15 December 2018

Bitcoin in the News : 2018-11 Deeper

In my first 'Bitcoin in the News' post this month, 2018-11 Price, I noticed 'three distinct downward price shifts' and identified their start times. In my second post, 2018-11 More++, I collected November stories from two mainstream financial news services, CNBC and Forbes, with an eye on finding an explanation for the price drops. For this third post, I located three stories from each service that were published around the time of the drops.

CNBC:-

All three stories were by Kate Rooney, 'Markets Reporter'.

Analysts attributed bitcoin's continued sell-off to technical levels and stop orders in the market kicking in after bitcoin fell below $6,000. "The next logical level of support is at $5,000 but if that doesn't hold, the next logical support level isn't until $3,500," eToro analyst Mati Greenspan said in a note to clients Monday. "With all the falling prices lately, this definitely fits the definition of a buyers market."

$5000 didn't hold; $3500 didn't hold. As I write this, mid-December, the bitcoin price is around $3250. Those 'support levels' turned out to be imaginary. As for 'buyers market', that assumes there is real value in cryptocurrency. The article continued,

Others pointed to a split in the cryptocurrency bitcoin cash. That digital currency split into two versions last week -- "Bitcoin ABC" and "Bitcoin SV" -- which analysts said added to uncertainty in broader crypto markets.

U.S. regulators made good on promises to regulate non-compliant cryptocurrency projects last week. The Securities and Exchange Commission announced its first civil penalties against crypto founders Friday as part of a bigger regulatory and legal crackdown aimed at abuses and outright fraud in the growing digital currency industry.

The 'bitcoin cash' fork/split argument is the tail wagging the dog. The 'regulators' argument is plausible, but the threat has been there since shortly after the invention of bitcoin. Why would a crackdown on dubious crypto players affect the price of established currencies?

Some analysts blamed a "fork" in the cryptocurrency bitcoin cash for that initial drop below $6,000. That digital currency split into two versions in mid-November and diverted what's known as "hash power," which some say dragged down the broader crypto markets. Both sides appeared to be selling bitcoin to "fund mining operations to win the battle," Brian Kelly, CEO of BKAM, told CNBC. The $6,000 level could have been a key exit point for some traders. Bitcoin going below it likely triggered "stop losses" which could have exacerbated the selling. Those bitcoin support levels were broken as the cryptocurrency continued to hit lower lows.

Regulatory crackdowns have also weighed on prices.

Fork, stop losses (= support levels), regulatory crackdowns. Same old, same old?

These lower lows are marking key exit points for some traders. Bitcoin going below $4,000 likely triggered "stop losses", predetermined trading levels that often exacerbate the selling. Those bitcoin support levels were broken as the cryptocurrency plunged to new lows.

In recent weeks, regulatory crackdowns have also weighed on prices. The Securities and Exchange Commission announced its first civil penalties against cryptocurrency founders last week as part of a wide regulatory and legal crackdown on fraud and abuses in the industry.

Last week, Bloomberg News reported that regulators are investigating whether bitcoin's rally to almost $20,000 last year was the result of market manipulation. The U.S. Justice Department is investigating whether tether, a controversial cryptocurrency that founders say is backed 1:1 by the U.S. dollar, was used by traders to prop up bitcoin, according to the report, which cited three unnamed sources familiar with the matter.

The first two paragraphs are familiar territory, but that last paragraph deserves further investigation.

Forbes:-

It was not immediately clear what had triggered the sudden sell-off today but tensions in the bitcoin sector are high ahead of a fork of the bitcoin cash cryptocurrency, expected tomorrow. Bitcoin cash, which split from the original bitcoin blockchain last year, will tomorrow split in two again, creating a third cryptocurrency. The two digital currencies will go by the names Bitcoin ABC (core Bitcoin Cash) and Bitcoin SV (Satoshi’s Vision). Bitcoin cash has been highly volatile in the run up the fork, rising as much as 50% over the last few weeks before falling sharply more recently.

I have a small amount of bitcoin cash. In quantity, it is the same amount as my bitcoin, because I received it after last year's fork. In value, it is a small percentage of bitcoin, in the low single digits. I have trouble believing that it has any impact on the wider market.

Fundamentally speaking, the current sell-off is due to two main reasons; regulatory pressure and disagreement within the coin developer community, one of the biggest threats. The SEC reminded the crypto world that it has the final say over anything that smells like a security. The department issued civil penalties against two cryptocurrency companies because they failed to register initial coin offerings as securities. Investors will be given their refund and the firms will have to face fines. The fear is that the SEC may not stop here and might take similar action against several companies that adopted a similar path.

The community needs to stick together and work towards a more meaningful fork. This is because developers, on the one hand, try to convince the world that the supply is limited and, on the other hand, they keep looking at ways of triggering another kind of forks. Forking has become so common that it puts at risk the notion of limited supply altogether.

That last sentence implies that forking is equivalent to dilution. That makes some sense, but it still doesn't explain how a problem with bitcoin cash (BCH) spills over into bitcoin (BTC) or the other cryptocurrencies.

The bitcoin price falls over the weekend do not appear to be linked to any particular fresh news but a continuation of the sell-off sparked earlier this month by the fork of the bitcoin cash cryptocurrency that ignited a civil war between the bitcoin rival's two factions. Low trading volumes over the holiday weekend, however, mean the market is more vulnerable to so-called "whales" moving large amounts of bitcoin, ripple (XRP), or ethereum. When a major coin holder sells it can trigger automatic computer controlled sell orders leading to sudden sell-offs.

After reading those stories, I looked at another article, also from Forbes, specific to the bitcoin cash fork.

Thursday was a volatile day on the cryptocurrency markets with Bitcoin Cash forking into two different currencies, BCHSV and BCHABC creating considerable hash wars which are ongoing.

