People active in bitcoin and altcoin circles are often referring to a trend known as “the flippening”. it is evident the cryptocurrency landscape is undergoing some major changes, even though some users remain oblivious to what is going on. Now is a good time to explain the flippening and how it can affect bitcoin’s position as the top cryptocurrency in the next few years.
What On Earth is The Flippening?
Truth be told, it took some time to figure out what people mean by referring to the flippening. Consumers, investors, traders, and speculators have shown an appreciation for bitcoin these past few years, despite the cryptocurrency being far from perfect. Any other currency, or altcoin if you prefer that term, seemingly derives its value from being paired to bitcoin’s price. Over the years, this caused the value of altcoins to go down if bitcoin’s price took a hit.
That being said, things are changing in the world of bitcoin and cryptocurrency. Bitcoin “maximalists” have held onto their BTC supply in the hopes of everything turning out to be alright. So far, there has been no evidence proving these people wrong, yet that does not mean bitcoin is in a good place right now. Particularly speculators are actively diversifying their portfolio by investing in altcoins, as they grow concerned over bitcoin’s scaling issues.
Altcoins, on the other hand, have always been looked at as “second-rate projects” by bitcoin maximalists. One could argue there was an air of disdain between most pro-bitcoiners and those whose see the merit of alternative cryptocurrencies. Multiple years of friction have caused a paradigm shift in the cryptocurrency world, an effect known as the flippening. To be more specific, it is evident most altcoin traders no longer base individual coins’ value on the bitcoin price.
As a result of this paradigm shift known as the flippening, it is very well possible bitcoin may not be the dominant cryptocurrency in the future. Or to be more precise, it may not hold such a big lead over other cryptocurrencies moving forward. Bitcoin’s share of the total cryptocurrency market cap continues to dwindle, allowing altcoins to rise in value, regardless of what is happening to the bitcoin price. Until a year or two ago, such a change seemed impossible, yet the charts speak for themselves.
This does not mean people will lose faith in bitcoin by any means. Instead, a more competitive cryptocurrency ecosystem will be created, and altcoins are expected to significantly rise in value over the next few months and years. Ethereum, Monero, Dash, Factom, and others are all trying to find their place in the world right now. Nearly all of these currencies have risen in value despite bitcoin’s price either stagnating or going down. While it is possible this is just a temporary change, the flippening is not a trend that should be ignored by any means.
Leading the charge during “the flippening” is Ethereum. Several dozen ICOs are offered on top of the Ethereum blockchain, rather than using Bitcoin’s technology. It is evident Bitcoin will not be suitable for every project one can think of, or at least not in its current state. Competition in the cryptocurrency industry can only be a good thing. The flippening indicates this shift towards a more competitive industry in which bitcoin will not necessarily be the center of focus any longer.
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Monday, March 20, 2017
Bitcoin Falls to Lowest Share of Cryptocurrency Market, Altcoins Surge
Bitcoin’s scaling fight has led to a record low in its percentage of cryptocurrency’s total market cap as investors hedge with top altcoins.
As its user base expands, Bitcoin’s transactions have also grown, leading to blocks, capped at 1mb, to be filled to capacity. As a result, transactions have slowed and fees have spiked. An effort to solve Bitcoin’s scaling issues has led to a civil war of sorts between the Core development team and its supporters backing the Segregated Witness (SegWit) soft fork, and the Bitcoin Unlimited miner-directed block size hard fork and its supporters.
In contrast to previous hard fork attempts (XT, Classic), Unlimited has gained speed, occasionally passing SegWit in adoption by miners. Recently, Unlimited has secured a solid lead, due in part to a major mining pool, Antpool, switching to Unlimited.
“Bitcoin Jesus” Roger Ver, who has led the opposition to the current state of Bitcoin and its hard cap of 1mb blocks, has stated that he believes that the current inability to find a resolution to the issue has cost Bitcoin billions of dollars already:
Other coins rise as investors hedge their bets
As a result of increasing uncertainty, lack of usability and conflict surrounding Bitcoin, its growth has stagnated- even receded, while other coins have seen exceptional gains. Ethereum, cryptocurrency’s number two contender, has seen a massive increase, more than doubling in market cap and price in the last 10 days alone. It currently sits at about $4 bln total and $45 per coin, with a current trading volume of over $200 mln.
Dash has seen even more impressive relative gains, multiplying its value and market cap five times over since one month ago. It has broken the three-digit barrier and appears to have settled above $100, having also broken 10 percent the price of Bitcoin per coin. As a result of this growth, Dash’s treasury, 10 percent of its block reward set aside for development and other projects, has passed $500,000 monthly, closing in on a million dollar monthly budget for the newly number three ranked coin. Monero has also picked up on the Bitcoin exodus, doubling in value over the last 10 days, maintaining a solid fourth place and passing $300 mln in market cap.
This growth and reshuffling of the cryptocurrency field has led to a slipping in Bitcoin’s dominance. Bitcoin’s share of the total cryptocurrency market cap has sunk to 70 percent, a new all-time low since the previous low of 74 percent during Ethereum’s initial boom last year. Total cryptocurrency market cap remains slightly lower than its all-time high, while combined altcoin value has grown from approximately $2.2 bln at the year’s start to over $7 bln now, nearly $4 bln of that growth over the last month alone.
The scaling debate gets ugly
In spite of this growing shift, the Bitcoin scaling conflict continues to become more heated. Ver alleges that many Unlimited nodes identify as Core in order to avoid DDoS attacks, which have plagued Bitcoin.com all last week. Unlimited supporters have documented a pattern of alleged censorship on the Bitcoin subreddit, filtering out comments in support of an alternative implementation of Bitcoin than the one stewarded by the Core developers.
Meanwhile, faced by increasing resistance from large mining pools, such as Antpool, Core member Peter Todd publicly mused about a proof-of-work algorithm change in order to reshuffle mining power as a “backup plan”:
Meanwhile, Bitcoin’s network congestion remains an issue. Low-end fees remain above 50 cents and the median confirmation time continues to rise. The mempool of backlogged transactions has filtered out slightly, though it still remains in excess of 20mb over a seven-day average.
As its user base expands, Bitcoin’s transactions have also grown, leading to blocks, capped at 1mb, to be filled to capacity. As a result, transactions have slowed and fees have spiked. An effort to solve Bitcoin’s scaling issues has led to a civil war of sorts between the Core development team and its supporters backing the Segregated Witness (SegWit) soft fork, and the Bitcoin Unlimited miner-directed block size hard fork and its supporters.
In contrast to previous hard fork attempts (XT, Classic), Unlimited has gained speed, occasionally passing SegWit in adoption by miners. Recently, Unlimited has secured a solid lead, due in part to a major mining pool, Antpool, switching to Unlimited.
“Bitcoin Jesus” Roger Ver, who has led the opposition to the current state of Bitcoin and its hard cap of 1mb blocks, has stated that he believes that the current inability to find a resolution to the issue has cost Bitcoin billions of dollars already:
Other coins rise as investors hedge their bets
As a result of increasing uncertainty, lack of usability and conflict surrounding Bitcoin, its growth has stagnated- even receded, while other coins have seen exceptional gains. Ethereum, cryptocurrency’s number two contender, has seen a massive increase, more than doubling in market cap and price in the last 10 days alone. It currently sits at about $4 bln total and $45 per coin, with a current trading volume of over $200 mln.
Dash has seen even more impressive relative gains, multiplying its value and market cap five times over since one month ago. It has broken the three-digit barrier and appears to have settled above $100, having also broken 10 percent the price of Bitcoin per coin. As a result of this growth, Dash’s treasury, 10 percent of its block reward set aside for development and other projects, has passed $500,000 monthly, closing in on a million dollar monthly budget for the newly number three ranked coin. Monero has also picked up on the Bitcoin exodus, doubling in value over the last 10 days, maintaining a solid fourth place and passing $300 mln in market cap.
This growth and reshuffling of the cryptocurrency field has led to a slipping in Bitcoin’s dominance. Bitcoin’s share of the total cryptocurrency market cap has sunk to 70 percent, a new all-time low since the previous low of 74 percent during Ethereum’s initial boom last year. Total cryptocurrency market cap remains slightly lower than its all-time high, while combined altcoin value has grown from approximately $2.2 bln at the year’s start to over $7 bln now, nearly $4 bln of that growth over the last month alone.
The scaling debate gets ugly
In spite of this growing shift, the Bitcoin scaling conflict continues to become more heated. Ver alleges that many Unlimited nodes identify as Core in order to avoid DDoS attacks, which have plagued Bitcoin.com all last week. Unlimited supporters have documented a pattern of alleged censorship on the Bitcoin subreddit, filtering out comments in support of an alternative implementation of Bitcoin than the one stewarded by the Core developers.
Meanwhile, faced by increasing resistance from large mining pools, such as Antpool, Core member Peter Todd publicly mused about a proof-of-work algorithm change in order to reshuffle mining power as a “backup plan”:
Meanwhile, Bitcoin’s network congestion remains an issue. Low-end fees remain above 50 cents and the median confirmation time continues to rise. The mempool of backlogged transactions has filtered out slightly, though it still remains in excess of 20mb over a seven-day average.
Thursday, March 16, 2017
Crypto Market Is On Fire Right Now - Market Cap Nears $25 Bln
While people have been observing coins like Ethereum and Dash reach all-time highs, the crypto ecosystem as a whole seems to be taking off. The market capitalization of all cryptocurrencies in circulation has neared $25 bln.
Bitcoin – the dominant one
Bitcoin is, of course, the dominant cryptocurrency. It currently accounts for approximately 80 percent of the total market capitalization of all cryptocurrencies in circulation. In the run-up to the decision on the Winklevoss’ Exchange Traded Fund (ETF), Bitcoin dominance was as high as 88 percent.
Post rejection of the ETF, Bitcoin price has stabilized, and it has been in a consolidation mode.
Secondary coins take off too
Crypto investors, who were betting on ETF approval, now seem to prefer secondary coins like Ethereum and Dash. Both these coins have reported massive gains in the last three months and seem to be further increasing post the rejection of the ETF.
Ether’s market capitalization has shot up from $1 bln a month ago to over $2.5 bln currently.
Dash has recorded impressive gains too, with current market capitalization of $500 mln which is up from $120 mln a month ago.
Altcoins which have enhanced privacy features (like Monero and Zcash) are other coins which seem to be leading this bull run.
Bubble territory? Not even close!
Does a total market capitalization of $25 bln mean that cryptocurrencies are in bubble territory?
The market capitalization is a pittance when compared to other asset classes. The market capitalization of US stock markets is approximately $25 tln, or a thousand times the value of all cryptocurrencies in circulation. The value of all gold in circulation is approximately $7 tln.
The total market capitalization of all cryptocurrencies is roughly equal to the market capitalization of Snapchat and less than one eighth the market capitalization of Visa Inc.
Given the huge potential of cryptocurrencies in areas ranging from money transfers to smart contracts, cryptocurrencies are definitely not overvalued. If adoption increases further, their value could skyrocket.
Bitcoin – the dominant one
Bitcoin is, of course, the dominant cryptocurrency. It currently accounts for approximately 80 percent of the total market capitalization of all cryptocurrencies in circulation. In the run-up to the decision on the Winklevoss’ Exchange Traded Fund (ETF), Bitcoin dominance was as high as 88 percent.
Post rejection of the ETF, Bitcoin price has stabilized, and it has been in a consolidation mode.
Secondary coins take off too
Crypto investors, who were betting on ETF approval, now seem to prefer secondary coins like Ethereum and Dash. Both these coins have reported massive gains in the last three months and seem to be further increasing post the rejection of the ETF.
Ether’s market capitalization has shot up from $1 bln a month ago to over $2.5 bln currently.
Dash has recorded impressive gains too, with current market capitalization of $500 mln which is up from $120 mln a month ago.
Altcoins which have enhanced privacy features (like Monero and Zcash) are other coins which seem to be leading this bull run.
Bubble territory? Not even close!
Does a total market capitalization of $25 bln mean that cryptocurrencies are in bubble territory?
The market capitalization is a pittance when compared to other asset classes. The market capitalization of US stock markets is approximately $25 tln, or a thousand times the value of all cryptocurrencies in circulation. The value of all gold in circulation is approximately $7 tln.
The total market capitalization of all cryptocurrencies is roughly equal to the market capitalization of Snapchat and less than one eighth the market capitalization of Visa Inc.
Given the huge potential of cryptocurrencies in areas ranging from money transfers to smart contracts, cryptocurrencies are definitely not overvalued. If adoption increases further, their value could skyrocket.
Monday, March 13, 2017
Altcoins Make a Comeback in Wake of Bitcoin ETF Decision
With most traders focusing on the bitcoin market right after the ETF decision was made public, people tend to forget altcoins are worth keeping an eye on as well. A lot of altcoins are appreciating in value ever since the bitcoin ETF rule change was rejected. Dash, for example, has been doing extremely well these past few days. Other currencies are seeing similar results right now, indicating the altcoin market is in firing on all cylinders.
Altcoin Trading Gains Momentum After ETF Rejection
It has become evident the SEC decision means there will never be a bitcoin ETF. In fact, there will never be a cryptocurrency ETF, or at least not until something changes drastically in the regulatory department. It is doubtful the SEC will ever grant their approval for such an investment vehicle, though, but that is of little concern to the cryptocurrency community. In the end, cryptocurrencies continue to truck along regardless of what the traditional financial world feels is right.
One thing that has become apparent over the past few days is how altcoins see a lot of trading action as of late. Various alternative cryptocurrencies have seen an influx of bitcoin trading volume, pushing nearly all markets in the green. According to some altcoin traders, the time is now to invest in alternative cryptocurrencies, although it is doubtful any of these currencies can ever gain as much traction as bitcoin. Considering bitcoin is still a very niche market, that does not bode well for most altcoins.
