Perfect Storm for Bitcoin

The bitcoin halving is scheduled to occur in May 2020. Halvings happen about every four years, and each time, the amount of new bitcoin being mined is cut in half.

After this next halving, the reward for successfully mining a block will be reduced from 12.5 coins to 6.25 coins.

The “inflation rate” (percentage of new coins coming into the market) will go from 3.7% to 1.8%. That’s a big decrease in new supply.

In the past, halvings have been extremely bullish for bitcoin prices.

At the time of the first halving in 2012, bitcoin was trading around $15. It would reach a high for that cycle of $270 just 135 days later, as noted by Rekt Capital.

The second halving occurred in July 2016. And, as CCN reports, bitcoin prices went from $268 in July 2016 to $2,525 a year later.

Interestingly, there was a pullback of around 40% to 44% before each prior halving. That’s exactly what we’re seeing now: a 44% pullback from recent highs of $13,000.

Hat tip to Rekt Capital

The retracements (temporary price reversals within an overarching trend) before the previous two halvings provided an amazing buying opportunity.

Will the Halving Coincide With Financial Chaos?

The halving is a serious catalyst on its own, and I think it has the potential to power bitcoin much higher.

But I get the feeling that it won’t be the only thing driving bitcoin prices higher. I think the Federal Reserve and the U.S. government are going to be “helping” as well.

The Fed will be printing larger and larger amounts of money going forward. And with its new “not quantitative easing” program, the Federal Reserve is essentially now funding U.S. deficits.

It’s buying up $60 billion in Treasury bills per month, lowering interest rates and providing $87 billion of liquidity in the overnight repo market.

In July, I wrote a piece arguing that MMT (Modern Monetary Theory), or something a lot like it, is inevitable.

Here’s why. The current annual U.S. federal deficit is $896 billion, according to the Congressional Budget Office (CBO). The national debt stands at more than $22 trillion.

This year, the U.S. will pay out more than $500 billion in interest on that debt. By 2024, it is estimated that interest costs will surpass defense/military spending. The CBO says that interest costs could surpass $1 trillion by 2028 (but I suspect it will happen even sooner).

Digest that for a second. We will soon be spending $1 trillion on the interest costs of our debt. To put that into perspective, total government revenue (from taxes) totals about $3 trillion per year.

It looks more and more like this will be the case. The political establishment seems incapable of cutting government spending as much as we need it to. So my theory is simple: The Fed will print money to pay the bills. This is essentially what’s happening now. The Fed is buying up U.S. debt that nobody else seems to want.

All of the uncertainty surrounding this brewing financial disaster should be good for bitcoin. Bitcoin was built as an alternative to the fiat system for exactly these reasons. Fiat money can be printed at will.

Bitcoin is hard money. And after the May 2020 halving, it will have a similar inflation rate to gold. I think it all adds up to a perfect storm for bitcoin prices. I would not be surprised to see $50,000 bitcoin by the end of 2020.

I think this is a unique opportunity to buy bitcoin at the beginning of a new bull market.

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Source: Early Investing

US Congressman: Facebook Should Adopt Bitcoin, Drop Libra Project

U.S. Congressman Warren Davidson of Ohio’s 8th congressional district was recently interviewed by Noded Bitcoin Podcast co-hosts Pierre Rochard and Michael Goldstein. During the interview, the conversation turned to Facebook’s Libra project and the differences between the social media giant’s offering and Bitcoin.

Earlier this year, it was Congressman Davidson who used the term “shitcoin” during a congressional hearing related to Facebook’s digital currency plans.

According to Davidson, he first became interested in digital cash systems before Bitcoin existed, back in the days of DigiCash. This interest in digital cash was sparked by the issues related to moving between the United States and China.

“What really goes on in the back end there sometimes is governments are taking their time to validate everything, make sure they know it’s you, [and asking]: Why is this money moving?” Davidson told Goldstein and Rochard. “Who’s moving it? Are we okay with this? Should we process this request or should we follow it? Should we report it? All kinds of things.”

