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After a stressful Supreme Court hearing, India conceded that bitcoin and crypto assets are not illegal. The Reserve Bank of India, the countrys central bank, also stated it did not place restrictions on Bitcoin (BTC) or other virtual currencies.

The RBI put in place ring-fence regulations, to protect banks and institutions from the risks related to trading bitcoin and other crypto assets, reported the Economic Times of India. The central bank has also restricted banks from dealing in bitcoin and crypto, due to concerns for terrorism financing. The wider public is not restricted from trading, or using digital assets in a peer-to-peer fashion.

The central bank, however, has expressed concerns about the effects of digital assets, without going for an outright ban. This made the Internet and Mobile Association of India (IAMAI) to protest before the Supreme Court, based on an RBI circular distributed in 2018.

The bank explained that it did not ban all entities, but only a selected section of companies that should not be involved with bitcoin and other digital currencies. In an affidavit, the RBI explained:

Firstly, the RBI has not prohibited VCs (virtual currencies) in the country. The RBI has directed the entities regulated by it to not provide services to those persons or entities dealing in or settling VCs The RBI has been able to ringfence the entities regulated by it from being involved in activities that pose reputational and financial risks along with other legal and operational risks.

When it comes to banking, the crypto community expects problems with shifting between fiat and crypto, a problem that has put curbs on growth in multiple regions.

This year, regulators in India will loosen capital controls somewhat, allowing citizens to move up to $250,000 annually outside the country. This relatively small sum may allow Indians to invest in bitcoin and crypto through third-party exchanges.

LocalBitcoins volumes remain relatively high in India. The country is one of the advanced markets for bitcoin and crypto activity, especially after the government ran a program to mop up cash and crackdown on a large grey economy. But the RBI has been vigilant and has curbed the growth of crypto activity, by additionally discouraging local ICOs.

Still, India hosts 57 Bitcoin nodes, showing significant interest in cryptocurrency. The news of a country-wide ban has been refuted so far. Still, regulators remain vigilant about crypto-related risks, money-laundering, and effects on personal finance. India has also added significantly to the BitConnect scheme, with regional leaders taking in significant wealth.

What do you think about RBIs stance wrt to Bitcoin and crypto assets? Share your thoughts in the comments below!

Images via Shutterstock, Twitter: @Btcexpertindia, @howdy_akshay

See more here:
Bitcoin, Crypto Assets are not Banned in India: RBI - Bitcoinist

Bitcoin recorded another fresh 2020 high Friday as it climbed to $9,000.

There are different theories as to why the number one cryptocurrency suddenly came back to life. Just over a week ago, bitcoin rallied along with gold and oil after geopolitical risks in the Middle East escalated. Some analysts claim that speculators are already positioning for the May 2020 halving. Others claim that the loose monetary policies of central banks is driving investors to take on riskier assets.

While these theories have their own merit, new information tells me that institutional money may be powering bitcoins ascent.

In the fourth-quarter of 2019, the top cryptocurrency struggled to keep its head above water. From a high of $10,350 in October, it nosedived to $6,425 in December. At the time, the atmosphere was so pessimistic that calls for a drop to $5,000 or lower were dime a dozen.

At the same time, however, Grayscale was raking in institutional money. Last year, the Grayscale Bitcoin Trust drove demand as institutions invested $471.4 million. Nearly 200 million were raised in 2019.

This new information tells me that institutional investors helped carve the bitcoin bottom in December. It is no coincidence that the orange coin bottomed out just as institutional money came pouring in.

$200 million is a lot of money for an asset class with a market cap of about $162 billion. The impact of institutional money is magnified if you consider that more than half of BTCs in circulation have not moved in a year. Only $50 billion worth of BTCs have been changing hands over the past 12 months.

The chart shows that 64% of the over 18.04 million BTCs in circulation are dormant. Only 6.46 million BTCs are being used for trading or payments. These numbers indicate that the cryptocurrency is bound to soar if $200 million of new money enters the market.

While $200 million may be enough to carve a bottom, its not sufficient to push bitcoin to greater heights. Should the current bull rally fail to entice new investments, the coin will likely struggle to maintain its momentum. Whats even worse is that institutions might cash out just as new money from hyped retail traders enter the market.

