From the Supply Side, Bitcoin Halving Doesn’t have a “Major Impact” But what about the Demand Side?

The halving is almost here.

Bitcoin block reward halving occurs once every four years. This third such event will result in the bitcoin emission rate cutting in half to 900 BTC per day from the current 1800 BTC a day.

However, there can only be 21 million bitcoin that will ever exist, the only major tradable asset with a supply cap. This helps bitcoin retain its purchasing power especially in a world where fiat currencies with unlimited supply are losing their value fast.

This halving is also the remainder of the leading digital currency’s hard money characteristics.

No major impact from only supply side

But the speculation around price is just as strong with people debating the decrease in emission rates tends to push bitcoin prices up because post halving there will be less sell pressure from miners. BlockTower explained in its latest newsletter.

“While this may have been true in the past due to the large amount of emission relative to outstanding supply, the reality of the current situation is that there is regularly $1b in Bitcoin volume and a decrease of $9m of sell volume is negligible on a day to day basis.”

“From a pure supply side look, the halving doesn’t have a major impact.”

But this reduction in new supply issuance combined with the stability of new demand will lead to “a steady upwards drift on price.”

Search interest on Google for the term “bitcoin halving” has already jumped to its all-time highs.

What happened the last two times?

After leading 2019, the best performing asset class in 2020 with over 30% returns, bitcoin is beating gold and Treasuries that are up an impressive 21% and 13% gains respectively.

According to Fundstrat’s Tom Lee, the upcoming halving along with the macro investor Paul Tudor Jones buying bitcoin are “a solid set of tailwinds.”

Historically, halving has resulted in bull runs. In 2012, pre-halving, bitcoin price jumped 663% and post halving it gained over 3400%.

Before the second halving, BTC spiked 383% and post halving, the returns were of 4,080%. However, during the last 2016 halving, the price of bitcoin remained steady for over a month which was followed by a strong correction. The bull run didn’t come two months after that.

This time, Bitcoin has rallied over 340% since December 2018 bottom. But these low returns could actually be a good thing as analyst Rekt Capital pointed out, “if bitcoin rallies less pre-Halving, then it will rally more post-Halving.”

Moreover, most of the exponential growth actually occurs after the halving.

“The bitcoin halving is a key catalyst to beginning a new Bitcoin bull market,” and BTC “rallied between 12,000%-13,000% in each of its halvings to date,” noted the analyst.

On the other hand, although the reduction in supply is relatively negligible, halving is working as a strong marketing tool for bitcoin because of being in stark contrast to the greatest monetary expansion experiment in history.

“With much of the world staring down the barrel of potential inflation, currency crisis (such as in Lebanon) and global instability — this becomes an undeniably attractive opportunity to take a look at a truly scarce asset as a hedge.”

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Author: AnTy

Economist: BTC Needs Scaling to Have An ‘Impressive’ Price; Market Says That’s BCH, Not ETH

The price of Bitcoin is currently trading at $6,200, down 3.40% in the past 24 hours and almost -14% YTD.

In October 2017, it was the first time that Bitcoin price jumped to $6k, after 8 years. But for economist Jeffrey A Tucker, Bitcoin at $6,000 isn’t impressive. He argued that scalability would have done great things for the flagship cryptocurrency.

This tweet from Tucker came after last month, the AIER Editorial Director said, “Adoption hasn’t gone far enough and it hasn’t come into consumer use like it should and would have if it had been able to scale. Now we’re seeing what happens when Bitcoin was not properly scaled.”

Ether says Look at us

Tucker’s comment prompted a response from the second-largest network Ethereum co-creator Vitalik Buterin who asked him to look into Ethereum 2.0’s sharding, a scaling feature.

“High scalability but without the centralization that relying solely on increasing block sizes to a very high level would entail,” said Buterin.

But the community wasn’t really impressed with Buterin butting in with his scaling solution as Adamant Capital’s Tuur Demeester said, “I’ll believe it when I see it. Sharding is an unproven invention that has been promised by the Ethereum founders since 2014.”

