Category Archives: Bitcoin
Could Developing Nations Follow El Salvadors Move To Bitcoin? – Forbes
LA LIBERTAD, EL SALVADOR - JUNE 16: Beach town of El Salvador's El Zonte has been using Bitcoin for ... [+] small transactions for the last two years. (Photo by Alex Pena/Anadolu Agency via Getty Images)
When El Salvador decreed that bitcoin was to be made legal tender, the news reverberated around the world. Bitcoin proponents swiftly hailed the move as the progressive future of money, but many others were not convinced. It remains to be seen whether cryptocurrencies are a panacea for a reserve currency for developing nations.
The negative sentiment hasnt tempered El Salvadors enthusiasm for the great de-dollarization experiment and other developing countries are now contemplating following suit.
With the emergence of Central Bank Digital Currencies (CBDCs) and potential suitors for the status of a global reserve currency one thing is for sure, we are in for an exciting show in this next era of the evolution of digital currency.
Outside of the U.S. and its territories, eight sovereign nations Ecuador, El Salvador, Zimbabwe, Timor-Leste, Palau, Panama, the Marshall Islands, and the Federated States of Micronesia, use the U.S. Dollar as theirofficial currency. The British Virgin Islands and the British Turks and Caicos Islands also use the USD as an official currency of exchange.
Many other countries use currencies with fixed exchange rates to the USD while users of crypto worldwide has risen to 221 million according toCrypto.coms onchain research.
While dollarization was implemented to reduce currency risk and increase international investment and trade, the consequence for these nations is that they are effectively outsourcing their monetary policy to the U.S. Federal Reserve. This has created a hierarchical relationship that forgoes many of the tools required to influence their own economies by adjusting the money supply or exchange rate.
This dollar-dependent system results in the loss of a national symbol, can increaseinequalitythrough the reduction in purchasing power caused by debasement, and gives upseigniorage incomethat reduces GDP and passes it to the U.S.
Jeff Bandman, a cryptocurrency and digital assets expert, is a Principal at Bandman Advisors and a former CFTC Director and founder of LabCFTC and observes, For some countries seeking an alternate path to pegging their currency to the dollar, sterling or euro, an intriguing choice is whether to outsource monetary policy to the bitcoin algorithm.
"Since Facebook introduced the Libra proposal for a global stablecoin over two years ago, policymakers have focused considerable attention on the risks of a stablecoin issuer with billions of potential users conducting or exercising undue influence over monetary policy.
"Because of bitcoins price volatility, it has been been largely discounted by sovereigns until recently, missing the potential benefits for consumers and businesses who rely on its transparent algorithm, which in some instances, may be more predictable than another countrys central bank."
The case for seeking alternative monetary solutions that lie beyond Americas purview, for developing countries, is a compelling one, but is bitcoin the answer? At least one developing nation thinks so.
El Salvador, one of the eight sovereign nations using the USD, broke from the pack, passing a bill onJune 9that will see bitcoin become legal tender in the country in September and join the USD as its official currency.
This marks the first time bitcoin has been adopted as a legal tender in a sovereign nation, attracting praise from politicians in Latin America, Africa, and other parts of the developing world.
Maggie Wu, the CEO of blockchain venture capital firmKrypital Group acknowledges the current challenges in bitcoin adoption but is optimistic about the future and states, I believe that bitcoin adoption is conceivable, especially in the relatively small developing countries with inadequate monetary systems where the recognition of digital currencies there is relatively high, especially BTC.
The blockchain-related infrastructure that can carry digital currencies in most Central and South American countries and regions is not complete, including wallets, exchanges, etc. This is also the direction of our investment focus. We think there is huge potential and value here for fostering crypto adoption throughout the region.
El Salvadors adoption of bitcoin has brought concern from officials in developed nations as well as from international NGOs who often describe bitcoin as having few redeeming public interest attributes.
In response to such criticism, El Salvador President Nayib Bukelecommented, Who'd be against something that helps the people and doesn't do any harm? They're probably politically motivated.
El Salvadors economy relies heavily on the remittance market, representing over20 percent of GDP, or around $6 billion annually, with 95 percent of remittances sent from Salvadorans working in the U.S. to their families back home. Existing remittance services charge fees for these transfers that can make up a significant proportion of the value sent, particularly for smaller transfers. Funds can also take days to arrive and often require collection in person and given that an estimated70 percentof the El Salvador population are without access to a bank account, this increases time and costs further.
Remittance is one reason why the country is turning to bitcoin and the Lightning Network. Bitcoin provides an open monetary network in which anyone can participate without permission from a central authority. TheLightning Networkis a second-layer payment protocol, meaning that it offers a scaling solution built on top of the bitcoin network that allows for near-instant transactions with near-zero fees.
Milana Valmont is the Founder and CEO of blockchain-based fintechKIRA. She believes that bitcoin and Lighting Network technology can bring financial inclusion to El Salvador.
"Bitcoin adoption has the potential to decrease the risk of current and future governments imposing policies that might affect freedom of movement of capital and value of assets, stocks and other financial mechanisms used within and outside of local economies, says Valmont.
Following discussions between the El Salvador government and the U.S. digital payment company Zap Solutions that led to the bill, the President announced a $30 incentive for citizens to use thegovernments official bitcoin wallet application, Chivo.
Having already developed the payments applicationStrike, which uses bitcoin and the Lightning Network to offer instant and free payments globally, Zap Solutions appears well placed to help deliver the new El Salvador wallet which will allow users to convert between USD and bitcoin and send and receive payments in either currency using QR codes.
