Bitcoin Not Giving a Big Enough Hit as ‘Gateway Drug’

Interest in Bitcoin hit its high point leading up to its own high of $20,000 in the middle of December last year. Interest peaked, not only in investing circles, but also in the mainstream as Bitcoin became the buzzword on everyone's lips.

This adoption was championed by Bitcoin as it welcomed millions of users to the cryptocurrency community, as expressed in Coinbase’s figures alone. However, in this fast paced ecosystem, Bitcoin is not enough to hold the attention of this vastly diverse community. So, while it may be the ideal coin to get people hooked on cryptocurrencies, once they are in and settled, there is time to seek out a multitude of other coins that are better suited to their needs or beliefs.
 

The draw of big growth

Bitcoin’s biggest draw was the incredible returns it was offering as it rallied from 2,000 percent in 12 months. This phenomenal growth continued to increase interest in the currency, and that sparked even further growth in this massive hype cycle. It has been correlated before that searches for on Google for Bitcoin are closely related to its growth – a phenomenon known as the ‘Satoshi Cycle’. In the lead up to December’s high, the Satoshi Cycle was in full effect as Google trends showed some interesting figures.

Nicholas Colas, a pioneering Bitcoin analyst in the world of traditional investments, has taken this correlation very seriously and states that it plays a big part in his predictions. "Going into December, [searches] skyrocketed," Colas said on CNBC’s Fast Money. He added that the total number of Bitcoin Google searches worldwide tripled that month:

"You saw that correlates to the total increased number of wallet growth, which doubled in December from approximately 5 percent to 10 percent as Bitcoin rallied.”
 

Already hooked

However, taking this metric into consideration, it could be argued that the new wave of adopters are now starting to disperse and find their way to other coins that are more suited to their individual needs. It makes sense that as people become educated and learn more about options in the crypto community that they begin to diversify and pick out their favourite coins to invest in. This often leads to money moving away from Bitcoin and into Altcoins.

Bitcoin, being the dominant, most adopted and scene-leading coin, will continue to be the ‘gateway drug’ of the community, but it is finding it harder to hang on to total support and dominance.

These sentiments are expressed by Colas, who adds:

"Bitcoin is considered the gateway drug to all cryptos and it has acted exactly that way. Right now [the Google search data] is telling me there's not really that next leg up in Bitcoin because there's not that interest that leads to wallet growth that leads to price appreciation."
 

Proof?

Colas tries to justify this position by explaining how Ethereum has been the only coin that has fared relatively well in the top echelons of the CoinMarket Cap:

“Some of the movement in Ethereum, which has traded much better [in January], is just money which is being pulled out of Bitcoin."

However, it is important to note that Bitcoin’s price fluctuations and movements are still heavily linked to all other coins. The saying that: ‘the tide moves all boats’ is still true in the cryptocurrency market with Bitcoin essentially being the tide. When Bitcoin is up, most coins follow, and when it is down, the same red graphs appear to follow suit across the board.

 

Author Darryn Pollock

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

Bitcoin SUCCESS sees Australia pledge creation of price stable gold-backed cryptocurrency

Bitcoin SUCCESS sees Australia pledge creation of price stable gold-backed cryptocurrency

A NEW cryptocurrency backed by gold is set to be made by Australia’s largest gold refinery after the Chief Executive announced plans to increase investment in the country’s metals.

Perth Mint have said they are hoping to capitalise on the rise the trading of digital currencies as a way to help increase interest in investing in Australia.

A number of cryptocurrencies have risen in popularity over the past 12 months with bitcoin, Ripple, and Ethereum all seeing surges.

Richard Hayes, Chief Executive of Perth Mint said: “I think as the world moves through times of increasing uncertainty, you’re seeing people look for alternate offerings.

“And you’re seeing this massive flow of funds into the likes of Bitcoin at the moment because people are looking for something outside of the traditional investments.”

He added that the proposed online money would “bring investors back to precious metals after a boom in alternative investments such as cryptocurrencies.”

Bitcoin was the original virtual currency and since it first mined in 2009, has seen its value surge and reach an all-time high of more than $17,000 (£12,000) in December 2017.

However, the value of bitcoin has plunged since then and last week saw its value drop to just £8,300.

Mr Hayes argued the decision of the mint to develop a gold-backed currency, similar to how physical currencies have previously been linked in the past, would help bring greater price stability to those investing in the digital money.

