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Category Archives: Bitcoin

Fake Trading Volumes and the Price of Bitcoin: Are They Connected? – Cointelegraph

Posted: March 31, 2020 at 6:13 am

Last year, Bitwise Asset Management reported to the United States Securities and Exchange Commission that 95% of trading volume in Bitcoin (BTC) was fake. Bitwise found that, according to data published by CoinMarketCap a widely cited tracker of crypto statistics Bitcoins approximate average daily volume in April 2019 was $10 billion. In comparison, just $5.5 billion worth of Apple stock the most liquid stock in the world trades daily, and the market cap of Apple stock is nine times the size of Bitcoins.

Related: Data Transparency and Fake Trading Volumes Institutionalizing Crypto

The Blockchain Transparency Institute has been investigating fake volume in crypto markets since 2018. Its April 2019 report suggested that 17 of the 25 largest exchanges listed on CoinMarketCap had more than 99% fake volume. The most recent report from September 2019 showed wash trading rates at high levels from 96.9% up to 99.7%.

As recently as 2019, the exchanges reporting the most volume were in some cases unheard of. According to Bitwises research, the largest reported exchange from April 2019, FCoin, declared $1.7 billion in daily trading volume, despite at the time having just 4,781 followers on Twitter. It had been mentioned only four times on Bloomberg, all in the context of fake trading volume, and the marketing tool Alexa ranked it as having the 56,539th largest website globally.

The Bitwise study ranked Binance as the largest exchange with real volume, though it ranked 15th overall when those reporting fake volumes were included. During April 2019, Binance reported $218 million in daily trading volume 1/7th that of FCoin despite being mentioned 6,830 times by Bloomberg, its CEO being followed by 342,000 people on Twitter, and having a website that ranked 971th in the world, according to Alexa.

The Bitcoin market is steadily maturing, to be sure, and todays Bitcoin market is not like it was in the past. Many first-generation pillars of the Bitcoin ecosystem were started by first-time entrepreneurs who were simply interested in Bitcoin. Mt. Gox, the beleaguered, Japan-based Bitcoin exchange, was once a site for trading Magic: The Gathering cards. CoinMarketCap, the most popular data aggregator in the space, was started in 2013 as a part-time project run out of an apartment.

Related: Mt. Gox Casts a Dark Shadow of Cryptos Collapse A Long Fight for Justice

Today, the best-known crypto exchanges are large enterprises operating in a maturing ecosystem. Regulated Bitcoin futures, the development of institutional short lending, large algorithmic market makers, Bitcoin custody and custodial insurance have added to the efficiency of the market. Despite Bitcoins faked volume, and a spot market smaller than commonly thought, its price is more accurately determined every day.

Bitcoin spot prices, as well as other larger-cap cryptocurrencies, are considered accurate, thanks to an established global market for Bitcoin trading and the prevalence of exchanges around the world. Whats more, traditional data aggregators think Nasdaq, the Intercontinental Exchange, Bloomberg and Thomson Reuters are entering the industry, which will give us only a clearer picture of the data that affects Bitcoin trading.

Researchers from the University of Cagliari in Italy used Google Trends, which illustrates how frequently a fixed term is looked up, to study the interplay between Bitcoin and Googles search engine. They specifically researched the relationship between Bitcoins trading volumes and the volume of Bitcoin-related search queries made using Google.

In a report titled The Predictor Impact of Web Search Media on Bitcoin Trading Volumes, the researchers found significant cross correlation values, demonstrating search volumes power to anticipate trading volumes of Bitcoin currency.

The researchers studied the period between June 2014 and July 2015 and compared Bitcoin trading behavior with data on search queries obtained from Google Trends. The report concluded:

We can afrm that Google Trends is a good predictor, because of its high cross correlation value. Our results conrm those found in previous works, based on a different corpus and referred to a different Bitcoin market trend. As future advancement, we are thinking about the possibility to apply this kind of approach to different contexts in order to better understand the predictive power of web search media. An other likelihood could be to consider not only search media but also social media like Twitter, Facebook and Google+.

As trading both digital assets and more traditional stocks and commodities become progressively digitized, online mentions will likely play a key role in determining and predicting the sentiment of various markets, not just cryptocurrency.

In a 2018 report titled Risks and Returns of Cryptocurrency, researchers Yukun Liu and Aleh Tsyvinski from Yale University found that the riskreturn tradeoff of Bitcoin, Ether (ETH) and XRP differs from those seen in stocks, fiat currencies and precious metals. Cryptocurrencies have no exposure to most common stock market and macroeconomic factors, they wrote. They also have no exposure to the returns of currencies and commodities.

