96. 07/04/2019 20:30
Returns on Crypto Assets: The Hidden Message

For those of us in the northern hemisphere, April is traditionally the month when the furious subterranean growth during the winter months finally breaks through in the form of the first buds of spring.

The crypto world does not move to such a predictable rhythm, however, and the building during the bear market has yet to show substantive signs of flowering. Yet, unruly shoots are starting to emerge in unexpected forms.

The past couple of weeks have seen a flurry of headlines proclaiming a relatively new type of crypto asset return: income, not from trading or realizing profits, but from just holding the cryptocurrencies and tokens.

Coinbase announced that it will start to offer staking services (in which tokens are deposited in order to participate in network maintenance) for institutional clients that hold XTZ, the native token of the tezos blockchain, which should earn holders a net return of over 6 percent. And Battlestar Capital has partnered with crypto lender Celsius to launch a staking network, which will handle proof-of-stake token deposits offering returns of between 5 percent and 30 percent.

We also have the growing attention paid to returns from crypto loans, evidenced by the inflow of $25 million-worth of crypto in just two weeks into BlockFi’s interest-bearing crypto accounts. TrueUSD stablecoin holders can earn up to 8 percent on tokens deposited with crypto lender Cred for a minimum of 6 months. And the Universal Protocol Alliance – a group comprised of exchange Bittrex, crypto lender Cred and others – is launching a euro-backed stablecoin that can be deposited for a return of 8 percent.

Yield, interest, dividends, rewards – whatever you want to call them (the crypto sector is notorious for its confusing vocabulary), they reveal two divergent characteristics of the crypto asset space.

Unexpected returns

First, they hint at the sector’s increasing maturity. While investors have by no means given up on the potential for price appreciation, it is interesting to note the growing focus on other sources of return.

Devising yield strategies is common in more stable investment assets; in crypto, it feels new.

Second, they add layers to the well-entrenched regulatory confusion over what these underlying assets are.
Interest-bearing accounts traditionally fall under the purview of banking authorities. Cryptoassets don’t. So who would regulate crypto asset interest-bearing accounts?

BlockFi offers interest on deposited bitcoin and ether. Both have been designated commodities by the CFTC, which regulates commodity-based derivatives – not commodity-based yields.

Much at stake

Let’s consider the business push behind reward management for proof-of-stake tokens, such as the Coinbase and Battlestar announcements.

Could staking rewards be considered “expectation of profit,” especially when the returns are advertised as such? If so, wouldn’t that nudge the tokens toward the definition of a security?

When it comes to stablecoins things get even more confusing.

The promised TrueUSD and euro-backed stablecoin returns could add fuel to the quietly simmering debate that even coins designed to not produce capital appreciation could still be considered securities. Should that happen, their intended use as transaction tokens could be compromised.

Both hands

So, on the one hand, the focus on yield implies a growing maturity and could entice new investors in as the dovish stance of central banks perpetuates the dearth of income elsewhere. This is positive.

On the other hand, the deepening layers of complexity highlight not only the lack of comprehensive and reassuring regulation but also the hard task ahead for regulators struggling to adapt old rules to new products. Furthermore, the rush to launch differentiated services with enticing yields is bound to attract the regulators’ attention, especially with services aimed at the retail market.

I’m not a lawyer and I’m sure there are many nuances and qualifications that I’m overlooking – but I am willing to bet that even lawyers don’t know for sure how this will play out.

I’m also willing to bet that most of us can agree on one thing: the more confusing this gets, the more interesting it becomes.

97. 06/04/2019 08:40
10 Passes to Go: Bitcoin’s Lightning Torch Will Soon Burn Out

Bitcoin’s lightning torch will soon burn out, putting an end to a global payments experiment that has seen participation from hundreds of recipients, from tech luminaries like Twitter CEO Jack Dorsey to users in countries cut off from parts of the world by economic sanctions.

Users taking part in the venture have been showing the power of lightning’s tech by passing a payment from one person to the next, adding a few cents worth of bitcoin with each step. The so-called “torch” has burned through at least 54 countries so far, showcasing its cross-border prowess.

