Bitcoin in the News : 2019-05 More++

After documenting last month's price evolution in last week's post Bitcoin in the News : 2019-05 Price, what other news is worth reporting? I ignored all the hand-waving about the continued price recovery (which was nevertheless welcome news), the usual warnings from the gloom-and-doomers (Warren Buffett and Nouriel Roubini both weighed in), and the scams (I counted three). One other story stood out : the Facebook story. In the past year and a half, I've mentioned Mark Zuckerberg's company a number of times. It turns out that those mentions, taken together, make a bigger story.

Bitcoin in the News : 2018-01 More++ • If you were a Facebook user in 2017, you probably noticed the many ICO ads that popped up everywhere, like weeds. That ended at the beginning of 2018.

2018-01-30: Facebook bans all ads for Bitcoin, ICOs, and other cryptocurrency (theverge.com) • 'Facebook is banning all advertisements for cryptocurrency, including Bitcoin and initial coin offerings, as part of an “intentionally broad” policy against deceptive marketers.'

Bitcoin in the News : 2018-03 Price • Facebook wasn't the only company to ban ICO ads.

Cointelegraph's Bitcoin Price Analysis (BPA) • 2018-03-15: Bitcoin++ Price Analysis, March 14: '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.

Bitcoin in the News : 2018-04 More++ • Did Facebook have a secondary motive in the ban?

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

Bitcoin in the News : 2018-12 Price • When did 'Its Own Stablecoin' become public knowledge? How could I have overlooked, even mocked, its importance?

Cointelegraph's Analysis category made no attempt to explain any of those three trends, focusing instead on stories like 'From Blanket Ban to Its Own Stablecoin: How Facebook’s Relationship With Crypto Changed Over 2018', which was the last article in the category for the year 2018.

Bitcoin in the News : 2019-03 More++ • The rumors became official a few months later.

After price, the most frequent bitcoin story in March concerned Facebook. What was that about? • Nytimes.com: 'Facebook and Telegram Are Hoping to Succeed Where Bitcoin Failed ' & Forbes.com: 'Blow To Bitcoin As Mark Zuckerberg Warns Facebook Payments Are Coming'

End-May the story was official. My Google News feed flagged two stories from Forbes:-

• 2019-05-24: Facebook And WhatsApp Break Cover With Bitcoin Rival Plans (forbes.com) • 'Facebook, the social networking giant which owns the popular WhatsApp messaging app and image-based Instagram, is gearing up to launch a rival to bitcoin as soon as next year as it accelerates plans to diversify its revenue away from advertising. The bitcoin-inspired cryptocurrency, reportedly dubbed GlobalCoin, is set to be rolled out for testing by the end of 2018 [2019?], with plans to launch it in 2020 in up to a dozen countries around the world -- potentially sending shockwaves throughout the burgeoning bitcoin and cryptocurrency sector.'
  
  
• 2019-05-27: Facebook's Upcoming 'Cryptocurrency' Has Nothing To Do With Bitcoin (forbes.com) • 'Rumors that Facebook will eventually issue their own cryptocurrency have been swirling for awhile now, but it’s likely that this product will be a "cryptocurrency" in name only and not have anything to do with the utility offered by bitcoin.

The two Forbes stories are by two different writers. Which is it: 'a rival to bitcoin', or '[nothing] to do with the utility offered by bitcoin'? It's probably some third option that is anybody's guess. What is Facebook’s GlobalCoin? (investopedia.com):-

Social media giant Facebook Inc. (FB) may become a formidable player in the rapidly growing markets for digital payments and cryptocurrencies when it enters both arenas early next year. Given its massive estimated base of about 2.375 billion monthly active users (MAU) in virtually every nation worldwide, Facebook could immediately become a major competitor to banks and payments processors such as Mastercard Inc. (MA), Visa Inc. (V), and PayPal Holdings Inc. (PYPL).

My guess is that MA, V, and PYPL have much more to lose from GlobalCoin than bitcoin does.

Bitcoin in the News : 2019-05 Price

For the fourth straight month -- the third was Bitcoin in the News : 2019-04 Price -- I can use the same observation:-

'The individual patterns are all similar: the market is in a state of equilibrium, then something happens -- always accompanied by significant volume -- to move it quickly to another state of equilibrium. The cycle repeats.'

Nevertheless, it goes without saying that every new month differs from previous months. The most striking aspect of the May chart was the steady rise from 5000 to 7000 (in round numbers) during the first third of the month.

Bitcoin (BTC) Price Index

The subsequent jumps/drops in the 'state of equilibrium' occurred at the following (approximate) times, always confirmed by a surge in volume:-

2019-05-13 0800 +
2019-05-17 0800 -
2019-05-18 2000 +
2019-05-26 1200 +

There was another drop near the end of the month, although its price movement was only about half of the movements I've listed. Cointelegraph's Analysis category served three stories that I found relevant. The first story concerned a small jump early in the month, accompanied by an outsized volume:-.

• 2019-05-04: Bitcoin Surges Past $5,700 in Hours: Experts Explain Factors of Overnight Rally • 'Over several hours on May 3, the price of bitcoin spiked from around $5,300 to over $5,700 in major markets, allowing the crypto market to gain more than $7 billion in a single day. [...] Crypto Rand, a widely recognized cryptocurrency trader and technical analyst, said that the upside movement of bitcoin and the rest of the market may have been simply technical.'

'Crypto Rand' - is that a real name? 'Simply technical' - is that a real reason? My interest in the second story isn't about its title; it's about its trigger:-

• 2019-05-26: Will Bitcoin’s Volatility This Month Hinder the Future of an ETF? • 'On May 17, bitcoin’s (BTC) price experienced a "flash crash," dropping to $6,400 within minutes, which was triggered by a 5,000 BTC sell-off — equivalent to around $35 million at the time.'

A 'flash crash' is caused by automated trading. Note that the drop was deeper than shown in the monthly chart above, because a partial recovery happened almost immediately. The third story is an eye-opener:-

• 2019-05-31: Bitwise Calls Out to SEC: 95% of Bitcoin Trade Volume Is Fake, Real Market Is Organized • 'Bitwise has recently prepared a 104-page white paper. In it, the fund manager argued that the bitcoin market still has inconsistencies regarding trading data, but the legitimate part of the market has a "remarkable efficiency." • Approximately 95% of reported BTC trading volume is fake • Bitwise analyzed trading data of some 83 exchanges. Researchers said they looked at the trade size histograms, volume spike alignment and spread patterns of these exchanges. They concluded that there are only 10 exchanges with 100% real trading volumes, and these 10 exchanges collectively account for 5% of the reported trading volume. • The remaining 5% makes up for a highly regulated and efficient market.

There was more about an ETF, which isn't relevant to understanding sudden price movements. It's the 95%:5% split that is relevant. Automated trading on suspicious data -- isn't that a dangerous combination? Given that bitcoin is traded all over the world, which means that it can escape any sort of regulation, and given that pots of money always attract fraudsters who are only interested in the size of their own bank accounts, why would anyone trust bitcoin? Maybe because it's a fascinating idea.