Category Archives: Bitcoin

After almost two years of debate and seemingly nothing left to be said on the topic of bitcoin scalability, miners continue to not make a concrete decision with transaction backlogs now becoming common.

BW.com, a mining pool with around 7% of the networks hashrate, signals for 8MB blocks, but has never mined with any client which increases maxblocksize. Bitmains co-founder, Micree Zhan, stated in a recent interview that he prefers Bitcoin Unlimited. Jihan Wu, the other co-founder of Bitmain, has vocally asked for a maxblocksize increase. Yet, despite the pool controlling around 18% of the networks hashrate, they do not mine with Bitcoin Unlimited and have never mined with any client which increases maxblocksize.

This behavior appears puzzling, but, there was collusion, CCN was told back in November by a miner who would rather not be named:

I saw industry colluding to push their agendas and I wanted no part in it.

He is one of many miners that have now entered the scene not primarily driven by profit seeking but to disrupt, or at least, irritate, the incumbents a little bit and free myself the burden of moral conflict.

No details were provided, nor any concrete evidence, but suspicions that there was collusion has continued to increase due to the maneuvers over the Hong Kong Agreement.

Just under exactly one year ago, almost all miners and many Bitcoin Core developers held a closed-door meeting where no journalists or independent observers were invited.

Little, if anything, is known about what exactly happened during those 17 hours, except for a published signed agreement which binds miners to only run Bitcoin Core compatible clients for the foreseeable future.

Indications that this was more than just a paper promise came within hours of the agreements publication due to a spat between miners and Adam Back, Blockstreams President. The English version showed him as signing under his individual capacity, but the Chinese version showed him signing as Blockstreams President. This discrepancy led to miners publicly asking him to changes the English version to Blockstream President, which he did.

Suspicions that this wasnt just a mere paper agreement grew further when Bitcoin Core pull requested an unfinished segwit to argue that, technically, they had kept the agreement. Luke-Jr further claimed he technically delivered on the maxblocksize increase promise by suggesting a decrease of the blocksize to 300KB, followed by a 17% yearly increase, delivering 2MB in around two decades.

The nature of these arguments, which are based on legalese technicalities, indicates the agreement was contractual and binding, but there has been no concrete evidence except for the miners statement that he saw industry collusion.

Bitcoin Core developers and miners have kept blaming each other for breaching the agreement, but all miners who signed it continue to mine with the Bitcoin Core client.

There are two proposals on the table to increase transaction capacity, Segregated Witnesses a proposal by Bitcoin Core and Bitcoin Unlimited a new grassroots client. They both currently stand at around 20-25%. Bitmain, F2Pool, BW.com and HaoBTC, all signers of the agreement, are not choosing either, maintaining capacity at a very limited 1MB.

It is not clear why they are making no decision. Suggestions have included that they are waiting for the right time, that they are waiting for Bitcoin Core to make a new, more acceptable, proposal, that they may be enjoying the high fees, that they find any move to be highly risky and that perhaps they are bound to run only Bitcoin Core compatible clients.

Segwit and Bitcoin Unlimited Current Hashrate Share image from nodecounter

Since the agreement was signed, mining has become more decentralized. In February 2016, F2Pool and Bitmain had, in combination, just above 50% of the network hash-share with Bitfury, BTCC and BW.com accounting for almost all of the rest. Now, new pools have entered the scene with ViaBTC and BTC.TOP being the most prominent. They have not signed the agreement and are both vocally in favor of Bitcoin Unlimited, mining with the new grassroots client.

However, without a decision by F2Pool or Bitmain, both signatory to the agreement, it is unlikely the situation will change anytime soon. Wang Chun, co-founder of F2Pool, told CCN earlier this month that they have no plan to upgrade to segwit or to mine with Bitcoin Unlimited. Jihan Wu, co-founder of Bitmain, told CCN on the 5th of February 2017 that:

The protocol debate is not my priority. I need to focus on BITMAINs own business these days.

