Market corrections are a natural part of their movements so we should not be surprised when they occur. Analysts and traders have been predicting this all week and it has finally been set in motion as Bitcoin and crypto markets tumble today.$30 Billion Dumped as Bitcoin DropsTotal market capitalization has declined by over $30 billion in 24 hours as mass profit taking occurs from assets that have been on fire all week. From a 2019 high of $264 billion yesterday market cap has dumped to $230 billion today as cryptocurrencies shed double digits. The slid has been expected however and markets are still up over 33 percent since the beginning of the month.The bitcoin price drops to $7,000 as crypto falls (source: coinmarketcap.com)Bitcoin has doubled in price since the beginning of April so a pullback is healthy and actually needed. Over the past few hours BTC dumped 10 percent, or a thousand dollars, back to just below $7,200. The sharp decline was triggered during the morning’s Asian trading session following a day with Bitcoin trading just below $8,000.Crypto traders and analysts are now turning to the charts to look for support levels which will represent new buying zones. Trader Josh Rager observed the fall in Bitcoin’s dominance as altcoins surged yesterday;“$BTC Dominance move down to 52% or below would continue to be extremely bullish for altcoins in the coming weeks,”At the time of writing BTC dominance was at 56.3 percent, it had peaked out at almost 60 percent earlier this week, which is a seventeen month high. Rager added that the CME futures gap had now been filled and Bitcoin had hit its support level at the bottom of it;$BTC – CME Futures Gap officially filledLooks like that was the dip to buyThis is very bullish pic.twitter.com/hYCRMKUj2i— Josh Rager 📈 (@Josh_Rager) May 17, 2019Even bigger support levels for Bitcoin lie around $6,400 so this would be seen as a new entry point for many traders. Civic CEO Vinny Lingham noted;“We’re in a Bitcoin recovery phase right now, since the $3100 bottom. Dips should be seen as good buying opportunities, unless we drop below the $6200 support level. Watch out for network congestion and fees hurting this run in the mid term if it moves up too quickly to test $20k.”We’re in a Bitcoin recovery phase right now, since the $3100 bottom. Dips should be seen as good buying opportunities, unless we drop below the $6200 support level. Watch out for network congestion and fees hurting this run in the mid term if it moves up too quickly to test $20k.— Vinny Lingham (@VinnyLingham) May 17, 2019Most are of the opinion that this dump is bullish and will result in further gains if the uptrend remains intact. BlockTower Capital CIO Ari Paul noted “I’m not sure this dip is bullish, but one interesting datapoint: I was in a room with 30 crypto people and no one batted an eye. Strong underlying confidence.”As usual the altcoins are getting hit harder. At the time of writing most of them were dumping double digits with XRP, Stellar and Cardano dumping 14 percent. Bitcoin Cash, Litecoin and Binance Coin had all lost over 10 percent on the day as the correction continues on red Friday.Image from Shutterstock
Archives for May 17, 2019
By CCN: Dominant Indian tech lobby, NASSCOM, is pushing the Reserve Bank of India to be inclusive with cryptocurrencies like bitcoin in its regulatory sandbox to shape the future of the country’s fintech industry.
NASSCOM, which represents the $154 billion Indian IT sector and is a powerful voice in the industry, is calling for the RBI to include crypto in its so-called ‘Draft Enabling Framework for Regulatory Sandbox’ after they shunned its inclusion in the official document on the framework, and excluded cryptocurrency, crypto trading and ICOs from testing.
A NASSCOM spokesperson said including crypto in the framework would help the bank better understand the risks and opportunities presented by cryptocurrencies:
Since cryptocoins and tokens are an important component of the blockchain technology, the draft regulations appear to exclude testing of smart contracts and other approved blockchain technology under the sandbox.
The decision to keep cryptocurrencies, trading of cryptocurrencies and initial coin offerings out of the purview of the regulatory sandbox is still not clear.
The call is backed by the Payments Council of India (PCI), which is also seeking a more open regulatory structure.
Naveen Surya, chairman emeritus of PCI, said:
The boundaries can’t be defined right away. The discussion has been on how an open framework can be created instead of a subset of existing laws, because then we wouldn’t be achieving the innovation objective. Ideally, they shouldn’t have such large exclusions.”
Clearer regulation could help millions
Nischal Shetty, founder and CEO of Indian crypto exchange WazirX, says including cryptocurrencies like bitcoin in the regulatory sandbox would help create wealth and millions of jobs for youths in India, and called for people to stand up and demand the government recognise the nascent industry.
