16 December 2017

Bitcoin Futures

Last weekend saw the launch of bitcoin futures trading, and since this month has five Saturdays, I'll use the extra Saturday to write a short post about the event. The main product page appears to be XBT-Cboe Bitcoin Futures (cboe.com). It starts,
The First U.S. Bitcoin Futures • Bitcoin futures are now available for trading on the Cboe Futures Exchange, LLC (CFE). CFE launched trading in Cboe bitcoin futures on December 10 under the ticker symbol "XBT". This brings many benefits to traders, including transparency, efficient price discovery, deep liquidity and centralized clearing. XBT futures provides a centralized marketplace for participants to trade based on their view of bitcoin prices, gain exposure to bitcoin prices or hedge their existing bitcoin positions.

The related press release said,

Cboe Plans December 10 Launch of Bitcoin Futures Trading • CHICAGO – December 4, 2017 – Cboe Global Markets, Inc. (Cboe: CBOE | Nasdaq: CBOE), one of the world’s largest exchange holding companies, today announced that Cboe Futures Exchange (CFE), plans to offer trading in bitcoin futures beginning at 5:00 p.m. CT on Sunday, December 10, 2017, at the start of Global Trading Hours. Monday, December 11, will be the first full day of trading, and trading will be free through December.

Cboe’s bitcoin futures will trade on CFE under the ticker symbol 'XBT'. XBT [SM] futures are cash-settled contracts based on Gemini’s auction price for bitcoin, denominated in U.S. dollars. Gemini Trust Company, LLC (Gemini) is a digital asset exchange and custodian that allows customers to buy, sell, and store digital assets such as bitcoin. XBT futures are specifically designed to allow participants to implement straightforward trading strategies, through settlement to a single, tradeable auction price.

Ed Tilly, Chairman and Chief Executive Officer of Cboe Global Markets, said: "Given the unprecedented interest in bitcoin, it’s vital we provide clients the trading tools to help them express their views and hedge their exposure. We are committed to encouraging fairness and liquidity in the bitcoin market. To promote this, we will initially offer XBT futures trading for free."

Tyler Winklevoss, Chief Executive Officer of Gemini, said: "Developing a regulated derivatives market is the next logical and crucial step towards advancing the broader digital asset market. We have been working for years to build infrastructure to grow the digital asset market and today’s news marks a significant milestone."

On Friday, December 1, Cboe announced that CFE had filed a product certification with the Commodity Futures Trading Commission (CFTC) to offer bitcoin futures trading. More information on XBT futures is available at www.cboe.com/xbt.

Over the last five years, the total value of all bitcoin outstanding (i.e., "market capitalization") has grown from less than $1 billion to over $183 billion with daily notional turnover over $10 billion. The total value of all cryptocurrency tokens outstanding is now approximately $332 billion.

The link www.cboe.com/xbt returns the main product page I gave above. That last paragraph of the press release has a footnote that says,

All data given as of December 1, 2017, source: https://coinmarketcap.com/

The Coinmarketcap.com link, which I can't remember seeing before, currently lists 1360 cryptocurrencies, sorted in descending order by market cap ('Total Market Cap: $583,439,429,633'); that's $583.4 billion! Has the introduction of futures dampened the explosive price rise of bitcoin? Not exactly. Here's a bitcoin price chart for the first week of futures trading.


Bitcoin (BTC) Price Index

As for what the pundits are saying, I'll cover that in my next two posts, 'Bitcoin in the News : 2017-12 Price++'.

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09 December 2017

Bitcoin in the News : 2017-11 More++

In my previous post, Bitcoin in the News : 2017-11 Price, I identified three stories that fueled the price of bitcoin in November:-
  • Bitcoin futures on CME (Chicago Mercantile Exchange)
  • Collapse of SegWit2x
  • Reaching the $10.000 mark

Curiously, those three stories occurred at the start, at the middle, and at the end of the month. Predictably, they each provoked an avalanche of commentary in the financial press. I'll mention just one article on each, although there were many more. Coincidentally, these three articles are all from cnbc.com:-

After these stories, the theme repeated the most involved the B-word : Bubble! I'll mention just two of the half-dozen that popped up:-

  • 2017-11-01: The Head and Tail of Bitcoin Bubble (entrepreneur.com) • 'More than as an instrument to buy and sell goods and commodities, increasingly money is being invested in bitcoin to make even more money.'
  • 2017-11-21: Bitcoin: An Unknowable Bubble? (seekingalpha.com) • 'There is a much-discussed in the crypto-sphere chart making rounds these days, plotting Bitcoin price dynamics against the historical bubbles of the past.'; chart gives graphical overview of past bubbles

Looking back, the first occurrence of the B-word on this blog was a passing reference in the post titled '2017-05 Price' (June 2017). Looking forward, there will be more occurrences until the bubble finally bursts. And burst it will -- maybe at a much higher price level -- but it will inevitably happen when everyone wants to exit at the same time. 'What goes up must come down', 'trees don't grow to the sky', yada-yada, etc. etc. (NB: I'm not a gloom-and-doom person, it's a party. I was reminded of this in a Yahoo.com article from Rick Newman, one of my current favorite financial writers.):-

  • 2017-11-30: Owning bitcoin is so much fun • The title I originally recorded was 'Owning part of a bitcoin is the most fun I’ve ever had investing-- even if it collapses', which echoes my sentiment exactly.

Bitcoin articles have been appearing with increasing frequency in Yahoo. (NB: Exploding popularity often precedes a bubble.) Another article bearing the same date as the one above was by Daniel Roberts, another favorite financial writer:-

Because I had never heard of most of these people, it's worth noting their names (listed alphabetically) and their companies. The ones I don't know I should research further, but there's only so much time in a day.

1. Brian Armstrong, Coinbase
2. Vitalik Buterin, Ethereum
3. Juthica Chou, LedgerX
4. Jack Dorsey, Square (also CEO Twitter)
5. Terry Duffy, CME Group (Chicago Mercantile Exchange)
6. Charlie Lee, Litecoin
7. Naval Ravikant, MetaStable, CoinList
8. Elizabeth Rossiello, BitPesa
9. Barry Silbert, Digital Currency Group ('portfolio of more than 100 investments includes all the biggest names')
10. Balaji Srinivasan, Earn.com
11. Elizabeth Stark, Lightning Labs

Yahoo has a page on bitcoin, BTC/USD ('BTCUSD=X; CCY Delayed Price. Currency in USD'), with links to current articles. I'll add this to the right navigation bar.

