- Bitcoin’s price consolidation in a tight range continues for the eighth day, as litecoin rallies to its highest level since May 2018.
- BTC’s 4-hour chart shows $8,053 is the level to beat for the bulls. A high-volume break higher could be followed by a rise to $8,500.
- LTC looks set to extend its recent rally as per the 3-day chart.
- LTC already rallied more than 100 percent in the last six weeks, so a pullback to $120 could be seen before further gains.
Bitcoin (BTC) is lacking a clear directional bias for the eighth consecutive day amid a continued rally in litecoin’s (LTC) price.
The price of a single bitcoin – the world’s leading cryptocurrency market value – has been restricted to a $600 range since June 5. While any drops to $7,500 have been consistently short-lived, buyers have also repeatedly failed to engineer a convincing break above $8,100.
As of writing, BTC is changing hands at $8,000 on Bitstamp, representing a 0.5-percent gain on a 24-hour basis.
With BTC so indecisive, major alternative cryptocurrencies like ethereum’s ether token, XRP, bitcoin cash and EOS are also struggling for clear direction.
Litecoin, however, is flashing 6.5 percent gains on a 24-hour basis, according to CoinMarketCap. The fourth largest cryptocurrency by market capitalization rose to $141 on Bitstamp earlier today, the highest level since May 2018.
More notably, at the current price of $136, LTC is up nearly 40 percent from lows below $100 seen just seven days ago. Meanwhile, BTC is up 4 percent on a weekly basis.
BTC 4-hour chart
As seen above, BTC has created a sideways channel inside a falling channel, so a break above $8,063 would confirm two channel breakouts and open the doors to $8,500.
It is worth noting that the breakout could be short-lived if trading volumes continue to remain low.
On the downside, the higher low of $7,713 is the immediate support. A violation there would expose the lower edge of the sideways channel, currently at $7,500.
LTC 3-day chart
Litecoin’s relative strength index is reporting a symmetrical triangle breakout – a bullish continuation pattern.
The 5- and 10-candle averages continue to trend north, indicating a bullish setup.
Further, LTC has consistently seen higher volumes on days of positive price action compared to days of negative price action. Therefore, the path of least resistance looks to be to the higher side.
That said, a pullback to the 5-candle MA support, currently located at $122, could be seen before further gains, as the cryptocurrency has rallied 118 percent in the last 6 weeks and the bulls often take a breather following such stellar rallies.
Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.
The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.
Advances in cryptography are converging to help developers bring blockchain applications closer to the core decentralizing principles on which this technology is founded.
Inventions such as atomic swaps, zk-SNARKS and Lightning-based smart contracts are allowing developers to realize the dream of true peer-to-peer transactions in which neither party, nor an outside intermediary, can act maliciously. Witness the rising number of non-custodial and decentralized exchange (DEX) services for trading crypto assets.
This is exciting. But it also shines a light on another big problem that has curtailed the widespread adoption of cryptocurrency and blockchain technology: secure key management.
For too long, the most reliable means of protecting the private keys that afford the holder control over an underlying crypto asset have been too clunky, insufficiently versatile, or difficult to implement on scale. User experience has been sacrificed in return for security.
Now, some big strides in another hugely important field of cryptography – secure multiparty computation, or MPC – point to a potential Holy Grail situation of both usability and security in a decentralized system.
A keyless wallet
Progress in this field was marked last week by Tel Aviv-based KZen’s public announcement of the specs for its new ZenGo wallet. ZenGo uses MPC, along with other sophisticated cryptographic tools such as zero-knowledge proofs and threshold cryptography, to share signing responsibility for a particular cryptocurrency address among a group of otherwise non-trusting entities.
The beauty of the KZen model is that security is no longer a function of one or more entities maintaining total control over a distinct private key of their own – the core point of vulnerability in cryptocurrency management until now. Instead the key is collectively derived from individual fragments which are separately generated by multiple, non-trusting computers.
The model draws on the genius of MPC cryptography.