That was the lead sentence, after which there were no further mentions of BCH. Instead there were a number of cheerleading statements from people whose destinies are tied to the crypto markets. The writer of the story closed by saying,

All very positive but what most of these people seem to forget is that the market has been sinking for a long time and absolutely no signs of an uptick are present. Price levels are, in many cases, 90% down from their all-time highs just a few months ago. Use cases are bountiful but is there any mass adoption going on out there? In most cases, it seems that cryptocurrencies and blockchain are being used in countries where the economy is totally broken, such as Venezuela and Palestine. Adding to the dubious prevalence of money laundering schemes and scams in eastern European countries such as Belarus (who incidentally are also legalizing cryptocurrencies), the future looks pretty bleak.

When I checked my account to see the quantity/value of BCH vs. BTC, I found three new currencies available for trading: 0x (ZRX), Basic Attention Token (BAT), and Zcash (ZEC). I looked at a few external pages to find out what they were, then bought a small quantity of each. The best way to learn about the crypto markets is by participating, although always with non-essential money.

Before closing this post, I looked at that mention of 'market manipulation' in the last CNBC story quoted above. I found another CNBC story linked from my '2018-11 More++' post, also by the same writer as the other three:-

As bitcoin continued its downward slide Tuesday, U.S. regulators are reportedly looking into whether its record-breaking rally last year was the result of market manipulation. The U.S. Justice Department is investigating whether traders used tether, a controversial cryptocurrency that founders say is backed 1:1 by a U.S. dollar, to prop up bitcoin, according to a report from Bloomberg News, which cited three people familiar with the matter.

As for the mechanics of how that might have happened, I will leave that for another time.

08 December 2018

Bitcoin in the News : 2018-11 More++

In last week's post, Bitcoin in the News : 2018-11 Price, I wrote, 'The month of November 2018 must show the worst chart for bitcoin during nearly two years.' I summarized the post with:-
When I look at the chart I see sideways price movement (= no movement) for the first half of the month, followed by three distinct downward price shifts. [...] These downward shifts can be roughly pegged to these start times:-
- 14 Nov 06:00
- 19 Nov 00:00
- 24 Nov 12:00

How to explain the drops? In separate 'Bitcoin in the News' posts a few months ago I highlighted two mainstream financial news services...

...by showing which stories had been published by the two news services. Let's do the same for November, comparing the stories from both services with the goal of understanding the November price movements. Of course, this isn't a comprehensive look at all of their stories -- it's a list of stories that were flagged by Google News, using whatever its criteria are.

CNBC:-

Forbes:-

Why are there more stories from Forbes? Because the service appears to have more writers covering the bitcoin++ topic. Since I have one extra Saturday this month to explore the topic, I'll use it to take a closer look at the relevant stories from both sources.

Before closing today's post, I have one more story to highlight. It's related to the first CNBC story, 'Bitcoin turns 10 years old':-

The story is based on a Morgan Stanley report and copied the following chart.


'The evolution of bitcoin'

From 'Digital Cash: Untraceable but full Confidence' (Ha!) to 'New Institutional Investment Class' (Huh?), the 'Bitcoin/Crypto' believers have been one chasing one elusive thesis after another.

01 December 2018

Bitcoin in the News : 2018-11 Price

Next month, January 2019, will mark two years since I've limited this bitcoin blog to two posts per month, where the first post has been a chart of the previous month's price movements. The month of November 2018 must show the worst chart for bitcoin during the nearly two years.


Bitcoin (BTC) Price Index (cointelegraph.com)

When I look at the chart I see sideways price movement (= no movement) for the first half of the month, followed by three distinct downward price shifts. Using the same mouseover mechanism that I noted last month in Bitcoin in the News : 2018-10 Price, these downward shifts can be roughly pegged to these start times:-

  • 14 Nov 06:00
  • 19 Nov 00:00
  • 24 Nov 12:00

Looking at the stories in Cointelegraph's Analysis category (in which there are less than half the number of stories for October), only one story addresses (the first two of) the three drops.

2018-11-22: What Is Going On With the Crypto Markets, Analysts Unpack Factors Behind 10-Days Slump • 'Over the last 10 days the cryptocurrency markets have endured a massive sell-off across the board. There are a number of reasons that have led to the highly bearish sentiments on the market but seeing red has been difficult for many. As the value of Bitcoin and numerous altcoins have continued to decline to depressing levels, and a certain amount of panic has ensued.'

A graph of 'Total Market Capitalization' (of what, exactly, isn't clear) shows the market cap going from just over $200B to $150B starting 14 November. The first discussion in the story reduces to:-

'Main factors to consider' : Bitcoin Cash fork, Regulatory pressures, Global pressures (e.g. Brexit)

The other discussions are:-

'“Does this mean Bitcoin is broken? No”', 'Low trade volumes and high uncertainty', and 'A short term outlook'

The 'Bitcoin is broken?' section shows indices for three major American equity markets, all dropping lower on 20 November in tandem. All in all, none of these discussions is particularly revealing and I'm not convinced that this 'What Is Going On' story is anything deeper than cheerleading. Under Cointelegraph's Price Analysis tag, I found three stories coinciding with the drops.

2018-11-14: Bitcoin, Ethereum, Ripple, Bitcoin Cash, EOS, Stellar, Litecoin, Cardano, Monero, TRON: Price Analysis, Nov. 14 • 'Major cryptocurrencies have seen major losses today after months of stability, with Bitcoin reaching a new low for 2018.'

2018-11-19: Bitcoin, Ripple, Ethereum, Stellar, EOS, Litecoin, Cardano, Monero, TRON, IOTA: Price Analysis, Nov. 19 • 'Following the increase in volatility and a renewed downtrend in markets, some analysts have projected abysmally low prices for Bitcoin.'

2018-11-26: Bitcoin, Ripple, Ethereum, Bitcoin Cash, Stellar, EOS, Litecoin, Cardano, Monero, TRON: Price Analysis, Nov. 26 • 'Rampant selling in recent weeks dragged total market capitalization from above $210 billion on Nov. 14 to just below $116 billion on Nov. 25.'