Some alternative cryptocurrencies may have a better shot at gaining mainstream traction alongside bitcoin, though. Dash, for example, has seen a spectacular value increase over the past few weeks. Particularly once the bitcoin ETF news came out, Dash saw an influx of new trading volume. It is evident bitcoin holders are looking to diversify their cryptocurrency portfolio, which is always a smart strategy. There is no reason to put all of one’s eggs into the same basket.
With the Dash price currently sitting at US$72.75, it is evident demands for more anonymous cryptocurrencies is not dwindling anytime soon. A lot of the current Dahs supply is locked up in masternodes which provide anonymous transaction services to the network. It takes 1,000 Dash to run such a masternode, which needs to be locked into a wallet at all times. Users also receive a small reward for providing these services to the network, hence there is no reason for people to sell their existing Dash supply all of a sudden.
Dash continues to rally against bitcoin in quite spectacular fashion as well. With a 26.5% gain in the past 24 hours alone, it is evident the ETF rejection is doing wonders for the Dash price right now. It is a bit unclear how long this trend will be maintained, though. Volatility is a part of the cryptocurrency ecosystem, particularly in the altcoin market. Always be careful when investing your bitcoin in altcoins, as values can shift in a matter of minutes.
Other altcoins are reaping the rewards from the bitcoin ETF rejection as well. Monero and Ethereum have all seen nice appreciations a swell these past few days. Similarly to Dash, however, it is impossible to tell what is driving these price trends exactly, other than the bitcoin ETF rejection. Bitcoin trading is usually a bit stale during the weekend, which gives alternative currencies a chance to shine. The bigger question is whether or not this trend can spill over to next week or not.
If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.
Altcoin Trading Gains Momentum After ETF Rejection
It has become evident the SEC decision means there will never be a bitcoin ETF. In fact, there will never be a cryptocurrency ETF, or at least not until something changes drastically in the regulatory department. It is doubtful the SEC will ever grant their approval for such an investment vehicle, though, but that is of little concern to the cryptocurrency community. In the end, cryptocurrencies continue to truck along regardless of what the traditional financial world feels is right.
One thing that has become apparent over the past few days is how altcoins see a lot of trading action as of late. Various alternative cryptocurrencies have seen an influx of bitcoin trading volume, pushing nearly all markets in the green. According to some altcoin traders, the time is now to invest in alternative cryptocurrencies, although it is doubtful any of these currencies can ever gain as much traction as bitcoin. Considering bitcoin is still a very niche market, that does not bode well for most altcoins.
Some alternative cryptocurrencies may have a better shot at gaining mainstream traction alongside bitcoin, though. Dash, for example, has seen a spectacular value increase over the past few weeks. Particularly once the bitcoin ETF news came out, Dash saw an influx of new trading volume. It is evident bitcoin holders are looking to diversify their cryptocurrency portfolio, which is always a smart strategy. There is no reason to put all of one’s eggs into the same basket.
With the Dash price currently sitting at US$72.75, it is evident demands for more anonymous cryptocurrencies is not dwindling anytime soon. A lot of the current Dahs supply is locked up in masternodes which provide anonymous transaction services to the network. It takes 1,000 Dash to run such a masternode, which needs to be locked into a wallet at all times. Users also receive a small reward for providing these services to the network, hence there is no reason for people to sell their existing Dash supply all of a sudden.
Dash continues to rally against bitcoin in quite spectacular fashion as well. With a 26.5% gain in the past 24 hours alone, it is evident the ETF rejection is doing wonders for the Dash price right now. It is a bit unclear how long this trend will be maintained, though. Volatility is a part of the cryptocurrency ecosystem, particularly in the altcoin market. Always be careful when investing your bitcoin in altcoins, as values can shift in a matter of minutes.
Other altcoins are reaping the rewards from the bitcoin ETF rejection as well. Monero and Ethereum have all seen nice appreciations a swell these past few days. Similarly to Dash, however, it is impossible to tell what is driving these price trends exactly, other than the bitcoin ETF rejection. Bitcoin trading is usually a bit stale during the weekend, which gives alternative currencies a chance to shine. The bigger question is whether or not this trend can spill over to next week or not.
If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.
Friday, March 10, 2017
China Bitcoin Exchanges: What “Withdrawal Suspension” Really Means for Users
Barely a few days before the expected resumption of withdrawals by the big Chinese exchanges, a statement by OKCoin indicated an imminent extension of the suspension. In a statement to users on Wednesday, OKCoin said: “Once the regulatory authorities have given their approval, you may withdraw currency.”
A lot of Bitcoin users now think that the decision concerning the resumption of withdrawals is dependent upon the timing and decision of the PBoC.
Contrary to this assumption, active participants in the Chinese Bitcoin community, as well as BitLox Director Dana Coe, tell Cointelegraph that the present “suspension” may have been misunderstood by a lot of people as most users in China have carried on with their normal businesses.
Coe says:
“I don’t really see a huge disruption for the majority of the users. The selling of Bitcoins and withdrawal of RMB is not impeded at all.”
According to Coe, most Chinese participants in the Bitcoin community are interested in Bitcoin for its value in trading and arbitrage. Most users of the Chinese exchanges deposit RMB so that they may purchase Bitcoins and take advantage of market movements, as any gains are normally converted back to RMB or held on the exchange as Bitcoins.
However, Coe notes that even though it may be an inconvenience for users to not take their profits in Bitcoins, it is only appropriate to wait and see what sort of a plan the Chinese regulators and exchanges will come up with:
“It appears they are negotiating for a plan, but it is difficult to say what such a plan will look like as the motives of the regulators is somewhat unclear.”
Chinese regulation is good for Bitcoin
Coe continues by telling Cointelegraph of his suspicion that regulators in China may want to reduce overleveraging and what they call “excess” speculation.
The rationale behind this is that they do not want to be blamed and/or asked to reimburse losses from risky trades or system failures. Regulators want a reduction of such “horror stories” where people lose their shirts from 20x leveraging or not being able to get onto a website so as to sell in a stop-loss capacity. This development in Coe’s opinion is, in the long run, a good thing for Bitcoin in China as stories about sensational losses always scare people.
Another aspect that Coe observes is the regulation of exchanges in that they must have transparent volume reporting. This he says is healthy for the whole Bitcoin system, as a more accurate picture can be drawn of volumes and transactions.
Coe concludes by saying:
“When the exchanges resume withdrawals of Bitcoin, I expect it will be heavily encumbered with some sort of a quota or reporting system, as China has rather strict controls on the amount of currency that may be taken out of the country. But as noted, on the whole, I do not believe this will actually have a great effect on the market or exchanges. The market and Bitcoin community as a whole will probably breathe a sigh of relief and rally once the decisions come out, whatever they are. Markets hate uncertainty.”
A lot of Bitcoin users now think that the decision concerning the resumption of withdrawals is dependent upon the timing and decision of the PBoC.
Contrary to this assumption, active participants in the Chinese Bitcoin community, as well as BitLox Director Dana Coe, tell Cointelegraph that the present “suspension” may have been misunderstood by a lot of people as most users in China have carried on with their normal businesses.
Coe says:
“I don’t really see a huge disruption for the majority of the users. The selling of Bitcoins and withdrawal of RMB is not impeded at all.”
According to Coe, most Chinese participants in the Bitcoin community are interested in Bitcoin for its value in trading and arbitrage. Most users of the Chinese exchanges deposit RMB so that they may purchase Bitcoins and take advantage of market movements, as any gains are normally converted back to RMB or held on the exchange as Bitcoins.
However, Coe notes that even though it may be an inconvenience for users to not take their profits in Bitcoins, it is only appropriate to wait and see what sort of a plan the Chinese regulators and exchanges will come up with:
“It appears they are negotiating for a plan, but it is difficult to say what such a plan will look like as the motives of the regulators is somewhat unclear.”
Chinese regulation is good for Bitcoin
Coe continues by telling Cointelegraph of his suspicion that regulators in China may want to reduce overleveraging and what they call “excess” speculation.
The rationale behind this is that they do not want to be blamed and/or asked to reimburse losses from risky trades or system failures. Regulators want a reduction of such “horror stories” where people lose their shirts from 20x leveraging or not being able to get onto a website so as to sell in a stop-loss capacity. This development in Coe’s opinion is, in the long run, a good thing for Bitcoin in China as stories about sensational losses always scare people.
Another aspect that Coe observes is the regulation of exchanges in that they must have transparent volume reporting. This he says is healthy for the whole Bitcoin system, as a more accurate picture can be drawn of volumes and transactions.
Coe concludes by saying:
“When the exchanges resume withdrawals of Bitcoin, I expect it will be heavily encumbered with some sort of a quota or reporting system, as China has rather strict controls on the amount of currency that may be taken out of the country. But as noted, on the whole, I do not believe this will actually have a great effect on the market or exchanges. The market and Bitcoin community as a whole will probably breathe a sigh of relief and rally once the decisions come out, whatever they are. Markets hate uncertainty.”
Bitcoin ‘mining’ is big business in Venezuela, but the government wants to shut it down
CARACAS, Venezuela — Venezuela has become widely known as an economic basket case in recent years. But with its cheap electricity and volatile national currency, the country has at least one competitive advantage: It’s a good place to make the digital cash known as bitcoin.
Bitcoins are increasingly accepted online for buying real-world goods and services. And, unlike the Venezuelan bolivar, the virtual currency has been going up in value.
Making bitcoins is known as “mining,” but it requires a powerful computer instead of a pick and shovel. Those computers produce bitcoins by creating elaborate algorithms, but they also suck up a lot of electricity. In many countries, the cost of running a “mining terminal” can run higher than the value of the actual bitcoins.
Today's WorldView
What's most important from where the world meets Washington
That’s not the case in cash-poor, oil-rich Venezuela, where state-subsidized electricity is so cheap it’s virtually free. But Venezuela’s government isn’t pleased. It’s cracking down on bitcoin mining, even though the country has no laws on the books outlawing the currency or its manufacture.
In November, Venezuela’s secret police raided the house of two brothers in Caracas and found more than 90 mining terminals. The agents demanded $1,000 in bribes for each machine, according to the brothers, who spoke on the condition of anonymity because they fear arrest. The brothers said they paid the bribes to stay in business.
This isn’t an isolated case — and such operations appear to be expanding. In January, Venezuelan federal police arrested four bitcoin miners in the town of Charallave. They were accused of Internet fraud and electricity theft. According to an Instagram post published by Douglas Rico, the director of the federal police agency CICPC, the miners were endangering the stability of the town’s electrical service. During that same week, Edward and Erick Tapia Salas were also arrested in Caracas for selling bitcoin-mining machines through a Venezuelan e-commerce site.
Miners have taken to websites such as Reddit to share their fears of being caught. “Miners are getting jailed and accused of terrorism, money laundering, computer crimes and many other crimes,” read one comment from a user who claimed to be Venezuelan. “It's getting crazy here and I really don't want to waste my life for money.”
Those who keep mining in Venezuela said they have started taking extreme precautions to hide their activities. Luis León, 25, a business student and bitcoin miner, said miners have learned not to keep all of their computers in one place. If they do, the state power corporation can detect the abnormal amount of electricity the mining terminals use.
“That was [the brothers’] big mistake,” León said. “They were consuming 20 times the normal level of electricity for that house.”
Venezuela’s crackdown on the bitcoin industry started in March 2016 with the arrest of two miners in the city of Valencia. According to news accounts of their arrest, Joel Padrón, 31, and José Perales, 46, were charged with electricity theft and possessing contraband computers.
CONTENT FROM WELLS FARGO ADVISORS
Keep these factors in mind when planning for retirement
Understanding the risks that can come between you and the retirement you want is an important step toward meeting your goals.
But miners and bitcoin users are not the only ones at risk. When Padrón and Perales were detained, Daniel Arraez, a 30-year-old economist who was working as a consultant for a Venezuelan bitcoin market called Surbitcoin, was called by the secret police to testify in their case. Padrón had told the agents that he and Perales had exchanged money through Surbitcoin.
Arraez was asked to come to the secret police offices in Valencia. “To my surprise, I never returned home,” he said. He was placed in the same cell with Padrón and Perales and charged with making illegal transactions and criminal association.
Arraez said his arrest was a way for the government to blame someone else for its ruinous policies, including chronic mismanagement of public utilities. “We were only the scapegoats of the disastrous situation in the country’s electricity sector,” he said.
After eight months in jail, Arraez was released in October. He’s awaiting a pretrial hearing. Despite having to share a small cell with eight other men and seeing the sunlight only twice a week, he said Venezuelan miners should keep making bitcoins to “advance technologically like other countries.”
The crackdown has not stopped Venezuelans from using the currency, either. The continued decline of the Venezuelan bolivar has fueled a growing internal demand for bitcoins. According to Surbitcoin, the number of bitcoin users in the country rose from 450 in 2014 to 85,000 last year.
In a country with the world’s highest inflation rate and strict controls on currency exchange, users see bitcoins as a safe alternative to protect their savings. People have also used bitcoins to buy basic products online that have disappeared from Venezuelan shelves.
But the widespread adoption of the currency seems unlikely any time soon: nearly one-third of the population doesn’t even have a bank account.
Bitcoins are increasingly accepted online for buying real-world goods and services. And, unlike the Venezuelan bolivar, the virtual currency has been going up in value.
Making bitcoins is known as “mining,” but it requires a powerful computer instead of a pick and shovel. Those computers produce bitcoins by creating elaborate algorithms, but they also suck up a lot of electricity. In many countries, the cost of running a “mining terminal” can run higher than the value of the actual bitcoins.
Today's WorldView
What's most important from where the world meets Washington
That’s not the case in cash-poor, oil-rich Venezuela, where state-subsidized electricity is so cheap it’s virtually free. But Venezuela’s government isn’t pleased. It’s cracking down on bitcoin mining, even though the country has no laws on the books outlawing the currency or its manufacture.
In November, Venezuela’s secret police raided the house of two brothers in Caracas and found more than 90 mining terminals. The agents demanded $1,000 in bribes for each machine, according to the brothers, who spoke on the condition of anonymity because they fear arrest. The brothers said they paid the bribes to stay in business.
