Bitcoin and the aggregated crypto markets incurred a significant influx of buying pressure earlier this morning that ultimately resulted in yet another swift rejection that sent the markets reeling lower.
This rejection and the subsequent drop have weakened the bullish scenario that many analysts believed BTC was facing, and some analysts are now noting that a much larger drop could occur if Bitcoin closes the day below its resistance levels.
Bitcoin Plummets Towards $11,600 as Bears Roar
At the time of writing, Bitcoin is trading down nearly 1% at its current price of $11,670, which is down significantly from its daily highs of nearly $12,100 that were set earlier this morning.
Bitcoin has been incurring significant buying pressure over the past couple of days that has allowed it to put a significant amount of distance between its recent lows of $9,100 and its current price.
Despite this, BTC’s bulls may not be as strong as some had expected them to be, as the cryptocurrency has now been rejected in the $12,000 region on multiple occasions.
These rejections may signal that bears still have the upper hand over bulls, which may also point to the possibility that the cryptocurrency’s recently incurred gains may be in grave jeopardy.
“Oh $BTC #Bitcoin, you nasty,” Big Cheds, a popular cryptocurrency analyst on Twitter, concisely noted in a recent tweet, pointing to the rejection at $12,000.
Analyst: BTC Could Plummet Further if Resistance Holds
Furthermore, analysts are also noting that Bitcoin’s recent volatility and rejections in the $12,000 region may signal that further losses are imminent, assuming it is unable to incur any massive buying pressure before the end of the day.
The Cryptomist, a popular cryptocurrency analyst on Twitter, discussed this in a recent tweet, saying:
“People who claim ‘manipulation’ are just lazy. Data shows we previously put in two volatile upper wicks within these daily resistances before dump. We’ve just put in two volatile upper wicks, I am expecting dump to commence if we close below resistance today. Happy to be wrong!”
Although Bitcoin remains in limbo between another bull run and another deep pullback, it is clear that further volatility is imminent in the near-future.
The market capitalisation of the Ethereum network has fallen below the levels observed prior to its epic price run up in 2017. The total value of all Ether (ETH) tokens in existence now accounts for just less than eight percent of the entire cryptocurrency market.
At the height of Ethereum hype, the smart contract platform accounted for over a third of the wider digital currency market. This caused its proponents to claim that it would overtake Bitcoin in a so-called “flippening”.
Ethereum’s Fall from Grace
As highlighted by Twitter user @StopAndDecrypt earlier today, Ethereum’s share of the entire cryptocurrency market has fallen to just 7.86 percent. This is the lowest it has been since early March 2017.
High profile interest in the smart contract platform caused a lot of the hype that saw Ethereum’s rise to over a third of the entire digital currency market by June of the same year. Early announcements from the newly-formed Enterprise Ethereum Alliance announced the interest of big companies to investors eager to realise the kind of gains early Bitcoin speculators had seen. The likes of Toyota, Delottie, and the Royal Bank of Canada joined a host of other household names and blockchain startups as members of the organisation.
At a similar time, infighting over how to scale the network plagued the Bitcoin community. This likely contributed to Ethereum’s rising share of the market as many people diversified Bitcoin holdings into other projects fearing that a new technology would usurp Bitcoin’s position at the top before the number one cryptocurrency could address its own issues.
However, the so-called “flippening” (Ethereum overtaking Bitcoin), championed by many Ethereum proponents the time, never happened. Money flowed back into Bitcoin following its successful hard fork and those not aligned with its road path departed to work on Bitcoin Cash and later Bitcoin SV. Updates from the Enterprise Ethereum Alliance also slowed down and it emerged that many companies were interested in using private versions of Ethereum. Thus their involvement in the group would be unlikely to drive prices up with the launch of some killer application as many had hoped.
