Is Bitcoin (BTC) Basically A Tech Stock On Steroids?

There’s been a lot of talk about bitcoin being “digital gold”
but could a comparison be better made with high-flying tech stocks?

For crypto followers looking for an answer to the critics who say it isn’t backed by anything and no one really uses it to buy stuff, the digital gold idea is a handy riposte.

If bitcoin is indeed digital gold then it is the cost of
mining it that informs the measure of its intrinsic value, and that has been
variously calculated to be anywhere between circa $4,000 and $2,000.

However, Charlie Morris, the founder of data site ByteTree.com, thinks tech stocks should be the preferred candidate for similarities with bitcoin and he has found a persuasive pattern in the price movements of bitcoin and tech stocks to prove his point – with the comparator for both being network growth.

So if we look past the breakeven for bitcoin mining and unpack the metrics of the network the miners do the bookkeeping for, then we have a valuation approach that owes more to Metcalfe’s law (value is proportional to the square of connected users) than it does to a latter-day digital version of the labour theory of value or Austrian School “hard” money.

Like a tech stock “with extra vigour”

Talking to the Daily Telegraph newspaper in the UK, Morris takes the network approach, as do many others. “The more people who use it, the more valuable it becomes,” he explains.

But instead of likening bitcoin to gold he says the better match
would be with technology stocks, or at least a subset thereof.

“Bitcoin is an ultra high-growth asset that behaves just
like internet stocks, just with extra vigour,” Morris told the Telegraph.

He isn’t buying the scarcity school of thought that is often
seen as the critical value property of bitcoin in likening it to gold.

Morris thinks that perhaps as little as 5% of price appreciation is because of supply-side factors. The main driver of prices is the growth of the network and the demand that implies.

 “It was indeed
designed around the idea of gold, in that it has limited supply, but that’s as
far as it goes. By my calculations, the surge in Bitcoin is mainly attributable
to network growth – demand – with perhaps less than 5pc due to supply factors.”

If the digital gold approach is anywhere near correct then it is makes sense to divide the amount of gold above ground by the total supply of bitcoin to arrive at a figure of $333,000, assuming 100% displacement of the yellow metal.

Bitcoin network demand is on the up

Morris says a valuation methodology makes much more sense and
that means looking at transactions. Again, Morris is by no means unique in that
regard.

Others have done work on this, notably Willy Woo on the network
value to transactions (NVT) ratio, so Morris is not saying something new but
does draw out the parallel with “internet stocks”.

Looking at the value of transactions, Morris notes that bitcoin:
“is on track to see $600 billion transacted this year, a number that will soon
pass a trillion”.

He continues: “To put that into perspective, $18 billion of
Bitcoin changed hands in 2013, when there was a widely reported bubble, and
$576 billion in 2017, when there was said to be another bubble.”

The $333,000 valuation for bitcoin as digital gold, assuming
demand is constant and 100% displacement, is lofty indeed but the tech stock
valuation thesis could see a future price much higher still.

If bitcoin becomes the reserve currency of the crypto space,
if not, initially at any rate, the wider financial system, then the room for “network
growth” will be immense, assuming progress on scaling solutions.

With Facebook going all in on crypto, Amazon offering
blockchain as a service on Amazon Web Services and going Google beating a similar
path to name just three of the US giants, not to mention how the tech cold war
is likely to turbo-charge blockchain and AI development in China, it doesn’t
take much of a leap to see how bitcoin could find itself at the centre of the crypto-secured
digital money world.

Striking correlation

According to the report, Morris “pointed to a striking correlation between the price of the cryptocurrency and the share prices of technology companies, as measured by the Solactive Social Media index”.

Courtesy Telegraph

The two follow each other extremely closely which may also
be partly because the investors in stocks such as Facebook and Twitter overlap
somewhat with the same demographic of investors driving bitcoin buying.

However, the “tech stock” view may have a downside, given that the stockmarket by most measures is looking pretty frothy, with the bull market likely at or near its end.

Big tech might not be so hot from here on out, but bitcoin’s just getting started

So, could Morris’s line of thinking see the bitcoin price
follow tech stocks lower?

