Category Archives: Bitcoin

A recent report by blockchain tracking and analytics provider, Whale Alert, revealed that the miner known as Patoshi mined over $10.9 billion or 1,125,150 BTC during Bitcoins infancy in order to protect the network from a 51% attack.

Patoshi has been confirmed to be the anonymous Bitcoin creator known as Satoshi and the early blocks mined by Patoshi also include the first BTC transaction to Hall Finney, a well known developer and early Bitcoin contributor.

Whale Alert was able to come to this conclusion by reviewing previous research conducted by independent researcher and cryptographer Sergio Lerner. Lerner coined the term Patoshi miner back when a cryptographic pattern that revealed most of the early Bitcoin mining was done by one individual with access to modified mining software.

The Patoshi Pattern. Source: Whale Alert

In the chart above, the Patoshi pattern is visualized and it reveals that the straight lines are using the standard Bitcoin mining software and the saw-like lines are attributed to Patoshi.

This same pattern allowed Whale Alert to discover that the Patoshi miner adjusted its speed between blocks in order to keep the average block time at 0.6 blocks per 10 minutes.

Based on the patterns left by the miner on some of the code that is stored in each Bitcoin block, Whale Alert also concluded that this early Bitcoin mining operation was composed of up to 48 computers and one of them was responsible for coordination.

According to Whale Alert, there are two reasons for adjusting the speed, to either keep the block time near the 10 minute mark or to protect the network from a 51% attack.

Satoshi kept his share of the hashrate at a steady 60% as the network grew and a 51% attack was a major threat for Bitcoin at that time, as it has been for newer cryptocurrencies in recent times.

It seems likely that Satoshi was trying to protect the Bitcoin network but as it became less prone to malicious attacks he reduced Patoshis block creation rate to 1 block per 10 minutes.

Blocks mined per 10 minutes per Patoshi chain. Source: Whale Alert

Many analysts believe Satoshi stopped mining at block 54,316 once he deemed the network sufficiently decentralized. However, there have been some irregularities in later blocks that span up until May 2010 or block 112,500, but currently these cannot be confirmed as Patoshi or Satoshi.

The actions of the Patoshi miner appear to be meticulously calculated and geared towards the protection of the network as the global Bitcoin hashrate increased and mining picked up. It seems unlikely that this same entity would want to sell some of the Bitcoin supply and this would have a deteriorating effect for the BTC network. Whale Alert concludes as much by saying:

The timing of the shutdown, the mining behavior, the systematic decrease in mining speed and the lack of spending strongly suggest that Satoshi was only interested in growing and protecting the young network. The bitcoin mined by Patoshi were possibly a mere byproduct of these efforts and it is unlikely that the remainder will ever be spent, although the question remains why Satoshi didnt simply burn them in this case.

According to an early Bitcoin developer, Satoshi feared a 51% attack so much that he even had a GPU ready to defend the network, although it was not used to keep mining somewhat balanced.

Lerner also believes that the Patoshi miners actions were not motivated by financial gain and according to Lerner, Satoshi won't use his coins ever.

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$10.9 Billion Bitcoin Stash Proves Satoshi Is Still the Biggest Whale - Cointelegraph

A picture taken on January 15, 2020 shows the facade of the Banque de France building in Paris. The ... [+] bank is working with the European Central Bank to re-imagine how new technologies can change the way money works.

The central bank of France is on the verge of conducting a series of sweeping experiments whose lessons could be used to change the way money works. Cryptocurrency wont be included. In a statement from the Banque de France, the nations central bank, which works together with the European Central Bank to determine the monetary policy of the continent, the institution today released the names of eight participants in the experiments and the scope of the work.

Participants are consulting giant Accenture ACN , settlement giant Euroclear, the HSBC bank, French firm, Iznes, etheruem platform LiquidShare, little-known startup, ProsperUS, crypto bank Seba, and Forge, Societe Generales digital capital markets spinoff. The broad parameters of the experiments include everything from testing regulation using digital currency to improve cross-border payments, an analysis of how a central bank digital currency should be made available, and importantly, to explore new methods of exchanging financial instruments (excluding crypto-assets) for central bank money.

The statement from one of the words leading central banks shows how the vaunted institutions are scrambling to learn the best that cryptocurrency, and its underlying blockchain technology have to offer, but only within limits. Neither blockchainthe shared ledger that lets bitcoin existnor the more sanitized word to describe the larger group of technologiesdistributed ledger technology were mentioned by name in the statement. As such, the work also helps define the limits of what any actual adoption of the technology might look like.

