Ep26: Weekly Cryptocurrency News 12/19/18

Consensus Network Weekly Cryptocurrency News 12/19/18

Cryptocurrency Market Capitalization: $125 Billion

Bitcoin Price (Coinbase): $3791

Crypto Come Back or Dead Cat Bounce?

Bitcoin was up just under 7 percent this week. According to theblockcrypto.com, senior market analysts believe that this might be the result of traders closing out short positions.

According to Math Greenspan of eToro, “Closing short sell positions creates an upward pressure on prices. Evidence: BCH is up the most.” BCH or Bitcoin Cash has proven itself to be BTrash over the past month.

Frankly, there is NO other reason for this rally right now. In fact, the global markets themselves are shaky. I do not subscribe to the idea that bitcoin is yet an uncorrelated asset.

In times of uncertainty, people sell off speculative assets. Most of the world views bitcoin and especially other cryptocurrencies that way.

My vote: dead cat bounce. There is no reason for a recovery right now. 

Is the Bear Market Scaring Off Institutional Money?

According to Bloomberg, JP Morgan analysts believe that the protracted cryptocurrency bear market is driving away institutional interest.

The report sites decreasing interest in the open contracts on bitcoin futures at the Chicago Board of Options Exchange. Last month was apparently the lowest level of interest since the futures trading began in December of 2017.

A similar sentiment was recently reported by Coinshares CSO Meltem Demirors. 

In my view, that is what makes this crash “different”. Many crypto enthusiasts boast about seeing these kinds of corrections several times and not being phased by them.

However, we were on the precipice of seeing bitcoin go mainstream. The crash, mainly triggered by a ridiculous battle between bitcoin cash rivals has hurt the ecosystem at large and I suspect will delay an ETF and other advancements of bitcoin within the Wall Street Ecosystem.

Startup to Focus on Accepting Lightening Network Merchant Payments

OpenNode, a startup backed by Tim Draper, raised $1.25 million to help build a new bitcoin payment platform that focuses on ease of use.

The software essentially makes it very easy for merchants to accept bitcoin. What makes it different from Bitpay and Coinbase Commerce is that it allows for merchants to accept bitcoin through the lightning network— a second layer that allows for cheap instantaneous transactions of bitcoin off-chain. You can learn more about lightening network on our recent interview with Samson Mow of Blockstream.

I love the technology and it will be interesting how it plays out. I’m also interested in understanding how bitcoin taxes will be paid if it is actually used for transactions. In other words, when you pay someone with bitcoin that has gone up in value, will that be a taxable event. 

If you pay someone in gold, it is a taxable event. This could be a problem for mass adoption of bitcoin as a payment system in the US.

Ep24: Weekly Cryptocurrency News 12/12/18

Consensus Network Weekly Crypto News 12/12/18

Cryptocurrency Market Cap: $111 Billion

Bitcoin Price (Coinbase): $3463

SEC Decision on Bitcoin ETF Set for February

The Securities and Exchange Commission (SEC) has postponed their decision on a bitcoin ETF again to a final deadline of February 27, 2019.

The ETF in question is the one everyone was excited about because of the sponsors, the Chicago Board of Options Exchange (CBOE) and VanEck SolidX. 

The big issue of concern voiced repeatedly by the SEC is that the market is exposed to manipulation and that not enough safeguards have been put into place.

Here’s the deal—it ain’t going to happen. That’s my prediction. The SEC is going to error on the conservative side. A lot of people have lost a lot of money lately and there is no rhyme or reason to the movement of bitcoin price right now. That makes market manipulation an easy argument to make.

That said, all markets are manipulated to some extent—especially the commodity markets that bitcoin would fall under.

I am convinced that this ETF will not get through by the deadline. I think that the SEC is seeing this market grow in real time and infrastructure getting put in place for it to become more transparent. But bitcoin is not ready for prime time…yet. 

I hate to say this because I, like so many others, was so optimistic about this ETF going through virtually guaranteeing the existence of bitcoin for the next 100 years.

I still think it will happen but I would not get your hopes up for it to happen in the first quarter of this year as some of my fellow podcasters and newsletter writers have predicted. On the other hand, there is plenty of other institutional movements in bitcoin to look forward to including the launch of Bakkt in January and Fidelities involvement that could prove to be even more important. 

Be ready for winter to last a while folks.

BlockFi raises $4 million to Help with Crypto Credit Cards

BlockFi, who’s founder and CEO Zac Prince was previously featured on Consensus Network scored another round of investments from some big money investors including Fidelity.

Part of the funds will be used to build out products including a crypto backed credit card and potentially a credit card that offers bitcoin rewards instead of miles or cash back.