According to Davidson, Bitcoin first came onto his radar back in 2013 or 2014.

The Problems with Facebook’s Libra Currency

Once the conversation turned more directly onto Facebook’s Libra currency, Davidson let it be known that his main issues with the project revolve around the degree of centralization involved with it. The congressman claimed it’s clear Libra would be regulated as a security if it were ever to launch due to the fact that the entity or group in control of the network could make changes to the currency that would affect its exchange rate. For example, Libra holders could be harmed financially if it was decided that a much weaker currency, such as the Venezuelan bolivar, should be added to Libra’s fiat currency reserves.

“If that central authority is able to manipulate the value of [Libra], how do you not treat it as a security?” Davidson rhetorically asked Goldstein and Rochard during the podcast interview.

Rochard pointed out that Cash App was able to fly under the radar by simply integrating Bitcoin into their platform rather than trying to create something completely new. The Noded Bitcoin Podcast co-host asked Davidson if he thought Facebook also would have been better off taking this approach.

“I hope they try it because it’d be a way better idea than Libra,” Davidson responded.

That said, Davidson also added that Libra has been valuable in terms of illustrating Bitcoin’s key value proposition as a decentralized, uncontrollable digital money. Davidson pointed out that Facebook already filters content on their social media platform, and questioned whether people would want that same sort of filtration in terms of the transactions in a digital currency system.

“Do we want filtered speech or free speech?” asked Davidson. “Do we want filtered transactions or freedom?”

According to Castle Island Ventures Partner Nic Carter, this trend of missing the point of why Bitcoin has value in the first place is extremely prevalent throughout the altcoin market. Notably, a recent report from privacy-focused search engine DuckDuckGo revealed that social media users are taking more steps to protect their online privacy, which could be a bullish trend for Bitcoin over the long term.

Goldstein pointed out that CNBC Squawk Box’s Joe Kernen appeared to learn a lot about Bitcoin thanks to the discussions around Libra this year.

“Throughout this Libra thing, we got to watch in real time as Joe came to understand Bitcoin by virtue of seeing the problems with Libra,” said Goldstein.

These issues of centralization found in Libra were…

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Top 10 Altcoins in 2019

Most crypto investors and enthusiasts are always looking for the best opportunity to scoop some altcoins.

However, while it may be tempting to value altcoins versus the US Dollar, such a metric may lead to bad outcomes.

In this piece I will look into the top altcoins and how they’re performing versus Bitcoin. Hopefully, at the end, it will be clear if now is a good time to purchase additional units, given each altcoin price vs BTC.

Looking into Bitcoin dominance

View photos

BTC dominance vs altcoins, courtesy of Trading View

First things first. As I did mention last week, it’s important to focus on the overall state of the altcoin market.

Hence, a key metric to look into, at either Coinmarketcap, Messari or Trading View, is the total Bitcoin dominance (BTC.D).

Since early 2018, when Bitcoin’s dominance was on the low of around 33%, the world’s leading cryptocurrency has slowly begun to regain its due credit, as investors and traders flee the altcoin market on the burst of the ICO bubble.

After the turmoil that remained throughout 2018 and the altcoin bloodshed of the current year, it seems Bitcoin investors may be looking into diversifying with riskier assets. Looking above, dominance shifted after the high during early September, when BTC.D touched 73%, to around 68%, where it sits now.

Looking at the macro trend, it seems BTC.D has a tendency to grow exponentially fast and then spill over altcoins.

If the trend continues, I argue altcoins are in for a treat. We could expect BTC dominance to eventually touch the support line (pink), perhaps after the halving event happening sometime in May 2020. This means some altcoins could have a serious pump.

Which ones though?

Current top contenders

View photos

Top-10 altcoins vs BTC, courtesy of Messari.io

Looking at the real top-10 list of altcoins, when measured versus Bitcoin, there seem to be some interesting surprises.

I will ignore the coins I’ve discussed last week, such as ChainLink, Stellar and Binance coin. On this piece I will mainly focus on the rest of the pack.

