First Cash, Now Gold? Another Bitcoin Hard Fork Is on the Way

first cash now gold

First Cash, Now Gold? Another Bitcoin Hard Fork Is on the Way

Bitcoin, bitcoin cash, bitcoin gold?

There could be as many as four cryptocurrencies bearing the bitcoin name if a small group of miners and developers carry out a planned fork of the blockchain this month.

Styled as a rebellion of sorts, bitcoin gold aims to follow a similar launch plan as bitcoin cash – the blockchain that split from bitcoin this summer by way of a "hard fork." The idea of the project is to release an improved protocol, one that will challenge bitcoin cash in particular, and details are now starting to come come into focus.

Led by Jack Liao, CEO of Hong Kong mining firm LightningASIC, bitcoin gold is slated to launch on October 25, with its cryptocurrency being opened to exchanges on November 1.

Still, while whispers of the event are just beginning to spread, the importance of the project appears up for debate. Given that bitcoin cash produced an ultimately smaller bitcoin network, not to mention a cryptocurrency that's worth about 12 percent as much as bitcoin at press time, most seem to view the plan as another distraction in an already divided community.

For one, bitcoin gold looks like it could be even smaller that bitcoin cash, at least in that not as many miners seem to support it.

In remarks, BTC.Top founder Jiang Zhuoer and ViaBTC CEO Haipo Yang – two early champions of bitcoin cash – went so far as to downplay bitcoin gold as insignificant.
 

'Decentralized again'

But while those in the know might be skeptical of bitcoin gold, it does have a goal that many in the community may find attractive: creating a truly decentralized bitcoin.

Most notably, the developers behind the network hope to open up mining to more participants by replacing bitcoin's mining algorithm with one that will enable it to be mined with graphics cards. The idea is to make big miners – sometimes controversial figures on the network – less relevant.

"Bitcoin gold will implement a proof-of-work change from bitcoin's SHA256 to Equihash, a memory-hard algorithm that is ASIC-resistant and optimized for GPU mining," explained pseudonymous bitcoin gold developer "The Sorrow."

That the plan is being hatched in China, long the hotbed of bitcoin mining, only adds another layer to the story. Liao, whose mining hardware largely focuses on the litecoin network, is seen as one of the few voices domestically that can challenge the established order.

Yet, Liao was quick to name one mining firm in particular, Bitmain, as the reason that more bitcoin users should support the idea. A mining company that has been at the center of bitcoin drama over the last year, critics have long argued that the firm has too much of an influence over the network.

Still, creating a network that grows so popular as to remove miners is easier said than done, and some are skeptical that this would lead to the end goal that bitcoin gold advocates desire.

"GPU mining can't prevent centralization. GPU [markets] are controlled by Nvidia and AMD," Zhao Dong, a cryptocurrency trader and investor, argued in response to the plan.

Liao, however, argued the accessibility of the companies' products means the distribution of hashing power might evolve differently.

 

Bitcoin gold's unknowns

Again, though, even project leaders admit many of the details around the hard fork are fuzzy.

Bitcoin gold's pseudonymous lead developer "h4x" said that the project is "still evolving" and details such as exact block height of the hard fork are still up for discussion.

According to the original website text, bitcoin gold was even planning an initial coin offering (ICO) by which 1 percent of the bitcoin gold coins would go to the developer team, but these details have since been removed.

One thing is clear though about the funding: because of the nature of the split, every bitcoin user at the time will have an equal amount of bitcoin gold associated with their private key.

"It is a minimalist fork of the Bitcoin Core codebase in the spirit of litecoin – only a few conservative modifications," said h4x.

H4x went on to describe bitcoin gold in more abstract biological terms, arguing that it tests how well hard forks work and if they benefit the ecosystem.

He said:

"Organisms derive benefits from creating offspring. With bitcoin gold we are conducting an experiment to see if that principle holds true in the world of blockchains."

And this sentiment is largely in line with developers who have predicted that more bitcoin forks similar to bitcoin cash will come forth in the future.

