Investors are irresponsible if their portfolios have no exposure to bitcoin, according to Anthony Pompliano of Morgan Creek Digital Assets.The co-founder & partner said in his latest “Off the Chain” podcast that it makes sense for fund managers and investors to keep 1 to 5 percent of their capital in bitcoin. He explained that the cryptocurrency is presenting itself as the perfect global hedge in times of economic uncertainties. That should prompt investors to take notice as their investments in the mainstream markets threatens to shrink any further.“We are living in exceptionally volatile and unpredictable times. Institutional investors have sought out non-correlated assets as portfolio diversification tools for decades,” wrote Pompliano. “Now that Bitcoin is presenting itself as the perfect global hedge, it will quickly become irresponsible for these investors to remain with 0% exposure to the digital currency.”The inverse correlation between $SPX (blue) & #Bitcoin (Candles) / #Gold (orange) remains strong. My thesis is money will continue to flow into these assets in a slowly declining market. If it turns into a crash they may get sold off in a scramble for liquidity. pic.twitter.com/xsS7iuTURY— Alex Saunders (@AlexSaundersAU) August 5, 2019Economy in RedThe statements borrowed sentiments from the economic uncertainties arising on a global scale. United States President Donald Trump has escalated his trade war with China after threatening to impose an additional 10 percent tariff on $300 billion worth of Chinese imports. In response, Beijing depreciated its national currency – the Chinese Yuan – below $7 for the first time in eleven years.China continues to remain unfazed. The superpower announced yesterday that it is suspending agricultural purchases from the US. The White House, in retaliation, branded Beijing as a currency manipulator.The result of the catfight is an economy in red. Global markets are plunging, with both Asian and US equities falling right of a cliff.Fragile calm returns to stock mkts as Yuan steadies. Asia equities not able to fully follow through rebound on Wall St after PBOC set Yuan daily fix marginally stronger than 7 a dollar. Bonds continue rally w/US 10y yield at 1.68%, Gold at 6y high, Brent Oil w/ $58.85 in bear mkt pic.twitter.com/cEdGPofe9X— Holger Zschaepitz (@Schuldensuehner) August 7, 2019Among the assets that are returning profits amidst an economic meltdown is bitcoin. The non-sovereign asset is performing exceptionally well as investors flock towards its market for their reasons: to fight capital control in China, to protect their investment portfolios, or whatnot.“Bitcoin,” wrote Pompliano, “is a non-correlated, asymmetric return-profile asset. It has proven even to be inversely correlated in times of increased global instability. Take May 2019, for example — the trade wars were escalating, and threats of tariffs were being lobbed at multiple countries. Bitcoin was up 55% for the month and showed a negative correlation to the S&P 500 and gold.”The Anti-Bitcoin Views, MeanwhileThe inverse proportionality between bitcoin and global markets is visible on the charts. Nevertheless, some financial experts believe the ones that are driving the cryptocurrency higher are not investors, but speculators. Peter Schiff of Euro Pacific Capital thinks on the same lines.Bitcoin may be up more than gold or silver today, but gold and silver stocks are up more than Bitcoin. Since there is much more upside potential with less downside risk in mining stocks than there is in Bitcoin, speculators should move from Bitcoin to precious metals stocks!— Peter Schiff (@PeterSchiff) August 5, 2019“Why does CNBC allow Brian Kelley to lie about Bitcoin,” he tweeted about a Squawk Box coverage about the cryptocurrency’s rise. “He just assured viewers that a new high in Bitcoin is a certainty because for the first time an institutional herd is now buying. Brian, I challenge you to identify those institutional investors that have piled in!”
Archives for August 7, 2019
Bitcoin price action is once again heating up, with the crypto asset making repeated attempts to regain its bullish footing and continue toward retesting the previous all-time high set back at the height of the crypto hype bubble at $20,000.
The European Central Bank (ECB) has issued a new report indicating that it plans to use more on-chain data to better monitor the crypto markets.