If that happens, we might see bitcoin capitulate to $5,000 as trapped retail money rush to exit the cryptocurrency.

Disclaimer: The above should not be considered trading advice from CCN. The writer owns bitcoin and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.

This article was edited by Sam Bourgi.

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Institutional Money May Be Igniting the Current Bitcoin Rally - CCN.com

This week saw Bitcoin price (BTC) hitting the $9,000 barrier amid the launch of CME Bitcoin options and Plaids acquisition by Visa, reaching a record price for the last two months.

Bitcoins 27% price gain since the beginning of the year along with the future bullish scenarios laid down by investors may attract new crypto holders. But since BTC/USD is traded 24/7, new investors may be wondering: is there a difference between investing on a particular day of the week?

Figure 1. Crypto market data, 1-day performance. Source: Coin360

The basis of a difference in a day of a week returns comes from traditional stock markets. It has been shown that stock returns on Mondays are, on average, negative. This is called the Weekend Effect. One explanation is that the effects on a particular stock will only be felt on Monday since the market is closed during the weekend. However, the cryptocurrency market is always open: Could we expect the same behavior on Mondays for Bitcoin?

Analyzing Bitcoin returns from the beginning of 2019 until Jan. 13, 2020, data shows that Fridays present the highest average return across the days of the week at 1.1%. In contrast, only two days of the week show negatively average returns, Tuesday (-0.24%) and Thursday (-0.97%).

If an investor only started investing at the start of 2019 on a particular day of the week, Friday would present the best cumulative return, followed by Monday (Figure 2). Taking Fridays as an example, its assumed that the strategy would be to buy BTC closing price on Thursdays and sell it at the closing price on Fridays.

The closing prices (UTC timezone, a rolling 24-hour period) are used for simplicity reasons since the desired time to buy and sell during those days is based on the investors preference. The same buy/sell rationale applies if another day of the week is chosen to conduct the strategy (i.e. Monday).

Figure 2: Cumulative Return for investing on a specific day only between January 2019 and January 2020

Taking a deeper look at Bitcoin returns for a longer time period, as seen from Figure 3, we can conclude that Mondays offer the best average return from all the days of the week (0.54%).

On the other hand, Thursday and Wednesday are the worst days of the week to invest in Bitcoin with an average return of -0.09% and -0.23%, respectively.

Bitcoins Monday anomaly case is reinforced from a statistical perspective since Monday is the only day of the week with a statistically significant result from the used regression models.

Curiously, as a truly anti-status quo coin, Bitcoin shows a mean positive return on Mondays, in contrast to traditional stock markets Weekend Effect.

Figure 3: Average Daily Return for each Day of the Week between April 2013 and January 2020.

Using the same long-term sample starting in April 2013, an investor choosing exclusively one day of the week as a strategy would get the best option by choosing Mondays, followed by Saturdays, as seen from Figure 4.

Figure 4: Cumulative Return for specific day investment during the entire sample analyzed (Between April 2013 and January 2020)

We cannot ignore Bitcoins explosive gains from two highly volatile periods seen in 2017 and how those influence the average returns for the longer time sample. By isolating that year, we find that Monday still shows the highest average return (1.5%) across the days of the week, followed by Thursday (0.55%).

Figure 5: Average Daily Return for each Day of the Week between during 2017

In summary, Bitcoins unique features reveal an opposite behavior to traditional stock markets, showing a positive average return on Mondays when considering wider time periods. However, when dealing with shorter time frames, we identify Fridays as the day with the highest average returns across the days of the week.

As reported by Cointelegraph, a study in September 2019 showed that Bitcoin holders make a profit after an average of 1,335 days, or roughly three years and eight months. Overall, holding BTC has been profitable for over 94% of days Bitcoin has existed, according to the latest data from Bitcoin Hodl Calculator.

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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New Analysis Finds That Mondays Are the Best Days to Buy Bitcoin - Cointelegraph

This article seeks to answer the question, what is the biggest investment opportunity of 2020? First and foremost, you are not likely to find it in the stock market with current frothy conditions.