After bitcoin cash forked earlier this summer, for example, Lightning Network developer Tadge Dryja argued that more forks would spring up, but for another reason: money.

With bitcoin gold in the works and another hard fork slated for November, it seems that prediction is slowly becoming reality.

 

Sep 27, 2017 at 08:00 UTC by Alyssa Hertig

 

Posted by David Ogden Entrepreneur
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Early bitcoin investor Palihapitiya declares ‘nobody can stop it’

Early bitcoin investor Palihapitiya declares 'nobody can stop it'

Early bitcoin investor Palihapitiya declares 'nobody can stop it'

  • Social Capital's Chamath Palihapitiya was early in both Facebook and bitcoin and continues to back both.
  • "The idea that the government can put curbs on this is actually pretty specious," he said in response to JPMorgan Chase CEO Jamie Dimon's criticism of bitcoin.

Investors who followed Social Capital's Chamath Palihapitiya into the early stages of two investments he advocated would have made an awful lot of money.

Palihapitiya was early in both Facebook, the ubiquitous social network, and bitcoin, the disruptive crypotcurrency that has sharply divided investors who continue to argue over its legitimacy.

Even with the major gains both have made, Palihapitiya remains hot on tech stocks in general, and bitcoin in particular. The digital currency, despite some volatile times, has soared nearly 300 percent this year.

That has come even though JPMorgan Chase CEO Jamie Dimon has called it a fraud that is doomed to fail.

"Nobody can stop it because nobody can control it," Palihapitiya said in an exclusive CNBC PRO interview at the Delivering Alpha conference on Sept. 12. "The idea that the government can put curbs on this is actually pretty specious."

Rather than debate its status as a currency or its use for nefarious purposes, he said there should be a broader discussion about how to put it to better use.

"As far as I'm concerned, the genie is out of the bottle," he said. "Now the real question is how can we productively use it to solve some of society's issues around the financial services infrastructure."

 

Jeff Cox | @JeffCoxCNBCcom

 

Posted by David Ogden Entrepreneur
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Bitcoin’s price is spiking by 7 percent as traders shake off China fears

Bitcoin's price is spiking by 7 percent as traders shake off China fears

Bitcoin's price is spiking by 7 percent as traders shake off China fears

The price of bitcoin is up nearly 300 percent year to date.

Bitcoin is still under the $4,000 level, which it broke through after JPMorgan CEO Jamie Dimon said on Sept. 12 that the cryptocurrency is a "fraud" that will eventually blow up.

 

The price of bitcoin rose sharply on Monday with its price spiking up 7 percent midday, according to CoinDesk market data.

The price of the cryptocurrency is up nearly 300 percent year to date.

Bitcoin's price is spiking by 7 percent as traders shake off China fears

Bitcoin is still under the $4,000 level, which it broke through after JPMorgan CEO Jamie Dimon said on Sept. 12 that the cryptocurrency is a "fraud" that will eventually blow up.

In addition, recent reports said regulators in China have ordered bitcoin exchanges to close hurt the digital currency's price.

"In my opinion, the markets overreacted to the China news. In the short term, it was bad news, but long term the fundamentals are unchanged," William Mougayar, author of "The Business Blockchain," wrote in an email.

-CNBC's Evelyn Cheng contributed to this report

Author: Tae Kim |

 

Posted By David Ogden Entrepreneur
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Bitcoin Price Rises by 5% to $3,740 as the Cryptocurrency Market Gradually Recovers

Bitcoin Price Rises by 5% to $3,740 as the Cryptocurrency Market Gradually Recovers

Bitcoin Price Rises by 5% to $3,740 as the Cryptocurrency Market Gradually Recovers

Today, on September 23, the bitcoin price increased from $3,600 to $3,738, recording a daily increase of 4.88 percent. At today’s peak, the bitcoin price surpassed the $3,800 mark, showing signs of recovery from the largest price correction.

Bitcoin Price Rises by 5% to $3,740 as the Cryptocurrency Market Gradually Recovers

On September 20, less than three days ago, the price of bitcoin and most of the cryptocurrencies in the global market declined significantly. The bitcoin price plunged from $4,020 to $3,530, by $490, and the price of other leading cryptocurrency such as Ethereum also dropped by over 10 percent.
 

Bitcoin Remains Stable in $3,800 Region, Optimistic Indicators

In 2013, when the Chinese government banned bitcoin and trading activities around the cryptocurrency, the bitcoin price fell by over 40 percent and it failed to recover for more than eight months thereafter. The bitcoin price surpassed the $1,000 mark for the first time in December of 2016. However, when the Chinese government issued a nationwide ban on bitcoin, the bitcoin price was not able to surpass the $1,000 mark again until January of 2017.

In consideration of the impact the Chinese government and its ban on bitcoin had on the price of bitcoin in 2013, China’s nationwide ban on local bitcoin exchanges had significantly less impact on both the price of bitcoin and the state of the global bitcoin exchange market.

When the Chinese government requested major bitcoin exchanges and trading platforms including BTCC, OKCoin and Huobi to shut down, analysts expected the price of bitcoin to remain below the $3,000 mark for awhile, since the Chinese bitcoin exchange market was still a large market for bitcoin. But, as an increasing number of traders and investors began to realize that the Chinese market was only accountable for around 10 to 13 percent of global bitcoin traders, the international bitcoin exchange market started to demonstrate increasing demand from investors.

It is important to acknowledge that stability is most likely a far-fetched term to depict the recent performance of the bitcoin price. But, relative to previous events such as the 2013 ban on bitcoin by the Chinese government, bitcoin has done surprising well, showing resilience towards FUD and regulatory uncertainty in China.
 

Can Bitcoin Price Recover Beyond $4,000 In Upcoming Weeks?

Financial and bitcoin analysts including Max Keiser and Ben Verret reaffirmed that the bitcoin price is likely to increase in the upcoming days and weeks, considering that the weak hands have left the market. Earlier today, Keiser also emphasized his short-term price target of $6,000, given that the bitcoin price has been able to hold up and sustain momentum despite the uncertainty in regards to the Chinese bitcoin market and also, the country’s local bitcoin mining industry.

Since 2016, an increasing number of investors and traders have begun to seek bitcoin as a safe haven asset to avoid global markets volatility and weakening of reserve currencies. As the conflict between North Korea and the US continues to intensify, it is likely that more investors will seek out for bitcoin in the upcoming weeks.

More to that, as JP Vergne, a professor at Ivey Business School explained, developer activity around cryptocurrencies is the best indicator for price. Bitcoin development is booming with the emergence of Lightning-based applications and Segregated Witness (SegWit)-supporting wallet platforms.
 

Joseph Young on 23/09/2017
 

Posted by David Ogden
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Wall Street Journal Argues Bitcoin Is “Probably worth Zero”, Joins Obituary List

Wall Street Journal Argues Bitcoin Is “Probably worth Zero”, Joins Obituary List

Wall Street Journal Argues Bitcoin Is “Probably worth Zero”, Joins Obituary List

One of the Wall Street Journal’s most read articles of the day implies that bitcoin’s volatility reveals that the cryptocurrency is “probably worth zero.” The author of the piece starts by stating that a borderless digital currency out of the government’s reach that allows for semi-anonymous transactions sounds good, but that he’s not really a bitcoin fan because of the small number of transactions it can handle, and the amount of power necessary to maintain the network.

Bitcoin is scalable and can eventually reach and surpass VISA’s volume of, on average, about 2,000 transactions per second (tps). As CCN previously reported, SegWit’s activation on both the litecoin and bitcoin networks enables cross-network transaction swaps between the two cryptocurrencies, facilitating a host of other innovations, making it clear that, in the future, the problems that currently haunt the cryptocurrency won’t be there anymore.

The author then uses Gresham’s law, the principle that “bad money drives out good money” to argue against bitcoin. The article reads:

“Given the choice of spending inflationary government-issued money or something which holds its value, everyone would spend the bad paper stuff and hoard the bitcoin.”

In his argument, he says that no one wants to be the person that once bought two pizzas for 10,000 bitcoins, when the cryptocurrency was nearly worthless. The point being that if no one spends the currency while waiting for it to gain value, it will never really get established as a currency. Then again, no one in Venezuela wanted to see their currency’s value decrease, but the people didn’t have much of a say in that and, as such, were forced to use bitcoin to survive.

Then, unpacking the idea of bitcoin being based on illegal transactions, the author uses math done by Dan Davies, a bank analyst at Frontline Analysts in London, to assume that all drug dealing moves online, so as to get to $571 per bitcoin. The argument adds that drug dealers might put up with bitcoin’s current problems – which I addressed above – as laundering dollars is harder and more expensive than transacting in bitcoin.

Given that various studies already clarified that criminals aren’t using bitcoin that much, the value would be much lower, according to WSJ’s article. As such, the author concludes that bitcoin’s current price, of nearly $4,000, is mostly speculation and that JP Morgan’s Jamie Dimon was right to compare it to the 17th-century Dutch tulip bubble.

Basing the cryptocurrency on illegal activity neglects that hundreds, if not thousands, of legitimate businesses already accept bitcoin, so much so that it’s possible to live on bitcoin. Plus, the cryptocurrency is mostly used for legitimate purposes by those who simply want to be in charge of their own money, not those who have something to hide.

 

Bitcoin as Digital Gold

WSJ’s article goes on to imply that bitcoin’s true believers cling to the idea of it being digital gold that will maintain its value if a government currency collapses, and that this idea is supported by history’s examples of it happening.

The article points out that gold has had thousands of years and a history of being used to back fiat money to support its current position. Bitcoin has had less than a decade to prove its worth and most people just only heard of it. A recent study by YouGov revealed that 34% of Americans never even heard of bitcoin, and that 29% thought the cryptocurrency was just used to purchase illegal goods or services.

Still, bitcoin’s potential to replace gold led to a $5,500 price per coin, switching Thomson Reuters GFMS’ estimate of 2,155 metric tons of gold held in exchange-traded funds to the cryptocurrency. If bitcoin was to completely replace gold coins and bars, given GFMS’ supply estimate of 24,000 metric tons bought for investment in the past half-century, we would get $61,000 per coin.

Finally, the author states that bitcoin’s volatility can somewhat be explained by it either succeeding or failing in completely displacing gold, implying that the cryptocurrency is either extremely precious, or worthless. The article reads:

“Based on the simple choice between total success and failure, we can very roughly say that bitcoin at 70% of the gold ETF-derived price suggests a 70% of displacing so-called paper gold as society’s chosen emergency store of value, and a 6% chance of displacing physical gold. Even digital dreams should accept that is far too high.”

At the end of the day, bitcoin’s value, just like the value of other cryptocurrencies, depends on its users as it is the first free market backed currency, and its growth is consistent with its userbase increase. A quick look at Google Trends shows us that interested in the cryptocurrency is still surging.

At the end of the day WSJ’s article is just one more to add to the bitcoin obituary list.

 

Author: Francisco Memoria on 20/09/2017

Posted By David Ogden Entrepreneur
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Bitcoin Mining Could be China’s Next Target – Why It Does Not Matter

Bitcoin Mining Could be China's Next Target - Why It Does Not Matter

Bitcoin Mining Could be China’s Next Target – Why It Does Not Matter

 

Several sources including the Wall Street Journal have reported that the Chinese government and its regulators may target bitcoin mining operators in the region following the imposition of a nationwide ban on cryptocurrency and bitcoin exchanges.

Experts in the cryptocurrency sector and mining industry including John McAfee strongly believe that the Chinese government will not order a crackdown on bitcoin mining centers and operators. As Cryptocoinsnews previously reported, McAfee revealed that Jihan Wu, the co-founder of Bitmain, the world’s largest bitcoin mining equipment manufacturer that is reportedly valued at billions of dollars, told McAfee in a meeting with Roger Ver that the Chinese government is not planning a ban on mining centers.

But, in a statement, ViaBTC CEO Haipo Yang explained that if the Chinese government decides to ban bitcoin mining centers and operators, it will be the end of the Chinese bitcoin mining industry. Yang wrote:

“Technically, China can’t ban bitcoin traffic, we have our own sync network. But if the Chinese government says mining is illegal, we are fucked.”

As Yang noted, it is possible for the Chinese government to target bitcoin mining operators in many methods. For instance, the Chinese government could decide to nationalize bitcoin mining centers and announce them as the property of the Chinese government.

For the Chinese mining industry, the crackdown on bitcoin mining by the government will lead to financial turmoil. More specifically, companies like Bitmain that recently secured multi-million dollar funding rounds will not be able to serve their biggest markets, which are domestic miners and mining centers.

Earlier today, through its a PBoC-owned financial news publication, PBoC researcher and Central University of Finance and Economics professor Huang Zhen explained that the central bank of China perceives bitcoin as a threat. More importantly, Zhen emphasized that the government plans to release a government-issued national digital currency in the future, as a rival currency to bitcoin.

If the intention of the government is to eliminate bitcoin in the Chinese market in order to promote and issue its own digital currency, the Chinese government will likely ban aspect of bitcoin. But, in contrary, if the Chinese government is not ready to release a digital currency of its own, it will re-instate bitcoin trading platforms and prevent from issuing any further restrictions and regulations on bitcoin miners.

“The central bank has set up a research group and a digital money research institute to explore the digitization of sovereign money. After this round of virtual money markets supervision, we expect under the auspices of the Chinese central bank to launch our own sovereign digital currency as soon as possible to help maintain China’s leadership in the development of global digital finance,” Zhen wrote.

Ultimately, even if the Chinese government does ban bitcoin mining centers and operations in China, in the mid-term, it will not pose a major threat to the global bitcoin mining industry primarily due to the emergence of multi-billion dollar Japanese conglomerates that are developing their own ASIC miners and manufacturing independent bitcoin mining equipment to mine the digital currency.

 

Author: Joseph Young on 19/09/2017

 

Posted By David Ogden Entrepreneur.
David Ogden Cryptocurrency Entrepreneur

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Bitcoin Price Technical Analysis for 19th September – Can Bulls Keep It Up

Bitcoin Price Technical Analysis for 09/19/2017 – Can Bulls Keep It Up

Bitcoin Price Technical Analysis for 09/19/2017 – Can Bulls Keep It Up

Bitcoin price seems to have completed a large correction and is ready to resume its long-term uptrend.

 

Bitcoin Price Key Highlights

  • Bitcoin price has bounced off a long-term area of interest after its recent sharp drop, signaling that the uptrend could still resume.
  • Applying the Fib extension tool on this major correction could indicate how high bulls could take bitcoin from here.
  • Technical indicators on the daily time frame also suggest that the long-term climb could carry on.

Bitcoin price seems to have completed a large correction and is ready to resume its long-term uptrend.

 

Technical Indicators Signals

The 100 SMA is above the longer-term 200 SMA on the daily chart, signaling that the path of least resistance is to the upside. The gap is also gradually widening to reflect strengthening bullish momentum. Also, the 100 SMA has recently held as dynamic support as it lined up with the rising trend line connecting the lows since April.

Stochastic has pulled up from the oversold region to show that buyers are regaining control of bitcoin price action. RSI is also turning higher and appears to be heading north so bitcoin could follow suit.

The next potential resistance is at the 38.2% extension just past the $4000 major psychological barrier. The 50% extension is at $4637, the 61.8% extension at the $5000 handle close to the record highs, and the 76.4% extension at $5464. The full extension is around the $6200 level.

Bitcoin 19th September

Market Factors

Chinese regulators have confirmed that they are stepping up their efforts to crack down on the cryptocurrency, following rumors that authorities are already shutting down exchanges in the country. However, investors seem to have moved on from this news as other markets like Japan and South Korea are taking majority of the market share and activity.

Meanwhile, the US dollar is giving up some ground to bitcoin price ahead of the FOMC decision, during which the central bank would likely keep rates on hold and downgrade growth forecasts on account of the recent hurricanes. A press conference will also follow and Yellen’s responses will be scrutinized as traders hunt for clues on December tightening.

Author Sarah Jenn on 4:23 am September 19, 2017

Time to ride the tiger

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Bitcoin Price Technical Analysis for 09/18/2017 – Chance to Short?

Bitcoin Price Technical Analysis for 09/18/2017 – Chance to Short?

Bitcoin Price Technical Analysis for 09/18/2017 – Chance to Short?

Bitcoin price is making a correction from its recent selloff, but it might be ready to resume the drop soon.

Bitcoin Price Key Highlights

  • Bitcoin price has been selling off in the past few days on reports that China has officially confirmed it would be shutting down exchanges.
  • A bearish channel can be seen on the 1-hour time frame and it’s currently showing a pullback opportunity.
  • Price is stalling at the top of the channel resistance but a higher pullback to the $4000 area of interest might be possible.
  • Bitcoin price is making a correction from its recent selloff, but it might be ready to resume the drop soon.

Technical Indicators Signals

The 100 SMA is below the longer-term 200 SMA on this time frame, so the path of least resistance is to the downside. The 200 SMA dynamic resistance lines up with the channel resistance around $3850 and the 61.8% Fibonacci retracement level, adding to its strength as a ceiling.

However, there’s also another area of interest located at the $4000 psychological level, which held as support in the past. This could serve as the line in the sand for this correction and a break past the level could indicate that buying pressure is back in the game.

Stochastic is still pointing up so there’s some bullish momentum left. RSI is also heading north so bitcoin price might follow suit. If the selloff resumes, bitcoin could drop to the swing low near $3000 or form new ones closer to the channel support at $2800.

Bitcoin Price Technical Analysis for 09/18/2017 – Chance to Short?

Market Factors

News that BTC China would be halting trading for its clients by the end of the month pretty much sealed the deal for speculations that the world’s largest bitcoin market would see a large drop in activity. Liquidation has been taking place for the most part of the previous week and this would likely carry on in the coming days.

As for the dollar, the focus has been on tax reform, which has been bullish for the fiat currency. Easing fears of a North Korea missile strike have also weighed on bitcoin price as this is often treated as digital gold during risk-off days. Meanwhile, the upcoming FOMC decision could still be a risk factor for BTCUSD as downbeat remarks could lead to a selloff for the dollar.
 

4:26 am September 18, 2017

Author Sarah Jenn

 

Posted by David Ogden Entrepreneur

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$11 Billion – 24-Hour Cryptocurrency Trading Volume Hits New Record

$11 Billion - 24-Hour Cryptocurrency Trading Volume Hits New Record

$11 Billion – 24-Hour Cryptocurrency Trading Volume Hits New Record

Cryptocurrency trading volume reached a new milestone on Friday, crossing $11 billion for the first time amid regulatory uncertainty in China.

Crypto Markets Post Record Volume

According to data obtained from CoinMarketCap, the combined 24-hour trading volume of all cryptocurrencies rose to $11.5 billion shortly after 16:00 UTC. The only other time daily trading volume has surpassed $10 billion was on August 19, when it briefly spiked to $10.5 billion


Cryptocurrency Trading Volume & Market Cap Chart from CoinMarketCap

Bitcoin topped the charts with $4.2 billion in volume, while ethereum and litecoin posted $1.9 billion and $1.5 billion, respectively. In all, 10 different currencies posted volume greater than $100 million.

$11 Billion - 24-Hour Cryptocurrency Trading Volume Hits New Record
Chart from CoinMarketCap

Bithumb and Bitfinex each handled about $1.5 billion in trades while Chinese bitcoin exchange OKCoin accounted for $750 million. Altogether, at least seven exchanges, including GDAX, Bittrex, Poloniex, and Huobi surpassed the $500 million mark (Volume had tapered off a bit by the time of writing, so it is possible Kraken and Coinone crossed $500 million earlier in the day).

Friday’s trading volume surge was caused by market volatility stemming from China’s crackdown on bitcoin exchanges. Yesterday, the markets crashed following reports that a bitcoin exchange ban was “certain” and BTCC’s subsequent announcement that it would shut down all trading services at the end of September. The markets continued to plunge Friday morning as Huobi and OKCoin were rumored to be meeting with regulators and two smaller exchanges–Yunbi and ViaBTC–also announced September closures.

However, later in the day OKCoin and Huobi issued concurrent statements that suggested they might continue providing cryptocurrency-to-cryptocurrency trading services. Both exchanges announced that they would close CNY trading pairs on October 31, but–unlike BTCC, Yunbi, and ViaBTC–they did not announce the suspension of “all trading.” Moreover, they indicated that they “expect to continue to provide Chinese users with [compliant] digital asset services.”

These announcements led to an immediate rally, and trading volume soared to a record level as the markets climbed back to $120 billion after dipping below $100 billion earlier in the day.

 

Author: Josiah Wilmoth on 15/09/2017

 

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Bitcoin Price Analysis – A perfect storm

Bitcoin-Price-Analysis-Sept-15-2017-Banner3

Bitcoin Price Analysis – A perfect storm

Bitcoin has dropped ~USD$400 in the past 24 hours, contributing to a ~USD$1450 drop in the past seven days. The leading cryptocurrency is down ~US$1150 Since the recent high of ~US$4950 on Sept 2nd, or nearly 30%. The lackluster performance can be attributed to both technical and fundamental factors.

On September 4th, China announced an outright ban of all ICOs, suggested refunding any collected funds in any ongoing crowd sales, and hinted at the shuttering of exchanges trading ICOs.

Earlier today, the oldest Bitcoin exchange in China, BTCC, announced it would end trading on September 30th. Competitors OKcoin and Huobi have yet to make announcements but they may also close their doors.

Needless to say, the market has reacted. Today marked the highest volume for a daily candle since Chinese exchange regulation in January, according to the BLX.

Not making a single clear statement, and therefore adding to fear, uncertainty, and doubt (FUD) is a classic move from the Chinese government and has occurred multiple times in the past.

The crackdown in China occurs in the context of an already overbought market. These conditions are almost identical to those in January, when the Chinese government reigned in Bitcoin exchange trading.

One high volume Bitcoin trader, who likes to protect their identity, had this to say about the situation. “I see regulations as a means of protecting the investor. During the 1920’s the United States stock markets were cesspools of corrupt insider trading, front running and taking advantage of the general population. The Securities Act of 1933 put an end to most of that, although many now a days would say otherwise, ending the so called ‘wild west of the stock markets’. Cryptocurrency, still in its infancy in my opinion, is just this; markets untamed a wild west ruled by non professional pundits and early adopters. I expect regulation will potentially be a good thing at first. However, coming into larger global adoption – I fear that cryptocurrencies as a whole will become just as easily manipulated, if not more, by the J.P. Morgans and Goldman Sachs’ of the world, as has been demonstrated during the tumultuous events of the past seven days.”

When fundamentals and technicals are united, the price move and reaction becomes amplified. So no, CEO of J.P Morgan Jamie Dimon’s comments this week didn’t crash Bitcoin. The market was due for a large correction after spending only eight days in the 3000 range.

Exchange traded volume has been led by USD. Tether (USDT) is pegged to the dollar, and has also seen a significant bump in volume. This suggests that traders are using USDT as a safe haven from the pullback.

CNY volume accounts for <18% of exchange traded volume globally, but it’s clear that Chinese regulators have rattled the markets. Bitcoin has been selling for a significant discount in Yuan (CNY) markets, compared to other pairs, suggesting an influx of CNY traders selling bitcoin. CNY traders buying bitcoin had been paying a premium as recently as June.