Also, how much further does the likes of Facebook have to grow? And Twitter and Snapchat, for example, have basically stopped growing.

And the cost of competing is rising. As Clem Chambers, Forbes contributor and chief executive of ADVFN and Online Blockchain recently put it regarding the computing power consumed by the bitcoin network, “don’t worry about bitcoin, AI will fry the oceans”.

The huge capital outlays are starting to eat into the profit of the tech giants, even before the regulators get their teeth stuck into the social platforms.

And it’s also assuming some tech stocks actually make a profit – hopefully no readers had any money in the Uber or Lyft IPOs because the VCs and private equity sucked all the value out a while back.

The truth is the market opportunity that bitcoin is
attacking is more fundamental than social networks – it aims to disrupt the
entire monetary realm and if it only partly succeeds it could be a network of
value transmission far greater  order of
magnitude than even the largest of tech stocks.

The post Is Bitcoin (BTC) Basically A Tech Stock On Steroids? appeared first on Ethereum World News.

Confident in the Future: EOS Developers Attempt 10% Buyback Ahead of Major Announcement

EOS developer Block.one is attempting a 10% buyback of its stock.

Earlier this week, it was revealed that EOS developer Block.one is attempting a 10% buyback of its stock, reportedly the second one in less than a year.

It seems that some of the company’s investors are up for a big payday: The earliest backers could expect a hefty 6,567% return on their initial investments, while Michael Novogratz has already managed to secure a much more modest, though still profitable, 123% return.

But why would Block.one buy its shares back in the first place? It appears that the startup’s executives are confident about the future of their network — and a marketed announcement scheduled for June 1 could be one of the reasons.

What is Block.one?

Block.one is a private company known for developing and publishing the EOS.io protocol. It is registered in the Cayman Islands, lead by CEO Daniel Larimer and chief technology officer Brendan Blumer.

EOS.io, in turn, is a blockchain-powered smart contracts protocol for the development, hosting and execution of decentralized applications (DApps). In other words, it’s a decentralized alternative to cloud hosting services.

EOS.io is supported by its native cryptocurrency, EOS, currently the fifth-largest by total market cap. The tokens can be staked for using network resources: As per the project’s white paper, DApp developers can build their product on the top of the EOS.io protocol and make use of the servers, bandwidth and computational power of EOS itself, as those resources are distributed equally among EOS cryptocurrency holders.

The platform was launched in June 2018 as open-source software, with its first testnets and original white paper emerging earlier in 2017.

Notably, Block.one holds the absolute record in terms of funds raised during an initial coin offering (ICO): It has managed to gather around $4.1 billion — or about 7.12 million ether (ETH) — worth of investments for EOS.io after fundraising for nearly a year. The second-biggest campaign of the sort, the messenger Telegram, has raised less than half the amount — i.e., $1.7 billion.

What is the purpose of the new buyback?

Having raised a record-breaking amount of money last year, the EOS.io publisher is now performing a 10% buyback of its shares.

A Block.one spokesperson has confirmed to Cointelegraph that the stock repurchase is “closing,” and hence at the final stage. The company’s representative also said they are unable to reveal the participants.

“Buybacks are a normal activity for many companies,” the spokesperson told Cointelegraph. “Block.one is confident of its growth prospects and industry opportunities. We are pleased with the support from investors, and that they have been able to benefit from, and participate in, the success of our company.”

Notably, this isn’t the first buyback for Block.one. As per Bloomberg, this stock repurchase offer comes “less than a year” after the initial buyback, in which Block.one reportedly aimed to acquire 15% of its outstanding shares at $1,200 each, but gathered a total of 13.8% in the end, which equaled around $300 million.

The new buyback, in turn, values the company at around $2.3 billion, up from about a $40 million valuation in 2017. The repurchase price being offered is reportedly even higher this time, at $1,500 per share — up 6,567% from the original price of $22.50.

Later backers — including PayPal co-founder Peter Thiel, crypto mining hardware billionaire Jihan Wu of Bitmain, as well as hedge fund managers Louis Bacon and Alan Howard, who all bought into Block.one in July 2018 — could also be in for a massive payoff, if they agree to sell.