If I had the time, I would look at these analyses in more depth, but I'm again not convinced that I would find any real explanations. Maybe I'll find the time to look at them when I work on the second post this month, like last month's Bitcoin in the News : 2018-10 More++.

Back to the November chart above, I noticed that there are three additional price sources available over what was shown in the '2018-10 Price' post.

(A : 2018-10 Price) Index, Binance, Bitfinex, Bitstamp, Gdax, Hitbtc, Kraken

(B : 2018-11 Price) Index (A1), Bitstamp (A4), Bitfinex (A3), Hitbtc (A6), Huobi, Poloniex, Kraken (A7), Binance (A2), Okex, Coin

That brief (A/B) analysis shows that one source disappeared between (A) and (B), 'Gdax', and four were added. It might again be useful to look at these changes in more depth, but at least I've flagged the keywords for any future searches on this blog.

10 November 2018

Bitcoin in the News : 2018-10 More++

In my previous post, Bitcoin in the News : 2018-10 Price, I observed,
The price moved mostly sideways during the month. The exceptions were two sharp shifts with a large spike in volume, where a mouseover on Cointelegraph's original chart generates crosshairs that pinpoint the action to six hour time ranges:-
- 10 Oct between 1800 & 2400 (=0000 11 Oct)
- 15 Oct between 0000 & 0600
Cointelegraph's Analysis category had no articles to explain these movements.

Could the other news and analysis services explain the sharp shifts? The first of the events, a drop, had a straightforward explanation, which damages bitcoin's reputation as a 'safe haven' for money.

  • 2018-10-11: Bitcoin slumps more than 5%, puts ‘digital gold’ status in jeopardy (marketwatch.com) • 'Bitcoin prices on Thursday finally broke out of a recent lull, dropping as much as 6% [...] The decline comes on the heels of one of the worst sessions for global equities in 2018, putting bitcoin’s “digital gold” status in jeopardy. Bitcoin proponents have argued that the cryptocurrency would be a haven in times of turmoil, just like gold, and go up in value.'

The subsequent rebound was less straightforward. I chose another story from MarketWatch.

  • 2018-10-15: Bitcoin jumps after credit scare; Fidelity enters crypto sphere - MarketWatch (marketwatch.com):- • 'Bitcoin rose sharply Monday after a credit scare on a major cryptocurrency exchange created a rush for the No. 1 digital currency. [...] The move higher in bitcoin came at the expense of Tether (USDT), the stablecoin on the Bitfinex exchange, which traded to 88 cents. A stablecoin traditionally trades at or very close to $1 as it is a U.S. dollar backed coin that investors use to trade between different cryptocurrencies as opposed to going in and out of fiat.'

Tether the stablecoin? Sounds like an exercise involving horses. In fact, my '2018-10 Price' post gave a similar explanation -- 'Stable coin Tether is being cited as one of the main reasons for the spurt in crypto prices' -- although I failed to understand its meaning at the time. Here's another story from a reputable source.

  • 2018-10-15: Bitcoin Has Leapt Sharply Higher -- Here's Why (forbes.com):- • 'Bitcoin, which just last week had its first major sell-off in months, has this morning jumped almost 10% [...] The sudden rise in the bitcoin price this morning was signaled by a sell-off of the dollar-linked tether digital coin — the only cryptocurrency which is down today, according to CoinMarketCap data. Traders often sell tether to buy other cryptocurrencies and a sudden influx of tether sellers would push down the tether price — and boost the bitcoin price if that's what traders are moving their money to. Tether was down by some 3% in the run up to bitcoin's sudden price rise.'

This sounds suspiciously like the cart leading the horse. The phrase 'signaled by' doesn't necessarily imply a cause-effect relationship. It could be a side-effect, like smoke rising from a fire. As long as I'm on animal analogies, whales also received some attention. Here's another analysis from MarketWatch.

  • 2018-10-18: Bitcoin whales aren’t responsible for volatility, research firm finds:- (marketwatch.com) • 'The bitcoin whales are back. At least, that’s the conventional narrative that takes hold when the world’s largest cryptocurrency exhibits significant price swings, often over a short period. However, new data from Chainalysis, a blockchain research firm that specializes in detecting fraud and money laundering, suggest this isn’t to be the case. In fact, it is quite the opposite.'

The following chart shows four categories of whale, one of which is 'Lost'.

The last day of October marked a significant milestone in the bitcoin saga.

  • 2018-10-31: Factbox: Ten years of bitcoin (reuters.com) • 'Bitcoin, the world’s first and most famous cryptocurrency, celebrates its tenth birthday on Wednesday [31 October].'

The 31st of October is also known as Halloween. How's that for a scary coincidence?

03 November 2018

Bitcoin in the News : 2018-10 Price

In last month's Bitcoin in the News : 2018-09 Price, I had trouble capturing the price chart for September. This month I simply forgot -- 1 November is a public holiday in many Catholic countries -- and didn't get around to it until today. Note that for the first time in these monthly 'Price' posts the 'Date Range' is displayed even though I haven't specified it.


Bitcoin (BTC) Price Index

The price moved mostly sideways during the month. The exceptions were two sharp shifts with a large spike in volume (plus a smaller shift later in the month), where a mouseover on Cointelegraph's original chart generates crosshairs that pinpoint the action to six hour time ranges:-

  • 10 Oct between 1800 & 2400 (=0000 11 Oct)
  • 15 Oct between 0000 & 0600

Cointelegraph's Analysis category had no articles to explain these movements. The site's Price Analysis tag, which brings together posts based on technical analysis, had three articles which glossed over the sharp swings.

2018-10-13: Top 5 Crypto Performers Overview: TRON, Bitcoin, Litecoin, EOS, Cardano

On October 11, the total market capitalization of the cryptocurrencies plunged below $200 billion for the first time since September 20, as a global risk-off trade led investors to dump their holdings. However, the encouraging sign is that the sell-off was short-lived and most currencies are trying to claw back.