But because of a hard-coded transaction limit of about $170 at time of press (it’s officially 4.29 million satoshis), there’s a limit on how much bitcoin can be sent across a lightning channel at once. As such, users will only be able to pass the torch less than a dozen more times before it hits that limit.

Once the torch payment hits the limit (which was put into place for safety reasons) people can no longer add 30 cents or so to the torch with each pass, as was the lightning torch tradition.

Of course, it’s impossible to say what exactly what will happen to the torch until it dies out. Will the torch die out? Or, will someone simply start a new one?

The pseudonymous Hodlonaut, who started the lightning torch on a whim, has been counting down the remaining spots on Twitter (now down to 10), telling CoinDesk that he is not planning to start up a second torch.

When asked whether they’re planning to start another torch as this one dies out, Hodlonaut responded: “I don’t think so. Maybe something else ;)”

Global experiment

The possible end to the lightning torch raises what might be an obvious question: what are the key takeaways?

Participants argue that, for better or worse, the lightning torch has shown that the technology is unstoppable, as it crossed into more than 50 countries with ease. If one country implements policies that are unfair, bitcoin can bypass this, because payments can’t be stopped by any one person or entity.

In addition to passing through so many countries, that the torch was sent to Iran seemed to vindicate this view. Iranian bitcoin user Ziya Sadr tried to receive the torch, but some torch bearers were too scared to pass it to him due to U.S. sanctions potentially making it illegal to do so. But, when an unknown user from Wales passed Sadr the torch, it seemed to secure the view that bitcoin’s lightning is borderless.

Sadr agrees with these sentiments. “Bitcoin and lightning are truly censorship resistant and people manifested this too during this very public and bold experiment!” he told CoinDesk, adding:

“Bitcoin is borderless and it will not conform to state-backed sanctions and national politics.”

According to bitcoin enthusiast and entrepreneur Akin Ferdinandez, the experiment “showed clearly that the world is actually just one place, and with the right tools it’s possible to traverse national borders and reach everyone as if there were no barriers between anyone.”

“The torch entering and leaving Iran unimpeded is all the proof you need to show this is true. People really can get along if given the chance,” Ferdinandez told CoinDesk.

Hodlonaut also pointed out some of the lesser-known facts of the experiment. For example, a group of Venezuelans received the torch while the country was roiling amid a power outage. With no electricity, they powered their lightning node with a motorcycle battery.

Ferdinandez, who carried the torch last week, thinks it shows that even when a technology is early on, it can do good.

“It also shows once again that a small number of people can have a hugely significant global impact in a short amount of time if their thinking is right and they have the focus and skills to execute in software,” Ferdinandez (who also goes by the moniker Beautyon) told CoinDesk, adding:

“The lesson here is, ‘Do not underestimate bitcoin’.”

Lightning limitations

But while the experiment shows the latent promise of the technology, it also shows how unready it is, Charlie Lee, creator of litecoin, argued to CoinDesk.

“I think the torch shows [that] using lightning by running one’s own node and lightning is still not easy enough. Most torch holders end up using a custodial solution, which is not ideal,” Lee told CoinDesk.

“Custodial” wallets like Bluewallet have recently sprung up. Lightning users, including those who have participated in the lightning torch, have flocked to them because they make lightning easier to use. They don’t need to set up their own lightning node, a time-consuming process that requires a lot of hard drive space, for instance.

While this sounds great, it’s “not ideal” as Lee put it, because custodial wallets have full control of users funds — a characteristic that sort of defeats the purpose of bitcoin as a digital currency that users are intended to have complete control over.

“We still have lots of work to do to make lightning easy to use,” Lee said.

This technological immaturity is embedded in the very reason the lightning torch is near its end, about to reach its transaction limit. The limit is there for a reason, as it’s one of the features put in place by developers to keep users safe since lightning is still a budding technology susceptible to bugs.

Accidental altruism

Another outcome of the experiment is it has unexpectedly turned into a crowd sourced charity project.