This isn’t an isolated case — and such operations appear to be expanding. In January, Venezuelan federal police arrested four bitcoin miners in the town of Charallave. They were accused of Internet fraud and electricity theft. According to an Instagram post published by Douglas Rico, the director of the federal police agency CICPC, the miners were endangering the stability of the town’s electrical service. During that same week, Edward and Erick Tapia Salas were also arrested in Caracas for selling bitcoin-mining machines through a Venezuelan e-commerce site.
Miners have taken to websites such as Reddit to share their fears of being caught. “Miners are getting jailed and accused of terrorism, money laundering, computer crimes and many other crimes,” read one comment from a user who claimed to be Venezuelan. “It's getting crazy here and I really don't want to waste my life for money.”
Those who keep mining in Venezuela said they have started taking extreme precautions to hide their activities. Luis León, 25, a business student and bitcoin miner, said miners have learned not to keep all of their computers in one place. If they do, the state power corporation can detect the abnormal amount of electricity the mining terminals use.
“That was [the brothers’] big mistake,” León said. “They were consuming 20 times the normal level of electricity for that house.”
Venezuela’s crackdown on the bitcoin industry started in March 2016 with the arrest of two miners in the city of Valencia. According to news accounts of their arrest, Joel Padrón, 31, and José Perales, 46, were charged with electricity theft and possessing contraband computers.
CONTENT FROM WELLS FARGO ADVISORS
Keep these factors in mind when planning for retirement
Understanding the risks that can come between you and the retirement you want is an important step toward meeting your goals.
But miners and bitcoin users are not the only ones at risk. When Padrón and Perales were detained, Daniel Arraez, a 30-year-old economist who was working as a consultant for a Venezuelan bitcoin market called Surbitcoin, was called by the secret police to testify in their case. Padrón had told the agents that he and Perales had exchanged money through Surbitcoin.
Arraez was asked to come to the secret police offices in Valencia. “To my surprise, I never returned home,” he said. He was placed in the same cell with Padrón and Perales and charged with making illegal transactions and criminal association.
Arraez said his arrest was a way for the government to blame someone else for its ruinous policies, including chronic mismanagement of public utilities. “We were only the scapegoats of the disastrous situation in the country’s electricity sector,” he said.
After eight months in jail, Arraez was released in October. He’s awaiting a pretrial hearing. Despite having to share a small cell with eight other men and seeing the sunlight only twice a week, he said Venezuelan miners should keep making bitcoins to “advance technologically like other countries.”
The crackdown has not stopped Venezuelans from using the currency, either. The continued decline of the Venezuelan bolivar has fueled a growing internal demand for bitcoins. According to Surbitcoin, the number of bitcoin users in the country rose from 450 in 2014 to 85,000 last year.
In a country with the world’s highest inflation rate and strict controls on currency exchange, users see bitcoins as a safe alternative to protect their savings. People have also used bitcoins to buy basic products online that have disappeared from Venezuelan shelves.
But the widespread adoption of the currency seems unlikely any time soon: nearly one-third of the population doesn’t even have a bank account.
How Bitcoin Is Set to Crush Other Currency in 2017
When the crypto currency was created back in 2008, it rose a couple of eyebrows but very few people took it seriously. Less than a decade later, Bitcoin is on the lips of all those who care about the direction in which financial markets are heading. If we were to look back at its rise and paraphrase Schopenhauer, we’d say that it passed through three stages. First, it was ridiculed. Then, it was violently opposed. Now it is accepted as being self-evident and people no longer dismiss it as an alternative to traditional currency.
Early adopters always have the upper hand over people who wait for a trend to be established. Back in the day, it was relatively easy to mine Bitcoin and the price of the crypto currency was quite low. Most people have serious doubts of its potential and even fewer understood how Bitcoin work in the first place. Downswings caused by the high profile incidents, such as the Mt. Gox currency theft further hurt its image and brought the specter of doubt back. Somehow it survived and is now going strong.
The Best Year yet for Bitcoin
2016 started on a positive note and the crypto currency increased its value significantly in just a couple of months. It gained a lot of traction and didn’t lose steam in the second half of the year, despite the turmoil caused by US elections. In fact, Donald Trump’s election pushed it to new highs and growth is expected to continue. By December, it crushed every other currency in 2016 and financial pundits predict that it will set new milestones in 2017.
There are several reasons for why Bitcoin is now at an all-time high, but one of them is that the crypto currency has earned the trust of users and markets as well. People view it as a credible form of payment and have started to act on it, especially those who want to keep transactions anonymous. Not even the regulatory crackdown enforced by the Chinese authorities was enough to stop the trend. Users are adamant in their resolve and love a currency that is seemingly outside the control of authorities.
In 2017 help arrived from an unlikely source, as Congressman Mick Mulvaney was chosen as the new Office of Management and Budget chief. Donald Trump’s pick was both a surprise and extraordinary news for Bitcoin users and owners. Mulvaney is known as a crypto currency proponent and was invited to or hosted several conventions discussing its usefulness. Under these circumstances it’s not that surprising that bitcoin has smashed a record in February and the sky seems to be the limit.
New Challenges and Promises at the Horizon
Now that Bitcoins can no longer be ignored, regular people, businesses and governments pay more attention to the crypto currency. There is already a huge exchange coinbase and more people join, drawn by the advantages. The fact that sovereign currencies are plagued by global restrictions is convincing more people to adopt Bitcoin. Those who are concerned about the anticipated reduction in remittances also regard it as a safe haven.
Increased acceptance is perhaps the main reason for why the price of Bitcoin is higher today than ever before. In the beginning, only a couple of online casinos accepted the crypto currency and most chose to stick to traditional money. Even today not many entertainment websites use bitcoin as a payment method, and usually have other banking options. However, more consumers are using it and companies regard it as a reliable means of payment.
Not everyone is enthusiastic about its popularity surge and governments are particularly concerned. If Bitcoin would render traditional money useless, central banks will have no means to manipulate currency. They did it more than once to mitigate the effects of financial crisis and regard it as a solution of last resort. This means that governments are expected to oppose the crypto currency at any corner. There are also technical problems to factor in, which can disrupt the big coin services. The recent Amazon outage caused a stir and brought this sensitive issue back on the table.
Early adopters always have the upper hand over people who wait for a trend to be established. Back in the day, it was relatively easy to mine Bitcoin and the price of the crypto currency was quite low. Most people have serious doubts of its potential and even fewer understood how Bitcoin work in the first place. Downswings caused by the high profile incidents, such as the Mt. Gox currency theft further hurt its image and brought the specter of doubt back. Somehow it survived and is now going strong.
The Best Year yet for Bitcoin
2016 started on a positive note and the crypto currency increased its value significantly in just a couple of months. It gained a lot of traction and didn’t lose steam in the second half of the year, despite the turmoil caused by US elections. In fact, Donald Trump’s election pushed it to new highs and growth is expected to continue. By December, it crushed every other currency in 2016 and financial pundits predict that it will set new milestones in 2017.
There are several reasons for why Bitcoin is now at an all-time high, but one of them is that the crypto currency has earned the trust of users and markets as well. People view it as a credible form of payment and have started to act on it, especially those who want to keep transactions anonymous. Not even the regulatory crackdown enforced by the Chinese authorities was enough to stop the trend. Users are adamant in their resolve and love a currency that is seemingly outside the control of authorities.
In 2017 help arrived from an unlikely source, as Congressman Mick Mulvaney was chosen as the new Office of Management and Budget chief. Donald Trump’s pick was both a surprise and extraordinary news for Bitcoin users and owners. Mulvaney is known as a crypto currency proponent and was invited to or hosted several conventions discussing its usefulness. Under these circumstances it’s not that surprising that bitcoin has smashed a record in February and the sky seems to be the limit.
New Challenges and Promises at the Horizon
Now that Bitcoins can no longer be ignored, regular people, businesses and governments pay more attention to the crypto currency. There is already a huge exchange coinbase and more people join, drawn by the advantages. The fact that sovereign currencies are plagued by global restrictions is convincing more people to adopt Bitcoin. Those who are concerned about the anticipated reduction in remittances also regard it as a safe haven.
Increased acceptance is perhaps the main reason for why the price of Bitcoin is higher today than ever before. In the beginning, only a couple of online casinos accepted the crypto currency and most chose to stick to traditional money. Even today not many entertainment websites use bitcoin as a payment method, and usually have other banking options. However, more consumers are using it and companies regard it as a reliable means of payment.
Not everyone is enthusiastic about its popularity surge and governments are particularly concerned. If Bitcoin would render traditional money useless, central banks will have no means to manipulate currency. They did it more than once to mitigate the effects of financial crisis and regard it as a solution of last resort. This means that governments are expected to oppose the crypto currency at any corner. There are also technical problems to factor in, which can disrupt the big coin services. The recent Amazon outage caused a stir and brought this sensitive issue back on the table.
Is This Actually Your Last Chance to Buy Bitcoin?
In 2010, a Florida programmer called Laszlo Hanyecz convinced someone to accept 10,000 Bitcoins he’d mined on his computer in exchange for two pizzas. Back then, when the currency was still in its infancy, that amounted to around $25. On today’s exchange rate those pizzas would be worth an eye-watering $12,046,100.
“It wasn’t like Bitcoins had any value back then, so the idea of trading them for a pizza was incredibly cool,” Hanyecz said in an interview with the New York Times. “No one knew it was going to get so big.”
The unprecedented success of Bitcoin
Fast-forward to 2017 and times have changed for Bitcoin, so much so that major banks, venture capitalists and forward-thinking individuals have shown a growing interest in the currency. At the last count, around 150,000 merchants now accept Bitcoin with the number of daily confirmed Bitcoin transactions at just under 300,000.
Unlike 2010, the cost of one Bitcoin is now trading at $1,252 despite a slight drop from a March high of just under $1,300. Recent developments such as the Bitcoin ETF's pending SEC approval indicate that the currency has reached a tipping point.
Speaking to Cointelegraph, David Farmer from Coinbase said the company believes it is increasingly likely that a Bitcoin ETF will be approved at some point this year.
“Our professional trading exchange GDAX has received a lot of inbound interest from Wall Street firms,” Farmer said. “If an ETF is approved, this large institutional volume will enter the ETF and spot markets and trusted and regulated exchanges like GDAX will play an important role in creating a well-functioning asset-based ETF.”
So, with the digital currency steadily rising over the last six years, is this the last chance to buy Bitcoin?
Are the days of making big money from Bitcoin really over?
In an article from The Motley Fool, it says: “The days of making big money from Bitcoin are almost certainly over, while the risks are as high as they ever were.” While there are some who will disagree, there is some truth in what’s being said.
At the rate the currency is trading at, it is becoming increasingly difficult for people to invest in the currency. Not only that, but Bitcoin remains volatile. Its price slumped after the collapse of Mt. Gox in 2013 and more recently in January as China attempted to bolster the yuan. If its price were to drastically collapse, no central bank would rush to help with compensation.
And yet, while it may be difficult for people to invest in the currency, this could be the last opportunity to do so.
Diversification is key to an investment portfolio
According to analyst Adam Davies, who recently spoke to CNBC, the price of Bitcoin could hit $3,000 by the end of the year, representing a near 150 percent increase from its current price, at the time of publication. Additionally, as the supply of Bitcoin is limited, its price is expected to increase over time.
Speaking to Cointelegraph, David Motta, business financial consultant, marketer and investor, said that he thinks the coin will continue to go up.
“[However], I think it’s wiser to invest $10,000 in something that I can purchase for .04 cents that can eventually reach $1 per coin, instead of investing $10,000 in Bitcoin and [waiting] for it to go up another $1,200 to double my investment,” he said.
He adds, though, that people should expand their portfolio and diversify with other coins in the market to lower risks and to make big money over the long-term.
Diversification is key to an investment portfolio and will do well to have some Bitcoin attached to it, so if you buy Bitcoin now, you may do well over time with them. As with all investments, though, there will be ups and downs to it.
“It wasn’t like Bitcoins had any value back then, so the idea of trading them for a pizza was incredibly cool,” Hanyecz said in an interview with the New York Times. “No one knew it was going to get so big.”
The unprecedented success of Bitcoin
Fast-forward to 2017 and times have changed for Bitcoin, so much so that major banks, venture capitalists and forward-thinking individuals have shown a growing interest in the currency. At the last count, around 150,000 merchants now accept Bitcoin with the number of daily confirmed Bitcoin transactions at just under 300,000.
Unlike 2010, the cost of one Bitcoin is now trading at $1,252 despite a slight drop from a March high of just under $1,300. Recent developments such as the Bitcoin ETF's pending SEC approval indicate that the currency has reached a tipping point.
Speaking to Cointelegraph, David Farmer from Coinbase said the company believes it is increasingly likely that a Bitcoin ETF will be approved at some point this year.
“Our professional trading exchange GDAX has received a lot of inbound interest from Wall Street firms,” Farmer said. “If an ETF is approved, this large institutional volume will enter the ETF and spot markets and trusted and regulated exchanges like GDAX will play an important role in creating a well-functioning asset-based ETF.”
So, with the digital currency steadily rising over the last six years, is this the last chance to buy Bitcoin?
Are the days of making big money from Bitcoin really over?
In an article from The Motley Fool, it says: “The days of making big money from Bitcoin are almost certainly over, while the risks are as high as they ever were.” While there are some who will disagree, there is some truth in what’s being said.
At the rate the currency is trading at, it is becoming increasingly difficult for people to invest in the currency. Not only that, but Bitcoin remains volatile. Its price slumped after the collapse of Mt. Gox in 2013 and more recently in January as China attempted to bolster the yuan. If its price were to drastically collapse, no central bank would rush to help with compensation.
And yet, while it may be difficult for people to invest in the currency, this could be the last opportunity to do so.
Diversification is key to an investment portfolio
According to analyst Adam Davies, who recently spoke to CNBC, the price of Bitcoin could hit $3,000 by the end of the year, representing a near 150 percent increase from its current price, at the time of publication. Additionally, as the supply of Bitcoin is limited, its price is expected to increase over time.