This would be a good point to sign off, but I touched an important subject in last month's post, Bitcoin in the News : 2017-10 More++, and there were a few relevant articles this month: 'How to value bitcoin (or any other cryptocurrency)?':-

We know how to value stocks by looking at various ratios of the underlying company, market share (and pricing power) being one piece of the analysis. How those ratios compare to the stock's current price -- showing good or bad value -- is a matter of judgement. What are the factors besides dominance that temper the judgement for a crypto-currency?

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02 December 2017

Bitcoin in the News : 2017-11 Price

I ended last month's bitcoin price review, Bitcoin in the News : 2017-10 Price, with the cryptocurrency just under $6500. This month's chart shows the price starting at $7000. Why the gap of $500? Maybe it's an error in the charting service; maybe it's the day or two difference in my capture of the chart; maybe it's something else. Whatever the reason, it's not the gap at the start of the month that matters; it's what happened during the rest of the month that matters.


Bitcoin (BTC) Price Index

The main critical points were around 12 November (I'm not sure where to attach the dates on the x-axis) and around 28 November. Let's look once again at the stories from Cointelegraph.com's Bitcoin Price Analysis to understand the dynamics.

Wait a moment! It looks like there was another critical point at the beginning of the month. Maybe the gap I flagged does matter after all.

  • 2017-11-02: Bitcoin Shatters $7k Barrier After Futures Trading Announcement by CME Group • 'Bitcoin continued its five-day surge, rising from $5,750 on Oct. 28 to just over $7,000 at press time on the GDAX exchange. The currency’s definitive smashing of its most recent all-time high and the $7,000 barrier seems to be tied to its increasing integration in mainstream finance.'
  • 2017-11-03: The What and Why Bitcoin Price Reached $7,000 • 'This week, Bitcoin price, on its usual upward trajectory, barely blinked as it smashed through the $7,000 mark. [...] The biggest factor behind the rally was the announcement of Chicago Mercantile Exchange’s decision to offer Bitcoin futures.'

Let's skip ahead to mid-month.

  • 2017-11-13: Counting Costs of Bitcoin’s Big Three Drops of 2017 • 'A lot has happened in a week for Bitcoin. The on-again-off-again plans for SegWit2x were officially put on ice and the effervescent Bitcoin celebrated by reaching yet another all-time high of $7,888. However, what comes up, must come down. Bitcoin then went into a spiral as a number of factors influenced its latest drop of 29 percent, which saw $38 bln wiped clean off the market cap.'
  • 2017-11-13: Bitcoin Price is Up 17%, Will it Achieve a New All-Time High in Short-Term? • 'Bitcoin price has risen by 17 percent within the past 24 hours, after dipping below $5,560 earlier today. Since then, Bitcoin price has stabilized at $6,450, recording a daily increase of around $890. [...] Triggered by the sell-off of major Bitcoin investors and the rapid surge in the value of Bitcoin Cash, Bitcoin price plunged over the past weekend.'

That second article continued, 'As expected, Bitcoin price recovered relatively quickly as the Bitcoin Cash price declined from over $2,800 to $1,200'. Is there an inverse, negative correlation between the prices of Bitcoin and Bitcoin Cash? If so, why? I covered the introduction of Bitcoin Cash in Bitcoin [Cash] in the News : 2017-08 Price (September 2017), but there was no indication that the two crypto currencies were in any sort of quantum entanglement. To be watched...

The end of the month saw the bitcoin price hit five figures for the first time. That milestone number provoked an avalanche of stories.

  • 2017-11-28: Increasing Adoption Demonstrated by Huge Trading Weekend for Bitcoin, Soaring Prices Market-Wide • 'In a sign that adoption is massively increasing, trading numbers from last weekend indicate that the volume of cryptocurrency trades exceeds that of many U.S. equities trading markets.'
  • 2017-11-28: Why Bitcoin Continues Its Phenomenal Rise • 'Bitcoin continues its phenomenal surge in the financial trading market as it already reached the $9,000 per token mark as of late November 2017. The leading cryptocurrency was also traded at $10,000 in some markets. The sustained upward trajectory of the most popular cryptocurrency has continued to baffle both the virtual currency markets and the wider investment community'
  • 2017-11-28: Bitcoin Price Hits $10,000 • 'Black Friday [Thanksgiving weekend] saw the currency hit new highs in the upper $8,000s before surmounting the $9,000 level Saturday and immediately charging toward the $10,000 mark Sunday.'
  • 2017-11-30: Experts Answer Question: “How Did Bitcoin Reach $10,000?” • 'In January this year, $1,000 was the milestone Bitcoin owners were eager to reach. The digital currency hit that, overcame it and increased ten-fold to over $10,000.'

That last link lists two answers to the 'How' question:-

  • Institutional money
  • Newcomers are still early adopters

Will those two groups -- institutions and newcomers -- continue to provide funds? They represent opposing points of view toward investing that are often described as 'smart money' and 'dumb money'. They can't both be right, can they?

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11 November 2017

Bitcoin in the News : 2017-10 More++

Continuing with Bitcoin in the News : 2017-10 Price, before I get to the rest of the news from October, I have to look after my own affairs. A few weeks ago I received an email from Coinbase, saying,
We wanted to remind you that the upcoming Bitcoin Segwit2x fork is projected to take place on November 16 and will result in two bitcoin blockchains.

This reminded me that two months ago, in Bitcoin [Cash] in the News : 2017-08 Price, I wrote,

Since I'm a Coinbase user, the Bitcoin Cash fork doesn't affect me (at least for now).