The authors concluded that cryptocurrency returns can only be predicted by aspects specific to crypto:

Specifically, we determine that there is a strong time-series momentum effect and that proxies for investor attention strongly forecast cryptocurrency returns.

In short, cryptocurrency returns have little exposure to traditional asset classes, such as stocks, fiat currencies and commodities.

The researchers determined that cryptocurrency returns are predicted by two factors: momentum and investor attention.

Our findings call into question popular explanations that supply factors such as mining costs, price-to-dividend ratio, or realized volatility are useful for predicting the behavior of cryptocurrency returns.

When trading Bitcoin, knowing the rules and regulations is essential. The U.S. Internal Revenue Service declared in 2014 that Bitcoin was property, not currency. Any profits made from Bitcoin investing and trading, therefore, would be taxed at each investors capital gains rate, not an ordinary income rate.

In July 2019, the IRS sent letters to 10,000 digital-currency holders who failed to pay taxes or properly report taxes on digital assets. IRS Commissioner Chuck Rettig stated:

Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties.

There are other things to keep in mind when trading. Before trading a specific digital asset, especially those considered altcoins, investigate its trading volume. If youre considering trading a more obscure altcoin, then you should learn how many such tokens are being bought and sold daily.

The higher the trading volume, the easier it will be to buy and sell the digital asset. Low trading volume, on the other hand, suggests a lower level of liquidity; that is, a trader could struggle to buy or sell the digital asset on the open market. Crypto exchanges have even delisted tokens with dubious or declining trade volumes.

Having a plan for every trade can help ensure you dont make a knee-jerk reaction in a fit of emotion-based trading. Disciplined investors and traders draft a game plan for the prices at which they intend to buy and sell an asset and dont deviate from this plan. In order to manage this, traders can use stop-loss orders, which ensure an asset is sold at a predetermined price.

The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and you should conduct your own research when making a decision.

Justin OConnell is the founder of ChangeOutput.com, a communications shop for blockchain. He first wrote about Bitcoin in early 2012 and has worked in the industry ever since. He has software engineering experience, and his written work has appeared throughout the industry over the years.

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How Bitcoin’s Price Slump Is Changing the Geography of Mining – CoinDesk

Posted: at 6:13 am

Although China remains, by far, the leading region for bitcoin mining, the coronavirus downturn is changing the picture in other geographies.

According to Thomas Heller, business director of one of the worlds largest bitcoin mining operations, F2Pool, market dips have made it unprofitable for some bitcoin (BTC) miners with older machines to operate.

We lost 10 percent of our bitcoin hashrate from our clients, for some of our competitors it was closer to 30 percent, Heller said, referring predominately to miners across Asia and Europe.

Mining operations in North America have also been impacted. Upstream Data founder Steve Barbour, who operates bitcoin mines on oil fields in Canada, said fewer companies are allocating resources to experiment with bitcoin, at least so far.

Pretty much every Canadian oil producer is basically telling their staff to do nothing and spend no money, and were a service provider for those companies, Barbour said. We were growing, month by month. This month is flat and Im expecting next month to be down.

Likewise, the California-based Digital Farms is closing up shop until the price of bitcoin resurges and makes mining more profitable.

Meanwhile, the coronavirus crisis is hindering the global hardware supply chain.

One anonymous bitcoin miner in Iran said his operations stalled because the sector hasnt been able to get new equipment into the country. Leading bitcoin miner manufacturers in China started reporting coronavirus-related delays in late January. Although some global shipments have resumed, other supply chains remain backed up.

Plus, due to the upcoming decrease in mining rewards called the halving, some mining operations are shutting off, at least temporarily until prices make their efforts lucrative again.

Heller estimated Chinese miners still contribute roughly 60 percent of the global hashrate, followed by Russia with 15 to 20 percent and North America with roughly 15 percent. Irans hashrate share is difficult to quantify due to a lack of official statistics.

Russian miners havent been hit as hard by the coronavirus market dip, partially because the Russian ruble was already in dire straits.

The Russian mining operation Bitriver said at least one client moved operations from China to Bitrivers Siberian facilities earlier this month. A second Iranian bitcoin miner, whose operations are stalled due to tax conflicts, hypothesized many Iranian mining operations will eventually follow suit and move to Russia if the regulatory climate doesnt improve in Iran.

Perhaps ironically, the bitcoin mining industry in Iran is dwindling despite domestic demand from retail users. Sources on the ground in Iran, once home to a thriving mining industry, say the Middle Eastern nation is no longer hospitable to crypto entrepreneurs.

