Peter Schiff and Alessio Rastani

When the stock markets crashed in March, Alessio Rastani was buying into the S&P 500 and the UK FTSE 100, averaging down by going long as the S&P 500 dropped from 2600 to 2191. Even though most investors were bearish and anticipating another stock market crash, Rastani was bullish and profited from bearish sentiment.

Now, Rastani is looking to pull out of stocks as he believes that the U.S. stock market is about to enter, a risky zone. In this exclusive interview, Rastani shares his thoughts on why stocks in the near future carry risk, how this risky zone could impact bitcoins price and why he is bullish on bitcoins long-term picture.

Bullish on U.S. stocks

According to Rastani, as long as the S&P can remain above 2550, he will maintain his long-term bullish perspective on the stock markets. Rastani thinks that most investors considered the recent stock rally to be nothing more than a bear market rally or correction. He disagrees with this perspective for 3 reasons:

Stocks could enter risky waters

The U.S. stock market is getting very close to a 100% full recovery from the black swan crash of March, and because of this, Rastani calls it a risky zone for stocks. Rastani says, This rally is going to get overbought and over-extended soonand the dumb money is likely to enter at the worst possible timevery likely when the S&P gets to the 3150-3200 zone.

Rastani says that: At the time of writing, the stock market has already reached my first targets at 3150 to 3200 (the levels I mentioned in my video 2 weeks ago on 22nd May). I think the markets will likely pause here near 3200 for a pullback, while the potential still exists for this rally to fill the gap at 3300 in the next few weeks or months. He thinks that between the 3200 to 3300 levels is where the most risk exists, as shown on the chart scenarios below:

S&P 500 Weekly Chart

Rastani sees 2 potential scenarios playing out for the chart above:

However, in both scenarios, Rastani is still bullish for the long term, as we will likely see a multi-month rally above the highs of this year.

Rastani is essentially eluding to the idea that once the stock markets return back to their former glories, then this could potentially lead to a massive sell-off of stocks as the majority of companies are in the black and reporting losses. This means that if such a massive sell-off were to take place, then retail investors that buy into this hype could suffer the brunt.

Unfortunately, most people have been on the wrong side of this market - they were bullish at the worst time (in January-February 2020), bearish at the worst time (from the end of March to May 2020), and now greedy at the worst time (June 2020), as this chart below shows.

Dumb Money Sentiment

If this scenario on the stock markets played, bitcoin could also take a temporary nosedive. Rastani says, If the positive correlation between bitcoin and the S&P 500 continues, which is likely, then bitcoin could also see a retracement or correction at the same time when the S&P starts its corrective drop.But this correlation remains to be confirmed by price action.

Long-term bullish on bitcoin

Rastani says, I have been bullish on bitcoin since late March and early April 2020especially when I saw bitcoin holding the weekly 200 moving average (200 WMA). This was an important bullish clue, and as long as bitcoin remains above 7000, I will continue to remain bullish for the long-term.

He further goes on to say, Once bitcoin escapes the 10K resistance potentially in the next few months, we are likely to see extreme bullish sentiment in the bitcoin community. This is especially the case as we likely approach the 11K to 12K levels. I would use that contrary signal as extreme optimisma likely indication that we are reaching the next turning point for bitcoin.

This would then likely be followed by a drop or correction (Wave 2) back down below the 10K level towards 9K by September or October of this year. However, this will likely be the last time bitcoin goes below 10K. This is because once the correction ends this year, I see a much bigger bullish multi-month rally (Wave 3) towards significantly higher levels in the near future I.e. towards 14K this year to 20K by next yearand then towards 30K to 50K in the next couple of years.

In the short-term

Due to the danger zone that stocks are currently about to enter right now, Rastani said in May that he is looking to exit stocks. I have been taking profits along the way in this rally, but I am not completely out yet. I am looking to exit the stock market and take the majority of my profits. Ill do this when the S&P 500 goes into the risky danger zone between 3150 to 3200, says Rastani (levels which have now been reached).

I am happy to remain in cash until a better opportunity develops to go long on the US stock markets again and potentially bitcoin. I will wait for a corrective drop back down to support before I buy again. Its of my opinion that sometimes the best position can be to do nothingI.e. stay in cash until a high probability chart setup appears.