For this next fork, I had to pay more attention. The latest Coinbase email linked to two more resources, both dated 24 October:-

The 'Clarification' link led to a previous blog post, Timeline and Support - Bitcoin Segwit2x and Bitcoin Gold, which informed,

The Bitcoin Gold fork is projected to take place on 23 October. [...] The Bitcoin Segwit2x fork is projected to take place on 16 November.

As you might expect, the news from October carried further reports about these two events. The first event occurred in October:-

The second event will happen in a few days:-

The two forks focused attention on a question that has been in the back of my mind for some time now: how to value bitcoin (or any other cryptocurrency)?

  • 2017-10-06: Bitcoin Metric Doesn't Lie, But It Obfuscates (bloomberg.com) • 'The metric is called the network value-to-transaction ratio, or NVT. Some have dubbed it bitcoin's P/E. And, at least in the community, it's becoming something of an industry standard valuation metric. [...] It's based on bitcoin use, not just its wild price swings. [...] On Wednesday, bitcoins had a network value, that is the total value of all bitcoins, of nearly $70.2 billion, and $591 million daily in transactions, for a NVT of nearly 119.'
  • 2017-10-24: NYU's 'dean of valuation' says can't 'value' bitcoin, only trade it (cnbc.com) • 'New York University professor of corporate finance and valuation Aswath Damodaran argues that bitcoin is a currency, but it is still not that practical for transactions. [...] Wall Street's "dean of valuation" said Tuesday that bitcoin's price could be justified if it is widely usable as a currency for daily transactions.'
  • 2017-10-28: How Bitcoin Forks Influence Bitcoin Price Rise and Fall (cointelegraph.com) • 'Preparing for the fork' & 'What happens when a chain forks'

There were other stories that would be worth reporting in a normal month, but I'll stop here. The Segwit2x fork is roiling markets as I write this and all else appears to be secondary.

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04 November 2017

Bitcoin in the News : 2017-10 Price

In last month's post, Bitcoin in the News : 2017-09 Price, I wrote, 'I must remember to prepare the chart on the first of the month rather than for the first post'. In this I was successful. In the previous month's post, Bitcoin [Cash] in the News : 2017-08 Price, I wrote of the monthly chart, 'The following chart might be captioned, "Straight Up!".' The same goes for the current month's chart. In trying to understand why it went straight up, I was unsuccessful.


Bitcoin (BTC) Price Index

As in previous months, let's look for clues to the price action in Cointelegraph's Bitcoin Price Analysis (BPA).

Most of the BPA articles were of the type in that last bullet. They show short-term charts of each of the mentioned cryptocurrencies, along with a technical analysis of the price action (resistance & support levels, that sort of thing) indicated by the charts. I don't recall ever seeing anything like a fundamental analysis and don't know if it's even possible. Is the price of bitcoin++ driven entirely by market psychology?

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14 October 2017

Bitcoin in the News : 2017-09 More++

I ended the previous post, Bitcoin in the News : 2017-09 Price, with an observation and a question.
Can we conclude that the bitcoin price is mainly driven by rumors from China? Crackdown on ICOs, ban the activities of cryptocurrency exchanges, ban of mining farms; what's next? Despite all of this, the price of bitcoin at the beginning of the month was only a few percentage points above the price at the end of the month. Does China really matter?

Let's go a little deeper into the news from China.

  • 2017-09-06: Bitcoin Comes Clawing Back After Selloff on China Ruling: Chart (bloomberg.com) • 'Bitcoin traders seem to be taking Monday’s 11 percent slump -- triggered by China ruling initial coin offerings illegal -- as a buying opportunity.' [NB: This drop is missing from the price chart I used in the previous post.]
  • 2017-09-08: Bitcoin's price tanks after report China plans further crackdown (cnbc.com) • (Title now: 'Bitcoin's price tanks after report China may shut down exchanges') 'Local outlet Caixin is reporting the Asian country is planning to shut down local bitcoin exchanges, according to a Google translation'
  • 2017-09-11: China is shutting down domestic Bitcoin exchanges (theverge.com) • 'China plans to shut down domestic Bitcoin exchanges, anonymous sources told The Wall Street Journal today. The sources said that regulators weren’t giving a clear message on when the shutdown would occur.'
  • 2017-09-15: China's bitcoin crackdown forces exchanges to close (cnn.com) • 'Two of the country's most prominent bitcoin exchanges, BTC China and Via BTC, said they will halt trading this month. BTC China has also stopped registering new users, it said in a statement posted on social media.'
  • 2017-09-19: China orders Bitcoin exchanges in capital city to close (bbc.com) • 'China is moving forward with plans to shut down Bitcoin exchanges in the country, starting with trading platforms in key cities.'
  • 2017-09-20: China's bitcoin clampdown is likely here to stay, analysts say (cnbc.com) • 'Chinese authorities banned token sales this month and local exchanges, under regulatory pressure, plan to close by the end of September. Analysts told CNBC the crackdown is likely part of a longer-term effort by regulators to control bitcoin. '
  • 2017-09-23: How Shanghai Govt Came To Forcing All Bitcoin Trading to Stop: The Insider Story (cointelegraph.com) • 'The Paper news agency reported that the Chinese regulators not only banned the exchange between Bitcoin and other cryptocurrencies and the Chinese Yuan, but they also called for all trading of cryptocurrency to any fiat currency to end'

There was no news about Chinese mining farms, but other governments appear ready to take up any slack.

Meanwhile, there were reminders about the dark side of mining.

  • 2017-09-14: Cryptocurrency Mining Malware Infection Attempts Are on the Rise Again • 'As we have documented on this site multiple times, rogue cryptocurrency mining malware is of keen interest to cybercriminals. By distributing this mining malware, criminals can effectively use victims’ computer resources to mine Ethereum, Monero, and a few other currencies.'
  • 2017-09-28: Monero Windows IIS mining made over $60,000 for a hacker • 'Stealing computing resources for cryptocurrency mining can be profitable—to the tune of tens of thousands of dollars a month. Security software vendor ESET found that a hacker has infected hundreds of Windows servers with a secret cryptocurrency mining program, generating $63,000 over three months. [...] The malware mines Monero, a cryptocurrency that currently has a total market value of about $1.4 billion. It’s just one of the thousands of crypto coins in the marketplace.'
  • 2017-09-28: The Ridiculous Amount of Energy It Takes to Run Bitcoin (ieee.org) • 'Running Bitcoin uses a small city’s worth of electricity. Intel and others want to make a more sustainable blockchain.'