@SecretaryDEA Please help our voices be heard. Positive crypto regulations in India will help create wealth and jobs for millions of Indians. Millions of youth in India want to see positive crypto moves by the government.
Jai Hind 🇮🇳
— Nischal (WazirX) ⚡️ (@NischalShetty) May 16, 2019
Top talent migrating away from India
The exclusion of crypto from the proposed framework and the government’s shifting position on the sector has left a lot of crypto business owners wondering what’s next for the industry on the sub-continent.
Indian Youth is looking up to you for positive #Crypto regulations.
Help India grow and innovate in this new technology!
Please create an atmosphere of inclusion for Cryptos.
— Shantanu Sharma (@Shaanush) May 16, 2019
Many have decided to close down and move to more favourable regulatory environments in Asia like Japan or Singapore.
Ramani Ramachandran, CEO of ZPX, a Singapore-based startup that is part of the framework of Bahrain’s central bank, said:
With Bahrain, the approach is that startups enter the sandbox and if their developments pan out, they are given licences to start operating,”
What’s wrong with crypto?
The RBI’s unwillingness to even consider including crypto in a draft framework suggests there’s a long way to go before India embraces cryptocurrency. The central bank specifically forbade the country’s banks from offering services to crypto startups, effectively a death kneel to crypto exchanges across teh country.
The problem is this approach is driving India’s homegrown talent to countries that are more willing to embrace the opportunities that crypto brings.
The net result? India loses as innovative founders and start-ups decide to build their businesses elsewhere.
Dovey Wan is a partner at Primitive Ventures, a crypto asset investment fund.
Contrary to what many think, China does not oppose blockchain technology.
Rather, it takes issue with bitcoin and other privately issued cryptocurrencies, which it fears may facilitate financial fraud and capital flight. The People’s Bank of China (PBOC) has, in fact, had an initiative for issuing a blockchain-based digital renminbi (RMB) since 2014. The project has already generated 71 patents and has initiated a trial operation for an interbank digital check and billing platform.
If successful, this digital RMB project could expand the central bank’s influence over both the domestic and international economy. It has broad implications for the geopolitics of money and for the future of private cryptocurrencies such as bitcoin. To understand the PBOC’s motives, we must first distinguish between the digitalization of fiat currency and digital fiat currency. They are not the same thing. Each has a very different impact on the money supply and on the power balance between central banks and commercial banks.
The digitization of currency, which stems from the advent of electronic payment/clearance and mature interbank IT systems, allows commercial banks to more efficiently and independently generate the credit flows that expand broad
money supply, or M2. By contrast, digital fiat currency, enabled by blockchain technology, affects the base currency measure known as M0.
Traditionally, central banks directly control base money creation/destruction but have only indirect power over the broader, credit flow-driven monetary supply. Now, with digital fiat currency, they have the potential to bypass commercial banks and regain control of currency creation/supply end to end, thereby structurally centralizing their power in policymaking.
The PBOC’s interest in this solution comes as highly advanced digital payment systems like Alipay and WeChat have created a cashless and cardless economy. This is a form of currency digitalization, built upon a network of commercial bank accounts, operating at the M2 level of money supply.
By contrast, a digital RMB would be integrated into M0, thus restoring control and influence to the PBOC. As the Vice President of PBOC Fan Yifei put it in a public interview: “With the help of technology innovation, we can gradually transit into issuance and circulation of digital RMB and impose effective supervision of in the private sector.”
High M2 supply and massive shadow banking
From 2007 to 2017, China’s M2 supply grew from 40 trillion RMB to 170 trillion RMB ($25.5 trillion), with an average annual growth rate of 15%, far outpacing the 10 percent nominal GDP growth rate over the same period. This massive expansion is largely due to the excessive issuance of commercial bank loans, primarily for real estate development, local governments’ infrastructure projects, and state-owned enterprises.
It has led to a highly leveraged banking system and left a huge debt risk hanging over the Chinese economy.
What’s more, the measurement of M2 underestimates the real currency growth rate in China due to shadow banking. High-yield “wealth management products” and structural deposits offered by banks, as well as internet financing such as P2P lending, make up a separate financial industry that’s worth 70 trillion RMB.
