Immature Bitcoin Market Data Is ‘Garbage’ But It’s Sign of ‘Being Early’ – MicroStrategy CEO

Since first announcing bitcoin purchase in August and again in September, MicroStrategy CEO Michael Saylor had become a very vocal bitcoin supporter, a big change from seven years back when he thought its days were numbered.

Now, it is the ultimate hedge, according to him.

He constantly tweets about Bitcoin and how “it is an ark of encrypted energy to escape the currency flood.”

Recently, he talked about “The Long-Term Bull Case” for Bitcoin in an interview with Keith McCullough to convince Hedgeye CEO to “change his opinion of Bitcoin and join the cyber hornets.”

McCullough actually sold all his BTC earlier this month, just a couple of weeks before Bitcoin rallied 23% following Square’s $50 million investment, UK’s public listed Mode converting 10% of its cash reserves into BTC, and PayPal announcing buy, sell, hold, and shopping support for it.

“Bitcoin is an asset, not a commodity. Commodities are abundant and should be traded. Assets are scarce and should be owned. Pure monetary energy is the ideal treasury reserve asset, and for the first time in history, we can now own some,” is Saylor’s message to McCullough.

The “Garbage” Market Data

On Tuesday, he argued his Bitcoin investment by comparing it with Google and Apple investments.

“The thing with technology, Figure out the thing that is gonna eat the world, if you are right, own it, hold it and wait,” said Saylor.

In the current environment, bitcoin is the choice when the monetary expansion is expected to double, he said. Adding that the Federal Reserve has crowded everybody out of Treasury and debt with yield being effectively zero, which has been “stampeding investors into a store of value.”

As a matter of fact, Apple has been more volatile than bitcoin in the past three months, said Saylor. This has been because while monetary stimulus has been debasing fiat currencies, it has been pushing the stock market to new highs.

He particularly talked about the market data during the interview, which he argued is just “garbage.” The trading volume figures of the bitcoin market, according to him, are widely inflated as he challenged Bitcoin’s $25 billion volume to Apple stocks’ $24.76 billion.

“I know for a fact you can’t buy more than $35 million a day without people knowing, so there’s no freaking way there’s $24 billion trading,” Saylor said.

It isn’t even surprising, but a known fact as a 2019 report to the US SEC concluded that 95% of reported volume on crypto exchanges is actually fake.

According to Saylor, false market data is holding the leading digital currency back as it could erode trust in Bitcoin as an asset.

But on a positive note, Saylor said he “love[s] the fact that the data is a little immature” as it represents “the pain and the work of being first or being early.” But of course, the market “needs” high-quality data.

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Author: AnTy

Will Bitcoin’s Price Over the Next Two Weeks Set the Pace for September’s Bulls or Bears?

As we enter the last week of August, several traders opine that the Bitcoin price’s performance over the next two weeks will determine if the value will drop below $10,000 or a positive surge will go on.

The week’s candle comes at a time when CME’s Bitcoin futures, as well as Deribit’s options contracts, are set to expire. This has the potential of setting the tone of prices for September. More so on whether Bitcoin will end the month above or below various key levels.

Mohit Sorout, Bitazu Capital founding partner, states that $11,800 is a crucial level for Bitcoin. He argues that an upsurge to $11,800 is likely to “put sellers to sleep.”

There are only a few days before the end of August and the Bitcoin futures sector has remained cautious. The number of long contracts in the market is more than the short-sellers with Bybt showing that longs are 53.36% of the total futures market. This indicates that traders are highly cautious and that a couple of scenarios might happen in September.

Bullish Short-term Scenario

In order for Bitcoin to continue with its upward trend in the short-term, traders state that Bitcoin’s price needs to trade above the $11,800 level. If this was to occur, traders forecast that Bitcoin is likely to trade above $12,500. Consequently, others believe that if Bitcoin trades between $10,900 and $11,500, then a bullish scenario is likely in the short-term.

Nunya Bizniz, a crypto analyst, explains that if monthly candle structure at the moment was to follow the previous ones, then a newfound bull run is likely in the short-term.

