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.

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.

• 2017-06-06: Bitcoin is a 'bubble,' Mark Cuban says (businessinsider.com) • 'When everyone is bragging about how easy they are making money, it's a bubble.'
• 2017-06-09: Is bitcoin in a bubble? This metric suggests there’s more room to grow (marketwatch.com) • 'Bitcoin’s "P/E ratio" looks at the digital currency’s network value -- the number of outstanding bitcoins multiplied by price; this figure is currently $44.69 billion -- against its daily transaction volume.'
• 2017-06-10: Four Reasons Bitcoin is Not A Bubble: Analyst (cointelegraph.com) • 'Decentralization, Supply, Security, Fraud-proof'

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.')

• 2017-06-17: There Will Be No Bubble for Bitcoin and Ethereum, Here’s Why. (cointelegraph.com) • 'Such a thing is impossible due to the market-influencing capabilities of Bitcoin and Ethereum.'
• 2017-06-22: The Bitcoin Bubble Will Turn Into Mania Before It Bursts (forbes.com)
• 2017-06-28: Ignore the Naysayers, there’s no Bubble in Bitcoin (newsbtc.com)

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

• 2017-06-23: It's a gold-rush mentality in bitcoins, and many are at risk of losing big (indiatimes.com)
• 2017-06-27: Bitcoin Development Similar to 1800s Gold Rush: Expert (cointelegraph.com)

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

• 2017-06-02: Bitcoin start-up Coinbase aims for $1 billion valuation (cnbc.com)
• 2017-06-23: Bitcoin speculators are the new day traders (cnbc.com)

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

• 2017-06-19: Move Over, Bitcoin. Ether Is the Digital Currency of the Moment (nytimes.com) • Nathaniel Popper; chart comparing market caps
• 2017-06-23: itcoin: Why The 'Flippening' Failed - Winklevoss Bitcoin Trust ETF (Pending : COIN) (seekingalpha.com) • 'Many feel that as soon as Bitcoin is dethroned ... dubbed "The Flippening"'

The word 'flippening' was new to me.

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.

• 2017-06-02: Bitcoin Price Recovers to $2,400 as Chinese Exchanges Resume Withdrawals

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

• 2017-06-05: Bitcoin Price Resilient to Economic Uncertainty, Hits $2,600 as Markets Plunge
• 2017-06-06: Bitcoin Price Hits New All-Time High at $2,933, Closing on $3,000

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

• 2017-06-08: Bitcoin Price Can Reach $1 Mln: CNBC's Jim Cramer
• 2017-06-09: Bitcoin Price Will Hit $250,000 by 2020 If Seven-Year Trend Continues

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.

• 2017-06-12: Bitcoin Price Made History Again by Topping $3,000

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.

• 2017-06-24: Bitcoin Price Stabilizes at $2,700, Another Surge Imminent?
• 2017-06-24: Cryptocurrency Bubble Will Burst: Aberdeen Asset Management

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?

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:-

• 2017-05-15: Hardly Anyone Paying the Hackers? Because Using Bitcoin Is Hard (bloomberg.com)

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.

• 2017-05-16: Massive cryptocurrency botnet used leaked NSA exploits weeks before Wanna Decryptor (arstechnica.co.uk; also 'WannaCry') • 'On Friday, ransomware called Wanna Decryptor or WannaCry used leaked hacking tools stolen from the National Security Agency to attack an estimated 200,000 computers in 150 countries. On Monday, researchers said the same weapons-grade attack kit was used in a much earlier and possibly larger-scale hack that made infected computers part of a botnet that mined cryptocurrency.'
• 2017-05-16: From Kill Switch To Bitcoin, 'WannaCry' Showing Signs Of Amateur Flaws

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.

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

• 2017-05-01: Bitcoin Price Can Reach $2,000 This Year, Still Has Advantage: Expert, and
• 2017-05-02: Bitcoin Price New All-Time High at $1,442, Bitfury Executive Predicts $5,000

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.

• 2017-05-13: Bitcoin Price Drops 12 Percent Overnight, Quickly Recovers: Why It Happened
• 2017-05-20: Bitcoin Price Breached $2,000, Pundits Coin-Flip What Comes Next

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.

• 2017-05-26: Bitcoin Demand Explodes in India, Overwhelmed Exchanges Put Limits on Purchases
• 2017-05-27: Bitcoin Bubble Was Imminent, Bitcoin Price Drop Deepens, But Recovery Nears
• 2017-05-31: Breaking: Chinese Exchanges Resume Withdrawals, Bitcoin Likely to Surge

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?

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...

• 2017-04-03: Japan Finally Recognizes Bitcoin After Long Battle (investopedia.com)
• 2017-04-06: By This Summer, Bitcoin Will Be Accepted at More Than 260,000 Stores in Japan (futurism.com)

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

• 2017-04-05: ‘Bitcoin Should be Declared Illegal’ Demands Indian Politician (cryptocoinsnews.com) • 'Kirit Somaiya, a member of the Indian Parliament who belongs to the BJP, India’s conservative ruling party at the center, questioned if bitcoin is a "pyramid ponzi scheme"'
• 2017-04-08: Bitcoin Startups Fear No Ban in India, Say Technology Will Make Inroads (entrepreneur.com)

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:-

• 2017-04-11: Mirai botnet variant turns IoT devices into bitcoin mining slaves (theinquirer.net)
• 2017-04-15: Bitcoin Wallets Under Siege From 'Large Collider' Attack (fortune.com)

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:-

• 2017-04-18: Can Bitcoin Be the Foundation of a Fairer Financial System? ([MIT] technologyreview.com)

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

• 2017-04-22: The Need for Bitcoin Evangelists and How to Be One (themerkle.com)

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

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:-

• 2017-04-21: Bitcoin Price Heads To Pre-ETF Highs, Exceeding $1,250 • 'Following a month of subdued value after the Winklevoss ETF rejection in March, a steady resurgence has been underway.'
• 2017-04-26: Bitcoin Price Breaks All-Time High, Hits $1,300: Potential Factors • 'Most analysts seem to believe that the recent surge in bitcoin price was caused by the SEC’s decision to re-examine the bitcoin ETF proposal of the Winklevoss twins.' [...] 'It is likely that the arbitrage in the US market caused by Bitfinex and other exchanges’ inability to process withdrawals and deposits in fiat money is causing bitcoin price to increase at a rapid rate.'
• 2017-04-29: Bitcoin Price Sets New All-Time High at $1,377: Main Factors • Ditto.

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:-

• 2017-04-17: Bitcoin Price at $500,000 by 2030: African Projection • 'The advent of new services that use the digital currency for the purpose of sending money from one point to another has started eating into the roughly $4 bln per year cost that banks and other institutions make from international transfers to Africa.'
• 2017-04-27: Bitcoin Price Over $10,000 by 2021 If It Manages to Hold Market Share: Voorhees Prediction • 'The entirety of the token market, which as an asset class has surpassed $30 bln, would be worth more than $300 bln in the next four years.'

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