What’s more, the shortcomings of the Ethereum network were very publicly demonstrated at the tail end of the 2017 too. The first truly popular decentralised application launched on the blockchain, CryptoKitties, caused such a spike in network use that it ground to a halt. Clearly, Ethereum was a long way from supporting the kind of world-changing, never-stop applications that lured many early investors to back the project.
Since then, apart from a few blips, Ethereum’s market share has gradually declined to its current point before the Enterprise Ethereum Alliance made its big announcements. The bear market years, along with a lack of meaningful updates from developers and still no world-changing applications has caused investor interest to drop significantly. The beneficiary of this drop, and those of other so-called alt-coins, has been Bitcoin, which recently rose to its highest point of market dominance in over two years.
The traditional equities markets have been caught in a tailspin over the past couple of days due to increasing tensions between the U.S. and China that have escalated the trade war into a full-fledged currency war. At the same time, Bitcoin (BTC) has been incurring decent upwards momentum, which has strengthened the “digital Gold” narrative.
Despite this, one analyst is quick to note that Bitcoin’s correlation with Gold still remains fairly loose, making it speculative to believe that BTC is inversely correlated with the equities markets in the same way as Gold is.
Bitcoin and Gold Both Incur Significant Buying Pressure
At the time of writing, Bitcoin is trading down just over 1% at its current price of $11,625 and is down significantly from its 24-hour highs of $12,100 that were set earlier today. Despite today’s drop, BTC is still up significantly from its recent lows of $9,100
Similarly, Gold has also incurred significant buying pressure over the past several days and weeks and is currently trading up 2.3% at its current price of $1,506 per ounce. Over a one-week period, Gold is trading up nearly 6%.
Gold’s positive performance as of late has come about from increasing economic instability across the globe, with the U.S. and China both escalating the trade tensions and even engaging in a currency war.
This instability has led investors to flee to Gold, which has subsequently led its price to climb. Despite this, it remains unclear as to whether or not Bitcoin’s recent price rise has the same root cause.
Analyst: BTC Correlation with Gold Remains Loose
Despite the perceived correlation between Bitcoin and Gold, and the widespread narrative that BTC is a digital version of gold, the correlation between the two assets is nearly non-existant.
Mati Greenspan, the senior market analyst at eToro, spoke about this in a recent email, saying:
“With everything above, one might expect bitcoin to come in as a hedge and react to things like trade wars and or rate cuts, but the data suggests otherwise… For all three assets measured against bitcoin, the 90-day correlation factor is less than 0.2, meaning it’s virtually nonexistent.”
Although it remains unclear as to whether or not all the discussion about BTC being a safe haven asset will become a “self-fulfilling prophecy,” at the moment it is simply an uncorrelated asset, which may be due to its relatively small market size.
After entering a month-long lull, the Bitcoin (BTC) price has begun surging yet again. As of the time of writing this, the cryptocurrency is trading at $12,000, having managed to reclaim that key level after some tumult.
$12,000 is, of course, still $2,000 lower than Bitcoin’s year-to-date highs of $14,000. Regardless, industry sentiment is still running high, as investors await a surge to fresh all-time highs in the coming months and year.
Bitcoin All-Time Highs in Sight
Bitcoin has had a stellar 2019 so far. Since bottoming at $3,150, the asset has rallied by nearly $10,000, outpacing any other serious asset class, forcing the world to take notice of crypto assets.
According to Nunya Bizniz, a prominent analyst that focuses on long-term trends and patterns in BTC’s chart, Bitcoin is one step away from achieving a fresh all-time high.
In a recent tweet, the up-and-coming analyst, whose work is followed by some of the biggest names in cryptocurrency investment, wrote that once Bitcoin closes a monthly candle above $14,000, BTC may “never look back”, and leave the four-digit range in the dust, potentially forever.
Backing his point, Bizniz points out that during the two previous occasions that BTC has closed a monthly candle above a previous all-time high, a long-term surge ensued. A surge that didn’t take the asset back to its pre-rally levels.
