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3 Reasons Behind Bitcoin and the Crypto Market’s Sudden Crash

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Bitcoin whales have been shorting the market.

Bitcoin and cryptocurrencies crashing

On Nov 21, crypto analyst Willy Woo indicated that “old hands have been selling into this rally since the start of November.” Old hands selling is a bad sign that may mean that a price drop may be coming soon.

Bitcoin whales stir movement on the market

On Nov 22, Crypto Quant CEO Ki Young Ju indicated that “When whales are active (over 90%) on Coinbase, the $BTC price will likely be going sideways or bearish.” Typically, whales can acquire Bitcoin at a much lower price. They simply cash out to guarantee enough profit when the market becomes overheated.

The 2017 Bitcoin surge followed by its crash may be related to Bitcoin whale manipulations.  According to University of Texas professor John Griffin and Ohio State University’s Amin Shams, the Bitcoin bull run in 2017 may be driven by Bitfinex. They said through an academic paper:

“This one large player or entity either exhibited clairvoyant market timing or exerted an extremely large price impact on Bitcoin that is not observed in aggregate flows from other smaller traders.”

Although there are more and more investors interested in Bitcoin (BTC) and other cryptos, the current price action of BTC seems to be primarily driven by institutional and big players. This year, Grayscale and its Bitcoin trust have been really eye-catching, as it has secured the largest Bitcoin amount seen by any institutional investor up to now. MicroStrategy and Square’s big Bitcoin buy-ins are also influential pulses that have driven Bitcoin’s price up as well.

Bitcoin economy fits billionaire investor George Soros’ quote perfectly. The philanthropist stated:

“Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend, and step off before it is discredited.”

Possible crypto regulation time bomb

There may be a series of crypto regulations upcoming in the US. Coinbase CEO Brian Armstrong has allegedly heard rumors that the Trump Administration may soon issue a huge and strict crypto wallet regulation on United States traders with privacy-invading data collection requirements.

On Oct 8, the U.S. Department of Justice published a “Cryptocurrency Enforcement Framework” that put cryptocurrency under strict regulations, similar to policies revolving around fiat money.

Google Trends indicate Bitcoin is booming

On Nov 25, CNBC’s Brian Kelly warned of a Bitcoin short-term correction that could see its price plummet to $12,000.

An explanation may be that altcoins rose much more than Bitcoin in price, which could serve to attract more funds into altcoin speculations. Whenever Bitcoin crashes, altcoins get pulled down as well.

Another reason is that searches for “buy bitcoin” on Google Trends have exploded to new highs, which means rising demand from retail investors. But this may not be a good sign. As Kelly said:

“Whenever you get that big of an address growth implied, that is a caution sign.”

Image source: Shutterstock Source: https://Blockchain.News/analysis/3-reasons-behind-bitcoin-and-crypto-market-sudden-crash

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Kraken Becomes Latest Exchange to Halt XRP Trading

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US residents see their options shrink even further as Kraken freezes trading of the beleaguered crypto.

Kraken announced on Jan. 15 that it would halt trading in XRP for US residents. The company made the move because of the Securities and Exchange Commission (SEC) filing against Ripple Labs.

Kraken sets parameters

The exchange specified that US residents would still be able to deposit, hold, and withdraw XRP after the freeze takes place. The action affects only US residents. “Clients residing in other countries are not affected.”

The announcement also includes a FAQ list. It covers topics such as how long the ban will last (they will adapt to any change in the SEC saga). The upcoming change to a deposit-hold-withdraw only regime may change as the situation warrants. Also, the company’s plans regarding the Spark token airdop remain unchanged.

The SEC filing

The SEC action mentioned in the announcement is the set of Dec. 23 charges laid against Ripple Labs and some of its executives. The SEC claims that the company sold $1.2 billion of unregistered securities in the form of XRP through its platform. Former CEO Christian Larsen and current CEO Brad Garlinghouse are also charged with selling another $600 million in unregistered securities in the form of XRP. 

Ripple Labs is defending itself in court and in the media. Garlinghouse in particular has taken to Twitter to explain the company’s position.

Garlinghouse points out that the Ripple platform has been out for over seven years. Furthermore, it already has government decisions in several countries, including the US, stating that XRP is a form of currency and not a security. He also drew attention to the timing of the charges, and claimed that the outgoing SEC administration essentially left a mess for the incoming Biden team to clean up.

Ripple in still waters

The market reaction to the SEC charges came swiftly. XRP sank highs associated with the Flare airdrop at the end of November. It hit a bottom of under $0.20 at the end of December, while retail investors were raising bitcoin to new highs. A January rally raised XRP into the high 20s.

Exchanges with significant US exposure also moved quickly. Garlinghouse noted that the US accounts for about 5% of XRP holders, but the exchanges kept an eye on compliance. Coingate, Coinbase, and Bitstamp are among the exchanges that have already signaled stoppages.

In one sign as to how Ripple will leave this eddy of activity, SEC Commissioner Hester Peirce, commonly known as ‘Crypto Mom’, stated in a recent interview that charges such as these often get settled out of court.

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James Hydzik is a finance and technology writer and editor based in Kyiv, Ukraine. He is especially interested in the development of regulation in the face of increasingly rapid technological change. He previously covered the CEE region for Financial Times banking and FDI magazines. An ardent believer in gut renovating eastern Europe one flat at a time, he currently holds more home renovation gear than crypto.

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Source: https://beincrypto.com/kraken-becomes-latest-exchange-to-halt-xrp-trading/

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China-based BSN Readies International CBDC Platform

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China’s initial CBDC trials captured the attention of the world’s central bankers. Now, they’re planning on going global.

