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Does Bitcoin Realize Henry Ford’s Dream Of Energy Currency?

Does Bitcoin Realize Henry Ford's Dream Of Energy Currency?

Almost 100 years ago, industrialist and automobile magnate, Henry Ford, proposed an ‘energy currency’ to replace gold. Does Bitcoin finally fulfil some of the promise of this ‘energy currency’? Yes, according to a recent Medium post by Capriole Investments.

Currency Backed By Energy
Ford’s argument for energy currency was that, unlike gold, it could not be controlled. Instead, every country could issue currency based on the natural wealth of its energy resources. The standard of value for this system was to be a certain amount of energy exerted for one hour which would be equal to $1.
This kilowatt hours (kWh) backed currency has some parallels with Bitcoin, which can also be considered as ‘backed’ by energy input.
For around 80% of its existence, Bitcoin’s price history correlates very closely to the raw amount of energy (in Joules) needed to create it.
Ford’s ‘Energy’ Valuation Of Bitcoin
Using Ford’s standard, Bitcoin’s current value can be determined by it’s energy value (in kWh) multiplied by a factor of 0.00173 (to convert between Joules and kWh).
As the Bitcoin network currently consumes around 6.9 million kWh of energy, a bitcoin is ‘worth’ around $12,000.
However, Bitcoin is unique due to its decreasing inflation rate. The effect of the halving event in May, will essentially mean that the energy required to create each bitcoin doubles. This will have the same doubling effect on its intrinsic value.
Plans Shelved Due To Power Politics
Of course, Ford eventually had to give up on his plans. After all, why would a government consider a system which could make its control of wealth redundant.
A simple affair of business which should have been decided by anyone within a week has become a complicated political affair.
Over 60 years later, Austrian economist, Friedrick Hayek, echoed this frustration, that the monetary policy of governments had only harmed the concept of ‘good mney’.
I don’t believe we shall ever have a good money again before we take the thing out of the hands of government. That is, we can’t take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can’t stop.
Is Bitcoin An Energy Currency?
So is Bitcoin, an energy-backed currency, immutable and uncontrollable by governments, a realization of Ford’s plan, and Hayek’s ‘Good Money’?
Potentially, ‘Yes’, says Capriole, as Bitcoin has, to date, found a way around politics. There are potential risks, but Bitcoin’s energy value hit an all-time high this month, despite a prolonged bear market.
As Ford says:
It’s simply a case of thinking and calculating in terms different from those laid down to us by the international banking group to which we have grown so accustomed that we think there is no other desirable standard.
Do you think Bitcoin satisfies Henry Ford’s vision of an energy currency?

Images via Shutterstock The post appeared first on Bitcoinist.com.

Source: Bitcoininst

Crypto Lending Crowned the Industry’s Most Profitable Sector

crypto top on twitter

Lending crypto-assets has been one of the most explosive sub-sectors of the cryptocurrency industry. Since the market downturn in December of 2017, we have seen huge growth among lending platforms which lend fiat to borrowers who use crypto-assets as collateral.

DeFi has taken the Ethereum world by storm
Crypto-asset lending has been a sub-sector of the overall crypto markets which has been quietly growing in the shadows for the last few years. Initially, the crypto-asset lending industry began with centralized lending services such as Celsius Network and Block-Fi, which did garner attention from their initial success. To date, Celsius Network has reported over $4 billion USD in loans.
However, the hype and attention surrounding Decentralized Finance (DeFi), and the growth of several major lending platforms under the DeFi umbrella on the Ethereum blockchain, has recently shined a lot more light on one of the crypto industry’s best kept secrets.
The success of DeFi can be ascribed to a number of different reasons, but record low-interest rates for savers in traditional banks and financial institutions has been a major factor.