Titled “Understanding the crypto-asset phenomenon, its risks and measurement issues,” the report reveals that the ECB has already built a system that uses “high-quality” aggregated data available online in its efforts to analyse “the crypto-asset phenomenon” to identify and monitor how the financial technology might affect monetary policy and the risks it potentially poses to market infrastructures, payments and financial stability.
However, using available data in this way has limits to its value. The report explains that this data leaves “gaps and challenges,” such as the exposure of financial institutions to crypto-assets and payment services that use layered protocols.
It lists, among others, derivatives and investment vehicles’ exposure to digital assets, financial firms moving into custody and other services, and payments platforms using cryptos as potentially having implications for financial policy and stability.
While currently “contained and/or manageable,” such links with regulated financial firms “may develop and increase over time.”
Going into more detail on these issues of collecting accurate data, the EU banking authority says:
“Specifically, it is hard to retrieve public data on segments of the crypto-asset market that remain off the radar of public authorities; some relatively illiquid trading platforms may be affected by wash trading; and there is no consistency in the methodology and conventions used by institutionalised exchanges and commercial data providers. Moreover, new and unexpected data needs may well arise with further advancements in crypto-assets and related innovation.”
Going forward, the ECB plans to go into more granular detail for its analyses of crypto assets, and “will continue to work on indicators and data by dealing with the complexity and growing challenges encountered in analysing on-chain and layered protocol transactions.”
It will further seek new data sources for information on links between crypto assets and regulated firms.
Regarding off-chain transactions – transactions conducted off the blockchain and later aggregated back on-chain in fewer transactions – the ECB said it will work on increasing the “availability and transparency” of reported data and the methods used to provide it, “harmonising and enriching the metadata and developing best practices for indicators on crypto-assets.”
Euro sign image via Shutterstock
A San Francisco judge cleared Coinbase of fraud, but slammed the exchange for its ‘incompetent’ handling of the BCH launch. Source: Shutterstock
The Northern District Court of California has slammed Coinbase’s ‘incompetence’ over its controversial Bitcoin Cash launch in 2017. The court denied a renewed motion by the company to force arbitration against plaintiff Jeffrey Berk, but dismissed allegations of fraud against Coinbase.
“Moreover, while the factual allegations paint a compelling picture of an incompetent launch by Coinbase, the complaint does not outline a coherent account of fraud by Coinbase, Armstrong, and Farmer.”
As reported by CCN earlier this year, the cryptocurrency trader sued the exchange for insider trading in Bitcoin Cash. While the ruling cleared Coinbase and its leadership of outright fraud, they clearly can’t be too pleased with the current state of affairs.
A judge ruled that Coinbase might not have committed fraud, but that doesn’t necessarily mean it’s in the clear. | Source: Scribd
The arbitration ruling was a win for Berk; however, the judge also threw out multiple claims that he and other plaintiffs made. Crucially, US District Judge Vince Chhabria sided with Coinbase regarding the alleged market manipulation:
“That standard plainly has not been met for the plaintiffs’ claims premised on Coinbase’s alleged facilitation of insider trading or alleged market manipulation.”
Buyers, not sellers, to move forward with negligence lawsuit due to Bitcoin Cash Launch
BCH spiked a day before listing on the popular American exchange back in 2017 causing Berk and others to speculate on whether Coinbase had provided insiders the opportunity to buy ahead of the news.
Readers will recall that Coinbase subsequently halted trading in Bitcoin Cash within a few minutes of officially listing. At the time, they cited “significant volatility” as the cause for suspension.
That’s a rather dubious claim in a market that is generally quite volatile. And Judge Chhabria agreed:
“The complaint also lays out a plausible account that Coinbase breached its duty to maintain a functional market. For starters, the fact that Coinbase halted trading within three minutes of the launch is indicative of dysfunction.”
He further noted the premiums that many buyers were forced to pay given the situation. As such, Judge Chhabria has given the go-ahead for buyers, not sellers, to move forward with a negligence lawsuit against the cryptocurrency exchange.