Wealth management products alone have grown from a 0.5 trillion RMB industry in 2007 to a whopping 30 trillion in 2017. These are not counted as M2 and are often hard to track due to their being hidden from bank balance sheets, making it even harder for the PBOC to manage the Chinese economic cycle. Current attempts to address the problem largely consist of more stringent reporting and regulation, but this merely chases behind the problem rather than stamping it out.
To get ahead of it requires a new financial system altogether. That’s what’s intended with the Digital RMB, a project that’s conceived of as a means of reasserting monetary control in the interests of financial stability.
While the PBOC is still considering different possibilities for network design, it seems likely to be a permissioned network in which nodes are controlled by the PBOC and major Chinese banks. This suggests transactions will be visible to the banks and government, but not to the public.
According to Yao Qian, the head of PBOC Digital Currency Research Center, the designated PBOC digital currency system has a few key elements:
- A PBOC-managed private cloud as the IT infrastructure
- A database on the private cloud to allow the PBOC to exercise full control over monetary issuance and ledger management
- A reserve database accessible by commercial banks, which can either reside on the PBOC private cloud or on banks’ own private cloud
- A digital RMB wallet client, published and maintained by the PBOC that’s used by all entities and individual
- A verification center where the PBOC can manage institutional and user identity information
- A registration center which records the registration of currency ownership and keeps the ledger of digital currency generation, circulation, and inventory management
- A big data analysis center used for anti-money laundering, payment behavior analysis, and analysis of regulatory signals.
Some might wonder why blockchain or distributed ledger technology (DLT) is needed at all if nodes are not highly decentralized. The answer is that a blockchain model offers a better coordination paradigm compared to traditional currency supply management, which is heavily dependent on bookkeeping. Blockchain’s tamper-proof nature and private-key cryptography prevent false transactions and counterfeiting, while also making it much easier for the PBOC to manage the circulation flow.
Domestic impacts and beyond
The issuance of a digital RMB will not only make cash and coinage obsolete (which is already happening in China), but also make commercial banks and M2 easier to control. It means the PBOC can more effectively control and regulate an
overextended debt market. Thanks to blockchain’s traceability and programmability, it will become much more difficult to hide banking products and services from balance sheets.
This also allows for easier execution and more accurate assessment of monetary policy, and makes the measurement of currency supply, circulation speed, currency multipliers, and distribution much more accurate. PBOC can write rules at the code level regarding where digital RMB can and cannot flow to. If it wants to cool down the housing market, for example, it can simply set a program preventing digital RMB from entering the real estate sector.
As for policing individuals, a person’s spending history and assets balance are immediately evident on the blockchain, making it much easier to accurately assess creditworthiness, detect money laundering, and prevent tax evasion and capital flight. This is, of course, is likely to strengthen privacy advocates’ already mounting criticisms of China’s social credit score model, It’s not clear that such criticism is having any influence over the government’s thinking on such matters, however.
A digital RMB could even strengthen China’s influence overseas. If the One Belt One Road initiative succeeds, a digital, borderless, stable currency could facilitate international trade among its 60-plus member countries. This, coupled with the fact that China is the biggest creditor to Venezuela and it holds over 14 percent of African countries’ sovereign debt, would position it to offer a digital RMB as the next reserve currency of emerging-market economies.
This would require those countries to confer to China some degree of influence over their monetary conditions. Would they prefer that to their current dependency on the U.S. Federal Reserve’s dollar?
It’s an open question. But it will be highly synergetic with China’s rigorous effort of de-dollarization: reducing US dollar asset in both its foreign exchange reserve, largely increasing its gold reserve and selling off US Treasury debt. Either way, these moves could increase tensions between US and China and might even force the U.S. to pursue a similar digital model for the dollar.
We still have a little time before such questions become pressing. Even so, change is coming. According to people working on this initiative, adoption will come with a great deal of observation and adjustment over the course of 10 years or more, with experiments in various use cases starting in “special economic zones” like the city of Shenzhen. Eventually, the plan is to use incentives such as increasing the transaction cost of cash to push people towards using digital currency.
Cash is expected to disappear almost entirely.
The next question is: what does this mean for private, decentralized cryptocurrencies such as bitcoin?
It may seem incongruous that blockchain technology, initially introduced under the ethos of censorship-resistance, is now being used by central banks to further centralize their financial power. But from the perspective of the Chinese government, it’s not hard to see why. Over the long term, a digital RMB has the potential to make global trade more efficient and money laundering more difficult.