While $14,000 is still around 17% higher than current levels, bullish momentum, which is being accentuated by technical indicators, may aid BTC.
Technicals in BTC’s Favor
As reported by NewsBTC, there are clearly a number of technical factors showing that bulls are in control. Per previous reports from NewsBTC, BTC saw its one-day Moving Average Convergence Divergence (MACD), an indicator that tracks trends, experience a bullish crossover, printing a green candle on the histogram.
Joe McCann points out that the last two times that Bitcoin has seen this signal in this cycle was preceding two three-weeks surges to the upside of 52% and 61%.
Should history repeat itself, BTC could surge to around $17,000 by the end of August, riding on the back of bullish momentum.
Also, on Bitstamp’s three-day BTC-to-USD chart, a “golden cross” just occurred. For those not versed in technical analysis, a so-called golden cross is when a short-term moving average moves above a long-term one, implying that bulls are in control of the price of a given asset.
The one that Bitcoin’s three-day chart recently saw was the cross of the 50 moving average above the 200 moving average. What’s notable about this is the last time this technical event played out was early-2016, February 2016.
What came after that is historic. This being the rally from $500 to $20,000 — a jaw-dropping 4,000% move — in under 24 months, of course. Should history repeat from here, Bitcoin could reach $400,000 by mid-2021.
Bitcoin Touts Strong Fundamentals
Not only are Bitcoin’s technical prospects strong but so are its fundamentals. As this outlet recently detailed, Bitcoin is seeing a “perfect storm” brew for it.
Markets research firm Delphi Digital recently explained that Bitcoin continues to remain totally uncorrelated (not positive or negative correlation) from key indices, like the S&P 500. Per Delphi, this is a sign that the asset’s status as “digital gold” is being realized.
This uncorrelation comes in spite of the fact that there have been growing geopolitical and macroeconomic tensions, like the trade war between the U.S. and China, that have hurt many investments.
Also, there is rising institutional demand for cryptocurrencies. Sam Doctor of Fundstrat reported a few weeks back that there is “anticipation” from a “critical mass” of institutions for Bakkt’s Bitcoin futures product, which many say is slated to revolutionize price discovery, liquidity, and investment as a whole in the industry.
Just a week after the Bitcoin network notched up another new hash rate high, it has done it again and this one is a bit of a milestone.
Bitcoin Hash Rate Hits 80 EH/s
For the first time ever, Bitcoin’s hash rate has topped 80 Exahashes per second. According to Bitinfocharts.com network hash rate hit 80.249 EH/s yesterday. The latest milestone has not gone unnoticed on crypto twitter.
In simple terms the hash rate is the speed at which computers on the Bitcoin network operate. The higher the number, the better it is for miners, as the chances of completing the mathematical problem to solve the block and collect the resultant block reward is increased. These measurement records the number of hashes per second Bitcoin miners are performing on the network.
As a parody against rival blockchains which have forked off from Bitcoin, some have been comparing the two hash rates. Bitcoin Cash and Bitcoin SV are both light years behind in contrast.
I literally had to made @rogerkver and Craig bigger in the info-meme to even make them visible. Like no kidding in this chart below all 3 hashrates are shown #Bitcoin#80E#BTC
Even RT anchor Max Keiser has noticed the significance of this computing milestone, tweeting ‘Hashrate leads price. 80 Quintillion high means we’re on track.’
Network strength is a bullish sign of market health and several of these measurements, including volume are now higher than they were during the price peak in late 2017. BTC can cope with growth better and other aspects such as block reward halving in May next year can only add to the sentiment.
BTC Transactions and Price Holding Steady
Another measurement of adoption and growth is daily transactions on the Bitcoin network. At the moment there are around 370k transactions per day. The all-time high came during Bitcoin’s price peak in mid-December 2017 when it hit 490k. The most recent high was in early May this year when daily transactions topped 450k.
