Niklas Nikolajsen, the founder of Swiss crypto broker Bitcoin Suisse, predicts that Bitcoin (BTC) will move to Proof-of-Stake (PoS) once the Ethereum (ETH) network has proved the algorithms success.

Bitcoins current Proof-of-Work (PoW) consensus algorithm the pioneering concept which in fact pre-existed Bitcoin, but has since come to be indissociable from the cryptocurrency will probably change in the future, Nikolajsen argued.

In outtakes from an interview conducted for a German TV documentary recorded back in October 2019, but uploaded on April 6 Nikolajsen said:

[Bitcoins move to Proof-of-Stake] is not planned, but the second-largest cryptocurrency, Ether, will move to a Proof-of-Stake concept that demands vastly less electricity, already in a few months. Im sure, once the technology is proven, that Bitcoin will adapt to it as well.

Once its proven that Proof-of-Stake works well, its a superior system to Proof-of-Work, he said.

In blockchains that use a PoS system, nodes in the network engage in validating blocks, rather than mining them, as in PoW. For PoS, a deterministic algorithm selects block validators based on the number of tokens a given node has staked in their wallet i.e. deposited as collateral in order to compete to add the next block to the chain.

Nikolajsen's prediction that Bitcoin will eventually migrate to a PoS system was made in the context of a discussion of the notoriously high levels of electricity needed to sustain mining on the current network.

He dismissed claims that mining Bitcoin consumes levels of electricity comparable to small nations and also emphasized that mining's energy-intensity is less of an issue than where that energy is produced and how sustainably it is generated.

Moreover, the energy consumption of producing gold Bitcoins proverbial predecessor must be equally acknowledged, Nikolajsen states, as does that in the existing banking system and tech industry:

Which metropolis in the world doesnt have 100-story-high banking towers, glowing in a million different colors all night, and their financial systems, their computers, server rooms. How much energy does Facebook consume? They have 21 huge data centers worldwide, Id say probably more than Bitcoin. The banking system for sure consumes a lot more energy.

The common perception that high energy consumption is an Achilles Heel for Bitcoin has been critiqued by some proponents of clean energy, who, like Nikolajsen, place an emphasis on the sources of power, rather than levels of consumption.

Beyond the energy problem, the PoS vs. PoW debate engages questions of economic fairness, barriers to entry, network security and decentralization.

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Bitcoin Will Follow Ethereum And Move to Proof-of-Stake, Says Bitcoin Suisse Founder - Cointelegraph

One of the most well-known figures in the crypto industry, supporting Bitcoin from the very beginning, has expressed some positive comments regarding the stand out altcoin cryptocurrency Chainlink, which has been a top-performing asset throughout the last two years. He even compares the assets community to that of Bitcoin or Ethereums, noting that it is one of the rare cryptocurrencies with real merit behind it.

Cameron and Tyler Winklevoss are widely recognized as investors, businessmen, and entrepreneurs by the general public, due to their close involvement with the early days of Facebook. The duo worked closely with Mark Zuckerberg and was emblazoned in a long court battle over rights to the social media network.

After losing the fight to Zuckerbergs arsenal of lawyers, the pair brushed off their losses and took another chance at something potentially as disruptive and far-reaching, if only the world could ever realize its power. During the earliest days of Bitcoin, the Winklevoss twins met Charlie Schrem, who put them onto the first-ever cryptocurrency.

Related Reading | Chainlink Integrates Real-World Assets Into DeFi on Ethereum

They bought a substantial amount of the asset, and are known to have one of the largest holdings of Bitcoin even today. When Bitcoin ballooned to over $20,000, their net worths skyrocketed, thanks to the two betting big on what they refer to as the future of finance.

Their belief in crypto was so powerful, the two launched the Gemini cryptocurrency exchange as a means to connect the disruptive fintech with consumers at scale.

Tyler Winklevoss, shares some of that belief in the up and comer altcoin called Chainlink, tweeting positively about not only the asset itself but its development and investor community.