Bitcoin’s Stagnation Scenario

An alternative scenario, as advanced by some investors, is that the leading cryptocurrency may experience several months of low volatility or price remaining stable before a significant price surge. 10T Holdings co-founder, Dan Tapiero, explained that each price cycle has taken about 800 to 1,100 days for it to be complete. At the moment, the current cycle is not even 400 days old which means that Bitcoin’s price is likely to stagnate in the next one year. He said:

“Each upcycle takes longer to play out and is less extreme as absolute dollar value gets much larger. May or may not be another 6-12 months before price breaks up. It should not matter as the end price point obscenely higher. Holders rejoice.”

Historically, September has been a slow month for the crypto market, and as expected traders have mixed opinions on the next move for Bitcoin.

What’s your opinion on the next price move for Bitcoin? Let us know in the comments section.

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Author: Joseph Kibe

Bitcoin Rules the Macro & Poised to Attract More Traditional Equity Investors

August is coming to an end, and hopefully, it will end Bitcoin’s ranging.

This month started on a good note as July saw the largest digital asset breaking above the key levels, moving from $9,000 to $12,000.

But August remains within $11,000 – $12,000, for the most part, and is now looking to end the month right around where it started it.

Trading under $11,500, bitcoin is managing just over $1.3 billion in ‘real’ trading volume. BTC ranging meanwhile is good for altcoins.

LINK is back on the move and up 5.58% while Cardano, Monero, and EOS are recording greens of over 3%.

Other gainers include NEM (25%), Siacoin (17%), Waves (10.71%), BTT (9.68%), and NEO (7%).

DeFi meanwhile is on their own trajectory of explosive gains.

For starters, YFI has broken above Bitcoin’s ATH to well nearly $25,000. Tendies is trading above $1 with 33% gains and Ampleforth 26.8%.

Against BTC, almost every DeFi token has surged in the past year, last 90 days, and in the past month.

2020 is all about DeFi.

The Macro of it

In the macro world, the stock market is also enjoying an uptrend.

All the market trends this year have been affected by the central bank policies in its attempt to prop up the economy battered by the pandemic. In response, the Federal Reserve dropped the interest rates to virtually zero and started printing money by adopting quantitative easing.

However, in expanding its balance sheet as a percentage of GDP, the Fed is nowhere near the Swiss National Bank and Bank of Japan, though it has surpassed the Bank of England and is making efforts to catch up to European Central bank.

This has US stocks making new highs, with S&P 500 surging over 3,500, up 3.6% from the February high. The equity market still recorded just 7.7% returns YTD.

In comparison to SPY, although bitcoin is still down 42.5% from its ATH, it is up 56.46% in 2020 so far.

Tech dominant Nasdaq had an amazing year, which is up 28.6% but Dow Jones industrial average remains in the red by 0.74% YTD.

Coming onto the precious metals, gold broke the 2011 peak to surpass $2,000, with over 29% returns in 2020. But it was silver that rallied the hardest, 52.7%, and left everything behind.

The US Dollar index meanwhile has been losing its strength since mid-March and is down by 4.65% YTD.

This week, Fed Chairman Jerome Powell also shared that they will let the inflation run above its 2% target and plans to keep interest rates low.

“Crypto discourse has been objectively dominated by the likely bullish nature of this decision for BTC and the rest of the asset class. Traditional equity investors are speculated to continue to want to look elsewhere to invest their capital, and alternative means of currency like Bitcoin, Ethereum, and precious metals should (at least in theory) benefit,” noted Santiment.

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Author: AnTy

Brazilian Central Bank Task Force To Study CBDC Issuance and Impact

The Central Bank of Brazil on 21st August announced that it will be setting up a world-wide study group to research the issuance of central bank digital currencies (CBDC). The central bank, in its official statement, noted the growing impact and adoption of digital assets, especially CBDCs.

The new study group will look into various aspects of digital assets and how it can help in the economic uplifting of citizens while ensuring to mitigate all risks associated with digital assets.

The main intention of the study will be to improve commercial transactions between public and private entities, along with improving international or cross-border remittance services. Some of the critical areas of this worldwide CBDC Study include,

  • Scope
  • Societal benefits
  • National challenges

The study group tasked at looking into different aspects of CBDC will also study the security vulnerabilities involved with these digital assets like data protection and regulatory compliance risks involved.

