Technicians inspect bitcoin mining machines at a mining facility operated by Bitmain Technologies ... [+] Ltd. in Ordos, Inner Mongolia, China, on Friday, Aug. 11, 2017. (Qilai Shen/Bloomberg)

The Bitcoin price is known to be extremely volatile over the short term, but the past couple of months have been a particularly wild ride for the crypto asset. After hitting a 2020 high of over $10,000 in the middle of February, the Bitcoin price was lower than $5,000 a month later. Since then, the price of the worlds most popular cryptocurrency has recovered somewhat to around $7,300.

These extreme fluctuations in the price have many speculators wondering what will happen with Bitcoin next, especially in the context of massive, debt-based government expenditures in response to the Coronavirus pandemic. Former Facebook executive Chamath Palihapitiya recently stated that theres now a five or ten percent chance that Bitcoin will be worth millions of dollars one day. Earlier this year, Tesla TSLA CEO Elon Musk noted that hes not convinced the cryptocurrency could become a major database for money around the world. Additionally, billionaire investor and Bridgewater Associates founder Ray Dalio believes investors will turn to gold rather than Bitcoin during a potential crisis in the worlds major fiat currencies.

This excitement around the price of Bitcoin may only increase over the next 34 days, as the third halving event in Bitcoins history approaches. For those who dont know, a halving in Bitcoin is when the number of new Bitcoin created roughly every ten minutes is cut in half. This change in the Bitcoin issuance rate is scheduled to take place every 210,000 blocks (around four years).

Recently, Blockware Solutions CEO Matt DSouza discussed the implications of the upcoming halving on an episode of The Stephan Livera Podcast. Blockware Solutions recently put out a full report on how the Bitcoin price is greatly affected by the level of efficiency achieved by miners on the network. The report also covers this mining-related phenomenon in the context of the halving.

Its kind of like this perfect storm for Bitcoin, DSouza told Livera during their chat.

Miner Capitulation is Good For the Bitcoin Price

While the halving of Bitcoins issuance rate has obvious effects on the supply-side economics of the Bitcoin market, Blockware Solutions makes the case that the implications of the halving for the price of Bitcoin go far beyond changes in supply.

As outlined in their recent report, the halving also has the side effect of putting newly-created Bitcoin into stronger hands due to the fact that inefficient miners with small margins will be pushed off the network once the block reward subsidy is cut in half.

Capitulation is a very good thing, explained DSouza. Its removing the inefficient miners. They no longer get their rewards. Their rewards get allocated to the efficient miners the guys that have deployed correctly that have low [cost] electricity. And those are the strong hands. We want Bitcoin in their hands because they dont have to sell as much Bitcoin. Their margins are good, they dont have to sell as much Bitcoin, theres less sell pressure on the network, and the Bitcoin price could increase.

According to DSouza, inefficient miners tend to add more sell pressure to the market due to the fact that a higher percentage of their total mining rewards must be sold to pay for things like electricity bills.

Its going to be extremely healthy, DSouza, who is also the CEO of Blockware Mining, later added in reference to the upcoming halving event. We encourage the halving. We dont fear it. We welcome it.

That said, DSouza also explained that there could be some short-term pain in the Bitcoin price before the inefficient miners remove themselves from the network. This is because some miners will be incentivized to operate at a loss for a period of time due to the nature of their business contracts.

Theres all types of deals out there that are going to make some miners operate at a loss, which creates more sell pressure because all of the Bitcoin theyre mining is going to get sold, said DSouza. And then theyre going to have to tap into their treasury. And that has to get sold too, so thats more sell pressure. So, we need all that to blow out.

In DSouzas view, it could take two to three months for inefficient miners to get blown off the network if the Bitcoin price stays around the current price level.

In addition to the benefits of miner capitulation, DSouza discussed other ways in which next months halving could affect the Bitcoin price. For one, the Blockware Solutions CEO expects the event to affect the demand side of the Bitcoin market as well.

Everyone knows the halving is typically bullish, said DSouza. People understand that the supply-side economics will improve, so thats going to improve sentiment into the system on the demand side.

DSouza also pointed out that miners are beginning to collateralize their Bitcoin, which should reduce sell pressure on the network. When miners can borrow fiat against their Bitcoin holdings, they are no longer selling Bitcoin in order to pay their bills.

Its another lever of, basically, improving the supply side, said DSouza.