The Gemini exchange co-founder and one half of the Winklevii, Tyler, took to Twitter to commend the cryptocurrency known as Chainlink, and the assets community.

He revealed that the passion the community shows is appreciated, and reminds him of the dedication early Bitcoin supporters like himself and his twin brother. The same goes for the community involved in the number two crypto by market cap, Ethereum.

Related Reading | Crypto Trader Gets $0.0001 Chainlink Order Partially Filled on Binance

Etheruem enjoys one of the most active development and investment communities in the investment space, so comparing it to Chainlink is an enormous nod of approval. Chainlink doesnt yet support such activity, but the altcoin is very young and support is still growing rapidly.

And so is that assets price. After being the top performing crypto asset of 2019, Chainlink was the only altcoin to set a new all-time high amidst the coronavirus chaos last month, when markets collapsed into a downward spiral of panic-selling.

With such community support, rapidly rising prices, and a nod of approval from the likes of Tyler Winklevoss, Chainlink is set to have yet another incredible year.

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Here's Why This Billionaire Just Applauded Chainlink and Compared it to Bitcoin - Bitcoinist

A federal judge said Craig Wright's objection to handing over crucial evidence regarding billions in bitcoin left her "puzzled," as he seemed to be arguing the court should "blindly accept" everything he says.

District Judge Beth Bloom overruled Wright's objections to an Order of Discovery issued by another judge, compelling Wright to produce 11,000 documents for the Kleiman lawsuit. She said the defendant mischaracterized the order and relied on unsubstantiated arguments.

In a highly critical explanation for her decision for the Southern District Court of Florida, Bloom said it was the role of the presiding judge to determine what evidence was admissible in court. She ruled Wright's arguments that the documents would be inadmissible because they would disregard his attorney-client privilege was a mischaracterization.

The brother of Wright's deceased business partner is suing Wright for half of the 1.1 million bitcoin supposedly held in a joint mining venture known as the Tulip Trust. Based on today's price, the overall value of the bitcoin in question would be more than $7.7 billion, according to CoinDesk's Bitcoin Price Index.

Wright has long claimed to have access to the bitcoin but has told the court he couldn't prove this as it would infringe on the privilege he has with a mysterious Kenyan lawyer known as Denis Mayaka, who is supposedly counsel for the Tulip Trust.

As Bloom said in this week's court order, Reinhart already highlighted Wright's relationship with this lawyer could not properly be authenticated. The evidence consists of a LinkedIn printout and typed declaration asserting he is counsel for the Trust. This "could easily have been generated by anyone with word processing software and a pen," Reinhart had said.

In her reasons for overruling Wright's objections, Bloom said Reinhart "was not clearly erroneous or acting contrary to law" after he issued the discovery order. "Defendants gripe, therefore, is not with the supposed exclusion of the evidence but instead with the weight assigned to it."

Bloom said Reinhart's skepticism was justified on the basis of Wright's history of providing false evidence.

"[T]he Court is puzzled by Defendants apparent argument that Judge Reinhart must blindly accept items produced by Defendant such that Judge Reinhart cannot rely on his past experiences with Defendant in this litigation (including his history of providing forged materials and giving perjured testimony) in evaluating whether Defendant has carried his burden as to privilege."

"That is not how fact-finding works," Bloom added.

Bloom found nothing to support Wright's argument that producing the evidence would leave him in violation of Australian law. She also threw out claims the magistrate judge should have determined whether documents were relevant to the proceedings before ordering Wright to produce them in court.

The court order is the latest development in a long lawsuit characterized by bad blood on both sides. Wright was previously found to be in contempt of court, while just last month Reinhart criticized Kleiman's legal team for charging "excessive fees" that were to be paid by the defendant due to the drawn-out proceedings.

Wright now has until April 17 to produce the requested documents.

See the full filing below:

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.

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Judge 'Puzzled' by Craig Wright's Objections to Producing Evidence of Over 1.1M Bitcoin - CoinDesk

Its fair to characterise Bitcoin as a reaction to the last global economic meltdown. At the time, this crypt offered great promise as a safe haven for investors against exactly the type of financial crash we saw in 2007/2008 and, with appalling (and predictable) inevitability, are seeing again now.

