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BTC, NEO, XMR, ADA, LINK

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The total crypto market capitalization has recovered from the Sep. 6 lows near $314 billion but it is struggling to sustain above the $350 billion mark, which shows that higher levels continue to attract sellers.

Bitcoin’s (BTC) dominance fell from above 68% in mid-May to about 56% in the first half of this month as DeFi tokens embarked on a strong bull run. 

However, in the past few days, the DeFi assets have witnessed sharp corrections and their volatility has increased. This could possibly shift traders’ attention back to Bitcoin. It’s also possible that Bitcoin’s inability to hold above the $11,000 level could also be negatively weighing on the confidence of altcoin and DeFi-token traders.

Crypto market data daily view. Source: Coin360

Although Bitcoin has been struggling to find momentum, a positive is that the volume of Bitcoin futures trading on Bakkt has been increasing and the exchange whale ratio is near yearly lows. This suggests accumulation by the whales and institutional traders.

Currently, most major cryptocurrencies are not following a general trend as the price action has been mostly coin specific. This has opened up opportunities both on the short side and the long side. Hence, in today’s list, two short ideas have been discussed for the traders who are bearish on the crypto markets.

BTC/USD

The relief rally in Bitcoin is facing stiff resistance near the 50% Fibonacci retracement level of $11,147.60. This shows that the bears have used the current relief rally to initiate short positions.

BTC/USD daily chart

BTC/USD daily chart. Source: TradingView

If the bears can sink the price below the uptrend line and the $10,625 support, it will signal weakness. If the BTC/USD pair sustains below $10,625, it will increase the possibility of a retest of $9,835.

However, if the pair rebounds off the $10,625 support sharply, this will be the first sign that the correction might be over. Trading momentum is likely to pick up after the rally breaks above the downtrend line.

If the price closes (UTC time) above the downtrend line, the possibility of a rally to $12,460 increases. Even though there is resistance at $12,000 it seems likely that it will be crossed.

BTC/USD 4-hour chart

BTC/USD 4-hour chart. Source: TradingView

The pair is currently attempting to rebound off the uptrend line, which suggests that the bulls purchased the dip to this support. The buyers will now make one more attempt to push the price above the $11,147.60 resistance.

If the bounce fizzles out and the bears sink the pair below the uptrend line, a drop to $10,625 could occur. This is an important support for the bulls because selling is likely to intensify if this level breaks down.

If the pair rebounds off $10,625, a few days of range-bound action is possible. The flattening moving average on the 4-hour chart suggests a balance between supply and demand. 

NEO/USD

NEO is currently facing stiff resistance at $25.23, which shows that the bears are aggressively defending this resistance. However, as it is in an uptrend, traders are likely to view the dips as a buying opportunity. 

NEO/USD daily chart

NEO/USD daily chart. Source: TradingView

The immediate support on the downside is at $23 and below that at the 10-day simple moving average ($22.26). If the NEO/USD pair rebounds off either support, it will indicate that the bulls are not waiting for a deeper fall to buy which is a positive sign.

If the bulls can push the price above the $25.23–$25.78923 resistance zone, the uptrend is likely to resume. The next target on the upside is $29.

A break below the 10-day SMA will be the first sign that the momentum is weakening and a drop below $20.9633 will signal a possible change in trend.

NEO/USD 4-hour chart

NEO/USD 4-hour chart. Source: TradingView

The 4-hour chart shows that the bulls pushed the price above the $25.23 resistance twice but they could not sustain the higher levels. This shows that the bears are attempting to stall the rally at this resistance. 

However, on the downside, the bulls have not allowed the price to sustain below $23, which shows that the buyers are accumulating on every minor dip. 

This could keep the pair stuck between $23 and $25.50 for a few more days. The moving averages have flattened out, which suggests a balance between supply and demand. 

XMR/USD

The recovery in Monero (XMR) from the Sep. 5 low of $74.1012 has been strong and the bulls have pushed the price back above the moving averages, which increases the possibility that the correction might be over. 

XMR/USD daily chart

XMR/USD daily chart. Source: TradingView

However, the bears are unlikely to give up without a stiff fight at the $97.4615 resistance. If the XMR/USD pair turns down sharply from the current levels and breaks below $84, a drop to $74.1012 is possible.

Conversely, if the bulls can arrest the next dip at the 20-day exponential moving average ($89), it will increase the possibility of a breakout of $97.4615. Above this resistance, a move to $105.9131–$107.3742 is possible. A break above $107.3742 can result in a rally to $120.  

XMR/USD 4-hour chart

XMR/USD 4-hour chart. Source: TradingView

The 4-hour chart shows that the recovery from $74.1012 has been gradual. Although the bears broke the pair below the 30-EMA on several occasions, they could not capitalize on it and intensify the selling. 

This shows that the bulls are accumulating on dips. Currently, the price has again dipped back below the 30-EMA. If the pair rebounds off the current levels, the bulls will try and drive the price above the overhead resistance at $97.4615.

The short-term momentum is likely to weaken if the bears can break and sustain the price below the immediate support at $87.5629. 

ADA/USD

The relief rally in Cardano (ADA) from the lows of $0.0855982 on Sep. 6 hit a stiff resistance at $0.0997444 on Sep. 13. The moving averages are sloping down, which suggests that the bears are in command.