Speaking to Cointelegraph, David Motta, business financial consultant, marketer and investor, said that he thinks the coin will continue to go up.
“[However], I think it’s wiser to invest $10,000 in something that I can purchase for .04 cents that can eventually reach $1 per coin, instead of investing $10,000 in Bitcoin and [waiting] for it to go up another $1,200 to double my investment,” he said.
He adds, though, that people should expand their portfolio and diversify with other coins in the market to lower risks and to make big money over the long-term.
Diversification is key to an investment portfolio and will do well to have some Bitcoin attached to it, so if you buy Bitcoin now, you may do well over time with them. As with all investments, though, there will be ups and downs to it.
No Bitcoin For You! Winklevoss’ Proposed ETF DIW?
The Securities and Exchange Commission denied the proposed Winklevoss Bitcoin Trust ETF on Friday at around the market’s close. Basically more than three years of waiting and prodding have resulted in absolutely nothing. The untraceable cryptocurrency was down 4.7% to $1,100.44 at the market’s close.
Here’s the SEC’s ruling in full. The ETF was disapproved, because the proposed rule change to the BATS Exchange was “not consistent with these legal requirements.” Here’s an excerpt:
Photographer: Chris Ratcliffe/Bloomberg
As discussed further below, the Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest. The Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (“ETPs”) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter. First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated.
The Commission takes issue with the unregulated markets for bitcoin. I suppose investors will now fixate on whether SolidX or Greyscale will get approval. This decision doesn’t look good for them.
MarketWatch’s Ryan Vlastelica reported that Winklevoss Capital remained “optimistic and committed” to making COIN — the symbol it would’ve traded under — happen.
Here’s the SEC’s ruling in full. The ETF was disapproved, because the proposed rule change to the BATS Exchange was “not consistent with these legal requirements.” Here’s an excerpt:
Photographer: Chris Ratcliffe/Bloomberg
As discussed further below, the Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest. The Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (“ETPs”) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter. First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated.
The Commission takes issue with the unregulated markets for bitcoin. I suppose investors will now fixate on whether SolidX or Greyscale will get approval. This decision doesn’t look good for them.
MarketWatch’s Ryan Vlastelica reported that Winklevoss Capital remained “optimistic and committed” to making COIN — the symbol it would’ve traded under — happen.
S.E.C. Rejects Winklevoss Brothers’ Bid to Create Bitcoin E.T.F.
The SEC just issued their ruling on the Winkelevoss bitcoin ETF, and it wasn’t good news for enthusiasts of the digital currency. Regulators rejected the proposed application, mainly because of the lack of regulation currently surrounding bitcoin.
An approval would have meant that the public could invest in bitcoin simply by purchasing shares in the ETF, which would trade on a U.S-based stock exchange.
The assumption was that an approved ETF would open the floodgates to both Wall Street and regular investors who want a stake in the digital currency but didn’t feel comfortable purchasing it on their own. This influx of new investors would then drive up the price of bitcoin.
Instead, the price dropped about 22 percent, from about $1,295.00 to as low as $1,000 as soon as the news broke. It’s since stabilized to about $1,120.00, which is still a drop of about 14 percent.
In its decision, the SEC explained that a Bitcoin ETF would not be consistent with current rules requiring securities exchanges to regulate and monitor the markets where underlying products are traded. Essentially, the underlying markets that currently exist for trading bitcoin aren’t regulated enough to responsibly support an ETF that would rely on those markets for liquidity.
An approval would have meant that the public could invest in bitcoin simply by purchasing shares in the ETF, which would trade on a U.S-based stock exchange.
The assumption was that an approved ETF would open the floodgates to both Wall Street and regular investors who want a stake in the digital currency but didn’t feel comfortable purchasing it on their own. This influx of new investors would then drive up the price of bitcoin.
Instead, the price dropped about 22 percent, from about $1,295.00 to as low as $1,000 as soon as the news broke. It’s since stabilized to about $1,120.00, which is still a drop of about 14 percent.
In its decision, the SEC explained that a Bitcoin ETF would not be consistent with current rules requiring securities exchanges to regulate and monitor the markets where underlying products are traded. Essentially, the underlying markets that currently exist for trading bitcoin aren’t regulated enough to responsibly support an ETF that would rely on those markets for liquidity.
Thursday, March 9, 2017
Coinbase, Bitfinex Would List Bitcoin Unlimited As “Altcoin” After Soft Fork: Mow
Former BTCC COO Samson Mow has said in the event of a Bitcoin hard fork, Bitcoin Unlimited could become a “new altcoin.”
Citing information from exchanges Coinbase and Bitfinex, Mow tweeted on Wednesday that Bitcoin Unlimited would in the future list as $BTU or $XBU.
“That is if they even list it at all,” he added.
The news is the latest development in the ongoing clash between various development teams over how to scale the Bitcoin network.
Having continued for almost two years, rhetoric has recently adopted a more poignant tone as the Blockchain struggles to cope with demand and transaction fees rise considerably.
The latest solution championed by Core proponents is to let the ecosystem activate its Segregated Witness without depending on mining pools exclusively, the so-called User-Activated Soft Fork (UASF).
Bounty
Earlier this week, Mow offered a one BTC bounty to anyone who could create “code enabling a safe UASF.”
As Bitcoin Unlimited proponent Roger Ver released his own mining pool on Monday, Mow called out the entrepreneur for “misleading advertising,” quoting a source stating his 110 percent block reward was in fact “not much better” than existing options.
The mining reward is intended to incentivize nodes to support Bitcoin Unlimited.
BITCOIN AND ALTCOINS MARGIN TRADING FOR BEGINNERS
For traders with a limited amount of crypto resources, i.e. Bitcoin and altcoins, there is the option of margin trading in order to add leverage to the investment. This, in fact, increases the amount invested without having to actually hold the assets. It is important to mention that margin trading is not recommended for everyone and it has a very high risk.
LET’S START: WHAT IS MARGIN TRADING?
Margin trading allows a trader to open a position with leverage. For example – we opened a margin position with 2X leverage. Our base assets had increased by 10%. Our position yielded 20% because of the 2X leverage. Standard trades are traded with leverage of 1:1.
Margin trading is possible due to the existence of the lending market. Lenders provide loans to traders so they can invest in larger amounts of coins, and lenders benefit from interest on the loans. In some exchanges, like Poloniex, users provide the loans for the margin markets and in others the exchange itself provides them. For example, in the Poloniex exchange anyone can lend their bitcoins or altcoins and benefit from interest on the loan. The main disadvantage is that the coins need to be in the exchange’s wallet, which is a lot less secure than a cold wallet.
COSTS AND RISKS OF MARGIN TRADING
As mentioned above, the cost of the margin position includes paying the interest for the borrowed coins (whether to the exchange or to other users), and fees for opening a position with the exchange.
As the chance to earn more increases, so does the risk to lose more. The maximum we can lose is the amount we invested in order to open the position. This level is called the liquidation value. The liquidation value is the value where the exchange would automatically close our position so we won’t lose any of the loaned money, and only lose our own money.
Example: if we are talking about standard trading, leverage 1:1, the liquidation value is when the position reaches a value of zero. As the leverage increases, the liquidation value will get closer to our buying price. For example, Bitcoin value is $1,000, we bought one Bitcoin (long) with leverage of 2:1. The cost of our position is 1000 USD, in addition we borrowed 1000 more USD. The liquidation value of our position will be a little over 500 USD – because at that level we lose exactly our initial 1000 USD plus interest and fees.
Margin trading can also be against the market, we can also short position with leverage.
MARGIN TRADING TIPS
Risk Management – When trading on margin it is important that there are clear rules of risk management, beware of excessive greed. Take into account the amount you are willing to risk, keeping in mind it can be lost completely. Set clear levels for closing positions, taking profit or a stop loss.
Watch closely – Crypto coins are considered assets with excessive volatility. Margin trading of crypto currencies doubles the risk. Therefore try to make short-term trading leveraged positions. Moreover, although the daily fees or margin position is negligible, in the long term the fees can amount to a significant sum.
Extreme movements – Crypto trading sometimes has extreme fluctuations that occur in both directions (“Deep”). The risk in this case is that the deep will touch our liquidation value. It could happen where the leverage is relatively high so the liquidation value is relatively close. In fact you can take advantage of these deeps and try to set closing target positions, hoping the deep will run over them, leaving you with a decent profit and then going back to the previous price.
Additional tips for trading Bitcoin and Altcoins – can be read here.
EXCHANGES WHICH ENABLE MARGIN TRADING
It is now possible to trade margin on most exchanges. The advantages of leveraged trading are very clear and another important advantage is the security aspect. Crypto traders should strive to minimize the amount of coins they hold on exchanges. Exchanges are considered hot targets for hackers and in recent years there have been several hackings of exchanges, the last major break was the Bitfinix hack in 2016 when a third of the exchange’s Bitcoins were stolen.
Trading on margin allows us to open increased positions with no need to provide the Bitcoin required, that way we can hold less coins on the exchange account. For example, if our portfolio consists of five Bitcoin and we want to hedge against the risk of Bitcoin’s decline, 10X leveraged short position could be open and it will be equivalent to 40% of our Bitcoin portfolio. To open the position the amount required is only a tenth of it (10 times leverage). That means that we need to only hold 0.2 Bitcoin. So our Bitcoins are stored securely in cold wallets.
Bitmex – is a relatively new exchange. It has gained a great reputation in a short time and many traders use it frequently. Leading the margin trading, the exchange offers up to 100X leverage margin trading, both long and short. It’s very easy to operate and has good support. With this link you can get a discount on the fees.
Bitfinix – This exchange coordinates the largest trading volume of Bitcoin USD market, with margin trading up to a leverage of 3.3X. The interface is user friendly and it’s simple to carry out transactions.
Poloniex – the largest crypto exchange. Leveraged trading of 11 Altcoins, there is no BTC USD margin trading. Leverage is available only at 2.5X. Relatively high interest fees when shorting.
Wednesday, March 8, 2017
We are at a turning point in crypto
My fellow crypto friends. We are at a turning point in crypto. Roger Ver is colluding with an ASIC manufacturer (Bitmain) + mining pools (his and others) + rogue "developers" to split the Bitcoin network. If they are successful, this will set a terrible precedent, and likely shatter the ecosystem. It will destroy an enormous amount of invested money, time, and effort. From now on, I will be advising everyone I know to stay the fuck away from Bitcoin and digital currencies for the forseeable future. I will be doing a more thorough write-up after the ETF news, to discuss the threats to the ecosystem going forward. This includes some follow-up to Vlad Zamfir's opinions about Ethereum he discussed in his latest blog posts and which he discussed in recent presentations. I think he's a really smart guy, and Ethereum is lucky to have him. Ethereum is equally as risky a proposition at this point, because Vlad admits it is generally under the central leadership of Vitalik, and the value proposition of both Ethereum and Bitcoin are somewhat flawed. While I am still "bullish" in the long-term, I believe the next 3-6 months will be a crazy roller coaster.
Bitcoin Price Slumps, 9 of Top 10 Cryptos Follow Due To Security, Bitcoin ETF Concerns
All but one of the top ten cryptocurrencies have lost between three percent and 12 percent of their value in the past 24 hours.
On Wednesday, Bitcoin was down over $100, representing approximately a six percent loss, with Ethereum posting similar results. Monero was 10 percent lower and Dash four percent.
PricesThe broad downturn comes ahead of a likely ETF decision from the US Securities and Exchange Commission by Friday, traders selling off to avert losses engendered by a refusal.
In addition, on Tuesday, Wikileaks published the first volume of its bulk data project relating to US spying practices, which implicate consumer electronic devices such as smartphones worldwide.
While it is difficult to attribute the sudden slump to any particular factor, the news of the vulnerability of consumer devices is likewise a timely reminder of the vulnerability of cryptocurrency funds accessed on such devices.
Prior to the leak, John McAfee notably warned at a Blockchain Money conference in London last November that passwords for wallets accessed on smartphones could be cracked in “five minutes.”
"Some people have hundreds of thousands of dollars on their smartphone wallet. And I tell them – if you give me your phone number, in five minutes I will transfer all of your Bitcoins into my account," he said.
According to Wikileaks’ data, it has now come to light that any user interaction with their device can be logged and subsequently used by the CIA.
Meanwhile, only Ripple posted a decidedly steep 6.5 percent climb Tuesday, the de facto centralized protocol seemingly going against the trend.
On Wednesday, Bitcoin was down over $100, representing approximately a six percent loss, with Ethereum posting similar results. Monero was 10 percent lower and Dash four percent.
PricesThe broad downturn comes ahead of a likely ETF decision from the US Securities and Exchange Commission by Friday, traders selling off to avert losses engendered by a refusal.
In addition, on Tuesday, Wikileaks published the first volume of its bulk data project relating to US spying practices, which implicate consumer electronic devices such as smartphones worldwide.
While it is difficult to attribute the sudden slump to any particular factor, the news of the vulnerability of consumer devices is likewise a timely reminder of the vulnerability of cryptocurrency funds accessed on such devices.
Prior to the leak, John McAfee notably warned at a Blockchain Money conference in London last November that passwords for wallets accessed on smartphones could be cracked in “five minutes.”
"Some people have hundreds of thousands of dollars on their smartphone wallet. And I tell them – if you give me your phone number, in five minutes I will transfer all of your Bitcoins into my account," he said.
According to Wikileaks’ data, it has now come to light that any user interaction with their device can be logged and subsequently used by the CIA.
Meanwhile, only Ripple posted a decidedly steep 6.5 percent climb Tuesday, the de facto centralized protocol seemingly going against the trend.
Bitcoin could hit $3,000 by the end of the year after recent rally
The price of bitcoin could hit $3,000 by the end of the year after recently trading above gold and hitting a fresh record high, an analyst told CNBC on Tuesday.