The first, and most obvious, is Ethereum. Looking above, it’s the most liquid after Bitcoin and has been out-performing the BTC over the last three months. However, ETH is still quite below it’s all-time-high (ATM), both in BTC and USD. Looking at the past year alone, ETH has underperformed BTC at some 30%.

Moreover, in dollar terms, ETH is still 80% below its ATM.

Ripple’s XRP has mostly suffered the same fate. It is down close to 50% since last year in Bitcoin terms and over 90% in dollar terms since its ATM, in early 2018. XRP has been recovering and, during the past three months, it went up more than 30% in BTC terms. Quite a nice recovery for the cryptocurrency.

Bitcoin Cash, the project led by Roger Ver – an awesome guy I was able to talk to early this year – has been the worst performer of the pack.

Even though it has been having loads of new commits, BCH hasn’t been able to push higher. It’s still sitting 60% below since last year in BTC terms and hasn’t been improving recently.

Finally, both Litecoin (LTC) and EOS have been making shy attempts at pushing higher. While LTC is still down more than 20% since last year’s highs, EOS is above 55%. After the LTC halving event, which took place a month ago, the coin saw a huge pump followed by a massive dump.

EOS has also been facing some issues with block producers, which may explain some of the recent price-action…

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Why Ethereum May Be Setting Up for a 30% Surge

Bitcoin (BTC) dominance remains high at 66.3% and so does the amount of attention traders are dedicating to the largest digital asset’s price action.

Last week’s move from $7,800 to $8,850 will have further entranced investors, and the hope of breaking above $10,000 may have distracted some traders from noticing the awakening that has occurred with many altcoins.

As reported by Cointelegraph, a growing number of altcoins have posted impressive gains as Bitcoin consolidates and it appears the trend is set to continue. For some traders, this is a welcome change of events.

Bitcoin’s multi-month consolidation in a giant descending wedge led altcoins to defy trader’s common logic and the majority of altcoins continued to drop to new lows instead of rallying.

A likely explainer of this scenario is that:

  • Many traders still have burned fingers from attempting to take altcoin positions throughout 2018.
  • Altcoins sharply decreased in value as Bitcoin made a parabolic move from $4,000 to $13,800.
  • Altcoin’s continued to drop in value as Bitcoin consolidated from Jun. 26 until Sept. 22 and traders appeared reluctant to take up positions in altcoins as previous market cycles showed that strong upside moves from Bitcoin led to a drop in altcoin prices. The same occurred when Bitcoin’s price dropped.

It seems that the most recent drop from $10,300 to a multi-month low at $7,700 served as a signal to invest in altcoins. Some traders have found confirming evidence in comparing Bitcoin and altcoin fractals to identify bottoming patterns and the possibility of future rallies.

Others recall 2018 when Bitcoin traded in the $6k range for many months before dropping to $3,200 in November as the Bitcoin Cash hard fork took place.

Bitcoin’s recent price action in the $10k to $9k range might have led some traders to predict that a drop below $8,000 might eventually bring the digital asset back to the $6k range.

While this has yet to occur, the drop from $10,300 to $7,800 has given traders enough confidence to begin taking positions in altcoins.

Will Ether kick off a new altcoin season?

Given that Ether (ETH) is the largest altcoin by market cap, it seems reasonable to look to the asset as an indicator of how other large-cap altcoins might perform.

Last week Heath Tabert, the chairman of the United States Commodity Futures Trading Commission (CFTC) said that he believes Ether is a commodity and Tabert suggested that Ether futures trading would soon become a reality. BKCM CEO Brian Kelly also believes that the classification is highly bullish for Ether and Kelly said…

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Is This The Real Reason Behind Bitcoin’s Latest Sell-Off?

Bitcoin has been struggling recently after a period of stability, suddenly moving sharply lower at the end of last month.

The bitcoin price, which is still up more than double from where it began the year, fell from its recent plateau of around $10,000 per bitcoin to just above $8,000 in a move widely put down to the lackluster performance of the hotly-anticipated Bakkt bitcoin and cryptocurrency platform.