ADA/USD daily chart

ADA/USD daily chart. Source: TradingView

In a downtrend, the bears short on pullbacks to resistance levels as that improves the risk to reward ratio of the trade. Currently, if the bears can sink the ADA/USD pair below the $0.0855982 support, the decline might resume.

Traders can consider taking positions on the short side with an appropriate stop-loss to benefit from the likely down move. The next support on the downside is at $0.074 but if this support fails to hold, the drop can extend to $0.05. 

This bearish view will be invalidated if the pair rebounds off $0.0855982 and the bulls drive the price above $0.10. Such a move will suggest that the downtrend might be over. 

However, it is not necessary that a new uptrend starts as soon as a downtrend ends because many times, the price remains range-bound as it tries to form a bottom. 

Therefore, traders can step aside and wait for a new bullish setup to form if the price breaks above $0.10.

ADA/USD 4-hour chart

ADA/USD 4-hour chart. Source: TradingView

The 4-hour chart shows that the pair has been gradually declining towards the critical support at $0.0855982 and a close (UTC time) below this level is likely to start the next leg of the down move.

However, if the pair rebounds off $0.0855982, the bulls will make one more attempt to propel the price above $0.10. If they succeed, a quick relief rally is possible.

Conversely, if the price again turns down from $0.10, the pair might remain range-bound for a few days.

LINK/USD

Chainlink (LINK) is in a downtrend and it has been making a lower high and a lower low pattern for the past few days, which shows that the bears are using the relief rallies to sell. 

LINK/USD daily chart

LINK/USD daily chart. Source: TradingView

The down sloping moving averages suggest that the trend favors the bears. If they can sink the LINK/USD pair below $9.65, a drop to $9 is likely. This is an important support to watch out for because a break below this level is likely to resume the downtrend.

The next support on the downside is $7. Therefore, traders can consider benefiting from the possible down-move.

This bearish view will be invalidated if the pair turns up from the current levels or rebounds off sharply from the $9 levels and breaks above the downtrend line. 

LINK/USD 4-hour chart

LINK/USD 4-hour chart. Source: TradingView

On Sep. 5 and 6, the bears were unable to sustain the price below $10.50, which shows that the bulls were attempting to defend this level. 

However, during the current fall, the price has been sustaining below $10.50 for the past two days, which suggests that the buying has dried up.

The moving averages are sloping down gradually and the price is below the averages, which suggests that the advantage is with the bears.

A break above the 30-EMA will be the first sign that the bears are losing their grip. Until then, the path of least resistance is to the downside. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.



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Big Bitcoin prediction, OKEx spooks markets, Ripple exec’s big mistake

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Coming every Sunday, Hodler’s Digest tracks every important crypto news story from the previous week. Essential reading for all Hodlers!

 

Top Stories This Week

 

Calm before the storm? Analyst says $20,000 Bitcoin is possible in three months

Bitcoin volatility has fallen to a 16-month low, indicating that a sharp move is on the horizon.

Large fluctuations tend to follow prolonged periods of consolidation, and according to a Bitazu Capital founding partner, Mohit Sorout, BTC could reach its previous all-time high if it was to break out today.

There are other factors at play. The U.S. dollar has been weak recently, and traditionally, this leads to strength across other “safe haven” assets. Bitcoin exchange reserves have also continued to plummet, indicating there’s a shortage of sellers… or a lack of trust in centralized platforms.

Cointelegraph analyst Michaël van de Poppe says BTC must hold $11,000 for October’s rally to continue — paving the way for a retest of $12,000 in the short term. Meanwhile, a report by Stack Funds suggests BTC has support to climb all the way to $15,000 if historic trends repeat themselves this year.

But this optimism isn’t universal. JPMorgan Chase experts believe Bitcoin is slightly overvalued and think the asset could see selling pressure ahead.

 

BTC and OKB plunge after OKEx suspends withdrawals

OKEx, a major crypto exchange, spooked the markets this week by announcing that it had suspended withdrawals.

The company said one of its private key holders was “cooperating with a public security bureau” concerning ongoing “investigations.”

In the immediate aftermath of Friday’s statement, Bitcoin fell nearly 3%, while OKEx’s native token, OKB, crashed 15%.

According to Caixin, OKEx founder Mingxing Xu — also known as Star Xu — was the executive who was questioned by authorities. The Chinese news agency also reported that he was investigated “at least a week ago” and had been absent at work for some time.

Industry executives have expressed surprise at how events unfolded. The Bitcoin Association’s president, Leo Weese, wrote: “That one person sits in China holding the keys to an entire offshore cryptocurrency exchange is probably the most surprising thing about this industry I learned this year. That customers don’t demand transparency about key management comes in at a close second, though.

Armstrong says “silent majority” supports Coinbase apolitical stance in leaked audio

Staff at Coinbase fear that the exchange’s leadership are watching their every move and monitoring their messages, it has been reported.

According to Motherboard, the exchange’s newfound “apolitical” stance has led to allegations of surveillance and censorship, but in a leaked recording of an ask me anything session, CEO Brian Armstrong said the “silent majority” supported the move.

Elsewhere, it was claimed that Coinbase’s management had “stunted internal discussion” and forced employees to delete political Slack messages. The exchange responded to Motherboard’s claims by describing the accusations as “quite extreme and absolutely false.”