View post:
Alessio Rastani On The State Of U.S. Stocks And Bitcoin - Forbes

However, what weve observed in the Macquarie Business School research entitled Why you dont pay for coffee with Bitcoin is that the size of bitcoin transactions has been substantially increasing through time.

In other words, people are not paying for their coffees in bitcoin. Rather, average transactions sizes being more than $10,000 have been skyrocketing.

Much like gold, bitcoin is not a convenient payment mechanism nor is it likely to replace the transactional utility of a typical currency.

Nobody wants to wait 10 minutes to know their bitcoin payment for their coffee has been approved particularly after the invention of PayPass!

Our research shows that there has been a significant shift in the types of transactions included in the network.

In the early years of bitcoin, the majority of transactions were worth less than $1, and more than 90 per cent were for less than $100.

With the introduction of institutional investors, the majority of transactions are now $10,000 plus, with over 20 per cent of all transactions being for more than US$100,000.

A recent trend has seen much larger million-dollar-plus holdings, with bitcoin acting more as a store of value than as a transactional currency.

These changes are driven by the limited capacity of the bitcoin network being approximately 2,500 transactions every 10 minutes. This allows larger transactions to crowd out smaller transactions in the network.

The increase in investment-style activity is likely driving demand for these larger transactions in the bitcoin network. Both holdings and transactions are increasingly dominated by large institutional investors (such as hedge funds) wanting to diversify their portfolios.

This diversification can be particularly important in times of extreme volatility, such as during the current COVID-19 epidemic. Bitcoin, similar to gold, has a low correlation (or beta) with the market. This makes it a perfect safe haven asset when traditional stores of wealth, such as equities, experience sharp declines in price.

And that brings me to the potential use of bitcoin by investors and governments in these uncertain times.

To counteract the economically damaging effects of COVID-19, many developed economies like Europe, Australia and the US are using quantitative easing bazookasto stimulate their flagging economies.

Effectively, these policies result in central banks printing money, distributing it within their economies through initiatives such as the federal governments JobKeeper and JobSeeker.

Printing more money reduces the value of a countrys currency, to the point where some economies now have negative interest rates.

Such economic stimulus is inflationary, and is likely to lead to an implicitdefault on government debt basically printing money to repay that which was spent during the COVID-19 crisis.

All this points to significant and ongoing inflation, devaluing currencies such as the Australian dollar, US dollar and European Euro.

To counteract inflation, many investors look for safe haven assets in which to store their wealth.

Gold has historically served as the perfect hedge against such uncertain times. Bitcoin might be another such asset.

Unlike fiat currencies, where central banks can, literally overnight, double the money supply (halving the value of existing dollars), bitcoin is an inherently deflationary asset, experiencing ongoing quantitative tightening.

To understand this deflationary nature, it is important to understand how bitcoins are created.

Miners race to solve complex mathematical puzzles, with the winner receiving the block reward or new bitcoins.

In 2009, a miner would receive 50 bitcoins for solving these problems (currently worth $600,000). However, approximately every four years, this block reward halves.

On 11 May, the third such halving event occurred, lowering the block reward from 12.5 to 6.25 bitcoins, every 10 minutes.

This change has halved the number of new bitcoins brought into existence every 10 minutes.

In fact, this halving process will continue until a total of 21 million bitcoins have been mined (around 2120).

In this way, bitcoin may represent an even scarcer resource than gold, given there is a hardwired maximum amount of this asset that can ever exist.

In an environment where we anticipate many new Australian dollars, US dollars and euros being generated, which will significantly reduce their value, we are seeing the opposite occurring in bitcoin with the number of new bitcoins generated everyday halving.

What COVID-19 has demonstrated is the fragility of the current system and the fiscal and monetary policy mechanisms that have historically been used to stabilise our currencies and economies.

Currencies like bitcoin really shine in these unstable times because they are not linked to any central bank, and their value cant be destroyed with the stroke of a pen, as central banks can do with fiat currencies by ever-increasing the total money supply.

Thats simply not possible in bitcoin and thats what many investors find attractive.

Governments, too, are viewing bitcoin with some interest, particularly with the movement of large investors into the network.

