BTCUSD Daily on Bitstamp

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#BTC is trading at USD 5855 at press time. This is after a plunge down to 5650 earlier today

We had a tombstone doji yesterday which in some technical circles portends a reversal of trend.

So far we have absorbed the bad news of the #BinanceHack with nary a blip on the daily timeframe, but that downside wick does hint at the volatility of the day.

Lets zoom in time to take a a look...

Looks as if the first market reaction to the hack was happening as we were retesting the high of 5970 from the previous day

In a 15min phase, btc lost 2.5%

Buying pressure created a floor at the 5790 range

Then we had another plunge 9 hours later of about 4%. This may have been when CZ went live online to break the news officially and to calm Binance users.

What do we learn from this episode?

CZ, the Head of Binance is showing himself and his exchange to stand apart from the average run of the mill exchanges that go to great lengths to mask and deny any hack rumors. He has come straight out and told everyone what happened in a timely manner. This has gone a long way to pausing any extension of the route in BTC and crypto markets.

Binance stared setting up a rainy day fund some months ago to put aside some of the trading fees they earn to shield users from losses due to hacks. He came out and openly said that everyone would be made whole from this fund. Nobody would lose any coins.

The news of this hack comes at a critical time for BTC and the crypto market in general. We are retesting a very significant resistance BTC level at 6k. This level formed very strong support for BTC for about 5 months which ended in mid Nov 2018. Everyone who reads charts believed that we would be strongly rejected when we came to challenge this level. Many were waiting for this as a buy opportunity.

Such news would have easily been enough catalyst to plunge BTC down HARD. I personally would have not been surprised at a 10-15% crash in the price (back to low 5k level) considering this setup and this news.

Instead we have seen a surprising resilience to the price! This is almost enough to begin to reassess the current state of BTC, and how it will react to a retest of the 6k resistance.

Seems that there is quite a solid floor in the market at the mid 5k level somewhere.

I feel better about using Binance after this event. I like the way they have acted professionally and in the interest of their users.

Where to from here?

I am no longer so sure we will get a nice correction in BTC following a challenge of the 6k level.

If we were to have one, this was the perfect storm to create it. I may be speaking too early, but after watching BTC markets for over 5 years now, this is really not what I expected.

The next 72 hours will be quite telling.

If we retest and break the recent highs, in other words challenge 6k again, the odds of breaking it have just improved significantly.

There still is a chance that the plunge has only been delayed. A odds of a revisit of 5k or even high 4k may have diminished, but definitely has not vanished.

The most important take away

Even a well run and professional outfit like Binance is not immune to hacks.

Exchanges represent a honeypot for hackers. It is inevitable that they will be targeted by hackers, and in this environment, it is unrealistic to image that any exchange will remain impervious.

If you are speculating on cryptos, then carefully assess which funds you want to trade with. All others should be removed into personal cold storage.

Moving funds from cold storage to exchanges needn't be a laborious and lengthy process. In most cases, by using a hardware wallet, these transfers take only a few hours

Learn what it means to be your own custodian of coins.

This knowledge is invaluable. Learn it, use it.

As always guys, leave comments, have fun and trade safe.

Disclaimer: This post is not financial advice. Before investing any funds do your own research and make your own decisions. Cryptocurrencies are highly speculative.
And finally: Do not invest money you are not comfortable losing.