According to Bloomberg, Bacon and Howard have declined to specify whether they are going to sell their shares, while Thiel is not responding to messages. Cointelegraph has reached out to Bitmain to clarify whether Wu is planning to participate in the buyback but has not heard back as of press time.

Nevertheless, there is at least one confirmed investor who has agreed to participate in the stock repurchase. Novogratz’s crypto merchant bank, Galaxy Digital, accepted the offer and sold shares in Block.one for $71.2 million — securing a 123% return on the initial investment.

In an accompanying press release, Novogratz stressed that “substantial outperformance” from Block.one had contributed to the decision and that his bank will continue to work with the startup. “We continue to work closely with Block.one as a key partner across a number of our business lines, including the Galaxy EOS VC Fund, which invests in companies building on the EOS.IO protocol, and remain excited about the EOS.IO protocol,” the Galaxy Digital CEO said.

Later, Novogratz took to Twitter to reiterate that Galaxy Digital is still a shareholder in Block.one as well as a “large holder of $EOS tokens.” To explain why his crypto merchant bank sold the shares, he stated the following: “Took profit to rebalance our portfolio.” The investment bank had a net loss of $272.7 million in 2018 — evidently due to the bear market — and the recent deal might be an attempt to mitigate those losses.

According to a Blockforce Capital analyst Charlie Smith, the most likely scenario is that Block.one believes it is worth more than the price it is buying back at. In an email to Cointelegraph, Smith wrote:

“By buying back shares from investors, Block.one can clear some names off the cap table and establish more centralized decision making. Even if the investors that sold shares had no say in the direction of Block.one, by clearing them off the cap table, Block.one can focus more on its own interests.”

What is Block.one planning to do with all that money?

Block.one’s total assets, including cash and investments, amounted to $3 billion at the end of February, according to Bloomberg, who reportedly obtained that number from a March 2019 email to the company’s shareholders.

$2.2 billion of this was held as what the company called in its email “liquid fiat assets,” with most of it invested in U.S. government bonds. The letter also reportedly revealed that the company’s crypto portfolio had halved to around $500 million during the crypto winter. However, in a more recent email sent out in May, the company ostensibly said those losses were “more than fully recovered,” given that bitcoin has been on a rally over the previous months.

The new buyback as well as the “few outward signs of progress since the sale of EOS tokens,” as Bloomberg puts it, raise the question: What is Block.one’s plan, and why does the startup need all that money?

“Basically, Block.one raised a massive fortune with the EOS ICO, and most of it just sat there,” Mark D’Aria, founder and CEO of Bitpro Cryptocurrency Consulting, told Cointelegraph. “They used some to fund development of the ecosystem but as the Bloomberg report points out, there was never any need for billions of dollars to create something like EOS.”

Blumer, CTO of Block.one, strongly disagrees with the idea that his company has not largely advanced since the ICO phase, citing an earlier Bloomberg article penned by Alastair Marsh to prove his point. “I guess taking 48% of active Dapp users in market share in its first year is what Alastair interprets as showing ‘Little signs of progress,’” he wrote in the official EOS Telegram group chat, adding:

“Last year’s buyback was to make room for new investors without unnecessarily inflating our balance sheet. This round included highly strategic shareholders such as Peter Thiel, Alan Howard, and Louis Bacon, and was a very positive thing for the company. This year’s buyback positions us for the same, and we also expect it will be another milestone for us.”

According to Blumer, this information, “along with a lot of other material,” was presented to Bloomberg’s Marsh, but “facts were chosen and arranged deceitfully and with poor journalism standards.”

When asked by a Telegram group member to specify why Block.one needs to make room instead of doing equity dilution, Blumer replied:

“Block.one was a VC funded startup and after so much growth it’s prudent to allow liquidity to earlier investors to make room for larger more strategic ones.”

