This communications tool that we call the internet is very powerful but it can also be dangerous.

Those of you who’ve been reading my updates for a while know that I love getting messages from people, especially when people send me information and links to sources. Don’t be surprised though if I ask you what’s in the link before clicking.

One of the most common ways for hackers to seize control of your device is by getting you to click on a malicious link. A malware attack known as Digmine was recently discovered on Facebook Messanger. Unsuspecting users who click on the link expecting to watch a video from their friend, inadvertently download a bit of software that runs in the background and uses the victim’s computer to mine currencies.

Though, I’m not sure what’s scarier, instant messenger mining this Dutch company who recently had success mining cryptocurrencies by harnessing the power of the human body. Even though inefficient compared to solar energy, it seems with these new devices body energy can in fact be harvested.

These type of images instantly bring up memories of the Matrix movies and give me the heebeegeebeez. I mean, if robots are eventually going to farm humans, why are we doing the work for them?

Happy boxing day!!
eToro, Senior Market Analyst

Today’s Highlights

Ridiculous Spikes

Crypto for Garbage

Are we out of the woods yet?

Please note: All data, figures & graphs are valid as of December 26th. All trading carries risk. Only risk capital you’re prepared to lose.

Liquid Example for Crypto

Most of the markets are back online already but it’s still a holiday in Europe and many investors simply take the entire week off. So liquidity is still thin. In fact, for those of you who are new in the market and joining due to the recent excitement in crypto, we actually have an excellent example of what low liquidity can do.

In eToro, as with many brokers, we too the decision to close the currency markets yesterday for Christmas. Some brokers however, decided to remain open despite the lack of customers.

The conventional currency markets are usually pretty fluid and the prices are quite stable. However, when there are no regular order flows, a small group of people or even a single player can move the market in leaps and bounds.

Yesterday, we saw this type of ridiculous price spikes all over the currency markets. Here lets take a look at the chart of the Euro/Dollar from Bloomberg’s pricing…

Notice, how the price per Euro suddenly dropped from about $1.19 to around $1.165 in the span of about 20 minutes. This is not a normal movement, especially on a day that there is no special news happening.

As we can see, the prices remained erratic for a total of six hours before returning to normal. Of course, any trader who might have had their stop loss anywhere within the line of fire would certainly have been shot and killed.

Here you can see eToro’s chart where the prices were simply closed for the long weekend and opened back up last night with little change from Friday’s close. Had we been open, prices would have spiked all the way down to that red X on the chart below.

What this means for Crypto

In the cryptocurrency market prices are always illiquid. During a regular day, if you want €100 Million you can usually get it from the top tier financial institutions literally faster than you can say “Jack Robinson.” Automated systems have been built over the last few decades that can produce the liquidity within milliseconds.

In the Crypto-market no such systems exist and when there are a large number of orders in a single direction, buy or sell, it can sometimes be difficult to execute those orders.

Note: This is also why the price moves so darned fast in this market.

Is the pullback over???

Short answer: It is in Asia.

Bitcoin is back at $18,500 in Japan, and almost $19,000 in South Korea. The price of Ethereum broke through 1,000,000 KRW (S Korean Won), which is about $955. In this holiday themed chart from we can see a clean breakout of the round number, with high volume.

The price level has been tested as a support but if the West manages to use the momentum from Eastern Cryptotraders over the next few hours, the pullback might just be over.

However, as we noticed over the last few days, the West has been driving this sell-off so we should soon see if they’ve gotten it out of their system.

Over the course of the year, we’ve noticed the different types of pullbacks. Sometimes it has taken a few days or even weeks for the market to recover and gain confidence, and sometimes it’s snapped back instantaneously.

For Bitcoin, the recent pullback has been the largest bitcoin has ever seen in terms of Dollar amount and largest this year in percentage terms. The decline has taken us from high of $20,155 on December 17th to a low of $10,720 on December 22nd, a total retracement of 46%.

I would assume that this type of blow might take a while to recover from and it’s possible we’ll see some gigantic range trading opportunities in the next few weeks.

Of course, a breakout in either direction above $21,000 or below $9,000 could also have serious psychological implications on the market in the long term.

For today, Bitcoin is leading the market with her 10% gains. 😉

Happy holidays!!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation. The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro. Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Important: Never invest (trade with) money you can’t afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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