A rise on this scale would represent a near 150 percent increase from bitcoin's current price of $1,204 at the time of publication, and a more than 130 percent increase from the fresh $1293.47 high it set last week, according to CoinDesk data.
The price of bitcoin at time of publication is not trading above an ounce of gold, but the recent rise in price, which is up 195 percent in the past 12 months, has been attributed to a number of geopolitical and broader market factors.
These include:
Increased regulation from Chinese authorities to clamp down on money laundering
Demonetization in India which has caused bitcoin to be seen as an alternative store of value
Volatility in other currencies and uncertainty in the global economy
Now Adam Davies, a consultant at Altus Consulting, who works with large financial institutions on technology, is predicting bitcoin can go even higher.
"In terms of price this year, I think it will go up to $3,000. As it becomes more pervasive and more generally accepted, I think you'll see rapid growth in adoption," Davies told CNBC in an interview on Tuesday.
"People are unsure about what is going on in the world, and digital currencies unlike the U.K. pound sterling have been hit badly because of Brexit, so people are looking to divest into bitcoin. There is a definitely upward trend. So the drivers will be hedging against currency fluctuations and insecurity in the markets."
Play Video
Bitcoin is a on a good run, but don't compare it to gold just yet
Peter Smith, CEO of Blockchain, a bitcoin wallet, told CNBC by email that his company is seeing "unprecedented volume and sign ups", adding that at the current price appreciation, a £3,000 dollar price by the end of the year is "feasible".
Experts said a number of other factors could help boost bitcoin this year. These include:
The expected approval of a bitcoin-based exchange traded fund created by Tyler and Cameron Winklevoss. This could lead to a "flood of institutional funds" entering the market, according to Thomas Glucksmann, head of marketing at cryptocurrency trading platform Gatecoin.
Japan has recently passed a bill that deems digital currencies as similar to fiat money and can be used as methods of payments, which could further the credibility to the cryptocurrency, which was once seen as just a means to buy illegal drugs
Glucksmann said that $3,000 by the end of the year seems "realistic" but somewhere in the region of $2,000 to $2,500 is a safer prediction.
"The bitcoin price will continue to rise this year although it's difficult to say by exactly how much," Glucksmann told CNBC.
Disclosure: Adam Davies of Altus Consulting owns bitcoin
A rise on this scale would represent a near 150 percent increase from bitcoin's current price of $1,204 at the time of publication, and a more than 130 percent increase from the fresh $1293.47 high it set last week, according to CoinDesk data.
The price of bitcoin at time of publication is not trading above an ounce of gold, but the recent rise in price, which is up 195 percent in the past 12 months, has been attributed to a number of geopolitical and broader market factors.
These include:
Increased regulation from Chinese authorities to clamp down on money laundering
Demonetization in India which has caused bitcoin to be seen as an alternative store of value
Volatility in other currencies and uncertainty in the global economy
Now Adam Davies, a consultant at Altus Consulting, who works with large financial institutions on technology, is predicting bitcoin can go even higher.
"In terms of price this year, I think it will go up to $3,000. As it becomes more pervasive and more generally accepted, I think you'll see rapid growth in adoption," Davies told CNBC in an interview on Tuesday.
"People are unsure about what is going on in the world, and digital currencies unlike the U.K. pound sterling have been hit badly because of Brexit, so people are looking to divest into bitcoin. There is a definitely upward trend. So the drivers will be hedging against currency fluctuations and insecurity in the markets."
Play Video
Bitcoin is a on a good run, but don't compare it to gold just yet
Peter Smith, CEO of Blockchain, a bitcoin wallet, told CNBC by email that his company is seeing "unprecedented volume and sign ups", adding that at the current price appreciation, a £3,000 dollar price by the end of the year is "feasible".
Experts said a number of other factors could help boost bitcoin this year. These include:
The expected approval of a bitcoin-based exchange traded fund created by Tyler and Cameron Winklevoss. This could lead to a "flood of institutional funds" entering the market, according to Thomas Glucksmann, head of marketing at cryptocurrency trading platform Gatecoin.
Japan has recently passed a bill that deems digital currencies as similar to fiat money and can be used as methods of payments, which could further the credibility to the cryptocurrency, which was once seen as just a means to buy illegal drugs
Glucksmann said that $3,000 by the end of the year seems "realistic" but somewhere in the region of $2,000 to $2,500 is a safer prediction.
"The bitcoin price will continue to rise this year although it's difficult to say by exactly how much," Glucksmann told CNBC.
Disclosure: Adam Davies of Altus Consulting owns bitcoin
Tuesday, March 7, 2017
Top 3 Bitcoin ETFs Awaiting SEC Approval
The current bitcoin price is allegedly dominated by speculation regarding the ETF decision. Although no one knows for sure if the SEC will approve this investment vehicle, quite a few companies are in the running to enter this market. Below is a list of all of the bitcoin ETFs which may see the light of day.
3. Grayscale Investments
The latest entrant in the bitcoin ETF scene is Grayscale Investments, this company filed for SEC approval on January 20 this year. If the application is approved, the Bitcoin Investment Trust will launch on the New York Stock Exchange in the coming months. As part of this ETF, the company plans to launch with an initial US$500m public offering, which is quite a substantial amount.
Just because Grayscale Investments are the latest to file for ETF approval, that doesn’t necessarily mean the SEC will look favorably upon this offering. Although bitcoin has been gaining a lot of momentum as of late, the SEC may still decide not to approve these filings. Then again, Grayscale Investments is quite optimistic about their submission, albeit the final decision may be months, if not years, away.
2. SolidX Bitcoin Trust
The New York Stock Exchange will be a prime target for any company looking to launch a bitcoin ETF moving forward. SolidX Partners sent in their application in July of 2016, with the hopes of getting listed on the NYSE. Exposing bitcoin to mainstream traders and investors may help the cryptocurrency in gaining more traction. Moreover, it would send the market cap towards the US$100bn mark rather quickly.
The Solid X Bitcoin Trust will be a passively managed exchange-traded fund under the XBTC ticker. Shareholders will be exposed to the daily changes in the US Dollar price of bitcoin. Right now, that value evolved in a positive manner for people who managed to buy in at a cheaper price. A bitcoin ETF could have the same goal, without forcing investors to go through centralized exchanges.
1. Winklevoss Bitcoin ETF
Most of the attention has been on the Winklevoss Bitcoin ETF as of late. Although Tyler and Cameron Winklevoss filed for SEC approval a while ago, they were rejected multiple times in the process. All things considered, the brothers spent over three years on this project and they have no intention of backing down now.
The Winklevoss Bitcoin Trust ETF aims to list 1 million shares at US$65 each under the COIN ticket. The SEC will have to decide on approving or rejecting this ETF filing by March 13. With the deadline drawing near, there’s a lot of speculation as to how this decision will play out. Most people still believe the SEC will not approve the bitcoin ETF, although anything can happen at this point.
Source: https://themerkle.com/top-3-bitcoin-etfs-awaiting-sec-approval/
3. Grayscale Investments
The latest entrant in the bitcoin ETF scene is Grayscale Investments, this company filed for SEC approval on January 20 this year. If the application is approved, the Bitcoin Investment Trust will launch on the New York Stock Exchange in the coming months. As part of this ETF, the company plans to launch with an initial US$500m public offering, which is quite a substantial amount.
Just because Grayscale Investments are the latest to file for ETF approval, that doesn’t necessarily mean the SEC will look favorably upon this offering. Although bitcoin has been gaining a lot of momentum as of late, the SEC may still decide not to approve these filings. Then again, Grayscale Investments is quite optimistic about their submission, albeit the final decision may be months, if not years, away.
2. SolidX Bitcoin Trust
The New York Stock Exchange will be a prime target for any company looking to launch a bitcoin ETF moving forward. SolidX Partners sent in their application in July of 2016, with the hopes of getting listed on the NYSE. Exposing bitcoin to mainstream traders and investors may help the cryptocurrency in gaining more traction. Moreover, it would send the market cap towards the US$100bn mark rather quickly.
The Solid X Bitcoin Trust will be a passively managed exchange-traded fund under the XBTC ticker. Shareholders will be exposed to the daily changes in the US Dollar price of bitcoin. Right now, that value evolved in a positive manner for people who managed to buy in at a cheaper price. A bitcoin ETF could have the same goal, without forcing investors to go through centralized exchanges.
1. Winklevoss Bitcoin ETF
Most of the attention has been on the Winklevoss Bitcoin ETF as of late. Although Tyler and Cameron Winklevoss filed for SEC approval a while ago, they were rejected multiple times in the process. All things considered, the brothers spent over three years on this project and they have no intention of backing down now.
The Winklevoss Bitcoin Trust ETF aims to list 1 million shares at US$65 each under the COIN ticket. The SEC will have to decide on approving or rejecting this ETF filing by March 13. With the deadline drawing near, there’s a lot of speculation as to how this decision will play out. Most people still believe the SEC will not approve the bitcoin ETF, although anything can happen at this point.
Source: https://themerkle.com/top-3-bitcoin-etfs-awaiting-sec-approval/
Bitcoiners Beware – U.S. Customs Agents Are Coercing for Mobile Passwords
U.S. Customs and Border Protection Agents Are Coercing Travelers for Mobile Passwords
Bitcoiners Be Aware U.S. Customs Are Coercing for Mobile PasswordsBitcoin.com has covered many different aspects concerning Bitcoin under the Trump administration. Everything from Bitcoin supporters being appointed to the administration, the planned wall in Mexico, and the possibility of some financial regulations ending. However, Bitcoin proponents may have something to worry about if they travel inside the U.S. border. According to various reports, CBP agents are increasingly searching phones and electronic devices. Even though the CBP and the Transportation Security Administration (TSA) legally cannot search electronic devices without a warrant they have been doing so for quite some time. Just recently a U.S.-born scientist was forced to reveal his NASA-issued mobile phone password at a border checkpoint.
Sidd Bikkannavar gave up the passcode to the CBP agent while he waited thirty minutes for it to be returned. According to the CBP the agents had performed an algorithm test looking for threats to national security, but found none.
“This is a huge, huge violation of my work policy. This is a matter of great concern,” explained Bikkannavar.
Bitcoiners Be Aware U.S. Customs Are Coercing for Mobile Passwords
More Instances of Passphrase Searches
The violation of privacy is setting a precedent and could have severe implications towards bitcoin users keeping wealth on their mobile devices. Moreover, there have been other recorded events in the U.S. of border agents looking for passwords to electronic devices over the past few months. Just last month the New York Times reported on a man named Haisam Elsharkawi who was detained by the CBP for three hours after his flight. According to Elsharkawi, CBP officials pestered him for the phones passphrase and asked if they could view his contacts, social media apps, and photographs.
“I travel all the time, and I was never asked to unlock my phone,” Mr. Elsharkawi told the press. “I have personal photos there, which I think is normal for anyone. It’s my right. It’s my phone.”
According to the CBP, the agency details they can seize your mobile device and may keep it to copy data off of the device. Those who have experienced a phone seizure have said the agency could take your phone for weeks as the CBP states they will “return your property within a reasonable time upon completion of examination.”
One instance of Bitcoin going through customs made headlines back in March of 2014. Bitcoin Not Bombs founder, Davi Barker was harassed by a group of plain-clothed TSA agents. Barker’s luggage was swabbed as the TSA employees said, “We saw bitcoin in your bag and need to check.” According to the agents, the security team was concerned with international travelers carrying more than $10,000 in digital currency.
Agents Could Easily Gain Access to Bitcoin Wallets and Private Keys
Bitcoiners Be Aware U.S. Customs Are Coercing for Mobile PasswordsThe fact of the matter is a lot of bitcoin users carry funds on their mobile device. Phones contain bitcoin wallets, and some even show a mnemonic seed phrase to your private keys. On top of that, government authorities can take the device and copy all the data using their own discretion, and ironically, in private. Additionally, the CBP may also share the device with other agencies for technical assistance and decryption.
“The information may be made available to other agencies for investigation and/or for obtaining assistance relating to jurisdictional or subject matter expertise, or for translation, decryption, or other technical assistance,” explains the U.S. Customs and Border Protection agency.
Of course, agents will need a passphrase, but it seems coercing people to give one up is all too easy these days. The implications of these events with U.S. customs can be frightening for all individuals who recognize privacy as a fundamental sovereign right. All of the sudden, certain rules under Trump’s new guidelines may not be so pleasing to bitcoin enthusiasts after all.
What do you think about the U.S. Customs and Border Protection pressuring people to give up their phones and passphrases? Let us know in the comments below.
Bitcoiners Be Aware U.S. Customs Are Coercing for Mobile PasswordsBitcoin.com has covered many different aspects concerning Bitcoin under the Trump administration. Everything from Bitcoin supporters being appointed to the administration, the planned wall in Mexico, and the possibility of some financial regulations ending. However, Bitcoin proponents may have something to worry about if they travel inside the U.S. border. According to various reports, CBP agents are increasingly searching phones and electronic devices. Even though the CBP and the Transportation Security Administration (TSA) legally cannot search electronic devices without a warrant they have been doing so for quite some time. Just recently a U.S.-born scientist was forced to reveal his NASA-issued mobile phone password at a border checkpoint.
Sidd Bikkannavar gave up the passcode to the CBP agent while he waited thirty minutes for it to be returned. According to the CBP the agents had performed an algorithm test looking for threats to national security, but found none.
“This is a huge, huge violation of my work policy. This is a matter of great concern,” explained Bikkannavar.
Bitcoiners Be Aware U.S. Customs Are Coercing for Mobile Passwords
More Instances of Passphrase Searches
The violation of privacy is setting a precedent and could have severe implications towards bitcoin users keeping wealth on their mobile devices. Moreover, there have been other recorded events in the U.S. of border agents looking for passwords to electronic devices over the past few months. Just last month the New York Times reported on a man named Haisam Elsharkawi who was detained by the CBP for three hours after his flight. According to Elsharkawi, CBP officials pestered him for the phones passphrase and asked if they could view his contacts, social media apps, and photographs.