Now, new data has suggested the slump in the bitcoin price might be more to do with the “coming of age” of bitcoin and cryptocurrency markets–with exciting new competitors distracting investors from the long-time crypto poster-boy.

Bitcoin, cryptocurrency and financial markets research company Indexica has found that bitcoin’s strongest predictive measure was its “quotability,” it was first reported by Bloomberg, a financial newswire–meaning traders are treating it like any other investment asset and showing bitcoin is most often being talked about in conjunction with more traditional currencies.

“Now that bitcoin is a big kid, anything can make it move, just like anything can make gold or a G-10 currency move,” said Zak Selbert, chief executive of Indexica told Bloomberg, adding bitcoin’s sensitivity to new competitors such as Facebook’s troubled libra project and Mastercard’s partnership with R3 demonstrates the industry’s maturity.

“Bitcoin is part of the financial landscape in a very intertwined and mature way.”

Many bitcoin and cryptocurrency watchers had hoped that bitcoin’s reputation as “digital gold” would mean it began acting as a so-called safe haven asset, with investors buying into bitcoin at times of political and economic uncertainty.

This appeared to happen…

Continue reading at FORBES.com

Is Bitcoin a Safe Haven Like Gold? These Four Charts Say…

Investors are beginning to have a clear sense why bitcoin exists: it’s digital gold, a narrative that has emerged clearly as other assets flounder, gasping for air in the muddy water of shallow memes.

Ethereum has hopped from story to disjointed story; now it’s “money” (OK). Nobody knows what Ripple, er, XRP is.

If bitcoin is digital gold, then it must be a haven in times of crisis – a “risk-off” asset. Any thoughts of bitcoin being a safe haven have been put to bed in the past 10 days and can be found there thrashing in their own clammy sweat, racked by fever-nightmares of 2018.

The question is, can bitcoin become a safe haven? We may be about to find out. Born during the last global financial crisis, bitcoin has yet to see one. In the CoinDesk Research white paper, “Is Bitcoin a Safe Haven?” we look at some of the theories around how bitcoin might perform during a macroeconomic crisis and present a few metrics that might be used to measure bitcoin’s response. You can download the paper here. This article will present an up-to-date look at a few of those metrics.

Bitcoin vs. gold

Some people you run into may show you a bitcoin chart next to a gold chart and point out similarities in their shape. Ignore it.

Bitcoin’s price has never shown a correlation with gold, positive or negative, for any length of time, since early 2015. Over the long term, it’s moved toward less correlation, not more.

bitcoin vs gold

Bitcoin vs. the yuan

A haven is in the eye of the beholder. Bitcoin may be a risk-on asset for venture investors in Silicon Valley, and a risk-off asset for people caught in a currency crisis. Bitcoin adoption in Venezuela is often cited to indicate the latter.

Bitcoin adoption in China may be another measure. China also has authoritarian currency controls and a wobbling economy; its population and total wealth are orders of magnitude greater than Venezuela’s. Thus, its potential impact on the bitcoin price is greater.

The past five years have seen several significant periods of strong correlation between USD-CNY and bitcoin. That is, when the yuan wavers in dollar terms, bitcoin’s dollar price often tends to rise. This may be a positive indicator for those who hope that a yuan currency crisis could ignite safe-haven demand for bitcoin.

bitcoin vs yuan

Bitcoin vs. ETH & Bitcoin vs. XRP

Bitcoin is the only crypto asset about which rational people could even discuss a haven narrative. Other crypto assets may be compelling, but they clearly represent risk-on bets against a vision of future adoption that may take years to prove. If bitcoin is becoming a “risk-off” asset, bitcoin returns ought to start decoupling from other crypto assets.

BTC vs ETH

 

BTC vs XRP

Hmmm, nope.

With both ethereum’s ETH and Ripple’s XRP, bitcoin returns are clearly establishing a stronger positive correlation over time. There is no decoupling here.

