Crypto Tidbits: Bitcoin Mining Still China-Centric, Ethereum Istanbul Live, Banks Use Blockchain For Bonds

Another week, another round of Crypto Tidbits. Bitcoin, again, saw an effectively flat week, losing a few percent in the past seven days (which isn’t much in the grand scheme of things), according to the latest data from Coin360. Altcoins have posted similar results, with a majority of cryptocurrencies shedding a percent or two, just around how much BTC lost.

This comes as analysts have started to get bullish on the cryptocurrency, citing fundamental developments such as increasing adoption, bullish macro tailwinds, the halving, and so on and so forth.

Despite the market lull seen over the past week, which analysts say will be preceding a large breakout in some direction, the industry has continued to chug along.

Bitcoin & Crypto Tidbits

  • Bitcoin Mining Remains Centralized in China: According to a recent report from Reuters, a recent report from CoinShares has confirmed that Chinese Bitcoin miners control two-thirds of the network’s computational output, “a growing share that is likely to benefit the country’s miners.” This 66% figure is purportedly up from 60% in June, which marked the top of the recent bull run, and is actually the most centralized CoinShares has seen Bitcoin since it began tracking geographic ties to the network’s hash rate some two years ago. CoinShares’ head of research, Chris Bendiksen, attributed this trend to the growth in ASIC deployment, specifically citing the IPO of Chinese miner Canaan and other companies in the region that have recently released new chips. The fact that China’s share of the Bitcoin hash rate is up from 60% in June also implies that the recent 50% decrease in the Bitcoin price has forced more expensive miners, who operate in countries like the U.S. and Canada, to temporarily pause their operations.
  • European Central Bank Wants in On Digital Currency Game: Bitcoin may be falling, but central banks still want in on digital currencies. On Thursday, the newly-instated President of the European Central Bank, former Chair and Managing Director of the International Monetary Fund Christine Lagarde, said that one of her initial mandates will be to focus on the development of stablecoins. She said:

    “My personal conviction is that, given the developments we are seeing, not so much in the Bitcoin segment but in the stablecoins projects, and we only know of one at the moment but there are others being explored and underway at the moment. We’d better be ahead of the curve.”

  • Ethereum Istanbul Goes Live: On Saturday, Ethereum developers rolled out the latest iteration of the software, “Istanbul.” Istanbul introduces six new Ethereum Improvement Protocols (EIPs), which are focused on reducing network spam, allowing for interoperability with ZCash and private and scaling technologies, and making the network more secure. The upgrade allows for the implementation of so-called ‘ZK Rollups,” which will allow for “Layer 2 scaling on Ethereum supporting upwards of 3000tps (larger than Visa), while maintaining decentralization and privacy. This is a big win for ETH-based stablecoins, [like USD Coin (USDC)],” Circle’s Jeremy Allaire wrote on the matter.
  • Bakkt Launches Two New Bitcoin Products: This week, prominent cryptocurrency startup Bakkt, whose chief executive officer recently assumed a seat on the U.S. Senate, launched two Bitcoin derivatives products this week: BTC options for its futures contracts, and cash-settled futures for the Singaporean/Asian market.
  • Chinese Bank Uses Blockchain: According to an article from Chinese business news site Sina Finance released on Friday last week, the Bank of China — one of the biggest state-owned commercial banks in China not to be confused with the central bank of the People’s Bank of China — recently completed the issuance of a 20 billion yuan (just around $2.8 billion U.S. dollars) worth of small enterprise and micro-enterprise bonds via blockchain.
  • Bitcoin Giant BitMEX Sued for $300 Million By Early Investor: According to a recent report from Bloomberg, Frank Amato and RGB Coin Ltd, who claim to be the first seed investors in BitMEX in 2015, have sued the exchange for $300 million. Their claim is that the exchange, now one of the most prominent Bitcoin startups and exchanges in existence, did not grant them equity after their initial $30,000 investment, now valued at over $50 million.
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Could Bitcoin Price Press Higher as PlusToken Liquidations Slow?

Over the past few months, the crypto industry has been awash with news about the PlusToken Bitcoin scam, which allowed scammers to accrue billions worth of digital assets over the course of a year-long operation.