Bonds and gold provide decent opportunities. If you believe that we are in the late stages of the business cycle, being long bonds is the best way to articulate that view without taking the outsized risk of shorting equities. Meanwhile, negative yielding bonds in Europe and Japan, geopolitical tension, and foreign central bank demand have created the perfect storm for gold prices.

Commodities are inexpensive, but if global industrial production continues to lag, base metals and other commodities will remain cheap. For context on lagging industrial production, the current print on the ISM is 47.2. There has been a 65% chance of recession whenever the ISM dropped below 50, and a 100% chance whenever the ISM crossed below 46. Despite this, neither stocks, bonds, gold, nor commodities offer the same risk/return profile of the asset class I am about to propose.

The biggest opportunity of 2020 and beyond is Bitcoin. Bitcoin's stock to flow (SF) ratio has a 95% coefficient of determination, or R-squared, with the price per coin. In plain terms, 95% of the variation in the historical price of Bitcoin can be explained by its stock to flow (existing stockpiles/yearly mining) ratio. Only 5% is determined by other factors such as regulations, adoption rates, and news surrounding Bitcoin. This model has Bitcoin's fair value at $55,000 by May 2020 due to the upcoming halving.

My first impression was incredulity. For a regression analysis on the price of an asset to be that parsimonious seems too good to be true. Yet both individual statisticians and institutional investors have confirmed the validity of the model. Surely, the model can break down for currently unforeseen reasons. I would not suggest levering up or putting most of one's portfolio in any cryptocurrency. However, the risk versus reward is highly asymmetric. Investors risk losing principal in order to gain 10x or more.

There are three primary ways to think about Bitcoin. The first is as a disintermediary in the financial system. Before Bitcoin, no mechanism existed to transfer value over a communications channel without using a third party. Peer-to-peer transactions on a distributed ledger reduces the time and transaction costs associated with online payments going through a bank or other trusted central authority. The largest issue with online coins is preventing double-spending, a flaw whereby someone can falsify and spend the same coin multiple times. Bitcoin's proof of work system prevents double spending. The Bitcoin ecosystem also aims at privacy with all transactions displayed using anonymous public keys and security through decentralization.

The second way is as a superior form of money. My previous Bitcoin article sticks exclusively to this realm. Essentially, it serves as a greater medium of exchange than gold because it can be sent instantly and as a greater store of value than the dollar because it is not subject to fabrication from Central Banks.

The final way to think about Bitcoin is digital scarcity as its enigmatic creator Satoshi Nakamoto explains:

"As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties: boring grey in colour, not a good conductor of electricity, not particularly strong [...], not useful for any practical or ornamental purpose ... and one special, magical property: can be transported over a communications channel."

The mining process of Bitcoin is akin to gold and silver in that it requires time and energy, but through computational power and electricity instead of labor. After satisfying the proof of work requirement, a miner is rewarded with newly created coins. The number of coins rewarded began with 50 and is halved every 210,000 blocks, or roughly four years, until the stock reaches 21 million coins. That means every four years, the stock to flow ratio doubles, and price moves exponentially higher with increases in SF. The chart below shows price action with previous halvings.

(source: "Modeling Bitcoin's Value with Scarcity")

The SF model holds true for gold and silver prices as well. Gold, silver, and Bitcoin trade very similarly based on scarcity dynamics. That's why from a valuation perspective, perhaps the best way to think about Bitcoin is digital scarcity.

(source: Ibid.)

Thus far, I have presented the fact that the SF model has a 95% correlation coefficient with the price per Bitcoin. I have also presented the fact that the SF of Bitcoin will double in May of this year. A model with 95% accuracy up to this point stating that the price of an asset will move exponentially higher within the next few months is worthy of some attention. And while critics object that Bitcoin is too risky, the chart below shows that historically, a 1% BTC/99% cash portfolio would have outperformed any asset class while taking next to zero risk.

(source: "Efficient Market Hypothesis and Bitcoin Stock-to-Flow Model")

The SF model is credited to both Saifedean Ammous, author of The Bitcoin Standard, and Plan B, an anonymous quantitative institutional investor from the Netherlands. Plan B highlights and addresses two major objections to his model. Firstly, halvings should already be priced into Bitcoin as all information is priced into an asset according to the Efficient Market Hypothesis. The counterargument goes that despite the public availability of the model, most investors overestimate the risks associated with investing in Bitcoin. These risks include hacks to exchanges, a superior coin entering the market, governments making Bitcoin illegal, etc. While reasonable risks, these objections have been used since Bitcoin's infancy.