CBDCs have been a priority for many countries, especially after China’s aggressive approach towards blockchain and the launch of its native CBDC. Most of the countries are quite receptive to blockchain technology despite being critical of cryptocurrencies. This is the reason most of the countries are looking for ways to launch their own CBDC.

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Author: Rebecca Asseh

62k Bitcoin Options Expiring This Week with Institutional Investors Short-term Bearish

As we enter into the last week of August, it’s time for bitcoin derivatives to expire.

This week, 62,000 BTC worth about $730 million of Bitcoin options will be expiring on Friday.

June’s $1 billion bitcoin derivatives expiry was a non-event for the price of the digital asset. Now, it’s to be seen how the market will fare this time.

As we reported, open interest on bitcoin options has grown six-fold since the beginning of 2020 to $2 billion, last seen around July expiry.

Given that about a third of these will expire, it isn’t expected to have much of an impact on the market.

Deribit, which accounts for 80% of the bitcoin options market, has 46.6k BTC to be expired this week, but about 60% of them are out for the money and have no intrinsic value, as such reducing the selling pressure further.

When it comes to bitcoin futures, which will also be expiring this week, the open interest on them climbed to its all-time high of $5 billion last week.

The point worth noting is that CME data shows “institutional investors are short-term bearish.”

The number of leveraged funds longs has fallen 10.6% from their all-time high in the last two weeks, while the number of leveraged funds shorts rose 10.3%.

“This trend, reflecting net shorts, shows a lack of institutional confidence in Bitcoin’s short-term price growth,” notes OKEx.

The Bitcoin futures market is actually in contango with 3-months futures contracts at a 9% annualized premium.

However, the Bitcoin futures price at CME currently is at the same level as the spot market, unlike last week, which has been trading at over 1% premium.

This week has another major event, bigger than the expiration of the derivatives happening. The macroeconomic event coming this Thursday is Federal Chairman Jerome Powell’s speech about the inflation target at the Jackson Hole Forum, which is expected to affect bitcoin, gold, and the stock markets.

While BTC started on a positive note today to reach $11,800, the market sentiment remains of “extreme greed,” which has been ruling the market through this month.

The yellow metal also spiked 1.5% only to move back down to $1,940; meanwhile, the US Dollar index is uptrending.

S&P 500, on the other hand, is enjoying the gains by opening higher and continuing to make new highs — currently up over 1% from the ATH hit in February. Nasdaq also hit a new peak, a whopping 16.5% higher than pre-March crash levels.

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Author: AnTy

Institutional Investors Gobbling Up More Bitcoin Than Being Mined This Month

Even since Bitcoin entered August, the price has taken to test the $12,000 level after successfully breaching the key levels, $10,000 and $10,500 last month.

But so far, the digital asset hasn’t been able to sustain above $12k despite breaking above it twice, resulting in a crash afterward. We are now back to trading around $11,500.

While the price has taken a breather here, people are not passing this opportunity to buy the dips.

In the past two weeks, Grayscale Investments added 14,422 BTC to its bitcoin product Grayscale Bitcoin Trust (GBTC). Although the real BTC purchased might not be this high given that these figures are based on the outstanding shares created by Grayscale’s institutional clients which involve “in-kind” purchases as well, there is some level of activity going on, for sure.

Interestingly, Grayscale Bitcoin Trust saw its value increasing by $1.6 billion in the first half of 2020. The number of BTC held in the GBTC fund grew from 261,192 to 386,723.

In total, Grayscale has $5.6 billion in assets under management.

The Big Names

Besides Grayscale, the first publicly listed billion-dollar company MicroStrategy dived in Bitcoin. As we reported, within a fortnight of announcing in its Q2 2020 earnings call, the company bought 21,454 BTC, to replace cash in its balance sheet as a reserve asset. Arcane Research noted,

“To put that into context: MicroStrategy just bought the next 23.8 days of new bitcoin supply.”

The company shared in its official announcement that they see bitcoin as digital gold and a superior asset class with the potential for incremental returns. The decision to invest in bitcoin was taken in the light of ongoing currency debasement because of the unprecedented money printing, quantitative easing, and the lack of yield.

Going with Bitcoin for treasury management purposes resulted in the company’s market cap increasing by 11% “relative to the straight fiat cash exposure.”