During an AMA back in June, Armstrong had reportedly resisted the idea of making a public statement in support of Black Lives Matter following the killing of George Floyd by police. However, he later backtracked and posted a series of tweets in support of BLM.

Coinbase has been hemorrhaging employees of late, with at least 5% of its workforce opting to take an exit package if they were unwilling to avoid political and social issues at work.

 

Following whipsaw launch, Filecoin looks to weeklong conference for stability

It’s been a wild ride for the FIL token following Filecoin’s long-awaited launch.

FIL initially rocketed by 118% before plunging by 80% as the cryptocurrency was listed on major exchanges — three years after the project’s ICO was held.

Now, the blockchain-based data storage platform is hoping to right the ship through a weeklong digital conference that begins on Oct. 19.

“Filecoin Liftoff Week” is going to be centered on education, infrastructure, interoperability, and future plans, with each day focusing on a different theme.

Despite the recent plunge in FIL’s value, the Filecoin team remains optimistic about the project’s future prospects: “This is only the beginning for the Filecoin network.”

 

Ripple’s CTO sold 40,000 Ether for just $1 each

And we end our news roundup with a painful story courtesy of Ripple’s chief technology officer David Schwartz.

He revealed that he and his wife came up with a “derisking plan” for their crypto investments in 2012 — and missed out on millions of dollars in profit as a result.

Schwartz sold 40,000 ETH for $1 each at the time — a stash that would be worth more than $15.5 million at today’s prices.

The Ripple executive also sold a significant sum of BTC for $750 apiece, and a large trove of XRP for $0.10.

He described himself as a “risk averse person with people who depend on me financially and emotionally” but admitted that selling his crypto at this bargain basement prices “hurt.”

 

Winners and Losers

 

Gainers and losers

At the end of the week, Bitcoin is at $11,435.68, Ether at $375.90 and XRP at $0.24. The total market cap is at $359,603,174,619.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are ABBC Coin (77.11%), Filecoin (44.49%) and Waves (28.70%). The top three altcoin losers of the week are Arweave (-32.22%), OKB (-23.80%) and Crypto.com Coin (-21.98%).

For more info on crypto prices, make sure to read Cointelegraph’s market analysis

 

Most Memorable Quotations

 

“All your funds and assets are safe. The investigation concerns a certain private key holder’s personal issue only.”

Jay Hao, OKEx CEO

 

“That one person sits in China holding the keys to an entire offshore cryptocurrency exchange is probably the most surprising thing about this industry I learned this year. That customers don’t demand transparency about key management comes in at a close second, though.”

Leo Weese, The Bitcoin Association president

 

“The Chinese government is cracking down on money laundering using cryptocurrency for telecom fraud, and centralized exchanges are in a very dangerous state.”

Colin Wu, crypto reporter

 

“I do believe we’ll be seeing a relatively boring and corrective quarter on the cryptomarkets. In history; $ETH frequently bottoms out in December, to start running the quarter after. $BTC dominance to run up, to have an altseason in Q1 2021. Continuing the patience.”

Michaël van de Poppe, Cointelegraph analyst

 

“You can only try to win the hand with the high hand: gold, silver and Bitcoin. You can’t win playing the low hand unless you’re a sovereign state or a major investment bank, and that’s the game today.”

Max Keiser, broadcaster

 

“We’d like to keep tabs on what other central banks are doing and learn from them, not just from China but from other countries.”

Kazushige Kamiyama, Bank of Japan’s CBDC head

 

“Our eyes are peeled on the $12,000 key resistance level, as we expect further consolidation around current levels going into the elections before breaking into the upside going forward.”

Stack Funds

 

“So if I am to buy the dip, where would the perfect dip be? Well, the perfect dip would be… around $11,000.”

Tone Vays, trader

 

“It’s definitely sending a message to the crypto world that when there are U.S. users of a product or a service, there’s going to be enforcement of U.S. laws.”

“Crypto Mom” Hester Peirce, SEC Commissioner

 

 

Prediction of the Week

Could there be a massive Bitcoin shortage?

Rapid growth of institutional investments in crypto has prompted 10T Holdings co-founder Dan Tapiero to warn that shortages of Bitcoin could be on the horizon.

He warned: “SHORTAGES of Bitcoin possible. Barry’s Grayscale Trust is eating up BTC like there is no tomorrow. If 77% of all newly mined turns into 110%, it’s lights out. Non-miner supply will get held off market in squeeze. Shorts will be dead. Price can go to any number.”

Institutional demand surged rapidly after March when Bitcoin suffered one of its steepest falls in recent history. This indicates that big players see staying power in the world’s biggest cryptocurrency. 

The speculation about a potential supply-side crisis around Bitcoin also coincides with the post-halving cycle. Bitcoin went through its third halving on May 11, and historically, halvings lead to extended bull runs in the two years that follow.

Bitcoin may fall upwards

FUD of the Week

 

G7 will oppose Libra launch until regulations in place

The G7 has warned that it will initially oppose the launch of Facebook’s Libra project.

In a statement that pulled few punches, the Group of Seven wrote: “The G7 continues to maintain that no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory, and oversight requirements through appropriate design and by adhering to applicable standards.”

The statement was co-authored by central bankers and finance ministers from the United States, Canada, Japan, Germany, France, Italy and the United Kingdom.

The G7 has previously raised concerns over how to ensure digital assets comply with Anti-Money Laundering laws, consumer protection rules and other regulatory matters.