He claimed his plans would mean people could trust that the cryptocurrency was actually worth a physical amount.

He said: “With a crypto-gold or a crypto-precious metals offering, what you will see is that gold is actually backing it.

“So it will have all the benefits of something that is on a distributed ledger that settles very, very quickly, that is easy to trade, but is actually backed by precious metals, so there is actually something behind it, something backing it.”

The Perth Mint are not the first to announce their intentions of creating a currency linked to gold.

Last year a cryptocurrency linked to gold called Onegram was announced by finance firm Shariah-compliant , leading to significant media attention.

However, sale of the currency flopped, with less than 0.14 per cent of the company’s target being sold in the first phase of the initial coin offering.

Venezuela has also announced plans to launch a cryptocurrency, called the Petro, that will be supported by gold.

 

Author DAN FALVEY UPDATED: 02:09, Sun, Jan 28, 2018

 

Posted by David Ogden Entrepreneur
David ogden cryptocurrency entrepreneur

How Chinese Bitcoin Buyers Are Getting Around Government Ban

How Chinese Bitcoin Buyers Are Getting Around Government Ban

Chinese citizens are still investing in Bitcoin and the cryptocurrency market despite the government’s heavy crackdown.

In September 2017, Chinese cryptocurrency exchanges BTCC China, Huobi and OKCoin were ordered by the government to shut down their businesses. At one point, executives of the three cryptocurrency exchanges were prevented from leaving the country, due to a government investigation into local cryptocurrency exchanges.

Three months later, in December of 2017, China’s three largest cryptocurrency exchanges relocated their businesses to Hong Kong. BTCC China, Huobi and OKCoin rebranded to BTCC, Huobi Pro and OKEx, respectively. They intended to address the rapidly growing demand from Hong Kong-based investors.

Shortly after their move, the three trading platforms started to see daily volumes from Chinese investors grow exponentially. Somehow, Chinese investors were managing to circumvent Chinese trading restrictions by using Hong Kong-based exchanges. How is this possible?

In Hong Kong, it is relatively easy for investors to set up businesses. With less than $1,000, businesses can be legally created, which allows the opening of business bank accounts at Hong Kong-based financial institutions. Beginning in December 2017, many Chinese investors moved their funds from their Chinese bank accounts to Hong Kong bank accounts and started to trade cryptocurrencies more actively, effectively bypassing China’s restrictions.

But, unlike China, Hong Kong has a substantially lower supply to meet the growing demand. While China is home to major miners like Bitmain, Hong Kong does not produce much Bitcoin and other cryptocurrencies. As such, premiums in the Hong Kong cryptocurrency market increased, surpassing even that of the South Korean market. On January 18, when the global average price of Bitcoin was around $11,500, Bitcoin was being traded at above $13,000 on Huobi Pro.

Krystal Hu, a Hong Kong-based finance journalist, noted that traders outside of China have also started to take advantage of the arbitrage opportunity presented by the Hong Kong market. For instance, on January 18, the price of Bitcoin on Coinbase was $11,800. Purchasing Bitcoin from Coinbase and selling it on any Hong Kong-based market would have generated $1,200 in profit.
 

Chinese Government Concerned

Hong Kong’s exchanges have also integrated widely-used fintech applications in China such as Alipay and Tencent’s WeChat Pay. Alipay is a $60 billion fintech app that is used by more than 50 percent of mobile users. WeChat Pay, which was only used by seven percent of mobile users in 2014, is now being used by more than 40 percent of mobile users in China.

The integration of the two fintech payment networks has increased the accessibility of Hong Kong-based cryptocurrency OTC exchanges for Chinese investors, easing the process of investing in the cryptocurrency market.

To prevent Chinese investors from buying digital currencies, the Chinese government and the People’s Bank of China (PBoC), have asked local banks to disclose any suspicious transactions linked to Hong Kong-based markets. However, even this action will not be able to prevent Chinese investors from accessing Hong Kong-based markets, due to apps such as Alipay and WeChat Pay.

 

Author Joseph Young

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

Bitcoin Alternatives - Ethereum Vs Litecoin Vs Verge Vs Ripple Vs Zcash

Bitcoin Alternatives – Ethereum Vs Litecoin Vs Verge Vs Ripple Vs Zcash

After bitcoin, ripple is one of the largest cryptocurrencies by market capitalization

The bitcoin prices may have stabilized but, they still hover around $13,000, a price far too high for a lot of potential investors. The exorbitant price of bitcoins dissuaded hundreds of thousands of potential investors who missed the 2017 rally. The bitcoin prices had jumped in the last month of 2017 in run up to the launch of futures trading by CBOE (Chicago Board of Options Exchange) and CME Group this month. After the futures trading launch, the prices have more or less fallen from the peak of $19,666, a feat achieved on December 17. However, there are numerous cryptocurrencies which are still not as popular and can be bought owing to their affordability.