Interestingly, the largest asset manager in the world, BlackRock, and largest mutual funds provider Vanguard together own 25% of MicroStrategy.

More Demand than Supply

This demand actually outstrips the supply of Bitcoin which has been 900 BTC per day since the halving.

In these past two days, while Grayscale and MicroStrategy combined bought 35,876 BTC, only 12,594 BTC were mined during this period, showcasing the growing demand for this “alternative” class as an inflation hedge.

Institutional interest in Bitcoin is strong as we have been seeing throughout 2020. As of June, about 90% of North America’s cryptocurrency transfer volume came from professional-sized transfers, those above $10,000 worth of digital assets, as per Chainalysis. The report states,

“Over the last two years in North America, we’re seeing the impact of a growing class of institutional investors whose transfers account for the growing dominance of professionals in the North American market since December 2019.”

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Author: AnTy

Bitfinex Offers $400M Reward For Info on 120k BTC Stolen in 2016; Hackers Can Collect Too

On August 2, 2016, Bitfinex experienced one of the biggest crypto heists of all time, as hackers exploited the system, running off with approximately 120,000 BTC. Shortly after, the price of BTC collapsed to 20% marking one of the darkest days in the top coin’s history. Now the exchange wants to clear this dark day in history with a $400 million dollar reward to the hackers if the full amount is recovered.

In a blog post on their website, four years later the exchange is offering anyone who will help them recover the Bitcoins a hefty 5% reward for the amount recovered. The statement reads,

“Bitfinex is offering a reward to any persons that connect us with hackers responsible for the unauthorized transfer of almost 120,000 bitcoins from the exchange in August 2016. As part of the same initiative, Bitfinex is also offering a reward to the hackers themselves for the return of the stolen property.”

The exchange is also ready to offer the hackers 25% of whatever amount is recovered (at the current BTC prices) which would translate to a total of 30% for the full reward. The 119,755 BTC currently trade for $1.3 billion at market prices, and a $403 million reward if the full stash is recovered.

The U.S government in 2017 recovered 27 Bitcoins in an investigation but the rest remains with the hackers.

Bitfinex claims they will ensure the process is safe and private enough with the identities of the hackers (if known) will remain uncovered. The statement reads,

“We will work to ensure this can be done safely, thereby protecting the identities of all parties, and Bitfinex reserves the right to impose conditions on any transfers in order to verify claims and ensure a secure process.”

April 2019 marks the first time the hacker moved the stolen BTC with 300 BTC, then trading at $1.5 million, moving into 13 new addresses. In May this year, the hacker moved $255k, or about 29 BTC to another unknown wallet keeping the identity a mystery. On the week leading to the fourth anniversary of the attack, Aug 2, the hacker moved of $12 million in BTC, Whale Alert reported – $7 million transferred on August 3 while the remaining $5 million was moved on July 29.

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Author: Lujan Odera

Ethereum 2.0 Final Testnet, Medalla, Rolls Out; Is A 2020 Launch Now In Sight?

The Ethereum 2.0 Phase 0 Medalla public testnet finally went live on August 4, 2020 at around 1AM GMT giving hope of a possible ETH 2.0 mainnet launch this year. News coming in to BEG desk, confirms all five named client implementations have successfully synced to the Medalla testnet including Prysmatic Labs’ Prysm, ChainSafe’s Lodestar, PegaSys’ Teku, Status’ Nimbus and Sigma Prime’s Lighthouse.

Over the past two years or so, Ethereum developers have launched testnets with an aim to improve the development towards ETH 2.0. The Medalla testnet, the fifth and final official testnet in the transitioning of Ethereum to a proof-of-stake (PoS) network, is the only public test net so far.

The launch follows previous releases of the Sapphire testnet, when developers tested the validators by depositing 3.2 ETH. The Topaz testnet, released by Prysmatic Labs, introduced the full 32 ETH validators fee and in June, the Ethereum community introduced the Onyx testnet to boost the number of validators to 20,000.

Finally, a coordinated multi-client testnet dubbed Altona went live in early July to ensure further stability before the Medalla testnet could be rolled out this month.