Bitcoins Current Hashrate Distribution

If there was indeed collusion, then Bitcoin is facing its ultimate test. Mining is an open and permissionless zero-sum game as any gain in hashrate is at the expense of other miners. As such, concentration of hashrate, in theory, is not a great problem because any abuse would likely lead to miners being replaced with newer honest miners who wish to protect their investment.

Whether that theory translates into practice remains to be seen, but what appears clear, for now, is that any solution is unlikely for 2017, with transaction backlogs probably continuing as bitcoin begins to transform into a slow, unpredictable and expensive payment network.

Image from Shutterstock.

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Bitcoin Industry Colluded, Says Miner - CryptoCoinsNews

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Bitcoin: Paying with the cryptocurrency | All media content | DW ... Deutsche Welle Bitcoin has long had a poor reputation. On the dark net it has been used to buy drugs and arms. Its reputation is improving, however, and it is now being used for ... Bitcoin: How to Improve Your Privacy | Eastern Daily NewsEastern Daily News all 6 news articles »

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Bitcoin: Paying with the cryptocurrency | All media content | DW ... - Deutsche Welle

Investors are betting the Securities and Exchange Commission (SEC) will approve at least one of the three proposed bitcoin-focused exchange-traded funds, despite doubts expressed by Wall Street analysts, according to MarketWatch.

Futures contracts traded on BitMEX, an exchange incorporated in the Republic of Seychelles, and the falling premium of the Grayscale bitcoin trust shares traded on the secondary market, indicate participants are expecting approval, said Spencer Bogart, an analyst at Needham & Co., one of the few Wall Street analysts who cover bitcoin.

The trusts premium over bitcoins net asset value (NAV) has dropped from around 42.21 percent in early January to about 13% in recent trade, according to Grayscale. The falling premium reflects less willingness to pay for shares since investors expect near-term approval of one of the ETFs, Bogart said. Shares of a bitcoin ETF would trade closer to bitcoins net asset value, according to bitcoin observers.

BitMEX has launched a futures contract allowing investors to bet on the odds that the SEC will approve the Winklevoss ETF. It is currently trading around 33.3, reflecting that the thinly traded market is pricing in around a 33% chance of approval. This is higher than what Bogart expects.

BitMEX could not be reached for comment.

Grayscale recently filed for an initial public offering to allow its Bitcoin Investment Trust to trade as an ETF on the New York Stock Exchange. The trust is one of the few registered investment vehicles available to financial institutions.

Another company, SolidX, has also filed for a bitcoin ETF.

Also read: Analysts: Be ready for trading frenzy if SEC approves a bitcoin ETF

Should an ETF be approved, more than $300 million of institutional capital will flow into the bitcoin ecosystem in the first week, according to Bogart. This is expected to boost bitcoins price.

Chris Burniske, blockchain products lead at ARK Invest, which holds shares in Grayscales bitcoin trust, said the fall in the trusts premium indicates investors are taking a wait-and-see approach.

The trust, a taxable registered security, could attract institutions as well as individuals seeking to add bitcoin to retirement accounts, Burniske said. Only accredited investors can invest directly in the trust. The trusts market capitalization was $205.6 million last week.

Grayscale declined to comment further due to security law restrictions.

Image from Shutterstock.

Excerpt from:
Investors Ignore Analysts, Bet on SEC Approving Bitcoin ETF - CryptoCoinsNews

By Nate Raymond | NEW YORK

NEW YORK A Florida software engineer and a New Jersey pastor engaged in lies and corruption to facilitate an illegal bitcoin exchange business whose operators wanted to take over a small credit union to evade scrutiny, a federal prosecutor said on Wednesday.

At the start of a trial in Manhattan federal court, Assistant U.S. Attorney Won Shin told jurors that programmer Yuri Lebedev schemed with others to bribe Trevor Gross, the pastor and head of a Jackson, New Jersey-based credit union housed in his church.