Last October, one of its reports also warned that global stablecoins pose a threat to the global financial system.

G7 issues warning to stablecoins

16 countries join forces to clamp down on money laundering crypto criminals

Europol has announced that 20 individuals suspected of working for the “QQAAZZ” criminal network have been arrested in an operation that spanned 16 countries.

The organization is accused of laundering tens of millions of euros for top cybercriminals since 2016. About 40 homes were searched as part of “Operation 2BaGoldMule,” with arrests made in Australia, the U.S, the U.K, Portugal, Spain, Latvia and Poland.

On the same day, a 40-year-old man was arrested in New Zealand for using cryptocurrency to launder more than $2 million for criminals — as well as by purchasing luxury vehicles including a Lamborghini and Mercedes G63.

And in the U.S, six individuals have been charged for their participation in a conspiracy to “launder millions of dollars of drug proceeds on behalf of foreign cartels.”

 

Deadline for Mt. Gox trustee rehabilitation plan extended again

The trustee of the now-defunct Japanese cryptocurrency exchange Mt. Gox has obtained another approval to extend the deadline for submitting a rehabilitation plan — this time to Dec. 15.

As reported by Cointelegraph, Nobuaki Kobayashi received a number of similar deadline extensions in March 2020 and April 2019.

The Mt. Gox crypto exchange is known for encountering the largest cryptocurrency hack in history. The exchange lost a total of 1.35 million Bitcoin in two hacks in 2011 and 2014.

Despite the hacks happening years ago, Mt. Gox customers have still not received compensation for their stolen funds. 

Kobayashi, a Japanese lawyer who was appointed to oversee the civil reimbursement process, reportedly has 150,000 BTC to repay users, but the refund process has been delayed multiple times since 2019.

 

Best Cointelegraph Features

 

The curious case of Coinbase — Employees driven out by “apolitical” stance

Coinbase’s new “apolitical” culture has led to some employees taking severance packages, as the crypto community reacts with ambivalence.

 

The next big treasure: Corporations buy up Bitcoin as a treasury reserve

The entry of firms like Square, MicroStrategy and Stone Ridge may open the BTC floodgates and provide “confidence for the rest to follow,” writes Andrew Singer.

 

Game theory meets DeFi: Bouncing ideas around tokenomic design

Andrew Fenton talks to Jack Lu about his new DeFi platform Bounce, which has been described as a decentralized version of eBay, Sotheby’s or Christie’s.



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Uniswap payday, ETH transactions hit record high & EU backs stablecoins

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Coming every Sunday, Hodler’s Digest tracks every important crypto news story from the previous week. Essential reading for all Hodlers!

 

Top Stories This Week

 

Frenzy as Uniswap launches new governance token

Uniswap stole the show this week when it announced it was launching UNI, its very own governance token. A total of 1 billion tokens will exist, and anyone who has ever used the platform can claim 400 of them.

Thousands came forward to accept their reward, and at one point, the airdrop was worth a cool $3,356. Not bad considering each token was initially priced at $3.

Within a single day, UNI was listed on more than a dozen exchanges and had driven $1.8 billion in trading volume. Binance added to the excitement by announcing support for the token just 90 minutes after it went live.

Many analysts were unsurprised when UNI rallied to highs of $8.60, and although the token has since had a correction, some traders believe the token could be worth many billions in the long term. 

One of them, Crypto Medici, wrote on Twitter: “UNI going to be worth $3-5 billion (conservative) Still extremely undervalued. Token distribution was genius and many that sold will FOMO back in when we break $1 billion. This is before V3 comes out, and liquidity mining ramps up.”

Daily Ethereum transactions hit a new historical high amid DeFi boom

The Uniswap frenzy helped daily transactions on the Ethereum blockchain reach a new all-time high of 1.4 million — exceeding the previous record of 1.35 million transactions in January 2018.

After the UNI token launched, transaction fees spiked to almost $1 million an hour. All of this means that the significant levels of congestion on the Ethereum network show no signs of abating, prompting renewed concerns about scalability. 

Now, Coinbase Pro has had enough. The exchange has announced that it will no longer cover network fees on behalf of users. In a series of tweets, it explained: 

“Historically, Coinbase Pro has absorbed these fees on behalf of our customers. However, as crypto has begun to gain broader adoption in applications like DeFi, payments and other projects, networks have gotten busier.”

In other Ethereum news this week, new research published by Cointelegraph Consulting has revealed that the total market cap of ERC-20 tokens has overtaken Ethereum’s.

 

A boring week for Bitcoin — But will momentum tip back in favor of bulls?

As Cointelegraph analyst Michaël van de Poppe notes, it’s been a relatively dull week when it comes to Bitcoin’s price.

The world’s biggest cryptocurrency has seen a slow upward trend after finding a footing above $10,000. Although the rally continued to $11,000 on Sept. 18, it was pushed back by some short-term resistance levels.

Van de Poppe says BTC is now facing a crucial resistance between $11,200 and $11,400, and if this area can be broken, a retest of higher levels will be back on the table. He doesn’t expect there to be a clear breakout out of this zone in one go and says sustaining support at $10,750 is crucial.

“Establishing new yearly price highs highly dependent on breaking the multi-year resistance level at $12K to continue the general uptrend for the rest of the year,” he wrote.