For some context, PlusToken was a cryptocurrency “wallet” and storage solution that gave users returns on their deposits and also gave refers rewards, acting much like a classic Ponzi scheme but with a cryptocurrency backdrop.

Earlier this year, a number of ringleaders of the operation were arrested in Vanuatu, though a few individuals remain missing abroad. While few in the West have heard of the scheme, for it was operated mainly out of China, data indicates that the firm stole upwards of $3 billion of cryptocurrencies, mainly Bitcoin, at its peak.

And according to analyses by on-chain analyst Ergo, the remaining ringleaders of PlusToken have likely been selling “a little over 1,100 BTC per day” via mixers and exchanges, which is approximately 60% of the daily block rewards issued by the Bitcoin network, and has been for at least the past four months.

If PlusToken and other scams have really been liquidating millions of dollars worth of Bitcoin a day, that would explain why the leading cryptocurrency’s price has bled out by some 50% over the past six months

Data shows, however, that the selling pressure of these coins on the underlying BTC spot market is starting to slow, presenting a potential bullish case heading forward into the end of 2019 and into the start of 2020.

PlusToken Selling Abating, Presenting Bullish Bitcoin Case

Ergo’s latest analysis has found that the PlusToken coin distribution has “dropped off a cliff,” purportedly falling far below 500 coins per day, under half of what was seen just a week or two ago.

In fact, he noted that over the past week, the average coin distribution from Bitcoin wallets purportedly owned by the scammers, has collapsed well under 300 coins per day, which coincides with an uptick in public awareness about the liquidations.

With there now being hundreds of coins fewer being sold on the open market, Bitcoin could start to form an uptrend once again, that’s if you believe that the sales of cryptocurrency by the aforementioned scammers formed the six-month-long downtrend that sent BTC from $14,000 to $7,000.

This isn’t the only trend that should have bulls over the moon, so to speak. Blockchain Capital partner Spencer Bogart, whose firm just reported that it expects BTC to “blow past” its all-time high of $20,000 in 2020, said in a recent interview that the fundamentals are leaning in favor of bulls.

One of Bogart’s first points conveyed to the Bloomberg audience is that Bitcoin remains a very useful network from a transactional standpoint, “processing $1 billion to $3 billion worth of transactions daily,” which is a far cry from when the cryptocurrency was deemed “a joke” just years ago.

He also added that the American public’s sentiment on Bitcoin remains widely positive, implying that long-term buying pressure for the cryptocurrency exists, despite the downturns seen.

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What’s So Cool About the First Ethereum-Based Home Sale?

If you’ve perused Crypto Twitter at all over the past few months, you’ve likely heard the term “decentralized finance” or “DeFi” tossed around in relation to Ethereum, the second-largest blockchain by the market capitalization of its cryptocurrency.

While some see it as a joke, a tokenized home — yes, an entire property — was purported to just have been entirely sold on the Ethereum blockchain, marking a positive step in the right direction for the fledging DeFi.

Entire Home Sold on Blockchain, Nets Holders DAI Crypto

According to a Twitter thread posted by RealT, a U.S.-based global real estate platform working with Ethereum and blockchains, the “first property ever to be tokenized on Ethereum [has been] sold.”

RealT, which sold the 9943 Marlowe RealToken (which represents the ownership of a Detroit home worth around $60,000), claims that this sale marked a number of “firsts” for the Ethereum ecosystem: these being the first tokenized real estate property, the first security token integrated into DeFi, and the first real estate asset tradable inside of Uniswap exchange and through the actual RealT website.

9943 Marlowe is currently owned by 107 individuals from 33 countries, such as France, Canada, Singapore, Hong Kong, U.K., amongst many other places. The property is also owned in part by RealT itself, which has slowly been distributing through its website.

Owners of the tokens are also eligible to earn a portion of the current $30 or so dollars distributed via DAI each day because of the rent paid on the property.

DeFi, Ethereum’s Killer Use Case

With entire homes being sold on Ethereum, some have started to suggest that decentralized finance and related applications are the killer use case for the popular blockchain, which in 2017/2018 was almost solely used as a platform to launch often-questionable initial coin offerings.