With this approach, multiple non-trusting computers can each conduct computation on their own unique fragments of a larger data set to collectively produce a desired common outcome without any one node knowing the details of the others’ fragments.
The private key that executes the transaction is thus a collectively generated value; at no point is a single, vulnerable computer responsible for an actual key. (KZen’s site includes a useful explainer on how it all works.)
KZen is not the only provider of MPC solutions for blockchain key management. Unbound, another Israeli company, is going after the enterprise marketplace with its MPC solutions for crypto security.
Unbound’s prolific (if blatantly pro-MPC) blog offers different angles on the same argument.
It makes a repeated case for why MPC is superior to the two preferred approaches to crypto security of the moment: hardware security modules (HSM), on which hardware wallets like Ledger and Trezor are built, and multi-signature (multisig) technologies, which are favored by exchanges.
Attacking the trade-offs
If KZen and Unbound are to be believed, MPC solutions resolve both the hot-versus-cold trade-off in key management and the dilemma of self-versus-managed custody.
Cold wallets, in which keys are stored in an entirely offline environment out of attackers’ reach, are quite secure so long as they remain in that offline state. (Though you really don’t want to lose that piece of paper on which you printed out your private key.)
But bringing them into a transactable, online environment poses an overly cumbersome challenge when you want to use those keys to send money. That’s perhaps not a problem if you’re just a HODLer who transacts rarely but it’s a serious limitation to blockchain technology’s prospects for transforming overall global commerce.
On the other hand, hot wallets have, until now, been notoriously vulnerable.
Whether it’s the relentless “SIM jack” attacks on people’s phones that are emptying out both hosted (third-party custodial) wallets and on-phone self-custody holdings, retail participants’ horror stories are legion. And, of course, we all know the stories of custodial exchanges being hacked – from Japan, to Hong Kong, to Canada, to Malta.
At the same time, the solution that regulated institutional investors are currently seeking – that custodians and exchanges build Fort Knox-like “military-grade” custody solutions – inherently contain a compromise.
Not only does this approach fail to resolve the dependence on a third-party, but there are serious doubts about whether any such solution can be forever safe from hackers, who are constantly improving their methods for getting over firewalls. In best-case scenarios, the constant IT upgrades becomes a massive money suck.
Alternative to HSMs and multisig
None of this is not to say that existing security technologies are useless.
Ledger and Trezor’s hardware devices – a more nimble form of cold wallet – are widely used by individuals who are uncomfortable with both external third-party custody and online, on-device self-custody wallets. And, separately, multi-signature (multisig) solutions, in which an m-of-n quorum of keys are required to execute a transaction, have proven robust enough to be used by most exchanges.
But in both cases, vulnerabilities have been exposed. And to a large extent those risks come down to the fact that, regardless of the surrounding security model’s sophistication, the all-important keys are always sitting at single points of failure.
Just last week, researchers demonstrated how they could hack into a remote hardware security module. The irony: the researchers were from Ledger, which relies on HSM to secure its customers’ keys.
Multisig models arguably offer protections across such attacks, because a breach requires simultaneous control of more than one key held in separate locations, but the fact is that multisig solutions have also failed because of both technical and human vulnerabilities (inside jobs).
What’s more, both solutions are inherently limited by the need to customize them to particular specifications or ledgers. Crypto developer Christopher Allen pointed out last week , for example, that HSMs are particularly constrained by the fact that they are defined by government standards.
And in each case, the ledger-specific design of the underlying cryptography means there is no support for the kind of multi-asset wallets that will be needed in a decentralized interoperable world of cross-chain transactions.
By contrast, KZen is boasting that its key-less wallet will be a multi-ledger application from day one.
Challenges and opportunities
To be sure, MPC remains unproven in a practical sense.
For some time, the heavy resources needed to carry out these network computing functions made it a challenging, costly concept to bring into real-world environments. But rapid technical improvements in recent years have made this sophisticated technology a viable option for all kinds of distributed computing environments where trust is an issue.