Once the torch hits the transaction limit, Hodlonaut and the community plans to donate the torch to the non-profit Bitcoin Venezuela, dedicated to spreading the word about bitcoin as a currency alternative in the economically troubled country.

Hodlonaut tweeted:

“[These] guys really deserve all the support we can give them. They will receive the #LNTrustChain torch, but that only amounts to around $170.”

To expand the donation effort to not only just the few who get to carry the lightning torch, Hodlonaut started a parallel donation effort on Tallycoin, a fundraising platform accepting solely bitcoin and lightning payments.

Without a transaction limit to worry about, the fundraiser has snowballed much more money than the torch, attracting has attracted 235 donations totaling 0.38672 bitcoin, worth about $1,553 at time of press.

98. 05/04/2019 08:24
Bitcoin Faces Price Pullback Amid Extremely Overbought Conditions
  • Bitcoin’s quick drop from a 4.5-month high of $5,345 to levels below $5,000 validates the extremely overbought readings on the 14-day relative strength index.
  • BTC could consolidate around $5,000 with a negative bias over the next day or two. A pullback back to key support levels at $4,672 and $4,565 (200-hour MA) can’t be ruled out.
  • The longer-term outlook will remain bullish as long as bitcoin’s price holds above the former resistance-turned-support of $4,236.

Bitcoin (BTC) could be in for a minor price pullback as the RSI is showing the most overbought conditions for 16 months.

The crypto market leader cruised past the crucial resistance at $4,236 on Tuesday, confirming a longer run bearish-to-bullish trend change and hit a 5.5-month high of $5,345 yesterday, according to Bitstamp data.

With the near 30 percent rally to 4.5-month highs seen in the last 48 hours, bitcoin’s 14-day relative strength index – a widely-followed momentum indicator – has jumped above 70.00, indicating overbought conditions. In fact, the RSI is currently seen at 89.11, its highest level since December 2017.

An overbought reading on the RSI is often taken to be a sign of impending bearish reversal. In reality, however, an above-70 print merely indicates that the rally is overdone and a reaction – a price pullback – could be in the offing.

These overbought indicators become valid only when the price begins to flash early signs of buyer exhaustion, which seems to be the case with BTC.

The cryptocurrency witnessed a sharp drop to $4,800 within two hours of hitting highs above $5,300 at 21:00 UTC yesterday and is now struggling to hold onto price points above $5,000.

As a result, price consolidation or a deeper pullback to $4,600 could be seen in the next couple of days.

Daily and 4-hour charts

The long upper shadow attached to Wednesday’s candle (above left) indicates the bullish move is running out of steam.

Validating that argument is the big bearish engulfing candle seen in the 4-hour chart (lower left), which indicates that the period began with optimism but ended on a pessimistic note.

Both candlesticks add credence to the extreme overbought reading on the 14-day RSI (right).

Hourly chart

On the hourly chart, the RSI has rolled over from the overbought territory, having charted lower highs over the last 48 hours, contradicting the higher highs on price.

That bearish divergence also favors a price pullback to key support levels lined up at $4,672 and $4,565 (200-hour MA).

99. 04/04/2019 11:29
3 Reasons Bitcoin’s Price Suddenly Surged Back to $5K

The crypto market sprang back to life with bitcoin’s surge to nearly 5-month highs yesterday. But why?

To those who have been paying attention to the charts, it shouldn’t come as a surprise. The leading cryptocurrency by market value jumped nearly $1,000 to $5,080 in a 60-minute window early on Tuesday, confirming a transition from bear market to bull market that it had been signaling for some time.

In fact, after a year-long bear market, savvy traders were waiting on a trend change that would gain credence if and when prices established the most basic of all bullish technical patterns – a higher low and a higher high on its weekly charts. (A higher high would have been confirmed above $4,236.)

Looking back, a big move was overdue, as bitcoin’s average daily trading range had slipped to two-year lows in March. An extended period of low volatility often ends up with a violent move on either side.