Read the rest here:
A Perfect Storm Is Brewing For The Bitcoin Price - Forbes

Bitcoin and cryptocurrency investors are gearing up for what could be their biggest month ever as the countdown to bitcoin's next halving begins.

This week, bitcoin offshoots bitcoin cash and bitcoin SV will also go through halvingswith the number of new tokens awarded to so-called cryptocurrency miners cut by halfand giving bitcoin and crypto traders some indication of what to expect for bitcoin itself in mid-May.

Bitcoin has seen a surge in interest over the last month as the spreading coronavirus crisis sees ... [+] governments and central banks unleash never-before-seen levels of quantitative easing and stimulus.

Bitcoin cash, which split from bitcoin back in 2017 amid a row over the size of bitcoin's block size, will see its reward for miners fall from 12.5 bitcoin cash tokens to 6.25 on April 8.

Later this week, bitcoin SV, a further fork of bitcoin cash, will go through a similar token halving.

The halvings this week could push bitcoin cash and bitcoin SV miners toward bitcoinsomething that could send the bitcoin price higher.

"There is a real risk that the hash rate might be temporarily halved on both the bitcoin SV and bitcoin cash networks until the bitcoin halving in May, unless the price of the coins or the transaction fees of the networks increase significantly relative to bitcoin," analysts at Arcane Research have found, warning this could weaken the bitcoin cash and bitcoin SV networks and leave them open to attack.

Bitcoin is set to see its coin reward to miners fall from 12.5 bitcoin per block to 6.25 on May 13, 35 days from now, with the cryptocurrency community already looking forward to what's expected to be one of the biggest ever events in crypto.

"As the third halving event to occur, there are expectations for what might come after, with history telling us that the bitcoin price will typically begin to rise significantly within the 12 months following a halvingsomething that can be simply put down to supply and demand," said Danny Scott, the chief executive of Isle of Man-based bitcoin and crypto exchange CoinCorner, adding he expects the bitcoin price to surge back to its all-time high of around $20,000 per bitcoin this year.

There have already been two bitcoin halvings since bitcoin launched in 2009, one in 2012 and another in 2016. Bitcoin halvings are scheduled to continue roughly once every four years until the maximum supply of 21 million bitcoins has been generated by the networkwhich isn't expected to happen until well into the next century.

Bitcoin and cryptocurrency prices have broadly climbed this week, somewhat in anticipation of the upcoming halvings, but the global coronavirus crisis and government's extraordinary lockdown measures have dominated traditional and crypto markets.

Bitcoin and its forks' upcoming halvings puts them directly at odds with the massive stimulus measures and quantitative easing unleashed by the U.S. government, the Federal Reserve and other central banks around the world to spur economic activity as countries shut down to try to contain the coronavirus COVID-19.

Bitcoin's halving has "recently been dubbed the 'quantitative hardening,'" according to Scott, with CoinCorner reporting that March was its busiest trading month in two years.

The bitcoin price has climbed this week after a massive coronavirus-induced sell-off last month.

Some have suggested surging bitcoin demand could result in a bull run to rival bitcoin's epic 2017 rally that saw the bitcoin price climb from under $1,000 to around $20,000 in less than 12 months.

Other bitcoin and crypto exchanges have reported a similar uptick in activity over the last month with year-on-year U.S. registrations for London-based bitcoin and crypto specialist broker eToro soaring 221% in March.

"People are coming to us to invest in crypto-assets so we are still very bullish on its long-term potential," said Guy Hirsch, eToro's U.S. managing director, adding: "There is a growing consensus that due to the Fed announcing unlimited quantitative easing, investors could soon be looking to bitcoin as an inflation hedge against a depreciating dollar."

Other bitcoin and crypto market watchers are similarly upbeat, betting on bitcoin as a "store of value" due to its "scarcity."

"Whilst halving events have previously generated major bitcoin price runs, I believe that other key drivers will have a more significant, longer-term impact on the price of the digital currency," said Nigel Green, the chief executive of financial advisory group deVere, pointing to central banks cutting interest rates to zero in an attempt to offset the economic turmoil wrought by the historic coronavirus pandemic.

"In this time of economic turbulence, the growing consensus that bitcoin is becoming a flight-to-safety asset has further strengthened," Green said.