According to Larimer, who also joined the Telegram chat to address investors’ questions regarding the stock repurchase, Block.one couldn’t have chosen to buy EOS tokens instead, because the company cannot own more than 10% of the total supply, which it has already maxed out. “We […] want eos to remain decentralized,” the CEO added. “We keep our non-EOS treasury in a blended portfolio of Crypto and Fiat.”

Is centralization a problem for EOS?

Notably, decentralization might be one of EOS’ weakest spots. In November 2018, its governance model was exposed, as evidence suggesting that some confirmed transactions were reversed surfaced on social media, which puzzled some pundits as well as ordinary crypto enthusiasts.

Around the same time, blockchain-testing company Whiteblock published the results of “the first independent benchmark testing of the EOS software.” The investigation came to several conclusions about EOS, the most bold of which was that “EOS is not a blockchain, rather a distributed homogeneous database management system, a clear distinction in that their transactions are not cryptographically validated.”

Further, in October 2018, allegations arose accusing the platform’s major Block Producers (BPs) — entities that essentially get to “mine” the EOS blockchain after being elected — of “mutual voting” and “collusion,” suggesting that the entire model of governance might be corrupt.

However, full decentralization is not necessarily paramount to the project’s success at this point, D’Aria of Bitpro acknowledged to Cointelegpraph:

“Yes, EOS is unequivocally more centralized than Bitcoin or Ethereum. Decentralization has a tremendous cost in terms of performance and efficiency, and EOS gets around those limitations by simply being less decentralized. It’s not fully centralized, it’s just further down the spectrum than ETH. So then the question becomes, ‘is EOS decentralized enough’? For a lot of use cases, I do believe it is.”

In D’Aria’s view, EOS has a high chance of effectively competing with Ethereum as the main platform for DApps, which seems to be Block.one’s current primary aim. D’Aria opined, “If you asked me whether ETH or EOS would ultimately be more successful 10 years from now, I’d have a really hard time answering that question because they’re both legitimate competitors for that space.”

EOS’ future is looking bright — at least in the eyes of its creators

Notably, Block.one’s leaders appear to be confident about the future of their product. “We sold a product, a place on a snapshot list that could be used by the community to create the highest performance and most used blockchain,” Larimer wrote in the Telegram group chat. “We sold the community tools that enabled them to create $6b in value.”

“If we had not sold our funds on an ongoing basis we would have inflated Ethereum to the moon and then crashed it when exiting,” Blumer also wrote in the chat. “One day btc will probably run on eosio chains.”

Also, Block.one has scheduled an event for June 1, which will take place in Washington, D.C. While the company has not revealed what product might be presented there, the most common prediction is that it could be a social media platform.

Major Swiss Telecoms Firm Swisscom to Distribute Tokenized Artwork

Major Swiss telecommunications firm Swisscom announced its plans to distribute tokenized artwork through its Swisscom TV television network.

Major Swiss telecommunications company Swisscom announced its plans to distribute tokenized artwork through its Swisscom TV television network. The news was reported by Cointelegraph auf Deutsch on May 24.

Per the company’s press release, limited artworks — initially 100 works by 30 artists — from selected artists are exclusively available on the Swisscom TV box through the NOOW app. The app was developed by Swiss tokenization startup Dloop. The works have been chosen by Stefanie Marlene Wenger, who commented in the press release on the development:

“This is about more than creating a virtual gallery; the next step will be to include curated exhibitions on the platform and a close collaboration with galleries.”

Since its launch, NOOW app reportedly allows users to select pieces and buy certified copies, which will be issued in limited numbers. The press release claims that digitization has eroded the value of original art by allowing it to be copied without any quality loss.

As the announcement claims, in the Swisscom system “the owner receives a certificate of authenticity and knows how many copies of a work exist.”  Basel artist Jonas Baumann is also quoted, praising the distribution advantages of digitization:

“NOOW helps me to bring art to the screen. It also offers new creative opportunities to experiment with animated images and offer them to a wider audience.”

As Cointelegraph reported in March, the blockchain-based art registry startup Artory has acquired auction house database Auction Club.

Also, in May last year news broke that American online art auctioneer Paddle8 and The Native, a Swiss tech company, were launching a blockchain-based art authentication service.