Conclusion and a note on the data

None of this is to say that bitcoin doesn’t have a…

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Bitcoin And Ethereum Suddenly Soar Despite SEC Blow

Bitcoin and ethereum, the two biggest cryptocurrencies by market value, suddenly soared yesterday despite the U.S. Securities and Exchange Commission (SEC) rejecting the latest attempt at creating a bitcoin exchange-traded fund (ETF).

The bitcoin price is up some 5% over the last 24-hour trading period, while ethereum has risen almost 6%, both adding to gains earlier in the week.

“The news that the SEC is not going to approve a bitcoin ETF has not impacted the market with bitcoin heading higher again,” Marcus Swanepoel, chief executive of London-based bitcoin and cryptocurrency exchange Luno, wrote in a note this morning.

“Overall, global markets are also up and we are seeing some positive sentiment.”

Today In: Money

Bitcoin’s bounce was attributed to the U.S. Federal Reserve’s plans to pump cash into the financial market to boost bank balance sheets and drive inflation.

“We know that [Fed easing] has historically helped bitcoin,” Joe DiPasquale, chief executive of the bitcoin and cryptocurrency investment firm BitBull Capital, told bitcoin industry news site Coindesk.

The SEC yesterday ruled the Bitwise Asset Management ETF proposal, filed with the NYSE Arca stock exchange, did not meet legal requirements to prevent market manipulation or other illicit activities.

“Because, among other things, [Bitwise and NYSE Arca] has asserted that 95% of the bitcoin spot market consists of fake and non-economic activity, but has not established that it has, in fact, identified the ‘real’ bitcoin market, or that the ‘real’ bitcoin market is isolated from the fraudulent and manipulative activity, we find, in each case, that NYSE Arca has not met its burden to demonstrate that its proposal is consistent with the requirements … and therefore the Commission disapproves this proposed rule change,” the SEC said.

The SEC has so far rejected all bitcoin ETF proposals due to concerns around fraud and market manipulation, with the regulator knocking back the closely-watched VanEck bitcoin ETF application last month.

Bitcoin speculators have long hoped…

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The U.S. Government Tried To Shut Down Bitcoin

Bitcoin conspiracy theorists have long suspected the U.S. government, among others, would like to shut down bitcoin.

Bitcoin’s first decade has seen its price explodemaking early adopters overnight millionaires, and prompting some of the world’s biggest technology companies to create their own versions of bitcoin.

Now, it’s been revealed federal prosecutor-turned bitcoin and cryptocurrency expert Katie Haun was asked to look into “shutting down” bitcoin by her boss at the U.S. attorney’s office in 2012.

“They said ‘we have this perfect assignment for you’–there’s this thing called bitcoin and we need to investigate it,” Haun told CNBC in a wide-ranging interview, adding a colleague asked her to take down bitcoin.

“That was the first time I’d ever heard of bitcoin.”

Over the next few years Haun would go on to sit on the board of U.S. bitcoin and cryptocurrency exchange Coinbase and teach a class on cryptocurrency at Stanford Law School.

Any serious attempt made by the U.S. Department of Justice to shut down bitcoin inevitably came to naught, with Haun saying, “it would have been akin to saying ‘let’s go prosecute cash.'”

Haun, who is now the first female general partner at U.S. venture capital firm Andreessen Horowitz and co-heads its $350 million cryptocurrency fund, has worked closely with social media giant Facebook in development of its troubled libra cryptocurrency project

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Top 3 price prediction Bitcoin, Ripple, Ethereum

The cryptoverse gained Monday’s battle between bulls and bears – which is expected to continue today in full force.

Many headlines ask rhetorically about the direction in the coming weeks. The question is simple: Will Bitcoin collapse to support at $4,000, or will it go in search of a new historical high?