The strong mobilization around this call for candidates testifies to the interest of the actors of finance and technology for this approach aiming to explore the potential contributions of a digital money issued by the central bank to improve the functioning of financial markets, in particular interbank regulations, according to a Google GOOGL translation of the statement. A representative of the Banque de France declined to share any additional context.

Over the coming days, the Banque de France will begin conducting experiments with each of the candidates, according to the statement, with some of the projects expected to take as long as multiple months. Candidates were asked to respond to the banks call for applications for CBDC experiments by May 15. The experiments could have far-reaching implications to the decision-making processes for the central bank, which in addition to helping define Europes monetary policy and implement it in France, regulates Frances banks and insurance companies and ensures risk management.

Beyond the confines of France though, lessons learned from the central bank digital currency experiments will be contributed to the international work being led by the Eurosystem, the monetary authority of the European Union. Earlier this month, the bank joined Germanys central bank, the Deutsche Bundesbank, and the European Central Bank in co-hosting a new innovation center in Europe within the framework of the Innovation Hub of the Bank for International Settlements.

In May, European Central Bank executive board member, Yves Mersch, confirmed in a speech at industry conference Consensus, that the European Central Bank was one of at least 66 central banks exploring how lessons learned from blockchain could change the very fabric of what we consider money.

For example, Chinas central bank, the Peoples Bank of China, has taken a giant first-mover advantage in the space, starting its CBDC experiments years ago, and currently testing a working implementation. If successful, one side-effect of CBDCs could be borderless transactions, possibly giving people the choice to store Chinese Renminbi in addition to, or instead of dollars, as a global reserve currency,

Based on what we know of the nearly pervasive experiments around the world looking into the nature of CBDCs, some of the other possible changes to the way money works could include giving citizens accounts at central banks, allowing them to occasionally bypass commercial banks and receive direct access to stimulus checks and more. Another possible, but controversial side-effect of central bank digital currencies could enable online payments while maintaining the privacy citizens have historically enjoyed with cash.

Skeptics of the CBDC concept argue that so long as central banks continue to have the authority to print or issue nearly unlimited amounts of the currency the underlying problems of inflation will continue to drive people to more distributed, deflationary alternatives such as bitcoin, which has a set amount. Other skeptics point to the unlikelihood that central banks will ever actually allow citizens the same privacy they have in the real world, online, and could use the technology as a way to track their own citizens spending habits.

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Bitcoin And Other Crypto-Assets Excluded From Central Bank Experiments - Forbes

Russia has dropped plans to criminalize bitcoin transactions for now, according to local media reports.

The Digital Financial Assets Bill (DFA), due to be read for the second time in the Russian parliament or State Duma on July 21, has removed references to administrative and criminal liability for dealing in bitcoin (BTC). A third and final reading will establish it as law.

There will be no liability in this bill, Anatoly Aksakov, head of the parliaments financial markets committee, told local news agency Ria Novosti. Aksakov, who is sponsoring the draft law, said the idea to penalize BTC investors with fines and jail terms had been set aside for the time being.

Theyve removed everything, theres only a link that the regulation of digital currency will be determined in another law, he stated.

An earlier version of the DFA bill proposed to levy fines of up to $7,000 or seven years in jail for individuals buying bitcoin with cash. It also planned to punish companies that issue or operate virtual currencies without approval from the Russian central bank, with fines of up to two million rubles or about $28,000.

Under the original bill, companies would have to pay the equivalent of one million rubles ($13,900) and individuals at least 200,000 rubles ($2,800) for violation of the rules for transactions with cryptocurrencies, if they are used as payment for goods or services.

According to Aksakov, the revised draft law, in its current format, now deals with issues around the definition of digital financial assets and establishes requirements for blockchain operations, among other matters.

He expects the proposed law to enter into force on January 1, 2021, once it is adopted in the second and third readings, in the spring session. The State Duma spring session ends July 23, Ria Novosti reported.

However, Russian lawmakers are planning another special law on crypto regulation that might reintroduce severe penalties for dealing in BTC, as originally proposed.

There will be a special law on digital currency, which can be adopted in the autumn session, Aksakov was quoted as saying. The autumn session ends in December.