Canada and China have launched their own central bank digital currencies in an effort to emulate the ongoing success of bitcoin.

It might not be long before central banks with reserve assets like gold, US dollars and euros hold bitcoin as a new global reserve currency as well.

What you dont want as a central bank is to hold assets that are going to rapidly lose their value.

In an era where we are seeing high inflation in countries that have been hit by the coronavirus, such as the US and Europe, its likely that those US dollars or euros held by the central banks as reserve currencies will lose their value the longer they hold onto them.

So, for both the Reserve Bank and traditional investors, diversifying into assets such as gold may limit the inflationary losses which are about to be foisted upon us due to increasing levels of inflation.

Its very likely well see continued increase in demand for bitcoin not just because of halving and its deflationary nature, but because investors see bitcoin as a tool to diversify the returns in their portfolio in these uncertain times.

Associate Professor Sean Foley is from the Macquarie Business School at Macquarie University

Bitcoin in the times of COVID-19 will we see a new reserve?

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Bitcoin in the times of COVID-19 will we see a new reserve? - InvestorDaily - InvestorDaily

Bitcoin bulls are currently out in force, talking up the cryptocurrency amid unprecedented central bank stimulus and quantitative easing.

The bitcoin price, which has failed to hold its ground over $10,000 per bitcoin in recent weeks, has climbed some 30% since the beginning of the yearbut remains far from its all-time highs (for the time being).

Now, crypto pioneer Adam Back has predicted bitcoin will soar to $300,000 per bitcoin within the next five years, even without Wall Street's highly-anticipated institutional support.

The bitcoin price has struggled in recent weeks after a strong start to the year with the bitcoin ... [+] rally hitting a brick wall at $10,000 per bitcoin.

"[Bitcoin] might not require additional institutional adoption [to reach $300,000] because the current environment is causing more individuals to think about hedging [and] retaining value when theres a lot of money printing in the world," Back told financial newswire Bloomberg.

Last month, bitcoin got a big boost when legendary macro investor Paul Tudor Jones revealed he is buying bitcoin as a hedge against the inflation he sees coming as a result of never-before-seen levels of central bank money-printing.

"It is causing people to think about the value of money and looking for ways to preserve money," Back said, adding "its a difficult environment to get any yield."

Back, a cryptographer who invented a system of verification used by bitcoin called Hashcash, was again forced to deny he's bitcoin's mysterious creator Satoshi Nakamoto after fresh claims last month.

Earlier this year, Back said "hyperbitcoinization" and "Modern Monetary Theory rationale for high inflation" could, in theory, mean bitcoin is one day worth $10 million.

"$100,000 bitcoin doesn't seem so far given we already crossed $10,000 threshold a few times when few expected even $1,000 some years back and $10,000 seemed crazy," Back said via Twitter.

Meanwhile, long-expected institutional adoption of bitcoin is still looking precarious despite some early signs Wall Street is coming around to crypto.

JPMorgan, once described as "bitcoin's biggest enemy," has added its first crypto exchange customers and its chief executive Jamie Dimon reportedly hosted secret meetings with the boss of major bitcoin and crypto exchange, Coinbase.

Elsewhere, Goldman Sachs poured cold water on bitcoin and cryptocurrency community hopes the Wall Street giant was about to dive into crypto last month in a highly critical investor call.

The bitcoin price has slumped since last year with early signs of another bitcoin bull run halted by ... [+] the coronavirus crash in March.

Back's latest bitcoin price prediction comes as Donald Trump's administration weighs another massive round of stimulus measurespotentially adding a further $1 trillion.

Already this year the U.S. has signed off on $3.5 trillion in relief measures to combat the economic downturn caused by the coronavirus pandemic and lockdowns put in place to contain the virus.

The stimulus measures, as well as the Fed moving to backstop financial markets, have meant stocks and shares resumed their march higher after a historic crash in March.

Bitcoin has also rebounded but has failed to breach recent highs set in February.

Bitcoin has been put further into contrast with fiat currency by a supply squeeze last month, which saw the number of bitcoin rewarded to those that maintain the bitcoin network, called miners, cut by halfdropping from 12.5 bitcoin to 6.25.