It is impossible to say where Bitcoin will move in the next few months, but I think some data can help you construct a scenario:

  1. – Bitcoin managed to escape the broad long-term bearish channel in mid-June. In the last two weeks, Bitcoin tested it again – and for now – it has been respected.
  2. – Ultra-Long-term indicators show that at no time have bulls lost leadership in the BTC/USD pair. The current advantage of bulls over bears is small. A return to $4,000 would cross these indicators to the bear side and, by the time amplitude, plunge Bitcoin into a long, hard winter.
  3. – Ultra-Long-term moving averages still move at very low levels, around $4,500. In daily charts, the SMA200 moves around $8,700. The price of any asset usually orbits around this classic moving average of technical analysis.
  4. – This week is the deadline for the SEC to resolve ETFs over Bitcoin. In recent weeks, several Bitcoin derivative instruments have been launched, such as Futures, Options, and Swaps. It seems complicated to keep barring the passage to an ETF on Bitcoin with these possibilities of obtaining reliable sources of price and implementing risk hedges.
  5. – The ETH/BTC pair consolidates the bullish trend and keeps the technical pattern active. This pair must be bullish for the market as a whole to improve its valuations.

 

ETH/BTC Daily Chart

The ETH/BTC crypto cross is currently trading at 0.221, showing some difficulty in conquering the 0.0222 resistance level. The 50-period exponential moving average is about to cross the 200-period simple moving average upwards, which can increase volatility and consolidates the bullish trend if it confirms the bullish cross.

Above the current price, the first resistance level is at 0.0222, then the second at 0.023 and the third one at 0.0256.

Below the current price, the first support level is at 0.020, then the second at 0.0189 and the third one at 0.018

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What’s Going to Happen With Bitcoin?

Since its inception in 2009, Bitcoin has made and ruined fortunes, helped sell fentanyl and books about cryptocurrency, withstood literally millions of jokes and just as many predictions of imminent collapse, and—through a process opaque to most people, myself included—arrived at a point where, as of this writing, roughly ten of them could buy you a decent-sized house, assuming your realtor takes cryptocurrency. What’s next? Will it all come crashing down, or will this one-time punchline survive through the next decade? For this week’s Giz Asks, we reached out to a number of experts for some sense of Bitcoin’s future.

Sabrina T. Howell

Assistant Professor, Finance, NYU Stern School of Business & NBER

Bitcoin represents a watershed in the development of digital assets: It was the first decentralized currency that managed to prevent cheating (often called the “double spend” problem), encode rules for creating new currency, and incentivize participants (“miners”) to maintain and secure the historical record of transactions. This is a breakthrough in record keeping that is not about any one currency—and there are now thousands of cryptocurrencies. It’s about the underlying decentralized, tamper-resistant record keeping technology of blockchain.

My answer to “What’s going to happen with Bitcoin?” is that I have no idea. Bitcoin faces many challenges to widespread use, including the fact that it can handle just 7 transactions per second, while Visa can handle 10,000. However, if the main miners adopt a protocol update enabling higher volumes, it’s not impossible that Bitcoin will become much more widely used. Today, it is mostly a speculative asset, a tool for money laundering, and a currency of last resort for people in countries with grossly mismanaged currencies, like Venezuela.

The bigger picture is that blockchain will affect all sectors that rely on secure data transacted among many participants, which is basically all sectors. This fall Walmart’s leafy green suppliers will be required to use the IBM blockchain built for supply chain logistics. This is not an accident, because leafy greens are often the site of food borne illnesses and the cause of expensive recalls. When each package is on the blockchain, managers will be able to source the problem to the farm in seconds rather than weeks, and discard only the packages from the problem farm. I believe that healthcare, financial services, and real estate will also see their data shift to blockchains.

Garrick Hileman

Head of Research at Blockchain and Researcher at the London School of Economics

Bitcoin is only just over 10 years old, but it has already attracted tens of millions of users and is growing faster than both the internet and personal computer. Looking ahead, there are a number of powerful drivers behind the growth of bitcoin and other cryptoassets. Today, owners of stablecoins can earn 10% annual interest on their savings through various Open Finance or DeFi (decentralized finance) platforms. This is far superior to the de minimis or even negative rates offered at many legacy banks. The development of decentralized Web 3.0 technologies, and the work to rearchitect the internet around “can’t be evil” blockchain infrastructure, is another longer-term driver of cryptoasset growth…

Continue reading at GIZMODO.com