And key management isn’t its only application for blockchains, either. MPC technology plays a vital role in MIT-founded startup Enigma’s work on “secret contracts” as part of its sweeping plan to build the “privacy layer for the decentralized web.”
(An aside: Enigma CEO and founder, Guy Zyskind, is also an Israeli. Israel has fostered a remarkable concentration of cryptographic expertise in this space.)
It would be unwise to assume that MPC, or any technology for that matter, will provide a perfect, totally infallible solution to security problems. It is always true that the biggest security threats come when human beings complacently believe security is not a threat.
However, if you squint hard enough, and think about how this technology’s prospects for better key management can be married to Enigma’s vision for an MPC-based secret contract layer and to the broader march toward decentralized, interoperable asset exchanges, a compelling vision of true peer-to-peer blockchain-based commerce starts to emerge.
At the very least, you need to watch this space.
A polish cryptocurrency exchanged called Coinroom shut down on April 2, 2019, taking multiple customer accounts worth up to $15,000. The site is currently down and there is no way to contact the founders.
“We don’t know how much they took,” said one user named Maciej. “But it is definitely a lot of cash.”
Polish news site Money.pl first discovered the exit scam on May 31.
“Coinroom registered as a business in 2016 and a year later opened its website. Clients could deposit, buy, and sell cryptocurrencies. They could also exchange cryptocurrency for fiat,” wrote Marcin Łukasik on. “In April users received an email that told them that their accounts would be closed. They had one day to get their cash out. In order to do this they had to contact the exchange admins directly. Everything was laid out in the terms of service the users signed.”
The exchange closed the next day and users who did not follow the proper procedure – one laid out by the exchange itself – lost their assets.
The owners disappeared and the president, Tomasz Zbigniew Wiewióra, was not available to answer questions regarding the exit scam. One Coinroom client found that Wiewióra opened a business in Estonia after leaving Poland. Users also believe that the company ran afoul of the KNF, the Polish economic authority. Łukasik noted that the same thing happened to another exchange, Bitmarket24, resulting in an overnight closure. Coinmarket was under investigation but survived a few months after being entered in to the KNF’s black list.
One former user thinks the cash is long gone.
“There are some very interesting indicators that the cryptocurrencies were taken out and moved to other exchanges a few days before the shutdown,” he said. “On the blockchain nothing disappears.”
Bitcoin ATMs have become “an ideal money-laundering vehicle,” according to the Vancouver Police Department, prompting a proposed city-wide ban by the mayor, and potential federal legislation, The Star reports.
The 76 machines within the city limits have come under police fire twice already this past year due to perceived regulatory issues. Though, most recently in February 2019, Sergeant Alvin Shum took aim not only at Bitcoin ATMs, but also the ideological underpinnings of blockchain generally. He wrote, in a report to the Vancouver Police Board:
“Given the lack of a central authority, there is no controlling organization who can monitor or regulate the transfer of funds to ensure a legitimate transaction. This creates a prime opportunity for the criminal element to capitalize on remaining anonymous, as they work to defraud unsuspecting citizens, launder money, and make large-sum anonymous transactions.”
This lack of regulation, Shum said, will allow for the incubation of organized and petty crime. Indeed, he points to the rising trend of cryptocurrency police filings in Vancouver year over year, which increased 350% from 2016 to 2017, and saw a further 250% increase in 2018.
Current reporting rates indicate the Metro Police will receive 840 reports this year, on track for a 300% increase in reports from 2018.
It is unclear how many of these crimes were directly tied to the use of cryptocurrency ATMs, though Shum spoke of a “high-pressure” tactic employed by fraudsters to direct victims to withdraw large amounts of cash and deposit it in a Bitcoin ATM to a predefined Bitcoin address. These scams target the most vulnerable segments of the population including recent immigrants and the elderly.
Since Shum wrote to the police council, 15 new machines have been added to the Vancouver metro area, according to coinatmradar.com.