Cryptocurrencies remain a grey area in Russia, with the legal status of smart contracts, initial coin offerings and mining not clearly defined despite a raft of proposals brought to parliament for this purpose.

What do you think about the Russias proposed crypto law? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Russia Shelves Plans to Criminalize Bitcoin Transactions - For Now | Regulation - Bitcoin News

Bitcoin prices on Wednesday evening were virtually unchanged, even as unknown hackers were perpetuating a massive scam to lure bitcoins away from owners.

Scammers were engaged in a sprawling hack that compromised the Twitter Inc. TWTR, +0.54% accounts of a parade of high-profile individuals and entities, including Tesla Inc.s TSLA, -1.87% CEO Elon Musk and Berkshire Hathaway BRK.A, +1.35% BRK.B, +1.37% billionaire Warren Buffett. Hackers used the accounts to solicit bitcoins from individuals by promising to double the amount sent to a bitcoin wallet address. Former President Barack Obamas Twitter account also was hacking, underscoring the breadth and sophistication of the hacking (see an attached screenshot of the tweet).

Bitcoin BTCUSD, +1.99%, however, was seeing little in the way of significant movement, with the value of the worlds most popular digital currency off 0.4% at $9,209.77, and futures for bitcoin trading on the CME Group were up slightly, around 0.5%, in electronic trade, after the June contract settled at $9,190, according to FactSet data.

In a stated via its platform, Twitter said that it was aware of a security incident on its platform. We are investigating and taking steps to fix it. We will update everyone shortly.

Bitcoin has a long history of hacking by perpetrators looking to abscond with other peoples digital currencies. The cryptographic asset also has a history of individuals hacking bitcoin exchanges.

Last year, popular exchange platform Binance said it discovered that hackers stole 7,000 Bitcoins from a single digital wallet, totaling some $40 million, according to a report from the Wall Street Journal.

Hacks have been a primary reason that many have been circumspect about the future of the cryptocurrency, which introduced the world to blockchain technology. According to WSJ, more than $1.7 billion in bitcoin has been publicly reported stolen, since the inception of the coin back in 2009, including the historic Mt. Gox hack.

It isnt clear if any coins have been lost in this episode, but some have speculated that the perpetrator of this Twitter attack may have gotten some $100,000 in coins sent to their account.

Meanwhile, other cryptos that also tout the blockchain ledger technology, the signature element of bitcoins, also were seeing little price movement.

Prices of Ether, the currency that runs atop the Ethereum ETHUSD, +3.00% platform, were off 1% at $238.07, those for XRP XRPUSD, +1.63%, the currency pegged to Ripple, were down 0.5%, trading at 19.7 cents.

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Bitcoin prices unfazed as major Twitter hijacking ripples through social media and digital currency community - MarketWatch

In the race to become the dominant cryptocurrency platform, Ethereum is gaining on Bitcoin.

Take a look at the market capitalization of ether, the native token of the Ethereum blockchain. Currently, the value stands at about $26 billion. But that figure doesnt include all of the digital assets built atop the Ethereum blockchain, including some of this years hottest tokens:stablecoinslike tether and USDC and altcoins likeCrypto.coms CRO, Chainlinks LINK, CompoundsCOMPand KybersKNC.

Youre readingFirst Mover, CoinDesks daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you dont have to. You cansubscribe here.

Related: Bitcoin Rises With Stocks as EU Agrees 750B in Coronavirus Stimulus

The combined value of those ERC-20-standard tokens is alsoaround $26 billion, according to the data provider Messari. That puts the market capitalization of the Ethereum ecosystem at more than $50 billion closer to bitcoins $170 billion than if ether were considered alone.

The comparison shows how the rapid pace of development this year on Ethereum has brought the blockchains ecosystem closer to challenging Bitcoin. The value gap narrowed overthe past month as bitcoins price stagnated,while demand for stablecoins and a flurry of activity in decentralized finance, known as DeFi, has ignited the value of Ethereum and the tokens that depend on it.

DeFi tokens continue their bull run, cryptocurrency analysis firm TradeBlock wrote Monday in aweekly commentary.

Messari, a digital-asset data firm, said in a report thatthe Ethereum blockchains daily settlement value recently surged to about $2.5 billion, surpassing Bitcoins for the first time since at least early 2019.