Following are some of the bitcoins' smaller rivals

Ripple (XRP): Ripple, one of the largest cryptocurrencies by market capitalization, claims to offer frictionless experience to its customers to send money globally using the power of blockchain. By joining Ripple, financial institutions can process their customers' payments anywhere in the world instantly. The Ripple woos banks and payment providers to use the cryptocurrency for reducing costs. Ripple's price had surged $1 for the first time on December 21.

 

Litecoin (LTC): The market capitalization of litecoin rose from $1 billion in November 2013 to $4.6 billion. What makes a litecoin appealing is that the price of a litecoin (at $277) is still affordable for many such investors, at least as of now. Another thing that distinguishes litecoin from a bitcoin is that the litcoin takes relatively less processing speed (2.5 minutes) unlike bitcoin that takes around 10 minutes for one block. The market capitalization of litecoin is over $15 billion.

 

Ethereum: Ethereum is a distributed public blockchain network. Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher. Bitcoin offers one particular application of blockchain technology, a peer to peer electronic cash system that enables online Bitcoin payments, the Ethereum blockchain focuses on running the programming code of any decentralized application. The value token of the Ethereum blockchain is called ether. The price of Ethereum is over $700.

 

Verge (XVG): Verge currency is a cryptocurrency that improves upon the original Bitcoin blockchain and aims to meet the primary purpose of providing individuals and businesses with a fast, efficient and decentralized way of making direct transactions while maintaining personal privacy, says the Verge currency's website. Verge makes it possible to engage in direct transactions quickly, efficiently and privately. With Verge currency, businesses and individuals have flexible options for sending and receiving payments. Verge uses multiple anonymity-centric networks such as Tor and 12P. The IP addresses of the users are obfuscated and the transactions are completely untraceable. Price of one verge is around $0.1583 on Saturday while the total market cap is over $2.2 billion.

 

Zcash (ZEC): While the bitcoin blockchain contains records of the participants in a transaction, as well as the amount involved, Zcash's blockchain shows only that a transaction took place, and not who was involved or what the amount was. Zcash is an open-source protocol because of which, the Zcash Company does not control it (including controlling the mining or distribution of it), not does it have any special access to private or shielded transactions. Just like anyone else, the Z cash Company only has the ability to see a private or shielded transaction if it is a party to that transaction or someone provides it with the correct view key. Zcash is valued at $518.

 

David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

 

Bitcoin Price Technical Analysis for 12/27/2017 – Rebound Underway?

Bitcoin Price Technical Analysis for 12/27/2017 – Rebound Underway?

Bitcoin price is slowly starting to trend higher once more, possibly rebounding from the slide in the previous week.

Bitcoin Price Key Highlights

Bitcoin price appears to be recovering from its pre-Christmas slump, forming higher highs and higher lows again.

Price is trading inside an ascending channel pattern and is currently testing the resistance.

A pullback to support could be due and using the Fib retracement tool shows the potential inflection points.

Bitcoin price is slowly starting to trend higher once more, possibly rebounding from the slide in the previous week.
 

Technical Indicators Signals

The 100 SMA is still below the longer-term 200 SMA on this time frame, so the path of least resistance is to the downside. This means that the selloff is more likely to resume than reverse.

However, the gap is narrowing to signal weakening bearish momentum. If an upward crossover materializes, bullish pressure could kick into high gear and allow the uptrend to continue.

Stochastic is also on the move down, though, so buyers might be taking it easy. This could allow bitcoin price to retreat to the channel support at $14,000 near the 61.8% Fibonacci retracement level. A shallow pullback could find a floor at the 38.2% Fib closer to $15,000 and the mid-channel area of interest.

RSI has plenty of room to head south, so bitcoin price might follow suit until both oscillators hit oversold levels and turn back up.

Bitcoin Price Technical Analysis for 12/27/2017 – Rebound Underway?

Market Factors

Analysts are attributing the recent climb to improved access to buying cryptocurrencies. However, Coinbase suffered a backlog of outgoing transactions earlier on and the issue remains unresolved.