An anonymous mining pool manager in Southeast Asia said many Iranian miners are looking to move their operations to Russia or other places with cheap power since the Iranian government is now proactively focused on taxing mining operations.

As well-resourced Chinese companies build new setups ahead of the bitcoin halving in May, certain geographies could see an uptick in hashrate share.

Chinese miners are trying to sell large quantities of older S9s [mining machines], Heller said. With potential buyers particularly in Russia, the Commonwealth of Independent States region [post-Soviet republics in Eurasia] and the Middle East.

Anna Baydakova contributed reporting.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Bitcoin And Crypto World Rocked By Massive $400 Million Binance Bid For CoinMarketCapReport – Forbes

Posted: at 6:13 am

The world's biggest bitcoin and cryptocurrency exchange, Binance, is in talks to acquire popular crypto data site CoinMarketCap, it has been reported.

The deal, said to be in final stages, looks set to see Malta-based Binance pay as much as $400 million for U.S.-based CoinMarketCap, according to bitcoin and crypto news and analysis website The Block, which broke the news.

Binance, the world's biggest bitcoin and crypto exchange by volume, has been eyeing expansion around ... [+] the world in recent months.

The Block reports the deal is expected to be announced later this week and that CoinMarketCap's ability to drive "a significant amount" of web traffic is a major reason for Binance's interest, citing people familiar with the matter.

"I wonder how Binance is going to deal with the obvious conflict of interest," Larry Cermak, The Block's director of research said via Twitter, warning that CoinMarketCap will no longer be impartial but that it already doesn't have a good reputation among the bitcoin and crypto community.

"Who would ever trust CoinMarketCap after this," asked Eugene Ng, head of sales at Matrixport and former trader at Deutsche Bank, via Twitter, adding the deal doesn't make sense to him.

"A stake from Binance might likely work better than an acquisition, just defeats the purpose of having a balanced and neutral index aggregator."

The chief executive of Binance, Changpeng Zhao (CZ), earlier this year teased two "major" acquisitions in the company pipeline that he is "very excited" aboutadding he expects the deals to have a "significant impact" on the sector.

"As the saying goes, when you cant beat them, buy them," CZ wrote to Binance users in January.

"When we identify top talent with a top product that we cant beat, and the teams share common values, a merger makes sense in most cases. There are always a number of deals being discussed at any given time, and there are 2 that I am very excited about specifically. We will announce them in due time."

Binance made nine acquisitions in 2019, with "only a small number of them being publicly announced so far," CZ said.

Binance has been focused on expansion around the world in recent years, taking its services to the U.S. in 2019.

This will be Binance's fifth major acquisition, according to data from Crunchbase.

If the Binance bid for CoinMarketCap goes through it would be one of the largest ever in the burgeoning bitcoin and cryptocurrency industry and a sign it's beginning to mature.

Binance declined to comment when asked about the deal.

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Bitcoin Follows Stock Markets Higher; How Long Will They Move in Lockstep? – CoinDesk

Posted: at 6:13 am

After the weekend slump, many cryptocurrencies made strong gains Monday, as did major stock indexes, while the coronavirus continues to wreak havoc on the global economy.

Traders werent confident the green flashing across all markets would last, however.

Bitcoin (BTC) climbed 8 percent and ether (ETH) gained 6 percent. Other notable performers include bitcoin SV up 11 percent, bitcoin cash (BCH) in the green 8 percent and IOTA (IOTA) gaining 8 percent. These 24-hour price changes are as of 20:00 UTC (4 p.m. ET).

Japans Nikkei 225 Index saw heavy selling during the open hour of trading but climbed back and ended the session down down a modest 1.5 percent. This followed Prime Minister Shinzo Abe announcing Friday that Japan would introduce a fiscal stimulus larger than the 56.8 trillion yen ($526 billion) injection the country required in the 2008 crisis.

In Europe, the FTSE 100 index closed up 1.7 percent, while the U.S. S&P 500 rose 3.3 percent. Tuesday will close out the first quarter of 2020, so traders are unsure whether the traditional markets will continue to make gains because the end of an accounting period is typically a time to rebalance portfolios.

I think we see equities much lower so it will be interesting to see if bitcoin follows, said Chris Thomas, head of digital assets at Swissquote Bank.

Still largely correlated

Bitcoin came under selling pressure late last week, not long after the U.S. markets closed at 20:00 UTC Friday. It dropped from $6,672 at 23:00 UTC that day to as low at $5,853 1:00 UTC Monday on exchanges like Coinbase.