“I travel all the time, and I was never asked to unlock my phone,” Mr. Elsharkawi told the press. “I have personal photos there, which I think is normal for anyone. It’s my right. It’s my phone.”
According to the CBP, the agency details they can seize your mobile device and may keep it to copy data off of the device. Those who have experienced a phone seizure have said the agency could take your phone for weeks as the CBP states they will “return your property within a reasonable time upon completion of examination.”
One instance of Bitcoin going through customs made headlines back in March of 2014. Bitcoin Not Bombs founder, Davi Barker was harassed by a group of plain-clothed TSA agents. Barker’s luggage was swabbed as the TSA employees said, “We saw bitcoin in your bag and need to check.” According to the agents, the security team was concerned with international travelers carrying more than $10,000 in digital currency.
Agents Could Easily Gain Access to Bitcoin Wallets and Private Keys
Bitcoiners Be Aware U.S. Customs Are Coercing for Mobile PasswordsThe fact of the matter is a lot of bitcoin users carry funds on their mobile device. Phones contain bitcoin wallets, and some even show a mnemonic seed phrase to your private keys. On top of that, government authorities can take the device and copy all the data using their own discretion, and ironically, in private. Additionally, the CBP may also share the device with other agencies for technical assistance and decryption.
“The information may be made available to other agencies for investigation and/or for obtaining assistance relating to jurisdictional or subject matter expertise, or for translation, decryption, or other technical assistance,” explains the U.S. Customs and Border Protection agency.
Of course, agents will need a passphrase, but it seems coercing people to give one up is all too easy these days. The implications of these events with U.S. customs can be frightening for all individuals who recognize privacy as a fundamental sovereign right. All of the sudden, certain rules under Trump’s new guidelines may not be so pleasing to bitcoin enthusiasts after all.
What do you think about the U.S. Customs and Border Protection pressuring people to give up their phones and passphrases? Let us know in the comments below.
Yale Lecturer: Bitcoin is No Bubble, Long-Term Outlook is Bright
Is bitcoin’s historic rise headed for a major fall? Vikram Mansharamani, author of “Boombustology: Spotting Financial Bubbles Before They Burst” and a lecturer at the Harvard John A. Paulson School of Engineering and Applied Sciences at Yale University, analyzed the likelihood of a new bitcoin bubble in his LinkedIn post. Using five “lenses” he has developed, he concluded that bitcoin’s long-term outlook is positive.
Mansharamani noted behavioral and informational issues distort price at any point in time, but such distortions tend to disappear since supply and demand markets are basically efficient.
This might not always be the case, he observed. Higher prices could actually increase demand, according to George Soros’ Theory of Reflexivity. Soros holds that prices can trend away from equilibrium, creating booms and busts.
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Higher Price Raising Demand?
At present it is not clear if a higher bitcoin price has brought more demand, Mansharamani observed. On one hand, rising interest tends to drive up prices. At the same time, bitcoin trade volume has not increased with prices. While trade volume is not a good demand indicator, it does reflect activity. Lense 1: half a point.
Another bubble sign is the presence of leverage pushing higher prices. It is not clear if bitcoin prices are bubbly. There is no sign of leverage driving prices. There are no futures contracts enabling large exposure with little collateral or options providing de factor leverage.
The amount of debt supporting fiat currencies is an indicator. Traditional currencies are getting debased worldwide. Cryptocurrency offers a non-printable currency like gold. Lense 2: zero.
Psychological Factors
Psychology is another factor. When people assume the belief that “it’s different this time,” it’s time for buyers to beware. Asset prices never increase indefinitely. Bitcoin is no different in this regard.
Agreement exists that cryptocurrencies are in vogue and offer freedom from authoritarian manipulation. Mansharamani noted Peter Thiel has acknowledged that PayPal did not create a new currency, but a new payment system, whereas bitcoin has provided a new currency.
Bitcoin has its dedicated advocates. Internet analyst Henry Blodget and CNBC commentator Brian Kelly have delivered highly optimistic forecasts for bitcoin’s value. Lense 3: check.
Political Considerations
Politics is yet another consideration, including both moral hazards and regulations. Regulations can distort prices of any asset by artificially raising or undermining supply or demand.
As an example, political considerations delivered regulations that encouraged people in the U.S. to buy houses. Buyers had Fannie Mae or Freddie Mac to fall back on.
Bu there are no artificial government interventions supporting bitcoin prices. Regulators, for their part, are trying to discourage bitcoin. Governments, however, can’t do much more than temporarily impact the price of bitcoin, as was the case when China recently tried to control bitcoin trading.
There are no signs of moral hazards surrounding bitcoin. The people who lost millions when Mt. Gox filed for bankruptcy did not get bailed out. Bitcoin market players are buying with open eyes and are aware of the risks. Lense 4: zero.
Bitcoin Not Yet Widely Held
In comparing investment hysteria to a spreading fever, the variables of concern include the infection rate, the removal rate and importantly, the portion of the population not yet affected. The last metric can be seen as the fuel available to keep the fever spreading. Once it runs out of victims, the fever’s over. New demand disappears and prices fall.
The number of potential bitcoin buyers is big. The market capitalization at $20 billion is minuscule compared to its potential. A recent Twitter poll found that 49% plan to buy bitcoin while 22% said they were “max long” on bitcoin or “curious.” Bitcoin is not as widely held as it could be. Lense 5: zero.
In reviewing all five factors above, Mansharamani said the likelihood of bitcoin being a certain bubble only registers 1.5 out of 5 possible points. The stage could be set for it to become a bubble, but it is not yet there.
Short-term price corrections are always possible, but the long-term outlook for blockchain enabled currencies is positive.
Mansharamani noted behavioral and informational issues distort price at any point in time, but such distortions tend to disappear since supply and demand markets are basically efficient.
This might not always be the case, he observed. Higher prices could actually increase demand, according to George Soros’ Theory of Reflexivity. Soros holds that prices can trend away from equilibrium, creating booms and busts.
Let us help you become financially independent. Join Hacked.com now and use the discount code "CCN" to get a $20 monthly discount.
Higher Price Raising Demand?
At present it is not clear if a higher bitcoin price has brought more demand, Mansharamani observed. On one hand, rising interest tends to drive up prices. At the same time, bitcoin trade volume has not increased with prices. While trade volume is not a good demand indicator, it does reflect activity. Lense 1: half a point.
Another bubble sign is the presence of leverage pushing higher prices. It is not clear if bitcoin prices are bubbly. There is no sign of leverage driving prices. There are no futures contracts enabling large exposure with little collateral or options providing de factor leverage.
The amount of debt supporting fiat currencies is an indicator. Traditional currencies are getting debased worldwide. Cryptocurrency offers a non-printable currency like gold. Lense 2: zero.
Psychological Factors
Psychology is another factor. When people assume the belief that “it’s different this time,” it’s time for buyers to beware. Asset prices never increase indefinitely. Bitcoin is no different in this regard.
Agreement exists that cryptocurrencies are in vogue and offer freedom from authoritarian manipulation. Mansharamani noted Peter Thiel has acknowledged that PayPal did not create a new currency, but a new payment system, whereas bitcoin has provided a new currency.
Bitcoin has its dedicated advocates. Internet analyst Henry Blodget and CNBC commentator Brian Kelly have delivered highly optimistic forecasts for bitcoin’s value. Lense 3: check.
Political Considerations
Politics is yet another consideration, including both moral hazards and regulations. Regulations can distort prices of any asset by artificially raising or undermining supply or demand.
As an example, political considerations delivered regulations that encouraged people in the U.S. to buy houses. Buyers had Fannie Mae or Freddie Mac to fall back on.
Bu there are no artificial government interventions supporting bitcoin prices. Regulators, for their part, are trying to discourage bitcoin. Governments, however, can’t do much more than temporarily impact the price of bitcoin, as was the case when China recently tried to control bitcoin trading.
There are no signs of moral hazards surrounding bitcoin. The people who lost millions when Mt. Gox filed for bankruptcy did not get bailed out. Bitcoin market players are buying with open eyes and are aware of the risks. Lense 4: zero.
Bitcoin Not Yet Widely Held
In comparing investment hysteria to a spreading fever, the variables of concern include the infection rate, the removal rate and importantly, the portion of the population not yet affected. The last metric can be seen as the fuel available to keep the fever spreading. Once it runs out of victims, the fever’s over. New demand disappears and prices fall.
The number of potential bitcoin buyers is big. The market capitalization at $20 billion is minuscule compared to its potential. A recent Twitter poll found that 49% plan to buy bitcoin while 22% said they were “max long” on bitcoin or “curious.” Bitcoin is not as widely held as it could be. Lense 5: zero.
In reviewing all five factors above, Mansharamani said the likelihood of bitcoin being a certain bubble only registers 1.5 out of 5 possible points. The stage could be set for it to become a bubble, but it is not yet there.
Short-term price corrections are always possible, but the long-term outlook for blockchain enabled currencies is positive.
Bitcoin plunges sharply and suddenly
Bitcoin plunged by more than $100 in a matter of minutes on Tuesday morning. The cryptocurrency was down about 1.5% at $1,260 a coin just after 6 a.m. ET before tumbling below $1,160 within 30 minutes. As of 12:19 p.m. ET it was down 2.1%, or $27, near $1,249 a coin.
While no headlines can be directly tied to the plunge, about two hours earlier a Bloomberg headline cited a People's Bank of China official as suggesting the recent bitcoin regulation wasn't temporary.
The PBOC recently announced it was cracking down on bitcoin trading, and China's largest bitcoin exchanges have since introduced a flat 0.2% fee on each transaction and announced a blockage of withdrawals.
Tuesday's sell-off could also be tied to nervousness over a coming Securities and Exchange Commission ruling. The SEC is expected to issue a ruling on whether it will approve at least one of the three proposed bitcoin-focused exchange-traded funds by a Saturday deadline.
The price of bitcoin has rallied 27% in 2017 after gaining 120% in 2016. Bitcoin has been the top-performing currency in each of the past two years.
BitcoinInvesting.com
Get the latest Bitcoin price here.
While no headlines can be directly tied to the plunge, about two hours earlier a Bloomberg headline cited a People's Bank of China official as suggesting the recent bitcoin regulation wasn't temporary.
The PBOC recently announced it was cracking down on bitcoin trading, and China's largest bitcoin exchanges have since introduced a flat 0.2% fee on each transaction and announced a blockage of withdrawals.
Tuesday's sell-off could also be tied to nervousness over a coming Securities and Exchange Commission ruling. The SEC is expected to issue a ruling on whether it will approve at least one of the three proposed bitcoin-focused exchange-traded funds by a Saturday deadline.
The price of bitcoin has rallied 27% in 2017 after gaining 120% in 2016. Bitcoin has been the top-performing currency in each of the past two years.
BitcoinInvesting.com
Get the latest Bitcoin price here.
Monday, March 6, 2017
Bitcoin Exceeds $20 Billion in Market Cap
The soaring gains made by bitcoin in its latest bullish run in 2017 has seen the cryptocurrency’s market capitalization now exceed $20 billion for the first time in its history.
Bitcoin’s price rally and a few stumbles have already seen a dramatic year for the cryptocurrency, less than 3 months in. At the time of publishing, bitcoin is trading at $1,279, $20 away from its all-time high of $1,298 set on Friday, March 3, 2017.
Accordingly, current figures from CoinMarketCap reveals that a total of 109,320 bitcoins traded in a 24-hour period. With approximately 16.2 million bitcoins currently mined and in circulation, the world’s most prominent and valuable cryptocurrency is now valued at a little over $20.6 billion.
Pitting bitcoin against the world’s M1 (liquid money metric) scale on the CIA global list, the cryptocurrency is up a few places to reside at #66 in the rankings, now ahead of Bulgaria and Cuba and below Lithuania.
Bitcoin has now gained over a third in in market capitalization since the last week of 2016, a year which saw the cryptocurrency double in price over the year. The cryptocurrency crossed the $15 billion mark on December 28 last year as price pushed toward the $1,000 milestone.
Having begun the year above the $1,000 mark, bitcoin’s market cap hit $17.5 billion, before the bullish run hit a brick wall after intervention by China’s central bank which began investigating bitcoin exchanges in the country. Bitcoin has since persevered. free from the influence of the PBOC as Chinese traders took to alternative platforms.
On March 2nd, bitcoin surpassed parity with gold, a milestone for the cryptocurrency that is quickly being regarded as a store of value for investors around the world. Bitcoin’s gains have led to a positive trend among other cryptocurrencies. Ethereum, the second largest cryptocurrency after bitcoin, is nearing a market cap of $2 billion. Dash, third in the list after Bitcoin and Ethereum hit an all-time high market cap of $329 million the same day bitcoin announced it was more valuable than gold.
For a live Bitcoin Price chart, click here.
Bitcoin’s price rally and a few stumbles have already seen a dramatic year for the cryptocurrency, less than 3 months in. At the time of publishing, bitcoin is trading at $1,279, $20 away from its all-time high of $1,298 set on Friday, March 3, 2017.
Accordingly, current figures from CoinMarketCap reveals that a total of 109,320 bitcoins traded in a 24-hour period. With approximately 16.2 million bitcoins currently mined and in circulation, the world’s most prominent and valuable cryptocurrency is now valued at a little over $20.6 billion.
Pitting bitcoin against the world’s M1 (liquid money metric) scale on the CIA global list, the cryptocurrency is up a few places to reside at #66 in the rankings, now ahead of Bulgaria and Cuba and below Lithuania.
Bitcoin has now gained over a third in in market capitalization since the last week of 2016, a year which saw the cryptocurrency double in price over the year. The cryptocurrency crossed the $15 billion mark on December 28 last year as price pushed toward the $1,000 milestone.
Having begun the year above the $1,000 mark, bitcoin’s market cap hit $17.5 billion, before the bullish run hit a brick wall after intervention by China’s central bank which began investigating bitcoin exchanges in the country. Bitcoin has since persevered. free from the influence of the PBOC as Chinese traders took to alternative platforms.
