13 April 2019

Bitcoin in the News : 2019-03 More++

Once again, the main news around bitcoin in March was its price. At the start of the month we saw stories like:-

Remembering that the story was for the month of February, the full title was 'Bitcoin's First Monthly Gain Since July May Not Mean Too Much'. The month of March ended with reports like:-

Similar stories started appearing mid-month in other publications, documenting the struggle for the price to stay above the symbolic $4000 level. Looking at the chart from the previous post on this blog, Bitcoin in the News : 2019-03 Price, we know that the struggle was ultimately successful.

If the stories around bitcoin were only about price, the subject in itself would not be especially interesting. We might as well be discussing the price of gold or house prices in Seattle (to pick a random city). Since there is much more to bitcoin than its price, let's look at some other stories. After price, the most frequent bitcoin story in March concerned Facebook. What was that about?

  • 2019-02-28: Facebook and Telegram Are Hoping to Succeed Where Bitcoin Failed (nytimes.com; Nathaniel Popper and Mike Isaac) • 'Some of the world’s biggest internet messaging companies are hoping to succeed where cryptocurrency start-ups have failed by introducing mainstream consumers to the alternative world of digital coins. The internet outfits, including Facebook, Telegram and Signal, are planning to roll out new cryptocurrencies over the next year that are meant to allow users to send money to contacts on their messaging systems, like a Venmo or PayPal that can move across international borders. The most anticipated but secretive project is underway at Facebook.'

  • 2019-03-07: Blow To Bitcoin As Mark Zuckerberg Warns Facebook Payments Are Coming (forbes.com; Billy Bambrough) • 'Bitcoin, which has recently attracted the attention of some of the world's biggest technology entrepreneurs, is likely to soon get a major competitor: Mark Zuckerberg's social networking giant Facebook. Facebook, which was last week revealed to be working on its own cryptocurrency to rival bitcoin for the Facebook-owned WhatsApp messaging app, is trying to figure out how it can reposition itself in what Facebook founder and chief executive Mark Zuckerberg called a "privacy-focused" future that will likely weigh on his company's bottom line.'

Great! That's just what Facebook users need: having the non-"privacy-focused" company tracking our spending habits. The bitcoin mantra 'anonymous' might be exaggerated, but Facebook is the opposite of anonymous.

I once wrote a post about Bitcoin Futures (December 2017). Note the date; it coincided with the peak of the bitcoin boom.

If the introduction of bitcoin futures signalled a market top, does the withdrawal of those futures signal a bottom? The contrarian in me says, 'Yes, of course!' Moving on -- and skipping the ever-present reports about bitcoin horrors, mainly involving criminal activity -- one more story caught my attention:-

The massive use of electricity to drive bitcoin mining at the expense of more productive uses of the same energy might be considered another horror. Using waste to mine the same bitcoin is a genuinely good idea that should have other applications. Does anyone have an idea how to use the mountains of plastic waste that threaten the planet?

By at No comments:
Labels:

06 April 2019

Bitcoin in the News : 2019-03 Price

In last month's post, Bitcoin in the News : 2019-02 Price, I summarized the month's price chart with:-
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.

Although there were elements of that pattern in March, the chart was more like a steady ascent, punctuated by dips that corrected within a few days.


Bitcoin (BTC) Price Index

Since there were no dramatic price jumps or drops during the month, let's look at the volumes. I count three periods of heavy volume (each bar covers six hours) and I'll include a fourth near the end of the month to give me one heavy period per week. They occurred at the following (approximate) times:-

2019-03-05 12:00 +
2019-03-16 00:00 +
2019-03-21 12:00 -
2019-03-29 06:00 +

As usual, Cointelegraph's Analysis category provided no insight. The site's Price Analysis tag had nothing special to say, concentrating more on moving averages and resistance / support levels. Several 'Price Analysis' reports mentioned the Bakkt 'institutional trading platform'. Although the name wasn't completely new to me, I haven't mentioned it on this blog. The Bakkt.com home page says,

Bakkt is building an open, seamless global network to enable you to buy, sell, store and spend digital assets simply, safely and efficiently. Backed by Intercontinental Exchange’s proven financial market infrastructure and technology, Bakkt’s secure global platform will connect investors, merchants and consumers, making it easier, faster and more cost-effective to access, trade and use digital assets.