The mining news was accompanied by other news from the same Asian countries. Some of the news was good for bitcoin.

  • 2017-09-29: Bitcoin exchanges officially recognized by Japan (cnbc.com) • 'Japan's Financial Services Agency officially recognized 11 companies as registered cryptocurrency exchange operators. This is the latest decision in Japan to show support for digital currency. In April, it passed a law recognizing bitcoin as legal tender'

Some of the news was not so good.

  • 2017-09-12: North Korea is trying to amass a bitcoin war chest (cnn.com) • 'Hackers linked to North Korea are ramping up attempts to steal bitcoin in order to bring in money for Kim Jong Un's regime, a top cybersecurity firm says. Bitcoin and other forms of virtual money -- known as cryptocurrencies -- appeal to North Korea as the U.S. pursues international sanctions aimed at further isolating the country.'
  • 2017-09-14: North Korean Hackers Blamed for Bitcoin Attacks (infosecurity-magazine.com) • 'North Korean state hackers are increasingly looking to steal crypto-currency to fund the regime and circumvent tightening sanctions, according to FireEye. The security vendor’s ?senior cyber threat intelligence analyst, Luke McNamara, revealed a spike in spear-phishing attacks targeting South Korean Bitcoin exchanges since May.'

Two of the negative stories mentioned 'Monero'. What exactly is it? Wikipedia: Monero (cryptocurrency):-

Monero (XMR) is an open-source cryptocurrency created in April 2014 that focuses on privacy, decentralization and scalability that runs on Windows, Mac, Linux, Android, and FreeBSD. Monero was originally launched under the name BitMonero, which is a compound of Bit (as in Bitcoin) and Monero (literally meaning "coin" in Esperanto). Five days later, the community opted for the name to be shortened to just Monero.

The bitcoin price rise in 2017 has provoked an avalanche of related stories as general interest in the subject rises. I could continue by looking at those stories, but I think I've covered enough territory for one post.

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07 October 2017

Bitcoin in the News : 2017-09 Price

A comparison between the chart shown in last month's post, Bitcoin [Cash] in the News : 2017-08 Price, and the chart shown below, reveals a significant change. The upper right corner no longer says 'Powered by CryptoCompare'; it says 'The Cointelegraph Price Index'.


Bitcoin (BTC) Price Index

Other than that, I see two more features worth mentioning. The first is the one week gap at the beginning of the month -- (I must remember to prepare the chart on the first of the month rather than for the first post) -- although the price at the end of 2017-08 coincided with the price at the beginning of 2017-09. The second is the big, sudden price spike downward at mid-month, corresponding to the big, sudden spike upward in volume.

What does Cointelegraph's Bitcoin Price Analysis say about the spike? The beginning of the month was marked by rumors from China.

  • 2017-09-04: Bitcoin Price Drops to $4,300, What’s Next: Factors and Trends • 'Subsequent to achieving a new all-time high at $4,975 merely two days ago, Bitcoin price has decreased to around $4,350. Many analysts including Welt financial desk senior editor Holger Zschaepitz attributed the decline in Bitcoin price to China’s recent crackdown on initial coin offerings (ICOs).'

Mid-month was also marked by rumors from China.

  • 2017-09-14: Bitcoin’s Price Declines Anew, Hits Three-Week Low • 'The price of Bitcoin price has declined below the $4,000-level, extending its losses in overnight trading to reach a three-week low of $3,275. This represents a 35% drop from its high of $5,000. [...] There are several possible reasons behind the recent drop in the price of the number one virtual currency. One of these is the alleged plan by the government of China to ban the activities of various cryptocurrency exchanges in the country.'
  • 2017-09-15: Bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin: Price Analysis, September 15 • 'BTC China has decided to shut down operations by Sept. 30. The first reaction by harried traders on such announcements is to sell and encash their holdings. Therefore, the sharp fall is understandable.'

The end of the month was marked by rumors from China.

Can we conclude that the bitcoin price is mainly driven by rumors from China? Crackdown on ICOs, ban the activities of cryptocurrency exchanges, ban of mining farms; what's next? Despite all of this, the price of bitcoin at the beginning of the month was only a few percentage points above the price at the end of the month. Does China really matter?

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16 September 2017

Bitcoin in the News : 2017-08 More++

I ended my previous post, Bitcoin [Cash] in the News : 2017-08 Price, with a promise:-
Now that I understand that Bitcoin Cash is a new cryptocoin, I can return to the August price analysis for good old bitcoin. I'll do that in my next post.

That '2017-08 Price' post included a chart of the month's bitcoin price movement. It can also be explained verbally:-

Bitcoin started the month around $2800, climbed steadily in price, and ended the month around $4800. That made for a 70% upward movement in price during a single month.

Like many people, I've been interested in investing since I first started working full time and there is a good adjective for that sort of price climb: 'Extraordinary!' What do the price analysts at Cointelegraph.com say about this? Here's an example from the first week of the month:-

  • 2017-08-06: Bitcoin Weekly Price Analysis: July 29 - August 6 • 'On Aug. 1 Bitcoin was traded in the long-term $3,000 channel. Technically, the movement needed a pullback, as it had larger scale resistance. The fork resulted in the instant correction for Bitcoin price. The buyers’ prevailed, which is proved by the purchase volumes. There was also an attempt to form a reversal down at the peak of the correction. But you need to remember, that a reversal shatters the previous trend. Price movement is the result of the market demand and supply. So for a reversal, the demand volumes at the correction peak need to be at least equal to the ones, formed previously at this level.'

Some keywords: channel, pullback, resistance, correction, reversal. This is technical analysis, which means looking at psychological factors rather than fundamental values. It's also poorly written: "buyers’ prevailed", why the apostrophe?; "equal to the ones, formed previously", why the comma? The first sentence in the article was:-

Exchanges are announcing to allow the Bitcoin Cash deposits and withdrawal, which caused Bitcoin Cash price fall.