On March 2nd, bitcoin surpassed parity with gold, a milestone for the cryptocurrency that is quickly being regarded as a store of value for investors around the world. Bitcoin’s gains have led to a positive trend among other cryptocurrencies. Ethereum, the second largest cryptocurrency after bitcoin, is nearing a market cap of $2 billion. Dash, third in the list after Bitcoin and Ethereum hit an all-time high market cap of $329 million the same day bitcoin announced it was more valuable than gold.
For a live Bitcoin Price chart, click here.
Sunday, March 5, 2017
Dash Price Rises Exponentially, But Is it a Bubble?
The cryptocurrency Dash has seen a significant price spike over the past couple of weeks. Dash even acquired the cryptocurrency market capitalization top three position, and is priced over US$46 at the time of writing. Some cryptocurrency enthusiasts have applauded the significant rise for various reasons, while others believe the pump just doesn’t add up.
Dash Sees Significant Price Rise and Infrastructure Support
The cryptocurrency Dash (formally known as Darkcoin) has increased in value exponentially. Dash community members attribute the increase to the currency’s features such as quick confirmation times, low fees, a built in tumbler, and a governance system that uses masternodes. Since the upgrade, Dash has experienced a price increase of 295 percent, peaking at $60 USD per coin on March 2.
Many cryptocurrency infrastructure providers have been adding Dash to their repertoire. Hardware wallet manufacturers Trezor and Keepkey have added Dash support to their devices while exchanges like Wall of Coins, and Bitfinex have integrated the altcoin. BitfinexChief Strategy Officer Phil Potter details, “Dash is currently experiencing its breakout moment right now, and we want to be able to provide our growing customer base with seamless access to one of the rising stars in our space.”
The cryptocurrency Dash has seen its share of ups and downs over the years, receiving its first significant rise during the inception of the masternodes. The price per Dash rose to a high of $15, but subsequently dropped to a low of $5. Dash has also had to dodge rumors of an initial insta-mine and masternode centralization while appreciating over the course of 2016 and into 2017.
Criticism From Ark Invest Analyst Chris Burniske
Meanwhile, the latest Dash price spike has received criticism, as well. Two weeks ago Ark Invest senior analyst Chris Burniske did some research on Dash andstates, “some things still aren’t adding up.” The pumping price has caused Burniske to remain skeptical of the Dash rise as he reviews the currency’s average transaction value, daily transactions, and masternodes.
“For one, the average transaction value is extremely high,” explains Burniske. “For example, data from 2/21/2017 implies average txn value > $4K, which is 4X bitcoin. I would have to imagine this is largely masternodes / miners moving around their Dash? Such a hypothesis would jibe with the fact that the number of transactions per day using Dash has gone nowhere since launch. It’s stuck between 1500-2500.
Similarly, the number of Dash transacted/day has also gone nowhere. Again, a flat pattern from launch implies to me this equals masternode/miner activity. The only thing for Dash that has gone up is the trading volume, which jibes with a pumping price. But that only works for so long…
When Burniske publicly stated his opinion, Dash supporters disagreed with his analysis. So far Dash has continued to hold its high price point and its leading market capitalization of $329 million just below Ethereum. Others have also speculated some of the Dash price increase is also due to the current Bitcoin network congestion, as Dash may give people the opportunity to transact faster and with lower fees.
What do you think about the Dash price spike? Let us know in the comments below.
Roger Ver “Saves Few Bucks” With Dash, Loses $30,000 To Bitcoin Volatility: Woo
Bitcoin commentator Willy Woo has called out Roger Ver over his use of Dash to get around Bitcoin’s transaction fees.
Ver, a proponent of increasing block sizes considerably in order to increase capacity, yesterday said he had resorted to using altcoin Dash to move his money in order to avoid paying a high Bitcoin transaction fee to process his payment in a short enough time.
Responding to Ver’s announcement, Woo was critical.
“Ver saves a few bucks on fees using [Dash], loses $30k to volatility. This is why [Bitcoin’s] network effects of liquidity & volatility wins,” he stated.
“Exponentially growing”
Bitcoin is keeping up with “exponentially growing” demand despite “short-term clogging” of transactions, Woo continued.
Adding a more hopeful perspective to the Bitcoin scaling debate, Woo tweeted a graph of transactions per second on the Bitcoin network on Friday, noting that in principle, it was coping.
“Despite short term clogging of transactions, the [Bitcoin] network continues to keep up with exponentially growing throughput demand for now,” he wrote about the data.
His comments come as Bitcoin price continues to reach new highs, with trading activity rising to match. At the same time, the backlog of unprocessed transactions has recently spiked several times, fuelling concerns that Bitcoin is unable to cater to mainstream demand due to its Blockchain’s technical limitations.
Meanwhile, on Thursday, ex-Bitcoin Core Developer Gavin Andresen gave his most upfront support yet to Ver’s much-touted Bitcoin Unlimited solution, calling it a “viable” way forward to dealing with “destructive congestion.”
Ver, a proponent of increasing block sizes considerably in order to increase capacity, yesterday said he had resorted to using altcoin Dash to move his money in order to avoid paying a high Bitcoin transaction fee to process his payment in a short enough time.
Responding to Ver’s announcement, Woo was critical.
“Ver saves a few bucks on fees using [Dash], loses $30k to volatility. This is why [Bitcoin’s] network effects of liquidity & volatility wins,” he stated.
“Exponentially growing”
Bitcoin is keeping up with “exponentially growing” demand despite “short-term clogging” of transactions, Woo continued.
Adding a more hopeful perspective to the Bitcoin scaling debate, Woo tweeted a graph of transactions per second on the Bitcoin network on Friday, noting that in principle, it was coping.
“Despite short term clogging of transactions, the [Bitcoin] network continues to keep up with exponentially growing throughput demand for now,” he wrote about the data.
His comments come as Bitcoin price continues to reach new highs, with trading activity rising to match. At the same time, the backlog of unprocessed transactions has recently spiked several times, fuelling concerns that Bitcoin is unable to cater to mainstream demand due to its Blockchain’s technical limitations.
Meanwhile, on Thursday, ex-Bitcoin Core Developer Gavin Andresen gave his most upfront support yet to Ver’s much-touted Bitcoin Unlimited solution, calling it a “viable” way forward to dealing with “destructive congestion.”
Winklevoss Bitcoin ETF Decision Due This Week
ETF Daily News
Winklevoss Bitcoin ETF Decision Due This Week: Bitcoin To $2,000?
From Taki Tsaklanos: Bitcoin is a totally different asset type. Traditional analysis methods do not applying when trying to forecast the price of bitcoin.
That’s why we apply a more fundamental approach in this article in order to come up with a bitcoin price forecast for 2017.
How not to forecast the future price of bitcoin
Most readers would turn to the cryptocurrency blogosphere where they will read ultra bullish bitcoin price forecasts for 2017 similar to this one from Coindesk. The issue with this approach is that those sites only feature bitcoin enthusiasts and entrepreneurs, so they offer a very biased view.
Traditional financial media, on the other hand, have their classic story telling format. That is not a useful approach neither for investors. For instance, CNBC looked at the ongoing stream of articles that compare bitcoin with gold, and concluded that “the comparison is perhaps a positive signal that bitcoin is being commoditized. But bitcoin is not a commodity, while gold has been a commodity for thousands of years.” That obviously does not tell anything about the future price of bitcoin.
Fortune.com explained how demand for safe haven assets have fallen since the elections “on a stronger dollar, signs of future interest rate hikes, and potentially business-friendly policies that may arise from the Trump administration. Those potential regulatory changes would raise the chances of higher-yielding stocks.” That also is not useful as input for a bitcoin price forecast.
The most interesting headline comes from CNBC: “Bitcoin predicted to rise 165% to $2,000 in 2017 driven by Trump’s spending binge and dollar rally.”
There is obviously no correlation between the bitcoin price and the dollar or any other regular asset. Large investors simply don’t pull money out of currencies, stocks or gold in order to buy bitcoins.
A legitimate bitcoin price forecast for 2017
We believe that a combination of price analysis and fundamental analysis is the most appropriate way to come up with a legitimate bitcoin forecast.
Fundamentally, the bitcoin usage data look great: usage of bitcoins keeps on increasing, and that is exactly what it fundamentally is all about. Because of the fact that bitcoin is a form of money, the widening acceptance of bitcoin is the most fundamental data point to consider.
According to Statista, bitcoin usage keeps on growing as seen by the number of Bitcoin ATMs which increased from 538 in January 2016 to 838 by November. Most Bitcoin ATMs, as of July 2016, were located in the United States (345) and Canada (108). The Bitcoin ATMs located in Europe as of June 2016 constituted 24.02 percent of the global ATM market share.
bitcoin atm
Moreover, several bitcoin charts confirm a growing usage and acceptance:
Bitcoins in circulation rose 10% in last 12 months
Trading volume on major bitcoin exchanges is structurally higher in last 12 months
The average number of transactions per block is structurally higher in last 12 months
Last but not least, this research paper on bitoin’s big picture trends identifies 3 marked regimes that have evolved as the Bitcoin economy has grown and matured: from an early prototype stage; to a second growth stage populated in large part with “sin” enterprise (i.e., gambling, black markets); to a third stage marked by a sharp progression away from “sin” and toward legitimate enterprises.
In other words, fundamentally, the picture for bitcoin looks very good. This is not only a market for speculators anymore, but one of real users.
We are confident, based on the objective data set outlined above, that bitcoin’s price rise is not only legitimate, but will continue. That results in a bullish bitcoin price forecast for 2017 and beyond.
From a bitcoin price analysis point of view, the long term chart looks very constructive. Readers should compare the steep rally in 2013 with the steady and solid rise in the last 2 years. As the price of bitcoin took out all-time highs, it suggests it has much more upside potential.
The only ‘negative’ is that the price rise has accelerated in recent weeks. Investors want to see a steady rise, not a parabolic rise. So we hope there will be a healthy correction sooner rather than later, to cool off emotions. Ideally, bitcoin’s price corrects to the $1000 to $1100 area in the coming weeks.
We could easily see bitcoin’s price move to $2,000 in 2017.
bitcoin price forecast 2017
Editor’s note: The SEC will rule on whether the Winklevoss Bitcoin Trust ETF (NASDAQ:COIN) will be allowed to launch or not this week. Stay tuned to ETF Daily News for the latest on this developing story.
Thursday, March 2, 2017
Bitcoin Just Surpassed Gold Parity
Bitcoin has been on a bull run for much of this year, increasing from $920 to now stand at $1,239, surpassing gold parity by around $2 at the time of publishing.
Bitcoin Surpassed Gold Parity – image from cryptowatch
The currency has broken its all-time high while retaining value at current levels for some time. Benefiting from monetary mismanagement by authorities across the world during the second half of last year, its adoption has increased with bitcoin’s market cap now a hairbreadth away from $20 billion.
Gold has also increased during this year after reaching a low of $1,122 as some apparently began diversifying to bitcoin. For much of 2016, the two appeared to be inversely correlated, but began increasing at the same time this year. Gold, however, has fallen in value by $20 over the past 4 days.
Gold’s Price – image from tradingview
The main reason for bitcoin’s current rise is probably due to the much-anticipated Bitcoin ETF. Only nine days to go now before a decision deadline. If it is not rejected by the 11th of March, then the ETF is automatically approved.
The two commissioners, Michael Piwowar and Kara Stein were profiled for CCN earlier this week. Piwowar probably leans towards approval. Stein is less certain, but as Piwowar is acting chairman, his decision would prevail. It is more probable, however, they will either both approve, reject or if they are split then allow the deadline to pass and thus default approve the ETF.
Prediction Markets have now moved to almost equally split, leaning slightly towards approval, with bets giving the ETF a 51% chance of approval at the time of writing. At one point, it reached a 70% chance of approval.
They can be gamed and there would be good reasons to do so in this case, but, as the deadline nears the chances of approval might increase.
Analysts are predicting stratospheric price rises if the ETF is approved, with some targeting a price of more than $3,000 per bitcoin. Hundreds of millions are expected to move in during the first week of trading as stock investors diversify with bitcoin – a unique asset which does not correlate with anything else.
Piwowar has recently made some comments which appear to be directed towards the bitcoin ETF, including a mention of uncorrelated assets. In a speech at the “SEC Speaks” conference six days ago, Piwowar states:
“In my view, there is a glaring need to move beyond the artificial distinction between “accredited” and “non-accredited” investors. I question the notion that non-accredited investors are truly protected by regulations that prevent them from investing in high-risk, high-return securities available only to the Davos jet-set.”
In further comments, which seem to indicate the commissioner is in favor of approving the ETF, Piwowar states:
“By holding a diversified portfolio of assets, investors reap the benefits of diversification. That is, the risk of the portfolio as a whole is lower than the risk of any individual asset. The correlation of returns is the mathematical key. When adding high-risk, high-return securities to an existing portfolio, so long as the returns from the new securities are not in perfect positive correlation with the existing portfolio, investors may reap higher returns with little to no change in overall portfolio risk. In fact, if the correlations are low enough, the overall portfolio risk can even decrease.”
Kevin Lu, a hedge fund analyst, concludes in a detailed article for Seeking Alpha:
“Bitcoin is a unique, uncorrelated asset class that is not strongly affected by the macroeconomic factors that drive most asset classes. There are extremely few assets that are this uncorrelated with other assets and that makes bitcoin extremely desirable from a portfolio construction perspective.”
The commissioner has probably read that article and appear to be referring to it, but we won’t know for certain until a decision is made or the deadline passes. For now, the market is trying to place their bets as well as price in a potential approval.
Bitcoin Surpassed Gold Parity – image from cryptowatch
The currency has broken its all-time high while retaining value at current levels for some time. Benefiting from monetary mismanagement by authorities across the world during the second half of last year, its adoption has increased with bitcoin’s market cap now a hairbreadth away from $20 billion.