The wallet, set to launch in September when the new law comes into effect, will be available on iOS and Android devices that are far more accessible than bank accounts in the country and will not require a data plan. Transactions and conversions will be free, no commissions will be charged to merchants unlike credit cards, and users will also be able to access free USD withdrawals from over 200 Chivo branches or ATMs, asclarified by the Presidentin a recent update. The government will absorb any conversion costs as they are much cheaper than the administration of the current USD system, according to Bukele.
As a security measure, users must register for the wallet with their phone number and national ID to confirm against the records already held by the government. However, use is also optional and citizens are free to use any bitcoin or Lightning wallet of their choice with which the government wallet is also fully compatible. The use of bitcoin itself is also optional.
Anyone receiving payments in bitcoin can choose for it to automatically be received in USD instead, offsetting any concerns regarding the volatility of bitcoins value. This approach has brought criticism with questions regarding the safety of the government platform from attacks, citing high-profile hacks on third-party platforms.
In theory, it should be as safe as any major bitcoin wallet or exchange while avoiding dependency on either with the El Salvador government being ultimately responsible for ensuring assets are stored safely, providing more reassurance to some. As bitcoin funds can be removed to a wallet of the user's personal choice and control instead, for others it may simply serve as an on/off ramp between USD and bitcoin, without having to store funds on there for long periods.
Many have questioned whether bitcoin is the best solution for El Salvador and other developing nations, citing the often high transaction fees and slow processing times of the bitcoin blockchain. These concerns are alleviated by building applications on the Lightning Network instead, using channels that act similarly to a bar tab on top of the Bitcoin network, only settling back to it when necessary. This is what facilitates the near-instant and free transactions that make it viable as a currency.
Concerns remain among critics regarding the capacity of the solution for mass adoption, suggesting that the Lightning Network does not completely solve bitcoins transaction fee problem with costs to open and close channels and fees to route payments. The system is also reliant on a network of computer nodes that are required to be online at all times so payments can be sent and received, leading to offline transaction risk. Network congestioncaused by a potential malicious attack that could be used to attempt to steal funds from parties unable to withdraw due to such congestion is also cited.
Longer-term concerns have been raised surrounding the impact of quantum computing on the security of the cryptography used in technology like bitcoin, though such breakthroughs are likely some way off andquantum-resistant blockchainssuch as QANplatform have emerged to offer more future-proof alternatives.
Others have suggested the adoption of stablecoins or smart contract technology platforms likeXinFinwould be more suitable, providing the high transaction throughput and low fees El Salvador is looking for, as well as access to decentralized finance that can open up other use cases for cryptocurrencies like peer-to-peer lending and borrowing.
Whether through second-layer solutions built on top of bitcoin or through alternatives in the world of decentralized finance, there seems little doubt that the nation-state era of blockchain technology adoption has begun in the developing world, providing an alternative monetary solution to support growth, financial inclusion, and escape from poverty.
While developing countries led by El Salvador are opening up to the opportunities that bitcoin can bring, CBDCs projects are on the rise with the G20 economies, alongside finance ministers and central bank governors from other countries, many working with the IMF, World Bank, and BIS on their development. Over80 percent of the worlds central banks now researching their implementationaccording to the BIS. Though widespread deployment of CBDCs does not appear imminent, get ready - it is coming.
Arguably the most progress has been made by the Peoples Bank of China, with pilots for the newDigital Yuantaking place in Shenzhen, Suzhou, Xiong'an, and Chengdu. Richard Turrin, author of bestseller Cashless - Chinas Digital Currency Revolution, believes that China has stolen a march on the West that politicians and policy makers better wake up to.
Says Turrin, China clearly sees digital currency as a solution for increasing financial inclusion among its people, and increasing the level of societal digitization with the launch of its new central bank digital currency. The first generation digital payment platforms Alipay and WeChat Pay have proven beyond a doubt that mobile-based payments play a big role in reaching remote communities and increasing digital GDP.
What China does not believe is that cryptocurrencies like bitcoin have an important role in financial inclusion. China sees cryptos as not connected to the real economy, speculative, and dangerous to hold.A position it has made clear through its recent reduction in bitcoin mining and its warnings to people not to buy crypto. Still, the ownership of crypto is allowed and protected under property rights so its not correct to say that its been banned.
The eyes of the world are on the digital yuans use in cross border settlement.This is considered by many as the killer use case as it would start a new digital cash transfer network apart from SWIFT.China is the worlds largest exporter and if it can make buying from or selling to China easier and cheaper through the use of the digital yuan it will have a winner.
"China has already set up blockchain based trade platforms in the Greater Bay Area that have faster customs clearance and cheaper trade finance.Once these have digital yuan attached to them they can offer importers and exporters real benefits that just may entice them to convert to the digital yuan.Well have to wait to see how it works out, but betting against the digital yuan would be risky."
The Bank of Japan's CBDC project is not far behind and the U.S.FederalReserve is currently working alongside the Massachusetts Institute of Technology to develop a Digital Dollar with a research paper exploring a move to a CBDC expectedthis summer. The Bank of Englandrecently announcedthe creation of a task force to explore a potential Digital Pound and is credited with coining the term CBDC back in 2016. Other advanced economies considering introducing CBDCs are Switzerland, Israel, South Korea, Sweden, Canada, Australia, and Singapore.
In July, the European Central Bank (ECB) announced it was progressing with a project to further evaluate a Digital Euro. Ulrich Bindseil, ECB Director General, Market Infrastructure and Payments, commented at The 19th Financial Services Conference 2021 in June, that a Digital Euro would (ultimately) be central bank money made available to citizens and businesses and would seek to co-exist with cash. He noted it would also be important for the Digital Euro not to crowd out private industry and that the project must seek synergies with industry. If the Digital Euro project were eventually to move ahead Bindseil estimated it would be four to five years to implement.