Let's face it, we all knew this crash was coming (yes you did, even if you didn't want to); we just didn't know when or how bad.

Now we know "when"... and "how bad"...? Well, by any market metric it's not looking good not by a long, long margin.

Getting it Right this Time Round

The difference is, Dec will be sustainable in the face of a crisis in the way that Bitcoin was supposed to have been, but has (so far) proved not to be.

We now urgently need technology and digital assets that won't simply be a rinse and repeat of the last ten years; if not, financial "stability" will continue to be measured in the time it takes the (now demonstrably) fragile mainstream economy to cycle from boom to bust.

So the question begging to be asked (and answered) is...

What the Heck Happened to Bitcoin?

Any and every Bitcoin enthusiast you've ever been trapped in an elevator with will have told you (undoubtedly many times between floors) that socioeconomic crises like we are now encountering are precisely what this (and most current) cryptocurrency was designed to insure us against. Some of cryptos most ardent supporters are (or perhaps "were" in the light of recent events) adamant that due to these digital asset being uncorrelated with traditional assets like stocks they are safe havens against the type of economic crash Covid-19 is wreaking on the markets.

Maybe now it will sink in: the digital token smoke and mirrors charade represented by current crypts (and the ropy technology that supports them) is a terrible way to secure your financial future and a disastrous attempt at establishing some kind of reputed stable alt economy or sustainable payments system to challenge mainstream alternatives.

It is now time to think differently. And laterally.

But we need to do it quickly, and as a community.

What About Stablecoins?

For the purposes of this article, and its explanatory analogies vis-a-vis our tech and aims, stablecoins are fringe products: stablecoins function to create connections between the legacy world and blockchain. Thus, the raison dtre of stablecoins to mitigate and hence solve price volatility which has so pervasively characterised cryptocurrencies while attempting to retain other characteristics of Bitcoin, is interesting but not game changing in the way we propose.

The fact that stablecoins most notably Tether (USDT) is also a popular asset among crypto traders who want to place their funds in dollars during market downturns so they can avoid crypto price volatility really just reveals them to be a type of crypt that wants to have its proverbial cake and eat it too.

The problem with the stablecoin paradigm even though it seeks to maintain the free flow of capital and censorship resistance, which is laudableis that it is exclusively reliant on third-party factors and commodities, whether through value-pegging or collateralisation. As a result, the value of stablecoins is dependent on external factors that users cannot control, and in this regard they are very similar to a stock or a bond rather than a truly decentralised alternative.

Certainly, the concept of stablecoins is apartsolution but not thewholesolution to therealproblem that needs solving: a step in the right direction, yes; the answer to a truly stable, user-centric crypt that will achieve wide-scale public adoption, generating wealth for all (but an already wealthy elite), no.

Cryptocurrency: Inflated Financial Assets

In practice, Bitcoin is too slow and inefficient to act like electronic cash and hence support any sort of alt economy to rival its mainstream counterpart. (Proof-of-Work and other expensive and unnecessary protocols have effectively hobbled it.) Instead, many enthusiasts today view it as a form of digital gold. Real gold has long been considered a reliable store of value, and investors tend to see it as a form of insurance against an economic downturn.

Many Bitcoin advocates have claimed that the digital asset belongs in this league too.

Or at least they did. Until the proverbial odorous excrement hit the fan two weeks ago.

And that was before the unmitigated carnage of March 12, when Bitcoin lost more than 40% of its value...

As traders continue to rush for the door, dumping Bitcoin to raise much-needed cash, cryptocurrency in its current underdeveloped and over-hyped form is revealing itself to be little more than another financial asset.

But is This Really any Surprise?

It shouldn't be. Not to you and me. Not to anyone. Beyond the hype, Bitcoin (or any crypt) was never really anything elsebutan inflated financial asset; the issue is and always was that the promise of a safe haven implied by Bitcoin (and other crypts) was always the clue to its most egregious failing. Sure, Bitcoin (and other crypts) is not correlated to the financial markets but it is not correlated toanything(a feature that, as discussed, stablecoins are designed to overcome), hence leaving it open to its infamous volatility.