“Over the longer one-year term no sector had a median ROI higher than Bitcoin’s ROI over the same period (140%)” https://t.co/KMIjyuqp3C
— LongHash (@longhashdata) January 28, 2020

Messari study highlight’s DeFi’s success
While the nascent DeFi lending sector is still growing, there are several DeFi platforms that have over $10 million USD in Ether, already invested. Maker, Nexo, Ripio Credit Network, Aave, and Cred have had a an average rate of return of up to 15% in the last 90 days, and have been averaging a return of 75% over the last year. Only Bitcoin has had a higher yearly return. There were 349 different tokens which were studied with the same list of criteria.
Crypto-asset lending poised for explosive growth
With the remarkable success of Celsius Network and Block-Fi, along with the success surrounding DeFi lending platforms like Maker DAO, Compound, and Dharma, lenders and borrowers now have a plethora of new options.
With DeFi, you can even put your own Ether up as collateral and lend money to yourself through a smart contract on a platform like Maker. These loans are typically over-collateralized, for example, you’d have to put up a $150 dollars worth of Ether to get a $100 dollar loan in DAI, but for an unbanked person without the means to get funding through traditional channels, this kind of trade-off may be entirely worth it.
These kinds of DeFi lending options have been extremely popular, and platforms like Maker and Compound lead the rankings on websites like DeFi pulse, which provides data on DeFi projects.
DeFi isn’t perfect yet, but attempts to make it easier to use offerings of non-overcollaterlized loans and better debt-collection techniques, are already in development.
Ethereum isn’t the only blockchain pursuing DeFi alternatives to traditional finance models. Projects like BTCPay server, the Lightning Network, and Bisq DAO, are also happening on Bitcoin, and rival smart contract platforms like Tron and EOS are also pursuing DeFi and Decentralized applications as solutions.
What do you think of cryptolending? Let us know in the comments

Images via Shutterstock, Twitter @Longhashdata The post appeared first on Bitcoinist.com.

Source: Bitcoininst

3 Reasons Why Bitcoin Price Broke Above $9K Today

bitcoin price surge reasons

Bitcoin price broke back above $9,000 this morning, making this the second time this month that has happened. Following last week’s slide down from that level, all losses have been reversed since the weekend. So what could be responsible for bitcoin’s change in fortunes?

End Of Chinese New Year

The Lunar New Year always has an effect on bitcoin trading volumes, as Chinese traders take a few days off to celebrate. Despite cryptocurrency trading being technically banned in China, workarounds whereby traders use other Asian markets mean that it is still statistically significant.
BitMEX CEO Arthur Hayes predicted that volatility and trade volume would ‘nose-dive’ as the New Year approached. Indeed, in the week leading up to the New Year, daily volumes dropped by 50%, as BTC price followed them down from $9150, reaching as low as $8325 on Sunday.
Since Sunday’s low, volume has already regained almost all of the value previously lost, and prices have risen steadily to reflect that increase. While the Coronavirus may have meant an extended holiday for many Chinese, orders to stay at home don’t apply to those working outside of the law.
Global Crypto Market Cap Rising
The past few days have seen gains across the entire cryptocurrency market. With this much fresh money flowing into the market, it is only to be expected that Bitcoin price would also benefit from that.
As Bitcoinist reported yesterday, the total cryptocurrency market cap grew by over $17 billion in just 48 hours. It has continued to grow at a more modest rate since then, but is currently just $1.2 billion short of the psychologically significant $250 billion mark.
The market cap was last at this level in November, during the seven-month bear market when cryptocurrency prices were on the way down from their late-summer 2019 highs.
Regaining this level would be a strong indicator that this trend had reversed, and that a bullish cycle is once again underway.
The February Before The Bitcoin Halving
As February rolls ever closer, the market cannot help but consider historical data, which highlights the month as traditionally one of the more bullish for bitcoin. Of course, this doesn’t give any guarantees, and in fact we are closing out January, having bucked its usual trend of being a bearish month.
But of course we also have the ever looming halving event coming up in May of this year. Historical data again suggests that this will have a positive effect on BTC prices. Whether this is already factored in to bitcoin’s price is hotly debated. However, if prices continue to rise then we may find that FOMO makes it a self-fulfilling prophecy in either case.
For now, price just has to hang onto, and indeed build upon, that $9k.
Do you think Bitcoin will continue its current uptrend? Add your thoughts below!

Images via Shutterstock The post appeared first on Bitcoinist.com.