“Due to high volume, we are experiencing a backlog of outgoing transactions for BTC and ETH. … Outgoing transactions of BTC and ETH may be delayed by several hours.”

Event risks involve additional network upgrades or “hard forks” but rising investor interest appears to have been enough to keep bitcoin price supported. After all, bitcoin futures on the CBOE and CME have allowed access to more institutional and retail investors

Still, the dollar could prove to be a worthy opponent as the signing of the tax bill into law would be very positive for the US economy.

 

Author Sarah Jenn 4:53 am December 27, 2017

 

Posted by David Ogden Entrepreneeur
David ogden Cryptocurrency Entrepreneur

Watch out for a correction in bitcoin after a parabolic rise

Watch out for a correction in bitcoin after a parabolic rise

  • Cryptocurrencies are suitable for short-term trading

  • Bitcoin futures have limits on expiry

  • The bitcoin trend shows room for a 50% correction

Bitcoin trading, and the capital allocated to it, remains a very small part of the multi-trillion dollar equity markets. It is an even smaller part of the much, much larger derivatives market.

The key problem with bitcoin and other cryptocurrencies is that they are fiat currencies in the true sense of the word. A fiat currency relies on investors confidence for its value. A fiat currency is not backed in gold or some other asset. Most world currencies are fiat currencies, but they are backed by sovereign states. It is rare for a sovereigns States to default on debt which in turn leads to currency collapse.

Cryptocurrencies are the currency of choice for money laundering, hackers, terrorists and criminals. Governments will not stand by and allow these cryptocurrencies to evade the regulations around these activities. There is a high risk that sovereign executive action will destroy the value of these bitcoins.

Legitimacy

Cryptocurrencies do not have the support of sovereign states. In fact some sovereign states – China – refuse to recognize these as legitimate currencies.

This is the most significant risk in cryptocurrency trading. At any time a sovereign state like the United States may ban or prohibit cryptocurrency use and trading and thus render all contracts immediately worthless. This makes the cryptocurrencies suitable for short-term trading with exceptionally good risk management.

The listing of bitcoin contracts on Chicago futures exchanges does not legitimize Bitcoin. These contracts can only be cash settled in U.S. dollars. The contract cannot be converted to bitcoins on expiry. This gives an indication of the level of confidence in the currency. Creating a bitcoin futures contract legitimizes and regulates the trading activity, but it does not legitimize bitcoin as a currency.

CME, the world's largest futures exchange, launched its bitcoin futures contract this week under the ticker "BTC." The front-month contact opened above $20,000. The previous week the Chicago Board Options Exchange launched it own futures contract with the front-month topping $18,000.

Cryptocurrencies are also tracked on CoinDesk, which monitors prices from digital currency exchanges Bitstamp, Coinbase, itBit and Bitfinex.

The trend

This trend is a parabolic curve. The trend is best described using a segment of an ellipse, mistakenly called a parabolic curve
 

Once the three anchor points are set, the position of the curve does not change. The trend starts off slowly then accelerates very rapidly until the activity on the price chart is almost vertical.

Prices will soon move inevitably to the right of the curve. This usually signals a rapid retracement of 50% or more.

History

Alexandre Dumas wrote a book, The Black Tulip, which should be read by any person thinking about trading bitcoins. If anything, the situation is worse now that Dumas describes in his day when tulip futures were actively traded on the Amsterdam stock exchange.

Bitcoins will not impact the stock market other than to remove some speculative capital from the equity market. However the amounts are small when compared with overall market activity.

 

Author Daryl Guppy CNBC

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

Analyst who predicted bitcoins rise now sees it hitting $300,000-$400,000

Analyst who predicted bitcoin's rise now sees it hitting $300,000-$400,000

  • Ronnie Moas in July put a $5,000 price target on bitcoin when it was at $2,600
  • The founder of Standpoint Research now sees the cryptocurrency rising by another 500 percent

Bitcoin will surge past $20,000 and continue its meteoric march into six figures, according to independent research analyst Ronnie Moas.

"Bitcoin is already up 500 percent since I recommended it in the beginning of July, and I'm looking for another 500 percent move from here," said Moas, the founder of Standpoint Research, a self-described "one-man operation" based in Miami.

Over the summer, Moas put a $5,000 price target on bitcoin for 2018. At the time, the digital currency was trading at just $2,600. Since then, it has surged to $18,168 as of Monday, according to prices tracked on Coinbase.