- Bitcoin’s bull run from April lows near $4,100 seems to have stalled, with buyers repeatedly failing to keep gains above $12,000 in the last six weeks.
- A high-volume weekly close (Sunday, UTC) above $12,000 is needed to revive the bull market.
- A bullish weekly close may remain elusive if the cryptocurrency finds acceptance below $11,200 in the next day or two. That could pave way for a drop to $10,500.
Bitcoin needs to break above stiff resistance at $12,000 to unleash the next phase of the bull market, which began from lows near $4,100 on April 1.
The top cryptocurrency by market value is currently trading at $11,527 on Bitstamp, having fallen back from a one-month high of $12,325 yesterday.
This isn’t the first time BTC has failed to hold on to gains above $12,000. The cryptocurrency jumped to a high of $13,880 on June 26 only to fall back below $12,000 on the following day. Similar price action was seen in the following two weeks. Notably, prices rose to $13,200 on July 10, only to fall back below $10,000 the following day.
Currently, the bull market looks to have stalled, with $12,000 resistance acting as a ceiling to further gains, as seen below.
Bitcoin broke into a bull market with a convincing move to $5,000 in April and rose to a high of $13,880 on June 26.
The cryptocurrency, however, did not find sustained acceptance above $12,000 in either the last week of June or the first two weeks of July.
The repeated failure to close above $12,000 indicates a weakening of bull momentum and has established the psychological level as the resistance to beat for the bulls.
So, a high-volume weekly close above $12,000 is needed to signal a continuation of the rally from April lows near $4,050 and open the doors to resistances at $15,000 and $17,235 (January 2018 high).
The odds of BTC closing this week (Sunday, UTC) above $12,000 would drop if prices slip below key support at $11,200 in the next day or two.
BTC fell 2.8 percent yesterday, snapping its seven-day winning streak.
More importantly, the cryptocurrency failed to close above the upper edge of the falling channel on the daily chart and created a candle with a long upper shadow – another sign of buyer exhaustion above $12,000.
That candle would gain credence and the outlook would turn bearish if prices close below $11,200 (Tuesday’s low).
A close above $12,060 today would confirm a bull flag breakout on the 3-day chart. A bull flag breakout is a continuation pattern that usually accelerates the preceding rally.
If confirmed, a breakout would potentially open the doors to fresh record highs above $20,000 (target as per the measured move method).
That said, a weekly close above $12,000 would be a stronger confirmation of the revival of the bull market.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Despite the fact that Bitcoin and crypto assets are still down from their all-time highs, regulators the world over are more active than ever before in regulating this budding industry.Earlier this year, the U.S. Securities and Exchange Commission (SEC), the financial regulators presiding over most crypto projects with their own tokens, aimed its sights at initial coin offerings (ICOs).Related Reading: North Korea’s Crypto Cyber Attacks May Further Fuel US Fear of BitcoinPresumably due to its size and market impact, the SEC chose social media company Kik’s KIN ICO to target. But it seems that the Canadian crypto-friendly firm isn’t going down without a fight, releasing an impassioned response in the form of a 100-page legal dispute.Kik Interactive has hit back at the Securities and Exchange Commission lawsuit – @techcrunch https://t.co/Wn7ivly2v1— Kin Foundation (@kin_foundation) August 7, 2019Kik Sued by SECFor months now, Kik and the broader crypto community have been anticipating legal action. NewsBTC reported six months back that Ted Livingston, the chief executive of the firm, explained that his team is planning on fighting the SEC regarding its $100 million token sale that was not registered with the authority.In a letter, Kik’s lawyer even called the financial regulator’s approach to cryptocurrencies “flawed,” writing:“Bringing the proposed enforcement action against Kik and the foundation would amount to doubling down on a deeply flawed regulatory and enforcement approach.”Despite this strong stance, the SEC took action anyway. In a press release published in early-June, the SEC revealed that it would be suing Kik for breaking securities laws.Robert Cohen, the Chief of the Enforcement Division’s Cyber Unit, noted that since the firm explicitly told investors that they could post a gain on their KIN