See the rest here:
Bitcoin Could Hit $300,000 In Five Years Even Without Institutional Adoption - Forbes

The price of Bitcoin (BTC) has risen by 170% in the last three months from $3,600 to $9,700. Despite this immense 3 month recovery, a series of fundamental factors point to the possibility of another uptrend in the near-term.

Three reasons Bitcoin is likely to see an upsurge are increasing exchange outflow, miner revenue finding support, and the rising number of so-called hodlers or investors that hold BTC for prolonged periods.

When the outflow of Bitcoin from exchanges increases, it suggests investors are preparing to hold BTC for the long term.

Typically, exchange users withdraw Bitcoin with the intent of sending the BTC to a personal wallet and this trend often indicates that users have less appetite to trade Bitcoin in the foreseeable future.

The decline in Bitcoin exchange outflow coincides with a recovery in miner revenue. As miners generate more BTC through mining in the aftermath of the latest hashrate difficulty adjustment, existing miners are becoming more profitable.

If the operational costs to mine Bitcoin declines, the need to sell more BTC in the short-term for major mining centers could also decrease. There is a possibility that the outflow of BTC is partially coming from miners.

Verifiable on-chain data shows that miners sold less Bitcoin than they mined in the past week. In the last seven days miners mined about 6,694 BTC and data shows they sold 6,384 BTC, netting a positive inventory of 310 BTC.

Bitcoin miners sold less than they mined in the past week. Source: ByteTree

A cryptocurrency trader known as Byzantine General wrote:

Exchange outflow keeps going up. Miner revenue is finding support. Miners are hodling more and more. So even if the chart doesn't look very exciting, I wonder where bears think the big sell pressure is gonna come from.

Overall, miners have been moving less Bitcoin and applying less selling pressure on the spot price. The combination of fewer sellers in the Bitcoin market and a consistent increase in long-term hodlers raises the likelihood of a continued rally.

The prediction of a new phase of upward momentum for Bitcoin in the near-term is primarily based on the assumption that miners will not sell much BTC in the coming months. But, sharp shifts in BTC price and the difficulty to mine BTC could quickly cause a trend change.

An ideal scenario for a strong rally in the third quarter of 2020 would require that the price of Bitcoin remains stable above $10,000 and that the amount of BTC sold by miners on a daily basis continues to decline.

If this happens, it would signal that the price of Bitcoin broke out of a multi-year resistance with growing confidence of both investors and miners, making a proper long-term bull market possible.

Here is the original post:
3 Reasons Bitcoin Price Could Be on the Verge of a New Uptrend - Cointelegraph

Daily Ethereum network fees surpassed those of the Bitcoin (BTC) network for two consecutive days on June 6 and June 7, data obtained by on-chain market analysis firm Glassnode shows.

According to Glassnode, on June 6, the total amount in fees spent on the Ethereum network added up to $498,000, compared to Bitcoins $308,000. The gap continued to widen the next day, totalling $540,000 and $258,000 represectively.

This is the second time Ethereum network fees have topped Bitcoins this year. On March 12, there was a sudden spike in Ethereum network fees, which totalled almost $800,000, greatly exceeding the amount paid by Bitcoin users on the same day. The Ethereum network was experiencing major congestion at the time, which likely prompted users to pay more fees for their transactions.

This time around, the reasons behind what Twitter commentators are calling the feepeninig seem similar.

First, Bitcoins mempool has recently been cleared as a result of the latest difficulty adjustment, which took place on Thursday. The lack of pending transactions has greatly reduced transaction fees on the network, which have dropped to the $1 mark. For comparison, on May 20, an average Bitcoin transaction could cost up to $6.6 due to the post-halving state of the network.

Ethereums mempool is currently clogged, with over 103,000 transactions pending, which partly explains the latest network fees numbers. Moreover, stablecoin transfer value has been hitting new records this year, suggesting that stablecoins most of which, like Tether (USDT), Paxos (PAX) and USD Coin (USDC), operate on the Ethereum network have greatly contributed to the network activity.

Ethereum developers aim to address the scalability problem in the upcoming Ethereum 2.0 upgrade, scheduled for sometime in July.

