Bitcoin Rallys to $11,000; Caveat Emptor
- Bitcoin touches $11,000 as Korean Won buyers dominate.
- Record turnover in the last 24 hours, market cap hits $338 billion.
- The number of retail buyers soar, problems may lie ahead.
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The crypto-currency market continues to make new all-time highs in both price and volume terms but there is a nagging feeling developing that for the market to push even higher a time of consolidation, or lower prices, is needed.
At a time when retail accounts at US-crypto-currency exchange Coinbase now sharply exceed retail accounts at US broker Charles Schwab – 11.7 million to 10.6 million in October – fears are growing that traders’ fear of missing out (FOMO) is driving them in at a potentially unsustainable level. Day traders will need to keep very tight, and guaranteed, stop-losses on all positions to hedge themselves against a potentially sharp sell-off.
Korean Won (KRW) denominated buyers led the latest rush higher, paying on average a 12%+ premium for Bitcoin compared to US Dollar buyers. While KRW liquidity has been a problem in the past, turnover of $812 million in the last 24 hours shows ample liquidity, while the average price of $12,131 shows the one-way nature of today's trade.
We discussed the upside downside of BTC and ETH at this week’s Bitcoin webinar (attached) – and changed are views on the market to neutral with a negative outlook. While it is difficult to pinpoint an exact reason for turning negative, the overall over-exuberance of traders buying crypto-currencies reminds people of my era of the boom-and-bust of the dot.com bubble, when FOMO saw investors buying companies with little regard for valuation. Caveat Emptor.
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Chart: Bitcoin (BTC) Daily Timeframe (May 25 – November 29, 2017)
The chart above shows the price action in the last few days throwing out worrying signals that investors are buying BTC whatever the price. In such markets, any slippage can see sellers turning aggressive and will send the price materially lower.
Market Moves/Top 8 Capitalizations – November 29, 2017
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--- Written by Nick Cawley, Analyst.
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