Related: Market Wrap: Bitcoin Clings to $9,200 While Ethereum Transactions Soar

Ethereum has blown past Bitcoin, Ryan Watkins, a Messari analyst, wrote in the post on Monday. With the increasing amount of economic activity taking place on Ethereum, this trend is unlikely to reverse anytime soon, if ever.

Its the latest chapter in the competition among projects to attain critical mass in the cryptocurrency industry. For entrepreneurs and investors in the space, the goal is to establish networks and projects with enough name recognition, credibility and functionality to scale quickly if and when mass adoption comes.

Bitcoin, the oldest and largest cryptocurrency, attracted most of the hype early in 2020 as some analysts predicted a once-every-four-years event known as the blockchains halving could send prices to $90,000. Bitcoin got another bluster of endorsements as the spreading coronavirus slammed the global economy, sending traditional markets plunging and prompting the Federal Reserve and other big central banks to createtrillions of dollars of freshmoney.

Many investors predicted that the money injections would debase the dollars purchasing power, driving up theprice of bitcoin. Yet over the past couple months, bitcoins price has stagnated below $10,000, and even its notoriousvolatility has withered prompting fickle crypto traders to seek faster-moving action.

Bitcoin has been stuck in a tight trading range for weeks, boring for a market that used to be known for itsthrills. However, there are signs Tuesday that an expected big move may be building.

Still, Ethers price is up 81% in 2020 to $237, almost three times bitcoins 30% year-to-date gain.

Steve Ehrlich, CEO of publicly traded cryptocurrency brokerage firm Voyager Digital, says bitcoin has accounted for about 15%oftrading volumes so far in July, down from about 60% prior to the May halving.

Weve seen a tremendous change in our retail customerbehaviors, Ehrlich said Monday in a phone interview. Whenbitcoin is extremely flat in the marketplace, people are looking at other tokens.

In terms of name recognition and popularity outside of the crypto industry, Bitcoin still dominates. According to a report last week from the trading platform eToro and data provider The TIE, only four stories about DeFiappeared in June in non-crypto news sources, versus some 200 about bitcoin.

Story continues

There is a growing realization though that the 2020 DeFi hype may be overdone, Mati Greenspan, founder of the cryptocurrency and foreign-exchange analysis firmQuantum Economics, wrote Monday in an e-mail to subscribers.

Denis Vinokourov, head of research at the London-based cryptocurrency prime brokerBequant, said that ethereum risks becoming a victim of its own success, activity inthe tokens built atop the blockchain are driving up transaction fees.

This resurgence in the network performance has come with a raft of undesired consequences, Vinokourov wrote in emailed remarks.

And Jimmy Song, a well-known bitcoin developer and promoter, told the website CoinMarketCap in aninterview published last weekthat he thinks many DeFi projects will fail to live up to their decentralized billing because they almost always have to have some sort of back doorin case something goes wrong.

Its really just a form of gambling with limited upside for people that arent in control of the protocol, Song said.

For now, though, the Ethereum ecosystem is edging closer.

Jack Tan, of Taiwan-based quantitative firm Kronos Research, told CoinDesks Daniel Cawrey that he seesether hitting $500 by the end of this year. That would more than double ethers market capitalization, to say nothing of any potential increases in the value of ERC-20 tokens.

Ethereum the platform has done its job, the cryptocurrency investment firm Arca wrote Monday in a weeklyblog post.

Traders are apparently doing their jobs too following the action.

BTC: Price: $9,347 (BPI) | 24-Hr High: $9,363 | 24-Hr Low: $9,152

Trend:Bitcoin is showing signs of life on Tuesday with prices trading above $9,340 at press time, representing a 1.9% gain on the day. Notably, the cryptocurrency hasnt witnessed an over 1% move since July 9.

The 4-hour chart shows the cryptocurrency has broken higher from the four-week-long narrowing price range. The breakout is backed by an above-50 or bullish reading on the relative strength index. Meanwhile, the MACD histogram is printing higher bars above the zero line, a sign the upward move may gather pace.

The immediate resistance at $9,480 a lower high created on July 9 could be put to test over the next few hours.

Acceptance above that level would confirm a Bollinger band (volatility indicator) breakout on the daily chart and may yield a rally to $10,000.

The bias would turn bearish if the cryptocurrency finds acceptance under $9,000. However, sellers have failed multiple times in the last two months to establish a foothold below that psychological support.