Then last month happened. Though Bitcoins price has jumped since, the 40% dip of March 12 was enough to reveal the crypts instability in the face of the type of crises it was supposed to be stabilising HODLersagainst.

So is Bitcoin not actually a safe haven after all? Maybe. Maybe not. (At least if you cant sell corn or livestock you and your family can eat 'em.) Though it appears to have failed the biggest test of the idea yet, the debate will undoubtedly rage on, serving as a reminder that we are still figuring out exactly what Bitcoinisandis not.

Dec is What it is Not

It is the is not that our token, Dec, is specifically and unambiguously built as an antidoteto.

Unlike stablecoins (which are really only a reflection of legacy commodities and aggregate collateralisation of other crypts), Dec is pegged to the value of user data; user data being a commodity that is controlled by every user at the level of every user. Our platform and web browser ensures the 100% security and immutability of this data, hence ensuring its stability and value.

As a result, Dec places every users financial future in their own hands through proactive online activity and participation while specifically not leaving asset acquisition and valuation to the vagaries of external factors over which users have zero control.

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Covid-19 Exposes the Myth of Bitcoin as a Safe Haven - hackernoon.com

Hut 8 Mining Group, a publicly traded cryptocurrency mining firm, is concerned about coronavirus-related delays of new machine deliveries from potential suppliers such as Bitmain and MicroBT.

During an earnings call last week, CEO Andrew Kiguel said his firm was grappling with a vague timeline for the delivery of crypto mining machines to support its farms, saying that while in February, you thought machines could be delivered between March and April, these timelines have since shifted due to the ongoing pandemic. He did not have a revised timeline either.

His remarks follow guidance from competitor Riot Blockchain, which also warned the novel coronavirus outbreak would impact its business operations.

Three or four weeks ago, nobody thought these things would be an issue, and the world is grappling right now with different supply chain issues like getting ventilators and masks around the world as opposed to bitcoin mining machines, Kiguel said.

Bitmain was one of several Chinese miner manufacturers that warned as far back as January close to eight weeks ago it would be forced to delay deliveries due to the coronavirus outbreak.

Bitmain has since resumed operations, though its delivery timetable is still unclear.

Hut 8 Mining Group, one of the few publicly traded mining firms in the U.S., is also closely watching the upcoming bitcoin halving in hopes of appropriately scaling the size of its mining farm.

The Canadian firm is set to have a higher stake in the bitcoin market after launching its core operation in the middle of 2018 and acquiring facilities to boost its mining power last year. According to its year-end report for 2019, released on Monday, Hut 8 saw $58.6 million in revenue, up by 66 percent from the prior year, thanks to larger capacity and higher bitcoin price.

This places it as one of the productive miners in North America among its competition, including the Colorado-based Riot Blockchain.

Hut8s coronavirus concerns come as the firm prepares for bitcoins hotly anticipated halving, tentatively set to occur in mid-May.

There's a lot of different scenario planning that we've done, Kiguel said.

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.

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Another Bitcoin Mining Firm Warns COVID-19 Pandemic May Harm Its Business - CoinDesk

BTCPay, a popular open source tool for accepting bitcoin payments, is turning to PayJoin for preserving the privacy of those transactions.

PayJoin (also called P2EP) is a relatively new way to send private transactions in bitcoin and may offer better privacy than current popular alternatives such as CoinJoin. Having BTCPay on board gives PayJoin a major boost in recognition that could translate into broader use of the privacy technology by other firms.

BTCPay developer Andrew Camilleri told CoinDesk the company plans to release an "initial" version of the P2EP privacy feature built into BTCPay on Thursday. He and BTCPay lead developer Nicholas Dorier have been the main contributors to the code.

Open source BTCPay is used by a range of merchants as a way of accepting bitcoin and lightning payments.