That low volatility period ended with a strong bullish breakout, possibly due to the following three reasons:

1. Technicals were foreshadowing a bullish move

As mentioned, bitcoin’s charts have been signaling for some time that a bottom may be in the market.

This first began in late February, when we reported that bitcoin’s 50-week moving average dropped below the 100-week moving average, confirming a bearish crossover – the first since April 2015.

At the time, we wrote that the lagging indicator had turned bearish for the first time in four years, suggesting bitcoin’s price may have bottomed out after a year of declining prices.

We wrote:

Put simply, it takes a great effort on the part of the bears to push the 50-week MA below the 100-week MA. As a result, the bear market is usually exhausted by the time the crossover is confirmed, which seems to be the case with BTC.

That, however, was just the beginning. Several longer duration indicators, like the weekly money flow index (MFI) and the moving average convergence divergence (MACD), would add evidence to the trend.

On March 4, the MFI bottomed, contradicting the lower low in bitcoin’s price.

That bullish divergence is widely considered an early warning of a bearish-to-bullish trend reversal, a fact we noted at the time. A rising MFI indicates an increase in buying pressure, while a falling MFI is considered a sign of increasing selling pressures

The same day, the MACD, a momentum oscillator calculated by subtracting the longer-term moving average from the shorter-term moving average, also turned bullish, a fact no doubt noticed by traders.

2. Mining reward halving

Yet, these technical developments likely reinforced expectations of a stronger rally ahead of the incoming halving, a scheduled, programmatic reduction in the amount of new bitcoin paid to miners.

Bitcoin is set to undergo a mining reward halving in May 2020 and historical data indicates the process tends to put a bid under the cryptocurrency at least a year in advance. (The protocol automatically reduces new issuance after a certain number of blocks are processed, an event that occurred most recently in 2016).

Markets first took note of this possibility in December 2018 after the sell-off ran out of steam near $3,100.

The particular price pattern was reminiscent of how the previous bear market had ended at lows near $150 in early January 2015 – 17 months before a reward halving in August 2016.

Indeed, historical data shows that bitcoin traders generally respond to the halving, and that the event serves as a signal and potential catalyst.

The narrative that BTC is set to repeat history by breaking into a bull market at least a year ahead of the next mining reward halving (due August 2020) has only strengthened over the last three months, possibly leading to the bull breakout yesterday.

Indeed, analysts had been arguing for months that with the next bitcoin halving expected to happen in May 2020, the time had come for investors to start paying attention to this pattern.

3. Market activity

One can’t rule out market irregularities, though, and there appear to have been some yesterday.

Reuters reported Tuesday that a single algorithmically managed order worth $100 million spread across several major exchanges – Coinbase and Kraken and Bitstamp – triggered the sudden rally to multi-month highs.

Meanwhile, Bitfinex data indicates that the unwinding of bearish bets created upward pressure on prices.

BTC/USD short positions plunged from 20,654 BTC to 17,103 BTC between 04:00 and 06:00 UTC yesterday; later declining further to 16,978 BTC – the lowest level since March 2018.

After falling more than 17% Tuesday, funds in short positions climbed back up 13 percent.

What’s ahead

Looking forward, BTC could witness a minor pullback to levels below $4,700 in the short-term. The overall outlook, however, will remain bullish as long as BTC remains above $4,236.

BTC revisited yesterday’s high of $5,080 earlier today. The bullish move, however, was accompanied by a lower high on the relative strength index (RSI).

That bearish divergence indicates scope for a pullback to the ascending (bullish) 50-hour MA, currently at $4,572.

But both the triangle breakout and the bullish higher high above $4,236 indicate the tide has turned in favor of the bulls. Validating that argument are the ascending 5- and 10-week moving averages.

That said, with the short duration charts reporting overbought conditions, a break above the crucial 21-month exponential moving average (EMA), currently at $5,200, may not happen in the next few days.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

100. 03/04/2019 08:28
Bitcoin naik hingga 20% dan harganya hampir menyentuh 70juta!
Dalam 3 hari terakhir ini, Bitcoin naik hingga 20% dan harganya hampir menyentuh 70juta!