Shiba Inu SHIB/USD attempted to break up from Sunday’s 24-hour trading range on Monday but ran into a group of sellers who knocked the crypto down into a tight range.

For the last four 24-hour sessions, Shiba Inu, dubbed “the Dogecoin Killer,” has been trading within the Oct. 13 range, which has settled the crypto into a quadruple inside bar pattern on the chart.

Inside bar patterns indicate a period of consolidation and are usually followed by a continuation move in the direction of the trend.

An inside bar pattern has more validity on larger time frames (four-hour chart or larger). The pattern has a minimum of two candlesticks and consists of a mother bar (the first candlestick in the pattern) followed by one or more subsequent candles. The subsequent candle(s) must be completely inside the range of the mother bar and each is called an “inside bar.”

A double, or triple inside bar can be more powerful than a single inside bar. After the break of an inside bar pattern, traders want to watch for high volume for confirmation the pattern was recognized.

• Bullish traders will want to search for inside bar patterns on stocks that are in an uptrend. Some traders may take a position during the inside bar prior to the break, while other aggressive traders will take a position after the break of the pattern.
• For bearish traders, finding an inside bar pattern on a stock that’s in a downtrend will be key. Like bullish traders, bears have two options for where to take a position to play the break of the pattern.
• For bearish traders, the pattern is invalidated if the stock rises above the highest range of the mother candle.

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The Shiba Inu Chart: Shiba Inu showed a high level of volatility on Oct. 13, jumping up and down between $0.00000924 and $0.00001081. Since then, Shiba Inu has been trading within that range while tightening into a possible triangle pattern.

• On Monday, when the crypto attempted to break up from Sunday’s trading range, the crypto also attempted to break up from the triangle but failed. Traders can watch for higher-than-average volume to come in later on Monday or on Tuesday to break Shiba Inu up from the pattern; otherwise, the triangle will be invalidated.
• The inability for Shiba Inu to break from the triangle pattern is due lower-than-average volume. On Monday, Shiba Inu’s volume was measuring in at about 616.3 billion on Coinbase compared to the 10-day average of 1.5 trillion. Decreasing volume is often followed by an uptick in volume, which could eventually help the crypto choose a direction, depending on whether the volume surge is bullish or bearish.
• Shiba Inu has resistance above at $0.00001081 and $0.00001178 and support below at $0.00000975 and $0.00000856.

See Also: Bitcoin, Ethereum Strong, Dogecoin Slips: Analyst Sees End Of Crypto Winter If These 2 Things Happen Over Earnings Season

Photo via Shutterstock. 

The price of bitcoin has been doing significantly well compare to where it was about a week ago. It has now recovered above a highly coveted point, returning some faith back into the market. However, the position where the digital asset currently resides is one that is unstable. Even though it seems to have found its footing above the $31,000 level, there is still the question of what this recovery actually means in the short term.

Fakeout Or Breakout?

It is important to note that the price of bitcoin had trended for a long time between $29,000 and $30,500. It spent quite some time here as the cryptocurrency had consolidated for the longest time. With its most recent recovery, it had broken out of this consolidation point. But there hasn’t been enough by the way of recovery to simply be sure that this is one that will continue. 

Related Reading | Billionaire Tim Draper On What Will Trigger The Next Bitcoin Bull Market

Indicators point to this being a potential critical turning point for the price of bitcoin. Where it goes from here will likely determine the path of the digital asset for the rest of the month. For the cryptocurrency to really establish this as a breakout position, it would need to range upwards and break, its next significant resistance point which lies at $34,500.

Now, given that bitcoin is still languishing at the $31,000 territory, a rally towards $34,500 would need to be accompanied by tremendous momentum from the market. However, if this happens, then the digital asset can establish support at the same point that provided a good cushion at the beginning of the year.

BTC in critical position | Source: Arcane Research

As for a reversal, a potential takeout would have serious implications for the crypto market. Granted, the digital asset has managed to establish great support at $29,000, as evidenced by market movements in the last few weeks. However, a break below $29,000 will likely see bitcoin test the $25,000 support level before it begins another recovery trend.

Bitcoin Turning Bullish In Short-Term

The charts show a highly favorable short-term price of bitcoin but that is only dependent on how well it holds on to its current price. Since its recovery above $31,000, the digital asset is now comfortably trading above its 20-day moving average. This points to a slowdown in the sell-offs in the market and possible recovery towards 50-day moving average levels.

BTC continues recovery trend | Source: BTCUSD on TradingView.com

Losses in bitcoin have also slowed significantly since it hit its ninth red weekly close. This losing streak has been its longest in history and has tired even sellers out. A welcome development for the market.

Related Reading | Bitcoin Exchange Outflows Suggest That Investors Are Starting To Accumulate

If this is the case and sell-offs continue to drop, the reversal could be a potential breakout that could set the market on another bull rally, ending the losing streak. 

Bitcoin is trading at $31,557 at the time of this writing. It is headed for its first green close in more than two months.