"Our mission is financial sovereignty for everyone and PayJoin is a great tool to help break blockchain analysis heuristics and achieve that. Since BTCPay is so widely used, it should help jumpstart usage," Camilleri told CoinDesk.

The work has been sponsored by Blockstream for the past several months to help Camilleri focus on the PayJoin changes.

"We're hoping to improve the privacy and fungibility of bitcoin by accelerating the adoption of P2EP. If enough wallets and businesses support P2EP, it could provide the critical mass needed to achieve widespread financial privacy," said Blockstream Chief Strategy Officer Samson Mow.

Not as private

CoinJoin is the main privacy tool used these days, in part because it is used by wallets Wasabi and Samourai, making it much easier for people to use.

CoinJoin allows multiple people to mix their bitcoin transactions together, making it less obvious who owns which bitcoin. While it helps users to maintain their privacy, one of the main issues is it's easy to see when a bunch of users have done a CoinJoin simply by looking at the blockchain.

Bitcoin researcher Paul Sztorc likened the technology to "wearing a ski mask to an indoor mall."

The main benefit of PayJoin's ConJoin implementation, on the other hand, is that once done, the transactions look the same as other transactions on the Bitcoin blockchain.

So instead of many senders mixing their transactions, only the sender and receiver mix a transaction.

Ultimately we need to make a choice on what kind of world we want to live in, one where there is financial privacy or one where there isnt.

It "breaks blockchain analysis heuristics," Camilleri said. Blockchain analytics companies are able to glean certain transaction criteria to guess (often correctly) if bitcoins belong to the same owner, or to see if the transaction was a part of a CoinJoin.

"Bitcoin's our chance for a logical and fair form of money. Companies that offer services that enable others to discriminate are essentially destroying that chance," Camilleri said.

One disadvantage, however, is both the sender and receiver have to support PayJoin.

"Merchant payment processor support for P2EP made perfect sense. P2EP requires the sender and receiver to both be online. If you're sending, you're naturally online, and merchants have to be online all the time," Mow said.

What's next

PayJoin has been around since 2018, but not a lot of services have added support for it yet. Both the sender and receiver need to support the standard, but most wallets don't support it right now.

"The current active implementations only allow you to do PayJoins between the same wallets, which is a bit too restrictive for widespread usage. There's nothing stopping any wallet or service from adding support for a universal PayJoin protocol now," Camilleri said.

This is one problem the project Snowball is trying to solve by creating code allowing for PayJoin transactions that can be easily added to any bitcoin wallet. The developers behind it plan to eventually open "pull requests" with suggested code to popular bitcoin wallets, to help get the ball rolling by encouraging them to adopt the privacy feature, and making it as easy as possible to do so.

Blockstream plans to further spur adoption of PayJoin. For now, it is working on adding PayJoin support to the bitcoin wallet Blockstream Green.

"The next interesting step would be for an exchange to support P2EP. Ultimately we need to make a choice on what kind of world we want to live in, one where there is financial privacy or one where there isn't," Mow said.

"Money needs to be private and fungible in order for it to be a 'good' money," he added. "With bitcoin, every transaction is open for anyone to see, so we still have a lot of work to do to get it there. Without privacy and fungibility, money can be used as a tool for oppression or financial surveillance. Bitcoin is the future of money and the future of money shouldnt be Orwellian."

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.

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BTCPay Looks to Anonymize Bitcoin Transactions With PayJoin Integration - CoinDesk

Prominent Bitcoin and crypto analyst Tone Vays says his YouTube account has been terminated.

Vays, a former Bear Stearns risk analyst and vice president at JP Morgan Chase, says his account was taken down shortly after he received a warning on one of his videos.

The popular trader alerted his 201,000 followers on Twitter on Thursday, and the former home of his YouTube channel now displays a 404 Not Found error.

So that escalated quickly. From a single video warning to the ENTIRE CHANNEL Being taken down by YouTube. If @TeamYouTube cant resolve this, might be a career change in the near future. Will just trade during the day and have a nutrition @ytcreators channels at night.