Research: ICO Sector Signals Uptick After Crypto Winter

A new report from ICObench claims that the initial coin offerings sector is showing signs of an uptick due to positive investor sentiment.

The initial coin offerings (ICO) sector is showing signs of an uptick due to positive investor sentiment, apparently spurred by the recent crypto market rally. The data was revealed in a new report from token rating platform ICObench, shared with Cointelegraph on May 25.

Providing data as of May 21, the report notes that the success rate of ICOs has increased, ostensibly reflecting a rise in projects’ quality. 85% of total funds raised so far in May reportedly belong to projects with a high (3-3.5) rating — as compared with 68% in April.  

According to ICObench’s data, the number of published projects in May has increased by 157 to hit 5,512 projects, with 287 ongoing ICOs and 140 upcoming token sales expected.

The report notes that data for the total funds raised so far in May has been overwhelmed by the reported $1 billion initial exchange offering (IEO) from cryptocurrency exchange Bitfinex — bringing the total amount of funds raised via token sales this month to roughly $1.075 billion.

As reported, an IEO represents an alternative model of token offering wherein a centralized crypto exchange operates the sales and ostensibly vets both the projects themselves and prospective investors.

Aside from Bitfinex, IEOs from Economi and Poseidon each raised around $10.5 million and 2.4 million respectively, according to the report.  The sum of all funds collected from the top 5 IEOs (excluding Bitfinex) so far this month hit almost $15.5 million.

Bitfinex’s major offering has resulted in May being the month with the highest total funds raised so far in 2019. In ICObench’s historical data — which represents May 2018 through May 21, 2019 — only May and June 2018 saw higher levels of total funds raised via token sales.

In terms of geographical distribution, the Brisitish Virgin Islands took the lead in terms of total funds raised, followed by the Cayman Islands. The United Kingdom contributed the highest number of ICOs — with 9 projects — yet scored only 7th place in terms of total funds.    

In mid-May, Bitfinex unveiled its own native exchange utility token, LEO, for which the exchange had ostensibly raised the $1 billion in a private IEO — removing the need for a public offering. Also this month, together with spin-off Ethfinex, Bitfinex has launched an IEO platform.

The exchange meanwhile continues to challenge court proceedings sparked by the New York Attorney General’s (NYAG) recent accusations against it. The NYAG alleges that the firm lost $850 million in user deposits and had subsequently secretly covered up the shortfall using funds from its sister firm, stablecoin operator Tether.

Find the Bag, Find the Gold

Find the Bag, Find the Gold

On May 13th 2019, at the Consensus 2019 NYC Conference, BitcoinHD (BHD) presented the next generation consensus system to the whole world: POC, or Proof of Capacity.

Named after the core spirit of blockchain – Consensus
between participants in a network – the conference attracted community KOLs,
representatives from established organizations, investors and the world’s top
developers to gather and exchange their newest understandings and discoveries
about blockchain. As an enthusiastic member of the blockchain industry, BHD
attended the conference to present its POC consensus, to share, innovate and
create together with all the other industry peers.

BHD is a new type of cryptocurrency based on Conditioned Proof Of Capacity (CPOC). It uses a hard disk as a consensus participant, significantly lowers mining costs and the entry barrier for everyone. BHD’s mission is to create a valuable financial system that will change the way cryptocurrency is produced.

The innovative POC consensus and mining mechanism attracted much attention and interest at the Consensus 2019 conference. BHD set up an interactive game, ‘Find the Bag, Find the Gold’ on the exhibition floor. The community volunteers distributed BHD bags to visitors. There was a ‘golden treasure house’ hidden among the bags, and a ‘key to the world of POC’ which could open the ‘golden treasure’. All participants with a bag had a chance to win the potential ‘golden reward’. In 2008, the emergence of Bitcoin opened a treasure house of cryptocurrency and enabled many people to gain financial freedom. What will POC-based BHD bring us in future?

(visitor with ‘golden treasure’ bag)

BHD
is a new project based on a new form of consensus, just like BTC at an early
stage. BTC mining has become difficult over the years; BHD still has infinite
possibilities. Maybe these hidden opportunities match the way BHD named the game
at the conference: Find the bag, Find the Gold.

