Cloud Hosting

It is not the first time the U.S. Securities and Exchange Commission (SEC) rejected proposals for a Bitcoin spot exchange-traded product (ETP), but efforts continue to be made by different financial institutions. The recent attempt made by Cboe BZX Exchange on Jan. 25 to list the Fidelity Wise Origin Bitcoin Trust as a Bitcoin ETP has also failed.

The SEC letter published on Feb. 8 pointed out that the exchange has not met its burden to demonstrate the fund is designed to prevent fraudulent and manipulative acts and to protect investors and the public interest.

Although proposals of Bitcoin spot ETPs have never been approved by the SEC and such products are not available in the U.S. market, they do exist in the European market. By investigating the prices of ETPs traded in the European market, one could gain a good insight into whether fraudulent and manipulative acts are possible.

To investigate whether the SECs concerns of fraudulent and manipulative acts are justifiable, this article will compare the historic prices of three European listed ETPs and the Bitcoin spot price history from 18 exchanges to see if there are any significant price disparities that could induce market manipulation.

There were two major concerns raised by the SEC from a technical perspective towards BZX Exchanges proposal:

(1) No data or analysis was provided to support the argument that arbitrage across the Bitcoin platforms helps to keep global Bitcoin prices aligned with one another, thus hindering manipulation and eliminating any cross-market pricing differences. There is no indication of how closely Bitcoin prices are aligned across different Bitcoin trading venues or how quickly price disparities may be arbitraged away.

(2) The exchange does not demonstrate the proposed methodology for calculating the index would make the proposed ETP resistant to fraud or manipulation. Specifically, the exchange has not assessed the possible influence that spot platforms not included among the indexs constituent Bitcoin platforms would have on Bitcoin prices used to calculate the index.

To see if the above issues exist and whether manipulative acts are possible within the ETPs listed in the European markets, historic data (from Google Finance) of the following three ETPs listed in SIX Swiss Exchange are compared with Bitcoin spot price from exchanges (data from Cryptowatch).

As described in the proposal by BZX Exchange, the index calculation will be based on the volume-weighted median price (VWMP) in the previous five minutes from five exchanges Bitstamp, Coinbase, Gemini, itBit, and Kraken.

In a very simple and basic attempt to replicate the index calculation with best efforts, the daily spot prices from four out of the five aforementioned exchanges Bitstamp, Coinbase, Gemini and Kraken are used.

Since the Bitcoin ETP price scale is often different from the Bitcoin spot price, the daily percentage change (or daily return) is used in all charts for easy comparison of price disparities.

The graphs below show the daily return comparison between each of the three ETPs and the aggregated Bitcoin spot price, calculated from the four exchanges using the volume-weighted median method.

The left-hand-side scatter plot shows how closely the ETP price is aligned to the spot price. If the two are perfectly aligned, all the points should fall onto the blue dash line. The right-hand-side plot compares the daily percentage return and also plots the difference between the two.

Comparing WisdomTree ETP and the spot, although most of the points in the scatter plot cluster within the +/-5% radius, there are certainly some significant price disparities outside this radius. One day during the three-month period had the daily return difference (blue dash line) between the ETP and spot price reached above 10%.

It is also interesting to note that the volatility of ETP price percentage change tends to be higher than the spot. The graph below comparing Coinbase Physical Bitcoin (blue line) and Bitcoin spot (pink line) shows the percentage change of the former could reach nearly 15% whereas the latter only went past 10%.

Similarly, 21Shares Bitcoin ETP price is also more volatile than the spot and the correlation with the spot is lower (62%) than that of WisdomTree (67%) and Coinbase Physical Bitcoin (66%).

The price comparisons shown above suggest cross-market pricing differences between the ETP price and the Bitcoin spot price from exchanges exist. The price disparities have not been arbitraged away quickly enough to prevent manipulative acts.

However, it is important to highlight that this is only a very rough comparison using the daily data. The difference in prices might be due to the different cut-off times each ETP uses to calculate the end-of-day price, i.e., exchange-traded products do not trade 24-hours like the crypto spot price; they trade during the Exchanges regular trading hours from 9:30 am to 4:00 pm.

Also, in practice, a much higher frequency will be used to calculate the index price, i.e., the BZX Exchange proposal suggests calculating the index price using the previous five minutes data from five exchanges and updating the Intraday Indicative Value (IIV) per share every 15 seconds. The analysis done here is using only daily aggregated data to proxy the index price and might not reflect the actual index price using high-frequency data.