Shin said Gross accepted bribes including a $150,000 church donation in exchange for helping unlicensed bitcoin exchange Coin.mx's operator take over Helping Other People Excel Federal Credit Union.

Coin.mx, which employed Lebedev while running through a front called "Collectables Club," in exchange could use the credit union to evade scrutiny of banks wary of processing payments by individuals buying the virtual currency.

"The bribes and lies had a simple, shared purpose: For the defendants Lebedev and Gross and their co-conspirators to make money," Shin said.

But lawyers for Lebedev, 39, and Gross, 52, said they did nothing wrong and were being blamed due to actions by Anthony Murgio, who ran Coin.mx and who they said manipulated people while trying to illegally grow the business.

"Yuri was in the wrong place at the wrong time with the wrong people," said Eric Creizman, Lebedev's lawyer.

Kristen Santillo, Gross' lawyer, said he was tricked into believing Coin.mx was a memorabilia club, and thought there was nothing wrong about a donation to the church, and which did not benefit him personally.

"He didn't know anything about what they were up to," she said.

The trial followed an investigation rooted in a data breach that JPMorgan Chase & Co (JPM.N) disclosed in 2014 that exposed over 83 million accounts, leading to charges against nine individuals.

Gross, Lebedev and Murgio were not accused of hacking. But prosecutors said Coin.mx was owned by an Israeli behind the breach, Gery Shalon.

Prosecutors say Shalon, together with Maryland-born Joshua Samuel Aaron, orchestrated cyber attacks that resulted in the theft of over 100 million peoples' information.

Prosecutors said they carried out the hackings to further other schemes with another Israeli, Ziv Orenstein, including pumping up stock prices with promotional emails. Shalon, Aaron and Orenstein have pleaded not guilty.

Regulators took the credit union into conservatorship in 2015. Murgio pleaded guilty to charges related to Coin.mx in January.

(Reporting by Nate Raymond in New York; Editing by Bernard Orr)

TOKYO Toshiba Corp may delay the sale of its prized flash-memory chip unit after the conglomerate said it would consider selling most, even all, of the marquee business, a person with direct knowledge of the matter said.

STOCKHOLM Swedish music streaming service Spotify will move its U.S headquarters and more than double its workforce in the country by next year, New York governor Andrew Cuomo said on Wednesday.

TOKYO Toyota Motor Corp's chairman, who led the development of the Toyota Prius, expects the latest plug-in hybrid vehicles (PHVs) will catch on with consumers far more rapidly than the original Prius did.

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US takes pastor, software developer to trial over bitcoin exchange - Reuters

On February 2, Venezuela's leading bitcoin exchange, SurBitcoin, was forced to suspend operations when its bank account was revoked. According to Rodrigo Souza, who runs SurBitcoin's trading platform, the bank closed the account in anticipation of a nationwide crackdown on bitcoin use in Venezuela after the police raided a warehouse with 11,000 mining computers. SurBitcoin is in talks with other banks, and hopefully it will be operating again soon.

At its core, Bitcoin is a peer-to-peer system that allows users to exchange digital currency without permission from the government or any third party. That's why it's the ultimate libertarian technology. Bitcoin exchanges, like SurBitcoin, however, are subject to government control because they buy and sell bitcoins on behalf of their users and rely on a company bank account to collect and pay out money.

As Souza stressed in an interview last year, exchanges like SurBitcoin aren't actually necessary. They make buying and selling bitcoins more convenient, but users can always revert to peer-to-peer trading. As Souza put it, "how can [the government] stop software running on the internet?"