tokens, the crypto assets could be classified as securities:“Future profits based on the efforts of others is a hallmark of a securities offering that must comply with the federal securities laws.”Kik was quick to react. The week prior to the press release’s publishing, it created DefendCrypto, a fund meant to ensure that Kik could correctly fight the SEC to set a new legal precedent for ICOs and the broader digital asset space. The fund hasn’t gained that much traction yet, sporting a pool of funds mostly sourced from Kik itself.Hands Thrown Over KIN CryptoRegardless, Kik has continued to fight for itself and the crypto and blockchain industry. Today, the firm released a legal response over 100 pages long to rebut the SEC’s complaint.Katherine Wu, formerly of industry analytics and data provider Messari, broke down and annotated the report.😱 IT HAPPENED!!!!!:Kik filed their answer to the SEC’s complaint today and it’s 100+ pages long and if you don’t think I’m crazy enough to annotate ALL OF THE PAGES YOU’RE WRONG.Happy reading + some thoughts from me 🙂https://t.co/4YcMfDlRSm— Katherine Wu (@katherineykwu) August 7, 2019While the piece is quite long, there are a few key takeaways put forth by Kik’s team of lawyers and technologists: Kik did not sell digital securities, and thus did not violate any pertinent federal laws; the crypto isn’t the firm’s attempt to save itself from going under; KIN isn’t the only company foraying into social media digital assets, but is the first; the SEC is ignoring certain statements that would help Kik’s case; the SEC is operating on a “flawed factual and legal premise”.if Kik manages to prove that the current system the SEC has in place for targeting cryptocurrency projects is outdated or doesn’t fit digital assets, the regulator will likely need to create a new version of the Howey Test for the industry.Related Reading: Bitcoin Faces Strong Resistance at $12,000 as Technical Strength BuildsThis would be a step in the right direction, as it would set a legal precedent for firms in Kik’s boat to be safe from certain legal risks. This precedent may even spark a newfangled influx of crypto innovation, as the clarity provided by such a victory may push technologists to kickstart their plans to foray into this space.Featured Image from Shutterstock
Standard Chartered Bank has announced the successful completion of the first international letter of credit (LC) transaction on the oil industry-focused blockchain platform Voltron.
In an announcement Wednesday, the bank said it had conducted the pilot transaction for PTT Group, PTT International Trading Pte Ltd and IRPC Public Company Limited, which involved shipment of an oil product from Thailand to Singapore.
“Standard Chartered was able to digitise and simplify the end to end exchange of information between all parties in the transaction on the Voltron platform, including the issuance, advising and negotiation of LC and presentation of documents,” the bank said.
According to Samuel Mathew, global head of documentary trade product management at Standard Chartered:
“This pilot transaction marks the first of many that will follow from our participation with Voltron to digitise trade and enhance the client journey. As our clients increasingly look to technology to address the challenges of today’s global trade environment, we are extremely optimistic and excited about the potential opportunities that Voltron brings to the industry with its demonstrated benefits in improved speed and reduced risks of settlement, as well as its flexibility in connecting banks, businesses and other third-party providers in its network.”
Sending the documents electronically over the blockchain platform meant that all participants in the trade were able to view real-time data as the transaction progressed. This, Standard Chartered said, allowed a “significant reduction” in the time needed to complete the trade, which took less than 12 hours.
Oil companies often utilize letters of credit for short-term trade finance, but the process is largely manual and paper-based, taking up to five days for the documents to be delivered.
The use of blockchain also brings the oil industry participants of the Voltron platform greater transparency and cost efficiencies across the supply chain, the company added.
Voltron is an open industry blockchain platform set up to “digitally create, exchange, approve and issue Letters of Credits.” It recently announced the launch of Trade AI Engine, a solution developed in partnership with IBM aimed to improve trade document processing through increased efficiency and operational control.