Read more:
This Could Be The Biggest Ever Month For Bitcoin And Crypto - Forbes

Tokenized bitcoin (BTC) is coming to the Tezos blockchain.

Announced Wednesday, the Bitcoin Association Switzerland, Tezos Foundation and multiple partners will issue the first tokenized version of bitcoin on the Tezos blockchain, tzBTC. The asset will also be the first vehicle for Tezos-based decentralized finance (DeFi), according to a press release from the association.

Each tzBTC represents one bitcoin on the Bitcoin blockchain and is minted under the new FA1.2 Tezos token standard.

The tzBTC brings the brand and liquidity of Bitcoin to the Tezos blockchain and gains the potential for rich functionality made possible by Tezos smart contracts, Bitcoin Association Switzerland President Lucas Betschart said in a statement.

Another wrapped bitcoin project was announced for Ethereum last week, tBTC. Building a bridge that allows Bitcoin to interact with DeFi makes a lot of sense, investor Fred Ehrsam said of that project. Adding a bridge for Tezos to the most liquid cryptocurrency follows a similar logic.

Roman Schnider, CFO and head of operations at the Tezos Foundation, said the addition of bitcoin is just the tip of the spear as the community builds out DeFi products on Tezos.

This is kind of the first [wrapped] product that we see and there's not much you can trade against at the moment, but there is a roadmap, Schnider said in a phone interview.

Next up, Schnider said, are atomic swaps for building out DeFi exchanges and perhaps a wrapped ether (ETH) token.

tzBTC wont be alone on Tezos, however. The token could soon be joined by Tezos-based DeFi protocol StakerDAO, which is planning to launch this quarter, according to its website. StakerDAO automates capital allocation for staking on various protocols to earn yield for investors.

tzBTC will be overseen by numerous organizations, according to the tokens website. Bitcoin Association Switzerland will regulate keyholders who mint and burn tzBTC. Keyholders include Swiss crypto firms Inacta, Lexr, Swiss Crypto Tokens and Taurus.

Betschart told CoinDesk the idea first originated with Swiss Crypto Tokens, but the non-profit took up the project which retains a bitcoin-first bent.

Our interest is to push the adoption of bitcoin. So we're already involved with some other things to make bitcoin even more usable, Betschart 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.

See the original post here:
Wrapped Bitcoin Aims to Kick-Start DeFi on Tezos Blockchain - CoinDesk

The new and now often-cited connection between bitcoin (BTC) and global equities doesnt just mean they fall together.

Sometimes, it means they rally on potentially good news. And that seems to be the case on Monday, as positive data on the war on the coronavirus offer hope to the markets that better days may come soon.

The price of bitcoin is at $7,145 as of 13:45 UTC (8:45 a.m. Eastern time), a 5 percent gain from the previous 24 hours. The move began during Asian equity market trading hours as Japans Nikkei index moved up 4.2 percent. Futures contracts on the Dow Jones Industrial Average also had some sunshine around then, indicating a more than 700-point gain when New York traders heard their opening bell.

Part of that optimism in stock markets and in cryptocurrencies stems from a few glimmers of hope on the coronavirus front.

Looks like we're piggybacking on equities with some data possibly indicating virus peaking coming out of a few of the European countries, said Dave Vizsolyi, head of trading at Chicago-based proprietary crypto trading firm DV Chain.

To be sure, cryptocurrency markets often gyrate with little rhyme or reason, and an original selling point of bitcoin was as a non-correlated asset, indifferent to movements in traditional markets. However, during the recent crisis, the bellwether digital asset has tended to track the incumbents.

Daily new cases are slowing in places like Italy, where they have stayed in the 4,000 range since March 30; at its peak on March 21, over 6,500 new cases were reported. New York, the hardest-hit state in the U.S., saw a slight drop in coronavirus-related deaths; 4,159 lives were lost in the Empire State so far, but Sunday saw the first daily drop in fatalities since the crisis began.

Thats not to say the week promises to be easy on the UnitedStates, where there are more than 300,000 cases, a quarter of the worlds total.

This is going to be the hardest and saddest week of mostAmericans lives, U.S. Surgeon General Jerome M. Adams saidon Fox News over the weekend. This is going to be our Pearl Harbor moment,our 9/11 moment, only its not going to be localized. Its going to behappening all over the country.

However, his commander-in-chief, President Donald Trump, took a more glass-half-full approach, proclaiming in all-caps LIGHT AT THE END OF THE TUNNEL on his preferred method of communication, Twitter.