BlockFi is also planning to offer an interest earning savings account for cryptocurrency. Of note, despite the bear market, BlockFi has grown substantially year over year activity. 

I look at players like Fidelity still getting entrenched in this market and still see this as long term Bullish for Bitcoin. 

Coinbase to Pivot Towards More Alt Coins 

Coinbase is looking to add 31 new cryptocurrencies to its fiat exchange. Notably the list includes EOS, which ought to be given it is the primary competitor of Ethereum, and XRP. Now XRP (AKA Ripple’s cryptocurrency) is somewhat controversial because there is a strong case that it is a security so most exchanges that care about US regulatory laws are not really getting it involved in their projects—Gemini is a good example of that. 

Certainly this is a way for there to be more growth an liquidity in the cryptocurrency markets and certainly a way for Coinbase to make more money. However, when I look at the list, a number of the projects qualify as what I not so eloquently describe as “shitcoins”.

So what am I doing? I’m doing nothing right now. I think bitcoin still has potentially 50 percent to drop before we hit the bottom. When that happens, I may start to buy. But we have not seen true capitulation yet in my opinion. We have not seen a quick and dramatic slide to bottoms that no one thought possible. That’s when we hit the bottom in my opinion.

Ep22: Weekly Cryptocurrency News 12/5/18

Consensus Network Weekly Crypto News 12/5/18

Cryptocurrency Market Capitalization: approx $124 Billion

Bitcoin Price (Coinbase): $3713

SEC Meets with VanEck SolidX/CBOE to discuss bitcoin ETF…Again

We have been talking about this bitcoin ETF for some time now that involves a couple of major players including the Chicago Board of Options Exchange (CBOE). A lot of people believed that given the CBOE involvement that this ETF would eventually find its way through the SEC. So representatives from all of the involved parties met again on November 28th.

As you may recall, the last meeting occurred October 9th at which time the attempt was made to convince the SEC that the market is mature enough to support the ETF. Of course that was before the market plummeted from news surrounding bitcoin cash and the war between Roger Ver and Faketoshi, Craig Wright. I’m not sure that was good for their case!

This most recent meeting was in attempts to present the case that bitcoin is a commodity like silver or gold which already have ETFs. Furthermore, the case was made that several qualities of bitcoin and the bitcoin market make it less susceptible market manipulation than other commodities. 

The full presentation is on the SEC website. Suffice it to say that the case is compelling but I’m not sure the SEC is going to let it happen with all the money that has been lost in the cryptocurrency market this year. 

My guess is that we will see Bakkt, ErisX and Fidelity bring in more money and make this a larger more liquid market before the SEC will go for an ETF. We will continue to follow this story carefully.

SEC Penalizes Floyd Mayweather Jr. and DJ Khaled for Illegal ICO Promotion:

Boxer Floyd Mayweather Jr. and DJ Khaled have large Twitter followings—something which I do not. Both Celebs were also paid to promote ICO’s on their Twitter accounts and did not disclose payments.

Mayweather was paid at least $300K over the course of just a few months and DJ Khaled was paid $50K. Why anyone would take financial advice from Floyd Mayweather and DJ Khaled is beyond me personally.

The SEC has banned them from doing any further such promotions, ordered disgorgement of promotional funds received and tacked on interest and penalties for both celebrities to pay.

Of course these two guys were not the only ones doing this. There are bloggers and podcasters in the space that were doing the same that will almost certainly be under investigation by the SEC.

Frankly, we need this if the blockchain space is to succeed. We need to purge this world of as many charlatans as possible and focus on the technology. Things like this make the industry look bad and we need do a better job of self-regulating the industry if we are to be taken seriously.

One good outcome of the crypto blood bath is that all of these guys are suddenly silent and BS ICO’s are disappearing every day. We need to purge these elements to move forward.

I would like to point out that I seem to be the only one to have STARTED a podcast in the bear market. Hopefully that shows you my true conviction!

Bitcoin Declared Dead!…Again.

Several media outlets that have no clue what they are talking about have yet again declared bitcoin dead. This time, the focus has been on the idea that the price of bitcoin has dipped below a point at which miners will continue to secure the network. This has been characterized as the bitcoin “death spiral”.

The problem is, it’s just not true. Bitcoin adjusts its difficulty according to the hash rate—for every minor that turns off, mining becomes more profitable for the remaining miners. 

Bitcoin Mining difficulty dropped by 15 percent Monday—which was the second largest drop in ASIC history. Decreases in difficulty make it cheaper to mine. The math isn’t quite as hard for the computers to solve.