Jordane Rollin, Standard Chartered’s global head of digital transformation for trade product management added that as Voltron moves towards a commercial launch, “we are continuously getting feedback from our clients via pilots to enhance Voltron with new features. We have also started to ramp up on our contribution to this initiative to expand its offering beyond Letters of Credit and become a new industry standard for digitised traditional trade.”
This week, the bank also completed its first joint supply chain financing transaction with Linklogis for Digital Guangdong – a joint venture between Tencent, China Unicom, China Telecom and China Mobile – aimed to bring digital government services to residents of China’s Guangdong province.
Oil tanker image via Shutterstock
A key technical indictor acurrately predicts the best moments to accumulate bitcoin. Source: Shutterstock
It’s easy to get scared away by the daily volatile movements of bitcoin. Over the weekend, bitcoin jumped 20 percent in a matter of days. Since then, BTC shed over $1,000 before recovering slightly again. It’s a volatile market.
But zoom out for a moment and you’ll see the bigger picture. This chart, shared by on-chain analyst Willy Woo, pinpoints the best windows of opportunity to buy bitcoin for the long term.
Using what’s called the ‘ribbon difficulty’ indicator laid across the long-term logarithmic bitcoin chart, it has historically predicted the best moments to get exposure to bitcoin over the last ten years.
Introducing the Bitcoin Difficulty Ribbon. When the ribbon compresses, or flips negative, these are the best time to buy in and get exposure to Bitcoin. The ribbon consists of simple moving averages on mining difficulty so we can easily see the rate of change in difficulty. pic.twitter.com/6kBz4sLG1d
— Willy Woo (@woonomic) August 1, 2019
So next time you’re about to FOMO into the market, zoom out and take note of this chart.
The best time to buy bitcoin?
According to Willy Woo’s analysis, the perfect moment to accumulate bitcoin is when the difficulty ribbon compresses (gets very thin) or flips negative (when the strong, dark line crosses above the weaker lines), shown below.
The bitcoin difficulty ribbon accurately predicted the best moment to start accumulating bitcoin in early 2019, before a 200% runup. Source: Willy Woo / Twitter
The indicator accurately predicted the bottom of the market in late 2018, early 2019. Smart investors should have started accumulating at this point (many hedge funds were).
It’s a data-driven confirmation of a decades-old investment strategy: buy when there’s blood in the streets. In other words, you buy assets when others are fearful, and sell when they’re greedy.
What exactly is the difficulty ribbon?
The ribbon charts moving averages on mining activity, allowing us to visualize the change in bitcoin mining difficulty. It also depicts how bitcoin mining affects the BTC price. As Willy Woo explains:
“As new coins are mined into existence, miners sell some of their mined coins to pay for production costs. This produces bearish price pressure. The weakest miners sell more of their coins to remain operational. When it becomes unsustainable, they capitulate, hashing power and network difficulty reduces (ribbon compression), leaving only the strong, who sell less leaving more room for more bullish price action.”
Miners capitulate in bears, but also during block reward halvening events when suddenly only half the coins are mined for the same costs and the market price has yet to catch up to pay for it. See the compression after each halvening (marked as vertical lines) as miners die off. pic.twitter.com/IwRdpJ4DFt
— Willy Woo (@woonomic) August 1, 2019
Bitcoin remains under $12,000
The ribbon difficulty pattern accurately predicted the recent 200 percent bitcoin price runup. After hitting a high of $13,880, BTC fell back below $10k before mounting another run.
At the time of writing, bitcoin is battling the $12,000 mark in what most analysts see as a healthy pullback. Trader Josh Rager explains:
“Bitcoin is doing okay, needed a pullback day, I’m not remotely bearish as it just needs to [close above] $11k at this time. Right now we’re on our way to closing the highest price weekly candle of 2019 if $11,469 holds.”
A South Korean financial watchdog under the Financial Services Commission (FSC) is planning to more closely supervise cryptocurrency exchanges.