Although I think I understand what the writer wanted to say, it wasn't said very well. And why should announcing the possibility of deposits and withdrawals cause a price to fall? I'm not picking on this particular writer; other articles published during the month were comparable: poorly written psychological analysis. On top of this, the Cointelegraph price analysis was loaded with predictions:-

Pick a price, any price? No one can convince me that we're looking at serious analysis here.

After 'Bitcoin Cash' and the bitcoin price rise, what other bitcoin stories were in the news in August? Here are an even handful, all of them from the last days of the month:-

That second-to-last story -- 'illegal transactions in bitcoin have fallen' -- might be because volumes of legal transactions have increased. It might also be because growing interest in bitcoin means growing scrutiny. In last month's post, Bitcoin in the News : 2017-07 More++, I noted, 'No Bitcoin in the News would be complete without mainstream press reports on the dark side of bitcoin'. This month, I didn't detect any such reports. What will September bring?

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09 September 2017

Bitcoin [Cash] in the News : 2017-08 Price

If last month's price post, Bitcoin in the News : 2017-07 Price, had only a little real news behind it, this month's post makes up for it. The following chart might be captioned, 'Straight Up!'.


Bitcoin Price Index

Keeping to a single source, Bitcoin Price Analysis (BPA; cointelegraph.com), here is the first significant price news for August:-

Whoa! What is going on here? I go away for a month and nothing makes sense anymore. What was the first mention of 'Bitcoin Cash' on Cointelegraph.com?

  • 2017-07-25: Bitmain: Bitcoin Cash Hard Fork Merely Contingency Plan for UASF • 'In its initial announcement earlier this month, Bitmain, arguably the largest mining equipment manufacturer and mining pool operator in the industry, threatened the community with a contentious hard fork in response to the user-activated soft fork (UASF). As users, node runners and businesses proposed the activation of BIP 148, a user-activated soft fork that ignores the presence of miners and activates Segregated Witness, Bitmain, the operator of Antpool, emphasized that it will lead a Bitcoin hard fork on Aug. 1 and create Bitcoin Cash, a separate Bitcoin Blockchain.'

Here are some more early Cointelegraph articles on 'Bitcoin Cash'.

Since I'm a Coinbase user, the Bitcoin Cash fork doesn't affect me (at least for now). For the record, here are two more BPA articles from the first week of August.

Now that I understand that Bitcoin Cash is a new cryptocoin, I can return to the August price analysis for good old bitcoin. I'll do that in my next post.

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12 August 2017

Bitcoin in the News : 2017-07 More++

Bitcoin price movement was the main story in my previous post, Bitcoin in the News : 2017-07 Price, and speculation about the cause of the movement was the secondary story. Several sources mentioned 'civil war', as in
  • 2017-07-20: Bitcoin swings as civil war looms (bbc.com) • 'The value of the virtual currency Bitcoin has always been volatile. Even so, there has been particular turbulence in recent days as fears of a "civil war" among its adherents first grew and then subsided, although they have not gone away altogether.'

I could give many examples of related stories, but one article was more comprehensive than the others (NB: needs Flash).

Since no 'Bitcoin in the News' would be complete without mainstream press reports on the dark side of bitcoin, here are three:-

I could again give other stories, many of geographical interest, but I'll stop to document a personal experience. At the end of last year, I wrote a post about Buying Ethereum (December 2016). While writing this current post, I checked on the status of that trade and was surprised to see that the value of the Coinbase account had increased twenty times. I exchanged some of the ethereum for cash and used part of that to buy a small amount of litecoin, a cryptocurrency introduced by Coinbase since I last looked at the account.

Why mention this? First, because bitcoin++ is more than an arbitrary collection of news stories. Second, because cryptocurrencies are part virtual, part real. Third, because it introduces the last story.

  • 2017-07-29: Howard Marks says bitcoin isn’t real -- and we can all blame millennials for its rise (marketwatch.com) • 'Howard Marks has some harsh words for the bitcoin community and the rise of digital currencies, which have become all the rage lately. “Digital currencies are nothing but an unfounded fad,” said the co-chairman of Oaktree Capital Management, who was among the first to sound the alarm on the 2008 financial crisis.'

Will Howard Marks be massively right a second time? Time will tell, but it brings to mind the old saying, 'You don't make any money until you sell.'

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05 August 2017

Bitcoin in the News : 2017-07 Price

Although the chart below isn't strictly limited to first-day-of-the-month and last-day-of-the-month markers, it does show the bitcoin price action over the month of July. The chart's start price corresponds to the end of the chart in Bitcoin in the News : 2017-06 Price, while the end price shows the upward trend continuing into August.


Bitcoin Price Index

Once again I turn to Bitcoin price analysis (cointelegraph.com) for some background on the price movement. The first half of the month had only a few (increasingly tedious) stories predicting an eventual target price -- $55.000, $4.000, $500.000 -- which might as well be produced by a random number generator. The second half of the month had a few stories with more depth.

  • 2017-07-21: SegWit2x Deployment: ‘Excited Traders’ Drive Bitcoin Price Up • 'Bitcoin has bounced back from its huge loss after bridging an ideological gap that poses a threat to the number one cryptocurrency. [...] Many core members are still not open to the use of SegWit2x because they say it hasn’t been tested for bugs yet. Also, not all miners support SegWit2x, which they say is a flawed compromise that doesn’t solve the root scaling problem.'
  • 2017-07-28: Bitcoin Price Reacts to SegWit News • 'Yesterday, July 27, the signaling stage about the Segregated Witness protocol, SegWit, BIP 141, was activated'

The term 'SegWit' was first seen on this blog in Bitcoin in the News : 2016-10 More++. That post points to a previous post from April 2016 where the term 'segregated witness' was introduced and which itself points to an important video explaining the subject. As for 'SegWit2x', the simplest explanation I could find is How is Segwit2x different from Segwit? (bitcoin.stackexchange.com):-

SegWit2x is a combination of both SegWit and a 2MB hardfork (to activate three months after SegWit). SegWit2x uses a different 'bit' for signaling (bit 4 instead of bit 1) than SegWit.