However, shortly after the Nikkei slid and rebounded, bitcoin began climbing, entering $6,300 territory by 12:00 UTC.

"Bitcoin is still largely correlated with financial markets overall it seems, said Jack Tan, founding partner of Taiwan-based crypto trading firm Kronos Research. And from what I can tell, we are still headed lower in stocks so bitcoin will presumably follow. Also since bitcoin is priced mostly in USD, I suspect the dollar rally is also adding some pressure."

Low expectations for equities come from a number of factors, traders say. Energy consumption, for example, is down, as a glut of oil is causing storage problems with supply far outpacing demand. Oil prices dipped below $20 Monday, a level not seen since 2002.

In the short term, we can expect increased inventory and supply while decreased demand will drive the price even lower, Nemo Qin, an analyst for multi-asset investment platform eToro, said regarding oil.

As for precious metals, since March 27, gold prices have been in a consolidation pattern, a behavior cryptocurrencies exhibited late last week after hours, once the traditional markets closed.

It appears bitcoin is following traditional markets for the time being, despite advocates long-running argument that it is a non-correlated asset that should not move in lockstep with the pack. But traders remain on alert for news of record-breaking stimulus policies around the world that could stoke inflation, which theoretically should make bitcoin, with its predictable supply schedule, more attractive.

Japans stimulus plan, for example, has market participants thinking it might result in more crypto volume and subsequent price increases.

Bitcoin rallied last week on inflationary fears in the U.S. It is the first time this year that it behaved as promised, said Max Boonen, CEO of B2C2, a London-based over-the-counter (OTC) market maker.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Can Bitcoin Survive the Climate Change Revolution? – CoinDesk

Posted: at 6:13 am

Coronavirus might be the biggest story of the decade, but climate change will be the grand narrative of the century.

As energy of any kind becomes of premium value to the planet, and the worlds transport systems come onto the electric grid, how will notoriously energy-hungry processes like bitcoin fare?

In financial services, environmental, social and governance (ESG) is becoming the new buzzword among impact-minded corporations. An example of this was the latest letter from BlackRock CEO Larry Fink promising a fundamental reshaping of finance.

Bitcoin, although its also about fundamentally reshaping finance, has earned a bad reputation when it comes to energy use, thanks to the vast number of specially-designed computers needed to carry out its mining process.

How you choose to interpret bitcoins energy consumption depends on your perspective. Bitcoin supporters might point out that PlayStation, for instance, uses up about as much power as the Bitcoin network, according to research by Bitwise Asset Management. The reinvention of money, theyll add, is a much loftier goal than playing FIFA 20.

On the other hand, the Greta Thunberg generation may question what appears to be just another financial trading instrument but one that consumes as much electricity as Chile, a country with 18 million people.

The recent meltdown in markets caused by coronavirus raises other questions about bitcoins place in the world. Bitcoin, sometimes described as digital gold, was always seen as a safe haven for investors, un-correlated as it was with the rest of the financial system. But the coronavirus shock saw bitcoin fall even more precipitously than the stock market. Its recent ebbs and flows have mirrored that of the S&P 500.

As economist and author Frances Coppola puts it: If bitcoin can no longer be used as digital gold, what can it be used for?

Wall Streets cold feet

Some would argue the gradual encroachment of institutional money into bitcoin as a high-yielding alternative asset class comes with its own cost: a newfound correlation with the rest of the financial system.

Indeed, there has been an assumption from some quarters of the crypto world that its only a matter of time until swathes of institutional investment will flow into bitcoin. This will follow as the network becomes more regulated, they say, and things like dedicated exchange-traded funds (ETFs) emerge.

But with a firm focus on ESG among institutional investors of any real size, that may not happen after all, at least not at anything like the scale once predicted.

I think bitcoiners are very much hoping in the future that institutional investors will put their money in bitcoin, said Alex de Vries, blockchain specialist at PwC. But it's very unlikely that shareholders of those institutions will allow companies to invest in high-carbon assets.

Its not easy to take the temperature of large-scale buyside when it comes to crypto. When CoinDesk asked some of the largest investment firms if ESG concerns might be a factor regarding bitcoin as a hedge, most of them declined to comment.

It was sort of this niche hippie topic for bleeding-heart liberals and there were certain connotations with ESG that it was largely bullshit.

However, one of the largest retirement funds in the U.S., which asked not to be named, said simply: Things like bitcoin dont fit into our portfolio.

Within the confines of crypto, the question of ESG in relation to bitcoin does occasionally come up but it's relatively rare, said Matt Hougan, global head of research at Bitwise Asset Management.