"The end-game on bitcoin is that it will hit $300,000 to $400,000 in my opinion, and it will be the most valuable currency in the world," Moas told CNBC's "The Rundown."

"I don't know how much gold there is in the ground, but I know how much bitcoin there is, and in two years there will be 300 million people in the world trying to get their hands on a few million bitcoin."
-Ronnie Moas, founder, Standpoint Research

The analyst's comments came as the CME, the world's largest futures exchange, launched its own bitcoin futures contract. The Cboe did the same earlier this month.

His aggressively bullish call — a near-$380,000 dollar appreciation on today's prices — is based on the idea that since only 21 million bitcoin can ever exist. Increasing demand for the digital currency will naturally drive its price up, he said.

"I don't know how much gold there is in the ground, but I know how much bitcoin there is, and in two years there will be 300 million people in the world trying to get their hands on a few million bitcoin. This mind-boggling supply and demand imbalance is what is going to drive the price higher," Moas said.

Not everyone agrees

Moas said he believes his price target is a conservative call, but others disagree.

"We think that it's risky," Vasu Menon, vice president of Wealth Management at Singapore-based bank OCBC, told CNBC.

"I don't see strong fundamental drivers for this bitcoin rally," he said.

But Moas says the party is just getting started.

"I look at bitcoin the same way I look at Amazon," he said. "The way to play Amazon for the last 15 years was to buy it, hold it, and add on the dips. That's exactly the way I think people should be playing bitcoin."

Author Dan Murphy Correspondent, CNBC

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

Bitcoin Price Weekly Analysis – BTC/USD Upside Drift Above $20,000

Bitcoin Price Weekly Analysis – BTC/USD Upside Drift Above $20,000

Bitcoin price is surging higher towards $20,000 against the US Dollar. BTC/USD might soon break the $20k level and gain further traction in the near term.

Key Points

Bitcoin price is gaining pace once again and is currently trading above $18,000 against the US Dollar.

There is a monster bullish trend line forming with support at $17,000 on the 4-hours chart of BTC/USD (data feed from SimpleFX).

The pair is moving higher and it might soon break the $20,000 level for more gains in the near term.

Bitcoin price is surging higher towards $20,000 against the US Dollar. BTC/USD might soon break the $20k level and gain further traction in the near term.
 

Bitcoin Price Trend

There were nasty gains in bitcoin price above the $16,000 level against the US Dollar. After a major correction, the price found support above $15,000. Later, buyers gained momentum and were able to push the price above the $17,000 level. It opened the doors for more gains and the price was able to trade to a new all-time high above $19,000. The recent high was $19,426 and it seems like the current upside move is far from over.

During the upside move, the price was able to break a major connecting resistance trend line at $18,000 on the hourly chart. The current price action is positive above $17k and it seems like the price might continue to move higher. On the downside, an initial support is around the 23.6% Fib retracement level of the last wave from the $15,590 low to $19,426 high. Moreover, the broken trend line at $18K could act as a strong support in the near term.

Moreover, there is a monster bullish trend line forming with support at $17,000 on the 4-hours chart of BTC/USD. Therefore, the current trend is very positive and the pair might accelerate above $20K in the near term.

Looking at the technical indicators:

4-hours MACD – The MACD is gaining momentum in the bullish zone.

4-hours RSI (Relative Strength Index) – The RSI is reaching the overbought levels, but with no signs of a major correction.

Major Support Level – $17,000

Major Resistance Level – $20,000

 

Author: Aayush Jindal 6:00 am December 17, 2017

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

 

A bubble We don't even know how to value Bitcoin

A bubble? We don’t even know how to value Bitcoin

Bitcoin is a “speculative mania” according to the governor of the Reserve Bank of Australia. But it’s not so easy to say that Bitcoin is a bubble – we don’t know how to value it.

Recent price rises (close to $18,000 in the past three months) may be too great and can’t continue. But the Bitcoin market is only just maturing as an investment and as a currency, and so it may still have room to grow.

A bubble is when the price of an asset diverges from its “fundamentals” – the aspects of an asset that investors use to value it. These could be the income that can be earned from a stock over time, a company’s cash flow, the state of a country’s economy, or even the rent from property.

But Bitcoin does not pay out profits (like shares) or rent (like property) and is not attached a national economy (like fiat currencies). This is part of the reason why it is hard to tell what the underlying value of Bitcoin is or should be.