That appears to be where we are today -- more price news next month.

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08 July 2017

Bitcoin in the News : 2017-06 More++

When you think of bitcoin, what other words come to mind? There are a few associated words in this blog's title -- cryptocurrency, blockchain, mining -- but another word that occurs more and more frequently is 'bubble'. Looking at the price movement for the past few months (see Bitcoin in the News : 2017-06 Price for last month) makes it easy to understand why.

My Google news alerts for bitcoin for the 30 days of June included seven days with the mention of 'bubble'. This compares to five days in May, zero days in April, three days in March, and scattered single references since I started tracking the keyword 'bitcoin' two years ago.

Astute analysis or wishful thinking? Probably a bit of both. The next article makes no sense at all. (e.g. 'The main factor that makes a digital bubble impossible is market bipolarity.')

On the path from curiosity to bubble to mania, when does the phenomenon become a 'gold rush'?

Here are two more signs of a bubble, impossible or not. Both stories are from mainstream financial news.

There's nothing about bubbles in the last two stories, but both are worth noting.

The word 'flippening' was new to me.

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01 July 2017

Bitcoin in the News : 2017-06 Price

It's the first Saturday of a new month which means it's time to look at bitcoin price action for the preceding month. For the first month since March, the price at the end of the month was not substantially higher than at the beginning of the month. (For easy reference, my previous report on this blog was Bitcoin in the News : 2017-05 Price.) Here's the chart for 2017-06.


Bitcoin Price Index

Once again, I turn to Bitcoin price analysis (cointelegraph.com) for an explanation of the price movement. The first story echoes the last story in the '2017-05 Price' post.

Then it was up, up, and away...

...in my beautiful balloon? So it would seem to some pundits.

Let's do the math. We'll eventually have 21 million bitcoins, which is 21 x 10^6. If each bitcoin is worth 1 x 10^6 USD, then the total value will be 21 x 10^12 USD, which is $21 trillion. Wikipedia, in Economy of the United States, informs,

The United States' GDP was estimated to be $18.46 trillion in 2016.

U.S. GDP is more than 20% of world GDP, so even then the math doesn't support Cramer's prediction. In any case, 3.000 is a long way from 1.000.000.

Note that all of the preceding commentary took place in the first half of the month. Then we had a sharp fall of 20% -- in a stable market that would be called a correction -- then a rebound that 'retraced' (another word commonly used in market analysis) 50 % of the loss. So what's next? Up or down, it's anyone's guess.

The last week of the month saw a slide to the level we saw at the beginning of the month, but there were no further reports. Am I seeing a pattern here? The good news is reported; the bad news isn't. Or is this just my imagination playing tricks on me?

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10 June 2017

Bitcoin in the News : 2017-05 More++

I summarized my previous post, Bitcoin in the News : 2017-05 Price, in a single sentence:-
Last month's post about April was crazy, but this month's post is even crazier.

I could also have summarized the month with a couple of keyword nouns: high, $2000; or keyword verbs: soar, spike, surge. After that, the most prevalent keyword was something completely different: ransom, as in:-

After the ransomware began infecting users on Friday, they were given 72 hours to pay $300 in bitcoin -- chosen by the hackers because the crypto currency is harder to track than conventional payments -- or pay twice as much. If they refused to pay after seven days, their computer would be permanently locked -- a serious problem for those who haven’t backed up their data.

As of early Monday, only about $50,000 had been paid in ransoms, according to Elliptic Enterprises Ltd., a London-based company that tracks illicit use of bitcoin. The company calculated the total based on payments tracked to bitcoin addresses specified in the ransom demands, adding that it expects the total to rise.

More details emerged in the following days.

The WannaCry infection was preceded by another wannabe-rich-quick criminal scheme:-

  • 2017-05-07: Bitcoin Ransomware Education – AutoDecrypt (themerkle.com) • 'The number of different types of bitcoin ransomware continues to grow at an alarming rate. Earlier this week, security experts have come across a new strain that goes by the name of AutoDecrypt. Contrary to what people may believe by looking at the name, this malware will not automatically decrypt itself unless a payment is made.'

Unfortunately, this wasn't the last time we'll be confronted by this problem, partly because of another recurring keyword that appeared in different contexts: mainstream.

  • 2017-05-22: Bitcoin Is Going Mainstream, but Its Current Run-Up Has a Speculative Feel (thestreet.com) • 'Bitcoin has largely failed as a mode of payment for consumer transactions, with many of the retailers that embraced it a few years ago having backtracked and the rest (from all signs) mostly seeing limited bitcoin transaction volumes. What the predictions of bitcoin's death didn't foresee, however, was the degree to which it would be embraced as an alternative to precious metals as a safe haven for those worried about things like inflation, political instability and (in certain countries) the security of assets held in traditional currencies.'
  • 2017-05-24: Bitcoin is up over 400% in the past year—what’s stopping it from going mainstream? (marketwatch.com) • Abigail Johnson [CEO of Fidelity Investments] says bitcoin is grappling with technological and regulatory issues, as well as what to use it for in the first place.
  • 2017-05-27: From Bitcoin to Big Business, Blockchain Technology Goes Mainstream (voanews.com) • 'The technology behind bitcoin and other cryptocurrencies is being looked at by more conventional companies and businesses'

Soar, spike, surge; ransom; mainstream. These keywords are all linked by more than bitcoin.

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03 June 2017

Bitcoin in the News : 2017-05 Price

At the beginning of the year I used the first post to document the previous month's price action and continued the idea in the following months, each month more amazing than the previous month. Last month's post about April -- Bitcoin in the News : 2017-04 Price -- was crazy, but this month's post is even crazier. The chart for May is shown below.


Bitcoin Price Index

The first two stories from Bitcoin price analysis (cointelegraph.com), were

Other stories had different targets: 'Bitcoin Price May Rise To $3,000'; 'Bitcoin Price Likely to Hit $3,500 This Year'; 'Investors See $4,000 Ahead'. The actual price continued to rise, with a few hiccups on the way.

The month's peak at $2700 was nearly double the price at the month's start. The month ended with the price on the rise again.