Though CBDCs could introduce several benefits, including reduced costs, more efficient payments, greater transparency, improved financial inclusion, and enabling of direct monetary policy, their detractors are wary of the drawbacks. There are concerns that CBDCs could lead to a system of complete financial surveillance of citizens and an erosion of privacy in contrast to pseudonymous peer-to-peer networks like bitcoin, even with fully controlled and regulated KYC / AML on and off ramps deployed to access bitcoin.
Regardless of the path of nation-states, the stage is set for the growth of both fiat and non-fiat digital currencies. Let us hope we focus on the practical use cases for citizens and businesses and that they can co-exist peacefully. The worlds monetary system looks like it may undergo the biggest changes since the Bretton Woods agreement that led to the USD becoming the global reserve currency. Whatever the outcome, financial history will invariably be written by the victor(s).
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Could Developing Nations Follow El Salvadors Move To Bitcoin? - Forbes
Analysts identify $40K as the make-or-break level for Bitcoin price – Cointelegraph
Optimism from bulls is the leading sentiment of the day after Bitcoins (BTC) price made its way back toward thepsychologically important $40,000 level.
In addition to the reversal from this weeks local low at $37,500, Gary Gensler, the Chair of the United States Securities and Exchange Commission, issuedpositive comments about the crypto industry and reaffirmed the goal of ironing out fraud in the ecosystem.
Now that Bitcoins price appears to be back on the path to $40,000, heres what analysts and traders are saying about the top cryptocurrency.
To many traders, $40,000 is a pivotal level for Bitcoin, and how the price performs from here could determine whether the market enters another bullish phase or simply rejects to retest underlying support levels again.
As pointed out by the pseudonymous crypto Twitter analyst Rekt Capital, the $40,000 price target is close to the 200-EMA, and it is crucial that Bitcoin secures a few closes above this moving average.
Should Bitcoin fail to hold this level, the 50-day EMA at $26,723 could provide the next support zone. Failure to hold above this level increases thepossibility that BTC could drift back toward its July lows.
Rekt Captial said:
The importance of a strong BTC close above $40,000 was also highlighted by pseudonymous Twitter analyst Fomocap, who posted the following tweet that identifies the $40,400 price point as a key area to watch.
According to Fomocap, Bitcoin needs to close above $40,400 in order to solidify the uptrend, and rejection at this level opens the door to a revisit of the $30,000 range.
Based on the chart provided, the next levels of support below $37,000 are found at $34,300 and $32,000.
Related: Panic selling is crypto investors biggest mistake, new survey reveals
The indecisiveness that controlled Bitcoins price throughout July still extends into August, meaning traders will tread lightly even if the $40,000 level is reclaimed.
As things currently stand, a more decisive breakout that pulls Bitcoin price through the $40,000$43,000 resistance cluster is needed before traders can gain the confidence chase after this years all-time highs.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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Analysts identify $40K as the make-or-break level for Bitcoin price - Cointelegraph
Why Bitcoin Can Save Us From Inflation – Bitcoin Magazine
On July 13 at around 8:30 AM EDT, the Consumer Price Index (CPI) report for the month of June dropped. According to the report, consumer prices rose 5.4% this June 2021 from last June 2020. This was the biggest monthly increase in prices since August of 2008. Real wages were or have been negated by these price increases. The cost of things you use and need every day are going up. #Inflation is now trending. Part of the spike in the CPI numbers is due to the massive supply and demand shock the global economy has experienced in the last year. This makes sense considering that the U.S. doesnt manufacture much anymore.
I feel that I should briefly explain what exactly inflation is because CNBC and Bloomberg will lie to you.
We've been taught that inflation is simply the increase of prices. This is a common definition for inflation that you'll come across. To a certain degree, yes, inflation is the steady rise of prices over time, but this is akin to going to an orthopedist and saying you have a torn hip labrum. Well how did you tear your hip labrum? We gloss over the acute cause of inflation which is ... drum roll please
In all seriousness, the vast majority of US money supply is digitally made through a computer. There is an infinite amount of cash at the Federal Reserve. Let me show you a chart that only goes up because of that.
This is a chart of the Federal Reserve's balance sheet. Whats going on here?
The Fed controls the money supply in the U.S. and buys assets that go on the balance sheet. In 2006 the balance sheet was at just below $900 billion. In 2008 during the Great Recession, we had the balance sheet shot past $2 trillion. As of June of 2021, there are about $8 trillion dollars worth of assets on the balance sheet. The Federal Reserve has essentially expanded the balance sheet by a multiple of 10! This has boosted asset prices across investment vehicles.
The increase in the supply of money in an economy drives asset prices as well as consumer prices. Assets have, since 2008, appreciated in price. This includes bitcoin as it is currently being monetized (as in being utilized as a money) by retail, institutional investors and even nations such as El Salvador. Stocks, specifically the S&P 500, hit all-time highs almost every other day.
Since the March 2020 sell-off, the S&P 500 has gained approximately 100%. For every dollar you would have put into this index, you got $2 in return. The Fed injected unprecedented amounts of liquidity into financial markets and the consequences have been higher asset prices.
Inflation in government-issued currencies is rampant around the world, and has only shown signs of increasing. 35% of all the U.S. dollars ever printed by the government were printed between March and December of 2020. Dollars are melting ice cubes. There is a startling statistic that approximately 47% of Americans have no assets. They are getting hurt by this money printing, eroding their stored value versus those that are investing.