Also this week, the Bank of England became the latest central bank to discuss negative interest rates — effectively meaning that savers must pay to store cash. In response, Tyler Winklevoss said: “You couldn’t buy a better advertisement for Bitcoin.”

EU to see comprehensive crypto regulation by 2024

The European Union has officially got on-board with blockchain, announcing that it wants to make cross-border payments quicker and cheaper through the use of crypto assets like stablecoins by 2024.

The trading bloc is going to introduce fresh regulations that will promote this technology for international money transfers.

According to the European Commission, 80% of consumers in the EU use paper money at present, but it wants to see digital payments become more common, with immediate transaction times.

Documents seen by Reuters said: “By 2024, the EU should put in place a comprehensive framework enabling the uptake of distributed ledger technology (DLT) and crypto-assets in the financial sector. It should also address the risks associated with these technologies.”

Apple forces Coinbase to change its crypto products, CEO claims

Coinbase CEO Brian Armstrong has accused Apple of stifling innovation in crypto and sidelining DeFi to protect itself from competition.

The head of the exchange even claimed that other crypto firms are “reluctant to speak out on these topics for fear of retaliation.”

Claiming that attempts to talk to Apple directly have reached a dead end, Armstrong said that Coinbase is being stopped from adding features to its iOS apps that would allow users to earn money using crypto and access DeFi apps.

He wrote: “Why would Apple want to prevent people from earning money during a recession? They seem to not be ok with it, if it uses cryptocurrency. I’m not sure why.”

Winners and Losers

 

 

At the end of the week, Bitcoin is at $10,838.10, Ether at $368.44 and XRP at $0.24. The total market cap is at $344,943,312,540.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Hyperion, ABBC Coin and Celsius. The top three altcoin losers of the week are DFI.Money, SushiSwap and Flexacoin.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis

 

Most Memorable Quotations

 

“Following UniswapProtocol’s announcement of the $UNI token today, #Ethereum saw a massive surge in miner fees. Almost $1M USD in fees were spent in a single hour!”

Glassnode

 

“Starting today, Coinbase Pro will pass along network fees directly to our customers… Historically, Coinbase Pro has absorbed these fees on behalf of our customers. However, as crypto has begun to gain broader adoption in applications like DeFi, payments and other projects, networks have gotten busier.”

Coinbase Pro

 

“Prediction: $UNI will soon be the #3 crypto asset.”

Cole Kennelly, DeFi NYC founder

 

“I don’t necessarily think that 2020 is going to be the year of some type of major retail bull run, largely due to the fact that the global economy still lingers over this industry, just like other financial markets.”

Joel Birch, Stacked co-founder

 

“Thanks Bank of England, you will help drive $BTC adoption.”

Tone Vays, veteran trader

 

“2020 has witnessed a surge in the number of ATMs supporting digital coins.”

Aksjebloggen

 

“As $BTC has crossed above $11,000 for the first time since September 3rd, the sentiment of #Bitcoin on #Twitter is surprisingly at an all-time low.”

Santiment

 

“What happens when vaccine is proven? Gold silver Bitcoin will CRASH. Buying opportunity.”

Robert Kiyosaki, Rich Dad Poor Dad author

 

“Since DeFi protocols are designed to be permissionless, anyone in any country is able to access them without any regulatory compliance. As a result, DeFi can easily become a haven for money launderers.”

CipherTrace

 

“We added our 40th state today just a week shy of our one-year anniversary. 100% coverage is our goal.”

Binance US

 

Prediction of the Week

 

Bitcoin Birch says no retail crypto-wide bull run likely for the rest of 2020

In the aftermath of May’s halving, there was optimism that Bitcoin could be about to embark on a bull run — not to mention endless predictions that the cryptocurrency would return to all-time highs. But Joel Birch, the co-founder of the automated investing platform Stacked, now believes this isn’t likely.

Speaking to Cointelegraph, he said: “I don’t necessarily think that 2020 is going to be the year of some type of major retail bull run, largely due to the fact that the global economy still lingers over this industry, just like other financial markets.”

Despite that, he does believe that Bitcoin has an opportunity to continue heading upward between now and December.

Others remain as bullish as ever. PlanB, the creator of one of the best-known Bitcoin price models, has said it’s high time for BTC to begin its next significant price rise to $100,000, writing: “Time to go up.”

FUD of the Week

 

Police summon Bithumb chairman for questioning over alleged fraud

The drama over alleged fraud involving Bithumb’s senior executives continued this week, with the company’s chairman summoned for interrogation.

Police reportedly want to question Lee Jung-hoon, who is accused of multiple fraud and embezzlement offenses regarding the failed listing of the BXA token.

It is believed that investors lost up to $25 million as a result, with Lee allegedly embezzling these funds in overseas property purchases and offshore investments.

Also this week, Bithumb’s offices were raided for the third time this month. Police reportedly seized a number of shares in Bithumb Holdings belonging to Kim Byung-geon, the company’s Korea director.

Fresh reports of Indian crypto ban are ‘clickbait,’ says local source

Headline-grabbing pieces have warned that India’s parliament is preparing once again to try and ban crypto trading for good, but according to local experts, there might not be anything to worry about.

Siddharth Sogani, the founder of the Indian blockchain research company Crebaco, has described the reports as nothing short of “clickbait” — and he questioned the sources that Bloomberg had spoken to for a recent article.