Media Contact:

Website: http://www.btchd.org/

Email: master@btchd.org

Twitter: https://twitter.com/@btchdcommunity

Telegram: https://t.me/BitcoinHDofficial

Discord: https://discordapp.com/invite/pWde3gn

The post Find the Bag, Find the Gold appeared first on Ethereum World News.

Bitcoin Bulls Count on 2020 Halving to Give BTC Price Massive Push: Bloomberg

Bitcoin halving takes place every few years to prevent Bitcoin value from inflation, analysts and bulls point out that after each of those events Bitcoin price experienced a substantial rally

Halving or ‘halvening’ happens every few years – as soon as new 210,000 blocks are mined. When it takes place, the rewards of miners are cut down in half. As per the recent Bloomberg article, crypto bulls are already rubbing their hands in anticipation.

Bitcoin miners’ reward will diminish

The reason is that after the previous two
halvings Bitcoin quotes showed an extensive surge, bringing traders more than
healthy gains.

What happens at a halving is that the amount of coins that miners get for using their computation power to verify transactions gets cut by half.

The first halving occurred in 2012, another one was in 2016. After the first one Bitcoin price hit $1,000. The 2016 halving made Bitcoin price surge to an ATH of over $19,000.

Another mining award cut is expected in May 2020 and then an award for each block will total 6.25 BTC, instead of 12.5 BTC now.

Crypto community expects a major bull run

A recent Twitter poll shows that among 2,500 voters, 61% expect BTC price to demonstrate a major rally. Since the award will be cut down by half, fewer Bitcoins will be released in circulation, which will make the coin scarcer than it is now, thus the price should go up.

https://twitter.com/100trillionUSD

As said above, after the first halving in
autumn 2012 Bitcoin price spiked from $10 to $1,000 within a year. The next
halving saw Bitcoin surge to almost $20,000 before it collapsed in 2018.

Crypto experts agree to differ

Major Bitcoin bulls, writes Bloomberg, such as
Anthony ‘Pomp’ from Morgan Creek Digital, have been drawing attention to the
2020 halvening, emphasizing its importance.

Some crypto experts remain skeptical, though. Eric Turner, the head of research at Messary Inc., believes that the connection between Bitcoin halvings and Bitcoin price surges is very thin.

Gil Luria from DA DA Davidson & Co thinks
likewise:

“There are so many factors that impact the price of Bitcoin, but this should not be one of them.”

Photo by Aleksi Räisä on Unsplash

The post Bitcoin Bulls Count on 2020 Halving to Give BTC Price Massive Push: Bloomberg appeared first on Ethereum World News.

Litecoin (LTC) Leading in $10 Billion Crypto Market Surge

A crypto correction that started
a couple of days ago
was quickly quashed when Bitcoin found support and moved
back towards $8k once again. Since then the altcoins have been on fire with
some, such as Litecoin, surging ahead of the pack.

Another $10 Billion Back into Crypto

From a low of $243 billion yesterday crypto market
capitalization has pumped to a high of $254 billion before stabilizing at
around $250 billion where things currently sit. Daily volume has surpassed $80
billion once again which is extremely bullish. May has seen some of the highest
volumes on record and they have been maintained which has kept markets buoyant.

Total market cap 24 hours – coinmarketcap.com

Bitcoin has made it back over $8k one again, hitting an
intraday high of $8,140 according to Coinmarketcap.com. The
bullish sentiment has resulted in a further 2 percent gain from Bitcoin which
has yet to have any real pullback in this current rally. After spending the
majority of April at around $5,300 BTC has found a new resistance zone around
$8,000. Its market dominance is currently 56.6 percent and the altcoins are
leading the digital race today.

Litecoin Ignited in 20% Pump

Litecoin is one of the top performing altcoins at the time of writing. It has surged from $88 to $104 over the past day and reached its highest level for almost a year. There is massive resistance at $100 which LTC has already hit last week. A move above it could send the ‘silver of crypto’ surging in a parabolic pump mirroring that of December 2017. LTC has trounced EOS to take fifth spot with a market cap now exceeding $6.4 billion.