As he predicted, SurBitcoin's closure has led to a surge in peer-to-peer trading. LocalBitcoins, a site where users connect to buy and sell bitcoins, makes its trade volume public through an API. (See the chart below.) Last week, 464 bitcoins were exchanged in Venezuela on LocalBitcoins, the equivalent of nearly $470,000 dollars based on today's price. That's close to a 50 percent increase in volume since SurBitcoin stopped operating. (LocalBitcoins' previous trading volume peak was 377 bitcoins the week of October 15, 2016, but, at the time, bitcoin was worth almost 40 percent less than it is today.)

SurBitcoin's average weekly trade volume was about 330 bitcoins when it shutdown. So about two-thirds of SurBitcoin's activity has move to LocalBitcoins. (A similar phenomenon is happening in China.)

Why is bitcoin in Venezuela seemingly inexorable? For more, read "The Secret, Dangerous World of Venezuelan Bitcoin Mining." Or listen to this week's episode of EconTalk with Russ Roberts, where I discussed bitcoin in Venezuela and the impact cryptocurrency is having throughout Latin America.

As I told Roberts, I first learned about bitcoin when listening to 2011 EconTalk interview he did with Gavin Andresen, a pioneer in the field. I remember thinking, "this can't possible work." Six years later, in part through my reporting on Venezuela, I'm convinced bitcoin will change the world.

Listen to the interview below. (Bonus link: Nick Gillespie interviewed Russ Roberts in 2014 about his book on Adam Smith.)

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Peer-to-Peer Bitcoin Trading Surges in Venezuela - Reason (blog)

Trading bots are rather common in the bitcoin world, as very few traders have time to stare at the charts all day. Most people trade bitcoin as a way to generate passive income while working their regular day jobs. With so many people relying on trading bots, the question becomes which one can be trusted and which one should be avoided. Below is a list of known cryptocurrency trading bots, albeit your mileage may vary when using them.

NOTE: The Merkle does not condone the use of trading bots. The Merkle is not responsible for any financial losses sustained while using the software mentioned below. The Merkle is not affiliated with any of these trading bots.

One of the very first automated bitcoin trading bots to ever be created goes by the name of BTC Robot. While it seems to do the job and is quite easy to set up, users mileage may heavily vary when using this tool. Some people seem to be making modest profits, whereas others seem to struggle to get it to work properly. There is a 60-day refund policy, which makes it a no-brainer to try out regardless.

The Gekko trading bot is an open source software solution hat can be found on the GitHub platform. It was last updated a month ago, which seems to indicate it is still being actively developed. Using this automated trading bot seems rather straightforward, as it even comes with some basic strategies. It is not a high-frequency trading bot by any means, nor will it exploit arbitrage opportunities. With a good list of supported exchanges, Gekko could be worth checking out.

One of the more attractive albeit unknown solutions goes by the name of CryptoTrader. The service offers cryptocurrency users automated trading bots running on cloud platforms. Not having to install unknown software is a big plus, albeit it remains to be seen if this platform is legitimate. One intriguing feature is how CryptoTrader features a strategies marketplace where anyone can buy or sell their favorite trading strategy.

Another open-source solution for bitcoin traders goes by the name of Zenbot. Albeit this bot has not seen any major updates over the past few months, it is available to download and modify the code if needed. This marks the third iteration of Zenbot, which is still a lightweight and artificially intelligent bitcoin trading bot. It is also one of the very few solutions capable of high-frequency trading and supporting multiple assets at the same time. According to the GitHub page, Zenbot 3.5.15 makes a 1.531 ROI in just three months, which is quite surprising.

Although technically not a bot in the traditional sense, Tradewave is a platform allowing users to create automated bitcoin trading strategies. Users can connect most of the major exchanges to enable live trading within a few minutes. Moreover, there are quite a few trading strategies shared by community members for other users to try out. Tradewave is not free to use, though, albeit plans start at just US$14 per month.

The Haasbot is somewhat popular among cryptocurrency enthusiasts. On paper, Haasbot does all of the trading legwork on behalf of the user, although some input is required. Haasbot supports all of the major exchanges and is capable of recognizing candlestick patterns. Considering it costs between 0.12 BTC and 0.32 BTC per three-month period to use this tool, one has to be committed to using the software and hopefully make a profit from doing so.