I highly doubt any review by @TeamYouTube took place as the YouTube channel got taken down an hour after the initial warning and 30 minutes after my appeal. But if this it for my @ytcreators channel, then it is what it is, was fun while it lasted.

Cryptocurrency supporters on YouTube have reported an increasing number of issues on the platform in recent months, with videos being removed and channels receiving strikes without warning.

In December, hundreds of Bitcoin (BTC) and crypto-related videos were suddenly removed in a sweeping crackdown across dozens of channels.

However, those videos were eventually restored and a YouTube spokesperson said the worlds leading video-sharing platform made the wrong call by flagging content from crypto YouTube creators as harmful.

So far, YouTube has not commented on exactly why it terminated Vayss account, saying only that he violated the platforms terms of service.

Featured Image: Shutterstock/metamorworks

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YouTube Bans Bitcoin (BTC) and Crypto Analyst Tone Vays, Removes All Videos and Terminates Account - The Daily Hodl

Almost 30 years ago, Nobel Prize-winning American economist Milton Friedman said he would like to have money controlled by a computer. He also said it would be a better world without the Federal Reserve. One of his two desires is already happening in the form of Bitcoin. In fact, he seems to have predicted its formidable rise in 1991. And with the FEDs incessant money printing causing growing criticismis it a question of time before the other one comes true as well?

Its almost eerie watching this short clip in which Friedman appears to talk about Bitcoin, an invention that would come some 18 years later.

As the main advocate opposing the Keynesian government policies in place today, Friedman promoted a macroeconomic viewpoint known as monetarism. Rather than the FED stepping in and printing money as they see fit, he argued that there should be a slow and steady expansion of money supply.

With the historic bailouts and QE that we see going on today in response to the coronavirus pandemic, Friedman would probably be turning in his grave. He expressed his desire back in 1991 to have money controlled by a computer that could not interfere and adjust the policy at will.

The video clip was posted on the Bitcoin Twitter channel and naturally garnered scores of likes, retweets, and applause. Some of the comments said:

He would prolly be all in with Bitcoin if he was still alive

And others stated:

Well make it happen, Milton

Of course, with Bitcoin being the most successful experiment of tamper-proof decentralized money running across computers (nodes), its easy to forget that there were precursors to Bitcoin.

David Chaum released DigiCash in 1989 which made use of cryptography for private payments and introduced the concept of public and private keys. The project garnered support from libertarians and small groups in favor of a digital currency that could be transferred internationally free from government control.

While DigiCash and other projects pre-Bitcoin failed to gain traction,Friedman was no stranger to the fact that there was a need for electronic money. He believed that it would happen in the future. In fact, in that same year, he said:

One thing we are still lacking and will soon develop is reliable e-cash a method by which money can be transferred from A to B on the Internet without A knowing B and vice versa

With Bitcoin proposing a viable alternative to fiat and entirely free from central actors; will Friedmans second desire come true as well? Will the FED be removed completely? Its going to be interesting to how things unfold

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This Nobel-Winning Economist Predicted Bitcoin's Formidable Rise in 1991 - Bitcoinist

By Philippe Bekhazi, Co-founder and CEO of XBTO Group.

While we are by no means back to normalcy and the timetable is still murky as to when we resume business as usual, enough time has passed to hold a mirror up to how bitcoin responded to the initial Coronavirus shock and most pronounced market turmoil.

Firstly, any crisis whether induced by biological, geopolitical or financial shocks always results in a crisis of liquidity. Period. Peter sells some stock to pay for a loss on crypto or vice versa. Paul sells high yield bonds to buffer up MBS positions. Or simply selling winners and going to cash and short-term treasury instruments.

The vicious cycle spins and the same horror movie plays, as over-levered investors (mainly denominated in USD) need to sell indiscriminately and across asset classes. The rush to liquidity and the comfort of cash drives all correlations to one, despite promises and proselytization that some instruments are immune to this inevitable selling tsunami.