The agency in question, the Financial Intelligence Unit (FIU), has said it will directly regulate crypto trading platforms, which currently are indirectly controlled via guidance given to banks, says a report in Business Korea on Wednesday.
For example, last year, the FSC amended the anti-money laundering rules applying to cryptocurrency exchanges, which was to be carried out by requiring domestic banks to tighten up monitoring of exchange-held accounts.
In today’s report, Lee Tae-hoon, director of administration and planning at the FIU, was cited as saying Tuesday that the Korean government will set up a licensing system for crypto exchanges, as recently recommended in new international standards issued by the Financial Action Task Force (FATF). The move would boost the transparency of cryptocurrency transactions, Lee said.
“If an amendment to the Act on Reporting and Use of Certain Financial Transaction Information, which reflects the FATF’s international standards for cryptocurrencies, passes the National Assembly, it will be possible to prevent money laundering through cryptocurrencies,” Lee explained at a public hearing on crypto transparency at the National Assembly.
Approval of the amendment would make regulations more effective “by shifting from the current indirect regulation through commercial banks to direct regulation,” Lee added.
According to a Wednesday blog post from crypto compliance solution provider Argos, the amendment may also bring in the controversial “travel rule,” meaning that exchanges would have to share information on parties when making transactions. This would pose a major problem for exchanges as crypto transactions do not include identifying data, the post says.
Korean National Assembly image via Shutterstock
News is emerging that the world’s largest crypto exchange, Binance, has been the victim of an attempted ransom demand from a scammer. The attacker threatened to release KYC information if the company did not cough up 300 Bitcoins.Give me Bitcoin or Else …In its efforts to be totally transparent, Binance has just released a statement revealing that an unidentified individual has ‘threatened and harassed’ them. Enigmatic CEO, Changpeng Zhao, urged people not to believe or spread the FUD which had already been disseminated across social media.“Don’t fall into the “KYC leak” FUD. We are investigating, will update shortly.”Don’t fall into the “KYC leak” FUD. We are investigating, will update shortly.— CZ Binance (@cz_binance) August 7, 2019Just like Facebook before it, Twitter has now become a hotbed of scams and fake news and the platform seems indifferent to the problem. These types of posts started appearing on Twitter prompting Binance to clarify the situation.The statement added that the scammer demanded 300 Bitcoin in exchange for withholding 10,000 photos that bear similarity to Binance KYC data. It said that the company was investigating the legitimacy of the images and had refused to comply with the extortion. By then the perpetrator had begun releasing them online.A spurious Telegram group was created to disseminate the bogus KYC images. CZ responded to those sharing the link stating that they are doing greater harm than good.“I would like to add, by joining or spreading the link of the telegram group, you are helping malicious hackers (at least giving attention). What we should do as an industry is to fight them. Stay on the positive side. Report the group, then leave.”I would like to add, by joining or spreading the link of the telegram group, you are helping malicious hackers (at least giving attention). What we should do as an industry is to fight them. Stay on the positive side. Report the group, then leave. 🙏🙏🙏 https://t.co/Cvxks2S69i— CZ Binance (@cz_binance) August 7, 2019The statement continued to add that the images did not include the digital watermark and efforts were being made to identify their source. The exchange did say that they had previously outsourced KYC services to a third party vendor earlier this year.“On initial review of the images made public, they all appear to be dated from February of 2018, at which time Binance had contracted a third-party vendor for KYC verification in order to handle the high volume of requests at that time.”The hacker claimed to have images from other exchanges but could not supply irrefutable evidence of their findings. Binance has already contacted the relevant law enforcement agencies to pursue the perp. Additionally CZ and co offered a 25 Bitcoin reward for any information leading to the apprehension of the suspect. Finally there was a warning over impersonators attempting to contact customers and online scams in general.The incident does shed light on the clumsy way that KYC data is collected and stored, and may lead to improvements in methods exchanges get to know their customers.Image from Shutterstock