If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.

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Top 6 Bitcoin Trading Bots - The Merkle

Banks in the United Kingdom are turning a deaf ear to bitcoin exchanges, despite the governments pro-blockchain position, according to financial writer Roger Aitken, writing in Forbes. Unless the situation changes, the banks will undermine bitcoins progress and drive cryptocurrency entrepreneurs out of the banking system.

Cryptopay, a bitcoin brokerage, recently informed customers that it will no longer support British Pound deposits and withdrawals on account of new bank policies. Such incidents have increased as bitcoin has gained popularity.

Cancellation of GBP deposit and withdrawal facilities limits people to Single Euro Payments Area (SEPA) transfers, making Cryptopays buying and selling useless to most British customers.

A dozen or more U.K. brokerages and bitcoin exchanges have suffered over the past three to four years as banking facilities have become unavailable. Some have closed or resorted to awkward arrangements.

Britcoin, which became rebranded as Intersango, started in 2011. It faced problems with U.K. bank transfers before eventually closing. An August 2012 update noted that bridging the gap between bitcoin and the conventional banking system was costly on account of technical issues, missing transfers, and accounts frozen and closed without warning.

In 2014, Bit121 had a promising start, but banks withdrew their support and the exchange closed.

In Bitcoin We Trust suffered the same fate. It resorted to using postal orders before giving up.

Coinfloor, one of the only U.K. exchanges still operating, uses SWIFT transfers, which incur hefty costs and delays. The minimum transfer is 1,000 (c.$1,250).

CoinJournal, a bitcoin publication, saw its banking services come to an abrupt endafter its U.K. banking provider Barclays terminated its business account. CoinJournal received no official warnings prior to its account closure. Even more alarmingly, Barclays still hasnt given a reason for the extreme action.

CoinJournal believes the decision taken by Barclays to close its business account was an automated call, after seeing a pattern of banking transactions involving prominent bitcoin exchange and service provider Circle.

The decision was likely a result of us using Circle to transfer fiat from ad revenue into bitcoin to pay our writers and some overheads, a representative for the publication told CCN.

Similar scenarios have played out in Australia and New Zealand.

BitNZ, a New Zealand bitcoin exchange, has announced it is closing due to the refusal of New Zealand banks to allow bank accounts to trade bitcoins, and has advised customers to withdraw all funds before April 15, 2017.

The Australian Competition and Consumer Commission is scrutinizing attempts by Australias biggest banks to swallow fintech companies developing technologies like blockchain solutions in the financial sector.

Peer-to-peer services match individual buyers and sellers in the U.K. in lieu of traditional exchanges. Trust is established by reputation.

Once a buyer has paid, usually with a bank transfer the seller sends the bitcoins.

As for other nations, Russia recently relaxed its regulatory position and taken a wait and see approach. It has effectively legalized bitcoin and allowed for exchanges to operate. Switzerland is a more progressive country. It is easy to buy bitcoins through a network of ATMs on the rail system.

In Japan, it is possible to pay electric bills with bitcoin.

The United States has a more complex regulatory framework. But progress is on the horizon since the New York BitLicense took effect in 2015, with other states following a similar approach.

Bitcoin is legal in China, although the central bank recently stopped highly leveraged trading.

The banking sector is clearly at odds with the U.K. government, which is openly pro-blockchain. The situation is peculiar, with the government saying the country is open to bitcoin but the banking sector standing in the way.

Since the financial crisis, the taxpayer has become the majority shareholder in the Royal Bank of Scotland, holding at around 82% of the bank. This would normallytranslate into a certain amount of leverage by the taxpayer.

The U.K. also has a reputation for being a fintech hub, to which the banking sector seems to have taken exception.

For whatever reason, the banks have closed ranks and chosen not to work with bitcoin.