It is worth pointing out that although price disparities can be observed between ETPs and spot price using daily data, price discrepancies between the ETPs, themselves, are much smaller as shown in the graphs below.

It is very likely that these ETPs listed in the same exchange all use the same frequency and cut-off time to calculate their prices; hence, the price differences are smaller among themselves. This reinforces the point that the price disparities between the Bitcoin ETP and Bitcoin spot price might come from the frequency and the cut-off time used in the methodology of ETP index calculation, which can not be replicated exactly the same in this analysis.

In the first point of concern mentioned at the beginning of the article, the SEC also asked how closely Bitcoin prices are aligned across different Bitcoin trading venues.

Based on the cross-platform BTC/USD data collected from 18 exchanges from Cryptowatch, the exchange price disparities are very small. As an example to show how closely the prices align to each other, Coinbase, Gemini and Bitstamp are compared against Kraken and the correlation between each pair is very close to 100%.

The SEC is also concerned about the possibility of price influence and manipulation from spot platforms that are not included among the indexs constituents. If Bitcoin prices from other platforms are very different from the four constituent platforms, Bitstamp, Coinbase Gemini and Kraken market manipulators might seek to exploit the disparities for profit.

To see if price disparities exist between the four platforms and others, the bottom right graph below compares the aggregated volume-weighted median price from the four platforms with the aggregated price from all 18 exchanges. The nearly perfectly aligned line shows there is almost no difference between the two. The spot platforms do not have large price disparities and the prices are closely aligned across different Bitcoin trading venues.

With such great similarity in daily prices, manipulative acts will be very difficult across exchanges. However, price manipulation could still happen intraday but its beyond the reach of this analysis due to lack of high-frequency intraday data.

Based on the analysis from the three SIX Swiss Exchange listed ETPs prices and the Bitcoin spot prices from 18 exchanges, it seems price disparities do exist between ETP and spot. This could potentially lead to manipulative acts towards ETP index price, even though the applicants frequently claimed the sophisticated index calculation methodology prevents such acts.

The SECs concerns about fraud and manipulation seems to be justified based on the price disparities between these European listed ETPs and the spot price. That said, the difference could be caused by the daily data frequency used in this analysis, which is different from the high-frequency data used in practice.

On the contrary, no significant price disparities can be found among different Bitcoin trading venues. Although the spot markets from these venues are more decentralied and less regulated than traditional stock exchanges, malicious price manipulation across these platforms could still be very difficult.

Given the large number of centralized and decentralized, regulated and unregulated crypto exchanges out there, it is extremely hard to prove price efficiency and similarity across all of them. The U.S. ETP applicants still have a long way to go to convince the SEC.

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.

More:
Heres why the SEC keeps rejecting spot Bitcoin ETF applications - Cointelegraph

Bitcoin Magazine obtained exclusive access to details about the upcoming COLDCARD Mk4, the new version of Canada-based Coinkites Bitcoin hardware wallet that improves upon the popular COLDCARD Mk3.

The main features of the new model include a USB-C connector, no restrictions on Bitcoin transaction size, increased security with an extra secure element, NFC integration, a slide cover, a USB virtual disk mode, and an extensive Trick PIN optionality.

The front and back of Coinkite's upcoming hardware wallet, the COLDCARD Mk4. Photo courtesy of Coinkite.

In the connections front, the user can opt into using NFC with the Mk4 by enabling it in the devices settings as the feature will come disabled by default. Once turned on, NFC will enable the COLDCARD to come near a compatible device to sign a transaction or a message, co-sign in a multisig setup, or share information from the devices MicroSD card like a payment address or an extended public key, a partially-signed Bitcoin transaction (PSBT), a text file, or a transaction file.

Coinkite founder NVK told Bitcoin Magazine that the goal with NFC is to lower cost, improve UX, and further adoption.

Imagine hardware wallets being able to just tap-to-pay, he said.

Although QR codes have recently become popular in some hardware wallets, NVK said they havent been adopted in the larger payment industries because they have extremely low data bandwidth, are more complex and not human readable, and require more expensive hardware.

This feature was added to improve phone-wallet UX as all modern phones have NFC, free, already sitting unused, NVK said. NFC will be available to all COLDCARD functions we are able to send or receive data, just like the SD card or USB cable.