Source: Bitcoininst

SEC Brings Hammer Down on Infamous Bitcoin Scammer

SEC Files Motion For Sanctions Against Blockvest Founder

After filing a motion for sanctions against Blockvest and its founder Reginald Buddy Ringgold III, the U.S SEC is now hoping to close the case for good. 

US securities regulator builds up a case against Blockvest
The US SEC continues its efforts to crack down on numerous crypto scams that took place in the last few years. One of the most recent examples is a case against Blockvest and its founder, Reginald Buddy Ringgold III.
Earlier in January 2020, the regulator filed a motion for sanctions against the project and its founder. The United States Securities and Exchange Commission (SEC) claims that Ringgold used his company to deceive investors and the court alike, which should earn him a permanent injunction. The regulator also argues in favor of imposing disgorgement and civil penalties.
In the motion for sanctions, the regulator also produced evidence against Ringgold, proving that he knowingly submitted false and/or forged declarations in order to make his defense more watertight. In addition, the SEC reports that Ringgold attempted to persuade two pre-ICO investors to submit fake statements regarding their expectations of receiving profits from Blockvest tokens.
Expectation of profit is one of the Howey Test’s key criteria, and is the SEC’s sole benchmark for determining whether a token sale is an unregistered security offering or not.
On top of all of this, Ringgold allegedly attempted to convince another affiliate to lie to the regulator directly, regarding a $147,000 payment which is supposedly dedicated to the firm’s own development.
The regulator’s statement reads that,
Based on the evidence … there can be no genuine issue of material fact that defendants violated the federal securities laws through their fraudulent unregistered offer and sale of ‘BLV’ tokens.
The project deceived investors through false advertising
As Bitcoinist reported, the initial enforcement action from October 2018 stated that Blockvest had managed to raise over $2.5 million in its pre-ICO sale. It was also discovered that Blockvest had advertised to investors that its token sale was registered with the SEC, which was completely false.
Not only that, but Blockvest also deceived its investors through claims that it was under the eyes of the US CTFC and the NFA. The project also claimed that it was audited by Deloitte & Touche, which also turned out to be false.
The SEC claims that none of the companies which were listed as Blockvest’s partners had any connection to the fraudulent firm.
After hearing the accusations, Ringgold admitted that he and the company had made mistakes, however, he also claimed that none of the misrepresentations involved securities. According to him, all of the money gathered during the pre-ICO sale came from test investors, who did not expect to make profits by purchasing his BLV tokens.
The SEC continues its years-long crackdown
It’s been widely reported that the SEC has been clamping down on fraudulent ICOs for a while now. One of the biggest cases currently involves the lawsuit against Telegram, which involves a $1.7 billion unregistered token sale.
The regulator also recently charged a $600,000 project called Opporty for a fraudulent security offering less than a week ago, among many others who have attempted to scam unsuspecting investors during the crypto boom.
What are your thoughts regarding the SEC’s efforts against ICOs? Join the discussion and let us know what you think in the comments below.

Image via Shutterstock The post appeared first on Bitcoinist.com.

Source: Bitcoininst

Litecoin Founder: Miners Should Donate Block Rewards to LTC Foundation

Litecoin Founder: Miners Should Donate Block Rewards to LTC Foundation

Charlie Lee is nothing if not controversial. The Litecoin founder who sold all his holdings to avoid a ‘conflict of interest’ in 2017 just proposed miners should voluntarily donate LTC to fund the network’s development.

Miners Should ‘Donate’ Part of Their Litecoin Earnings
In what turned out to be a provocative tweet on Jan 24, Charlie Lee proposed a “voluntary” miner tax. He said that a “better way” of funding development would be if Litecoin mining pools donated 1% of their reward to the Foundation.
If every miner/pool does this, it amounts to about $1.5mm donation per year!