The main entry on Wikipedia is under Intercontinental Exchange ('! : reads like a press release or a news article'), where we learn,

Intercontinental Exchange (ICE) is an American company that owns exchanges for financial and commodity markets, and operates 12 regulated exchanges and marketplaces. This includes ICE futures exchanges in the United States, Canada and Europe...

The section titled 'Bakkt' says,

In August 2018 Intercontinental Exchange announced that it planned to form a new company, Bakkt, which is intended to leverage Microsoft cloud solutions to create an open and regulated, global ecosystem for digital assets. The new company will work with a marquee group of organizations [...] to create an integrated platform that enables consumers and institutions to buy, sell, store and spend digital assets on a seamless global network.

The Cointelegraph 'Price Analysis' reports implied that this will be a significant development in the evolution of crypto-currencies. I expect it will be heavily promoted when it's finally available.

By at No comments:
Labels: ,

09 March 2019

Bitcoin in the News : 2019-02 More++

One month does not signal a trend. In last month's 'More++' post, Bitcoin in the News : 2019-01 More++, I wrote,
For the first month in a long time the number of stories about bitcoin price seemed less than the number of other stories. I would 'bet' that's a positive sign. Markets tend to rise gradually when they are out of the spotlight.

This month the price stories were back on top, perhaps because it was an overall positive month for bitcoin. There was a one week period during the month that I described in the 2019-02 Price post as 'jump-flat-jump-drop'. This occurred during the week 2019-02-17 through 2019-02-24. I looked at one reliable source for stories covering that period and found four:-

  • 2019-02-19: Bitcoin Price Crosses Key Long-Term Hurdle For First Time in 4 Months (coindesk.com) • 'Bitcoin has passed through the 100-day moving average for the first time in 127 days. ... However, price action has stalled Tuesday, as indecision brings the possibility of a pullback.'
  • 2019-02-20: Bitcoin Price Looks North As Trading Volumes Hit 9-Month Highs (ditto) • 'Bitcoin witnessed an inverse head-and-shoulders breakout on Monday and rose to $4,000 yesterday, confirming a bullish reversal on the daily chart. The trend change is backed by a jump in trading volumes to levels last seen in May 2018.'
  • 2019-02-25: Bitcoin Shorts Dropped to 11-Month Lows During Sunday's Sell-Off (ditto) • 'The development comes just a week after the total value tied up in all short trades on the exchange reached a six-month low, one of a number of signs that would suggest investors are losing confidence in the idea that bitcoin’s price will further decrease.'
  • 2019-02-27: Bitcoin Price On Track to End Six-Month Losing Streak (ditto) • 'Bitcoin appears on track to snap its six-month losing streak and close February in the green for the fifth consecutive year. BTC may remain better bid in March, as the weekly chart is signaling bearish exhaustion.'

Those analyses are all technical and say little about the long term trend. On another of my favorite sources I found an article that gave some fundamental analysis.

  • 2019-02-23: Bitcoin Is Rocketing Higher -- Here's Why (forbes.com) • 'Bitcoin has again shot past $4,000 per bitcoin, giving fresh hope to long-suffering investors who have been stuck in a bear market for over a year -- the second weekend in a row the bitcoin price has rallied.'

The analytical points were summarized in a single sentence.

Bitcoin's sudden price leap comes after a week of positive bitcoin news, with the confirmation of Samsung's latest crypto-wallet supporting phone, tech billionaires talking bitcoin up, and approaching network upgrades [Ethereum].