Ashish Singhal, the CEO of the crypto exchange CoinSwitch, also told Cointelegraph that it is far too early for any draft bill to be presented to the country’s parliament.

He also pointed to the list of bills that is subject to discussion during the parliament’s Monsoon Session — and said a debate on banning crypto trading isn’t scheduled.

 

COVID-19 vaccine will spark Bitcoin crash, ‘Rich Dad Poor Dad’ author warns

Rich Dad Poor Dad author Robert Kiyosaki has claimed that Bitcoin will crash when the world finds an effective coronavirus vaccine.

On Twitter, he wrote: “What happens when vaccine is proven? Gold silver Bitcoin will CRASH. Buying opportunity.”

Nonetheless, Kiyosaki believes that gold, silver and Bitcoin remain the best investments in the long term, and he argued the biggest threat facing the American economy isn’t the pandemic, but rather the massive levels of debt that have left the U.S. “bankrupt.”

 

Best Cointelegraph Features

 

Programmable money: How crypto tokens could change our entire experience of value transfer

Writing for Cointelegraph Magazine, Andrew Singer explores the rise of programmable money — as some experts say the coronavirus “is forcing a slow-moving tsunami” in this area.

 

Illicit crypto transactions are getting more attention from the government

As Selva Ozelli writes, the IRS has a strong interest in receiving information from informed whistleblowers about offshore crypto accounts and criminal crypto tax activity.

 

DeFi and healthcare: A trillion-dollar opportunity for the taking

You may not think that decentralized finance and healthcare would go well together — but according to Pradeep Goel, there’s huge market potential.



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WTF happened in 1971 (and why the f**k it matters so much right now) – Cointelegraph Magazine

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If you’ve ventured on to Crypto Twitter this year, you may have seen a tweet from the meme account WTF Happened in 1971?

Created in March, the account posts numerous times a week to its fast growing fanbase of 10,500 followers. A typical post features a graph that shows how inequality has grown in recent years, inflation has skyrocketed and how ordinary people are being priced out of houses and stocks due to low wage growth. Somewhere on the chart there will be a little arrow pointing at 1971, which highlights when the rot set in.

And it invariably poses a question like: “WTF happened to wages in 1971?” Or, on a chart showing ever-widening political polarization: “WTF happened in 1971 that led to such a divergence in political thought?”

Its followers notice similar phenomena and contribute to the meme by tagging them in. This week someone reposted a New York Post article showing a decline in the happiness of lower socio-economic status white adults since the early 1970s, asking: “Gee I wonder #wtfhappenedin1971???’

 

 

So what did happen in 1971?

The WTF Happened in 1971 website suggests that all of these disparate effects are connected to President Richard Nixon calling time on the Bretton Woods financial system which tied the value of the world’s reserve currency — the U.S. dollar — to gold.

The ‘gold standard’ as it is known, underpinned global finance from 1944, when the World War II Allied Nations, including the U.S., Canada, Western European nations, Australia and Japan, negotiated the rules of the international monetary system with fixed exchange rates between currencies. This took place at a hotel in Bretton Woods, New Hampshire. At the time the U.S. controlled two thirds of the world’s gold and insisted the system was based on gold and the US dollar.

The system meant that in theory you could redeem $35 USD for one ounce of gold  – although in actual fact it was illegal for US citizens to hold gold between 1933 and 1974 after the government ran into trouble backing the currency during the Great Depression. Foreign governments could trade dollars for gold at that rate however. The government again ran into trouble backing the currency with gold in the late 1960s, after printing too much money to pay for things like the Vietnam war and various welfare programs, which was the rationale for Nixon killing the system on August 15, 1971.

 

Real Wages since 1971

 

Yeah, but it was a good thing

The effects of this are contested to say the least. The International Monetary Fund (IMF) for example suggests that fears at the time that the move away from gold would bring the era of rapid growth to an end were misplaced. “In fact, the transition to floating exchange rates was relatively smooth, and it was certainly timely: flexible exchange rates made it easier for economies to adjust to more expensive oil, when the price suddenly started going up in October 1973. Floating rates have facilitated adjustments to external shocks ever since.”

For many traditional Keynesian economists leaving the gold standard behind has provided governments with the flexibility to use activist monetary and fiscal policies to respond to, or prevent, economic crises. For example, without the Federal Reserves ‘unlimited’ quantitative easing program (money printing) this year, the economy may have fallen into such a deep hole the U.S. may never have clambered out of it. And Greece’s inability to inflate itself out of its sovereign debt crisis in the years after the global financial crisis was part of the reason it had to embrace crippling austerity measures. Surveys of mainstream economists suggest that 9 out of 10 think returning to the gold standard would be a disaster.

No, leaving the gold standard was a disaster

But WTF 1971 tells a different story. It showcases various graphs highlighting that from 1971 onwards productivity increased while wages flatlined; GDP surged but the share going to workers plummeted; and house prices went through the roof leading to Americans’ ‘savings’ becoming inextricably tied to home values. It suggests that around the world episodes of hyperinflation increased, currencies crashed more frequently and there was a spike in the number of banking crises. The personal savings rate fell off a cliff, the incarceration rate went up by a factor of five, divorce rates shot up and the number of people in their late 20’s living with their parents increased exponentially.