As I stated before, bitcoin is not exempt from the monetary inflation we are witnessing. In fact, it has benefited greatly from it. There are, however, key distinctions between bitcoin and all other assets that I'd like to point out.
It is the most accessible asset ever created since it was designed for a digital world.
The Bitcoin protocol is secured by tens of thousands of nodes distributed all across the globe. Because of this, the network maintains uptime and is resistant to any single point of failure. Anyone and everyone can participate in and secure the bitcoin network.
It is the first asset in existence whose supply is strictly limited. No matter how many people join the network, how much the value rises, or how advanced the equipment is that mines it, there will never be more than 21 million bitcoin in existence. If anyone attempts to raise the supply, they'd have to go through tens of thousands of full nodes. Due to the strict limitation in supply, there is no technical possibility of increasing its supply to match an increase in demand. In this way, bitcoin acts like a whole new asset class and may be one of the most efficient forms of a store of value ever seen. Bitcoin implements a far more superior monetary policy through code than central bankers in suits.
Since the inception of government issued currencies, nations across the globe have been plagued with unlimited printing by irresponsible governments. The current system is not designed to succeed, but rather to delay its ongoing and inevitable destruction.
Let's do a quick math problem:
What is /21,000,000?
This is a guest post by Paul Opoku. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
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Why Bitcoin Can Save Us From Inflation - Bitcoin Magazine
Ether Outperforms Bitcoin on London Hard Fork – CoinDesk – CoinDesk
Ether, the second largest cryptocurrency by market capitalization, was in the spotlight on Thursday as the latest hard fork upgrade, which wasa dubbed London, officially activated on the Ethereum blockchain network. The upgrade contributed to bullish price action as ether rose about 5% over the past 24 hours, compared with a 3% rise in bitcoin during the same period.
Despite ETHs rally, some analysts expect widespread institutional adoption to take a few years. Institutional interest boosted bitcoins investment appeal over the past year, which contributed to a crypto rally during the fourth quarter of 2020.
I think Ethereum might flip the bitcoin market cap in the long term, but not this year, CryptoQuant CEO Ki Young Ju, said in an interview with WuBlockchain.
I met Goldman Sachs, Fidelity and other big institutional asset management firms in Miami a few weeks ago and they said theyre still struggling explaining what Ethereum/DeFi (decentralized finance) is to their bosses, Ju said.
Latest prices
Meanwhile, some institutions remain active across the crypto market either directly or indirectly. On July 22, Fidelity Investments acquired a 7.4% stake in crypto miner Marathon Digital Holdings for about $20 million.
On Thursday, French asset manager Melanion Capital won regulatory approval to launch an exchange-traded fund (ETF) tracking the price of bitcoin and several crypto-related stocks.
Also on Thursday, Invesco, a U.S.-based asset manager, filed with the U.S. Securities and Exchange Commission (SEC) to list an ETF with indirect exposure to bitcoin via futures and other investment vehicles.
Large institutions are easing into the crypto market with a bitcoin-first approach. It will likely take some time, however, before investors fully embrace altcoins such as ether as regulatory hurdles must be cleared first.
Ethereum London hard fork
Ether was initially steady after the London hard fork was activated, but it started rallying about an hour later. As of press time, ether was changing hands at around $2,807, up from about $2,600 right before the changes took effect, CoinDesk 20 data shows.
Many crypto traders are focused on one component of the upgrade, called Ethereum Improvement Proposal (EIP) 1559, which changes the networks fee structure so that a certain amount of the cryptocurrencys supply will be burned, or removed from circulation. The bet is that the blockchains net issuance of new units of the cryptocurrency will slow as a result of the change, ultimately helping to set a floor under the price.
Analysts at Stack Funds and elsewhere have compared the London hard fork and implementation of EIP 1559 to the Bitcoin blockchains halvings that occur every four years in the sense that major changes in the cryptocurrencys supply growth are deployed at specific moments in the blockchains lifecycle. Some investors believe Bitcoins halving events in the past have helped to increase the price of the underlying cryptocurrency.
As of 15:06 UTC, some 585 ETH of fees had been burned, or roughly 43% of the block rewards issued since the Ethereum hard fork took effect at data block No. 12,965,000, according to the website ultrasound.money.
Ether technicals
Ether is now above the 100-day moving average for the first time since June. The price rally has cleared a significant technical hurdle, although the price could find some resistance at the $3,000 level.
Ether daily price chart shows support and resistance levels with RSI.
ETHs rally has outperformed bitcoin after a few months of consolidation. The ETH/BTC ratio is testing initial resistance at 0.06, but could see further upside as momentum improves.
ETH/BTC daily chart shows recent breakout with support and resistance levels.
Bitcoin seasonality
Similar to stocks, bitcoin is approaching a seasonally weak period, which could encourage buyers to take profits. The table below shows, on average, relatively weak returns in August over an eight-year period. September tends to be the worst month. Buying picks up in October and February.
Seasonal patterns can vary, especially as bitcoin departed from its historical trends when it tumbled in May.
Table shows average monthly historical bitcoin returns over an 8-year period.
Stablecoins as collateral
The margin assets for bitcoin futures trading has been shifting from bitcoin to stablecoins, according to Delphi Digital, a research company that focuses on digital assets. The shift has become especially significant as cash margined open interest soared after bitcoins price crashed in May.
The most important implication of this is that longs dont have the added boost of holding both spot BTC and BTC futures while it goes up, but theyre no longer exposed to deeper losses when their position turns against them (because their margin is in stablecoins, not BTC), Delphi wrote. For shorts, they can take advantage of downtrends without their margin value eroding, but they lack protection when BTC moves up.