Gold has also increased during this year after reaching a low of $1,122 as some apparently began diversifying to bitcoin. For much of 2016, the two appeared to be inversely correlated, but began increasing at the same time this year. Gold, however, has fallen in value by $20 over the past 4 days.
Gold’s Price – image from tradingview
The main reason for bitcoin’s current rise is probably due to the much-anticipated Bitcoin ETF. Only nine days to go now before a decision deadline. If it is not rejected by the 11th of March, then the ETF is automatically approved.
The two commissioners, Michael Piwowar and Kara Stein were profiled for CCN earlier this week. Piwowar probably leans towards approval. Stein is less certain, but as Piwowar is acting chairman, his decision would prevail. It is more probable, however, they will either both approve, reject or if they are split then allow the deadline to pass and thus default approve the ETF.
Prediction Markets have now moved to almost equally split, leaning slightly towards approval, with bets giving the ETF a 51% chance of approval at the time of writing. At one point, it reached a 70% chance of approval.
They can be gamed and there would be good reasons to do so in this case, but, as the deadline nears the chances of approval might increase.
Analysts are predicting stratospheric price rises if the ETF is approved, with some targeting a price of more than $3,000 per bitcoin. Hundreds of millions are expected to move in during the first week of trading as stock investors diversify with bitcoin – a unique asset which does not correlate with anything else.
Piwowar has recently made some comments which appear to be directed towards the bitcoin ETF, including a mention of uncorrelated assets. In a speech at the “SEC Speaks” conference six days ago, Piwowar states:
“In my view, there is a glaring need to move beyond the artificial distinction between “accredited” and “non-accredited” investors. I question the notion that non-accredited investors are truly protected by regulations that prevent them from investing in high-risk, high-return securities available only to the Davos jet-set.”
In further comments, which seem to indicate the commissioner is in favor of approving the ETF, Piwowar states:
“By holding a diversified portfolio of assets, investors reap the benefits of diversification. That is, the risk of the portfolio as a whole is lower than the risk of any individual asset. The correlation of returns is the mathematical key. When adding high-risk, high-return securities to an existing portfolio, so long as the returns from the new securities are not in perfect positive correlation with the existing portfolio, investors may reap higher returns with little to no change in overall portfolio risk. In fact, if the correlations are low enough, the overall portfolio risk can even decrease.”
Kevin Lu, a hedge fund analyst, concludes in a detailed article for Seeking Alpha:
“Bitcoin is a unique, uncorrelated asset class that is not strongly affected by the macroeconomic factors that drive most asset classes. There are extremely few assets that are this uncorrelated with other assets and that makes bitcoin extremely desirable from a portfolio construction perspective.”
The commissioner has probably read that article and appear to be referring to it, but we won’t know for certain until a decision is made or the deadline passes. For now, the market is trying to place their bets as well as price in a potential approval.
Monday, February 27, 2017
Why Single-Family Offices Are Investing In Bitcoin To Diversify Portfolios
Single-family offices are investing in bitcoin as a way to diversify portfolios, according to Angelo Robles, founder and CEO of the Family Office Association, reported Russ Alan Prince, a contributor to Forbes who writes on wealth management. Single family offices are following hedge fund investors and institutional players in looking to bitcoin for asset diversification.
Prince, president of R.A. Prince & Associates, is one of several wealth management experts who has noted more people are considering bitcoin as a way to diversify investment portfolios.
Bitcoin’s Benefits
Bitcoin is not dependent on other assets in a traditional family portfolio, Robles noted. Hence, it offers asset diversification.
Bitcoin is also decentralized, meaning there are not any institutions controlling the currency. In addition, it is transparent because of blockchain technology, it is a fast way to transfer funds, and the transaction fees are diminutive.
Bitcoin does require understanding the risks involved, according to David Berger, chairman of the Digital Currency Council. He said bitcoin will either be a “grand slam” or it will crash, with plenty of volatility. Berger said he doesn’t see bitcoin as suitable for a family looking to preserve wealth. He sees it similar to high risk/high reward venture investments.
More single-family offices are investing in bitcoin and other decentralized, digital currencies, Berger agreed. He said some are choosing to invest in ventures that are developing the technology and infrastructure. He noted that the ecosystem for this new asset class is expanding rapidly.
Also read: Portfolio manager high on cash suggests bitcoin for diversification
Experts Weigh In
Chris DeMuth Jr., a portfolio manager at Rangeley Capital, has suggested investors optimize their cash holdings and put 10% of it in bitcoin. He noted in June that the implied future annual return for the stock market is negative, and the price-to-sales ratio globally is as high as ever.
Not all investment bloggers are encouraging people to invest in bitcoin.
Matt Thalman, a blogger for ino.com, a market trader website, recently blogged that he considers bitcoin to be unproven as an investment. He is concerned about the secrecy surrounding various aspects of bitcoin. He also thinks the cryptocurrency will continue to be volatile.
Prince, president of R.A. Prince & Associates, is one of several wealth management experts who has noted more people are considering bitcoin as a way to diversify investment portfolios.
Bitcoin’s Benefits
Bitcoin is not dependent on other assets in a traditional family portfolio, Robles noted. Hence, it offers asset diversification.
Bitcoin is also decentralized, meaning there are not any institutions controlling the currency. In addition, it is transparent because of blockchain technology, it is a fast way to transfer funds, and the transaction fees are diminutive.
Bitcoin does require understanding the risks involved, according to David Berger, chairman of the Digital Currency Council. He said bitcoin will either be a “grand slam” or it will crash, with plenty of volatility. Berger said he doesn’t see bitcoin as suitable for a family looking to preserve wealth. He sees it similar to high risk/high reward venture investments.
More single-family offices are investing in bitcoin and other decentralized, digital currencies, Berger agreed. He said some are choosing to invest in ventures that are developing the technology and infrastructure. He noted that the ecosystem for this new asset class is expanding rapidly.
Also read: Portfolio manager high on cash suggests bitcoin for diversification
Experts Weigh In
Chris DeMuth Jr., a portfolio manager at Rangeley Capital, has suggested investors optimize their cash holdings and put 10% of it in bitcoin. He noted in June that the implied future annual return for the stock market is negative, and the price-to-sales ratio globally is as high as ever.
Not all investment bloggers are encouraging people to invest in bitcoin.
Matt Thalman, a blogger for ino.com, a market trader website, recently blogged that he considers bitcoin to be unproven as an investment. He is concerned about the secrecy surrounding various aspects of bitcoin. He also thinks the cryptocurrency will continue to be volatile.
Saturday, February 25, 2017
'Buy Bitcoin,' PwC Fintech Director Tells Fordham Students
Representatives from each of the 'Big Four' global auditing firms were in attendance yesterday at New York's Fordham University to discuss blockchain in the capital markets.
There, members of Accenture, Deloitte, EY, KPMG and PWC joined blockchain startup ConsenSys to discuss the future of the industry and to provide career advice to students on the cusp of beginning their professional careers.
While no companies provided new insight into their public strategies, their off-the-cuff remarks shed light on how traditional financial institutions are becoming more comfortable with the increasingly nuanced technology.
When given an opportunity to address the crowd, Subhankar Sinha, a PwC fintech director, told students that the best way to get involved in the industry is to buy and hold bitcoin and ethereum.
Sinha told the crowd:
"Buy it with your own money. That will give you a tremendous dividend. You have to put yourself in uncomfortable situations. Have an open mindset.”
Positive predictions
Elsewhere, there was discussion about how the industry might evolve.
An introduction from Fordham professor Dr Frank Hsu outlined the history of blockchain, drawing analogies to the TCP/IP protocol – an internet technology developed in 1983, but that did not gain mainstream adoption until 1995.
"Using that framework, blockchain, started in 2008, should gain mainstream status by 2020," he said.
Panelist Chris Broderson, Capital Markets researcher at Accenture, focused on healthcare, stating that cryptographic technology will allow medical records to be easily stored and transferred via blockchain applications while also reducing fraud.
Finally, panelist Vanessa Grellet, an ethereum executive and chair of Nexus Impact Investing Group, predicted that blockchain will disrupt the legal, financial services and remittance industries.
She ended with an appeal to students: "Follow your passion, doing something you love, stick with something for two to three years to build expertise and knowledge in your field."
And stressing the passion that those in the industry have for the technology, panelist and EY financial services manager Mike Maloney said:
"Nobody gets in Twitter fights over Swift and ACH."
Image by Michael del Castillo for CoinDesk
There, members of Accenture, Deloitte, EY, KPMG and PWC joined blockchain startup ConsenSys to discuss the future of the industry and to provide career advice to students on the cusp of beginning their professional careers.
While no companies provided new insight into their public strategies, their off-the-cuff remarks shed light on how traditional financial institutions are becoming more comfortable with the increasingly nuanced technology.
When given an opportunity to address the crowd, Subhankar Sinha, a PwC fintech director, told students that the best way to get involved in the industry is to buy and hold bitcoin and ethereum.
Sinha told the crowd:
"Buy it with your own money. That will give you a tremendous dividend. You have to put yourself in uncomfortable situations. Have an open mindset.”
Positive predictions
Elsewhere, there was discussion about how the industry might evolve.
An introduction from Fordham professor Dr Frank Hsu outlined the history of blockchain, drawing analogies to the TCP/IP protocol – an internet technology developed in 1983, but that did not gain mainstream adoption until 1995.
"Using that framework, blockchain, started in 2008, should gain mainstream status by 2020," he said.
Panelist Chris Broderson, Capital Markets researcher at Accenture, focused on healthcare, stating that cryptographic technology will allow medical records to be easily stored and transferred via blockchain applications while also reducing fraud.
Finally, panelist Vanessa Grellet, an ethereum executive and chair of Nexus Impact Investing Group, predicted that blockchain will disrupt the legal, financial services and remittance industries.
She ended with an appeal to students: "Follow your passion, doing something you love, stick with something for two to three years to build expertise and knowledge in your field."
And stressing the passion that those in the industry have for the technology, panelist and EY financial services manager Mike Maloney said:
"Nobody gets in Twitter fights over Swift and ACH."
Image by Michael del Castillo for CoinDesk
Bitcoin Price Next Milestone: Beating Gold Permanently
The Bitcoin price could soon surpass gold’s on a permanent basis supposing they both continue with their current market performance.
Gold hit a three-month high of $1260 at the end of business day on Thursday, Feb. 23, as a steady flow of safe-haven demand from traders and investors continued worldwide while Bitcoin topped $1170 around the same time. Civic CEO Vinny Lingham, gives Bitcoin about a month or less to consolidateits price in the $1300 range.
It’s Trump, not China
A report says ongoing uncertainty and some anxiety regarding the new US president and his administration’s new and potentially aggressive policies continue to support the gold market. Similarly, the latest rally in the Bitcoin market has been described by an analyst at Lux Research Inc., Mark Bünger, as likely unconnected to China but rather to some of the policies of US President Donald Trump.
It is worth noting that the Trump factor is pinned on the documents - minutes of the Jan. 31-Feb. 1 session of the Federal Open Market Committee - released on Wednesday that shows that the Federal Reserve could be giving a strong indication that another interest hike could come sooner due to some of the changes brought by the new administration.
That Bitcoin has been going more mainstream as additional companies have now been accepting it as a form of payment, according to equity strategist at Miller Tabak, Matt Maley, on CNBC's "Trading Nation," will support its push to overtake gold.
The media hype trailing the all-time high record in the Bitcoin price has gone far and wide in the last few days. The noise is likely to reach even further than could be captured because a rise in the price of Bitcoin has been known to magnetize new users. Gold isn’t as new to court similar attention.
ETF factor, France uncertainty
There is a likelihood that the first Bitcoin exchange traded fund or ETF could be approved. When it does get the approval on March 11, Bitcoin has been tipped to gain value.
Also, Chinese Bitcoin exchanges which contribute significantly to the global trading of the currency have had some aspects of their operations restricted pending their upgrade of the KYC/AML system. A slight change in Bitcoin price is expected as soon as they resume full operation.
Global political uncertainty particularly in the case of France’s far-right candidate, Marine Le Pen, of the National Front Party, ahead of the coming presidential election is also key to determine if and when Bitcoin price will beat gold’s.
Gold hit a three-month high of $1260 at the end of business day on Thursday, Feb. 23, as a steady flow of safe-haven demand from traders and investors continued worldwide while Bitcoin topped $1170 around the same time. Civic CEO Vinny Lingham, gives Bitcoin about a month or less to consolidateits price in the $1300 range.
It’s Trump, not China
A report says ongoing uncertainty and some anxiety regarding the new US president and his administration’s new and potentially aggressive policies continue to support the gold market. Similarly, the latest rally in the Bitcoin market has been described by an analyst at Lux Research Inc., Mark Bünger, as likely unconnected to China but rather to some of the policies of US President Donald Trump.
It is worth noting that the Trump factor is pinned on the documents - minutes of the Jan. 31-Feb. 1 session of the Federal Open Market Committee - released on Wednesday that shows that the Federal Reserve could be giving a strong indication that another interest hike could come sooner due to some of the changes brought by the new administration.
That Bitcoin has been going more mainstream as additional companies have now been accepting it as a form of payment, according to equity strategist at Miller Tabak, Matt Maley, on CNBC's "Trading Nation," will support its push to overtake gold.
The media hype trailing the all-time high record in the Bitcoin price has gone far and wide in the last few days. The noise is likely to reach even further than could be captured because a rise in the price of Bitcoin has been known to magnetize new users. Gold isn’t as new to court similar attention.
ETF factor, France uncertainty
There is a likelihood that the first Bitcoin exchange traded fund or ETF could be approved. When it does get the approval on March 11, Bitcoin has been tipped to gain value.
Also, Chinese Bitcoin exchanges which contribute significantly to the global trading of the currency have had some aspects of their operations restricted pending their upgrade of the KYC/AML system. A slight change in Bitcoin price is expected as soon as they resume full operation.
Global political uncertainty particularly in the case of France’s far-right candidate, Marine Le Pen, of the National Front Party, ahead of the coming presidential election is also key to determine if and when Bitcoin price will beat gold’s.
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