Nonetheless, some in the crypto markets arent sold on the idea that the worst is behind us.

Paxos exchange CEO Chad Cascarilla warned of a grim picture on Patrick OShaughnessys podcast, Invest Like the Best, if fiscal and monetary stimulus prove too little, too late.

Cascarilla sees about a 25 percent chance the U.S. would need a bank holiday similar to what happened in the Great Depression and even some nationalization in its financial sector.

It looks likely that were in a depression for at least aquarter or two, Cascarilla said. If youre in that for more than two quarters,I think you need to have bank failures. The market would have a really hardtime digesting that. If we need to fill a $6 trillion hole, Im not sure we cando that in time before the feedback loops kick in. And then you can end up witha bank holiday and nationalization.

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.

See original here:
Bitcoin, Stock Markets Rally on Signs of Hope in Pandemic - CoinDesk

Both bitcoin and the U.S. stock markets have witnessed a notable recovery rally over the past couple of weeks, but it's the cryptocurrency that's taken the lead.

Bitcoin (BTC) clocked a 3.5-week high of $7,459 early on Tuesday, meaning the cryptocurrency was up 4.2 percent from the yearly opening price of $7,160. Since then prices have fallen back slightly, putting the year-to-date gain at around 3.2 percent.

Meanwhile, the U.S. stock markets are still trading in the red on a YTD basis. The S&P 500, Wall Streets equity index, has pulled off a strong 21.5 percent rally from lows near $2,190 reached on March 23, but even so it's still down 17.5 percent for the year.

Gold, a classic haven asset, has gained around 2 percent so far since Jan. 1.

At press time, bitcoin is changing hands near $7,445 up around 90 percent from the low of $3,867 observed on March 13, according to CoinDesks Bitcoin Price Index.

As bitcoin looks to be moving in tandem with the equity markets, what's behind bitcoins outperformance of the S&P 500 on a year-to-date basis?

Bitcoin may be gaining altitude because the market is now dominated by long-term investors who believe in the narrative that the cryptocurrency is a hedge against global economic duress brought on by the coronavirus pandemic.

Bitcoins rapid drop from $8,000 to $3,867 seen on March 12 and March 13 was mainly fueled by long liquidations by institutions and macro traders. These non-crypto dedicated participants squared off their long positions to raise the cash needed to fund margin calls, said Richard Rosenblum, co-head of trading at GSR.

Following the liquidations, the market is primarily made up of crypto-native firms and long investors. Not surprisingly, bitcoin is acting more bullish, Rosenblum said.

The coronavirus-led sell-off in the equity markets, triggered a global dash for cash, which saw macro traders sell everything from gold to bitcoin.

Derivatives market data does suggest institutions took a break from the crypto markets in March. Open interest, or open contracts, in futures listed on global exchanges fell from $4 billion on March 11 to $2 billion on March 14, according to data from research firm Skew.

The cryptocurrency is expected to maintain its upward trajectory and challenge the high of $8,000 seen just before the March 12 sell-off.

Bitcoin is within shouting distance of its March meltdown level, and could make par by the weekend, Jehan Chu, co-founder and managing partner at Hong Kong-based blockchain investment and trading firm Kenetic told CoinDesk.

Chu, however, warned the cryptocurrency is still on uncertain ground and could slip back below $7,000. A pullback may be seen if key resistance near $7,480 proves a tough nut to crack.

Daily and 4-hour charts

Bitcoin charted a green marubozu candle on Monday (above left), which comprises a big body and small or no wicks. The candle indicates buyers were in control from the open to the close, reflecting strong bullish sentiment.

The pattern strengthened the case for a rally to $8,000 put forward by a pennant breakout confirmed last week.

So far, however, the buyers have failed to challenge the 50-day average hurdle at $7,482. Bitcoin narrowly missed passing the average resistance early on Tuesday, with prices dropping back from $7,459.

If the hurdle continues to cap upside during the U.S. trading hours, an overbought reading on the 4-hour chart relative strength index would gain credence, possibly yielding a drop to the daily chart rising channel support, currently at $6,810.

Disclosure:The author holds no cryptocurrency at the time of writing

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.

Originally posted here:
Up 3%: Bitcoin Leaves S&P 500 Behind in Year-to-Date Recovery - CoinDesk