Specifically, the network will move on to a Proof-of-Stake, or PoS, consensus meaning that asset holders, called stakers, will be responsible for network validation instead of miners. Curiously, last week, an anonymous user dropped an ETH 2.0 scaling solution on Medium.

See the original post:
Ethereum Topped Bitcoin in Network Daily Fees Over Weekend - Cointelegraph

As a former investment professional, I am constantly asked about Bitcoin (BTC-USD) and various other coins in the cryptocurrency universe. In a nutshell, I am far from convinced. The analogy that Bitcoin is to the blockchain as email was to the internet seems apt - blockchain, not Bitcoin, is the key. Yet, following the bursting of the 2017 bubble, another mighty run-up has emerged this year.

Source: Coindesk

For the various reasons cited in this article, I have no intention of participating in the 2020 version of the Bitcoin boom. Instead, I see a prime opportunity to capitalize on Bitcoin's volatility without making a directional call via equity in Bitcoin-related futures exchanges (e.g., CME Group (CME) and Cboe Global Markets (CBOE)) or exchange tokens (e.g., Binance Coin (BNB-USD)).

Per the Satoshi whitepaper, the initial intent of the Bitcoin cryptocurrency was for payments at lower transaction costs in a decentralized manner (i.e., without the involvement of centralized, third-party financial institutions). Bitcoin was clearly built on libertarian principles - through the network, participants were provided with a means by which to bypass the fiat currency system while maintaining transaction security.

Source: Satoshi Whitepaper

Yet, Bitcoin does not quite live up to its intended use case as P2P cash based on a comparison with existing online providers (e.g., TransferWise (TWISE)), the cryptocurrency fails to hold its own in terms of cost, speed, and transparency.

On cost, Western Union (WU) and TransferWise remain the cheapest options by far at <1% on a $1,000 transaction. Money transfer through the Bitcoin network, on the other hand, costs ~4% (via Coinbase), which is above even PayPal's (PYPL). This seems far too high, in my view, to ever sustain mass adoption as a cash-like medium of exchange.

Source: FXCIntelligence

Speed is another key hurdle - Bitcoin transactions are settled in ~10 minutes. This simply does not cut it, in my view, given day-to-day transactions require seconds, not minutes, for settlement. Since Bitcoin is typically exchanged through a third-party, the compliance issue is also a hurdle, whether one transacts in Bitcoin or fiat.

Admittedly, having transactions recorded on a blockchain does make it easier to track, but conventional payment services sent through a centralized network also offer similar tracking capabilities today. Arguably, users of the latter system benefit more from having an accountable third-party that can manually ensure the payment has arrived by messaging the retail agent in the receiving country. Here's a sample flow chart depicting Western Union's remittance strategy:

Source: SlideShare

As Bitcoin does not provide a significant enough benefit compared to conventional methods of money transfer and does not have a clear pathway to matching existing options, I fail to see how it can live up to its intended use case at any point in the future either.

While Bitcoin has clearly failed to live up to its original use case (facilitating casual transactions at low cost), Bitcoin's pseudonymous nature has allowed it to emerge as the preferred currency of cyber criminals. Per Chainalysis, a whopping $2.8bn worth of Bitcoin was sent to exchanges (e.g., Binance and Huobi) in 2019 alone.

Source: Chainalysis via Yahoo Finance

Besides the clear value proposition for criminals, speculators have also been attracted to the wild price swings of Bitcoin. March, for instance, saw a staggering ~50% price drop in one day. Per Coinbase, the extent of the drop was attributable to the extent of the leverage being used, with >100x leverage not unusual in this realm. Here's Coinbase on the episode (note the mention of 5-30x leverage being "more sensible"):

Bitcoin has some offshore exchanges that offer 100x+ leverage, where $1 of Bitcoin could be used as collateral to back $100 in purchasing power. To be fair, this is very risky a position leveraged to 100x would get force-closed if the market moved just ~1% against you. So most traders hold positions at a more sensible 530x leverage, but still notably higher than 23x.

Source: Coinbase

The process of mining new Bitcoin ("Proof-of-Work") also impinges on government territory. The rent from creating fiat currency (seigniorage), for instance, goes to governments, which indirectly allows for incomes to be taxed at a lower rate than otherwise. In this sense, the benefit of fiat issuance is shared. The prospect of a Bitcoin standard, on the other hand, would disrupt governments' seignorage revenue and the resulting shared benefit.