Therefore, in the most recent installment, when the VIX went to 80, and global uncertainty and fear on steroids reigned supreme, those over-levered pools of capital got flushed out again and red sprayed across our trading screens; regardless of the fundamental constructs and theses underpinning any asset classes or individual names. So, to hammer home the point once again, in any risk off environment there is no safe haven, especially not one traded as thinly and with as much speculation as bitcoin.

Holding the x-ray up to the light

Lets take an objective look at the state of bitcoin, how it fared during peak crisis, and its role in a portfolio anchored by a long-term view and mandate.

Firstly, bitcoin is not a deep market at all and with a market cap of around $120 billion equates to that of Tesla (TSLA). It is also driven, currently, in the short term, more by over-levered speculators than by long-term holders, hence its volatility, which (while gravely exacerbated with the crisis), had vacillated with large peak to trough moves of 10,000 to 3,500 (on some exchanges) in 2020 alone [and before Coronavirus was even a driving factor]. In contrast to a safe-haven cushion that would zig while the markets zagged, bitcoin dropped over 50% while the S&P dropped 30%.

While many speculators have indeed been flushed out by employing reckless amounts of leverage, savvy trading outfits and long-term investors continue to hold. They do so for the same fundamental reasons as to why they built exposure in the first place, a thesis that has been starkly reinforced through unprecedented Central Bank action worldwide, including the US Feds QE to infinity stance.

So, for the true believers in bitcoin, not only have the fundamentals not changed, but they have become more pronounced and engraved into the investment psyche. Moreover, in contrast to erratic and impossible to predict monetary policies, there are more knowns within bitcoin protocols, and an inability to put the printing presses on autopilot. On the contrary, a halvening in mid-May will result in less availability and scarcity as the block reward will fall from 12.5BTC per block to 6.25 (a block is roughly mined every 10 minutes), so a greater worth is placed on each unit, or coin similar to less mining equating to higher demand for existing reserves of gold, also touted as an asset to hold in unhinged times.

Bitcoin versus Gold

Now that we have morphed from an initial liquidity crisis into the potential next phase of a crisis (usually credit crisis, but could take on others forms), we can talk more rationally about safe haven assets and their long-term role in providing diversification and a non-correlating return stream to traditional equity and bond portfolios.

Many talking heads myopically preach either gold or bitcoin as the sole answer in dire times, often taking to public forums to attack each other and create a schism between either camp. As noted, neither acts as promised (at least initially), and there is no need to play a zero-sum game here. One could argue the merits of holding both as diversification tools and alternate stores of value, each with their own idiosyncratic benefits and use cases.

While gold certainly has a deep history narrating its utility and potential worth, bitcoin has more attractive, contemporary features, such as no physical delivery, no storage, and greater immutability and real-life payment applications. All valid reasons why many have made its case as a replacement to gold.

My view is that institutional allocators and stewards of capital should have exposure to both, placing at least 50% of their current gold holdings (usually 1-2% of an overall portfolio) into bitcoin. Those taking a 10-year outlook will see the non-correlation benefits to their portfolios and their participation (alongside the continued weeding out of weak players) will also smooth out volatility as larger tickets and block trades counterbalance shorter-term trading strategies.

While perhaps more evident to a newer generation embracing a more futuristic mind-set, bitcoin also provides exposure to an underlying network effect the value of which is not currently priced in, built on the premise of more decentralization, the utility and staying power of blockchain technologies and emerging tokens of value (stablecoins, security tokens etc.) that will coalesce to eventually make the asset truly reflect and catch up to the sum of its parts.

What does not kill you makes your stronger

While the current crisis engulfing our daily lives and the global economy is eerily unique, many of the lessons learned ring true from prior market disruptions and dislocations:

Sophisticated traders and long-term institutional investors alike should be easing their way in and taking a nibble at this digital diversifier, especially against the macro backdrop of irreversible currency debasement.

Moreover, structural positives did arise from this latest stress test, with the crypto infrastructure holding up and proving its mettle across custody, trading and execution which all came together to function in a global 24/7 environment that is very different from traditional market machinations.