In addition to requiring NFC to be turned on for usage, NVK told Bitcoin Magazine that the Mk4 will also enable the user to permanently disable the feature by scratching a PCB trace exposed on the MicroSD opening.

While previous versions of the COLDCARD had a single secure element (SE), Mk4 brings a second SE to establish a more robust security model for the users private keys and suppress potential single points of failure. Moreover, the fact that the second SE is from a different vendor further protects the user from any unexpected bugs or issues with a specific SE design.

An attacker would need to fully compromise the two secure elements and the main microcontroller (MCU) before being able to extract seed words from the COLDCARD Mk4 as the device now distributes the encryption key among the three components. Additionally, even if all three components are compromised, the devices PIN code would still be required.

Mk4 also allows the user to set up multiple Trick PINs. While the actual PIN unlocks the device and enables wallet functions, Trick PIN codes can exert alternative functionality such as unlocking a duress wallet, triggering a long login delay, or bricking or blanking the COLDCARD.

These PINs are useful in different scenarios, but they can often come in handy in a physical attack where the user is coerced into unlocking their COLDCARD. For instance, the user can just use a Trick PIN for unlocking a duress wallet for plausible deniability. Alternatively, in a more extreme scenario, the user can type in a Trick PIN that wipes the COLDCARD clean and then bricks it, making it unusable.

Additional improvements brought by Mk4 over Mk3 include faster booting; a 120 Mhz CPU, up from 80 Mhz; maximum space for settings now 512 KB, up from 4 KB; more multisig wallet possibilities; firmware upgrade now takes 15 seconds, down from two minutes; 216 bytes of new secure storage alongside main seed phrase; a flashing light indicating when the USB connection is in use; a USB disk emulation for simple use with web browsers and other PSBT sources; and a doubled flash memory for firmware, among other updates.

Mk4s launch date is yet to be determined, but the device is available for pre-order at the Coinkite store.

Read the original:
Inside The New COLDCARD Mk4 Bitcoin Hardware Wallet - Bitcoin Magazine

Yesterday (February 16), Intel Corporation CEO Patrick Gelsinger explained how his companys upcoming crypto mining chip could help to solve Bitcoins climate issue.

According to his LinkedIn profile, Gelsinger started his career in October 1979 by becoming senior vice president and the general manager of the Digital Enterprise Group, and he kept these positions for the next 30 years. Also for five years, starting in January 2000, he was the companys CTO. Before returning to Intel in February 2021, he was president and COO of EMC (Sep 2009 Aug 2012) and CEO of VMware (Sep 2012 Feb 2021).

His most recent comments about Bitcoin were made during an interview with Emily Chang on Bloomberg Studio 1.0.

Chang started by reminding Gelsinger that back in 2019 he had said Bitcoin was bad design, extreme, and climate-intolerant, and asked if he stell felt the same way.

Gelsinger replied:

Indeed I do. A single ledger entry in Bitcoin consumes enough energy to power your house for almost a day. Thats a climate crisis, right, at that point, and the more you use it.

So if we produce a technology that consumes that much energy, wow, thats not okay. And then most of the uses when I said that were illicit, right? And it couldnt be regulated. So, it could become a currency for nations and for people to use broadly as well.

So, I have this mantra, you know, and we at Intel believe deeply that we have to be shaping technology as a force for good, right? If its being used for bad purposes, a climate crisis Well, that is not good yet. That doesnt mean its not a good technology, but were not using it good yet.

Well, Intel is about to bring forward a blockchain chip, you know, thats dramatically better, that is orders of magnitude better in terms of power performance. So, were helping to solve the climate issue in that way. We want to work with the industry to find ways that technologies like blockchain can be properly regulated, managed as well so that they truly can be fully realized.

So, yes, this is one of those areas that were gonna work on fixing this one because this is a powerful technology. An immutable leverageable digitized entry system can transform currency transactions, supply chain. So yeah, this ones exciting.

With regard to the blockchain chip Gelsinger referred to in the interview, on February 11, Raja M. Koduri, Senior Vice President and General Manager of the Accelerated Computing Systems and Graphics (AXG) Group at Intel, made the following announcement:

Today, we at Intel are declaring our intent to contribute to the development of blockchain technologies, with a roadmap of energy-efficient accelerators. Intel will engage and promote an open and secure blockchain ecosystem and will help advance this technology in a responsible and sustainable way.

We are mindful that some blockchains require an enormous amount of computing power, which unfortunately translates to an immense amount of energy. Our customers are asking for scalable and sustainable solutions, whichis why we are focusing our efforts on realizing the full potential of blockchain by developing the most energy-efficient computing technologies at scale.