Buterin’s Ethereum prompt not only got the bitcoin community calling out “LOLs” and “April Fool’s” but BSV’s Calvin Ayre saw this is as an opportunity to voice his opinion that “Eth is a waste of time as it does not scale and is evolving towards being an illegal security with proof of Stake” and promoting BSV with “Original Bitcoin BSV is the only one that scales and is legal. There is NO centralization from on-chain scaling.”

Scaling doesn’t matter for price

While Tucker is of the opinion that scaling would push the Bitcoin price higher, Bitcoin enthusiasts pointed out how that isn’t the case, at all.

Well, gold is a good example as on-chain analyst Willy Woo said, “Gold is $9T. How many transactions per second does gold do? I mean shipping the underlying between vaults. That’s BTC main chain. The swaps we do on ETFs and derivatives is Gold’s layer 2. That shit scales, so will BTC’s layer 2.”

When it comes to price, bitcoin is well on its way to new all-time highs as the stock-to-flow model depicts.

“Bitcoin has been scaling tremendously well, beyond my greatest expectations. I’m extremely fortunate to be alive to witness it, said Michael Goldstein, a bitcoin maximalist and President of the Nakamoto Institute.

Contrary to Tucker, Bitcoin core developer Luke Dashjr said, “Bitcoin may fail because we didn’t reduce block sizes sooner. The longer we wait, the greater the danger.”

According to him, the market is already flooded with “pyrite,” fool’s gold.

Also, not to forget that the second layer on the Bitcoin network, Lightning Network already enables cheaper and fast transactions. But per Tucker, “it’s just in practice hard to be “excited” for four years.”

Well, BCH has Scaling, look at it!

Well, Tucker doesn’t need to imagine it as the community pointed him towards Bitcoin Cash (BCH) which got scaling but its price is around $200.

As per Vijay Boyapati, “the market massively discounts what you consider ‘proper scaling’ and greatly values immutability, the most important property of Bitcoin.”

Also, “In 1 week, BCH block subsidy is going to be worth far less than BTC transaction fees (currently ~0.25 BTC). How does that make you feel?,” pointed out network engineer Melik Manukyan.

But according to Tucker Bitcoin cash never had the network that Bitcoin had and people need to “think dynamically not statically.”

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Author: AnTy

Ultra Bullish on Gold and Crypto After USD Liquidity Squeeze: Popular Trader

  • Gold is almost back to its highs. Time for Bitcoin to get on its horse and ride
  • USD on longest winning streak since 2012

After yesterday’s jump above $6,600, today Bitcoin surged yet again to almost $6,900. From yesterday’s lowest level of about $5,700, the world’s leading cryptocurrency has jumped 20.4%.

Not just bitcoin but global markets also rose on the optimism of a strong US response. European stocks rose broadly while Asia stocks recorded similarly strong performance with the futures market suggesting Wall Street would open strongly as well on Tuesday.

Markets have been reacting to the Federal Reserve’s unlimited QE on Monday. Other markets also signaled improved investor confidence as the price of the 10-year Treasury bond fell, sending yields higher. Gold prices soared over 4% to $1,603.78 an ounce.

With “everything on the table” USD Soares

The US dollar initially slipped after the Fed announced fresh measures to supply liquidity into the funding markets but it is back on course for a 10th day rising, the longest winning streak since 2012.

greenback-perfect-10
Source: Bloomberg

“Given the big picture view, the dollar is still in a fantastic position that will be difficult to dethrone, no matter what people say,” said the chief executive officer at Eurizon SLJ Capital.

The dollar continues to rise while the Fed has basically announced an unlimited money supply to help the markets. Fed President James Bullard who recently suggested unemployment could reach 30% and GDP could fall 50% also said, “everything is on the table.”

In the recent interview, President of the Federal Reserve Bank of Minneapolis Neel Kashkari said there is “an infinite amount of cash at the Federal Reserve” further clarifying, “That’s the authority that (Congress has) given us: to print money and provide liquidity into the financial system.”

Biggest Argument for Bitcoin

And this is the biggest argument for Bitcoin yet. “Think of it less in terms of the ‘price of bitcoin’ and more in terms of the ‘exchange rate between BTC & USD.’ Now consider what happens as the supply of bitcoin remains fixed (21M) while the supply of dollars becomes infinite,” said Bitcoin enthusiast Russell Okung, an NFL player.