Billionaires can say what they want to serve whatever purpose and network upgrades happen frequently, but that first point might have long-term significance. Here is a more detailed story:-

Today the only purpose bitcoin serves is as an unconventional vehicle for speculating. If it could serve a real need, like paying for real stuff, it might acquire real importance.

By at No comments:
Labels:

02 March 2019

Bitcoin in the News : 2019-02 Price

In last month's chart, Bitcoin in the News : 2019-01 Price, the pattern for the month was flat-jump-flat-drop-flat. This month's chart shows flat-jump-flat-jump-flat-jump-drop-flat.


Bitcoin (BTC) Price Index

The approximate times of the jumps and drop and the corresponding price movements were something like this:-

2019-02-08 06:00 3400 > 3600 +
2019-02-17 18:00 3600 > 3900 +
2019-02-23 06:00 4000 > 4200 +
2019-02-24 06:00 4200 > 3800 -

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. What is happening to provoke the change in the level of equilibrium?

Cointelegraph's Analysis category offered nothing on the subject. The site's Price Analysis tag had one summary that looked like an explanation:-

The italics are mine:-

A bottom formation after a long bear market is not a linear process. At various intervals, we are likely to witness spurts of buying and selling as the bulls and the bears attempt to establish their supremacy. After a smart recovery from the lows, when it looked like the bears had surrendered, came the plunge on Feb. 24, that wiped off about $15 billion from the total market capitalization within a few minutes.

Such selling is not always based on fundamental news or events. Technical factors like profit booking near a stiff resistance and initiation of short positions by aggressive bears can bring about such a sharp fall.

That analysis describes coordinated actions. How are the actors ('the bulls and the bears') communicating with their like-minded counterparts?

By at No comments:
Labels:

09 February 2019

Bitcoin in the News : 2019-01 More++

In the first post this month, Bitcoin in the News : 2019-01 Price, I noted,
Except for that plateau between 5 January and 9 January, the trend for the month was a gentle but steady downward fall.

Looking at that 'plateau' a little closer, I see a steady price around $3800, followed by a sharp jump to $4000 which holds for a few days, followed by a sharp drop to $3600 which is the real start point for the 'steady downward fall'. I found two stories from the same source that bracket the plateau. Here's the first:-

  • 2019-01-07: The Bitcoin Price Has Leaped Sharply Higher -- Here's Why (forbes.com) • 'Just ahead of the bitcoin market spike last night a bitcoin whale moved some 2,500 bitcoin (worth just under $10 million) on the Luxembourg-based Bitstamp exchange, according to the Twitter price tracking bot Whale Alert. The move pushed the daily bitcoin volume up to over $5 billion, a 2019 high.'

It's not clear how a 'move' (is that a buy or a sell?) of $10 million results in a total of $5 billion, but I'm here to learn. The other side of the plateau was explained in a second story:-

So someone published 'market research' about 'a decline in investor sentiment' and everyone rushed for the exit? Later the same story mentioned,

Robust Twitter Activity: Before the widespread declines in digital currency markets, the top digital currencies experienced a greater number of tweets. [...]

Technical Analysis: While analyzing social media activity can help grant insight into the sentiment of traders, it is not the only tool that can be helpful in this respect. Technical analysis can also help shed some light on sentiment by looking at key market activity.

This confirms my current understanding of bitcoin price action. Since the cryptocurrency has no tangible underlying value, its price movement is driven entirely by 'investor' (a better word might be 'speculator') psychology.

[As an aside, the previous story looked like this on my screen...

...The real story occupies less than 25% of the screen space. The large ad in the top half starts to repeat in the lower right (it's in Dutch because I live in the Flemish region of Belgium) and the blue rectangle is a video. When I scroll down, the video switches to the lower left and follows my scrolling while the ad 'Fysiek Goud Kopen' ('Buy Real Gold') slides down the right side of the screen. Quel horreur!]