In the search for fundamentals some have suggested we should look at the supply of Bitcoins in the market (which is regulated by the technology itself), the number of Bitcoin transactions through the market, or even the energy consumed by Bitcoin miners (the computers that validate transactions and are rewarded with Bitcoins).

Diverging from fundamentals

If we take a close look, we can see how the price of Bitcoin may be diverging from these fundamentals. For instance, it is becoming less profitable to be a miner, especially as the energy required increases. At some stage the cost may exceed the price of Bitcoin, making the network less worthwhile to both mine and invest.

Bitcoin may be the best known cryptocurrency but it is also losing marketshare to other cryptocurrencies, such as Ethereum and Litecoin. Bitcoin currently accounts for 59.4% of the total global cryptocurrency market but at the beginning of 2016 it was 91.3%. Many of these other cryptocurrencies have more functionality than Bitcoin (such as Ethereum’s ability to execute smart contracts), or are more efficient and use less energy (such as Litecoin).

Government policy, such as taxation or the establishment of national digital currencies, may also make it riskier or less worthwhile to mine, transact or hold the cryptocurrency. China’s ban on initial coin offerings earlier this year reduced the value of Bitcoin by 20% in 24 hours.

Without these fundamentals the price of Bitcoin largely reflects speculation. And there is some evidence that people are simply buying and holding Bitcoin in the hope it will keep rising in value (also known as greater fool investing). Certainly, the cap on the total number (21 million) of Bitcoins that can exist makes the currency inherently deflationary – the value of the currency relative to goods and services will keep increasing even without speculation and so there is a disincentive to spend it.

Bitcoin still has room to grow

Many big investors – including banks and hedge funds – have not yet entered into the market. The volatility and lack of regulation around Bitcoin are two reasons stopping these investors from jumping in.

There are new financial products being developed, such as futures contracts, that may reduce the risk of holding Bitcoin and allow these institutional investors to get in.

But Bitcoin futures contracts – where people can place bets on the future price of stocks or markets – may also work against the price of Bitcoin. Just like gamblers place bets on horse races rather than buying a horse, investors may simply buy and sell the futures contracts rather than Bitcoin itself (some contracts are even settled in cash, rather than Bitcoin). All of this could lead to less actual Bitcoin changing hands, leading to less demand.

Although the rush to invest is apparently encouraging some people to take out mortgages to buy Bitcoin, traditional banks won’t lend specifically for that purpose as the market is too volatile.

But it is not just on the finance side that the Bitcoin market is set to expand. More infrastructure to support Bitcoin in the broader economy is rolling out, which should spur demand.

Bitcoin ATMs are being installed in many countries, including Australia. Bitcoin lending is emerging on peer-to-peer platforms, and new and more regulated marketplaces are being created.

Many companies are accepting Bitcoin as payment. That means that even if the speculation dies down, Bitcoin can still be traded for some goods and services.

And finally, although the fundamentals of Bitcoin are still up for debate, when it comes to transaction volume through the network there appears to be a lot of room for growth.

It’s good to remember that people have been calling Bitcoin a bubble for a long time, even when the price was just US$35 in 2013.

In the end, this is uncharted territory. We don’t know how to value Bitcoin, or what will happen. Historical examples may or may not apply.

What we do know is that the technology behind most cryptocurrencies is enabling new models of value transfer through secure global consensus networks and that is causing excitement and nervousness. Investors should beware.

Author: Alicia (Lucy) Cameron and Kelly Trinh for the Conversation

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

Bitcoin futures suggest breakneck rise in price to slow

Bitcoin futures suggest breakneck rise in price to slow

NEW YORK/LONDON (Reuters) – Newly launched bitcoin futures on Monday suggested that traders expect the cryptocurrency’s blistering price gains to slow in the coming months, even as it blasted above $17,000 to a fresh record high in the spot market.

Chicago-based derivatives exchange Cboe Global Markets launched the futures late on Sunday, marking the first time investors could get exposure to the bitcoin market via a large, regulated exchange.

The one-month bitcoin contract <0#XBT:> opened at 6 p.m. local time (2300 GMT) on Sunday at $15,460. By late afternoon on Monday in New York, it was trading at $18,650, roughly 8 percent above bitcoin’s spot price of $16,900 on the Bitstamp exchange.

Bitcoin earlier hit a record high of $17,270.

