Bitcoin - Forex Combo Strategy: Ripple Rally and Rumors
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Bitcoin - Forex Combo Strategy: Ripple Rally and Rumors
Welcome back everyone to this week’s edition of my Bitcoin - Forex Combo Strategy. Ripple is leading altcoins higher as Bitcoin has stalled. I have mentioned the bearish pressures surrounding Bitcoin several times over the past few weeks. The series of four lower highs is keeping price action in check and the bearish pressures will remain until Bitcoin can move above $10,891 and better yet above $12,271. I have outlined that a sell-off in Bitcoin may catch many by surprise and highlighted the key levels to watch out for in last week’s post “Bitcoin - Forex Combo Strategy: FB’s Libra Seeks Payment System License”.
As you all know I have repeatedly pointed out that Ripple is oversold and undervalued which is why I have been adding to my positions. Little did I know that my position qualifies me as a Ripple Whale which apparently you reach after holding just $20K worth of XRP. Bulls have woken up and ignited a strong rally in Ripple which invited other altcoins to join in. Several arguments into the reason behind the rally can be made, but from a fundamental perspective the rumors of a partnership between Ripple and Coinbase have definitely awakened the animal spirits.
Before taking a closer look at the Ripple rally and rumors, let me update you on my cryptocurrency portfolio. It did remain unchanged, but needless to say that the strong rally in Ripple has elevated my overall asset value. I still carry a floating loss on my Ripple holdings, but they are approaching profitability. I continue to hodl 500 Bitcoin at an average entry price of $8,500, 40,000,000 Ripple at an average entry price of $0.3388 and 20,000 Litecoin which I bought at $77.00. My cash balance is expanding as I am getting ready to take advantage of the expected sell-off in Bitcoin. The three charts below show my Bitcoin, Ripple and Litecoin holdings.
Ripple Rallies on Coinbase Rumors
Following the OECD Global Blockchain Policy Forum in Paris, the rumor mill has been churning fast. Breanne Madigan, Ripple's Head of Global Institutional Markets, joined the panel on regulation in digital finance which kicked off rumors that Coinbase could sign-up for Ripple’s xRapid in order to move value around the world. This would follow Ripple’s $30 million investment into MoneyGram which I discussed in this post “Bitcoin - Forex Combo Strategy: Ripple Buys Into MoneyGram”. Will rumors bare fruit and the partnership announced?
Madigan told the panel “We signed a deal with MoneyGram to help facilitate their cross-border flows. So there’s an example of, say, someone who lives in the US and wants to send Mexican pesos back to Mexico. So the way it works is, through our partnership, we send MoneyGram’s flow to one of what we call our originating exchanges – say it’s Coinbase in the US, as an example.” For now Ripple is soaring and the breakout rally has more room to cover before running into its net major resistance levels.
What is xRapid?
Ripple developed xRapid as an on-demand liquidity solution for banks who will use XRP as a bridge currency. This is designed to speed up transactions at a fraction of a cost as compared to current methods of transferring assets across the globe. Ripple outlines a transaction on xRapid which starts with “A financial institution connecting directly to digital asset exchanges in both the originating and destination corridors. The originating currency is exchanged into XRP which provides the necessary liquidity to power the final payment, and then in seconds that XRP is exchanged into the destination currency in the second digital asset exchange. Once this transaction takes place, the funds are sent out on the local rails of the destination country for payout. The transaction is tracked end-to-end, and the result is a cross-border payment that is cheaper and faster than ever before.”
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Ripple Sell 900 XRP worth $251 Million
According to the latest quarterly market report, Ripple has sold 900 million XRP at an average price of $0.27 worth $251 million in the second-quarter. Ripple, the foundation which controls and releases the XRP token asks its investors for patience and claims this dumping is part of a long-term plan for the company. Ripple also states it is necessary for those tokens to be released due to the demand. The company also pointed out that its xRapid transactions have increased by 170% and xRapid partners as well as customers rose by 30%.
Less XRP are expected to be released during the third-quarter. Larry Cermak, Director of Research at The Block, outlined that “It's incredible that there is enough demand that $250M doesn't completely crash the price. But I have long thought that Ripple is misleading XRP holders and most of them don't seem to understand that dumping like this to fund a business is not only unsustainable but ill-advised.” The anger of Ripple’s core investor base is understandable given the capital depreciation of XRP.
In the meantime, Ripple is frustrated by the regulatory environment in the US. Madigan added “On the regulatory side, I think the importance is really establishing really clear frameworks that are principles-based rather than rules-based because we are at such a nascent stage of this industry’s development that we need to allow for flexibility and allow companies to be nimble but still adhering.I think there’s concerns in the US with some of the approaches to date that we’re sort of missing out. There’s been other jurisdictions – Switzerland, Singapore and others – that have established more clear frameworks. And we are at a risk in the US, which is where our company is headquartered, of flight of talent if we can’t get to some consensus.”
Forex Portfolio Updates
I am a bit careful with the US Dollar and didn’t add any positions which have this currency as a base or quote currency. I will wait until after today’s FOMC announcement. In regards to the British Pound I am staying clear until the Supreme Court decides on the legality of the Parliament prorogation which is currently in place. After the sell-off in the Euro following the ECB interest rate cut/QE announcement, I bought 300 lots in the EURCAD at 1.4460 on September 12th 2019. The margin requirement was $66,263 with a pip value of $2,262.61 and I acted according to this base recommendation (with a modification due to the ECB inspired volatility) “EURCAD Fundamental Analysis – September 12th 2019”. I closed this position the following day, September 13th 2019, at 1.4685 for a profit of 225 pips or $509,087. The chart below shows my closed trade.
Yesterday, on September 17th 2019, I added a 300 lots long position in the EURAUD at 1.6050 according to this trading recommendation “EURAUD Fundamental Analysis – September 17th 2019”. The margin requirement was $66,263 with a pip value of $2,051.40. The chart shows my open forex position.
Here is the summary of my Bitcoin - Forex Combo portfolio: I hodl 500 Bitcoins worth $5,058,900, 40,000,000 Ripple worth $11,976,000 and 20,000 Litecoin worth $1,502,200 plus a total cash portfolio worth $10,382,038. In addition I have the following forex position in my portfolio: a 300 lots EURAUD long position worth $275,506. My total Bitcoin - Forex Combo portfolio is worth $29,194,444, up $2,998,430 from last week’s balance of $26,196,014 and at a new all-time high. With my strong cash balance, I am waiting for the right momentum to add to my cryptocurrency positions. The most likely candidate will be Bitcoin if the price drops to support. Are you ready to grow your account? Take your first step now, open your own PaxForex Trading Account today and follow my Bitcoin - Forex Combo Strategy! Comment below with any questions you may have and I will be happy to help you get started!
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