Featured image from MARCA, charts from Arcane Research and TradingView.com

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Commission-free stock trading platform Robinhood Markets (NASDAQ:HOOD) became a public company in July, finally giving people the chance to own a piece of the trading revolution driven by young, first-time investors. 

But the stock appears to have cooled off after an initial wave of enthusiasm. The company’s second-quarter earnings report highlighted an accelerating shift away from the roaring options and equity trading businesses Robinhood is best known for, and into cryptocurrencies — especially one highly controversial joke coin. 

In the face of ongoing regulatory questions about its business model, investors might be concerned that this sharp pivot will add fuel to the fire, as crypto is the subject of hot debate among lawmakers. Let’s explore the size of this potential risk. 

Image source: Getty Images

Is Robinhood now a cryptocurrency platform?

It seems to have happened in the blink of an eye: In the second quarter, Robinhood’s largest source of revenue stopped being transactions in conventional markets like stocks and options. Instead, cryptocurrency trading led the way amid soaring interest in assets like Dogecoin (CRYPTO:DOGE), a novelty token that has been heavily promoted by social media personalities.

Data source: Company filings 

Crypto comprised 51% of all transaction-based revenue, but what’s concerning is that of the $233.1 million Robinhood generated from digital currency trading, more than 62% came from Dogecoin trades alone. That means Dogecoin accounted for a little more than 30% of transaction-based revenue. Against the backdrop of a decline in stock trading, it signals that Robinhood’s customers are foregoing safer investments in favor of pure speculation in the crypto markets. 

This might spell trouble for the platform, which is already under regulatory scrutiny for encouraging risky behavior through its “gamified” features.

But despite accounting for the lion’s share of revenue, crypto assets held by Robinhood customers make up just 22% of all assets under custody. This suggests two things. First, its customers might be trading their tokens far more frequently than they traded stocks. Second, crypto may simply be a higher-margin business for the company. 

However, the quantity of crypto assets held by Robinhood customers is growing almost 14 times faster than overall assets.

Data source: Company filings. 1 basis point = 1/100 of a percentage point.

The risks continue to mount

Whether the trades in question involve stocks, stock options, or cryptocurrencies, Robinhood makes about 80% of its money through a controversial practice known as payment for order flow.

Robinhood became famous as a no-fee trading platform, but it still makes money from its customers’ trading activity. Users’ market orders are sent to third parties known as market makers that execute the trades and pay some of the proceeds back to Robinhood (that is, it takes payments based on the order flow). That’s one reason regulators are paying attention — the market makers, and Robinhood itself, are not exactly incentivized to find traders the very best prices.

The Securities and Exchange Commission found that payment for order flow cost Robinhood customers $34.1 million in hidden fees between 2015 and 2018, after accounting for the savings from the zero-commission model. The practice is banned in other major markets, including the United Kingdom, and deemed counter to the rules in the European Union.

Cryptocurrencies, though, present a whole new dimension of risks not only to Robinhood customers, but also to the company itself. 

In its second-quarter SEC filing, Robinhood warned that because of security risks involved with storing and dealing in cryptocurrencies, it could not obtain insurance to protect all of its customers’ crypto holdings. That means if Robinhood were hacked or lost control of the crypto assets in its care, those clients would have virtually no recourse to fully recover their losses.

This risk is not unique to Robinhood. It affects most players in the crypto space. However, investors who bought shares of this company because of its image as a stock-trading platform popular with younger generations now need to consider the potential consequences of Robinhood being the custodian for more than $22 billion in cryptocurrency assets (and growing).

Why I’m not buying it

Robinhood has done what no brokerage has been able to as well before — capture the business of young people. Stock investing was perceived as an older person’s game until technology made it more accessible. Now, Robinhood has 22.5 million customers — more than twice as many as it had at this time last year. The problem is that its users seem to be straying further and further away from actual investing. 

One of the largest issues I have with Robinhood is that its business will likely be confined to the U.S. It can only offer commission-free trading if it’s able to earn revenue through payment for order flow. Since that’s banned in many other major markets, global domination appears to be completely off the table. 

The question is whether the U.S. market alone is enough to provide Robinhood with sustainable long-term growth, especially since its stock trades around 25 times trailing-12-month sales — with revenue growth expected to slow to 18% in 2022, according to analysts. Compare that to competitor Interactive Brokers, which trades at 2 times sales and is highly profitable, whereas Robinhood is still losing money on the bottom line.

Robinhood has faced regulatory challenges to many parts of its business in its short history. It only increases the risk to the business that its users are pivoting so hard into cryptocurrencies at a time when the treatment of these assets is the subject of fierce debate among lawmakers.

But more important, its users appear to have become far less interested in stocks than they were previously. Now, the fate of Robinhood’s growth trajectory depends on whether or not crypto has staying power. And for the moment, the company’s future is most specifically tied to Dogecoin — a token that even its founder says is a joke.