A slight bump in the road

According to the Beacon chain, ETH 2.0 staking explorer, the Medalla testnet launched at Epoch 0 with 20,084 validators on board with over 640,000 ETH staked on the platform. Despite the successful launch, the platform faced a challenge with only 57% of validators available, presenting an issue in block finality.

However, Ethereum Foundation’s, Hudson Jameson said on Twitter, the low count in validator participation offers a learning moment for the upcoming ETH 2.0 mainnet launch. He wrote,

“We are getting to experience firsthand how the network operates with a low number of validators and how it will improve as more validators come online! This is what testnets are for and I’m excited to see the situation develop as we get more folks online on the testnet. Get hype. Eth2 is coming :)”

The low participation levels is mainly caused by the people who staked the 32 ETH but are not online to validate the blocks. This issue is set to be settled out with these validators expected to be thrown out in order for the Medalla testnet to reach the optimal 80% validator participation threshold.

The Medalla testnet, a Spanish name for medal, is similar to the final testnet of ETH 1.0, labelled Olympic testnet, which gives a possibility that the ETH 2.0 mainnet launch could be completed later this year despite earlier predictions of a 2021 launch.

More developments on the story to follow.

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Author: Lujan Odera

Flash Crash Caused Serious Network Congestion for ETH, ETC, And ERC 20 Tokens on Coinbase

On August 1, the Ethereum’s blockchain faced a spike in network transaction fees, causing a backlog in transfers across several exchanges. Coinbase and Binance, two of the largest cryptocurrency exchanges, saw hundreds of transactions jammed, leading to trading delays. In a blog post by Coinbase, during the fees peak, at 11 pm PST, a total of 559 transactions, deposits, and withdrawals were delayed.

The post reads:

“Starting at 9:45 pm PST, 559 transactions were delayed. The backlog of transactions started clearing 15 minutes after the peak of the fee spike and was fully processed in 110 minutes.”

Coinbase ETH Fees
Source: Coinbase

What Caused the Network Clog?

On the Ethereum blockchain, all transactions are charged a fee that is paid to miners that verify and confirm transactions. This network fee is determined by the variable demand for fixed processing capacity whereby when there is a significant demand, fees will rise and fall when demand is low.

The clog started at about 9.45 pm PST, causing a delay across the ETH and ERC20 tokens with the average delay spiking at 11:30 pm PST at 105 minutes.

Trading remained stable through the clogging moment, with only deposits and withdrawals affected. As of now, Ethereum Classic remains in the status of ‘degraded performance’ on Coinbase.

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Author: Lujan Odera

Crypto Working Group to Release FATF Travel Rule Whitepaper Framework For Sharing User Info

Leading crypto exchanges will release whitepapers in August that will detail a collaborative approach towards complying with the FATF Travel Rule. It has now been one year since this rule came into action with a recent review to assess progress on compliance. While it emerged that most Virtual Asset Service Providers (VASPs) have yet to fulfill its requirements, this might soon change according to Coinbase’s CCO, Jeff Horowitz.

Speaking at the Global Finance Event last week, Horowitz confirmed that a project was indeed underway to ease the burden of compliance brought about by FATF guidelines. The anticipated whitepaper will introduce a framework that crypto exchanges can rely on to share data via P2P networks in a transparent manner. It will also highlight the ‘bulletin board’ which will be fundamental in the whole data sharing processes.

The board will allow network participants to share information such as addresses through a claim of the data by one of the parties. In doing so, the working group is optimistic that the participants will be able to share data via P2P networks as well as prevent hackers from compromising the ecosystem. Crypto news site, TheBlock, has since reported that other exchanges, including Bittrex, Kraken, and Gemini, are part of the group working on a solution to the FATF Travel Rule compliance.

Other Travel Rule Compliance Initiatives

The Travel Rule, which essentially requires any amount above $1,000 to travel along with the sender’s data, has undoubtedly put VASPs on toes to come up with cost-efficient solutions.

On this note, BitGo recently launched a Travel Rule compliance product through an extension of its internal APIs. The exchange’s clients have since been asked to provide additional information so that BitGo can, in turn, report this under the FATF guidelines as well as share the information with other VASP providers.

To make this possible, BitGo further upgraded its API’s to be compatible with the IVMS101 standard also launched to harmonize communication between VASPs for better compliance of the Travel Rule.

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Author: Edwin Munyui