The mining process also wastes enormous amounts of electricity on solving complex computational tasks in the process, resulting in negative externalities from an environmental perspective. At this stage, Bitcoin mining has significantly impacted global electricity demand - mining already uses more energy than some developed nations.

Source: Forbes

This process seems wasteful, in my view, and I would not be surprised to see superior mining algorithms (e.g., Proof of Stake) eventually take hold. Perhaps more damning is the prospect of more restrictive government regulation - given Bitcoin mining will continue to impact electricity pricing, governments are increasingly incentivized to outlaw the practice.

Source: Cointelegraph

Admittedly, there has yet to be a full-fledged hack on the Bitcoin network itself but this does not mean Bitcoin is and will remain secure into perpetuity, in my view. Holders of Bitcoin, for instance, are constantly exposed to the risk of theft given the numerous well-documented hacks of well-established Bitcoin wallets and exchanges (see timeline graphic below). Note that once Bitcoins are stolen, there is no recourse.

Source: Fintechnews

The biggest risk, however, lies in the rise of quantum computing, which would make it very likely that Bitcoin private keys can eventually be generated from their corresponding public keys. Per MIT Technology Review, this could happen within the decade. In a best-case outcome, this could lead to additional forks, but in the worst-case outcome, this would entail a complete wipe-out of Bitcoin's value. Even if quantum computing does not spell the end of Bitcoin, it does introduce far too serious a risk to the Bitcoin story for it to emerge as a widely-adopted currency.

Source: MIT Technology Review

Another key stumbling block is custody - Bitcoin storage typically comes in the form of digital vaults, with holders storing sheets of paper on which the corresponding private keys are printed. This introduces a wide range of attack vectors, from physical theft to online hacking, which in turn, has led to the costs of Bitcoin storage eclipsing even some gold vaults. In some cases, Bitcoin custody can cost up to 15x that of gold. Even then, hacks continue to take place.

As an early-stage asset class, it is perhaps unsurprising that Bitcoin's price discovery is inefficient. What few account for, however, is the extent to which Bitcoin prices are manipulated - per a 2019 study, a single trader had manipulated the price of Bitcoin "sharply higher" during the 2017 run-up to $20,000 using Tether, a stable coin pegged to the USD. U of Texas' John Griffin calculates that Tether manipulation accounted for a whopping half of the increase in Bitcoin's price over the period.

I'll refrain from taking a stand on the study's findings, but I would note the credibility of the authors (both affiliated with credible academic institutions) and the fact that the paper was peer-reviewed (published in the Journal of Finance). It is also notable, I think, that the sharp price increase has tracked tether issuance fairly closely.

Source: Griffin/Shams 2019 Paper

These findings also, interestingly, come on the heels of the U.S. Justice Department's investigations into Tether's role (among other cryptocurrencies) in "a tangled web involving Bitcoin, Tether, and crypto exchange Bitfinex might have been used to move prices illegally."

Regardless of whether one thinks these investigations and studies are credible, negative news flow like this makes it much harder for regulators like the SEC to approve a Bitcoin ETF. It also complicates the private sector's efforts to enter the space while maintaining regulatory compliance (e.g., Facebook's Libra launch).

Asset bubbles are nothing new much like the California Gold Rush, some will hit it big here, and others will fail. I see the Bitcoin frenzy as a similar phenomenon. Yes, there is a chance one becomes an overnight millionaire; then again, there's also a very good chance it all goes up in flames. I'm inclined to side with the latter, but I do not think the right trade here is directional. Instead, I think the more favorable risk/reward lies in profiting from the volatility.

Much like the Gold Rush, when Levi Strauss made a fortune selling the picks and shovels, I think the exchanges are the way to play the Bitcoin theme. Thus, while the speculators bet on Bitcoin's rapid rise (or fall), I much prefer owning equity in exchanges such as the CME or CBOE, or exchange tokens such as Binance Coin all of which extract rent off the millions of Bitcoin-related volatility, activity, and volumes in the form of cash flows.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Read the original here:
Bitcoin: A Value Investor's Take On This Asset Bubble - Seeking Alpha

While bitcoin has outperformed gold and the S&P 500 index in 2020, data shows even better returns among leading bitcoin fork cryptocurrencies.