In January, the city council suggested a bylaw to “regulate the use and operation of cryptocurrency ATMs, including the requirement for a business licence, requirement for signage to advertise common frauds, requirement for identifications to be used to verify the sender and receiver of funds and requirement of security features.”
Four months later, at a May 28 council meeting, Mayor Kennedy Stewart pushed for the outright ban crypto ATMs in the city. Defenders of the machines cite the utility for people who have transaction limits on their bank accounts, and the convenience for conducting cryptocurrency transactions. The third largest metropolitan area in Canada, Vancouver only hosts about 12% of the nation’s total crypto ATMs.
The first bitcoin ATM ever was installed at a Vancouver coffee shop in 2013, which contained a built-in palm scanner designed to prevent users from processing more than $3000 CAD per day.
“We don’t want drug dealers sending a bunch of coke to the States and then withdrawing cash,” said one of the machine’s owners as it was unveiled at its location in 2013. “We don’t want these to turn into money laundering machines; that’s the worst thing that could happen.”
Currently, Vancouver lacks standardization for the types of transactions that can be performed on its ATMs. Some machines require a cellphone number and text verification for transactions over $1,000, while for others push the limit to $3,000, according to . A few machines advertise no limits at all, according to The Star.
A decision regarding the regulation, monitoring, or ban of crypto ATMs is currently being researched by city staff who will report back in the fourth quarter of 2019, Alvin Singh, the mayor’s director of communications, told The Star.
- Bitcoin has bounced back to $8,000, forming a double bottom breakout – a bullish price pattern – on the 4-hour chart.
- The price breakout has opened the doors to $8,400. On the way higher, BTC may face resistance at $8,350.
- A rally to $8,350, if any, could be short-lived if trading volumes remain low.
- A break below $7,432 (June 4 low) would revive the case for a drop to the 50-day moving average at $6,915.
Bitcoin has recovered to $8,000 after defending key support for two consecutive days and may remain well bid over the weekend.
The leading cryptocurrency by market value is currently trading at $7,990 on Bitstamp, having hit a high of $8,020 earlier today.
BTC ran into offers around $7,900 in the early U.S. trading hours on Thursday and fell back to $7,450. However, much like Wednesday, the drop below the 4-hour chart’s 200-candle moving average (then located at $7,588) was short lived.
With the rise back to $8,000, the cryptocurrency has charted a bullish technical pattern on one of the short-duration charts. As a result, the recovery rally may continue, with prices rising to $8,400 over the weekend.
The weekly close (Sunday, as per UTC) will also be key. BTC witnessed solid two-way business last week before ending on a flat note, a sign of indecision among buyers. A short-term bearish reversal would be confirmed if prices close below last week’s low of $8,000 on Sunday.
Bitcoin’s previous 4-hour candle closed out just above the resistance of $7,924, confirming a double-bottom breakout.
The pattern essentially represents a bearish-to-bullish trend change. So, it seems safe to say the pullback from the May 30 high of $9,097 has ended and the path of least resistance is now to the higher side.
It’s worth noting that a double-bottom breakout is usually followed by a move higher by roughly the length of the spread between the bottom and the neckline – in this case from $7,450 to $7,924, giving potential a rise of around $470.
So, with breakout already confirmed, BTC could climb toward $8,400 over the weekend. On the way higher, BTC may face resistance at $8,350 – the upper edge of the falling channel representing bearish lower highs and lower lows.
The rally, however, could be short lived if trading volumes remain anemic. As the above chart shows, trading volumes are locked in a downtrend despite the price recovery.
BTC created a long-tailed doji candle on Thursday amid falling volume bars – another sign the pullback may be over.
That said, the outlook would turn bullish only if prices see a high-volume UTC close above the 4-hour chart falling channel resistance, currently at $8,350. A channel breakout, if confirmed, would open the doors to $9,000.
On the downside, the June 4 low of $7,432 is the level to beat for the bears. A violation there would put the focus back on the bearish divergence of the RSI and the downward sloping 5- and 10-day MAs and allow for a deeper drop to the 50-day MA at $6,915.