BTC price was also holding fast at the time of writing. After crossing the $12k barrier twice in the past 24 hours, Bitcoin had retreated slightly to the $11,800 region at the time of writing, leaving it relatively flat on the day. Since the same time last Thursday, BTC has gained around 18 percent.
A couple of longer term technical indicators have turned bullish recently such as Bloomberg’s favoured GTI VERA Convergence Divergence Indicator. This measure of positive or negative trends has flashed a ‘buy’ signal recently according to the outlet.
Additionally a golden cross formed on the four hour chart yesterday. When the 50 moving average crosses the slower 200 MA, it is a sign of strengthening uptrend which is likely to lead to further gains in the respective time frame.
The shooting in El Paso this weekend took the lives of 20 innocent people. After it emerged that the alleged shooter had been using far-right echo chamber 8Chan to spread his message, Cloudflare announced it would cease the provision of cyber-security services, quickly forcing the site offline.
However, following in the footsteps of the Daily Stormer, 8Chan announced its intention to move its cybersecurity provisioning to Washington-based BitMitigate. BitMitigate has nothing to do with Bitcoin, but it does claim to have a “proven commitment to liberty.”But, in the prevailing political climate these days, “liberty” seems to have an uncomfortable overlap with violent extremism.
Epik Monsters
BitMitigate has some intriguing links to the decentralized world. It was previously acquired by a company called Epik, which provides software services including web hosting. One of its clients is Gab, an alternative social media network increasingly favored by the far right and other fringe figures as they’re forced off Twitter, YouTube, Facebook, and other leading social media.
Gab was previously blocked by domain registrar GoDaddy and PayPal, as the preferred platform of the mass shooter who gunned down 11 people in a Pittsburgh synagogue last year. It’s also the new social media home of figures like Milo Yiannopoulos, Alex Jones and Richard Spencer.
Both platforms are now realizing the value of decentralization. After becoming non grata with PayPal, Gab is now accepting Bitcoin, which its founder Andrew Torba has referred to as “free speech money.”
The CEO of Epik, aptly named Robert Monster, took it upon himself to use decentralized file-sharing protocol IPFS to upload banned videos of the Christchurch shooting in New Zealand. Taking to Gab, he called the technology “crazy clever” for its censorship-resistance, and informed his fellow users that he was working on software to make IPFS “easy for anyone, with no technical skills required.”
Deplatforming racists is one thing, but not all censorship is (pardon the expression) a matter of black and white. Back in 2011, donations to Wikileaks were blocked by credit card companies like Visa and MasterCard, after the group exposed the secrets of the world’s governments.
In this case, the joke was on the payments industry. Wikileaks started canvassing for donations in Bitcoin, and founder Julian Assange later claimed in 2017 that the site had made a 50,000% return on the funds it collected.
The Beginning and End of First Amendment Rights
Voltaire supposedly offered to “fight to the death” to defend his opponents’ rights to speech, and the same principle underlies the First Amendment in the United States. But in a world where mass shootings are incubated and livestreamed on social media, the debate between censorship and free expression could very much become a “fight to the death.”
Philosophical musings aside, it seems unlikely that the First Amendment’s authors could have anticipated the mass murders that have now become commonplace, or that constitutional liberties would be used to shelter for hate-filled manifestos.
Furthermore, nobody can argue that Twitter, Facebook, YouTube, Cloudflare or GoDaddy have an obligation to tolerate this from their customers. Freedom of speech doesn’t apply private companies.
But in a decentralized network, nobody is in charge; censorship-resistance does not discriminate right from left. Although some dApps, like Peepeth, are accessible via managed interfaces which can restrict content, open-source protocols like IPFS or a blockchain can be used by anyone with the technical know-how to access them.
Therefore, as extremists and hate speech are pushed out of the mainstream, they’re likely to decentralized protocols to spread their messages. The question is – what should the rest of us do about the fact that we’re sharing these decentralized protocols can become leveraged by extremist groups? And, more crucially: what can we do?