And that’s why bitcoin enthusiasts, investors, and traders are extremely bullish on Bitcoin. “Bullish on USD liquidity squeeze and then I’m ultra bull on gold/crypto,” said pseudonymous former crypto trader Crypto Cobain.

In a world of zero percent interest rates and unlimited QE, trader Ledger Status believes, “Bitcoin the only one that’ll hit $100k in this race.”

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Author: AnTy

Analyst: BTC Trading like an Absolute Shitcoin; ‘Hedge Against a Mild Global Recession’

  • Since the Coronavirus outbreak internationally, “Bitcoin has been mirroring the stock indexes, almost exactly,” – analyst Mati Greenspan
  • Messari Crypto’s Qiao Wang says Bitcoin looks “depressingly correlated with S&P” and that biggest risk is “breaking the narratives”
  • “Bitcoin market not positioned for a down move?”

Yesterday, the US Federal Reserve announced an emergency cut of 50 basis points for the first time since the 2008 recession. Although the stock market initially climbed up on the news, it soon fell. And bitcoin followed the stock market’s lead. Mati Greenspan notes,

“Bitcoin has been trading a lot like a risk asset lately and ever since the outbreak of Coronavirus made the leap from China into an international issue, Bitcoin has been mirroring the stock indexes, almost exactly.”

Bitcoin does react to events beyond the immediate industry

Over the past week, crypto-assets sold off in line with risk assets amidst the news of coronavirus spreading out of its epicenter China and its economic implications.

However, Coin Metrics notes that during the times when the need for liquidity is high, safe haven assets like gold and bitcoin can also be sold since liabilities, including margin calls and debt service obligations like interest and principal payments, can be paid only in fiat currency.

Bitcoin did register gains after Bank of Japan among other central banks said they would take all the necessary steps to stabilize markets which,

“Add to the body of evidence that BTC and the broader crypto asset market do react to events beyond the immediate industry.”

The crypto assets recorded sharp declines but forced liquidations on crypto derivatives exchange BitMEX and other futures exchanges “remain modest” which is in sharp contrast to the pattern we saw last year.

The biggest risk is breaking the narratives

Qiao Wang, Head of Product at Messari Crypto also noticed,

The fact that bitcoin has been trading like an “absolute Shitcoin” over the last couple of weeks, Wang calls for “hedging against a mild global recession” those holding large amounts of crypto.

Although it isn’t that bitcoin will necessarily get crushed by a mild recession, it would surely get affected as we have been seeing.

The biggest risk he said is “breaking the narratives (digital gold, halving rally, etc.) that took 10 years to form might set the entire industry back a couple of years.” However, he remains “incredibly bullish over a 5+ year time horizon.”

Futures market showing a grim picture

CME bitcoin volumes also share a similarly grim picture that says capital and focus is not on bitcoin currently. Bitcoin futures on the regulated platform have “collapsed” since the global market panic started.

Open interest and volume put/call ratio have also decreased to “historically low level” following the February expiry, notes Skew markets, questioning, “Market not positioned for a down move?”

Currently, bitcoin is trading around $8,760, up 0.08% in the past 24 hours. According to trader Nik Patel, the two possible scenarios for BTC price involves a sweep of yesterday’s low and a close above it or reclaiming today’s open at $8,757 with a tight SL at today’s low, expecting LOD to be in at that point.

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Author: AnTy

Increased Safeguards Is Needed For Crypto Growth As Nearly $10B Has Been Stolen: KPMG

  • Almost $10 Billion in Crypto Stolen by Hackers Since 2017
  • KPMG says the crypto market needs to improve security when it comes to digital assets, seeing the industry is currently valued at $245 billion and growing.

Ever since 2017, hackers have stolen over $9.8 billion in digital assets due to poorly written code or lax security, according to a KPMG report from Monday.

Furthermore, the accounting firm added that the adoption of cryptocurrencies like Bitcoin (BTC) and Ether (ETH) by institutional investors has increased competition amongst investors seeking to occupy a place in portfolios.