Speaking to Jon Jordan, communications at DappRadar, a service tracking information about blockchains, DeFi is Ethereum’s first killer app, not digital kitties or on-chain gambling:

“Depends on how you define ‘killer dapp’. DeFi certainly is the first category of dapps to attract significant amounts of value (both ETH and ERC20 tokens).  In terms of wider issues such as user numbers, however, it’s not clear DeFi will attract millions of users. But, yes, DeFi is the first killer dapp category on Ethereum.”

It isn’t only DappRadar that believes that DeFi is of utmost importance for Ethereum. A Coinbase Product Manager recently tapped the segment of blockchain applications, saying the following on the importance of DeFi in today’s crypto environment:

“DeFi is an opportunity to build financial infrastructure that spans the world, is open to everybody, and starts to change how we interact with markets.”

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How Crypto is Evolving into a Trustless Banking System With DeFi and Dai

The primary pull of decentralized crypto assets is financial freedom from the flawed banking system. Bitcoin is one step but without greater adoption it is still just a speculative vehicle. DeFi and decentralized protocols based on banking are another and they’re gaining traction fast.

Crypto Exchanges too Centralized

Many envisaged 2019 being the year of the DEX. In reality that did not materialize and the centralized crypto exchanges just grew bigger, consuming more of the market and gobbling up profits.

Over the past couple of years, centralized exchanges such as Binance and Coinbase have made a fortune. Binance burns 20% of its profits every quarter and the last time this happened was in October this year when 2 million BNB went up in smoke. This equates to an estimated third quarterly profit of $185 million.

Coinbase has some highest fees and spreads in the industry. It was widely reported that the US crypto exchange cleared a billion dollars in 2017 and made over half that in revenue in 2018 despite a massive bear market.

Many top exchanges have a tiered fee system which punishes the smaller traders and goes easy on the whales. In effect they are little more than digital banks which are profiting off the movements of other people’s money.

Decentralize It

Decentralized exchanges are the answer of course, and they have started to emerge through the growing DeFi ecosystem this year. DeFi is primarily based on Ethereum and Maker has over 50% of the market according to defipulse.com.

Investment levels are currently near record highs of $670 million and it has been predicted that the markets will be worth $5 billion next year.

DeFi embodies the notion of a decentralized banking system and the currencies used with it, namely Ethereum, Dai and Maker, are the backbone. Digital collateral baked Dai has evolved in recent months and the progress has not gone unnoticed.

Weiss Crypto Ratings observed that the dollar pegged Dai could well become the first world currency as it is far more stable than Bitcoin. MakerDAO then would be is decentralized central bank.

“This takes DAI one step closer to becoming a true world currency, and could turn Maker DAO into the first trustless central bank on the planet.”

The crypto industry needs this evolution from a scene of pumped and dumped altcoins and whales manipulating markets, to something which resembles a stable financial system free from profit taking overseers.

DeFi does that.

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Cryptocurrency Bollinger Band Squeeze Will Spur Next Big Move

Technical indicators are getting to that stage where another big move is becoming imminent on cryptocurrency markets. After several weeks of consolidation this is usually the case which leaves us with the big question; up or down?

Bitcoin Still in Slumber

Very little has happened on BTC markets over the past day or so. A slump that has been going on all week resulted in the digital asset declining 6% to bottom out at $7,100 on Thursday.

Since then it has been a very slow grind upwards to $7,250 where Bitcoin currently trades at the lower region of its three week sideways channel.

bitcoin cryptocurrency

A big move is imminent as pointed out by Mr Bollinger himself noting the big squeeze on the charts of most cryptocurrencies.

“Most crypto currencies are at or near Bollinger Band Squeeze levels. Time to pay attention.”

Sentiment is still pretty bearish though and there are more calls for a dump than a pump on CT.

In terms of dominance, Bitcoin has slipped down towards 68% according to Tradingview.com. Altcoins are all flat so it is hard to see what has increased in terms of market share.

Other BTC metrics are also bearish such as the fear and greed index which has slipped into ‘extreme fear’ with a rating of 22 today.

With several tests of resistance during the past week and a failure to break them, the bears may be on the right track again this time. The six month down trend has not been broken so it is plausible that BTC will spend the holiday season in the $6k price range.

Elsewhere on Cryptocurrency Markets

There is little to report for most of the altcoins as we enter another weekend. Total crypto market capitalization is still bearish below $200 billion and markets have shrunk by 4% since this time last week.