The Democratic Case For Censorship Resistance
Public blockchains allow everyone to operate within its space freely and on an equal footing. Decentralized protocols do away with traditional power structures, which can appeal to liberals, libertarians and anarchists alike.
Many crypto projects such as Monero are inherently tied to the concept of privacy, and some exchanges still sell themselves on the lack of KYC. Blockchain is delivering private web browsing, self-sovereign data, decentralized finance and much more.
But not all the beneficiaries of decentralization are so easy to sympathize with. Like the Chinese activists, Gab is making its bid for decentralization to overcome censorship. The platform is now attempting to raise series A funding for a move to blockchain, and recently migrated to the decentralized Mastodon social network, much to the dismay of Mastodon’s founder.
That came after Gab forked Brave back in April this year, in an attempt to create a censorship-resistant browser. The move led Brave CEO Brandon Eich to refer to Gab as a “parasite.”
Just as the privacy-conscious and oppressed can now find decentralized solutions so can extremists of every description.
Can Censorship-Resistance Be Conditional?
There are many others who share the views of the Mastodon and Brave founders and find the idea of sharing space with violent racism distasteful, but whether they have any choice in the matter is another question.
On the one hand, it’s impossible to imagine limiting censorship-resistant technologies to those with acceptable viewpoints, especially in the context of a decentralized environment.
On the other hand, the crypto space is already controversial enough, without becoming visibly occupied by extremists. If the next mass shooting is planned on a blockchain platform, cryptocurrencies could attract a very different sort of regulatory attention.
For advocates of decentralization, the question is which alternative is worse: a platform which forbids offensive expression, or a platform which cannot.
The Indian government is planning to introduce its controversial bitcoin ban bill in December-January parliamentary session, according to local crypto news provider Crypto Kanoon.
The decision surfaced during an ongoing court hearing between the Reserve Bank of India (RBI) and regional cryptocurrency exchanges. Officials representing the Narendra Modi’s financial ministry submitted a draft bill before the Supreme Court judge, which would serve as the basis of the future of cryptocurrencies in India.
Crypto Kanoon claimed that the draft is the same which was prepared by the intergovernmental committee led by former Economic Affairs Secretary Subhash Chandra Garg. The document recommended an outright ban on bitcoin and all types of “private cryptocurrencies,” and ten-year jail time for those who do not abide by it.
Meanwhile, the government officials requested the Supreme Court to adjourn the hearing unless January next year. They confirmed that they intend to introduce the bitcoin ban bill in the lower house of the Indian parliament during the winter session.
Last year in July, RBI had barred banks from doing business with firms associated with bitcoin and other cryptocurrencies. The Internet and Mobile Association of India (IMAI) later took the Indian central bank to the Supreme Court. It accused the federal body of being biased towards the emerging cryptocurrency sector in India, stating their circular was unconstitutional.
The case went through several delays in over the last 12 months, only to be heard at a full extent on August 8, 2019. The IMAI counsel argued that bitcoin is not a sovereign currency but a commodity, which is why any decision for it should come from the Securities and Exchange Board of India (SEBI), not RBI. The counsel also added that RBI exercised the same powers as parliament while forcing the Indian cryptocurrency market to shut down.
The IMAI lawyer also rubbished RBI’s views about cryptocurrency exchanges working without obtaining a license, stating that companies did not require such authorization, for bitcoin and the rest of the cryptocurrencies did not attain a legal definition in India. The counsel also referred to companies that either lost money or ran out of business opportunities because of the RBI circular.
The court recommended filing a fresh case against RBI under 19(1)-g – an Indian Constitution Act that guarantees to all citizens the right to practice any profession or to carry on any occupation, trade or business. Only reasonable restrictions can stop a person from working.
The case will resume on coming Wednesday 14th August 2019.
Galaxy Digital expects cryptocurrency lending to boom. The merchant bank has announced an investment in crypto loans provider DrawBridge Lending (DBL) in order to offer new financing products and help grow the lending/borrowing market.