2018-10-15: Bitcoin, Ethereum, Ripple, Bitcoin Cash, EOS, Stellar, Litecoin, Cardano, Monero, TRON: Price Analysis, October 15

Stable coin Tether is being cited as one of the main reasons for the spurt in crypto prices that pushed total market capitalization above $221 billion on Monday (UTC time), but it was not a new issuance of Tether that was the catalyst for upward market movement.

2018-10-17: Bitcoin, Ethereum, Ripple, Bitcoin Cash, EOS, Stellar, Litecoin, Cardano, Monero, TRON: Price Analysis, October 17

While crypto markets have given up much of their Oct. 15 gains, they are still trading well above the recent lows, which is a positive sign. A knee-jerk reaction to a news event can propel the markets only to a certain level, after which fundamentals take over. The next leg of the up move will be based on strong fundamental news flows.

Last month I used a second post, Bitcoin in the News : 2018-09 More++, to analyze a similar drop. I'll do the same for October in my next post.

13 October 2018

Bitcoin in the News : 2018-09 More++

In last week's post, Bitcoin in the News : 2018-09 Price, I noted,
None of the stories in Cointelegraph's Analysis category attempted to explain the drop at the beginning of the month.

Here's a similar chart showing just the week when the drop occurred. For the record, 5 September was a Wednesday.

It's not a very good chart. The only prices shown are from the midpoint of each day (noon?, GMT?) and are connected with a straight line. The first story I read about the drop was from CNBC:-

  • 2018-09-05: Bitcoin falls after Goldman reportedly drops crypto trading plans (cnbc.com; 'Published 9:00 AM ET Wed, 5 Sept 2018 Updated 4:50 PM ET Wed, 5 Sept 2018') • 'Bitcoin slipped below $7,000 Wednesday after a report that Goldman Sachs is abandoning plans to open a trading desk for cryptocurrencies. Goldman still sees the regulatory environment as ambiguous, according to Business Insider, which cited people familiar with the matter.'

By coincidence, the second story I read was from Business Insider:-

  • 2018-09-05: Bitcoin price: Cryptocurrencies drop suddenly with no explanation (businessinsider.com; Sep. 5, 2018, 4:09 PM) • 'Cryptocurrency prices plunged across the board suddenly and sharply Wednesday morning, seemingly with no clear reason. Having been steady at about $7,350 a coin during most of trading during both Asian and European morning hours, bitcoin lost more than $200 in mere minutes starting about 5:50 a.m. ET, or 10:50 a.m. BST.'

Both stories, from CNBC and from Business Insider, pointed to another story from Business Insider:-

Note that the 'earlier' story is dated three days after the 'later' stories. There is probably a good explanation for this, but I can't think of one. The CNBC story has a detailed price chart showing a steady price followed by two sharp drops: one just before 6 AM (EDT) and another at 7 PM. It's hard to believe that unconfirmed news about a single trading desk could cause such a sudden price shift, but what do I know? Then there was another sharp drop into the following day. I wonder what caused that.

06 October 2018

Bitcoin in the News : 2018-09 Price

The price chart for September is a bit different than it was for last month's Bitcoin in the News : 2018-08 Price. When I tried to capture the monthly price chart on 1 October, I received only current prices with no chart. When I tried to capture the same chart while preparing this post, I received the normal chart with the first week of September missing, because the monthly chart only goes one month back. The first week of September showed a large price drop, so I couldn't just ignore it. What to do?

Since February, the Cointelegraph price service has offered the possibility of entering a from-to date range. I set this to 1 September through 30 September and received the chart shown below. The data granularity for a specified date range appears to be a full day; the granularity of the monthly chart appears to be six hours. That accounts for the difference in the look of the chart.


Bitcoin Price Index

None of the stories in Cointelegraph's Analysis category attempted to explain the drop at the beginning of the month. Of the 30 or so stories in the category, one in particular caught my attention:-

  • 2018-09-11: The Crypto IPO Race Is On: From Mining Companies to Exchanges • 'Last week, at least two crypto-related enterprises, a Silicon Valley stock and cryptocurrency trading platform Robinhood and Singapore-based crypto exchange Huobi, moved closer to going public by holding an initial public offering (IPO).' The ‘old school’ way to collect investments might seem especially attractive in the context of mass adoption trends and a declining ICO market, which now sees its hardest slump in 16 months.

Using Cointelegraph's tag for technical analysis, Price Analysis, I'll point to a sample article from mid-month:-

The language in that analysis is decidedly negative. In the initial survey, it quotes a sector expert saying,

Bitcoin will resurge in 2019 but altcoins "will never come back."

The phrases 'bearish patterns', 'trend remains down', 'breakdown of the support zone', 'strong downtrend', and 'facing resistance' are used for the first five of the ten cryptocurrencies covered. The mania of 2017 is over.

15 September 2018

Bitcoin in the News : 2018-08 More++

After last month's price news, Bitcoin in the News : 2018-08 Price, what other bitcoin news made the headlines? In the corresponding 'Bitcoin in the News' analysis for July, 2018-07 More++, I featured stories from Forbes. In the analysis for June, 2018-06 More++, the spotlight was on CNBC. If I concentrated on those same sources for August, I would have twice as many stories from Forbes as from CNBC, making Forbes the blue ribbon service for bitcoin reporting and analysis.

For August, I noticed that the word 'scam' showed up in the headline for many stories. [For an explanation of how I choose the stories, see the first post in the series, Bitcoin in the News - June 2015 (December 2015)] The number of days where 'scam' appeared at least once was more than double an average month and beat the previous record, set in March 2017.

Looking closer at the days with 'scam' stories, I discovered that a few of them came from news alerts on the term 'botnet', another topic that I follow regularly. Following is an example of the several stories involving a high tech combination of a cryptocurrency, a botnet, and Twitter.