These cryptocurrencies are created by copying the Bitcoin source code repository through a process called forking. Developers then adjust certain parameters and features in the copied code to create a similar but distinct protocol. According to data from Messari, the three largest bitcoin (BTC) forks by market capitalization are bitcoin cash (BCH), bitcoin sv (BSV), and bitcoin gold (BTG).

Using an equal-weighted index of the four cryptocurrencies the returns are almost 14 times greater than bitcoin alone for the year to date, based on TradingView data. Since the beginning of 2019, this index outperformed bitcoin by 435 percentage points.

Individually, bitcoin sv and bitcoin gold have outperformed bitcoin by 61 and 37 percentage points, respectively, since the start of 2020. Bitcoin cash outperformed bitcoin until May. For the year to date, the largest bitcoin fork has underperformed bitcoin by 11 percentage points, according to TradingView data.

Some analysts arent surprised by these returns. Cryptocurrencies with low and middle market capitalizations like these bitcoin forks tend to outperform bitcoin during marketwide bull runs, said Aditya Das, market analyst at research firm Brave New Coin. Similar trends were observed during the 2017 bullish market cycle, he explained.The miner subsidy for bitcoin and its forks also halved this year, an event that occurs once every four years and is a bullish catalyst for some investors.

These returns are mostly attributable to a strong positive correlation with bitcoins price inflation combined with higher volatility, according to Louis Liu, founder and CIO at Mimesis Capital. Nonetheless, there is definitely alpha in bitcoin forks, he said, referring to the excess returns. However, he says they were not the result of fundamental value added by improving on bitcoin.

As is usually the case, greater returns come with increased risk. Liquidity is one such concern, Das explained.

Only two of the industrys largest exchanges by traded volume, Binance and Bitfinex, support markets for all three top bitcoin forks, according to Nomics. Moreover, the largest bitcoin cash spot market, supported by Binance, is only one-tenth the size of the largest bitcoin market, also on Binance.

Forks such as bitcoin cash and bitcoin sv are likely being used purely as speculative instruments, said Kevin Kelly, former equity analyst at Bloomberg and co-founder of digital asset research firm Delphi Digital.

Whats more, he added, the liquidity profile and long-term value proposition of bitcoin forks is drastically different, if even existent, when compared to bitcoin.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Continue reading here:
Returns for Bitcoin's Forks Have Trounced Bitcoin This Year - CoinDesk - Coindesk

Illegal cryptocurrency mining facilities in Russia have stolen electricity worth almost 450 million rubles ($6.6 million) over the past three years, according to the state-owned power grid Rosseti.

The figures were first reported by the grid operator on Telegram and revealed the high cost of black mining on its business.

The Most Diverse Audience to Date at FMLS 2020 Where Finance Meets Innovation

According to the company, the estimates came from illegal mining operations, tempered power meters, and underground mining farms.

The electricity distributor pointed out that many existing businesses in Russia run cryptocurrency mining operations in factories, offices, remote houses, and even in farms only to generate an additional source of income.

These businesses do not have any contract with the local power distributors and are using electricity for Bitcoin mining without paying for it. Rosseti is now hunting for such illegal operations, yet the losses made over the past few years were staggering.

2020 Trading Cup Gets Off to a Flying StartGo to article >>

The company also detailed that many facilities just hook a wire to the nearest power lines, stealing electricity, whereas a few even hide their mining equipment underground in the forests to avoid enforcement crackdowns.

Since 2017, Rosseti has found 35 cases of such illegal cryptocurrency mining facilities across 20 regions of the country.

Illegal crypto mining has been a headache for the authorities for years. As the price of Bitcoin surges, many jump into mining the digital currency, and to book more profits often try to bypass the electricity costs.

From South Korea to United States, and from China to Ukraine, almost all the countries have seen large scale illegal Bitcoin mining operations.

Last December, the Chinese authorities seized 7,000 illegal Bitcoin miners in a crackdown. The same month, Russian law enforcement also prosecuted two persons for illegally mining Bitcoins on government computers.