BTC Futures by Margin Asset: Stablecoins (Cash) vs BTC (Coin)
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Ether Outperforms Bitcoin on London Hard Fork - CoinDesk - CoinDesk
Bitcoin Analyst Says Young BTC Is on the Move Heres What It Could Mean for the Markets – The Daily Hodl
On-chain analyst Willy Woo says that Bitcoin (BTC) has entered a period of maximum noobishness.
Woo tells Scott Melker in a new interview that BTC is now in a zone where the smart money has essentially stopped selling.
The coins that are currently moving among investors are young assets that were recently acquired, says Woo.
The analyst relies on a metric called cumulative value-days destroyed (CVDD), also known as destruction. According to Woo, destruction is a ratio that expresses the duration of a held assetto the age of the market.
Woo says that he sees bullish signs when destruction bottoms and young coins are rampant.
You can look at the age of the coins moving per volume, moving between investors. And whenever it reaches a low of destruction, meaning those coins that are moving between investors are young, that means the sellers are newbs.
Were at maximum noobishness and whenever that bottoms, thats a time to buy. And its just bottomed in this last week. Were at max noob selling and the OGs are not selling. Theyre buying.
The analyst also points to Bitcoins massive network growth as a potential sign of strength.
If you wind back the clock to 2018 to now, the network growth in terms of users you can see on the blockchain its gone parabolic.
Im talking about parabolic on a log chart like were used to. Normally it grows and then the growth rate starts to taper off. For the last three years the growth rate has been going parabolic. Never been seen before.
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Bitcoin Analyst Says Young BTC Is on the Move Heres What It Could Mean for the Markets - The Daily Hodl
Bitcoins Rally to $90K+ Took a Detour but Appears Back on Track – Yahoo Finance
A month ago, see here, I showed the Bullish Elliott Waves (EWP) option for Bitcoin (BTC) looking for a rally to inittally low- to mid-$40Ks assuming a -what is called in EWP terms- 1,2,1,2 setup. Instead, it appears most likely, BTC formed an irregular flat (red) wave-ii (see Figure 1 below), completed wave-iii and is now in red (intermediate) wave-iv. Thus, IMHO, BTC took a detour but is still on track for $90K+ as long as can hold above $35495 on the current pullback. Allow me to explain.
Figure 1. Bitcoin daily chart with detailed EWP count and technical indicators.
What I originally viewed as a wave-i, ii, 1, 2, setup morphed IMHO into a wave-i, ii, a, b setup and the recent low on July 20th at $29320 was (green) minor wave-c of (red) wave-ii. Since that low, BTC rallied for ten consecutive days: wave-iii, which also subdivided nicely into five smaller (green) minor waves. A feat not seen since correction started mid-April. Besides, as you can see in Figure 1, BTC also rallied back above all its moving averages (10d, 20d, 50d) except the 200d SMA.
Moreover, the crypto currency was also able to rally back above its (green-red colored) Ichimoku Cloud. Lastly, the daily RSI5 and Money Flow Indicator (MFI14) have not been this overbought since Mid-April either. The latter is rather important as it shows BTC is experiencing genuine buying. All in all, since July 20th BTC has accomplished many good things, not seen since the entirty of the correction that started mid-April.
Because one can always find a bullish or bearish data point to support ones biased view, it is the weight of the evidence approach that allows for a much more objective interpretation. In this case it is rather obvious the weight of the evidence is predominantly bullish. All BTC now needs to do is reclaim its 200d SMA. I have outlined in Figure 1 the preferred illustrative-only path BTC now should follow based on the preferred EWP count shown, as well as the technical indicators, i.e., the RSI and MFI are often max overbought at 3rd waves because those are the strongest waves, just as BTC experienced recently.
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Bottom line: If BTC can hold above $35495 going forward (the red wave-i high made on June 24) and rally towards its 200d SMA from around current levels, then the chart shows a very good setup for five waves higher since the June 22nd low. That would then greatly increase the odds for a pullback, wave-2, before a strong rally to ideally new all time highs; wave-3. Ultimately, the triple bottoms around $30K made over the past three months must hold to prevent a bigger slide to potentially $20K. Based on the weight of the evidence I now prefer to look higher and maintain the Bullish perspective I already had a month ago.
For a look at all of todays economic events, check out our economic calendar.
This article was originally posted on FX Empire
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Bitcoins Rally to $90K+ Took a Detour but Appears Back on Track - Yahoo Finance
China’s attempt to kill Bitcoin failed Here are 3 reasons why – Cointelegraph
Bitcoin (BTC) might have suffered its largest coordinated attack over the last couple of months, but in this instance, the investor community did not capitulate.China outright banned mining in most regionsafter giving BTC miners a two-week notice, and this caused the single largest mining difficulty adjustment after the network hash rate dropped 50%.
The market sentiment surrounding Bitcoin was already damaged after Elon Musk announced that Tesla would no longer accept Bitcoin payments due to the environmental impact of the mining process. It remains unknown whether Chinas decision was influenced or related to Musks remarks, but undoubtedly those events had a negative effect.
A couple of weeks later, on June 16, China blocked cryptocurrency exchanges from web search results. Meanwhile, derivatives exchangeHuobi started to restrict leverage trading and blocked new users from China.
Finally, on June 21, the Peoples Bank of China (PBoC) instructed banks to shut down the bank accounts of over-the-counter desks, and even their social networks accounts were banned. OTC desks essentially act as a fiat gateway in the region, so without them, it would be difficult to exchange Bitcoin for stablecoins.