2018-08-06: Duo Security researchers’ Twitter ‘bot or not’ study unearths crypto botnet (techcrunch.com) • 'A team of researchers at Duo Security has unearthed a sophisticated botnet operating on Twitter -- and being used to spread a cryptocurrency scam. The botnet was discovered during the course of a wider research project to create and publish a methodology for identifying Twitter account automation -- to help support further research into bots and how they operate.' • The report was illustrated by the following graphic. ETH is, of course, Ethereum.



'To celebrate 10,000,000$ worth of ETH transactions
We are giving back to the community with
*** 10,000 ETH giveaway ***
Send 0.5-10 ETH to verify your address, and get 5-100 ETH
back (limit is 100 ETH per address). Fav this tweet when you get yours!'

It's hard to believe that many people would fall for this. It's also hard for cryptocurrency outsiders to believe that so many people would fall for crypto. Greed is a powerful motivator. Following are a few more scams which popped up for August. I'll give enough excerpts to understand how the scams work.

2018-08-13: 22-year-old man loses $24 million worth of bitcoins in apparent scam (mashable.com) • 'In June 2017, Saarimaa was approached by a group who convinced him to send him the bitcoins, the report claims, quoting findings by Thailand's Crime Suppression Division's (CSD), which has been conducting an investigation into the case for six months. Saarimaa believed he was investing in shares of three companies, a casino and a new cryptocurrency called Dragon Coins, but after seeing no returns at all, his business partner Chonnikan Kaeosali filed a complaint to the CSD. As it turned out, the group converted the bitcoins into Thai currency, deposited it into accounts belonging to seven suspects, and spent some of it on plots of land.'

2018-08-23: US Federal Trade Commission Issues Warning on Bitcoin Blackmail Scam ‘Targeting Men’ (cointelegraph.com) • 'The Division of Consumer and Business Education of the U.S. Federal Trade Commission (FTC) published an article August 21 titled "How to avoid a Bitcoin blackmail scam." The FTC’s letter focuses on consumer protection, in what it calls a "new scam targeting men," warning about blackmailing scams demanding payments in Bitcoin (BTC). The brief letter states: "Here’s how it works. Scammers have been sending letters to men, demanding payments using [B]itcoin in exchange for keeping quiet about alleged affairs. The letter also explains how to use [B]itcoin to make the payment."'

2018-08-26: Indian Authorities Nab High-Profile Bitcoin Scammers (bitcoinist.com) • 'One common thing promised to all the investors was that they would be getting 10 percent returns on their total investments for the period of next 18 months. One of the accused is a motivator who encouraged and inspired the investors to put their money into Bitcoin. Initially, some of the investors also started getting some returns, which gave them false assurance that their money was safe.'

2018-08-27: 'Wolf of Wall Street' warns investors of the next big trap: Bitcoin (cnbc.com) • 'Former penny-stock broker Jordan Belfort spent nearly two years in prison for scamming investors. Bitcoin, he has no doubt, is the next trap that could leave some retail investors penniless. "I was a scammer. I had it down to science, and it's exactly what's happening with bitcoin," he told CNBC in a documentary airing Monday. "The whole thing is so stupid, these kids have gotten themselves so brainwashed."'

Greed, gullibility, and high technology. That's all it takes to fall victim to a scam. There were several other stories that could have been featured in this post. I'll give two, one each from CNBC and Forbes. Both appeared around the time of the low point in the August price.

I have other August stories on my short list that contradict both of the above. When all is said and done, we're on our own with our beliefs.

08 September 2018

Bitcoin in the News : 2018-08 Price

For the third consecutive month, lack of time -- i.e. vacation! -- prevents me from posting a full report on last month's bitcoin price movements. Just like last month's Bitcoin in the News : 2018-07 Price, I'll have to settle for the usual price chart and reduced commentary.

The month showed an asymmetric 'V' shape. The price declined during the first few weeks, hit a monthly bottom around $6000, then increased during the last few weeks.


Bitcoin (BTC) Price Index

As for the associated commentary, the last time I attempted anything was Bitcoin in the News : 2018-05 Price. The first part was a look at Cointelegraph's Analysis category. The second part was a separate look at the category's articles on technical analysis, which disappeared that month.

This month I discovered that the technical analysis has been available all along via the Price Analysis tag. Every article also has further tags for the individual cryptocoins included in the analysis. It would be worth the time to look at those tags to understand how the Cointelegraph site is structured.

11 August 2018

Bitcoin in the News : 2018-07 More++

After seeing the chart of bitcoin's price movements in July, Bitcoin in the News : 2018-07 Price, what sort of stories accompanied those movements? Last month, in Bitcoin in the News : 2018-06 More++, I tracked the month using a single news source, CNBC. This month I could have done the same, but I noticed that another source, Forbes, was getting even more attention from my aggregator, Google News.

Here are the Forbes.com stories I collected for my short list, although I easily had more than double this number available from Forbes. Most of the other Forbes stories were of the type 'bitcoin will go {up/down/sideways : choose a direction}'.

Of those stories, increasing power consumption and the Russian indictments were reported on by a number of other news outlets. Two other stories also attracted wider interest than other stories:-

As I write this, the price of bitcoin has dropped back into the low $6000s. I'll cover that in next month's Bitcoin in the News.

04 August 2018

Bitcoin in the News : 2018-07 Price

Just like last month's Bitcoin in the News : 2018-06 Price, this month's price post is bare bones. After two months in a downtrend, bitcoin headed upwards in July.


Bitcoin (BTC) Price Index

And once again, I'll have to defer a discussion of the related Analysis -- see Bitcoin in the News : 2018-05 Price, ('the other stalwart of these monthly '20YY-MM Price' posts') for the most recent example. NB: Another note in that '2018-05 Price' post mentioned,

As for [...] the Cointelegraph technical analysis, the articles stopped appearing end-April. That's a pity, because I was just starting to get a feel for cryptocoin technicals.

I just noticed that these are now on the 'Price Index' page.