That last story explained,

OKCoin is the largest Bitcoin exchange in China which processes 31 percent of trades within the Chinese Bitcoin exchange market. In February, OKCoin and Huobi, the two largest Bitcoin exchanges in China, were flagged by the People’s Bank of China for operating a trading platform without appropriate Know Your Customer (KYC) and Anti-Money Laundering (AML) systems

The month ended with more predictions of fantastic gains for bitcoin owners: 'Bitcoin Price Could Reach $10,000 In Few Months'; 'Bitcoin Price Could Hit $100,000 in 10 Years'. Is this a classic case of supply-and-demand or an evolving example of the greater fool theory?

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13 May 2017

Bitcoin in the News : 2017-04 More++

In contrast to the price news -- 'Bitcoin Price Breaks All-Time High', etc. (see Bitcoin in the News : 2017-04 Price) -- April was a relatively quiet month for other bitcoin news. Of the more significant stories, another contrast appeared in the adoption of bitcoin by two of the planet's more important economies. While Japan moved forward...

...India moved backward in political circles and sideways elsewhere.

Other news included a typical story related to bitcoin's mysterious origins...

  • 2017-04-13: Bitcoin: Self-Proclaimed Inventor's Firm Sold to Private Equity (fortune.com) • 'A company built around the research of Craig Wright, who has claimed to have invented the bitcoin cryptocurrency, has been sold to a private equity firm in a deal the company says is the biggest to date involving bitcoin's underlying blockchain technology.'

...and a couple of stories that enhance bitcoin's bad boy reputation:-

That last story leads back to the mysterious origins.

But some speculate the goal of the project is not to rob a whole lot of wallets, but instead to strike a mother lode from a long-lost wallet from bitcoin's early days: "About 10% of Bitcoins were created early, before 2012, and have never been traded. If somebody ever finds the key of the early lost Bitcoins, they'll have a huge payoff, over a billion dollars. Speculation is that either "Satoshi Nakamoto", whoever he is, is holding onto them for a big payoff, or somebody lost the private key for all those early Bitcoins."

With that in mind, it takes a business school professor to ask the question:-

If your answer is 'Yes!', then the next story is for you.

Does having a bitcoin blog make me an evangelist? Short answer: 'No!'. Long answer: 'No, of course not!'.

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06 May 2017

Bitcoin in the News : 2017-04 Price

Just like last month, in Bitcoin in the News : 2017-03 Price, let's look at bitcoin price action for the month of April. The chart for the last 30 days shows a slow upward trend for the first few weeks, followed by a sharp rise near the end of the month.


Bitcoin Price Index

The main stories from Bitcoin price analysis (cointelegraph.com) for this period were:-

Arbitrage making the price rise -- how does that work? From the second link:-

Bitcoin price in the US, which holds 26.6 percent of the global Bitcoin exchange market share averaging at $1,315. On the other hand, Japan, the largest Bitcoin exchange market, is demonstrating an average price of $1,297. Competitors in the US Bitcoin exchange market including Bitstamp expressed their concerns over the current Bitfinex issue and its conflict with its intermediary banks.

The logic here isn't at all clear to me. Neither is the logic behind these predictions from the same source:-

That's not bad for an asset that isn't backed by anything tangible.

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15 April 2017

Bitcoin in the News : 2017-03 More++

In my previous post, Bitcoin in the News : 2017-03 Price, I identified two underlying reasons for the price changes in March: the SEC ETF decision and the scalability debate. Let's look at those ongoing sagas in more depth.

Quoting from the article,

The commission said it was rejecting the Winklevoss Bitcoin Trust because the markets where Bitcoin are currently traded are largely unregulated. The lack of such regulation, the commission said, raised "concerns about the potential for fraudulent or manipulative acts and practices in this market."

and later,

The twins already won regulatory approval from New York authorities for their Gemini Exchange, where virtual currencies can be bought and sold by professional traders. The proposed ETF would have been tied to the price of Bitcoin on the exchange. Most Bitcoin, however, are traded outside the United States, beyond the reach of American regulators. The virtual currency emerged in 2009 and was celebrated for its ability to circumvent government authorities. [NB: 'Bitcoin are traded', i.e. capitalized and plural]

Many bitcoiners are passionately proud that the object of their affection is outside any central government control. Looks like another example of cake that can't be eaten. As for the scalability debate, I noted a slew of stories from the same source, cointelegraph.com [NB: 'Bitcoin Core' (BTC) vs. 'Bitcoin Unlimited' (BTU)]:-

Although the last word has yet to be said, the hard fork isn't looking good for bitcoiners. ETF and scalability in the same month: looks like another example of the old double whammy. I noted a handful of other stories that expanded my knowledge of bitcoin.

Three out of those five stories are again from cointelegraph.com. That in itself is a story.

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08 April 2017

Bitcoin in the News : 2017-03 Price

I ended last month's post, Bitcoin in the News : 2017-02 Price, with,
I'm almost certain that I'll be doing a post next month for 2017-03 Price.

And so it is! One important difference needs to be flagged: the chart source has changed so a straightforward month-to-month comparison isn't possible.


Bitcoin Price Index

The new source is Live Bitcoin price and market cap (cryptocompare.com). Squinting at the post for '2017-02 Price' tells me that the previous source was BitcoinChain.com. The previous source allowed a custom date range, which the new source doesn't offer, so the chart shown above shows the month preceding my snapshot. As for the stories behind the price chart, I once again turn to Bitcoin price analysis (cointelegraph.com):-

Buy on the rumors, sell on the news? -or- Pump and dump? Maybe they are one and the same.

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01 April 2017

April Fool!


The biggest joke of them all!

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11 March 2017

Bitcoin in the News : 2017-02 More++

Am I constrained by a pattern here? In the previous post, Bitcoin in the News : 2017-02 Price, I wrote,
For the third consecutive month I'm practically forced to start Bitcoin in the News with a post about the preceding month's price.

In addition to that, my second post for February, Bitcoin in the News : 2017-01 More++, concluded,

Were there any other new stories in the bitcoin space that grabbed everyone's attention [last month]? No, there weren't. I did, however, pick up on one theme : how well bitcoin is accepted by national authorities. Here is a list of stories in chronological order.