As these events unfolded, some analysts were inclined to describe the tactics as nothing other than meaningless FUD fear, uncertainty and doubt but in hindsight, it appears that China launched a very well-planned and executed attack on the Bitcoin network and mining industry.
The short-term impact could be considered a moderate success due to the collapse in Bitcoin price and the rising concerns that a 51% hash rate attack could occur.
Despite the maneuvers, China's attack ultimately failed, and here are the main reasons why.
After peaking at 186 million TH/s on May 12, the Bitcoin network hash rate, an estimate of the total mining power, started to plunge. The first couple of weeks were due to restrictions to coal-powered areas, estimated at 25% of the mining capacity.
However, as the ban extended to other regions, the indicator bottomed at 85 million TH/s, its lowest level in two years.
As the data above indicates, the Bitcoin network's processing power recovered to 100 million TH/s in less than three weeks. Some miners had successfullymoved their equipment to Kazakhstan, whileothers shifted to Canada and the United States
Even though the companies involved in crypto transactions have been banned from the country, individuals continued to act as intermediaries some of these recorded over 10,000 successful peer-to-peer transactions, according to data from the exchanges own ranking system.
Both Huobi and Binance offer a similar marketplace where users can trade multiple cryptocurrencies, including Tether (USDT). After converting their fiat to stablecoin, transacting on a regular or derivatives exchange becomes possible.
A complete crackdown on trading from Chinese entities would likely be reflected in the exchanges previously based in the region, like Binance, OKEx and Huobi. However, looking at the recent volume data, there hadnt been a meaningful impact.
Take notice of how the three "Asia-based" exchanges remain dominant, while Coinbase, Kraken and Bitfinex are nowhere near their trading activities.
China's ban on Bitcoin mining and transactions may have led to some temporary hiccups and a negative impact on BTC price, but both the network and the price have recovered in a way that is better than many expected.
Currently, there is no way to measure the OTC transactions where larger blocks are traded, but it is just a matter of time until these intermediaries find new gateways and payment routes.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
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China's attempt to kill Bitcoin failed Here are 3 reasons why - Cointelegraph
Institutional Money Exiting Bitcoin and Ethereum As Crypto Investment Products See Inflows: CoinShares – The Daily Hodl
Institutional investors continue to move their money away from Bitcoin and Ethereum despite the recentboost in the crypto markets, according to the digital asset manager CoinShares.
However, institutions are buying multi-asset investment products. While digital asset investment products saw $19.5 million in overall outflows last week, multi-asset investment products had $7.5 million in inflows, CoinShares reports.
Overall, digital asset investment products had their fourth consecutive week of outflows, which CoinShares says were triggered by negative price action starting in mid-May. Bitcoin had outflows worth nearly $20 million, though BTC inflows year-to-date remain at $4.1 billion.
Ethereum had $9.5 million in outflows but also remains positive over the year, with $957 million year-to-date. CoinShares notes ETH investors have been more forgiving of the bearish price movement, only seeing outflows in six of the past 12 weeks, compared to 10 for Bitcoin.
Like multi-asset investment products, XRP, Cardano, and Polkadot alsowent against the overall trend, each seeing small inflows over the past week. XRP had inflows of $1.1 million, bringing it to a total of $45 million in inflows on the year. Cardano saw $0.5 million in inflows last week, bringing ADA to a yearly total of $37 million. And Polkadot had a weekly inflow of $0.4 million, bringing DOTs yearly total to $62 million.
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Institutional Money Exiting Bitcoin and Ethereum As Crypto Investment Products See Inflows: CoinShares - The Daily Hodl
Crypto Provision In Infrastructure Bill May Force Bitcoin Miners And Blockchain Companies To Flee U.S. – Forbes
Check in, Airport Departure & Arrival information board sign taken in 2015.
A relatively hidden provision in the $1 trillion bill plans to help pay for new roads and bridges by making the tax collection of crypto activities more efficient. However, it is inadvertently casting to wide a net over the industry, threatening its very livelihood in the U.S. A group of senators is pushing back on the language to make it more precise, but hurdles remain.
In this report, I break down what to expect in the coming days and break down what lawyers and industry participants need to know and decisions they must make.
I currently providelegal consulting to cryptocurrency and fintech companies. Prior to consulting, I spent years as Regulatory Counsel for various companies in the
I currently providelegal consulting to cryptocurrency and fintech companies. Prior to consulting, I spent years as Regulatory Counsel for various companies in the cryptocurrency space including Silvergate Bank, bitFlyer and Coinbase. I also previously served as Secretary of the Virtual Commodity Association.
Green Bitcoin Mining: The Big Profits In Clean Crypto – Forbes
This story appears in the August/September 2021 issue of Forbes Magazine. Subscribe
(IMAGE ABOVE) Bill Spence and Greg Beard on a Russellton, Pennsylvania, coal waste pile left by a mine that powered 20th-century Pittsburgh steelmakers. Theyre burning this polluting gob to mine bitcoin.
Growing up in rural western Pennsylvania in the early 1970s, Bill Spence played with his pals on piles of coal waste, oblivious to the toxic heavy metals right under his feet. After working as an oil industry engineer out west, he returned home in the 1990s and found the pilesknown as gob, for garbage of bituminousstill pockmarking the landscape. The present worry is that these unlined pits are leaching deadly carcinogens into the groundwateror, worse, that they will catch fire and start polluting the air, too. (Of the 772 gob piles in Pennsylvania, 38 are smoldering.)