14 July 2018

Bitcoin in the News : 2018-06 More++

Like my previous post, Bitcoin in the News : 2018-06 Price, this current post is abbreviated because of vacation. After all, what's more important : (free) time or (free) money? If the essence of the previous post was 'searching for salvation'...
Odd numbered month down, even numbered month up? [...] The month of June was even numbered, but there weren't even a handful of days that could be considered up. Abandon hope all ye who have entered here?

...then the essence of the current post is 'searching for a bottom'. For example:-

That happens to be the first bitcoin article flagged by my Google news service in June. It also happens to be the first of many articles from CNBC flagged in June. Let's look at some of the others.

'Is a bottom. Not a bottom. Might be a bottom.' • That last story ('slumps to November lows') says we haven't seen a bottom. Last year the talk was about bubbles; this year it's about bottoms.

30 June 2018

Bitcoin in the News : 2018-06 Price

So much for simple-minded technical analysis. A month ago, in Bitcoin in the News : 2018-05 Price, I wrote,
Odd numbered month down, even numbered month up? That was the trend in last month's Bitcoin in the News : 2018-04 Price, which continued in the month of May. A handful of months does not make a trend, but it does make a lead paragraph.

The month of June was even numbered, but there weren't even a handful of days that could be considered up. Abandon hope all ye who have entered here?


Bitcoin (BTC) Price Index

Sharp-eyed visitors to this page might have noticed that the date of this post is the last Saturday of June, rather than the first Saturday of July, which would be the normal day for posting this. The reason for this is almost the same reason for ending the post right here.

09 June 2018

Bitcoin in the News : 2018-05 More++

After the single-source news analysis in my previous post, Bitcoin in the News : 2018-05 Price, I had plenty of other stories from May to choose from. This first one was the most interesting, probably because I like writing 'Top Myths' stories myself:-

The piece listed five myths and their refutations. Here are the bullets:-

1. Digital Currencies Are Primarily Used for Illicit Activity
2. Digital Currencies Don't Have Value
3. Cryptocurrencies Aren't Secure
4. Digital Currencies Are Bad for the Environment
5. Cryptocurrencies Are a Scam

As I was working my way through other stories from May, I realized that the 'myths' might not be myths at all. They are more like controversies. Following is one story confirming each of the five myths:-

1. Illicit Activity • 2018-05-23: Kidnappers snatch a 13-year-old South African boy and demand his ransom be paid in bitcoins (cnn.com)
2. Don't Have Value • 2018-05-01: Warren Buffett explains one thing people still don't understand about bitcoin (cnbc.com; 'Bitcoin isn't an investment')
3. Aren't Secure • 2018-05-29: Bitcoin Gold Suffers Rare '51% Attack' (fortune.com)
4. Bad for the Environment • 2018-05-29: Bitcoin backlash as ‘miners’ suck up electricity, stress power grids in Central Washington (seattletimes.com)
5. Are a Scam • 2018-05-24: Bitcoin Price Manipulation Probe Launched By Justice Department (bloomberg.com)

The difference between a myth and a controversy is like the difference between a fact and an opinion. Here are three more opinions from knowledgeable financial experts who have made correct calls many times in the past:-

Compare these people with those who are trying to explode the 'myths'. What are their respective track records?

02 June 2018

Bitcoin in the News : 2018-05 Price

Odd numbered month down, even numbered month up? That was the trend in last month's Bitcoin in the News : 2018-04 Price, which continued in the month of May. A handful of months does not make a trend, but it does make a lead paragraph.


Bitcoin (BTC) Price Index

As for the other stalwart of these monthly '20YY-MM Price' posts, Cointelegraph's Analysis category (note that the title of the page has changed for the second time in two months), had 18 stories in May. Last month I tried to categorize the category:-

That makes a total of five dimensions for classifying cryptocurrency discussions. I'll see how this holds up in May.

Here is my tentative classification of the 18 stories for May.

Geographic:

Regulatory:

Predictive:

Coin-specific: I called this 'Specific' in May, but the title is so vague that I kept referring to the previous post to remind me what it meant.

Technological:

The classification held up well enough, although sometimes it's a toss-up: Should 'Ethereum Under The Regulatory Spotlight' be considered 'Regulatory' or is it 'Coin-specific'? It's both, but I don't want to introduce a matrix classification for an off-hand experiment. Another gray area is 'Women In Blockchain And Crypto'. Is this really 'Technological'?

As for the last discussion point in the '2018-04 Price' post, the Cointelegraph technical analysis, the articles stopped appearing end-April. That's a pity, because I was just starting to get a feel for cryptocoin technicals.

12 May 2018

Bitcoin in the News : 2018-04 More++

On top of the reports flagged in the previous post, Bitcoin in the News : 2018-04 Price, what other cryptocurrency stories appeared last month. First, let's go back to the March summary, Bitcoin in the News : 2018-03 More++ (April 2018), where I signed off with,
I'm tempted to start my own index: the 'Bitcoin Badnews Ratio' [BBR], a contrarian signal. Let's see what happens in April. If the price trend is up, the BBR might actually have some merit.

I qualified the April trend in the '2018-04 Price' post as 'steady upward'. Since the March stories were overwhelmingly negative, the BBR's first test was in its favor. One sample does not confirm a theory and I'll come back to the idea later in this post.

The subject of gender equality is a hot topic these days, so it's no surprise that it has come up in the crypto world. Consider these two stories:-

  • 2018-03-31: Bitcoin's Biggest Winners -- or Losers -- Are Likely to Be Men (theatlantic.com) • 'Simply put, many more men are buying crypto than women. The combined market capitalization of all the currencies appears to exceed 300 billion dollars. And due to their greater participation in this extremely volatile and thus highly risky realm, men will likely wind up squandering hundreds of billions of dollars more than women -- or else, perhaps, enjoying hundreds of billions in additional wealth.'
  • 2018-04-27: Bitcoin: Women Could Send Bitcoin Price to the Moon (fortune.com) • 'One analysis of Google searches found that 95% of people Googling "Bitcoin" were male, while only 5% were female. The trend seems to carry across to other cryptocurrencies such as Ethereum: According to another recent survey, just 4% of Ethereum traders are women.'