I would say it comes up in one out of every 20 serious conversations, he said.

However, Hougan conceded ESG is certainly the topic du jour, and he expects to hear it mentioned more often.

I fully agree that ESG has entered a sort of new era in 2020. It's the combination of Larry Fink's letter, of the Australia wildfires, the California wildfires, Greta's popularity. I do think its top of mind. I've overheard ESG investing conversations in coffee shops here in the U.S., which I've never done in the past, Hougan said.

That said, its probably fair to say the bitcoin community, for the most part, is not too concerned about environmental issues.

For example, Meltem Demirors, chief strategy officer of crypto-focused investment firm CoinShares, pointed out that ESG and environmental sustainability tends to come in cycles; it was a big topic 10 years ago, then it died down and now it's big again, she said.

Historically, ESG had sort of been a backwater of investing, where you got sent if you weren't fit for front office, said Demirors. It was sort of this niche hippie topic for bleeding-heart liberals and there were certain connotations with ESG that it was largely bullshit.

ESG community

ESG warriors perhaps share some similarities with the crypto community: Both are growing and passionate movements, and both could be viewed as extremists by the mainstream financial services sector.

And though some ESG fans see the value in blockchain for being able to track global supply chains, the goodwill does not extend to bitcoin itself.

Lauren Compere, director of shareowner engagement at Boston Common Management, a majority-employee-owned and woman-led investment firm with over $20 billion in assets under management, said millennials and post-millennials want to track how a particular T-shirt is made, for example, or check its provenance using a slavery app.

I think from an ESG perspective, they are also looking at, How does something like bitcoin fit into the ecosystem? said Compere. What kind of impact does it have on things like climate? Is it a contributor? Is it an enabler?

Brett Wayman, VP of impact investing at Envestnet, a provider of software to financial advisors, said its a question of deciding if the benefit of cryptocurrency as a separate asset class outweighs the negatives of the environmental impacts of Proof-of-Work (PoW) consensus mechanisms.

I think the climate problem will force bitcoin to self-regulate or reconfigure itself.

Right now I think the environmental impact is pretty extensive. I do think that bitcoin is an interesting investment. But from an energy usage standpoint, my understanding is that it will only become more and more energy-intensive to mine some of these currencies, said Wayman.

(That likely doesnt hold for cryptocurrencies based on the less-mining-intensive Proof-of-Stake (PoS), which includes the forthcoming overhaul of Ethereum, the second-largest crypto by market cap.)

Martin Vezer, manager of thematic research at Sustainalytics, which is 40 percent owned by Morningstar, said there are clear environmental concerns when a coin relies on mining, which can be quite energy- and carbon-intensive depending on where the electricity is coming from.

A fundamental question for investors to consider is whether a cryptocurrency is a commodity that actually adds value. In the early trends that we see, a lot of people appear to be buying and selling cryptocurrency as a short-term bet rather than a long-term investment. Sure, this gamble has paid off for some, but others have lost money, said Vezer.

Responsible investors typically look for long-term opportunities with a clear value proposition rather than a short-term betting opportunity, Vezer added. They weigh the environmental and social risks associated with an asset before adding it to their portfolio, he said.

Renewable reputation?

While much of the data is based on estimates, its thought that close to 75 percent of bitcoin mining is fuelled by renewable energy.

Bitcoin miners are nomadic and will migrate to the cheapest sources of energy. Over half of all bitcoin mining takes place in Chinas Sichuan province, which has excessive hydropower capacity.

The portability of bitcoin mining rigs allow for interesting innovations such as consuming wasted energy from oil wells. In such cases, trapped gas is vented into the atmosphere or burnt off by flare towers because its not deemed worthwhile to capture and transport.

Steve Barbour, the founder of Upstream Data, which operates bitcoin mines on oil fields in Canada, has even described bitcoin mining as a conservation machine. The vented gas fuels a generator that the mining computers are plugged into. Its a relatively low capital expenditure for an oil company, said Barbour, especially when presented with the prospect of future BTC returns.

Upstream Data is planning bitcoin mining trials with Canadian Natural Resources, a Toronto Stock Exchange-listed oil and gas producer that reported over $21 billion in revenue last year, Barbour told CoinDesk.

What we are doing with bitcoin mining reduces venting of methane into the atmosphere, he said. Its an example of how an ESG narrative around bitcoin is at least incomplete.

However, Martin Wainstein of the Yale Open Climate project, an advocate of cryptocurrencies and blockchain technology generally, said he remains skeptical of such green endeavors.