That little detour gives me an excuse to introduce the next theme: the number of stories that mentioned gold. The number of January bitcoin stories flagged by 'Google News' alerts was more than double the number in December, and more than any previous month. I saw from this little analysis that the bitcoin/gold connection has always been a recurring theme. Here are three stories that made my short list for the month:-

That third story references the first, making it clear where the theme started. The word 'bet' at the end of the next quote is appropriate:-

At the forefront of the bitcoin vs. gold movement are Cameron and Tyler Winklevoss, the founders of New York-based crypto exchange and custodian of Gemini Trust Co. The twins argue that bitcoin’s fungibility and divisibility -- thanks to its fixed and known supply -- make it a better bet than gold.

One more theme for the month is worth a mention. Three months ago, in Bitcoin in the News : 2018-10 More++ (November 2018), I quoted Reuters: 'Bitcoin ... celebrates its tenth birthday on Wednesday [31 October]'. Now I learn:-

There were other January stories I could flag, but I'll stop here. In fact, for the first month in a long time the number of stories about bitcoin price seemed less than the number of other stories. I would 'bet' that's a positive sign. Markets tend to rise gradually when they are out of the spotlight.

By at No comments:
Labels: ,

02 February 2019

Bitcoin in the News : 2019-01 Price

Last month's post, Bitcoin in the News : 2018-12 Price, displayed the last monthly price chart for 2018. This post shows the first chart for 2019.


Bitcoin (BTC) Price Index (cointelegraph.com)

If last month's chart looked like a roller-coaster, this month's looks more like a carousel. Except for that plateau between 5 January and 9 January, the trend for the month was a gentle but steady downward fall.

As usual, Cointelegraph's Analysis category carried no analysis of the curious pattern. The stories before, during, and after the bump could have appeared on any other day of the month:-

The site's Price Analysis tag likewise offered little explanation:-

In other words, 'a strong uptrend will be positive, a strong downtrend will be negative'. So what does a gentle downtrend say?

By at No comments:
Labels:

12 January 2019

Bitcoin in the News : 2018-12 More++

Just like every month over the past year, a monthly 'More++' post follows a monthly 'Price' post -- in this case, the preceding post was Bitcoin in the News : 2018-12 Price. And just like last year's January post, Bitcoin in the News : 2017-12 More++, I'll summarize all of last year's monthly price charts in a single chart.

I count six different months where the price retreated during the entire month. Good thing I have this yearly price overview to fall back on, because almost all of the bitcoin stories flagged during the month of December were about price. Take the following story, for example, which appeared at the beginning of the month:-

  • 2018-12-01: Bitcoin, and Cryptocurrency in General, Had a Terrible November (gizmodo.com) • 'Bitcoin, as well as smaller cryptocurrencies like XRP [Ripple] and ether, had a terrible November that saw $70 billion in value wiped off the market, CNBC reported on Friday. Bitcoin closed at $3,878, well below $6,000, which proponents had long insisted was its "floor" but in retrospect appears to have been a magic number.'

Also in retrospect, I can say that all bitcoin future price projections are based on 'magic numbers'. In 2017, they were fantastic price targets sometimes getting into six figures USD. In 2018, they were floors, always new, always lower. The only real floor is $0.00, about which there were more than a few articles in December. Opinions varied:-

Another recurring theme in December was to mark an ignominious anniversary. Here's an example from one of my favorite writers at Yahoo Finance.

In fact, the peak price was somewhat short of $20,000, but that's little consolation to anyone who actually bought at that price. Finally, let's not forget that this sort of thing has happened before.

Have we seen capitulation in the bitcoin market? I found two definitions on Investopedia.com:-

If we have seen capitulation, then we have seen the bottom. We'll find out in a year or so if that was in the case. As for me, I'll continue to do exactly what I always do : watch and learn. I'll learn nothing from capitulation.

By at No comments:
Labels: ,
Subscribe to: Posts (Atom)