The subject of taxes is always a hot topic in April, at least in the U.S. I counted as many stories in April as in the three previous months combined. For example:-

Back to the BBR, if you took this title at face value, you would say the story was negative:-

  • 2018-04-24: Let’s destroy Bitcoin (technologyreview.com; MIT) • 'Three ways Bitcoin could be brought down, co-opted, or made irrelevant.'

The three ways are not imminent; they are hypothetical:-

'Option one: Government takeover'
'Option two: Facebook sneak attack' ['If Facebook could persuade a large enough fraction of Bitcoin users and miners to run its own proprietary version of the Bitcoin software, the company would thereafter control the rules.']
'Option three: Go forth and multiply' ['The trend among blockchain startups is to build services that function only with the use of a native cryptocurrency, one specifically designed for the application.']

That story was one in an issue of the 'MIT Technology Review' focused on the underlying technology: The blockchain issue (ditto; May/June 2018). I've bookmarked it for future review.

Looking at other stories for April, I saw a mixture of positive and negative angles. How to determine the trend? Let's compare the most positive of the positive stories against the most negative of the negative.

I hope it's obvious that those were the positive stories. Here are the negative stories.

For me, the positive stories are less compelling than the negative. Of the other ~20 stories on my short list, only a half-dozen were positive or neutral, while the others were clearly negative. Here's one that would have made the 'most negative' list if I didn't want to go a little deeper:-

The four key reasons are:-

'The Group Mentality Risk'
'Regulatory Risk'
'Slower Speed' ['Each person left 'holding the bag' is looking for a chance to dump the product.']
'Not the Only Game in Town'

All in all, the consensus sentiment in April was negative. If the BBR has any merit, May should be a good month. Since I'm writing this mid-month, I can already observe that it's not looking like a good month at all.

05 May 2018

Bitcoin in the News : 2018-04 Price

In last month's post, Bitcoin in the News : 2018-03 Price, I noted,
The month of March saw a resumption of that 'steady downward trend'.

The month of April looked more like a typical month in 2017, a 'steady upward trend'.


Bitcoin (BTC) Price Index

In posts up to and including last month, I've been trying to understand the price movements using Cointelegraph's 'Bitcoin Price Analysis (BPA)'. The URL hasn't changed, but the Cointelegraph page is now titled Cryptocurrency and Company Analysis (I'll call it CCA), with the further explanation:-

Latest analysis of cryptocurrencies, ICOs, companies and technologies by experts from Cointelegraph.

The April CCA had 23 stories, of which 14 were non-routine. I discovered that I could classify the 'non-routine' stories into a number of broad themes or dimensions. Here are the themes that I determined for April.

Geographic: Cryptocurrencies are a global phenomenon. Asia was the dominant area for stories in April, but this was probably just a coincidence.

Regulatory: Although this is related to the 'Geographic' angle, the issues cut across (e.g.) national boundaries.

Predictive: It's almost a cliché that 'Past Performance Is No Guarantee Of Future Results', but what else is there to use as a guide?

Specific: With the exception of bitcoin, I'm not particularly interested in following the trials and triumphs of particular coins. This is nevertheless an important dimension.

Technological: April saw only stories about the blockchain, but I imagine that mining also belongs here.

That makes a total of five dimensions for classifying cryptocurrency discussions. I'll see how this holds up in May. As for the 'routine' Cointelegraph stories, I'll pick one from from mid-month for a brief analysis, just like I did for the '2018-03 Price' post.

The title lists the same nine cryptocoins I saw in March and the article has the same sort of technical analysis. Looking at the discussion of specific coins, I saw heavy reliance on the '50-day simple moving average (SMA)' along with identification of resistance and support levels. Is that the focus of cryptocoin technical analysis?

14 April 2018

Bitcoin in the News : 2018-03 More++

In my previous post, Bitcoin in the News : 2018-03 Price, I noted,
The month of March saw a resumption of that 'steady downward trend'.

What other news for the month of March is worth mentioning? Here's one story that emerged at the end of February:-

The long article explained that the positive dynamics of power generation are at risk of being usurped by bitcoin mining. Here are a few of the key points:-

Colin L. Read, the mayor of Plattsburgh, N.Y., also sees it as a public nuisance. The city was guaranteed a fixed supply of cheap electricity as part of the construction of power-generating dams on the St. Lawrence in the 1950s. Bitcoin mining companies are plugging into that power supply like a swarm of hungry mosquitoes. [...] Employers historically have created 30.5 jobs in exchange for each megawatt of low-cost electricity, according to the power authority, while Coinmint is proposing to create just new 10 jobs per megawatt. But 10 is more than none.

A few weeks later, the story evolved:-

  • 2018-03-16: Bitcoin Mining Was Just Banned in Plattsburgh, N.Y. (fortune.com) • 'A small lakeside town in upstate New York is fed up with Bitcoin miners using up so much of its low-cost electricity. Plattsburgh, whose residents are a quick jaunt from the Canadian border, has put an 18-month moratorium on cryptocurrency mining to preserve natural resources, the health of its residents, and the “character and direction” of the city.'
  • 2018-03-17: New York Authorities Crack Down on Bitcoin Miners Hunting Cheap Power (ditto) • 'The New York state Public Service Commission has ruled that power companies can charge higher rates to cryptocurrency mining operations, which have moved into the state’s north to take advantage of low-cost hydropower.'