1/ I think a better way to fund development is mining pools voluntarily donate a portion of the block reward. How about Litecoin pools donate 1% (0.125 LTC) of block rewards to the @LTCFoundation? If every miner/pool does this, it amounts to about $1.5MM donation per year!
— Charlie Lee [LTC] (@SatoshiLite) January 24, 2020

He added that, with merged mining of Dogecoin and other Scrypt coins, miners make 105%+ of block rewards.
So 1% is a reasonably small amount to give back towards funding a public good.
He also said that Litecoin miners could decide what organizations to donate their 1% to. It could be the Litecoin Foundation, Litecoin.com, theliteschool.com, “or any other Litecoin project.” So what do Litecoin miners think?
Not a Popular Proposal Overall
While Lee’s proposal received a few hundred likes (most notably, from theliteschool.com), the response to the voluntary tax was generally pretty savage. Some followers, such as @hodlonaut replied with simple GIFs shutting the proposal down.

pic.twitter.com/ZrMT4AQ88H
— hodlonaut (@hodlonaut) January 25, 2020

Others were visibly angered by it, asking why miners should payout instead of users or service providers.
Many more stated that a better way forward for Litecoin development would be if Lee donated some of the profits he made from cashing out in 2017.
One stated that Vitalik Buterin sold ETH to help the Ethereum Foundation, so why didn’t Charlie Lee do the same? Another asked:
How bout you donate all the millions you took when you dumped all your LTC on LTC bag holders?

How bout you donate all the millions you took when you dumped all your LTC on LTC bag holders?
— Snacktoshi Doritomoto (@doritomoto) January 25, 2020

With the Litecoin Halving in August last year, mining profitability reached all-time lows. This led to one follower replying:
Asking miners do donate and cut into their already low profits won’t fly with most miners. Unless it’s a forced fee in which case they don’t have a say but can come to an agreement on at least
Voluntary or no, squeezing out further profit from already struggling Litecoin miners does seem a curious approach to take right now. It obviously led to a slew of comments about Litecoin being on its last legs and running out of funding. Some even called it a Ponzi scheme and a scam.

The Ponzi continues pic.twitter.com/390Tb4K9PC
— Nik (@nikcantmine) January 25, 2020

Based on the overwhelming negativity to the idea, it looks doubtful that the tax scheme will go forward. But with Litecoin price languishing around $60, it looks equally doubtful that the “silver to Bitcoin’s gold” will go the distance either.
What do you make of Charlie Lee’s comments? Add your thoughts below!

Images via Shutterstock, Twitter @NikCantmine @doritomoto @hodlonaut @SatoshiLite The post appeared first on Bitcoinist.com.

Source: Bitcoininst

Research Reveals Which Top Altcoins Are Still Not Making Returns

altcoins losses

Altcoins are still in the depths of crypto winter no matter which way you look at it. A handful have performed better than others, and new research has revealed which ones would have left most investors out of pocket.

Total crypto market capitalization has returned to $250 billion today, which is over double what it was in December 2018. However, it is still down 70% from that heady peak of $830 billion in January of the same year.
Altcoins have borne the brunt of these losses, and investors of many of them are still out of pocket today.
Addresses In The Money
Blockchain analytics firm, Into The Block (ITB), has taken a recent look at some of the higher cap coins to see which ones are in or out of the money.
The study identified the average price/cost at which those tokens were purchased and compared it current prices to reveal the losers and the winners. The current price appears to have been taken a couple of days ago when BTC was $8,700.
It is no surprise that 73% of bitcoin addresses were found to be in profit, that is with an average purchase price below the current price.
The two hard forks, Bitcoin Cash and Bitcoin SV, were also in the green by 89% and 99% respectively. The latter is probably due to the recent all-time high of over $400 for BSV following the Wright Tulip Fund FOMO and resultant volume manipulation.
Huobi Token, which was one of 2019’s top performing altcoins, was also in the money with 60% of addresses having bought it below current prices.
Chainlink, another of last year’s top performers, also had 69% of addresses in profit. It would probably be a similar situation for Tezos which was not included in the study.
And The Altcoin Losers Are …
The biggest loser with 73% of addresses holding it now below their average purchase price was Ethereum. ETH is still down 87% from ATH and in the depths of a two year bear market.
Until it cracks past the psychological $200 barrier and makes larger gains, it remains a loser in terms of token price. Ethereum is still wallowing around the same level it was at in mid-2017, but back then things were wildly bullish.
Litecoin is another loser with 62% of LTC addresses having bought above current prices which are around $60. Cardano is another altcoin that has been utterly trounced and 60% of ADA holders are running at a loss according to the findings. Ethereum Classic was the other non-profitable altcoin with 51% of addresses in the red.