The fact that bitcoin is decentralized and fiat currency is centralized could be at the root of the conflict.

Also read: Blockchain platform Waves raises more than $2m at the start of the crowdsale campaign

Money cannot flow easily from the blockchain economy to the traditional financial sector and vice versa without banks cooperation. The bitcoin sector is not large enough to offer all the goods and services needed to make bitcoin a sufficiently broad means of payment.

Bitcoins volatility also makes it an unsuitable unit of account or store of value. While its a great transfer medium, its price against fiat fluctuates too much for most people.

The bitcoin economy wont expand until bitcoin is better suited as a means of payment. But it wont be better suited without more growth and stability.

Waves, a custom blockchain tokens platform, offers a solution fiat-backed blockchain tokens. It raised $16 million last summer through crowdfunding. Waves can act as a gateway between the blockchain and the fiat world.

Customers pay money into the gateway using a bank transfer or another suitable means, and the gateway issues them the same sum in blockchain tokens

The same exchange occurs in reverse when customers cash out their Waves GBP and have them sent as real GBP to their bank account. Waves essentially serves as a toolkit.

Sasha Ivanov, CEO and founder of Waves, noted that Waves can make money more efficient. By putting fiat money on the blockchain, Waves can make it more transparent and faster, and it can reduce the cost of sending it abroad.

Ivanov thinks Waves can introduce competition and encourage banks to become more accountable. If banks in one sector in one country wont work with Waves, it will work with those in another jurisdiction.

Waves does not immediately solve the problem of U.K. banks hostility to bitcoin, but it suggests the roadblocks are not insurmountable. The answer may be to work around them rather than with them.

Image from Shutterstock.

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Bitcoin's Growth in the UK Continues to Be Stifled by Banks - CryptoCoinsNews

Despite skepticism from prominent lawyers and Wall Street analysts, bitcoin investors are increasingly confident the Securities and Exchange Commission will approve at least one of the three proposed bitcoin-focused exchange-traded funds currently under consideration.

Pricing in futures contracts traded on BitMEX, a popular exchange that is incorporated in the Republic of Seychelles, as well as the rapidly declining premium for shares of the Grayscale Bitcoin Trust traded on the secondary market suggest that some market participants are bracing for approval, said Spencer Bogart, an analyst at Needham & Co. Bogart is one of the few Wall Street analysts who cover Bitcoin.

The trusts premium over bitcoins net asset value has shrunk from about 42.21% in early January to about 13% in recent trade, according to data provided by Grayscale.

The shrinking premium suggests investors are less willing to pay for shares of the trust because they expect one of the ETFs to be approved in the near future, Bogart said. Shares of a bitcoin ETF would likely trade much closer to the cryptocurrencys net asset value, bitcoin watchers said.

The trading activity is at odds with the likelihood of approval tabulated by Bogart, who places it at less than 25%. Last month, a former lawyer for Gemini Trading, the bitcoin exchange operated by Tyler and Cameron Winklevoss, said he believed the SEC wouldn't approve the creation of a bitcoin exchange-traded fund. The SEC has said it would issue a ruling on the Winklevosss proposed bitcoin ETF, known as the Winklevoss Bitcoin Trust, by March 11.

Read: Final rule on proposed bitcoin ETF to come in March

Read: And 2016s best-performing commodity is ... bitcoin?

Plus: Bitcoin price falls as Chinese authorities meet with exchanges

BitMEX recently launched a futures contract that allows investors to bet on the odds that the Winklevoss ETF will be approved. It is presently trading around 33.3, indicating that the thinly traded market is pricing in about a 33% chance of approval, which is higher than what Bogart expects. BitMEX couldn't be reached for immediate comment.

A few weeks ago, Grayscale, which launched the Bitcoin Investment Trust in 2013, filed for an initial public offering that would allow its trust to trade as an ETF on the New York Stock Exchange. The Grayscale bitcoin trust is presently one of the few registered investment vehicles available to financial institutions. A company known as SolidX has also filed for a bitcoin ETF.