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First Mover: Bitcoin Shows Signs of Life But Ether (And Crew) Steal the Limelight - Yahoo Finance

About 60% of bitcoin investors are willing to hold their coins until they die if the price fails to breach the key $10,000 level.

Now thats according to a Twitter poll by Peter Schiff. The gold-bug asked bitcoin hodlers: How much longer does the price of #Bitcoin have to stay below $10,000 before you will throw in the towel and sell?

With about 7 hours left for the poll to expire (at Press time), nearly 26,000 people have responded. At least 58% said they will hold the top crypto for as long as it matters, even if that means taking it to their graves.

Another 15%, or 3,900 people, said it will be a year before they decide to sell. Around 14% of the respondents said they will hodl for another three years and 13% for the next decade before opting to exit their positions.

It seems unfathomable that anyone would willingly die holding onto dear bitcoin because the price stagnated below the psychological $10,000 threshold. Rather, it is more plausible that Schiffs poll result illustrates the faith with which investors hold in regard to BTC, even as the price struggles.

Bitcoin bulls have struggled to gain momentum since the Bitcoin network scheduled supply cut of May 11 the event looked upon by many as a potential turning point for a bullish breakout. Previous such events have led to a major rally. Twice the price of BTC broke above $10,000 and twice it was rejected, at one point to as low as $8,600.

Today, BTC is trading at $9,248, down 0.9% over the last 24 hours, according to markets.Bitcoin.com data. The immediate target is to break above $10,000 and stay there. Analysts consider this level as important for sparking BTCs long-awaited price rally.

According to Chainlysis, a crypto data analytics company, most BTC investors do not want sell their assets because they regard it as digital gold. Of the 18.6 million BTC mined as of June 2020, around 60% is held by entities either people or businesses that have never sold more than 25% of the bitcoin theyve ever received.

The firm says only 3.5 million bitcoin or 19% of total circulating supply is actively traded throughout the world. Another 20% of the existing bitcoin supply has not moved from its current set of addresses in five years or longer what Chainalysis called lost bitcoin.

What do you think about the result of Peter Schiffs poll? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Survey: 60% of Bitcoin Investors Will Die With Their BTC If Price Stays Below $10,000 | News - Bitcoin News

Bitcoin, thrust into the international spotlight this week by Twitter hackers trying to defraud people of their bitcoin, is hard to track but by no means impossible.

Bitcoin, cryptocurrency and blockchain analytics companies are able to forensically examine crypto transactions and are often able to pinpoint exactly who made the transaction, where and when.

Now, a top Pentagon investigative unit is looking for information about hiring a crypto analytics service to "quickly detect criminal and suspicious cryptocurrency transactions" around the world.

A top Pentagon investigative unit has put out a request for a bitcoin and cryptocurrency analytics ... [+] service.

The U.S. Army Criminal Investigation Division Command (USACIDC) is looking to licence an application to help them track and trace illicit cryptocurrency transactions, according to a statement of work published on July 10. Unlike a more formal request for proposal, the posting is part of an earlier research phase called a request for information.

"The contractor must provide worldwide web-based access to a reliable cryptocurrency investigation service," the document read, giving a deadline of July 20 for companies to submit the information.

"The web based application must provide the capability to assist law enforcement identify and stop actors who are using cryptocurrencies for illicit activity such as fraud, extortion, and money laundering. Application must enables users to conduct in-depth investigation into the source of cryptocurrency transactions and provides multi-currency analysis from bitcoin to other top cryptocurrencies."

In addition, the application must "help spot suspicious transaction patterns and interactions with other entities," and "a link analysis tool to facilitate the analysis of data."

The request for work comes after the United States Army Contracting Command of New Jersey published a pre-solicitation notice seeking a similar web application to help law enforcement agencies to track and identify people using cryptocurrencies for illegal purposes in July last year.

The U.S. Army Contracting Command put out a so-called "request for information" on bitcoin and ... [+] cryptocurrency analytics services, inviting firms to respond by July 20.

Companies such as New York-based Chainalysis and London-based Elliptic, which recently won a contract with the IRS, have carved out a niche providing blockchain data and analysis to government agencies, bitcoin and crypto exchanges, and financial institutions.

Coinbase, the largest U.S. bitcoin and cryptocurrency exchange, has recently made headlines by licencing its blockchain tracing software to the U.S. government. The move has sparked controversy, with critics claiming the service causes a conflict of interest for the popular exchange.