Even though they have gotten very creative to be energy efficient at sources where you have waste, bitcoin is out of control and doesn't work the way it was designed for, said Wainstein. I think the climate problem will force bitcoin to self-regulate or reconfigure itself.

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How COVID-19 Is Changing Narratives From Bitcoin to DeFi – CoinDesk

Posted: at 6:13 am

How the once-in-a-generation COVID-19 pandemic is shifting the way we think and talk about different parts of the crypto industry - from bitcoin (BTC) to DeFi to stablecoins.

On Jan. 28, Bloombergs Joe Weisenthal tweeted, Notable overlap on here between the most alarmist people tweeting about the virus and those who are obsessed with the size of the Fed balance sheet.

There is no doubt the bitcoin and crypto community broadly were far earlier in recognizing the potential significance of the COVID-19 crisis than most professional communities. Today, America preps for at least another month of lockdown and social distancing. The markets continue their chaotic swing as investors are simply unable to price in such a once-in-a-lifetime event.

A question for the crypto community becomes: How is this impacting narratives about our own industry?

In this episode, @NLW looks at the impact of the COVID-19 crisis on narratives around:

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Bitcoins on the Move Is BTC Price Inversely Correlated to Mempool Size? – Cointelegraph

Posted: at 6:13 am

After making a strong recovery from $3,775 to $6,450, Bitcoins (BTC) price has traded in a tight range which has seen the price struggle to push above resistance at $6,400 and $6,850. Despite the current pullback, technical indicators like the Stock-to-Flow model and the networks consistent growth in hash rate show that investors have regained a small amount of confidence.

Another factor worth considering is Bitcoins mempool size as it also can provide some insight into how buyers and sellers are reacting during these uncertain times.

Cryptocurrency market weekly overview. Source: Coin360

The mempool is where all the unconfirmed Bitcoin transactions wait until all confirmations are released to conclude each transaction. The higher the mempool size, the longer it takes for transactions to be confirmed since more blocks have to be confirmed (more power input).

If a jam occurs in the memory pool due to an abnormal size of transaction waiting to be confirmed, the higher the probability to incur in a higher transaction fee to expedite it promptly.

Bitcoins mempool size reached a record-high value at over 130MB/block during January 2018, days after Bitcoin price slightly crossed its all-time high at $20,000.

Bitcoin Mempool size (in MB/Block) since June 2016-March 2020. Source: Blockchain.com

This could suggest a relationship between the number of transactions waiting to be confirmed and Bitcoin's price. If that is the case, the relationships would be inverse in times of corrections such as the one investors are facing now.

Considering a period from Feb. 19 until March 13, when Bitcoin lost 60%, we find that the correlation between the Bitcoin mempool size and its price is negative at -41.2%. This is a very high relationship considering that this correlation for the entire 2020 period available is almost non-significant at 2.34%.

A correlation of 100% means that the Bitcoin price and the mempool size move completely in the same direction, while -100% correlation means they are inversely related. A correlation of 0% means that the variables are not related in any way.

In correction periods during 2016, where Bitcoin lost more than 20% in price, we find the same negative relationship between the mempool size and Bitcoin price, even though both have a high difference in values one period is very inversely correlated (-83.1%) and the other period very slightly negative (-4.6%).

In the six periods where a correction of up to a 20% decrease in price during 2017 and 2018, we find an inconclusive relationship across the correlations and this makes it impossible to reach a solid conclusion.

Correlation between Bitcoin price and its mempool size for different correction periods during 2017

However, if we look closely at the two periods that occurred during the second half of 2017 when Bitcoin ended up reaching its record price, both periods show an inverse relationship between the mempool size and Bitcoin price.

Between Nov. 8 and Nov. 12, this relationship was very negative (-85.9%), while between Dec. 17 and Dec. 25, the correlation is very small (-5.6%).

Correlation between Bitcoin price and its mempool size during 2018 correction periods

During 2019, four out of the five correction periods identified showed a positive correlation between the Bitcoin mempool size and its price, except for the last periods, which showed a slight negative correlation.

Correlation between Bitcoin price and its mempool size during 2019

When considering the relationship during each year instead of only analyzing the corrective periods, we find a clear trend and a positive correlation between the mempool size and Bitcoins price.

Moreover, a high correlation is seen in 2017 (80.8%) and 2018 (72.2%), despite not being able to draw a conclusive trend when analyzing the correction periods within those years. The positive trend, although small in magnitude, is also seen between both variables in 2016 (26.3%) and 2019 (9.5%). While in 2020, the relationship is practically non-existent (2.34%).