Announced this morning, the Galaxy investment will provide DBL with funding to create a suite of financing vehicles, which will provide institutional investors with new loaning facilities and allow the crypto market to scale.
Galaxy and DBL plan to jointly develop a new special purpose funding vehicles (SPV), that will allow institutions to leverage digital assets for capital while maintaining overall ownership.
SPVs are subsidiary companies that hold all the assets of the parent company, as well as their risk and obligations. Also referred to as ‘bankruptcy-remote entities’, they isolate risk and protect institutions from the threat of bankruptcy.
By isolating risk, SPVs encourage institutions to lend more. Institutional borrowers will be able to access more capital to fund expenses or make new investments; lenders will be able to put digital holdings to work and earn interest.
Both Galaxy and DBL expect the new product to accelerate market development in what is still a relatively nascent space. “We believe the institutional crypto lending space will be a multi-billion dollar business in coming years,” a DBL spokesman told Crypto Briefing, “and we say this without any hesitation.”
DBL is already a CFTC-licensed lender in the U.S. Launched in 2018, it already provides lending facilities to institutional investors in forty-nine states as well as Washington D.C. Although the focus will primarily be on Bitcoin (BTC), Ether (ETH), BSV and EOS, the new SPVs will be available in any digital asset with sufficient liquidity.
“The institutionalization of digital assets is still relatively nascent despite increasing momentum and interest from a number of respected firms and industry players,” said Michael Novogratz, CEO and founder of Galaxy Digital.
Demand for cryptocurrency lending is growing. Crypto wealth management firm BlockFi – which provides crypto-denominated interest accounts and loans – successfully completed a Series A funding round this week, raising over $18M from Winklevoss Capital, ConsenSys as well as Galaxy Digital.
According to a report by Coin Metrics, 318 addresses own 80% of the current total supply of the Tether stablecoin. Bloomberg quoting excerpts from the Coin Metrics study reported that these addresses own at least $1 million in USDT.
The report also revealed that major exchanges like Binance and Bittrex are among the USDT whales. Tether accounts for a significant portion of cryptocurrency trades across several platforms in the market.
Other major players include high-volume crypto traders in China. As previously reported by Bitcoinist, Tether is finding significant utility in China for facilitating trade with Russia. Chinese traders are reportedly buying between $10 million to $30 million worth of Tether on a daily basis.
Whales owning significant portions of total crypto supply isn’t in itself a novel occurrence. However, the extent of the whale ownership centralization in USDT might raise some alarms.
Taking bitcoin, for example, whale wallets own only 20% of the total BTC supply. Also, unlike Tether, this whale share for BTC is spread out over more than 20,000 addresses holding $1 million or more in bitcoin.
BITCOIN MANIPULATION VIA USDT
With the continued debate over the role USDT plays in bitcoin price discovery, the revelation of massive USDT ownership centralization is sure to reignite discussions of whether a few market participants manipulate BTC price.
Speaking to Bloomberg, John Griffin of the University of Texas, said:
The concentration of Tether suggests that control of Tether is in the hands of a few central players who can swing Bitcoin prices, and have a vested interest in doing so. It also suggests that many exchange players have a vested interest in keeping the Tether game going.
Per a previous Bitcoinist report, some commentators believe Tether issuance to be the driving forcebehind bitcoin price gains. The narrative suggests that each large USDT printing exercise signals significant moves by whales — a precursor to a major price rally for bitcoin.
However, critics of the Tether manipulation angle argue that USDT market cap increase is nowhere near enough to cause the growth in the crypto market capitalization.
Currently, Bitfinex and Tether are involved in a legal imbroglio with the New York Attorney General (NYAG). As reported by Bitcoinist, the court recently postponed deliberation on the matter.
Do you think crypto whales use USDT in manipulating the price of bitcoin? Let us know in the comments below.
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