According to the model, Bitcoin will achieve a market capitalization of $1 trillion after May 2020. The question is, where will all this money come from? Plan B cites some examples as follows: "silver, gold, countries with negative interest rate (Europe, Japan, US soon), countries with predatory governments (Venezuela, China, Iran, Turkey, etc.), billionaires and millionaires hedging against quantitative easing (QE), and institutional investors discovering the best performing asset of last 10 yrs." I have a few important facts to add.

The world is awash with liquidity due to Central Bank policies. The world is also awash with investors seeking yield and undervalued assets in the current "everything bubble." Bitcoin is already in the top thirty global currencies by market cap. With a greater market cap than the Colombian peso and the New Zealand dollar, there is no denying that Bitcoin plays a role in the global macroeconomic landscape. As it moves higher as a share of global currencies and assumes a larger role in the future of the financial industry, more institutions will find themselves buying.

Regardless of one's personal opinion on the future of this asset class, enough quantitative evidence exists from Bitcoin's decade of existence to suggest that it has a role to play in everyone's portfolio.

Disclosure: I am/we are long BTC-USD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Continued here:
Bitcoin: The Biggest Opportunity Of 2020 - Seeking Alpha

INDIA - 2019/12/04: In this photo illustration a popular decentralised digital currency, Bitcoin ... [+] logo seen displayed on a smartphone. (Photo Illustration by Avishek Das/SOPA Images/LightRocket via Getty Images)

A rally in cryptocurrencies that began two weeks ago continued to gain momentum last week.

By late Saturday afternoon, Bitcoin was up 9.90%, ETH was up 21.38%, XRP was up 13.54%, and LTC gained 19.10%. Bitcoin raced towards the key $9,000-mark.

The rally was broad, with 90 cryptocurrencies advancing out of the top 100!

And it came as tensions with Iran eased and Wall Street staged its own rally.

That sounds like the old good days when Bitcoin was crossing one key-mark after another and the rest of the market was following through.

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How long the good days will last this time around? Experts see a pause at these levels.

Christopher Brookins, Founder and CIO at Valiendero Digital Assets, thinks that Bitcoin is currently taking a "breather.""The current value is still far from overbought territory, which bodes well for continued buying momentum with periodic consolidation points (currently happening)," he says.

Brookins estimates are based on The Hurst exponent (H) model, which is rooted in mathematics founded by Benoit Mandelbrot, to determine if a financial market is trending or not.

He's watching the $8680 (Kumo Cloud support) and $9418 (Cloud resistance and failed resistance from late-October surge). "A breach of either with significant volume can dictate where the price will go for the remainder of January. The current price action is still firmly bullish, but VFI will need to rise above 0 to confirm a bull market; preferably in combination with breaking key resistance. However, given the RSI level of 75, Bitcoin may run out of buying momentum before either is accomplished in the near term."

In addition, his model predicts that ETH and LTC price increases are unlikely to last for a sustained period. And he expects BTC to begin "demonstrably outperforming both ETH and LTC."

Nicholas Pelecanos, an Advisor to NEM Ventures, seesBitcoin sitting at a point of major technical resistance. "A break from here will lead to a rapid bullish climb. Currently, I'm watching BSV; further developments in Craig Wright's court case and relating to the Tulip Trust could lead to massive price appreciation and potentially a BTC sell-off," he says.

Meanwhile, Greg Forst, Director of Marketing at Factom Protocol, thinks that "the latest price rally gives a further illustration of the strong vital signs of the digital asset and DLT space."

And that makes him optimistic about the digital currency reaching its final "destination." "Reaching the point of truly mainstream adoption will take more time, but the rallies we've seen reaffirm what I've always believed: we are moving closer to the destination, fueled by the principles of transparency and efficiency," he says.

See the rest here:
Bitcoin, ETH, XRP, And LTC Rally Gains Momentum: How Long Will It Last? - Forbes