Last week, there has been an increase in the mempool size even as Bitcoins price is going down. Looking forward, we may see the continuation of this inverse relationship contributes to the uncertainty of Bitcoins price in the short-term.

As Cointelegraph markets analyst filbfilb recently pointed out:

I just cant be long while I know there is so much BTC in transit.

The amount of Bitcoin possibly being moved into and out of exchanges in the last weeks raises further doubts about the inverse relationship between the mempool and Bitcoin price.

Data for the mempool size drawn from Blockchain.com and prices from coinmarketcap.com. The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Bitcoin and Ethereum Are Worst Investments in 2020 after Crude… – Coinspeaker

Posted: at 6:13 am

Bitcoin and Ethereum are two of the most famous cryptocurrencies. During the fall of the markets, they fall especially loudly. Is this the store of value power weve been hearing about for years? But only oil perform worse these days.

Since the beginning of the global coronavirus pandemic, world markets kept falling into the abyss. Many people start thinking about the true value of Bitcoin, Ethereum, crude oil, futures, and stocks. The Block analyst and notable crypto observer Larry Chermak is publishing interesting stats. Per the numbers, Bitcoin and Ethereum are the two most volatile assets out there, if we dont count crude oil. Both coins lost a significant portion of the value during the global panic:

We see that commodities, ETF equities, and indexes are outperforming cryptocurrencies. The world slowly realizes that China is not just the country of Jackie Chan, Shaolin, and Mandarin, but the important economic circuit of overall stability. Since the supply chains stuck and banks are printing money, cryptocurrencies are believed to gain at the price and strengthen their power.

However, Larry notices that most performing assets are stocks of medical industries, consumer staples business, healthcare machinery producers, and gold-mining companies.

Bitcoin maximalists always hypnotized people with the usual claim about safe haven when it came to the causa of slow transactions. They say that Bitcoin is not about sending fast transactions, but about storing the value, because Bitcoin is digital gold. However, Bitcoin lost 35%, and Ethereum lost 50% during the first half of Q1 2020.

This is something else than the store of value because gold is the real store of value and it gained 0,3% over the same time frame. Interestingly, Bitcoin maximalists love to compare Bitcoin to gold, make jokes and memes about persons like Peter Schiff and more. Now, it seems like they have nothing to say, as cryptocurrencies are falling in a very quick manner.

Notably, gold is the only asset that has a price gain, and the market is more alive than ever. Gold bugs are buying and selling gold actively. The volatility of gold becomes even more attractive.

Per the graph with data from Factset, oil lost 62% of its value due to the political uncertainties and tensions between China, Saudi Arabia, the U.S., and Russia. During the last OPEC meeting, instead of decreasingthe oil extraction cap for the next period, they have disabled it. Since tomorrow, many of the world countries will have no burden on how much oil they can extract and sell. The further oil price decrease seems like an obvious outcome.

It will hit the Russian economy, as the local budget is heavily dependent on the oil industry. It will also make the U.S. based extraction ventures unprofitable. And Tesla Inc (NASDAQ: TSLA) stocks are keeping a good pace, despite serious losses, it is gaining even during coronavirus fears. You dont have to be a market expert to notice that the world is slowly shifting to electric vehicles. Now, its a fetish, but tomorrow its mainstream, and theres nothing you can do to revert scientific trends. Electricity is just believed to be better than oil, and thats it.

Jeff Fawkes is a seasoned investment professional and a crypto analyst covering the blockchain space. He has a dual degree in Business Administration and Creative Writing and is passionate when it comes to how technology impacts our society.

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Is Now the Time to Invest in Bitcoin? – Cointelegraph

Posted: at 6:13 am

With global markets tumbling out of control, will Bitcoin finally fulfill its role as a hedge asset? Is now a good time to invest in Bitcoin?

CEO and co-founder of Quantum Economics Mati Greenspan and trader Michal van de Poppe discuss how the Feds strategy of QE to Infinity will help Bitcoin finally become a safe haven asset. But is now the time to buy or should you wait for further drops? Watch the full video to find out!

In an article for Cointelegraph, Michal identified $6,800-6,900 as the key level to watch. Unless Bitcoin is able to break through that level, hes not very optimistic about upward movements:

Until we don't do that, I expect further downside to comments, just pure technical levels.

Mati is also watching those levels, but he is more focused on the long term than the short term:

So first of all, I only have bullish scenarios for Bitcoin. Yes, I would say 6,800 is a key level that has played out beforeI would say overall, I mean, we're looking at a very wide range for Bitcoin, something between $3,100 and $20,000.