I could say exactly the same thing this month. Here's the list:-

Still following last month's pattern: 'Short takes: Things I learned from this month's news exercise.'

And again: 'And that's a wrap. See you again at the beginning of March! April!' Cookie cutter blogging, here I am...

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04 March 2017

Bitcoin in the News : 2017-02 Price

For the third consecutive month I'm practically forced to start Bitcoin in the News with a post about the preceding month's price; see 2017-01 Price for last month.


Bitcoin Price Index

The chart from Cointelegraph.com shows the price crossing USD $1000 at the beginning of the month, dropping below that psychological level to a local low on 10 February, then rising to nearly $1200 by the end of the month. A number of articles from the same source attempt to provide an explanation. Once again, the single most dominant reason is *China*.

The phrase 'ETF Nearing' expands to 'the industry’s optimism towards the Winklevoss twin’s Bitcoin ETF approval on March 11'. With that in mind, I'm almost certain that I'll be doing a post next month for 2017-03 Price.

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11 February 2017

Bitcoin in the News : 2017-01 More++

After the topic in the previous post, Bitcoin in the News : 2017-01 Price, were there any other new stories in the bitcoin space that grabbed everyone's attention in January? No, there weren't. I did, however, pick up on one theme : how well bitcoin is accepted by national authorities. Here is a list of stories in chronological order.

Would you trust your retirement savings to bitcoin? Some people would. I bet that those who would are nowhere near retirement age.

Short takes: Things I learned from this month's news exercise.

  • 2017-01-10: What Is One Of The World's Largest Derivatives Exchanges Doing With Bitcoin? (forbes.com) • 'CME Group started more than a century ago in Chicago as a place where farmers could lock in prices for their crops. Today, its exchanges -- CME, CBOT (Chicago Board of Trade), NYMEX (New York Mercantile Exchange) and COMEX (Chicago Mercantile Exchange) -- cover every major asset class, such as metals and energy and U.S. Treasury bonds. And now it’s making a foray into bitcoin. This past November, CME launched both a once-a-day bitcoin reference rate (BRR) and a bitcoin real-time index (BRTI) that updates every second.'

  • 2017-01-16; High-Speed Traders Are Taking Over Bitcoin • 'The reality is that professionals armed with cutting-edge technology now drive as much as 80 percent of bitcoin trading, mimicking strategies honed by some of the biggest players on Wall Street.'

  • 2017-01-18: Bitcoin is mostly traded in China (businessinsider.com) • 'From less than a 10% share in January 2012, the yuan now makes up nearly 100% of all bitcoin trading.'

  • 2017-01-25: Bitseed Review - A Plug & Play Full Bitcoin Node (99bitcoins.com) • 'Bitseed – a product that claims to be a "plug n play" node for the average user. Just plug it into your router at home and you are instantly a part of the Bitcoin network by running your own personal node. Of course you can always use your personal computer for this but then you’d have to give away a large chunk of space from your hard drive in order to download the Blockchain to your machine.'

And that's a wrap. See you again at the beginning of March!

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04 February 2017

Bitcoin in the News : 2017-01 Price

Once again, as in

I find that the dominant bitcoin news story of the previous month was its price action. Instead of gathering stories from a number of different news sources, perhaps I would be better served by finding a single reliable source for all of the month's relevant stories. But which one? A few months ago I analyzed

  • Bitcoin in the News : Sources (October 2016) • 'General news sources often appearing in bitcoin news feeds:- [excluding bitcoin specific sources; ranked in descending order]'

where finance.yahoo.com was the top source. I looked at it again for 5-10 minutes, but couldn't locate any sort of regular, recurring analysis centered on bitcoin price. Perhaps it would be better to look at bitcoin specific sources. Again: which one?

Looking at my short list of January 2017 stories -- which I'll tackle in my next post -- the site that pops up the most often is cointelegraph.com. In addition, their articles often (always?) feature a bold graphic to add visual interest to the underlying story. Bingo! The page

seems to be exactly what I'm looking for. Of the 15-20 stories covering the month of January, I found a half-dozen that documented the January price action:-

On top of that verbal analysis, another page on the site offers a chart which can be tailored to display the latest month.


Bitcoin Price Index

The top portion of the chart shows January; the bottom portion shows January in relation to the historical, long-term price. The Cointelegraph services should be useful the next time I need a rapid analysis of the preceding month's bitcoin price.

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14 January 2017

Bitcoin in the News : 2016-12 More++

My previous post, Bitcoin in the News : 2016-12 Price, documented the price rise in December. What else was newsworthy? A year ago, in Bitcoin in the News : 2015-12, I wrote,
December is the month when journalists look back at the major stories of the waning year. It's also the month when they look forward to imagine what the coming year will bring.

This is no less true now than it was then, and the first article that bubbles to the surface is 2017: The Second Era of Bitcoin Begins (coindesk.com). Unfortunately, the article doesn't explain its title, unless 'there can be only one bitcoin' is somehow indicative of an era. It does, however, lead to a slew of articles under the title

Of the 50 linked stories, only 11 have the word 'bitcoin' in the title, while 33 have the word 'blockchain', which is the real news of 2016/2017. When has there been so much excitement about a data structure?

Another article, Bitcoin Price Prediction for 2017: 6 Major Events to Impact Bitcoin Value (cointelegraph.com), has in fact three bullets:-

  • Segwit, Lightning, Tumblebit ['all scalability solutions initially introduced to facilitate larger amounts of transactions']
  • Approval of Bitcoin ETFs
  • Financial crash and economic instability

Yet another article, Roger Ver: 2017 Will Be the Best Year for Bitcoin, offers an opinion that echoes the previous list.

  • Bitcoin ETF in 2017?
  • Blocksize challenges
  • Security issues
  • Bitcoin will regulate governments ['it will be Bitcoin that regulates governments, not the other way around']

Ver, 'owner of Bitcoin.com', which might make him less than objective on the subject, 'holds the belief that there is good reason to think that 2017 will be the best year for bitcoin'. I wonder what the owner of Blockchain.com is saying.

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