Coinbase said in an email that it was aware of the USACIDC request for work but had yet to make a decision on whether it will bid.

"We'll always look for ways to work with agencies and law enforcement to fight illegal activity," a Coinbase spokesperson said.

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A Top Pentagon Investigative Unit Wants To Spy On Worldwide Bitcoin And Crypto Transactions - Forbes

As reports hit the United Kingdom in mid-June warning that inflation rates had fallen to a four-year low, high-profile fund managers were conversely worrying that the COVID-19 stimulus from governments and central banks would ultimately drive up prices.

In a recent market outlook note, famed hedge fund investor Paul Tudor Jones warned that:

We are witnessing the great monetary inflation an unprecedented expansion of every form of money unlike anything the developed world has ever seen. High debt accommodated by money printing is difficult to banish. Inflation expectations could one day respond to this reality.

Crispin Odey, the London-based founder of Odey Asset Management, also agrees inflation is ultimately unavoidable given the level of stimulus. In the short term, the money will be made on the inflation bet, Odey wrote in a recent letter. With potential inflation seemingly on the horizon, investors are looking out for the next big hedge in order to protect assets during the nascent economic crisis.

Jones, for one, has decided a way forward is to invest his fund, Tudor Investment Corporation, into Bitcoin (BTC). If I am forced to forecast, my bet is it will be Bitcoin, commented Jones in the same letter to investors. Bitcoin reminds me of gold when I first got into the business in 1976.

After the United States Federal Reserve indicated on June 10 that interest rates will remain near 0% until 2022, Bitcoin saw a short-lived run past $10,000, gaining 1.6% over 24 hours before dropping back.

Institutional investment managers have been increasingly interested in all things crypto over the past couple of years, and their interest keeps rising. A recent Fidelity report shows that in a survey of almost 800 institutional investors across the U.S. and Europe, 45% of firms in Europe say they hold crypto assets. Fidelity goes on to report:

The survey revealed higher penetration with crypto hedge and venture funds, as expected, but also the financial advisor, high net worth individual and family office segments.

Consumers are also showing increased signs of interest, with the U.K.s Financial Conduct Authority reporting that an estimated 2.6 million people have bought crypto assets at some point, nearly double the number reported last year.

Investors across the board can take advantage of these same trends and realize the benefits of hedging against inflation via Bitcoin. But accessing crypto markets can be extremely convoluted at times, with crypto exchanges charging users hefty fees for the privilege. Yet over the past couple of years, there has been somewhat of a maturing of crypto markets. Now, more consumer-friendly, easy-to-use platforms have been set up, providing immediate and safe access to best-price crypto. Users of these platforms can benefit by instantaneously and effortlessly exchanging their money into digital currencies at competitive prices and monitoring their balances in real time.

Through these unprecedented times as economies around the world adjust to dealing with a pandemic, investors across the globe are having to readjust their positions. Using Bitcoin to hedge against potential inflation is not solely in the realm of the Joneses and Odeys of this world, however. New technology platforms are making it much easier for U.K residents to similarly safeguard their assets by combining currencies into one account, helping to make cryptocurrencies more readily available.

The best profit-maximizing strategy is to own the fastest horse, Jones said in his Great Monetary Inflation note. He clearly believes that Bitcoin is the one to back.

The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Mark Hipperson is the founder and CEO of Ziglu, a cryptocurrency trading platform. Previously, he co-founded Starling Bank, where he was responsible for helping to secure the U.K. banking license with regulators and obtaining the initial $70 million funding. He was also responsible for the design, build, implementation and support of the banks IT services platform, apps and infrastructure. Mark started his career at Barclays where he was deputy chief technology officer and head of technology for the Barclays Group.

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Bitcoin Could Be the Next Big Inflation Hedge - Cointelegraph

The response to the Covid-19 pandemic has been ruthless on the global economy and during the last six months, traditional stocks and commodities have felt extreme market volatility. Coinshares published a comprehensive report this week in regard to how bitcoin performed during the coronavirus outbreak. The seven-page study highlights how bitcoins rebound to pre-Covid price levels has unsurprisingly garnered attention amongst the investment community.

Coinshares head of research Chris Bendiksen recently published a report that discusses how bitcoin (BTC) reacted to the coronavirus outbreak and the mid-March market volatility. Despite what critics like Peter Schiff say, BTC has outperformed a great number of global assets including gold since the March 12, 2020 (Black Thursday) market rout.