Yet, given worldwide concern over surveillance by centralized institutions – both public and private – and the perennial risk that monetary policy mismanagement could foster a currency collapse akin to the Venezuelan bolivar, there’s no reason to believe such programs will kill private cryptocurrencies. On the contrary, it could boost demand for them. Anonymous, non-sovereign currencies like bitcoin or privacy coins become increasingly important in an environment where government money is closely surveilled and controlled.
What’s more, a programmable fiat digital currency could provide a seamless fiat-to-crypto on-ramp. Ironically, projects such as China’s, in which governments aim to concentrate control over money, could foster greater competition from private systems of money such as bitcoin.
Yuan and dollar image via Shutterstock
By CCN: On May 17, within minutes, the bitcoin price plummeted from around $7,800 to $6,400 in a flash crash, recording an unexpected 18 percent drop.
The sudden decline in the bitcoin price led the valuation of the crypto market to plunge from $257 billion to $225 billion, by more than $32 billion in less than 24 hours.
What triggered the sudden bitcoin price drop?
According to researchers and investors including Su Zhu, the CEO at Three Arrows Capital, and Eric Conner, a product developer at Gnosis, the bitcoin price plummeted as soon as a several thousand bitcoin sell order was placed on Bitstamp.
BitMEX wicked down to $6,400. 2,000 BTC+ sell wall on Bitstamp absorbed. Looks like a mark price exploit by placing a large sell on stamp (1 of 2 oracles for mark on BitMEX) to trigger liquidations on BitMEX. You would’ve been fine on lvg long on Bitfinex which didn’t go below $7,000.
Speaking to CCN in an exclusive interview, Zhu explained that investors may have taken advantage of the Bitstamp API, which then led contracts on BitMEX to become liquidated as the bitcoin price plunged.
“Bitstamp API issues I heard. Some bug where people getting filled on prices above their buys. This is used on leveraged products as mark price, hence triggering liquidations on BitMEX,” Zhu told CCN.
Conner suggested that the sell order on Bitstamp that led to BitMEX liquidations may have been larger than 2,000, likely around 5,000 BTC, worth more than $35 million.
“For reference someone put a 5,000 BTC sell on Bitstamp, which BitMEX uses for 50% of its feed and it appears to have tripped some algorithms which made a cascade on BitMEX,” Conner said.
Following the 18 percent drop in the bitcoin price, traders have become more cautious about the short-term trend of the market.
One trader said that he expected the market to absorb sell orders considering the positive sentiment around the crypto market in recent weeks. But, the market did not show a large buy back the trader anticipated.
“Hate to be that guy, but I’m not seeing the buy-back I was really hoping to see on BTC just yet. Objectively, this looks like a bear flag, and if I was looking for a long entry, I’d want to wait until we test $200 billion,” the trader said.
Will market recover?
Zhu noted that given the recent price action of bitcoin and other crypto assets is a result of a market structure related move, he expects the market to recover relatively quickly in the near-term.
“This is a purely market structure related move, I expect it to be bought up extremely quickly,” he said.
Josh Rager, a cryptocurrency trader, also emphasized that the gap between the CME bitcoin futures market closing and the surge in the price of bitcoin last week has been filled, indicating a positive trend for the market.
$BTC – CME Futures Gap officially filled
Looks like that was the dip to buy
This is very bullish pic.twitter.com/hYCRMKUj2i
— Josh Rager 📈 (@Josh_Rager) May 17, 2019
It remains unclear whether the absorption of a multi-million dollar sell order on May 17 would act as a roadblock in the short to medium term trend of the crypto market.
In recent weeks, the real 10 volume of bitcoin, which estimates the legitimate daily spot volume of the dominant cryptocurrency, hovered at around $1.9 billion, up more than six-fold since March.
If the volume of the market sustains, there exists a strong possibility that the market stabilizes subsequent to the sell-off, as Zhu suggested.
In the long-term, the prospect of the crypto market still remains positive. At Consensus, TD Ameritrade executive vice president Steven Quirk said that more than 6,000 clients of the institution traded something in the crypto market.