Volumes and volatility is dwindling for most crypto assets, Ethereum is no exception. Trading around $145 at the moment, ETH has wiped out all gains this year as it returns to January prices. Growing DeFi markets, the prospect of staking and the beginning of Serenity should spell a better year for Ethereum in 2020.

Most altcoins are trading flat at yesterday’s levels, only Tron has made a move with a 5% pump on the day. Its sister token, BTT is also having a crank today adding 14% and Zcash and BAT are also in the green.

Getting dumped on at the moment is VeChain shedding 10% following the wallet hack news.

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Why Bitcoin Price Crossing $10,000 is so Important: Top Investor Explains

For some reason or another, Bitcoin investors have long gravitated to round numbers. $1, that’s important. $100, make sure you watch that level. $1,000, all hands on deck. According to a prominent cryptocurrency investor and commentator, there’s truth to the importance of these round numbers, especially in this nascent market.

This would imply that reclamation of $10,000, then $20,000 on macro price scales will mean that Bitcoin has the fuel to shoot higher, potentially until it reaches another important round number.

Why Round Number Prices Are So Important for Crypto

In a recent podcast with Luke Martin, Su Zhu of Three Arrows Capital said that round numbers in the cryptocurrency market are extremely important. Zhu claimed that “round numbers have even more meaning in crypto [than forex] because this is what everyone thinks.”

This largely implies that Zhu believes that the leading cryptocurrency topping $10,000 will be an important moment in terms of price action analysis.

It isn’t only Su Zhu who believes that $10,000 is of utmost importance for Bitcoin to surmount.

Earlier this year, Fundstrat Global Advisors’ resident cryptocurrency analyst Tom Lee released an analysis from his firm that implied that $10,000 is the level to watch for the time being.

Fundstrat wrote in the analysis that once BTC tops $10,000, “Level 10” FOMO will grace this market, which last occurred when BTC blipped above $4,500 in late-2017. If history is any guide, the cryptocurrency market will shoot even higher once $10,000 is reclaimed on a macro scale.

As Lee wrote on Twitter earlier this year, “[$10,000] will see FOMO from those who gloated about the 90% crash in BTC… and those who saw Bitcoin dead as forever.”

There’s also Bloomberg, which wrote the following in November on the seeming importance of the barrier between four digits and five:

“Bitcoin faces solid resistance at the $10,000 level, with investors having difficulty valuing it given continuous debate on whether or not it’s an asset or a currency. For many investors, BTC will need to break that barrier for confirmation that meaningful gains could continue.”

Can Bitcoin Reach $10,000?

Speaking of Bloomberg and Bitcoin hitting $10,000, an analyst at the prominent markets research and news firm believes that it is “only a matter of time” before the leading cryptocurrency tops that key level.

Mike McGlone, senior commodities strategist at Bloomberg, last week revealed in his monthly crypto market update that he expects for Bitcoin to top the key $10,000 resistance eventually.

Firstly, he drew attention to the fact that as gold rallies, so too should Bitcoin. While the precious metal is currently trending lower, having peaked last summer in the midst of the trade war talks, the macro picture may start to favor gold (and thus Bitcoin) heading into 2020.

Also, McGlone opined that a perfect storm is building for the cryptocurrency in terms of its “basic premises” — mass adoption and a fixed supply cap. “Bitcoin is winning the adoption race among crypto assets and is becoming increasingly scarce, which favors price appreciation. Plenty can go wrong with a nascent asset, but unless the basic premises reverse, there’s a higher probability to sustain price appreciation vs. depreciation,” he wrote.

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Ethereum’s Volatility Is at Multi-Year Lows; Is a Massive Movement Imminent?

Ethereum and the aggregated crypto markets have been caught in a firm downtrend since early-November, and dwindling trading volume has resulted in ETH and other cryptocurrencies facing an ongoing period of sideways trading that has been frustrating for investors and traders alike.

This lack of volatility has especially impacted Ethereum, which is currently witnessing the lowest 60-day volatility levels seen since 2016, which may signal that a massive movement is imminent.

Ethereum Enters Tight Trading Range as Volume Dives

At the time of writing, Ethereum is trading down just under 1% at its current price of $144.55, which marks a slight decline from its daily highs of just over $146.