Golds price per ounce was $1,589, and the price has risen 13.90% to a high of $1,810 on July 17. Bitcoin (BTC) on the other hand slid to a low of $3,870 on Black Thursday sliding -49.39% that day. However, since then the price of BTC has increased 135% where it stands today at just above the $9,100 per coin region.

The report called Understanding Bitcoin During the Covid Crisis written by Bendiksen highlights how resilient bitcoin can be. Coinshares believes that the initial tumble on March 12 was ignited by fear spreading from other markets.

It then became particularly severe due to bitcoins unique market structure, Bendiksens report notes. The overall usage of leverage in bitcoin spot and derivatives markets is generally large, but in the time leading into March 12 & 13, leverage levels were abnormally high, making them extra vulnerable to shocks.

The report continues by adding:

Interestingly, even after sustaining a drop of that magnitude, Bitcoin not only found a natural bottom, it vigorously rebounded over the succeeding weeks and liquidity levels have normalised. Not only does that demonstrate that what we observed was a market dislocation caused by exogenous shocks, not a broad revaluation, but it also shows that Bitcoin markets are highly resilient and self-correcting, even in the complete absence of external intervention.

Despite the swift rebound, the Coinshares researcher explained that due to bitcoins market structure not really changing, theres little reason to doubt the March 12 volatility could happen again. Bendiksen says there were a number of things that happened prior to Black Thursday, which can be examined again for future volatility events.

The report details that traditional financial markets were on shaky ground in early March, and a stampede for cash took place after Europe and North America implemented the initial lockdowns.

But was really noticeable was the leverage levels in bitcoin markets prior to the Black Thursday fallout.

In bitcoin markets, leverage had been building in various forms, the report reveals. USD lending rates on margin platforms were elevated, and Long/Short (L/S) ratios at spot exchanges such as Bitfinex were hovering at abnormally high levels. Having come down from twin peaks of almost 12x in late December and early January, L/S ratios spiked back above 9x in the weeks leading up to March 11. By March 17, the ratio had dropped to less than 2x.

Bendiksen also stressed that the situation on derivatives exchanges did not help and the number of outstanding BTC-collateralized loans spiked to an all-time high before the March 12 event. Despite the -49.39% drop that day, Bendiksen said that BTC eventually found a bottom between $3,500 and $4,000 per coin.

Going forward, the Coinshares report said that monitoring leverage metrics will help gauge future volatility risk. Unlike traditional markets, BTC also didnt get help from external intervention from organizations like the Fed, and [bitcoins] recovery has been stronger and faster than almost all other markets, the research paper highlights.

Bendiksens report concludes by saying:

The continued and common usage of leverage in bitcoin markets means that the bitcoin price remains vulnerable to volatility spikes. If outside events of similar magnitude were to recur, it is not unlikely that bitcoin prices would behave in a similar way. Keeping an eye on these metrics should help in gauging ongoing volatility risk.

What do you think about Coinshares recent report concerning bitcoin and Covid-19? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons, Coinshares, Datamish.com, Genesis Capital,

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Report Shows Bitcoin's Covid-19 Recovery Stronger Than Other Markets With Zero Intervention - Bitcoin News

Since Bitcoin (BTC) price rallied above $19,000 in 2017, crypto analysts have issued an amazingly wide range of price predictions on the date and value of the next all-time high or low.

Sometimes these predictions are rooted in deep fundamental and technical analysis, whereas other times they are simply nothing more than off-the-cuff estimates issued at whim.

Options markets provide useful insights into traders' expectations, including mathematical probabilities for an asset's future prices. Using Black & Scholes model allows one to better assess the likelihood of analysts' estimates.

The Black & Scholes valuation algorithm has been the basis for the pricing of options on traditional assets since the early 1970s, and remains widely used.

Although the Black & Scholes option pricing model tends to underestimate the odds of substantial movements, it does provide precise and conservative estimates.

Similar to weather forecasting, adding more than a couple of days to an estimate reduces its precision by a logarithmic proportion. One must also consider that the model has to predict a binary outcome because a $9,500 option will be deemed worthless if the expiry price is $9,499.

Many analysts tend to exaggerate their estimates to make a bold statement and attract media attention, or their predictions are based on various types of bias.