Now also remember that some major minors are located in China with ridiculously inexpensive costs of electricity. Other minors are being subsidized by their governments or are using very inexpensive renewable energy.

We all seem to forget that bitcoin didn’t start out at $6000. It is software designed to adjust to demand. It will find its way.

Ep20: Weekly Cryptocurrency News 11/28/18

Consensus Network Weekly Crypto News 11/28/18

Cryptocurrency Market Capitalization: $138 billion

Bitcoin Price (Coinbase): $4196

Bitcoin Upturn or Dead Cat Bounce?

Bitcoin broke through the $4000 level and flirted with $3500. Today, everyone is getting excited because the market is up. In fact, bitcoin is up almost 20 percent since yesterday.

I’m not a trader. I’ve made that very clear in the past so I don’t buy and sell on short-term market movements. However, I am looking for a bottom because my long-term view on bitcoin and blockchain is very bullish. So, I’m eager to buy more when it’s on sale.

Now just because I’m not a trader doesn’t mean I don’t respect the abilities of those who are. Tyler Jenks was on the show a few weeks back when bitcoin was sitting in the mid $6000s and was about as sure as anyone that it was going to plummet in the short term. To be honest, I didn’t believe him until he literally called it the day before on Twitter. It was like watching Babe Ruth point to the rafters and hit it out of the park.

Now Tyler says that this really is short term and, even if it goes back up to $6K, it’s going easily sub $3k before it takes off. Tyler is seriously bearish on bitcoin price but highly bullish on bitcoin’s future so he’s looking to buy in as well. But he thinks we are going lower before we go back up. One of the things I have learned over the years is that it’s not a good thing to be the smartest guy in the room. You want to surround yourself with people who are smarter than you at various different tasks.

Tyler is a technical analyst and can identify good times to buy better than me for sure. So, I’m just going to buy more when Tyler tells me to buy more on his YouTube channel. You should check it out. It’s way over my head but fascinating nonetheless. 

So… bitcoin price may be headed south, but don’t let that fool you into this narrative that bitcoin is dead. While this uptick in bitcoin price may be a dead cat bounce, bitcoin has shown over the years that it has at least nine lives.

We’ve talked about the institutional frameworks that are now being built and those are not slowing down. And people are not slowing down their use of bitcoin. Bitcoin transactions have actually reached their highest level since mid-January. In fact, the number of daily transactions on the bitcoin blockchain is approximately the same as Mastercard.

Why is this significant? What gives Bitcoin its value? What gives anything value? Ultimately it’s faith in the system and the bitcoin blockchain is not being utilized any less than it was at $20K bitcoin.

I don’t know when, but I am quite sure a bitcoin bull run will happen again and this time it will include big money institutional investors that will take it to new highs.  I truly believe that we are seeing a tremendous transfer of wealth happening from scared retail investors selling to institutional ones who are buying from over the counter platforms like genesis. Individuals are selling and institutions are buying and they are going to make most of the money…like they always do.

SEC Chairman Comments Cast Doubts on ETF Approval

Jay Clayton, chair of the U.S. Securities and Exchange Commission, speaking at Consensus: Invest Conference reiterated previous concerns about the cryptocurrency market’s exposure to market manipulation.

This was one of the reasons cited by the SEC in multiple rejections of ETF applications. Many were optimistic about the CBOE/Van Eck Solid ETF being considered by the SEC, but Clayton suggested he did not think that had yet been accomplished.

Of course, the CBOE application addresses this problem with pegging the eta prices to over-the-counter trading such as Genesis Trading but given the recent events in the cryptocurrency world, I would personally be shocked if the application is in fact approved next year although eventually I think it is inevitable given the interest from institutional and retail investors.

Ohio Accepts Bitcoin for Tax Payments

The Wall Street Journal disclosed on Sunday that Ohio will become the first U.S. state to accept bitcoin for taxes. 

The guy behind this is Josh Mandel, the forty-one-year-old State Treasurer of Ohio who wants Ohio to be the national leader in embracing blockchain. 

Mandel says he believes in “leveraging technology for the democratization of finance”. 

In case you are wondering, Ohio will be using BitPay as a payment processor that will immediately convert bitcoin into US dollars. They do not currently plan on HODLing although that could actually be the smartest they could do given the price of bitcoin right now!

Ep17: Weekly Cryptocurrency News 11/14/18

Consensus Network Weekly Crypto News: 11/14/18

Cryptocurrency Market Capitalization: $188 billion

Bitcoin Price (Coinbase): $5588

Bitcoin Bloodbath!