Most horrifyingly of all, the number of lawyers quadrupled.

 

Population per lawyer since 1971

 

The site and Twitter account was founded by former 3D graphics designer Ben Prentice and Bitcoin podcaster Heavily Armed Clown — also known as Collin from The Bitcoin Echo Chamber. Both live on the east coast of the U.S., and met when Prentice pitched himself as a guest on Collin’s podcast.

Prentice discovered Bitcoin in 2017 and fell deep into the Austrian economics rabbit hole. That’s a strand of heterodox economics beloved by goldbugs that suggests Keynesian economists have got it all wrong, fiat is worthless paper and gold is the answer. Although hugely influential among Bitcoiners, Austrian economics is shunned by mainstream economists and frequently criticized for lacking scientific rigor and not relying enough on mathematical models and macroeconomic analysis. 

“Austrian economics is really just trying to dispel the logical fallacies inherent in Keynesian logic, starting at first principles and then building you way up from there,” says Prentice. However the pair have one major difference to the Austrians in that they believe Bitcoin is the answer that gold never was, he continues:

Our belief is that gold itself failed as a money. And that’s hard for the Austrians to get because they’ve been advocating for gold for so long. But the reason gold failed as money is because we had to come up with paper in the first place to scale it and we know how many problems come with paper.

Collin says he was trading penny stocks, alternating between pump and dumps and a value investing strategy “which isn’t really a real thing” when he stumbled across Presidential candidate Ron Paul’s End the Fed while researching the underlying causes of the 2008 Global Financial Crisis. This led to the work of famed Austrian economists Ludwig von Mises and Murray Rothbard — who coined the term anarcho capitalism.

“That’s where we found commonality,” says Collin. “And it was between our economic discussions talking about history, talking about money, talking about human action, that we came upon a lot of inflection points in the data, which happened around 1971.”

The first few graphs for the site were taken from the Wikipedia entry on Bretton Woods, and they kept seeing more and more charts that suggested the same thing.

 

 

“We started collecting those and other ones,” says Prentice. “We started arguing with economists on Twitter and eventually, I think it was Collin’s idea, he was like: ‘Well, we’ll just throw these up on a website and just ask WTF Happened?’ and the rest is history.”

So far in 2020, the site has had around 400,000 visitors, and is growing its audience month on month.

Collin says they’ve considered their arguments carefully.

“We spend the vast majority of every day especially Ben and I just in private, discussing these things back and forth and sending, you know, trying to poke holes in our ideas.”

Rising inequality the result

The most obvious effect of moving away from the gold standard, was the ability for governments to print as much money as their hearts desired. As Collin puts it:

The temptation to print money is the greatest temptation in the whole world.

To illustrate how this harms individuals, Prentice uses the analogy of a pie as representing the economy, with the slices representing the money in circulation. “As we’re printing more money, all we’re doing is taking existing slices and making them smaller and smaller and smaller,” he explains. “Each unit is now worth less. Nothing new has been created. You still have the same pie, but now your slice of the pie is much smaller than it was before.”

Collin says that this results in people trying to store their wealth in other ways, which has resulted in runaway asset price inflation since 1971.

“When money is debased, and it loses its value over time, people store their wealth in assets,” he says. “That’s why it’s common financial wisdom, to diversify your assets, to invest in stocks to invest in bonds to invest in gold, buy a house. The more assets you own, the better off you’ll be in the long run, because all of those assets are going to increase in price because of inflation.”

The net effect is a massive increase in economic inequality because the wealthier you are, the larger the percentage of wealth you can afford to hold in illiquid, volatile assets. Working Joes however — the median household net worth in America is $97,300 need to devote most of their dollars to rent and food and insurance, and have a larger share of capital in depreciating assets like cars.

“This system is very, very much tilted towards the wealthy,” says Prentice. “A very wealthy person would hold 80 to 90% of their wealth in business interests and equities, right, and those inflate. This is the money of the wealthy, but the access to those assets is almost nil for the poorest.”

This would be less of a problem if wages had kept up with inflation. While average hourly wages in the US have roughly increased in line with CPI, that’s just one way to measure inflation. One of the most telling charts on the site shows that the number of working hours to buy a single unit of the S&P 500 has increased to an all time high of 126 hours today, up from an average of 30.9 hours since 1860.

 

Buy the S&P cost since 1971

 

Depending on how deep down the rabbit hole you want to go, there are ramifications everywhere.

Collin explains there’s an economic calculation that can be performed normally whereby as capital is accumulated in bank savings accounts, interest rates come down. “Then people are more likely to borrow money and go out and try and engage in new productive ventures,” he says. “Creating new money and artificially suppressing the central bank interest rate is distorting that economic calculation.”

He says our crazy financial system is the reason hugely profitable companies like Apple still borrow billions of dollars to buy back their own stock.

“Why would they borrow money which they then have to use to pay interest in order to buy back their own stuff? The answer is the replacement cost of assets is higher than the replacement cost of capital.” 

Like the famous chapter of Freakonomics that linked the Roe vs Wade Supreme Court decision on access to abortion in the 1970’s to the decrease in crime two decades later, they’re also not discounting some less intuitive ramifications.

“We believe that a lot of second, third, fourth and fifth order effects happen as ripple effects that happen outwards of monetary policy,” explains Collin.