No one expects gold bugs like Peter Schiff to draw a bullish Bitcoin estimate, and the same can be said for expecting a bearish prediction from Stock-to-Flow model author PlanB.

The question investors should be asking is exactly how far off were those estimates compared to Bitcoin options pricing? Furthermore, should one even consider these analysts and pundits opinions?

Although the Black & Scholes options pricing model can be complicated, it's usage is pretty straight forward. By informing the current BTC price, strike level, days until expiry, and annual volatility, the model will instantly provide the odds above and below a specific price.

Skipping the complex calculations, one can refer to Skew Analytics to find current probabilities for each expiry based on options pricing.

Bitcoin probability at options maturity. Source: Deribit

Most active option strikes expire on the last Friday of every month. As previously explained, those figures will seem conservative. Both August and September strikes signify a mere 50% probability that Bitcoin price will remain above $9,000.

A 50% odd should is effectively neutral, as the mathematical model states that odds above and below such target are pretty much the same.

By contrast, the probability for a $8,500 on the July expiry (just two weeks from now) sits at 76%. The model becomes more confident as we approach maturity, so one should not expect options to price 90% plus odds for contracts with more than two weeks left.

To assert whether analysts and pundits' predictions fare better than options markets pricing, one needs to stack those odds against the Black & Scholes options model, which requires four basic inputs: current price, strike (prediction), days until expiry, and implied volatility.

Bitcoin price and pundits predictions. Source: TradingView

The above chart depicts six predictions over a 100 day period, which will be individually tested against the options markets model.

Despite having said numerous times that he isn't an active trader, Binance founder Changpeng Zhao often likes to publicize his predictions. In early November, CZ declared that BTC would hit $16K 'soonish,' so one should assume four months.

CZ missed the mark by 35% as Bitcoin failed to break $10,500 level within four months. This was not a lousy call, but rather way too optimistic as indicated by the Black & Scholes model.

Analyst Willy Woo reflected on the previous year cycle low of $3,100 and estimated that Bitcoin could drop 71% from its $12,800 high, reaching $4,500 before the next halving. It seemed rather unlikely at the time, but a six-month timeframe in cryptocurrency is a very long time.

Hats off to Willy Woo on this call as the March 13 infamous crash caused a brief test of the $4,000 level. Despite being correct, buying protection for such a long time frame costs substantial money. A $6K put option would have cost Woo $540 back then.

Notorious Bitcoin basher Peter Schiff spotted a head and shoulders pattern and issued a $1,000 prediction. Although no timeframe was set, based on such a pattern, a three-month time frame seems reasonable.

One doesn't need to be a statistician to deem such predictions as unreasonable. According to the options model, a $5,000 target back would still have shown a limited 10.7% probability.

Peter could have remained bearish using a more reasonable goal, according to options markets at that time.

The 40-year market stalwart said that BTC had already hit its floor; hence investors waiting for a price dip to $6,000 have "missed" their opportunity. No timeline was mentioned, although a 3-month prediction would have pleased most investors.

Less than two months after that tweet, the sudden Bitcoin collapse on March 13 proved Peter Brandt's prediction wrong.

In an interview with Yahoo! Finance, Fundstrat senior analyst Tom Lee suggested that Bitcoin's technical achievements paved the way for 200% gains within six months, with halving acting as a catalyst.

With less than 20 days to fulfill such a prediction, it seems very unlikely to occur. At least buying a $23K call option would have cost $65, a bargain considering a $4,000 upside to Lee's target.

The creator of the stock-to-flow model revealed his belief that Bitcoin would not return below $8,200. PlanB also mentioned that he was expecting levels above $10,000 near Bitcoin halving in May.

Less than a month later, PlanB's $8,200 support level was broken, although his $10,000 prediction for halving was pretty close as it was off by only 3% to 5%.

One might say PlanB got it 50% right, although the bold $10,000 prediction could have earned him good money using a butterfly spread strategy.

Black & Scholes can be a useful tool to understand how far a prediction might be from options pricing. Whats clear is that pundits seem to exaggerate their takes, which leads to huge misses and misinformation in the form of bad analysis being spread through major media outlets.

In some cases, the wild guesses do hit the mark. For example, Willy Woo and PlanB could certainly have profited by defying options model pricing, but generally it's better to do your own research instead of following calls from leading analysts.

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

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Bitcoin Price Predictions by Top Analysts Are Usually Wrong Heres Why - Cointelegraph