Bad Crypto News of the Week
Bitcoin has spent the last week bashing away at that $10,000 ceiling without quite managing to break through—even as it gained more than 1.5 percent over the last seven days. Analysts have put the failure to rise into five figures down to three factors: a meeting of the Federal Reserve’s Federal Open Market Committee which suggested that the jobs market has hit bottom; the liquidation of $14 million worth of short contracts; and an ongoing market reluctance to accept a $10,000-plus price.
As the coin continues to tickle the $10,000 mark though one whale has decided to move more than 132,000 bitcoins. That’s about $1.3 billion. The move came in three transactions a minute apart. The identity of the whale remains a mystery but it’s likely to be an exchange or a custodial service.
Despite Bitcoin’s struggles against the ceiling, it’s still doing very nicely, thank you. New data shows that the coin has outperformed other markets this year, while statistician Willy Woo has crunched some numbers and found that a $1 investment in Bitcoin in 2009 would buy a luxury yacht today. The same investment in gold would have produced enough profit to buy a chocolate bar. So it’s bad luck if you invested in BTC instead of gold eleven years ago. You missed out on candy.
In other news, a 20-year-old in California has been charged with conspiracy to commit wire fraud. Richard Yuan Li has been accused of targeting 20 people in SIM-swap attacks and attempting to extort a New Orleans-based doctor and cryptocurrency investor.
Li won’t be appearing in Blockchain Heroes, a new digital trading card series now in development by Joel Comm and Travis Wright, hosts of the Bad Crypto Podcast. The non-fungible tokens will present 50 blockchain personalities as superheroes. Comm and Wright aren’t revealing their identities but they’ll include Lady Lightning, Captain Currency, and Data Avenger.
Some cryptocurrency traders in China could do with a superhero right now. Local law enforcement has frozen the bank accounts of 4,000 traders in a crackdown on money laundering. Innocent traders can ask nicely for their accounts to be restored.
Germany is doing better. The Deutsche Borse Exchange will list a Bitcoin-backed security later this month. The exchange-traded product comes from investment firm ETC Group and will list on the Xetra market.
And if the thought of a Bitcoin-backed ETC whets your appetite then you can slake your thirst with some Coca Cola—at least in Australia and New Zealand. More than 2,000 vending machines there now accept Bitcoin—but only Bitcoin, although there are plans to expand into other coins. That’s just as well because Prysmatic Labs is moving ahead with the launch of a new test network for Ethereum 2.0.
And finally, after getting walk-on parts in The Social Network, the Winklevoss twins are finally getting a movie of their own. Bitcoin Billionaires will explain how they turned their $65 million lawsuit settlement with Mark Zuckerberg into a billion-dollar crypto-fortune. And Bitcoin can’t even bust $10,000.
Check out the audio version here:
Joel Comm is an internet pioneer, New York Times best-selling author, futurist speaker and co-host of The Bad Crypto Podcast. That’s a fancy way of saying he writes words, says things and loves to play with cryptos.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Gavin Andresen – CoinDesk
How an Art Collective Is Using Blockchain to Protest Police Brutality
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Bitcoin Bears Be Warned: Grayscale’s Trust Is Hungry For BTC
PARIS, FRANCE – FEBRUARY 01: In this photo illustration, a woman dressed in a t-shirt with … [+] cryptocurrency logos shows a visual representation of the cryptocurrency Bitcoin on February 01, 2018 in Paris, France. Cryptocurrencies including Bitcoin, Ethereum, Ripple, Litecoin, Dash and Monero have seen unprecedented growth in 2017, despite remaining extremely volatile. The fall in the price of major cryptocurrencies seems to be confirmed this week, after the piracy of the Japanese exchange platform “Coincheck” last week. (Photo by Chesnot/Getty Images)
Bitcoin has been on a roller coaster ride since the pandemic began. On May 11, block rewards for miners were reduced from 12.5 BTC to 6.25 BTC. This has put much pressure on low margin miners. The halving took place amid a historic recession and a BTC price plummet on March 12. Despite the digital currency’s recent volatility, Grayscale’s GBTC Bitcoin Trust has been buying the digital coin at a record pace.
Grayscale is a FINRA-approved investment vehicle that has bitcoin assets under management. Prior to the March 12 crash, it held more than 300,000 BTC. The trust has purchased 19,000 bitcoins since the halving. Bitcoin’s price has since rebounded to produce some of the best returns of all major assets in 2020. Here are developments in the mining sector and price.
Two competing participants
In a recent trend, automatic bitcoin purchase features have been implemented on Square’s Cash App. Bitmain spinoff Matrixport also implemented traditional finance concepts such as dual currency investment with exposure to the bitcoin and ethereum markets. There’s also Dip Hunter, a tool that allows for automatic purchasing of bitcoin at the lowest pricing.
One of the most salient developments since March 12 has been the dominance of spot leading the BTC price action compared to derivatives. It’s a healthy development for bitcoin. For example, the waterfall of cascading liquidations on the futures exchange BitMEX on March 12 drove bitcoin’s price down to below $4,000. It washed out the majority of open interest on bitcoin futures contracts.
The massive drawdown on March 12 spooked many crypto hedge funds, and some have become more conservative. This is represented by general Skew expensiveness and a flatter forwards curve. More negative funding rates on various perpetual swap instruments also means shorting is getting more expensive. Negative funding means shorts pay longs as a method of mimicking the expiry of futures contracts without having an expiration so that the futures price doesn’t deviate too far from the index price of the underlying asset.
A more efficient mining sector
Miner capitulation is when miners with older machines turn off operations due to low prices. These actions create a negative feedback loop that lowers the currency’s price. Recently, BlockWare Solutions conducted a report on how miner capitulation develops; and why it will lead to a more efficient mining sector that is conducive to bitcoin’s long-term price growth.