Who is making or losing money in the top coins?
ITB identifies the average price (cost) at which those tokens were purchased and compares it current price
Addresses at profit$BTC 73%$BCH 89%$BSV 99%$HT 60%$LINK 69%
Addresses at loss$ADA 60%$LTC 62%$ETH 73%$ETC 51% pic.twitter.com/gTcQH5MzT5
— intotheblock (@intotheblock) January 27, 2020

Other altcoins not included but likely to be among the losers include XRP, EOS, and Stellar.
Will altcoins make a recovery in 2020? Add your thoughts below.

Images via Shutterstock, Twitter @intotheblock The post appeared first on Bitcoinist.com.

Source: Bitcoininst

Icelandic Bitcoin Mining Giant Takes on UK Company in £6 Million Lawsuit

Icelandic Bitcoin Mining Giant Takes on UK Company in £6 Million Lawsuit

A new lawsuit filed by London-based Digital Capital Ltd. accuses Icelandic Bitcoin mining firm, Genesis Mining Iceland EHF, of failing to pay for the development and maintenance of its software.

UK firm accuses the mining giant of failure to pay for services
Recent reports indicate that the Iceland-based bitcoin mining firm, Genesis Mining Iceland EHF, did not pay Digital Capital Ltd. for the development and maintenance of its banking and card processing software.
The lawsuit alleges that Genesis was experiencing financial issues and decidedly stopped processing the plaintiff’s invoices for a number of months. However, this seems to be far from the first hiccup that the two companies encountered along the way.
Digital Capital misses the deadline, Genesis refuses to pay
Digital Capital’s lawsuit, which it filed with the High Court about a week ago, on January 21st, states that Genesis’ failure to launch the project on the scheduled launch date is not Digital Capital’s responsibility. Instead, Genesis itself supposedly failed to provide technical specifications that Digital Capital required in order to complete the project in time.
Digital Capital further claims that it assisted Genesis with matters regarding regulatory compliance. In addition, Digital Capital built the software for the mining giant’s customers to purchase goods on a debit card using various cryptocurrencies.
Genesis’ response to this assistance was, supposedly, to stop providing payments as far back as in November 2018. This created a £2.4 million debt, plus future lost profits until 2022. According to Digital Capital’s calculations, this amounts to approximately £6 million.
Meanwhile, Genesis argues that they are not obligated to keep following the established payment schedule due to the fact that the project missed the agreed completion date. With no system to maintain, the firm allegedly decided to close the deal. Digital Capital, on the other hand, claims that the Iceland-based firm stopped providing payments due to money troubles caused by a crash in Bitcoin prices at the time.
As many might remember, 2018 was the most bearish year on record for all cryptocurrencies, and the negative movement resulted in bitcoin tanking from nearly $20,000 to $3,200 per coin during this period. As a result, the mining giant’s only remaining move was to cut all expenses and costs that it could afford.
In other words, this is the reason why Genesis could no longer afford to pay for the monthly costs.
Genesis response
Genesis started its crypto mining operations back in 2013, and in the following years, it managed to become one of the largest BTC miners around the world. It operates facilities in North America and Europe, and it claims that it has around 2 million users worldwide. After the original accusations filing in November, Genesis’ response was that it should have the right to recover around £3 million for fees paid to Digital Capital.
Furthermore, the company states that Digital Capital did not finish the core banking software creation by late October 2018, thus missing the deadline. The company claims that the reason for this was the fact that the relationship between Digital Capital itself, and a company that was assisting it, known as ABBA, ‘collapsed irreparably.’
The defense further reads that Digital Capital’s breach of the contract allowed Genesis to terminate the agreement in June 2019, and that it was not under obligation to continue making payments after this date. The defense states that,
It would be commercial nonsense for it to be required to pay the claimant £223,000 per month where no software had been delivered and/or no progress was being made
Do you think that Genesis should have continued making payments even though the product did not arrive on time? Let us know in the comments below.

Image via Shutterstock The post appeared first on Bitcoinist.com.