Bitcoin prices fell by almost 10 percent today all the way down to $5555.34 on Coinbase. Listeners of this podcast heard Tyler Jenks with Lucid Investments last week hint at some of the chart analysis that indicated a potential drop in the market. Well, I guess he was right. Now Tyler also suggested bitcoin prices could go A LOT lower (around $1000). If that happens, I will do ANYTHING Tyler tells me to do!

Is Satoshi’s Vision Causing the Bloodbath?

Now, what could be causing this selloff? The only real instability in the market at large is the pending hard fork of bitcoin cash tomorrow. Bitcoin cash was of course a hard fork of bitcoin itself led by, among others, Roger Ver AKA bitcoin Jesus and Craig Wright AKA Fake Satoshi. Wright has claimed to be Satoshi Nakamoto himself, author of the bitcoin white paper but has never provided any evidence to that effect.

Now, Ver and Wright are facing off on a hard fork of bitcoin cash—Ver supporting software called ABC and Wright supporting software called “Satoshi’s vision”. 

An email from Wright to Ver was circulating on crypto twitter and showed the following excerpts from Fake Satoshi: “Bitcoin (Cash) will die before ABC shits on it. I will see BCH trade at 0 for a few years…Side with ABC, you hate bitcoin (cash), you are my enemy. You have no fucking idea what that means.”

Talk about Drama. I thought American politics was bad. This is crazy!

At any rate, this is the primary instability in the market and many trading platforms have frozen bitcoin cash trades until the issue is resolved. 

I would have thought that money would have fled into bitcoin from bitcoin cash to avoid instability the same way it did when money fled from tether, the stable coin that could never prove it’s peg to the US dollar. But that’s why I admit I am a terrible trader.

Something is going on here that I don’t understand. But fundamentally, my belief in bitcoin has got me seeing this as a buying opportunity. Warren Buffet said, “Be Fearful when others are greedy and greedy when others are fearful.” There’s a selloff going on and I am buying. I already bought at around $5600 today and will buy again we get close to $5200. I am NOT a trader but my long term view on bitcoin is still very bullish. 

I should point out that even though Tyler Jenks predicted this sell-off, he also believes bitcoin will eventually be worth $500K. If you are willing to hold for a few years, it may be an asymmetric bet to buy now.

SEC Chief Puts Decentralized Exchanges on Notice

Last week the securities and exchange commission newly appointed cyber chief Robert Cohen put distributed exchanges on notice. Specifically, he announced that they filed a case against ether delta creator Zachary Coburn. 

Decentralized exchanges are basically exchanges without centralized operations. Instead, trades are executed on smart contracts on the blockchain.

Cohen pointed out that using blockchain to create a decentralized trading platform does not remove the responsibility of the creator.

Cohen made it clear that a platform is operating in the United States must be compliant. It is not clear how the SEC plans to deal with anonymously created decentralized exchanges which are essentially impossible to shut down.

Anyway, the big news today is the bitcoin sell-off. I’m keeping a close eye on it. Follow consensus network on Twitter to get real-time updates.

Ep15: Weekly Cryptocurrency News 11/07/18

Consensus Network Weekly Crypto News November 7th, 2018

Cryptocurrency Market Capitalization: $220 billion

Bitcoin Price (Coinbase): $6510

The News:

SEC to Publish ICO Guidance: A high ranking official at the SEC, William Hinman announced last week that the SEC is planning to publish clearer guidance regarding ICOs.

“If someone’s offering an instrument for money or other consideration to a third party, and that third party expects the offerer to generate a return or something that will increase the value of the coin or token…and there’s expectation of return, we’re generally going to see that as a securities offering.” 

Clear? Not to me. 

Hinman also said ethereum is not a security because is is sufficiently decentralized. In other words, there are not enough whales to victimize retail owners of ethererum. Can you say the same of bitcoin? I'm not sure. There is only about $3 million circulating bitcoin and the rest are with HODLRs.

The ICO issue is confusing but it’s very important to get this sorted out quickly. Many blockchain projects are leaving the US or leaving out US investors because they fear the wrath of the SEC. That’s not good for our country in terms of positioning and profiting from this new technology.

Apple Censors Bitcoin Podcast

Apple iTunes apparently censored the Crypto focused podcast “Off the Chain” by Anthony Pompliano after posting an interview with bitcoin maximalist, Murad Mahmudov. I actually follow both his podcast and apparently it just came back on it’s own after a day of CryptoTwitter making a big deal of it. If it’s true, I have to say that it’s sort of shocking considering the crap that iTunes does allow. There are a ton of horrible crypto podcasts out there which have actually done real financial damage to people. Pompliano’s podcast is actually serious and legitimate so censoring it is sort of ridiculous.