This competitive climate means that the safeguarding of tokens to be even more important than it used to be.

Institutional Investors Don’t Take Risks When It Comes to Owning Crypto Assets

The co-author of the KPMG report and co-leader of the crypto asset services at KPMG, Sal Ternullo, said that:

“Institutional investors especially will not risk owning crypto assets if their value cannot be safeguarded in the same way their cash, stocks and bonds are.”

Coinbase Inc., Intercontinental Exchange Inc, Fidelity Investments and Gemini Trust Co. are the first companies to ever offer crypto custody services. Just like a type of bond or cash, cryptocurrencies are bearers instruments, which means they’re owned solely by the bearer.

What is actually being held is a dedicated private key, which consists of a string of characters from a digital wallet or a piece of paper.

If the paper or the key is lost/stolen, the asset is lost. For this reason, key custody represents a challenge for firms that have been offering traditional financial services until now.

KYC and AML Rules to Be Abided By

This is what the KPMG report adds:

“As crypto-assets proliferate, custodians have a tremendous opportunity to profit — both by earning management fees for delivering straightforward custodian services, and also by offering adjacent services only possible in the emerging crypto ecosystem.”

It’s important for the industry to create stricter rules when it comes to storing cryptocurrencies, the accounting firm adds. Much like with other financial transactions, brokers and banks need to respect the know-your-customer (KYC) and anti-money laundering (AML) laws.

According to KPMG, even the already established financial institutions that have the most mature compliance programs have to reconsider the ways they’re offering security for crypto assets.

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Author: Oana Ularu

4,040 ($37.7 Million) Bitcoin to Be Auctioned by US Marshals On February 18th

The US Marshals Service is going to auction almost $40 million in Bitcoin (BTC) for the first time since 2018.

It looks like about 4.040 BTC are going to be auctioned, which is at the moment worth $37.7 million. The bidders will be able to register until February 12, the Marshals Service press release says. The auction will take place on February 18, as the same press release writes:

“The auction will take place during a six-hour period Feb. 18. Bids will be accepted by email from pre-registered bidders only.”

$200,000 Deposit to be Made by the Bidders

The bidders will be required to make a deposit of $200,000 before they are able to make a bid. If they lose their bids, they will get their deposit back. The BTC are to be auctioned in 4 lots of 40.54069820, 500, 1,000 and 2,500 BTC each. The last 3 lots will be split into blocks that will have their own BTC set.

The BTC Comes from Over 50 Administrative Legal Cases and Forfeitures

According to the Marshals website, the BTC for the auction come from over 50 administrative legal cases and forfeitures. Marshals have been auctioning BTC ever since 2015. Its most recent auction of 660 BTC was in November 2018, raising more than $50 million in auctions that year.

The US Marshals Service Handles Many Types of Assets

The US Marshals Service is one of the United States’ oldest law enforcement agency. It started functioning in 1789, when President George Washington made an appointment for the first 13 Marshals. It manages many types of assets, from real estate to cash, financial instruments, art, jewelry, vehicles, collectibles, antiques, even aircraft and vessels. What it does more precisely is handling the distribution of payments and proceeds to third parties and victims of crimes.

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Author: Oana Ularu

Will Starbucks Use Crypto To Manage Its SBUX Prepaid Cards? Korean Banks Feel The Threat

The coffee behemoth Starbucks wants to use crypto to manage their almost $1.6 billion in cash obtained through customer’s use of prepaid gift cards.

The Seattle-based company has over 30,000 stores all over the world. If it expands its asset management business, it’s going to become a fintech giant and a notable competitor for banks in Korea. At the moments, Starbucks is offering its customers prepaid cards in SBUX, allowing for the coffees to be taken in advance. It seems people who want coffee worth of $1.6 billion by using their gift cards are acting just like creditors who really put their trust in the company.

Starbucks Loaning Money Without Paying Interest

This strategy is a way in which Starbucks is loaning money without paying interest. As a result of problems with regulations and because it has to manage many fiat currencies, it’s only logical for the company to manage its huge loans in crypto.