Its steep gains and rapid rise have attracted investors around the world as well as intense scrutiny from government regulators, which is the very opposite of what its creators wanted when it first launched bitcoin more than eight years ago.

“The bitcoin founder should be horrified seeing it rise so quickly, as any serious focus on it and its recent explosive move higher will soon end its freedom,” said John Taylor Jr, president and founder of research firm Taylor Global Vision in New York.

Taylor believes that based on his charts, bitcoin has not yet peaked, but as soon as the “upmove ends, it will crash.”

Given bitcoin has almost tripled in value over the past month, and was up more than 15 percent on Monday alone, the futures pricing suggested investors see price increases moderating.

Bitcoin futures were already offered on some unregulated cryptocurrency exchanges outside the United States, but backers said the U.S. market debut would confer greater legitimacy on the volatile cryptocurrency and encourage its wider use.

The CME Group (CME.O) is expected to launch its futures contract on Dec. 17.

VOLATILITY CONCERNS

Although there are hopes that the futures will draw in new investors, most fund managers at larger asset managers and institutional investors said bitcoin remains too volatile and lacks the fundamentals that give other assets value.

“There’s no place for bitcoin in a multi-asset portfolio given the very high volatility,” said Robeco Chief Investment Officer Lukas Daalder.

The two-month contract was trading at $18,750, an 11 percent premium over the spot price, while the three-month contract was changing hands at $18,140, a roughly 12 percent premium.

While modest when compared with bitcoin’s 270 percent increase over the past three months and 230 percent rise in the last two months, those levels still indicated a lack of large “short” positions betting against bitcoin.

“Anyone, especially a professional trading outfit, would be crazy to actually short sell this bull market,” said Nick Spanos, founder of Bitcoin Center NYC. “But just because it doesn’t happen on day one doesn’t mean it won’t in the future.”

Bitcoin was up more than 1,600 percent so far in 2017, having started the year at less than $1,000.

MARCH TOWARDS LEGITIMIZATION’

As of early afternoon trading in New York, 3,951 one-month contracts had changed hands, meaning around $73.1 million had been notionally traded. That compares with daily trading volumes of more than $21.5 billion across all cryptocurrencies, according to trade website Coinmarketcap.

There had been speculation that the futures launch would trigger more gyrations in the market. But while volatile compared with traditional currencies or assets, the rise on Monday was relatively tame for bitcoin.

Bitcoin surged more than 40 percent in 48 hours last week, before tumbling 20 percent in the following 10 hours.

“(Bitcoin futures) will speed up the march towards legitimization of an asset class that only a few years ago many law enforcement agencies would have argued had limited legitimate reasons for people to use,” said Jo Torode, a financial crime lawyer at Ropes & Gray in London.

The futures are cash-settled contracts, allowing investors exposure without having to hold any of the cryptocurrency.

The futures are based on the auction price of bitcoin in U.S. dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs and brothers Cameron and Tyler Winklevoss.

 

DRAMATIC GAINS

Bitcoin was set up in 2008 by an individual or group calling themselves Satoshi Nakamoto, and was the first digital currency to successfully use cryptography to keep transactions secure and hidden, making traditional financial regulation difficult if not impossible.

Central bankers and critics of the cryptocurrency have been ringing the alarm bells over its surge in price and other risks such as whether the opaque market can be used for money laundering.

“It looks remarkably like a bubble forming to me,” the Reserve Bank of New Zealand’s Acting Governor Grant Spencer said on Sunday.

Somebody who invested $1,000 in bitcoin at the start of 2013 would now be sitting on around $1.2 million.

Heightened excitement ahead of the launch of the Cboe futures gave an extra kick to the cryptocurrency’s scorching run this year.

The launch has so far received a mixed reception from big U.S. banks and brokerages.

Several online brokerages, including Charles Schwab Corp (SCHW.N) and TD Ameritrade Holding Corp (AMTD.O), did not allow trading of the new futures immediately.

The Financial Times reported on Friday that JPMorgan Chase & Co (JPM.N) and Citigroup Inc (C.N) would not immediately clear bitcoin trades for clients.

Goldman Sachs Group Inc (GS.N) said on Thursday it was planning to clear such trades for certain clients.

 

Additional reporting by Chuck Mikolajczak and John McCrank in NEW YORK; Michelle Chen in HONG KONG and Helen Reid in LONDON; Graphics by Ritvik Carvalho in LONDON and Reuters Graphics team; Editing by Meredith Mazzilli

 

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur