Bitcoin fundamentals briefing, December 2019

Bitcoin fundamentals briefing, December 2019

And the market is driven by…

Thus, guys, the year has passed fast. For cryptocurrencies it was not simple, tough, but interesting period. We could call it as “searching of the sense” year, because this was a time when first euphoria of cryptocurrencies starts to fade, returning everybody to reality, Bitcoin price collapsed and investors, traders – everybody around starts to search for the “sense” of Bitcoin and cryptocurrencies in general. What to do with this legacy next?

Investors’ mind finds the sense in expansion, to make cryptocurrencies as public as possible, involve classic-minded investors, increase trading volume in few times, open new horizons of application of cryptomarket. And, in the longer perspective, make a rival of traditional money, least in some spheres. So, we see changes in quantity but not a quality of cryptocurrency usage by far.

As a by-product of this process, we see big power that cryptocurrencies could give to large companies, that could control and influence on big mass of people. We mean big transnational banks, or, say, Facebook, who includes every third person on a planet.  This is something absolutely new – this tool in the hands of private-owned companies that could challenge classic financial system. Just imagine – Libra currency could become the one that is used by 30% of whole Earth population. And this 1/3 is most active and modern part of planet’s population. This is the issue that yet to be thought around and understand.  Such power hardly will stay unused and sooner or later but private companies will find the way how to use it. It provides, if not unlimited, but very wide options in financial and political sphere. Just imagine that you could print your own money. Is it a problem to become a President? Or manipulate by big mass of people? G. Soros hasn’t seen it even in the dreams…

This, in turn, disturbs government authorities, political parties, and supervision entities who reasonably see the hazard if this power will be concentrated in the hands of just few people and applied in the foreseeable future.

These are major factors that make the shape of current cryptocurrency market – expansion of the products that already have become a classic, I mean Bitcoin per se, and – preventing of appearing of private money in the way of private cryptocurrencies that could be adopted by big mass of people.

Although last month was rather dry with no big events, December shows better, more positive sentiment, which already is reflected in the price of BTC.

Mood is improving…

WisdomTree launches physically-backed Bitcoin ETP

Here is add-on to our mentioned above “expansion” factor.

WisdomTree, the exchange traded fund (“ETF”) and exchange traded product
(“ETP”) sponsor, has announced the launch of its first cryptocurrency product, a physically-backed1 Bitcoin ETP. The WisdomTree Bitcoin ETP (BTCW) listed on SIX, the Swiss Stock Exchange, todaywith a total expense ratio of
0.95%.

Alexis Marinof, Head of Europe, WisdomTree, said: “We have been monitoring cryptocurrencies for some time and are excited to bring investors secure access to this developing asset class. We have seen enough to believe that digital assets, like Bitcoin, are not a passing trend and can play a role in portfolios.

The ETP will be traded on a regulated stock exchange and shares in the ETP will settle via the International Central Securities Depositary (ICSD).

A Plan to Decentralize Bitcoin Mining Again Is Gaining Ground

The spec, Stratum V2, could significantly change how bitcoin mining functions and would add security and efficiency to mining pools, the entities that organize miners spread across the world.

When one of the miners in a mining pool wins a block and rakes in the 12.5 bitcoin reward, the mining pool decides which transactions go into that block. Bitcoin experts worry that these centralized entities could use this power to censor transactions they don’t like.

To prevent this, Stratum V2 supports “job negotiation” modeled off of Corallo’s BetterHash. This changes the relationship between the miner and the mining pool. Instead of mining pools deciding what transactions go into blocks, miners decide which ones to include.

Although it aims to improve bitcoin mining pools in a number of ways, the primary benefit comes from a component that reduces one of the most pressing problems in bitcoin: mining pool centralization.

“If this protocol does everything it promises, ‘mining centralization’ as an argument will be completely dead,” bitcoin developer and educator Jimmy Song said.

Ronaldo’s soccer club Juventus now has a token that gives its over 400M fans voting power

And here is good news for C. Ronaldo fans – now you could buy Juve token and use it for inner-club transaction, voting on transfers etc.

Fans can buy $JUV via Socios.com’s app and get the right to vote on certain club decisions.

Alexandre Dreyfus, founder and CEO of Socios.com, told The Block: “99.9% of sports fans are not in the city/country of the team they are supporting. We created these fungible fans tokens to allow fans to have an influence over some fan-based initiatives”

New Money Laundering Act – Banks can keep Bitcoin safe

A new business field could open for German banks from 2020: the sale and custody of Bitcoin and other cryptocurrencies.  The draft law passed by the Bundestag provides for corresponding relief, and approval of the federal states for the new regulation is expected.

From 2020, financial institutions will be able to offer their customers legally secure online banking in addition to classic securities such as shares and bonds. The law also provides for further relief, such as extended application deadlines for the necessary license.

Industry representatives were pleased. Sven Hildebrandt, head of the DLC consulting house, says: “Germany is well on the way to crypto heaven. German lawmakers are playing a pioneering role in regulating crypto-custodians. “

Andreas Antonopoulos indirectly confirms that CME were hurry to launch Bitcoin futures to blow the growing bubble. 

Bank of China issues special financial bonds worth 20 billion yuan for small and micro enterprises

In this issue, the Bank of China simultaneously used the self-developed blockchain bond issuance system, which is also the first domestic bond issue bookkeeping system based on blockchain technology. Issuers, some underwriters, and investors participate in the use of online operations such as bond issuance preparation, bookkeeping filing, and pricing placement. The system uses the blockchain network as the underlying platform to support on-chain interaction and deposit of key information and documents during the bond issuance process. (The article is on Chinese language – apply online traslation option to read it).

ICYMI: Bakkt Bitcoin has renewed top trading volumes

📈 Traded contracts: 5671 ($42.52 million, +148%) (New ATH 🚀)
🚀 All time high: 5671 (11/27/2019)
💰 Open interest: $4.16 million (+6%)

That was in the beginning of the December. A few days the new top achieved:

And, in continuation of Bakkt topic – here is good interview on How Bakkt aims to build digital asset ecosystem and consumer app

And here is quite specific news –

Iran leader urges deeper Muslim links to fight US ‘hegemony’

Iranian President Hassan Rouhani urged Muslim nations on Thursday to deepen financial and trade cooperation to fight what he described as U.S. economic hegemony

Rouhani proposed an Islamic financial payment with Muslim countries trading in local currencies and the creation of a Muslim cryptocurrency to cut reliance on the U.S. dollar and weather the effects of market fluctuation.

SBI Holding invests into Boerse Stuttgart Digital Exchange GmbH, and BoerseStuttgart Digital Ventures GmbH, providing a Digital Asset-Related Business in Europe

Yoshitaka Kitao, President and Representative Director of SBI Holdings, stated:

“Given that the digital asset has the characteristic of decentralized value, the highest priority upon establishing ourdigital asset ecosystem is to find trustable financial partners globally. The SBI Group, including its crypto-assettrading platform and other related business operating companies, will fully make use of the collaboration withBoerse Stuttgart Group, to well-establish the actual demands of the digital asset throughout the world”

Fidelity launches cryptocurrency business in Europe

Fidelity Digital Assets has appointed Chris Tyrer to lead a push into Europe.

One of the world’s largest fund managers has formed a new UK entity to sell cryptocurrency services to European clients.

And, Finally –

Congress Considers Federal Crypto Regulators In New Cryptocurrency Act Of 2020

The bill is called the ‘Crypto-Currency Act of 2020,’ and the stated purpose is to clarify which Federal agencies regulate digital assets, to require those agencies to notify the public of any Federal licenses, certifications, or registrations required to create or trade in such assets, and for other purposes.

The other side of the moon…

As we said – the most negative events in December are related to the regulation of the market. Government and supervision entities discover potential hazards not in Bitcoin per se but in tools that cryptocurrencies could provide potentially. Mostly they are tokens and altcoins, private cryptocurrencies, such as Libra. And here we see continues “squeeze tactics” by government and regulatory entities.

Fed’s Brainard: Facebook’s Libra faces ‘core set’ of regulatory hurdles

U.S. Federal Reserve Governor Lael Brainard launched a broadside against Facebook’s Libra digital currency project on Wednesday, saying it faces a “core set of legal and regulatory challenges” including clarity about how it would be tied to some basket of underlying assets.

“What would set Facebook’s Libra apart, if it were to proceed, is the combination of an active-user network representing more than a third of the global population with the issuance of a private digital currency opaquely tied to a basket of sovereign currencies,” Brainard said in remarks prepared for delivery at a conference in Frankfurt. “Without requisite safeguards, stablecoin networks at global scale may put consumers at risk.”

“Given the stakes, any global payments network should be expected to meet a high threshold of legal and regulatory safeguards before launching operations,” she said.

China’s Tech Hub Shenzhen Kicks off Cleanup of Crypto-Related Companies

Recall, guys, what we’ve said on Mr. Xi rally last month – dont’ fall in euphoria, be patient, time will set everything on proper places. And indeed –

China has recently renewed its hard-line approach to cryptocurrency trading and crypto exchanges, with the People’s Bank of China (PBoC) announcing that any crypto-related activities discovered would be “disposed of immediately”.

Weihai, a port city in Shandong province of eastern China, has a stern warning for investors: make sure you are really investing in blockchain innovation and not cryptocurrency masquerading as blockchain.

In response to Beijing’s rigid anti-crypto stance, local governments at all levels have been intensifying the clampdown on crypto-related activities with new regulations rolled out.

BANK OF CANADA GOVERNOR STILL BACKS CASH OVER CRYPTO

Poloz spoke about the role of technology in affecting how Canadians made payments.

The other nice thing about cash is that it will still work even during power blackouts or cyber attacks. As a consequence, banknotes will probably always be around to some degree, if only as a contingency for unusual events.

AUSTRAC revokes first crypto exchange licences

Australia’s anti-money laundering agency AUSTRAC has revoked the licences of three cryptocurrency exchange operators due to alleged criminal ties.

Cancellation of the registrations, which took place in September, are the first to be revealed by the agency since the agency was given powers to monitor local exchanges at the end of 2017.

Our traditional technical section

provides few interesting headlines.

There’s Something Very Strange Going On With Bitcoin Futures

Now, researchers have recorded “unusual” moves in the bitcoin futures market, with premium rates rising even as bitcoin prices fall—suggesting the bitcoin price could be headed higher next year.

Between November 29 and December 2, the premium on bitcoin futures increased over 30% while the bitcoin price dropped around 6%.

Source: Forbes

“The premium rates on bitcoin March 2020 contracts have been increasing, although the bitcoin price has decreased,” analysts at Arcane Research found, adding, “this is not a common observation.”

Bitcoin Charts First Weekly Golden Cross in 3.5 Years

Bitcoin’s weekly chart is reporting a bullish golden cross of the 50- and 100-period moving averages. The widely followed, but lagging, indicator may fail to attract buyers as broader market conditions are currently bearish.

That said, crossovers are widely followed indicators and attract a significant amount of buying if the broader market conditions are supportive, as seen below.

Andreas Antonopoulos Analyzes Google’s Quantum Supremacy Threat to Bitcoin (BTC) and Crypto

Bitcoin and blockchain expert Andreas Antonopoulos isn’t buying into the fear, uncertainty and doubt over Google’s “quantum supremacy.”

Google has reportedly built a quantum computer that can process certain calculations faster than any other computer on earth. The breakthrough triggered concerns of a hypothetical device powerful enough to crack modern forms of encryption – spelling trouble for Bitcoin and the thousands of other cryptocurrencies that are based on blockchain technology.

2020 Could Be the Year of Staking, Predicts Analyst

Could 2020 be the year of proof-of-stake (PoS) cryptocurrencies? According to one analyst, the market is currently overlooking its potential impact.

Proof-of-stake cryptocurrencies are posited as an alternative to proof-of-work mining, but are they viable in the long-run? Staking has yet to take off in the cryptocurrency industry, despite being talked about for years. However, some are speculating that 2020 may be the year that this idea finally becomes an industry standard.

Stakingrewards.com provides great information on stake passive return in different cryptos

Here is top 5 of stakeable currencies:

Source: stakingrewards.com

 

As a bottom line – where do we go?

Information that we’ve discussed above, guys, mostly confirm our identification of major driving factors. As “novelty effect” is faded and cryptocurrencies turn to more reasonable and slower price action next upside trend hardly will be the same speed as former one. It should be slower, but longer and more solid because the new trend should be driven not by emotions but cold math and common sense.

We see that as Blockchain technology as cryptocurrencies are showing progress. This topic is not dead, and interest still stands actual. We see it in expansion of the market and real interest from aside large companies that intend to invest in digital assets. We suggest that this process will be slow. Those who have made big money in the past on classic assets will not dive into new business blindly and will test “new” market for some time by growing investments. This is the way that we see right now is started.

The major risk for digital assets is its power that they could give. That’s what scaring governments and suprevision authorities. Regulation cares great risks and could make serious impact on liquidity and applicability of the currencies. Take a look at China, for instance… Ultimately, regulators could shut cryptocurrencies if they want, I mean in wide sense, by creating such conditions, sanctions and barriers that could be not acceptable for big funds and investors. This put under question expansion driving factor. But, let’s hope that this will not happen, at least in 2020.

 

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Sive Morten

Sive Morten

By day Sive Morten works for the large European bank. In that roll he evaluates the markets including currencies market managing bank risks and evaluating the bank portfolio.

At the Forex Peace Army, he is known as an author of Forex Military School, which quite unique free forex trading course. We do not know of any other free forex trading education covering such a broad spectrum of forex market concepts in such details while keeping it easy to understand and practically use.

As if that wasn't enough, he is the part of the Shoulders of Giants Program. He shares with his fellow traders at FPA his view and forcast of the Gold Market, Currency Market, and Crypto Market in form of weekly analytics and daily video updates.

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ED SCHAFFER
19 days ago,
Registered user
Hello Everyone > I enjoyed the Quantum Supremacy video as I am learning about cryptos but have yet to invest in them as I am an "old school" guy who needs to know what I am doing before I trade or invest in anything. Please do keep these articles & videos on cryptos coming SIVE as I find that they are a great learning tool for "newbies" like me to the crypto topic. Cheerio everyone.