Continue reading here:
Illegal Bitcoin Mining Cost Russia $6.6 Million in 3 Years - Finance Magnates

Bitcoin price seesaws around the unchanged level after yesterdays sharp reversal from 9,356 the daily low. The number one cryptocurrency continues to find support at the upward trend line which started since the March lows. Bitcoin failed to capitalize from the shift to risky assets as it rejected at the 10,500 mark.

Tencent Cloud launched an alliance to promote the development of the blockchain industry. The blockchain alliance aims to attract 100 members in 2020, including tech companies, industry associations, and universitiesthe alliance plan to establish blockchain industry standards and research potential blockchain applications. The alliance will form three committees standards, technical, and business ecosystem committee. The standards committee will cooperate with the government and regulators to develop national blockchain standards.

Chinas blockchain committee includes executives from Tencent, and the company is also one of the top blockchain patent application filers, having filed over 700 applications in 2019.

Litecoin (LTCUSD) is 0.21% lower at $46.52, Ripple (XRPUSD) is 0.20% lower at 0.2027, Lumen (XLMUSD) is 1.08% higher 0.0794, while Ethereum (ETHUSD) is 0.35% lower at 243.89.

Bitcoin price is 0.10% lower at 9,740 stabilizing after yesterdays volatile session. While the bitcoin price capped at 10,500, the technical outlook remains bullish above the major daily moving averages.

On the upside, first resistance for bitcoin will be met at 9,813 the daily high. The next hurdle stands at 9,919 the high from June 4th. In case the BTCUSD moves higher, then the next target stands at 10,255 the high from June 2nd.

On the other side, minor support stands at 9,645 the daily low and a break below might test the Sundays low at 9,350. If the sellers continue then the next target will be met at 8,980 the 50-day moving average.

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Bitcoin Price Targets The 10,000 Resistance - InvestingCube

THIS YEAR HAS been remarkable for digital currencies. First, the Indian courts announced that digital currencyexchanges were not in violation of any law andcould resume operations. While people could still trade in digital currencies, they could not do so over exchanges. Then China launched a digital iteration of its currency, Yuan,becoming the first major country to do so. While there is still some time before others follow the China example,yet,itis a significant development. An event related to the digital currency, however, went entirely unnoticed. On May11, the value of mining bitcoin halved to 6.25. This was the third having since the currency was launched in 2009.

This halving will take place till 2140 when mining fees decline to zero, and all earnings are from transaction fees.Arjun Vijay, co-Founder and COO of Giottus Cryptocurrency Exchange, explains the phenomenon of why halvingtook place and what it can mean for the future of bitcoin mining.

There are 21 million bitcoins in total, and 87.5% of them have been mined. What halving does it reduce the cost of mining every time miners hit a specific number of blocks. To make it simple, consider this when bitcoin started, people did not have much knowledge about what it was or how it worked. So, there was a lucrative amount to attract people to find more blocks and clear them-this is also called mining. But as the value of bitcoins starts shooting up, a lot of people thought this was the digital gold rush, and everybody started mining. Now, as more people got into mining blocks started clearing faster. Now every time 210,000 blocks are cleared, Vijay says, the value halves. So, after the first 210,000 blocks, it became 25 bitcoins; at 420,000 it became 12.5, and now at 6,30,000 it is 6.25.

This value will go on reducing till 2140, Vijay estimates, till the value becomes zero. At that time, transaction fees for clearing bitcoin would increase.

As Vijay explains, there is something called block difficulty. So every time the system itself makes it difficult to minea block, and this difficulty keeps on rising, as more people try to do clear blocks. So, there is a safety valve builtinto the system to protect it from too much mining.

Vijay says that over time it has become challenging to mine for bitcoins. People require expensive equipmentand servers to do so.As costs rise, only serious players will remain in the business. The hobbyists and first-time miners may quit the game, as mining becomes too expensive. However, he laso believes that prices of bitcoin mayrise. But bitcoin has its limitations, it can only store 4MB of data, unless blockchains from other countries can interact, its utility wont be complete.

Techsplained @FE features weekly on Mondays.If you wish to send in queries that you want explained,mail us at ishaan.gera@expressindia.com

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Bitcoin halving: What its and what it can mean for future of mining - Financial Express