The halving
event in 73 days
is likely to be driving early momentum for LTC which is
bound to trade a lot higher as August approaches. Coin scarcity and increased
demand could push prices back to their all-time highs of $370.

Binance Coin is also trading well and has just made a new
all-time high at $34. A 7 percent surge on the day has been the result of the
world’s top exchange announcing margin trading features. Though it can’t catch
Litecoin at the moment, EOS
has made 8 percent and is up to $6.50 at the time of writing.

The momentum for crypto markets is holding and May is
shaping up to be another month of solid gains. Crypto market cap has doubled
since the beginning of the year indicating that things have finally lifted off
the bottom and the bulls are running the show now.

The post Litecoin (LTC) Leading in $10 Billion Crypto Market Surge appeared first on Ethereum World News.

Bitcoin Demand Will Surge if The Chinese Yuan Falls More: BitMEX CEO

As we reported the other day, evidence is purportedly mounting that Bitcoin and the Chinese Renminbi (RMB), known as the Yuan, are tied to each other. A report from the South China Morning Post recently noted that after Donald Trump, the president of the U.S., announced tariff changes on Chinese imports, BTC began to rally. Simultaneously, the yuan purportedly fell to its lowest level in six months, as China looked to move against Trump.

Garrick Hileman, the head of research at industry startup Blockchain.com, told the SCMP that his team, in fact, sees a “strong inverse correlation” between the two assets. He does add that Blockchain.com can’t be “100% certain that Bitcoin’s recent price increase is being driven by trade tensions”, but subsequently noted that the Yuan has traded inversely to the RMB in the past.

As seen in the Twitter post below, there are some eerie similarities in the charts.

This sentiment was perpetuated on Thursday, with BitMEX’s Arthur Hayes releasing his latest edition of “Crypto Trader Digest”. In the edition, the former institutional investor accentuated that Bitcoin is a monetary asset, and that certain actions between America and China could result in a demand for BTC. He points to the fact that with the mounting trade war and a potential for the People’s Bank of China to tighten credit lines, the Chinese Yuan could continue to lose value against the U.S. dollar. He then concludes:

The OTC market is vibrant, and these venues have found politically acceptable ways to allow buyers and sellers to meet in China. The key number is 7.00. If the PBOC allows the Yuan to break this level, ordinary Zhou’s will scramble to get their hands on Bitcoin and other cryptos. Similar to 2015, a sharp and sudden Yuan depreciation could lead to the beginning of another epic bull market.

He isn’t the only industry exec with this thought process. In a recent Fortune article, Barry Silbert of Digital Currency Group stated that Bitcoin is best seen as a “non-correlated asset”.

Deemed Moot?

Some, however, believe that this analysis is moot.

Macro analyst Alex Krüger recently pointed out that Friday’s sell-off shows that BTC is a hedge against trade wars is “nonsensical”. Citing the fact that the Bitstamp sell-off was practically engineered by one entity, which many speculate was trying to turn a profit on BitMEX, he adds that Bitcoin’s recent parabolic rally likely is a result of “a handful of parties.”

He goes on to joke that the Bitcoin and RMB narrative is just as foolish as those saying that the cryptocurrency is correlated with avocados, which has spiked alongside BTC.

And, BTC hasn’t rallied much, despite mounting trade threats and tariffs from both sides, somewhat disvaluing this theory. But, who knows?

Photo by 郑 无忌 on Unsplash

The post Bitcoin Demand Will Surge if The Chinese Yuan Falls More: BitMEX CEO appeared first on Ethereum World News.

UK Financial Watchdog Warns Public of Crypto Clone Firm

The FCA has reported that ICAP Crypto is a clone firm borrowing details from ICAP Europe Limited.

The primary financial regulator of the United Kingdom, the Financial Conduct Authority (FCA), warned that ICAP Crypto is a clone firm in a public announcement on May 24.