Crypto markets in massive correction; XRP, Stellar, Cardano, Bitcoin Cash, BSV and Tron getting smashed. Market WrapA crypto correction has been on the cards for some time and it has finally arrived this morning. Bitcoin dumped almost a thousand bucks and total market capitalization shrunk by $32 billion in a matter of hours.After spending most of the day trading in the $8,000 range Bitcoin plunged to a low of $7,175 in less than an hour. The ten percent dump triggered a market wide selloff with altcoins getting hit harder as usual. At the time of writing BTC had recovered a little to $7,300 but further losses are expected. Analysts are eyeing the $6,400 level as support and a new buying zone.Ethereum slid back to $240 in a 7 percent slide which was not as severe as many of the others. Over the week ETH is still in a strong position having passed $200 for the first time since November last year. Such a rapid surge is always followed by a pullback which is what we are seeing today.The top ten is awash with red at the moment as all of the altcoins come crashing back down. Many are getting hit hard including XRP, Stellar and Cardano dumping 14 percent each. Also in bad shape are Bitcoin Cash, Litecoin, EOS and Binance Coin all dropping over 10 percent a piece.Losses are even more severe in the top twenty where Bitcoin SV has been smashed 18 percent. Tron is also in pain with a 16 percent dump while Monero, Dash, IOTA and NEO have all lost over 10 percent on the day. Only Tezos has survived as it actually adds a little today while all around it have collapsed.FOMO: Chainlink Alone in The GreenOnly one altcoin is bucking the trend today and making a gain. Chainlink has added 7 percent on the day to reach $0.884. The mainnet launch on Ethereum on May 30 appears to be the only thing driving momentum for LINK at the moment. The only other cryptos in the green right now are stablecoins as everyone is dumping their alts.There are too many double digit dumpers to mention but those getting hurt the most are IOST, Golem, Pundi X and Ontology.Total market capitalization 24 hours. Coinmarketcap.comA whopping $32 billion has been dumped out of crypto markets as they fell back to $225 billion a few hours ago. The epic 12 percent slide is one of the largest dumps of the year but it has not been entirely unexpected. At the time of writing markets had recovered back to $230 billion which is still 20 percent higher than this time last Friday.Market Wrap is a section that takes a daily look at the top cryptocurrencies during the current trading session and analyses the best-performing ones, looking for trends and possible fundamentals.
Bitcoin price formed a double top pattern near $8,330 and declined sharply against the US Dollar.The price broke the key supports near $8,000, $7,650 and $7,200 to test the $6,800 support area.This week’s followed bullish trend line was breached with support at $7,850 on the hourly chart of the BTC/USD pair (data feed from Kraken).The price tested a crucial support area near $6,700-6,800 and bounced back above $7,100.Bitcoin price started a major downside correction below $8,000 against the US Dollar. BTC formed a double top pattern, but it is now trading close to a few crucial supports near $6,800.Bitcoin Price AnalysisRecently, bitcoin price made another attempt to climb above the $8,330 and $8,350 resistances against the US Dollar. The BTC/USD pair failed to climb above $8,350 and formed a major double top pattern. As a result, there was a sharp decline below the $8,000 support area. Besides, there was a clear break below the $7,800 support area and the 100 hourly simple moving average.More importantly, this week’s followed bullish trend line was breached with support at $7,850 on the hourly chart of the BTC/USD pair. The pair declined more than 10% and broke the $7,450 and $7,000 support levels. It spiked towards the $6,650 support area and formed a swing low at $6,645. Recently, it recovered nicely above the $7,000 level and the 23.6% Fib retracement level of the latest drop from the $8,048 high to $6,645 low. The price is now trading above $7,200, but it is facing a strong resistance near $7,350 and $7,400.Moreover, the 50% Fib retracement level of the latest drop from the $8,048 high to $6,645 low is also acting as a barrier for the bulls. If there is a successful close above $7,400, the price could rebound towards the $7,700 level. Besides, it might test the 76.4% Fib retracement level of the latest drop from the $8,048 high to $6,645 low. Conversely, if the price fails to surpass the $7,400 resistance, it is likely to decline again. An initial support is near $7,000, below which there is a risk of a sharp decline towards the $6,800 or $6,650 support zone.Looking at the chart, bitcoin price clearly corrected lower significantly below $8,000 and $7,500. However, the $6,800 and $6,650 support levels are important buy zones. In the short term, the price could consolidate near $7,000 before it starts a fresh increase.Technical indicators:Hourly MACD – The MACD is gaining momentum in the bearish zone.Hourly RSI (Relative Strength Index) – The RSI for BTC/USD declined sharply below the 40 and 30 levels.Major Support Levels – $6,800 followed by $6,650.Major Resistance Levels – $7,400, $7,700 and $7,850.