The Fed was recently given the greenlight to print as much money as needed to stabilize the US economy. Michal explained how this could lead to two scenarios which would both benefit Bitcoin:

So what you want to see at some point is that investors run out of the dollar given the inflation or deflation, and start to seek for other assets which are commodities like gold, silver, platinum and Bitcoin. The other scenario is that the crisis just continues to fall down until 2021 or 2022 and the equity markets bottom out, after which the other commodity markets and Bitcoin start to outperform the equity markets in the first case, which we have seen in '09 to 2011 with gold. So in the end, quantitative easing: I expect that to be bullish for Bitcoin.

Mati continued Michals comparison of Bitcoin to gold in the post-2008 era:

If you look at that and the aftermath to the financial crisis, which was, really as Michal said, 2009, 2011, 2012. That's when gold really took the center stage It shot up $2,000 per ounce by 2011, 2012.

And I think that gold, again, is already showing us incredible resilience since the beginning of the year. And I say if it went up or down during the crisis because it's kind of been fluctuating, but it certainly hasn't taken a hit like the stocks have, it's more or less held its value over that time. And I believe that Bitcoin will also be seen as this type of asset.

But the question remains: is now the time to invest or are there more downturns to be expected? Watch the full video to make sure you dont miss Mati and Michals suggestions!

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Bear Market Over? Charts on Bitcoin and ASX 200 Suggest Otherwise – CoinDesk

Posted: at 6:13 am

Some financial publications around the world are touting the "shortest bear run in history" for U.S. equities, as if the dark days of the coronavirus sell-off are behind us.

Markets in the U.S. are beginning to show signs of life thanks to the Federal Reserve's quantitative easing plus the recently enacted $2 trillion U.S. stimulus package. The Dow Jones Industrial Average is up 23 percent and the S&P 500 index has gained around 20 percent from their respective March 23 bottoms. Yet, a conclusion to the wide-reaching COVID-19 pandemic is far from over.

Australia's equity benchmark ASX 200 index is off by 31 percent and Japan's Nikkei 225 has lost 21 percent from their February highs as the COVID-19 outbreak went from bad to worse over a month ago.

Government measures in Australia got a whole lot more stringent overnight. The country's prime minister announced gatherings were to be restricted even further to a maximum of two people in order to slow the spread of COVID-19 from within its borders. The unprecedented measure were agreed to by the newly created "national cabinet," comprised of the premiers of all the states and territories plus the prime minister and convened to coordinate a battle plan against the virus.

So far, the ASX has been slow to react. The index is up by about 2.3 percent on the day. However, pressure toward the downside is apparent. Gains may require significant positive day-on-day returns over the course of this week if they are to signal confidence in the country's latest measures.

Jehan Chu, co-founder and managing partner at Hong Kong-based blockchain investment and trading firm Kenetic, said that despite the turmoil the "corona moment" would be the moment we learned to be truly digital.

"While all market signs point to a long and lean winter, the silver lining is that remote working and especially socializing is clearly the catalyst to mainstream the digital experience," Chu said.

"From church services to dance parties, group meditation to infant play groups, the digital experience is normalizing for all sectors of society. This experimental phase, driven by a survival instinct, is fundamentally ushering the masses to the "digital-first" future," Chu added.

In commodities, oil is trading at lows not seen since February 2002. Gold is down half a percent from March 27's close and is showing signs of extreme volatility amid the uncertainty, currently changing hands for around $1,616 per troy ounce.

Bitcoin struggles to gain higher ground

Bitcoin prices' resistance near $6,900 is presenting a significant hurdle for the world's bellwether cryptocurrency. The cryptocurrency suffered continual losses last week, with prices down $1,000 from that local peak. Bitcoin is currently changing hands for around $5,900.

Further, two long-term moving averages (MAs), the 200-day and 100-day, are beginning to converge once more. That indicates the potential for a deeper drawdown from Feb. 13's high of around $10,500, reflecting sentiment on current global market conditions.

The last time these two MAs crossed was back in November 2019, when prices fell nearly a quarter to a local bottom of around $6,425 from $8,500.

Elsewhere in crypto, XRP is down 3.6 percent over the weekend. Ether (ETH) is currently trading 4.1 percent lower than March 27's close of around $131.

Global financial sentiment will need to continue to improve significantly in the coming week if there is any real chance of staving off a deeper recession. In the past week, almost all markets have suffered daily lower highs, taken by technical traders to be a negative signal.

With coronavirus-related updates changing daily at a rapid pace, a conclusion to the uncertainty and fear in markets may be far from over.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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