Our blockchain accelerator will ship later this year. We are engaged directly with customers that share our sustainability goals. Argo Blockchain, BLOCK (formerly known as Square) and GRIID Infrastructure are among our first customers for this upcoming product. This architecture is implemented on a tiny piece of silicon so that it has minimal impact to the supply of current products.

Intel Labs has dedicated decades of research into reliable cryptography, hashing techniques and ultra-low voltage circuits. We expect that our circuit innovations will deliver a blockchain accelerator that has over 1000x better performance per watt than mainstream GPUs for SHA-256 based mining.You will be able to learn more about our circuit innovations at the International Solid State Circuit Conference (ISSCC) this month.

He went on to say:

To support this, and additional emerging technology, we have formed the new Custom Compute Group within Intels Accelerated Computing Systems and Graphics business unit.The objective of this team is to build custom silicon platforms optimized for customers workloads, including blockchain and other custom accelerated supercomputing opportunities at the edge. Onward, we aspire to leverage technologies from our zetta-scale computing initiative to deliver energy-efficient solutions that make our tomorrow better than our today.

The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.

Featured Imageby TheDigitalArtist viaPixabay

Continued here:
Intel Wants to Solve Bitcoins Climate Issue With Its Upcoming Blockchain Chip - CryptoGlobe

Bitcoin (BTC) looks ready to fall below $30,000 in the coming months, per a confluence of historically accurate technical indicators brought forth by popular analyst Ari Rudd.

The independent market analyst published a thread on Feb. 14, explaining why Bitcoin's ongoing price recovery from below $33,000 on Jan. 24 to around $42,000 on Feb. 14 might not have strong legs.

In doing so, Rudd presented at least three long-term technical setups with extremely bearish outlooks.

They are listed as follows:

Rudd's Logarithmic Fractal Growth (LFG) is a Bitcoin price prediction model that relies on BTC's fractals that consist of "logarithmic scales on both axes." It then projects where Bitcoin may go next based on its historical price actions.

The analyst applied the LFG model on a monthly BTC/USD chart.

As shown in the chart below, the LFG levels had posed as accumulation/distribution zones for traders during the previous bearish cycles. So, Rudd noted that Bitcoin still had to fall to the lowermost level range, a so-called buy-area that had coincided with bottoms during the 2018 and 2020 price crashes.

"We are a few months away from reaching the accumulation phase," Rudd stressed, adding that:

Like the LFG model, moving average ribbons have coincided accurately with the end of Bitcoin's bearish cycles, including 2018 and 2020, on a quarterly timeframe.

In detail, these ribbons represent a range of moving averages (MAs) that enables traders to identify key resistance and support areas by looking at prices in relation to the MAs. Each of Bitcoin's top-to-bottom trends earlier has exhausted near its so-called "ribbon support."

With the cryptocurrency undergoing another price correction from its $69,000top, the analyst suggests that its strong bounce from near $33,000 could turn out to be a bull trap because the price is "due to retest the Ribbon support on [the] quarterly chart."

As a result, the moving averages ribbon indicator risks sending Bitcoin to $25,000 or below.

Another moving average ribbon indicator, but on weekly timeframes, has been instrumental in capping Bitcoin's ongoing price rebound.

Related:Up only for BTC fundamentals 5 things to watch in Bitcoin this week

The "strong resistance," as Rudd hinted, provided further bearish sentiment if coupled with Bitcoin's weekly relative strength index (RSI).

RSI gives traders cues about bullish and bearish price momentum. Rudd noted that the buying momentum weakened around a downward sloping RSI trendline, hinting at potential selloffs ahead for the BTC/USD pair.

In contrast to the bearish technical indicators mentioned above, there are several Bitcoin on-chain indicators providing an interim bullish outlook.

As Cointelegraph covered earlier, Bitcoin addresses that hold at least 1,000 BTC have added more tokens to their balances during the recent upside retracement, signaling that the richest crypto investors have been backing the BTC's rebound move.

Additionally, the amount of Bitcoin held by exchanges dropped on Feb. 13 to its lowest levels in over three years, data from Glassnode shows, in a continuing bullish downtrend that has remained intact since the March 2020 bottom.

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.

Go here to see the original:
Bitcoin bull trap? 3 indicators that predict BTC price falling to $24K27K this year - Cointelegraph