According to the report, ICAP Crypto is a clone firm of ICAP Europe Limited. Clone firms are a type of scam in which the scammers use information from legitimate firms in an attempt to convince targets that they are genuine.

In this case, ICAP Europe Limited is a legitimate firm that is authorized by the FCA, and its details are being propagated in scams using the similarly-named ICAP Crypto “firm” which is neither authorized nor registered by the FCA.

In 2018, the FCA issued warnings over at least two nominally crypto-related clone firms. The first clone, Fair Oaks Crypto, attempted to confuse targets by claiming to be affiliated with Fair Oaks Capital. The second clone, Good Crypto, ran its scam by misrepresenting some of the registration information of the legitimate firm Arup Corporate Finance as its own.

As previously reported by Cointelegraph, the FCA stated this week that crypto and forex investors in the U.K. were scammed out of over $34 million from 2018–2019. The FCA went on to say that it was contemplating a ban on “high-risk derivative products linked to cryptoassets.”

The FCA also recently accepted three blockchain businesses into its regulatory sandbox. According to the FCA, previous blockchain projects they have approved include:

“… digital identity solutions, platforms which tokenize issuance of financial instruments, and services aimed at facilitating greater access to financial services for vulnerable consumers.”

Bitcoin (BTC) Technicals Suggest Bearish Drawdown Ahead

Bitcoin Charts Seem Bearish

Bitcoin (BTC) may just have bounced back from another sell-off, moving from $7,600 to $8,000, but one analyst is still sure that the cryptocurrency market is currently topping.

Analysis group Bravado’s Bitcoin Jack, who seemingly called Bitcoin’s move to $8,000, broke down his thoughts on the matter in a Twitter thread. He notes that Bitcoin recently reached its “FAPFAP” bear market average price level, which Jack claims signals an impending reversal, as he saw similar patterns in gold, the S&P 500, and Bitcoin in its history. What’s more, BTC is currently trading at the monthly and weekly resistances from July 2018, which the leading cryptocurrency was rejected from when it attempted to break out.

He goes on to draw attention to the fact that parabolic advances, like the one that digital assets across the board just experienced, always result in a 60% to 70% retracement, which would result in BTC heading back to $5,000 or $6,000. And, to top that all off, Jack bluntly points out that longs are clearly consolidating on BitMEX; volume has slowed, despite the recent rebound; the Bitcoin-backed exchange-traded funds are off the table; and altseason, especially for an asset like Ethereum, seems to be right on the horizon. Not the prettiest signs.

He isn’t the first to have recently been bearish on Bitcoin for a medium-term time frame. As reported by Ethereum World News previously, Magic Poop Cannon, an ill-titled technical analyst that called last year’s BTC decline from $6,000 to $3,000, noted that there’s a likelihood that the bull market isn’t on yet. Per previous reports, the trader explained that there are clear signs that Bitcoin is overextended: the Money Flow Index and Network Value to Transactions ratio have both neared the top of their oscillators, which is a pattern that has historically preceded drops of over 80%.

He adds that Bitcoin’s current rally makes no logical sense, pinning the irrationality of this market to institutional investors, futures, trading desks, high-frequency trading, and other factors that have been known to manipulate the underlying nature of markets. 

Yet, others have been a tad optimistic, stating that Bitcoin still has some fuel to boom. Popular commentator and trader Galaxy recently opined that BTC is currently trading in a symmetrical triangle pattern (even after today’s $300 plunge), which studies state has a 60% chance of leading to a price breakout. If this breakout occurs, the analyst suggests that a move to $10,000. A breakout could occur any time within the next three weeks.

And more optimistically, analyst Nebraskan Gooner recently astutely noted that his proprietary “Top Goon X” indicator, which has historically flashed “buy”/”parabolic” to precede massive moves to the upside, has just issued a signal after over three years of inactivity. And, just as importantly, Bitcoin’s current one-day chart looks much like it did prior to BTC’s rally from $200 to $1,200 in 2013.

Photo by Kyle Johnson on Unsplash

The post Bitcoin (BTC) Technicals Suggest Bearish Drawdown Ahead appeared first on Ethereum World News.