Bogart believes that if an ETF is approved, more than $300 million of new institutional capital would flood the bitcoin ecosystem during the first week alone. Such an influx would likely cause the price of a single coin to skyrocket. Typically, trading volume in the global bitcoin market measures less than $100 million a day.

Read: Path to Bitcoin ETF still uncertain but may be easier under Trump

Dont miss: Bitcoin could soar if the Winklevoss ETF is approved

Chris Burniske, blockchain products lead at ARK Invest, believes that the decline in the Grayscale bitcoin trusts premium may suggest that investors are taking a wait-and-see approach ahead of the SECs decision. ARK holds shares in the trust.

The Grayscale trust, which is a taxable registered security, may appeal to institutions as well as individuals who want to add bitcoin to their retirement accounts, Burniske said. The fund was first launched in 2013. Only accredited investors can invest directly in the trust; for others, shares are traded on the secondary market. The trusts market capitalization was $205.6 million as of last week, according to company data.

Grayscale, which filed for the funds IPO on Jan. 20, declined to comment further, citing restrictions imposed by federal securities laws.

The price of a single bitcoin US:BTCUSD fell 1% on Monday to $991, in January it briefly traded at $1,100its highest level in more than three years. By comparison, one share of the Grayscale trust GBTC, +0.43% , meanwhile, traded at $105.50.

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Bitcoin investors bet the SEC will approve cryptocurrency ETF a view at odds with analysts - MarketWatch

Bitcoin prices continued to fluctuate around $1,000 today, as the global digital currency markets saw technical resistance around this figure.

Overall, bitcoin traded traded above $1,000 for roughly the first eight hours of the day, reaching as much as $1,007 during the session, CoinDesk Bitcoin Price Index (BPI) figures reveal.

Prices fell below $1,000 at 08:15 UTC, however, and failed to break through that level for the remainder of the day.

At the time of report, the currency was trading at $998.42, according to the BPI.

According to analysts, traders remain reluctant about placing bets in the market, as concerns linger about further actions from the People's Bank of China (PBOC), the nation's central bank.

The digital currency has experienced significant volatility in the last several weeks, as the PBOC's decision to crack down on domestic exchanges has caused these marketplaces to announce a slew of sudden policy changes.

Huobi, OKCoin and BTCC (previously called the 'Big Three' exchanges) all announced they wouldimpose consistent fees, cut margin trading and halt or slow deposits and withdrawals denominated in digital currency in recent days.

These continued developments have made some market participants reluctant to trade bitcoin, according to BTC VIX, community moderator for trading group Whale Club. He told CoinDesk:

"I wouldn't hold any position for more than a few hours because the PBOC will continue to be active and exchanges certainly have more announcements over the next 30 days," he said.

So far, there's evidence backing this theory, as traders put in a large number sell orders around the $1,000 price point. This resistance was confirmed by both order book data and the input of market analysts.

Exchanges Bitfinex and Kraken showed the number of sell orders exceeding the number of buy orders close to the $1,000 mark.

Tim Enneking, chairman of Crypto Asset Management, weighed in on this development:

"Bitcoin is definitely encountering technical resistance. $1,000 is a level that is going to take some time to break."

Petar Zivkovski, COO of leveraged bitcoin trading platform Whaleclub, offered similar input.

"The $1,000 level is indeed a strong psychological resistance. Bitcoin will need to cleanly break above $1,000 (high-volume rise and sustained price action above 1000) to transform that level into price support," he continued.

Still, he added that there are potential bullish catalysts, citing the March approval of a Bitcoin ETF or positive regulatory news from China as two possible boons.