Over the past week, ETH has been ranging within the mid-$140 region, finding strong support at roughly $140 and strong resistance at $150.

This trading range has been growing tighter in recent times, as ETH has been stuck between roughly $142 and $145 for the past few days, and it is currently showing few signs of any major trend shift being imminent in the near-term.

This bout of sideways trading has come about concurrently with a major drop in Ethereum’s 60-day aggregated volatility, which is currently sitting at multi-year lows.

CoinMetrics, a blockchain research firm, spoke about this in a recent tweet, noting that this could mean that a big price movement is imminent.

“With $ETH’s 60d volatility falling to levels not experienced since 2016 are we finally due for some price action? Or just more of the same,” they noted while pointing to the chart seen below.

It is highly probable that any near-term ETH movement will still remain somewhat dependent on Bitcoin, as BTC has been a strong guiding force over major altcoins in recent times.

Will Fundamental Strength Help Push ETH Higher?

Although it remains unclear as to whether or not Ethereum’s low volatility will result in a massive movement, growing fundamental strength could ultimately help propel the cryptocurrency higher.

Joseph Lubin, Ethereum’s co-founder and the founder of ConsenSys, spoke about Ethereum’s strength in a recent tweet, pointing to the massive amount of ETH currently locked DeFi initiatives as one reason why the blockchain is fundamentally strong.

“Over 20M total #Ethereum accounts were created in 2019. Over $650M USD is currently locked in #DeFi. Over 4.5M $ETH was issued this year from block rewards. The @ethereum machine just keeps chugging!” He explained.

While considering Ethereum’s low volatility and bullish fundamentals, it does appear that a bullish trend could be right around the corner.

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Boris, Brexit, and Bitcoin: How the UK’s General Election Might Impact Crypto

In yesterday’s UK General Election, the British people voted for the Conservative Party to take office for another term. The pound responded with a sudden rise in value reminiscent of a Bitcoin move.

However, with the now majority Conservative party campaigning to just “get Brexit done”, the future value of both the pound and euro is anything but certain. Economic uncertainty has long been linked with rising Bitcoin interest, and there is no shortage of that in the UK at the moment.

Does Bitcoin Become More Alluring in Times of Uncertainty?

Last night’s general election in the UK represented a serious upset to political norms of the nation. Several consistently held left wing strong holds fell to the rightist Conservative Party. The result, announced this morning, will see the first majority Conservative government take power since 1992.

The Conservative’s traditional opposition in the essentially two party British system is Labour. Led by Jeremy Corbyn, a very much love him or hate him, old school socialist type, business interests would have certainly been threatened if the UK’s largest left wing party got past the post first. The markets breathed a sigh of relief  as the party of business came out a clear winner in the early hours of this morning.

Despite the sudden gain in the pound’s value, Brexit still looms and the nature of the UK’s now-as-good-as-certain departure from the European Union is anything but clear. Boris Johnson, the previous and continuing Prime Minister, campaigned and won alongside a ruthless media machine with the simple message to “get Brexit done”.

It seems likely that any exit from the European Union will see both the euro and pound devalued, at least in the short term. A particularly abrupt exit without any form of trade deal could leave the pound in a bad way for the foreseeable future. In times of such uncertainty, store of value assets become attractive.

Although Bitcoin has hardly proved itself a store of value yet, the leading digital currency does possess all the qualities of something typically highly valued – it’s finite in issuance and it’s incredibly difficult to create more of. For these reasons, Bitcoin has often been compared to gold. The only thing the digital currency lacks is the historical precedence of gold, which is something it’s working on.

It would be naive to assume that Brexit alone will encourage UK citizens to go out and buy Bitcoin in their droves. However, events like Brexit are clear symptoms of an increasingly fractured world. In a time of widespread distrust, it seems only a matter of time before a system that removes the need to trust a fallible human gains significantly in popularity. Many early Bitcoiners talk about the Greek or Cypriot banking crisis as fuelling their own interest in the digital asset. It, therefore, doesn’t seem like much of a leap to think that the threat of losing savings thanks to a badly handled Brexit will encourage more folks to explore alternatives too.