Source: Bitcoininst

Bitcoin Moves on Path to Money But Unit of Account a Long Way Off

bitcoin money

Bitcoin is only a decade old but it has come a long way on the path to becoming money. A couple of metrics to consider are precision of spending and unit of account status.

Bitcoin Satoshi Precision Increasing
When bitcoin was first envisioned back in 2009 it was largely experimental. For its first year, tens of thousands of them were fired across networks just to see what happened.
The first real world transaction occurred in 2010 when Laszlo Hanyecz famously asked for pizza on the bitcointalk forum in exchange for 10,000 BTC. He received a $25 order of pizza in exchange for the coins marking the first ever transaction for a tangible asset.
It went from magic worthless internet money to something with real value, which was the desired intention for the transaction. At today’s bitcoin prices that pizza would be worth $90 million.
BitMEX Research has delved deeper into the precision of spending on the bitcoin network to reveal how the accuracy has improved over time.
By dividing outputs into groups increasing by a power of ten (from 1 satoshi to 100k BTC) and plotting the results on a chart it is clear to see the increase in precision over the past decade.
Currently over 70% of Bitcoin outputs use the highest available degree of precision (one satoshi), considerable growth since the c40% level in 2012.
The report concluded that an increase in precision would be beneficial to privacy based on the way bitcoin transactions work with UTXOs.
As our data shows, the level of precision is increasing, such that most outputs now have the maximum level of precision. This could inadvertently be positive news from a privacy perspective.
Three Steps to Money
The study went on to state that bitcoin needs to achieve three major steps before it can be considered the same status as money.
Firstly it needs to be used as a medium of exchange which is already happening, driven by its ‘potential unique capability: censorship resistant electronic payments.’
The second step has been clearly evidenced this month and that is its status as a store of value. With market movements mirroring the world’s largest store of value, gold, bitcoin is being viewed in the same light, especially in times of adversity.
Thirdly is the unit of account status. This is when goods and services are priced in bitcoin, or satoshis in this case. This is still a very long way off due to price volatility as BTC is still primarily a vehicle for speculation. There are also a number of factors that need to happen to the technology before it sees mass adoption.
It added that if this does finally occur then the degree of precision may decrease due to the asset’s increased use as a unit of account.
How long will it take for bitcoin to have money status? Add your comments below.

Images via Shutterstock The post appeared first on Bitcoinist.com.

Source: Bitcoininst

When Will the DeFi Boom Reflect in Ethereum Prices?

ethereum rally frozen

Crypto markets have been bullish for the past couple of days but Ethereum is still not getting the momentum it needs. This begs the question as to why ETH is still flat when DeFi is booming.

Since the weekend over $20 billion has flooded back into crypto markets raising total capitalization to $250 billion once again. The majority of that momentum has been driven by bitcoin as usual with a push past $9,000 today.
Ethereum has made some gains but is still largely on the back foot, and bearish below $200. ETH has made a couple more percent today as it inches towards $175 but it is still in the depths of a two-year bear market that even rapidly expanding DeFi markets cannot break it free from.
DeFi Not Helping Yet
Decentralized finance keeps making new highs, this week the total value locked in USD hit an all-time high of $845 million according to defipulse.com. The amount of ETH locked up is also at a peak with 3.2 million or almost 3% of the total supply.
MakerDAO is leading the way with a market share of 57% and it is not surprising to see why. Maker’s DAI Savings Rate (DSR) is currently 7.75% which can be had by simply holding dollar-pegged DAI which can be exchanged with ETH. This trounces on any high street bank offerings, most of which are less than half a percent, or even negative interest.
With such attractive investment opportunities, it begs the question as to why ETH prices are still so bearish. There are some possible reasons why the Ethereum bears still have such a strong grip over the markets.