When we look at things like obesity, right, and you say that is not related to the end of the gold standard. Are you sure? Because people have to eat a whole lot more subsidized food than they did 60 years ago and in America, the number one subsidized crops are sugar and corn.

They now believe the system has become so distorted, it’s no longer genuine capitalism. Collin points to the 52% of young adults who are now forced to live at home with their parents instead of building their own wealth, buying a house and starting their own families. “You can’t afford to do any of those things and you just look at the system that exists and you say: this is broken, right? You’ve always believed in capitalism, but now you’re seeing this system that they’ve called capitalism is broken. But Ben and I posit that this is not capitalism, this is something completely different. This is social monetarism.”

Although there are some pretty obvious drivers of the 100 days of protests and riots in America following the death of George Floyd, rising inequality has played a big role, says Prentice.

“I absolutely think so. I think that people get out in the streets when things aren’t going well. People are frustrated, because they don’t feel like this system is working at all, and that they work their whole lives at crappy jobs.”

But maybe they’re wrong

Collin and Prentice sound pretty convincing, but economics is a frustratingly complex area and even the world’s best economists are frequently way off. In December 2007 the Wall Street Journal asked 51 economists to predict what would happen in 2008. Not a single economist predicted a recession, much less the dramatic events of the Global Financial Crisis, even though the subprime mortgage crisis had begun five months earlier.

Even though the charts on the site show a strong correlation between the end of the gold standard and a variety of different things, that doesn’t prove it caused the issue. Correlation isn’t causation: For example the number of films Nicolas Cage appeared in between 1999 and 2009 strongly correlates with the number of people who drowned by falling into a pool during the same period. The increase in per capita cheese consumption between 2000 and 2009 almost perfectly matches the number of people who died by becoming tangled in their bedsheets.

 

Cheese Consumption 1971

 

Collin concedes that some of the charts may simply show a correlation.

“We get a lot of people who think that we’re attributing things to the end of Bretton Woods that we shouldn’t be,” says Collin. “And maybe in a little way, sometimes we do, because to be completely honest, the website is a meme. We embrace that. We love that. That’s what’s made it so popular and anytime we find any chart that has an unusual inflection point in 1971, you better believe it’s going on there,” he says.

Prentice adds: “We just put a bunch of data on a website and asked a question, right? So we’ve tried to not like explain all those charts on the website. We just want it to exist and let people answer their own questions and let them debate among themselves.”

And of course other things happened in 1971: Disney World opened, the Monkees broke up. Could these things help explain why that year changed everything?

“The one that we see the most is that someone says ‘I was born that year. This was all my fault’,” says Collin.

A more serious attempt to explain the major economic changes the charts show, is to attribute them to the wave of deregulation that swept over advanced economies in the 1970’s and 1980’s. Prentice says that he’d wrestled with this because from his libertarian, anarcho-capitalist influenced world view, everything should have become so much better.

“Why did everything get worse after deregulation?” he asks.

This is a great question to ask. (It’s) because the money system is so broken — it’s not capitalism. This is not what we’re advocating for. You took monetary socialism and then you took the reins off of it.

“So yeah, everything got way worse and the inequality got way worse. From that lens I think it’s much clearer to see why deregulation actually exacerbated everything.”

And while we’re trying to poke holes in the theory, a bunch of stuff has also got way better since 1971. Life expectancy in the U.S. is up 10%, infant survival rates have increased 71%, the food supply per person is up 21%. Globally, things have improved out of sight: in the early 1970’s half the world’s population lived in extreme poverty, now only 10% do. The number of illiterate people has dropped by more than 50%, while the number of people worldwide who live in a democracy grew from 32% to almost 56%

Prentice believes technological progress is the reason these some things have improved.

“We can afford more cool gadgets to increase our productivity, even something like as simple as the washing machine,” he says. “We used to spend hours a day washing our clothes and hanging them up and drying them. Now I don’t even think about it. Technology improves things like crops, right? Look at all the agricultural gear that we use now, these giant harvesters and all these things that allow us to get our food cheaper. In general, I believe all of the things you just listed are due to deflationary pressure inside an inflationary system.”

So essentially he’s saying that all of the things that got better, would have performed even better if they hadn’t been hampered by the end of the Bretton Woods system.

Economics backgrounds

Prentice says the pair are well aware their ideas are outside of conventional economic thinking, but say that’s because they’ve attempted to approach things from first principles and “expose the errors that other economists make.”

“We’ve seen their arguments, and we constantly question ourselves,” he says. “It’s like at the end of Marty Bent’s podcasts, he’s constantly saying ‘Are we crazy?’ We ask ourselves that all the time. I don’t have any hubris that I am a smarter economist than anybody else. But I do know that I work from logic and first principles, and I do wish to benefit everybody in the world.”

Since June they’ve also been expounding on their ideas in a newsletter, which is up to issue 68 already and hits inboxes every couple of days.

“We started the newsletter to give these little economic tidbits and explain little bits of monetary history because we believe that Bitcoin is inevitable and it is the best money that has ever existed,” says Prentice.

Collin says it may one day prove to be the first draft of a book on the topic. 

“If our audience continues to grow, and we continue to get a good reception, we’re building up a library of content that may one day be edited into a book,” he says. “An ebook with a more cohesive analysis of monetary history and the emergence of a new paradigm, which is Bitcoin — which will change the world because it is here and it can’t be stopped.”

 





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