That said, blockchain is an existential threat to iTunes and the Apple Store so perhaps that had something to do with it?

Jamie Dixon LOVES Bitcoin:: Jamie Dimon, CEO of JP Morgan Chase says that bitcoin is a fraud and says he doesn’t “give a shit” about it. Meanwhile, blockchain development has become a major effort of the bank and they clearly see that this is an existential threat to their existence.

Meanwhile, a former JP Morgan trader pleaded guilty this week of manipulating the US metals market for years. John Edmonds, the manipulator, worked for JP Morgan for 13 years and said his supervisors were aware of his actions.

Of course the main sticking point of the SEC on allowing a bitcoin ETF is that the bitcoin markets are easily manipulated. More bank and government hypocrisy. Surprise surprise!

Bitcoin Wins Midterm Election: The midterm election results weren’t terribly surprising yesterday. The Democrats took the house and the Republicans took the senate. That just means that our national news will further resemble a reality Television show for the next couple of years as the democrats now have subpoena power over the president.

But one thing that was of note for us bitcoin enthusiasts is that a couple of bitcoin supporters got elected governor. In California, Gavin Newsom got elected comfortably. Newsom started accepting campaign donations in bitcoin as far back as 2014 when it was around $500. 

In Colorado, democrat Jared Polis defeated Republican Walker Stapleton. Not only is Polis the first openly gay governor but has long been talking about the role of bitcoin and blockchain technology in his state’s future. He says he want’s to make Colorado the “hub” of all things crypto. I think Jared Polis is making a wise decision.

Ep13: Weekly Cryptocurrency News 10/31/18

Consensus Network Weekly Crypto News October 31, 2018

Today is the 10th anniversary of the Bitcoin white paper!

 

Wednesday October 30th, 2018

Cryptocurrency Market Capitalization: $203 billion

Bitcoin Price: $6308 on Coinbase

 

JP Morgan Chase to Tokenize Gold Bars: Yes. You heard that right. Chase, who’s CEO called bitcoin a fraud and said he would fire any of his employees who traded it, seems to have capitulated to the reality that blockchain and cryptocurrencies are actually real and can be very useful. Specifically, JP Morgan will use their enterprise blockchain network Quorum, which is ethereum based, to tokenize gold bars. They also see the tokenization of many other commodities as a reality. Jamie Dimon—what a f’ng hypocrite!

 

Coinbase raises another $300 Million to Fix Bitcoin’s Problems: Coinbase raised another $300 million in funding with institutional investors giving it a value of $8 billion. According to coinable officials, they are going to use that funding to “accelerate the adoption of cryptocurrencies and digital assets.”

Plans include:

  1. Global expansion to increase the number of cryptocurrency users.

  2. Expanding the number of coins in offers.

  3. Creating applications for bitcoin and crytocurrencies.

  4. Bringing established financial institutions into the digital asset space.

Coinbase says it will continue to build infrastructure between fiat and crypto in regulated markets around the world and will add features and crypto assets to it’s custody offering.

 

Bitcoin Becomes Less Volatile than Amazon! According to data released by Chicago Board of Options Exchange (CBOE), the current volatility of bitcoin is as low as that of Apple stocks and more stable than Amazon and Netflix.  Of course I believe that’s just because of lower trading volume right now. We actually did see a bit of a sell-off yesterday. But let me take this opportunity to talk about volatility. Bitcoin’s market capitalization is literally 1/10th of Amazon and Apple. Therefore, we expect it to be more volatile. When bitcoin has a market capitalization of $1 trillion or more, I fully expect it to have a far less volatile profile over-all. That’s what the critics of bitcoin as a store of value are missing. They say it’s too volatile to be a store of value. I agree with that… right now. But when it grows by 10X or 100X, you won’t see the same issues. It’s math.

 

A Bitcoin Wrapped in an Ethereum Smart Contract? Last week we talked about how Goldman Sachs made a huge investment into crypto custodian BitGo. BitGo recently announced that it, along with partners, are launching a fully ERC20 bitcoin token called WBTC.

My first response to hearing this was…why? Is it like the Crunchwrap Supreme at Taco Bell where they put a soft tortilla around a crunchy taco to make it taste that much better?

In all seriousness, there is value to this WBTC thing. First, it will allow BTC trades on decentralized exchanges and also facilitate various transactions on the ethereum network. Ethereum has an extensive smart contract developer ecosystem which bitcoin does not (it’s digital money not a contract).

Launch will be in 2019. Let’s see if it takes off.

 

That’s it for this week on Consensus Network’s Weekly Crypto News!

Make sure to send you questions and comments to info@consensusnetwork.io

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