So Spence, now 63, set out on a mission to whittle down the piles, restore the landand make money doing it. In 2017, he bought control of the Scrubgrass Generating power plant in Venango County, north of Pittsburgh, which was specially designed to combust gob. But gob isnt a very good fuel, and the plant was barely viable. Later that year, after being diagnosed with pancreatic failure and kidney cancer (which he speculates may have been linked to his early gob exposure), he stepped back from the business. Bored, he started dabbling in cryptocurrencies and soon had a eureka moment: He could make the Scrubgrass numbers work by turning gob into bitcoin.
After surgery and being taken off a feeding tube, Spence is now back at it, converting the detritus of 20th-century heavy industry into 21st-century digital gold. About 80% of Scrubgrass 85,000-kilowatt output is now used to run powerful, energy-hungry computers that validate bitcoin transactions and compete with computers worldwide to solve computational challenges and earn new bitcoinsa process known as mining. Depending on the price of bitcoin, which has recently been gyrating around $35,000, Scrubgrass realizes an estimated 20 cents or more per kilowatt hour (kwh) from mining, against just 3 cents selling to the power grid. Plus, because the plant is safely disposing of gob, it collects Pennsylvania renewable-energy tax credits now worth about 2 cents per kwh, the same as those available for hydropower.
Spence is one of an emerging cohort of American bitcoin miners who are turning one of the cryptocurrencys biggest liabilitiesits insatiable thirst for energyinto an asset. Whether theyre getting rid of waste fuels like gob, helping balance the electric grid in Texas or tapping into the flares at oil-and-gas fields, these cryptopower entrepreneurs are profiting by turning digital lemons into green lemonade. And with countries such as China, Indonesia and Iran moving either to severely restrict bitcoin mining or ban it altogether, the opportunity for domestic producers has never been greater. From just a 4% share two years ago, the U.S. has grown into the worlds second-largest miner, now accounting for 17% of all new bitcoins, according to the University of Cambridge Center for Alternative Finance.
The Belly of the Beast: At Riot Blockchains bitcoin mining facility in Rockdale, Texas, exhaust from some of the stacks of 120,000 energy-sucking computers pushes the temperature up to 130 degrees.
For all bitcoins purported benefits, its also clear that the currency is an environmental disaster. Depending on bitcoins cost (a higher price attracts more miners), its global network sucks up between 8 and 15 gigawatts of continuous power, according to Cambridge. New York City runs on just 6 gigawatts, the nation of Belgium on 10. Exactly how much carbon is released into the atmosphere by bitcoin mining depends entirely on what energy source is used. But the pollution is not negligible. To unlock a single bitcoin, miners must feed their machines about 150,000 kwh, enough juice to power 170 average U.S. homes for a month.
Its especially frustrating that high-energy inputs arent a bitcoin bug but rather a feature. Sure, some portion of the electricity is used to validate transactions, but much is seemingly wasted solving flat-out useless mathematical problems. This proof of work is simply a way to create artificial scarcity, making it far too expensive for any one group to corner or manipulate the market. In a 2010 message board comment, Satoshi Nakamoto, the pseudonymous creator of bitcoin, made no apologies: Its the same situation as gold and gold mining. The marginal cost of gold mining tends to stay near the price of gold. Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange. I think the case will be the same for bitcoin. The utility of the exchanges made possible by bitcoin will far exceed the cost of electricity used.
Of course, the system could have been designed differently. There are serious cryptocurrencies, including ethereum, cardano, stellar, Ripples XRP and algorand, which use vastly less energy than bitcoin or are being modified to do so. Ethereum, for instance, is transitioning next year from proof of work to a system called proof of stake, which cuts energy use by 99.95%. Theres even a new currency, candela, whose protocol requires solar-powered mining.
But bitcoin isnt going anywhere. Its first-mover advantage has translated into a recent market cap of $700 billion, more than the five next most valuable cryptocurrencies combined. (Ether, the second most popular, has a market cap of $250 billion.) And bitcoin mining is unlikely to get much less energy-intensive. Its algorithm forces miners to compete to unlock each new coin, and that competition will continue until the last bitcoin is mined, sometime around 2140. Registering a transaction on the bitcoin blockchain takes a million times more energy than processing one on Visas bank network. (Backers say a new Lightning transaction network designed to operate atop bitcoin could make it even more efficient than Visa.)
If you think its fake money, then any amount of energy use will be too much, observes Ted Rogers, vice chairman of Greenidge Generation Holdings, which operates a power plant and bitcoin mining facility on Lake Seneca in upstate New York. But bitcoin is not going away, and it is going to be the global reserve currency and the center of the future financial world.
If you think bitcoin is fake money, then any amount of energy use will be too much.
To see how green bitcoin can be, look no further than the Lone Star State, whose independent power grid famously failed during last winters deep freeze. Dozens of power plants were knocked offline, causing billions of dollars in property damage, and some retail customers were presented with monthly bills as high as $17,000. While the directors of the comically named Electric Reliability Council of Texas (ERCOT) have since resigned, the states politiciansbeyond mandating that plants prepare better for winter weatherhavent done much to reform the system.
Fortunately, the free market seems to be coming to the rescue, with 16 gigawatts of new wind and solar projects set for construction in West Texas over just the next year. During normal conditions this will be far more electricity than is needed to fill the Texas demand gap. But it will also ensure that theres enough power for extreme events like ice storms and summer heat waves. Bitcoin miners are acting as a kind of shock absorber for this new green power. They buy up excess energy when its not needed, then shut down their mining rigs when demand surges, releasing power back onto the grid.
West Texas is going to dominate; it will all come here, predicts Jesse Peltan, 24, CTO of Dallas-based Autonomous (and a member of the 2021 Forbes 30 Under 30). Last year Peltan helped launch a 150-megawatt crypto mining data center near Midland called HODL Ranch, named for crypto hoarders who buy and then (typo intended) hodl on for dear life. Its the first large-scale operation to be powered by the regions massive solar and wind farms. Some nights the gusts are so ferocious that grid operators give away power just to keep the system from overloading.
Heres the key: These miners have entered into so-called demand response contracts with the Texas grid, whereby they agree, in exchange for rebates, to shut down their computers at a moments notice during times of peak power demand. This brings average power costs at HODL Ranch down below 2 cents per kwh, for a mining cost close to $2,000 per bitcoin.
In Texas, bitcoin miners act as a shock absorber for new green power, buying energy when its not needed and shutting their rigs when demand surges.
The largest bitcoin mining operation in America is also in Texas, operated by publicly traded Riot Blockchain ($3 billion market cap) in Rockdale, northeast of Austin, near a giant interconnection that moves 5,000 MW of grid power through a maze of transformers and high-voltage lines. Riot taps directly into this interconnection to draw 300 MW of that juice, which powers 120,000 high-speed mining computers stacked in racks 30 feet high in three narrow buildings, each longer than two football fields. Construction is under way to expand to 750 MW, with 130,000 more machines to be installed by the end of 2022.
Riot has a ten-year contract to buy all the power it needs in Rockdale at a bargain 2.5 cents per kwh, counting a 0.5-cent-per-kwh discount it gets for participating in demand response. It also has the option to resell all its power to the grid. During the Texas freeze, the Rockdale facility voluntarily shut down all mining for two days. Assuming it earned the peak price of $9 per kwh, thats a $90 million windfall. At this scale of energy procurement, we are not just mining bitcoin, says CEO Jason Les. Instead, Riot is acting as a virtual power plant.
Les, 35, studied computer science at UC Irvine but first learned about bitcoin while playing professional poker in the mid-2010sand seeing other players use it to hold and move their winnings without banks. Hes not bothered by bitcoins volatility, because hes all in: When massive price swings come, they dont affect me whatsoever. In poker, if youre good, youre still losing 45% of the time. Im very comfortable with losing.
An even bigger technological green gamble is being taken by Crusoe Energy Systems, which has raised $250 million, mostly to mine bitcoin in the middle of remote oil-and-gas fields in six states, including New Mexico, Texas and North Dakota. Investors include Bain Capital, Valor Equity Partners, Tesla cofounder J.B. Straubel and the twin-brother crypto billionaires Cameron and Tyler Winklevoss. Crusoe has deployed 45 shipping containers stuffed with bitcoin mining computers, which are powered using natural gas that otherwise would have been burned off or flared. (When drillers complete new oil wells but dont yet have pipelines hooked up to gather the natural gas, they set it on fire, since allowing it to simply waft into the atmosphere would be even worse for global warming.)
We underestimated the operational complexities in the business, admits Crusoe cofounder Chase Lochmiller, a 35-year-old veteran of crypto investment firm Polychain Capital. The startup has found it a challenge to maintain containers spread out across the vast landscape, particularly during the heat of the summer. While Crusoe is unlikely ever to scale up to Riots size and profitability, it is already diverting 10 million cubic feet per day of gas that would otherwise be flared. We think the best way to improve the carbon economics of an oilfield is to add a few bitcoin rigs, Lochmiller says.
Reclaiming history: Spence and Beard of Stronghold walk the Russellton site, which produced metallurgical coal for Pittsburgh steelworks a century ago.
What really counts as green energy? Wind and solar power, for sure. Other sources can be a tougher call.
On the banks of New Yorks Lake Seneca, the Greenidge Generation plant produces 80 MW of power, using about half to mine crypto. Private equity firm Atlas Holdings, based in Greenwich, Connecticut, bought the mothballed plant in 2014 and invested tens of millions to upgrade it to run on natural gas. That means it emits just a quarter of the carbon dioxide it did during the previous six decades, when it ran on coal, and none of the sulfur compounds or particulate matter.
So far, so green. Yet, as it did when it was powered by coal, the plant sucks in up to 100 million gallons of water daily for cooling, returning it to Lake Seneca about seven degrees warmer. Local environmentalists call it a giant fish blender and blame the heated water for lowering oxygen levels and contributing to algae blooms. A bill that would have banned crypto mining in New York for three years died in a state assembly committee in June. Greenidge has been further greenwashing its bitcoin by acquiring CO2 allowances and forestry offsets. CEO Jeff Kirt notes the plants discharge water is well within regulatory limits and says it has been adding more screening systems to protect Senecas trout. The company plans to go public later this year.
Back in Pennsylvania, environmentalists arent entirely thrilled that Spences Scrubgrass plant gets the same subsidy as hydropower. But the state has decided its better to have carbon dioxide emitted by a gob-burning power plant than to leave the stuff in polluting pits.
The problem is real, Spence insists. The only way to fix it is these plants. The technology at Scrubgrass wasnt widely used until the 1990s and is expensive. A special reactor burns the gob, rocks and all, producing a high-pH ash that is applied to the remaining piles to neutralize their acidity. The economics make sense only with the addition of bitcoin mining. Spence has a new, well-connected partner in Greg Beard, who until 2019 headed natural-resources investing at private equity giant Apollo Global Management. The two cofounded Stronghold Digital Mining, which now owns Scrubgrass. With Beard, 49, as CEO, Stronghold raised $105 million in June from private investorsenough to buy more bitcoin mining equipment and acquire a second and possibly third gob-burning plantand has filed preliminary papers to go public. Beard says he never saw anything like this during his two decades in private equity. This is the most important growth play in a generation.
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Green Bitcoin Mining: The Big Profits In Clean Crypto - Forbes