The Miner Capitulation Roadmap
The error with the “death spiral” theory is found in the notion that an industrializing mining sector was unprepared for an event four years in the making. Miners were prepared for the halving, just not the events on March 12. Many miners actually capitulated two months before the halving. The conclusion is represented by a similar downward adjustment in the difficulty and lower hash rate on both March 12 and the halving event.
Total Hash Rate ( THR) distribution analysis by CoinMetrics indicates that many of the older mining hardware (like the S9 AntMiner) were turned off following March 12, only for some to be turned back on following the downward difficulty adjustment when bitcoin’s prices skyrocketed. Following the halving, it’s likely that newer versions of mining hardware will continue to absorb more of the hash rate, alongside their industrial-strength owners. The latter have balance sheets flush with BTC and can operate with economies of scale.
Grayscale and miner capitulation
Miner capitulation is actually a positive development because more efficient miners remain in the market. That leads to a smaller proportion of miners offloading their BTC balance sheets, which reduces downward pressure on price. Bitcoin’s price has rebounded more than 250% since March 12. The mining market looks healthy and short-sellers appear to be more conservative.
In the short-term, some crypto traders are anticipating a second post-halving miner capitulation, whereby unprofitable miner’s will sell off their bitcoins. However, even if such an event were to unfold—then, it is likely to have a relatively small impact on bitcoin’s price—due to strong institutional demand. One thing remains clear, Greyscale is likely to continue buying up bitcoin’s supply at a record pace, bitcoin bears, be warned.
Author: Luke Fitzpatrick
6 Questions for Michelle O’Connor of Uphold
Each week we ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and we throw in a few random zingers to keep them on their toes!
This week our 6 Questions go to Michelle O’Connor, VP of Marketing at Uphold
Michelle is passionate about building the future of inclusive finance through emerging technologies to both streamline and empower businesses and consumers through transparency and financial inclusion. She has spoken on FinTech, blockchain and digital financial services and community building efforts, and was recently recognized as one of the ‘Most Inspirational Women in Tech 2019.’
Earlier in her career, she founded a hybrid marketing agency bridging the gap between traditional media, public relations, social media, and community marketing. In this role she focused on lifestyle brands, providing strategic and lean marketing strategies along with social media, public relations, and community programs.
1 — Which two superpowers would you most want to have, and how would you combine them for good… or evil?
Without a doubt, I’d choose the ability to time travel and freeze time. How amazing would it be to wake up one day, think to yourself, I want to go back to meet Ada Lovelace, a renowned mathematician who is widely considered to be the first computer programmer way back in the mid-1800s?! To experience the world alongside Ada, knowing the world as it is now (in large part a result of her early work) — would be utterly inspiring.
My fascination with freezing time may be a direct result of growing up watching Evie Garland on the 1980’s show Out of This World freeze time, and how those scenarios played out. Now, more than ever, I’d love to have the ability to freeze things as they are, and in parallel fast-track the vaccine for coronavirus, then unfreeze time — and go back to before this all started.
2 — If you were investing in startup companies right now, what kind of blockchain-based business opportunity would catch your eye?
Blockchain companies working in healthcare are especially interesting; specifically those that improving medical record-keeping. This is important to me, as we need to ameliorate the level of care and democratize access for people who are under-insured or not insured.
Identifying trends across medical history, including family history, medication, allergies, and have it owned by the patient and accessible anytime, anywhere, regardless of their insurance status — game-changing.
3 — What’s the unlikeliest-to-happen thing on your bucket list?
Sadly, the thing that I would love most to do, is the most unlikely. Unplug from all social media and sail around the world with my family.
4 — If there is a future for cryptocurrencies, what is the main hurdle the industry needs to overcome. And if not, what does the future of money look like to you?
If the pandemic has shown us anything, it’s the need for alternatives to the legacy financial system.
Cryptocurrencies, stablecoins, and digital assets face two main challenges as it stands now — established and consistent regulation to nurture mainstream adoption, and a reduction in speculation. At the moment if you look up Bitcoin, or any of the top cryptos — everyone’s writing about their price, rather than the applications. (Editor’s note: Well, not everyone…)
As a real-world digital alternative to fiat currencies, cryptocurrencies need to shift from speculation to everyday use. Those changes have already taken place in countries where inflation and currency devaluation is more prevalent like Venezuela and Argentina. There, the need for stability and ease of use has driven acceptance of Bitcoin and other digital assets. In the U.S. we’re seeing currency debasement as the stimulus prints trillions of dollars — heading toward an inevitable devolution of the USD and piquing interest in alternative currencies like cryptocurrencies.
The bridge from old to new money systems used to be a long one, and you couldn’t quite see the other side — we’re closer than ever today.
5 — Tell us about a hidden talent – and give us a link to prove it!
Is gardening a talent? Not sure, but I love gardening and this year has taken it to the next level with three raised beds growing 20 different fruits and vegetables.
It’s been nearly a month since we planted our first garden & I’d say things are coming in nicely! #getoutdoors #gardening pic.twitter.com/XCj3IIEnXA
— Michelle O’Connor (@Mq2Oco) June 10, 2020
6 — From smart contracts, to DAPPs, to NFTs, to DeFi we have seen so many of the next “killer apps” for crypto, but none have really taken off quite yet. What will stick?
That’s the billion-dollar question…
What if it’s not the next killer app — but the next wave of use? If 2020 has taught us anything, it’s the need to expect the unexpected. What you’ve planned for can be upended overnight.
The winning solutions have to be designed around a real-world need or problem. Is there a need for something, what is the market fit? Companies that succeed need to design with their potential customer in mind. If they need what you’re building — especially now, being strategic and focused on improving what’s already been introduced.
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