The ecosystem is evolving and getting stronger and with that we need to advance the mindset, rationale for investing, and pools of incoming capital to strengthen the asset class.

The views represented in this commentary are those of its author and do not reflect the opinion of Traders Magazine, Markets Media Group or its staff. Traders Magazine welcomes reader feedback on this column and on all issues relevant to the institutional trading community.

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Bitcoin and the Folly of the Safe-Haven Trade - Traders Magazine

Bitcoin (BTC) price has been a sight to behold over the last week. After successfully breaking through the resistance of $7,200 on Monday, April 6, all eyes were on the leading digital asset to hold $7K as fresh support, but as soon as the weekend was upon us, the price fell through this floor finding a new temporary bottom of $6,750.

So are these weekend dumps a sign that interest in Bitcoin is waning? Or is this simply whales taking advantage of thinner weekend volume to accumulate before the next big run?

Daily crypto market performance. Source: Coin360.com

BTC USD daily chart. Source: TradingView

Bitcoin keeps finding itself in a descending channel that formed 10 months ago. The last time the king of cryptocurrencies broke out of this channel, it encountered fierce resistance at 5 different levels ranging from $8,750 to $10,500.

Currently, Bitcoin is once more above this channel, with a new ascending channel taking form.From here Bitcoin needs to form support by closing the daily above $7,100 for history to start repeating itself, and this is not the only pattern repeating itself this year.

BTC USD weekly MACD chart Source: TradingView

The Moving Average Divergence Convergence (MACD) indicator on the weekly timeframe looks almost identical to that of Jan. 14, which is when Bitcoin last closed above the descending channel. This resulted in a rally from $9,000 to $10,500.

However, much like the last few days, Bitcoin did fall back into the channel before pushing forward to the yearly high.

At the time this was attributed to the mining difficulty increasing every 2 weeks, a trend that seems to be returning.

BTC mining difficulty. Source: BTC.com

After the Black Thursday event, which saw the price of Bitcoin plummet by 50%, the mining difficulty adjustment dropped by nearly 16%. This was one of the largest drops in a single period that Bitcoin had ever seen.

However, last week saw the difficulty increase by nearly 6% and the next adjustment is already looking to increase by 7%. With only 8 days left to go, its highly probable that this will wipe out the negative adjustment seen this year, so does that mean that price will follow?

If the price action at the beginning of 2020 is anything to go by, it might suggest another big price surge is due over the week ahead.

BCH hashrate chart. Source: BITINFOCHARTS

Last week Bitcoin Cash (BCH) had its halving and this caused a lackluster price spike of about 11% before the digital asset slowly settled back to its pre-halving price. However, as a result of the halving, the hash rate dropped off a cliff as can be seen in the chart above.

The most likely reason for this drop is due to the fact that those mining Bitcoin Cash use exactly the same hardware as Bitcoin miners. So when faced with a 50% reduction in profitability it would make more sense to point your miners to the real Bitcoin.

With more miners heading to the Bitcoin network, it would entirely make sense that the difficulty would start to rise. This is something that I expect to continue happening over the next 30 days ahead of the real Bitcoin halving.

However, this will also lead to the difficulty in mining BCH to plummet, so this little dance is something that will cause some very interesting price action over the coming weeks.

If Bitcoin closes above $7,100 it will be incredibly bullish for the week ahead. Once more $7,200 is the first level of resistance, however, $7,400 and $7,700 are the next two levels holding Bitcoin back from breaking $8,000.

With the growing number of miners driving up the difficulty on the Bitcoin network, a run to $9,200 isnt something that would be unreasonable to expect before the week is over.

It still feels like Bitcoin is recovering too soon and the pullback this weekend doesnt seem like it was enough. Should the weekly candle close below $7,100 I would first be looking at $6,750 and $6,500 as the last levels of support before opening up mid $5k range for buyers to step in.

The views and opinions expressed here are solely those of @officiallykeith 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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Are Bitcoin Cash Miners Driving Up the Price of Bitcoin? - Cointelegraph