SBUX Was Used as an Example for Multinationals

In April 2019, Gavin Brown, the founder of Blockchain Capital, has made the suggestion for multinationals to launch their own coins, just like Starbucks launched the SBUX prepaid cards. It’s not yet known if the coffee giant is going to issue a cryptocurrency or continue to rely on the already existing one.

However, it has been dealing with crypto for some time, as it has made a serious investment in Bakkt, the ICE-backed Bitcoin (BTC) exchange. The two companies have partnered up to work on a consumer app for making crypto payments to Starbucks.

Korean Banking Groups Alarmed

Many Korean banking groups have been alarmed by Starbuck’s decisions, and have described the company as their rival because it threatens the survival of banks on the financial market. Their fears are that Starbucks is going to stir things up for the conventional financial setting by offering customers prepaid gift cards, which cards haven’t yet been financially regulated. This is what Kim Jung-tai, the Chairman of Hana Financial Groups said about Starbucks:

“Technologies have allowed coffee companies like Starbucks to be our rivals. It will be fine to call Starbucks an unregulated bank, not a mere coffee company.”

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Author: Oana Ularu

Bitcoin Rallying Hard, Gold Rallying Hard – Not a Coincidence

  • Bitcoin price jumps to almost $8,470 with strong volume after Iran fired a dozen missiles at US bases in Iraq
  • “A very classic risk off,” as both gold and bitcoin price jump
  • Bitcoin’s re-accumulation bottom completed, $10,400 coming?

This week Bitcoin is making a lot of movement that has us at the level we were at in mid-Nov.

First, on Jan 3rd, Bitcoin jumped from $6,850 to well above $7,400. Now today we shot past $8,000 to nearly $8,470.

The first surge in price has been after a US airstrike killed Iran’s general Qaseem Soleimani. Now, this another jump in price came after Iran’s missile attack on US-led forces in Iraq on early Wednesday. This attack came hours after the funeral of the Iranian commander whose killing in a US drone strike has raised fears of conflict in the Middle East.

Gold and Digital Gold in “Clear Focus”

This has the price of gold soaring, hitting their highest since March 2013 at $1,603.73 per ounce, as per goldprice.org. “It’s a very classic risk off,” said Rob Carnell, Asia-Pacific chief economist at ING in Singapore.

As Mati Greenspan, founder of Quantum Economics says, “Gold rallying hard. Bitcoin rallying hard” is not a coincidence.

The jump in the price of gold and digital gold is viewed by investors as a safer asset in the time of political and economic uncertainty.

The data clearly points out that both Bitcoin and gold are in “clear focus” as tensions between the US and Iran escalate. As Bitcoin enthusiast Rhythm trader notes,

“This is one of the first times we’ve seen BTC trade w/ a correlation to macro headlines in ~2+ years (when it took a lot less $$). Correlation =/ causation but its enough to start a narrative around BTC as people enter the new year with 0 PnL and assess portfolio allocation.”

“Price and volume are everything”

Though prices have started to correct a bit, Bitcoin’s not as much as other assets. At the time of writing, BTC/USD has been trading at $8,334 up 5.49% as per Coincodex.

What’s good about these moves is the strong volume they are backed by. From last week, the trading volume has gone up from less than $200 million to $1 billion this week and currently $1.65 billion. Trader Scott Melker,

“Price and volume are everything. When price and volume rise together (like they are now), it is incredible bullish,”

“When price rises and volume decreases, watch out.”

People are currently very bullish as calls are trading more expensively, says trader Cantering Clark which means, “the market not currently looking very interested in hedging downside risk.”

Re-accumulation bottom completed, $10,400 Coming?

Amidst this bullish momentum, market analyst Benjamin Blunts says this is a critical level we need to watch out for to see if this is breaking of the trend or we go up in 5wave marking the bottom. However, he’s not shorting the market and is seeing $10,400 coming up.

According to analyst Willy Woo, a move up might be in order as while pointing to his previous tweet where he called for the market to have already hit the bottom in early December, this latest move up has him now noticing,

“One month later from this on-chain momentum switch, re-accumulation bottom completed. Daily candle closed just minutes ago and we’re above the bearish channel that held us for 6 months.”

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Author: AnTy

Nearly 70% Of BCH Hashrate is Controlled by Unknown Mining Pools, Is A 51% Attack At Risk?