 

Related Reading: Faced with EU AML Regulations, Bitcoin Social Tipping Platform Terminates Service

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Bitcoin is Entering a Critical Junction; Here’s What Analysts are Saying

Analysts widely anticipated Bitcoin to begin incurring heightened volatility following its recent movement up to $7,500 that was instantly followed by a full retrace. Despite these expectations, BTC has remained stuck within the $7,200 region as it struggles to garner any momentum.

Analysts are now noting that the cryptocurrency may currently be at a critical junction that will determine the direction it trends in the coming weeks and months, which comes as BTC finds itself caught within a tight trading channel.

Bitcoin Caught in Ascending Channel as Analysts Look Towards Next Big Movement

At the time of writing, Bitcoin is trading up just under 1% at its current price of $7,275, which marks an extension of the bout of sideways trading that it has been experiencing over the past week.

Earlier this week, BTC incurred a swift and decisive surge that sent its price all the way up to $7,500 on major trading platforms like BitMEX, although its inability to maintain this momentum led it to fully retrace all of these gains.

The candle wick that resulted from this movement signals that mid-$7,000 region is a strong resistance level for the cryptocurrency and led many analysts to expect further short-term losses for the cryptocurrency.

In spite of this, BTC has been able to hold steady within a tight trading channel, which may continue to hold strong in the near-term.

Scott Melker, a popular cryptocurrency analyst on Twitter, spoke about this in a recent tweet, noting that BTC is “channel surfing” while pointing to the chart below.

Analyst: BTC Could Be Nearing a Critical Junction 

As for where this channel could lead Bitcoin’s price, one analyst is noting the where BTC closes in the coming hours could offer significant insight into where it heads next, as it is currently at a “critical juncture.”

“$BTC: Critical juncture here, plays to be made depending on the outcome of the next 1H close. Close above and I’ll look for longs, below and I think we move south. At the moment it is looking like a rejection… let’s see,” HornHairs, a popular cryptocurrency analyst on Twitter, explained.

The coming weekend trading period may elucidate whether Bitcoin will be able to gain some upwards momentum and end the year on a high note, or if the ongoing downtrend will extend into the new year.

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Faced with EU AML Regulations, Bitcoin Social Tipping Platform Terminates Service

A popular service for tipping social network users has announced that it will cease functioning on New Year’s Eve. BottlePay links social accounts with Bitcoin wallets to allow users to reward each other for agreeable content.

The news comes in response to EU anti-money laundering regulations. BottlePay has confirmed that users will still be able to withdraw funds up until the end of the year.

Regulations Force Bitcoin Tipping Tool to Call it Quits

According to a press release published earlier today by BottlePay, the social Bitcoin tipping service, will cease to exist at the end of the year. The company cited incoming EU money laundering regulations as the reasoning behind the sudden termination.

The custodial wallet provider is based in the UK and since the nation is in Europe, for now at least, it would need to comply with new anti-money laundering regulations coming in on January 10, 2020. BottlePay claims that the measures would require it to demand too much information from its users to continue offering a service comparable to that it currently does. Rather than transform it into something barely recognisable, the team has decided to call it quits.

Those behind the service write:

“The amount and type of extra personal information we would be required to collect from our users would alter the current user experience so radically, and so negatively, that we are not willing to force this onto our community.”

BottlePay says it has already terminated all its tipping bots on Twitter, Reddit, Telegram, and Discord. It is also not accepting new signups or deposits as of the time of the announcement. Any funds that have already been sent but not claimed will be returned to the sender within a week.

For those already using the service, withdrawals will remain online until 13:00 GMT on December 31. BottlePay will donate any funds still in wallets after this time to The Human Rights Foundation.

The company assures its existing users that any Bitcoin held in wallets is perfectly safe. It encourages its users to take down any payment page links from social profiles, to withdraw funds, and to uninstall the browser extension.

This is not the first time the evolving regulatory landscape has left cryptocurrency companies in a difficult position. When faced with a similar predicament, the once-anonymity-focused exchange platform ShapeShift alienated many of its users by introducing “know your customer” checks and identification verification.

Evidently, BottlePay is keen to not disappoint its users in such a way. It writes:

“… we feel confident we can close Bottle Pay with our heads held high, knowing that we always acted with the well being of our users foremost in our minds.”

 

Related Reading: Stablecoins Could Be Crypto’s True Killer App

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