’s Daily Bitcoin Commentary, together with his calls, is available to SIMETRI Research subscribers earlier in the day.

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