  • BTC.top formerly controlled 15% of the hashrate, which has dwindled to almost nothing.
  • No information has come from Bitcoin Cash on how this user gained such substantial control.

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One of the biggest threats to the cryptocurrency industry is that of a 51% attack, which is the possibility that holding over half of the control of the blockchain. According to recent reports from CCN and data from Coin Dance, it looks like this threat is heavily present on the Bitcoin Cash network, as an unknown miner presently has 69.44% control of the hashrate.

Surprisingly, the miner has managed to take over the hashrate, despite the presence of more significant mining pools, like BTC.top and Antpool. Though BTC.top accounted for close to 15% of the total hashrate on the network last week, that percentage has essentially disappeared. Antpool’s mining presence dropped by 50%.

The takeover got the attention of a supporter of Bitcoin Cash, who posted the current circumstances to Reddit. The post showed followers that the last 24 hours have significantly changed Bitcoin Cash’s network, remarking, “They can’t be up to much good.”

Right now, there still has yet to be a lead on exactly what is going on within the network. However, there is clearly a chance that some major changes will happen that could change the course of the network, if this mysterious miner uses the power for evil, rather than for good.

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Author: Krystle M

Bitcoin Price Jumps 9.7% But All Patterns Point to the Same Thing

  • Bitcoin recorded a spike of almost 9.7%, going as high as $7,772
  • But we are still not out of the woods, the price can very well go in the low $6,000s
  • 10,000 BTC added to longs, an increase of 43% and pushing for the ATH levels
  • Wall Street also recording gains after the Dow lost 457 points on Tuesday

In a sudden move, Bitcoin jumped to $7,772 level on Bitstamp. The world’s leading cryptocurrency has been trading just around $7,000 after recovering from the drop to $6,500 on Nov. 25. We dropped to the lowest point in five days at $7,087 today only to jump $500 in a few minutes.

Currently, BTC/USD is trading at $7,464 with 24 hours gains of 1.84% as per Coincodex. The trading volume has also seen a slight increase to $414 million from less than $200 million earlier this week. The 7-day average real trading volume has been slowly trending upwards since October as well.

“The technical pattern does look more bullish but the fact that it was a spike that carried it over, rather than more gradual growth is a bit suspicious. Now we’ll need to see how it closes,” wrote Mati Greenspan, founder of investment firm Quantum Economics in his daily newsletter.

The crossover between the 50-week moving average ad the 100-week moving average has been forming this week which is typically a bullish signal.

If BTC closes above these two moving averages, a trend shift might be on the line but if not, $5,000 is the most likely area next. And then, we could be looking at a bottom early next year.

Interestingly, 10,000 BTC has been added to the longs in the last 10 days on Bitfinex, which is an increase of 43% and pushing for the ATH levels.

“The steady rise after months of sideways makes me wonder if this is a single party trying to DCA in heavy,” said trader Jonny Moe about these longs.

However, in notional value — currently at $257 million, the longs are far from 2017 high at $619 million, even 2019’s notional value peaked at $323 million.

Bitcoin price might have seen some relief but it isn’t a guarantee that bulls are back in the market.

“If we need to capitulate, I don’t think it will happen now. More probably we will retest key resistance 7860-8090, and upper boundary of channel,” said analyst and trader CryptoWolf.

To be bullish, he said Bitcoin needs to break above and close above the key resistance area at $7,860-$8,090. Analyst Benjamin Blunts sees us eventually going to $6,800 but not before we make a few more ups and downs that won’t break above $7,600 level. Moe has even a lower target — it’s in the low $6,000s.

Wall Street is also looking good following a report that the US and China are moving closer to agreeing on the number of tariffs to be rolled back.

After losing 457 points at one point on Tuesday following President Donald Trump talking about waiting until after the election before making a deal with China, the Dow Jones Industrial Average rallied Wednesday. Nasdaq and S&P 500 also pointed to sharp gains.

However, disappointing jobs data — data from ADP and Moody’s Analytics reported private payrolls rose by just 67,000 last month, well below the estimated 150,000 — had futures pare their gains.

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Author: AnTy