Blocking football image via Shutterstock

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Bitcoin's Price Battles New Resistance in Bid to Breach $1000 - CoinDesk

Slide: 1 / of 1. Caption: Twelveofour

Jeffrey Tarrant is a Wall Street guy. He spent the last thirty years investing in new hedge funds. As the founder and CEO of a firm called Protege Partners, he compares himself to Sam Altman, the president of Y Combinator. What Altman does for Silicon Valley tech startups, Tarrant does for hedge funds. I help seed them and incubate them, he says.

The analogy has never been more true than right now. Tarrant is beginning to explore hedge funds built on ideas that have sparked so many companies and created so much wealth in Silicon Valleyideas that span artificial intelligence, crowdsourcing, and digital currencies. He believes the hedge fund world is on the verge of a new revolution, a revolution he calls the Third Wave.

Hedge funds are moving beyond the quants.

The 1970s saw the rise of discretionary funds, where iconic investors like George Soros used their very human judgments to find new opportunities in the market. Then came the quants at funds like Renaissance Technologies, who found even greater opportunities through statistics and computer algorithms. Now, Tarrant says hedge funds are moving beyond the quants.

As a prime example, he cites Numerai, a San Francisco hedge fund that makes trades using machine learning models built by thousands of anonymous data scientists paid in bitcoin. Funds such as Quantopian and Quantiacs are tapping the wisdom of the masses in other ways. And then theres Polychain, a fund that invests exclusively in bitcoin and other digital tokens housed on a blockchain, the distributed online ledger that makes cryptocurrencies possible. As its name suggests, Polychain isnt just investing in digital coinsits investing in a radically new breed of businesses owned, funded, and operated entirely by decentralized networks of anonymous online investors.

Such funds arent always easy to wrap your head around. But as Wall Street tries to make sense of them, these new tech-driven approaches to investing are proliferating. In the late `90s, Tarrant helped build an online directory of hedge funds called AltVest. Now, hes building a directory for this new wave of funds. It includes roughly fifty players, many of whom have yet to publicly announce themselvesthough Tarrant admits that only about half have demonstrated real promise so far.

Not surprisingly, some financial vets question how effective Tarrants new wave will be. In a recent Bloomberg story, several fund managers said that recent enthusiasm for machine learning is overblown. In some cases, even the founders of these Third Wave funds urge caution.

Regardless of what method you use in quantitative financebe it machine learning or traditional quant methodsthere are an infinite number of ways to fail, says Martin Froehler, a former quant with Superfund Asset Management GmbH in Switzerland who went on to found Quantiacs. Machine learning models are no superweapon, he says. In his experience, ninety percent of live machine learning tests fail.

But Froehlers fund benefits from machine learning, too. Based in Silicon Valley, Quantiacs attempts to crowdsource the quant model, and many of the quants feeding the fund are using machine learning technologies. Among other things, theyre making use of deep neural networks, complex mathematical systems for recognizing patterns in vast amounts of data. In other words, the Third Wave is not just about using one new technique. Its about combining techniques, from machine learning to crowdsourcing to the blockchain.

Nor is this just a battle of the old guard and the new. The founder of Renaissance has invested in Numerai, and Point72 Asset Management, the fund founded by billionaire Stephen Cohen, has put money into Quantopian. These people who I considered old school really understood what I was getting at, says Numerai founder Richard Craib. And I thought I was going to be ahead of my time.

Even the apparent skeptics are embracing the trend. Im concerned that people may have unrealistic expectations of what is possible with the current state of the art, David Siegel, co-founder of storied quant fund Two Sigma Investments, said last fall. But more recently, his fund ran an online contest through Silicon Valley data scientist marketplace Kaggle, offering a $100,000 prize for the best machine learning model. One company director indicated the contest was more of a recruitment tool than a full embrace of crowdsourcing or machine learning. But whatever the intention, it was yet another example of Silicon Valley and Wall Street drawing closer than ever before.

Read more:
AI and Bitcoin Are Driving the Next Big Hedge Fund Wave - WIRED