Cryptocurrency mining is getting a critical look for different reasons, mostly negative:-

  • 2018-03-02: Bitcoin heist: 600 powerful computers stolen in Iceland (nbcnews.com; Associated Press) • 'Some 11 people were arrested, including a security guard, in what Icelandic media have dubbed the "Big Bitcoin Heist".'
  • 2018-03-04: Top Cyberthreat Of 2018: Illicit Cryptomining (forbes.com) • 'Due to a combination of a leaked NSA hack, a cryptocurrency more anonymous than Bitcoin [Monero], and benign cryptocurrency transaction processing (aka ‘mining’) software that requires no command and control link back to the attacker, we now have the perfect combination of easy money, slim chance of detection, and billions of unsuspecting targets that may not even care they’ve been hacked.'
  • 2018-03-15: Bad news for bitcoin miners as it's no longer profitable to create the cryptocurrency (cnbc.com) • '"Bitcoin currently trades essentially at the break-even cost of mining a bitcoin, currently at $8,038 based on a mining model developed by our data science team," Fundstrat's Thomas Lee said in a report Thursday.'

Continuing with the negative slant on the bitcoin news, don't look to world class economists for any positive guidance:-

The silver lining in all this might be: What the Founding Fathers' Money Problems Can Teach Us About Bitcoin (smithsonianmag.com; April 2018) • 'Can you trust something that’s summoned into being, without a government backing it? As it turns out, this is precisely the conundrum that early Americans faced.' Meanwhile, in the 21st century bitcoin proselytizers run the risk of being branded criminals, probably because criminal activity is such a significant aspect of bitcoin lore:-

With so much bad news being associated with bitcoin and other cryptocurrencies, it's not at all surprising that an attempt at determining objective value is associated with the word 'misery'.

I'm tempted to start my own index: the 'Bitcoin Badnews Ratio', a contrarian signal. Let's see what happens in April. If the price trend is up, the BBR might actually have some merit.

07 April 2018

Bitcoin in the News : 2018-03 Price

I started last month's report, Bitcoin in the News : 2018-02 Price, with
If the first week of February looked like a continuation of January ('a steady downward trend during the course of the month'), then the rest of the month looked more like a typical month in 2017.

The month of March saw a resumption of that 'steady downward trend'.


Bitcoin (BTC) Price Index

In last year's '2017-01 Price' post, I started using Cointelegraph's Bitcoin Price Analysis (BPA) as a source for news on price movements. Of the 19 stories in the category for March 2018, five were non-routine:-

The 14 'routine' BPA stories (although there's nothing routine about cryptocurrencies) were of the type I mentioned in last month's '2018-02 Price' post. There I wrote,

Most BPA articles discuss technical analysis and I should look at those in depth in one of my posts.

Where to start? I picked two BPA articles from mid-month:-

Both articles are structured similarly. First, there is a summary of news that might affect the price of cryptocurrencies.

[1st link:] 'Google has followed Facebook in banning cryptocurrency-related advertising. While this is definitely not good news for ICO campaigns that rely heavily on marketing, this is unlikely to hurt the prospects of the coins backed by strong technical fundamentals.'

[2nd link:] 'Fundstrat's Thomas Lee believes that Bitcoin mining is an unprofitable venture at current prices. A model developed by his data science team has pegged the breakeven price at $8,038. If prices fall further, the miners will start to lose money on their operations.'

This is followed by a chart and verbal analysis of the cryptocurrencies mentioned in the corresponding headline: BTC [i.e. BTC/USD; almost all prices are pegged to the U.S. dollar], ETH, BCH, XRP [Ripple], XLM [Stellar], LTC [Litecoin], ADA [Cardano, pegged to BTC, i.e. 'ADA/BTC'], NEO, EOS. Some of these I had never heard of before.

The technical analysis of a market is essentially an attempt to understand the human psychology driving that market. Considering that cryptocurrencies have almost no intrinsic value, there is undoubtedly a wealth of knowledge to be gained from these analyses. How to continue?

10 March 2018

Bitcoin in the News : 2018-02 More++

Just as day follows night, a '2018-02 More++' post follows the previous post, Bitcoin in the News : 2018-02 Price. Or should it be 'as night follows day'? Last month's Bitcoin in the News : 2018-01 More++ (February 2018) was 100% bad news and I ended it with:-
Let's hope February brings better news for everyone.

First let's have some follow-ups. In January we had a couple of stories about 'Botnet/crypto hookups looking for miners', surreptitiously, of course -- otherwise it might almost be good news. Last month we had:-

In January we also had a couple of stories about 'Energy use'. Last month we had:-

  • 2018-02-13: How Iceland became the bitcoin miners' paradise (theguardian.com) • 'The island nation is the first to use more electricity on mining cryptocurriencies than on its households -- thanks in part to its magma-fuelled power plants.'

Granted, both of those February stories might be considered good news, depending on where you stand. How about this follow-up to January's '2018-01-13: Bitcoin Investors Are Using Credit Cards in Disturbing Numbers (fortune.com)'; is it good news or bad news?:-

The next two stories might also go either way: good news -or- bad news...

...until you read them. That first story, subtitled, 'The most memorable comments on the cryptocurrency from senior figures in world finance', was full of comments like:-

Yves Mersch, a member of the European Central Bank’s executive board: 'If you bought a bunch of tulips with bitcoin they may well have wilted by the time the transaction was confirmed.'

Agustín Carstens, the new head of the Bank for International Settlements: 'Cryptocurrencies could become more interconnected with the main financial system and become a threat to financial stability'.

Nouriel Roubini, the American economist credited with predicting the 2008 financial crash has called bitcoin "the mother of all bubbles" and "much worse" than tulip mania.

And the list of similar comments from financial movers & shakers went on and on. That second story had these bullets as section headers:-

The Cryptocurrency Bubble Has Only Started To Deflate
Bitcoin Has No Fundamental Price To Fall Back Upon
There Is Rampant Market Manipulation In Cryptocurrency
There Is Rampant Fraud In Cryptocurrency
Institutional Investors Are Staying Away

Now here a half-dozen stories that are strictly in the 'bad news' column:-

Unlike January, there were a couple of bright spots in February:-

The last two stories were from the end of the month, when the price of bitcoin was recovering. If this scenario continues, I might be able to test the hypothesis that bad news breeds bad news and good news breeds good news.