Ethereum Bears Still Resilient
Ethereum is currently priced at mid-2017 levels, a whopping 87.5% down from its all-time high this time two years ago. It is still in the depths of a two-year bear market and until it can crack $400 again will remain there.
Longhash has reached out to crypto-asset research firm Delphi Digital’s Anil Lulla and Yan Liberman for more insight. The main reason for Ethereum’s weakness at the moment, according to the pair, is that DeFi markets are generating a fraction of the interest that the ICO boom did in late 2017.
Some 16 million ETH was raised via ICOs from mid-2016 to mid-2018 at a time when the Ethereum supply was lower than today’s level of 109 million. The amount locked in DeFi is just a fraction of this and mostly from people already involved in crypto – not new money.
“Put simply, none of these DeFi projects are attracting new capital to flow into ETH as buying pressure,”
Delphi Digital revealed at the time that 60% of the ETH raised via the ICOs they tracked had been sent to exchanges which caused the price to collapse during 2018. It never really recovered in 2019 when the majority of altcoins suffered at the expense of bitcoin.
So, in conclusion, only when new capital from those not already holding ETH starts flowing into DeFi will Ethereum prices begin to recover.
This could happen in 2020 when DeFi markets top $1 billion and start attracting bigger investors. Further earning opportunities with new ETH staking options may also drive new money into the asset this year.
Will ETH prices recover this year as DeFi grows? Add your comments below.

Images via Bitcoinist Media Library The post appeared first on Bitcoinist.com.

Source: Bitcoininst

Bitcoin vs Coronavirus: Is BTC Trading like Stocks or Gold?

bitcoin vs coronavirus

Bitcoin markets have reacted with increased volatility to the news of the spreading coronavirus in China. The last few days may reveal patterns about BTC trading in relation to risk.

Bitcoin Shows New Trading Patterns on Risk Events
Bitcoin (BTC) showed behavior that may reveal new patterns of trading in relation to stocks. The coronavirus epidemic and subsequent lockdowns in China, coinciding with the Chinese New Year celebrations, caused a slump in Chinese and international stocks.
But Bitcoin prices showed a different pattern in relation to the movements of stocks, with waves of activity both coinciding with the overall slide in assets, but also rallies that suggest BTC is also a risk-averse asset.

1/ Bitcoin vs the Coronavirus
A look at reaction times and correlations to explore if bitcoin may be trading like a risk-on asset (such as stocks) or a risk-off asset (such as gold or bonds). pic.twitter.com/hVnQ4qM1ml
— Alex Krüger (@krugermacro) January 28, 2020

In January, Bitcoin gathered some data about its behavior during dramatic news events. The leading crypto coin started reacting to macro factors, sparking a lengthy commentary by markets observer Alex Kruger.
But BTC did not behave the same way as gold, which has a long-term risk-averse inverse relation to stock movements. Instead, Bitcoin charted its own path while showing it reacted to events and news.
The Iran tension and crisis in January caused the first rally of the coin above $9,000. Now, the coronavirus events unfurling are showing another propensity of BTC to rally on news of overall crisis. Bitcoin is starting to behave in ways that offset the risk of dramatic, unforeseeable events, which threaten with much more than asset price fluctuations.
BTC Becomes Attractive in Periods of Instability, Creating “Unicorn” Trading Patterns
Bitcoin has been used in multiple examples of hyperinflation and has become an alternative tool of payment and a store of value in unstable regimes. This also means that the benchmark crypto may be following another trading pattern, reacting to “unicorn” events, as Mr. Kruger suggested. While BTC does not have a predictable relationship to stocks, it can still have dramatic days to push the prices higher.
This fits the narrative of unexpected days of significant appreciation, which leads to outlandish returns that offset sluggish stocks. However, there is no telling when prices would react, and it is also possible Bitcoin slumps on unexpected news.
So far, Bitcoin has escaped the predicted fate of January lows. The recent appreciation above $9,000 created expectations of further appreciation in February, which is a traditionally strong month for BTC.
The unexpected rally by hundreds of dollars on the coronavirus news also has implications for the futures markets. The unexpected spikes mean BTC is not behaving predictably, possibly leading to the risk of fast liquidations. BTC traded at $8,988.64 on Tuesday, on volumes above $31 billion in 24 hours, stepping back from a temporary high at $9,008.
What do you think about Bitcoin’s behavior in relation to the coronavirus news? Share your thoughts in the comments section below!

Images via Shutterstock, Twitter: @krugermacro The post appeared first on Bitcoinist.com.

Source: Bitcoininst