In light of the China exchange bans, pending or otherwise, we can expect OTC volume to increase significantly, just as it did following the increased regulatory focus from the Chinese government in January.

On a geopolitically related note, North Korea appears to be itching for attention on the world stage, having fired another missile over Japan. Should an offensive campaign, police action, or outright war arise in the region, we can expect a reaction from Bitcoin in some fashion.

There has also been a great deal of press around the potential large scale bitcoin acquisition by North Korea, including: bitcoin mining based on an uptick of internet activity in the region, hackers targeting cryptocurrency exchanges, and their involvement with the WannaCry virus. Despite all the press, it is difficult to prove the extent at which this is occurring without significant and in depth investigations on several fronts.

However, Japanese Yen (JPY) and South Korean Won (KRW) constitute 28% of global bitcoin trading. Should Bitcoin be seen as a safe haven asset in those regions, we can expect a bullish spike in price, lead by bitcoin trading for a premium in those markets.

Technical Analysis

On weeks like this one, with intense selling, it’s important to understand why the selling is occurring from a technical perspective.

On the weekly timeframe, there was building volume and RSI bearish divergence, which was confirmed last week. This meant that as price is rising, it is doing so on less volume and less momentum that it had previously. It was losing steam.

Divergences are considered lagging indicators and are difficult to trade off in isolation. Much like this divergence however, traders will watch the momentum fade and take action when they are certain of the direction.

Bearish Divergences on the weekly chart have historically had significant pullbacks. Note that RSI divergences should be seen from the body of the candle, not the wick, because RSI is calculated at the close of the candle.

There have also been several hidden bullish divergences on the weekly chart, signaling weakening bearish sentiment. A hidden bullish divergence occurs when price makes a higher low on increased momentum. This means that in spite of increased momentum, price was unable to make a lower low.

This pattern has occurred several times on the weekly chart, and was a signal for strong bullish trend continuation. Should selling continue over the next week, there is the potential for another hidden bullish divergence.

When looking for strong high probability support, look no further than the Ichimoku Cloud. The Kijun (red) represents complete mean reversion of the historic prices over the past 30 periods. This zone is currently holding as support at the time of this article. Additionally, there is an incredibly small, but existing hidden bullish divergence should this zone hold.

Another indicator to use when looking for support is the Pitchfork (PF). They provide diagonals that can be thought of as a potential reversal zones or support/resistance lines. The upper diagonal zones being ‘most overbought,’ or the top bounds of the trend, and the lower diagonal zones being ‘most oversold,’ or the bottom bounds of the trend.
 

Based on the longstanding PF, beginning in 2015, there is potential for increased selling down to the median line, ~USD$2800. This zone also represents support from the previous ATH made earlier this year.

There is another noteworthy pattern developing on a shorter timeframe, the fifteen minute chart, a bullish three drives pattern with a growing volume and RSI bullish divergence.

Lastly, we are approaching a rollover date on the OKcoin quarterly futures. Although the alternating top/bottom price pattern between quarterly futures contracts began to get much looser on the most recent rally to ~USD$5000, volatility surrounding the contract dates is not unusual. With a potential touch of the 200EMA on the daily chart, this may very well represent an interim bottom until December, when another bull run may occur.

Conclusion

A perfect storm of technical weakness and Chinese regulatory belt tightening, neither of which was fully priced in until at least today. Once regulations are finalized and FUD is abated, we can expect a strong rally, similar to that in January of this year. Technicals are already showing signs of bearish momentum weakening, with support targets holding on the daily close. Interestingly, this drop has been timed almost perfectly with the open of a new quarterly futures contract on OKcoin. Although the volume on the daily candle is the highest it’s been all year, we’ve yet to see a strong capitulation wick, signaling the end of the pullback.

 

Author Josh Olszewicz , 15 Sep 2017 – Bitcoin Price Analysis, Opinion, Technical

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

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