China’s Blockchain Service Network (BSN) laid out its plans for 2021 on Jan. 15. The company expects to build a universal digital payment network (UPDN) over the course of five years. However, its goals for 2021 include launching a beta-test version of the UPDN in the second half of the year.

Besides the UPDN, BSN has three other primary goals for 2021. These include expanding the BSN network and overall ecosystem as well as promoting the non-CBDC private platform.

What is BSN?

Blockchain Service Network is a Chinese government-supported blockchain research and development company. It is responsible for developing and rolling out the extensive blockchain platforms serving as a digital backbone for the country. With over 34,000 blockchain companies currently working in China, the country’s use of the technology extends deep into its economic base.

Digital yuan

BSN’s plans take part in the Chinese government’s rollout of the digital yuan. The introduction of the digital yuan was a event in the CBDC sector. It eclipsed by far the efforts of the European Central Bank in both scale and scope.

While the ECB experimented with payments in France in 2H2020, the Chinese airdropped digital yuan, engaged citizens in contests to win the CBDC, launched P2P transfers and enabled retailers to accept it.

Do BSN’s plans pose a threat to other countries? They do say that they foresee expanding Public City Nodes for their blockchains in 50 cities, “covering most developed countries” and well-growing developing countries. This is a BSN blockchain network development goal, not a CBDC goal.

However, the ECB broadcast its fears of foreign digital intervention on the currency markets. In November, 2020, the ECB laid out its “Reinvention of Money” strategy. One reason for the introduction of the digital euro, ECB Executive Board member Fabio Panetta declared, was the introduction of foreign CDBCs and the possible threat to Europe’s currency sovereignty.

Meanwhile, in America

On Thursday, Jan. 14,Chair of the US Federal Reserve Jerome Powell stated during an interview on Yahoo Finance that the development of a US CBDC is not something to do in a hurry. Also, he sees the US as having a first-mover advantage in that the dollar is the world’s reserve currency.

Powell stated that it would take years for a US CBDC, not months. That said, he also pointed out that it is something that needs to be done, and done right.

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James Hydzik is a finance and technology writer and editor based in Kyiv, Ukraine. He is especially interested in the development of regulation in the face of increasingly rapid technological change. He previously covered the CEE region for Financial Times banking and FDI magazines. An ardent believer in gut renovating eastern Europe one flat at a time, he currently holds more home renovation gear than crypto.

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Source: https://beincrypto.com/china-based-bsn-readies-international-cbdc-platform/

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PayPal’s Bitcoin revenue expected to top $2 billion by 2023

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Global payments giant PayPal is expected to generate more than $2 billion in revenue from its cryptocurrency services over the next two years, according to Mizuho Securities research analyst Dan Dolev.

If the figure ends up surging to $2 billion, it would equate to 10% of PayPal’s total annual revenue following a shift in momentum towards cryptocurrencies.

At the time of writing Bitcoin is trading above $36,000 following a barnstorming rally that saw it eclipse its previous all-time high of $20,000 in December.

The rally has been attributed to a significant increase in institutional investment, with MicroStrategy investing more than $500 million into Bitcoin dating back to September.

An influx of institutional investment has been accompanied by PayPal’s offering, which targets the retail market.

Dolev revealed in a note to clients that “50% of PayPal’s crypto clients open the app daily”, demonstrating a clear shift in sentiment around the asset class.

In December, Pantera Capital CEO Dan Morehead said that demand on PayPal’s platform was more than 100 percent of Bitcoin’s mining supply.

PayPal’s foray into cryptocurrency will have been a surprise to industry sceptics, but it comes as no major surprise to those involved in the industry following Facebook’s proposed digital currency in 2019.

For more news, guides and cryptocurrency analysis, click here.

Source: https://coinrivet.com/paypals-bitcoin-revenue-expected-to-top-2-billion-by-2023/

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BeInCrypto Weekly News Roundup: January 16, 2021

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This week has been a much wilder ride than the weeks previous, with Bitcoin, Ether, and other cryptocurrencies falling 15 percent or more before recovering nearly to their previous high levels.

Along with the price action, it was another exciting week in the cryptocurrency space on other levels. Read more in our roundup!

Bitcoin bounces back after nearly dropping below $30,000

Earlier in the week, many expected the beginning of a widespread cryptocurrency bear market and a market top. The sentiment came as Bitcoin almost broke the $30,000 support level. Some speculated that this occurred due to moves from large scale institutions that wanted to take some profit. However, the assertion was not confirmed.

This price drop, which also drove Ether below the $1,000 mark, wiped over $3 billion from the market in one day. Since the dip, most cryptocurrencies have returned much closer to their previous all time high prices.

Sushiswap and PayPal see all time high transaction volume

Both Sushiswap and PayPal’s cryptocurrency exchanges saw record volume this week. The volume indicates that either more investors or more capital are entering the space. As we noted in the roundup (above), this happened during extreme price swings.

Sushiswap, a decentralized exchange, saw $700 million in trading volume, while PayPal, a centralized exchange that does not let users withdraw Bitcoin from its platform, held over $242 million in transactions. In the course of a few days, PayPal more than doubled its previous daily volume record.

Bakkt will be the first crypto exchange to go public

Bakkt, the SEC regulated cryptocurrency futures exchange run by Intercontinental Exchange Inc., the owners of the New York Stock Exchange, will be the first cryptocurrency exchange to go public. Unsurprisingly, the exchange will be listed on the NYSE. The exchange is will merge with a special purpose acquisition company (SPAC).

Bakkt will be going public with a $2.1 billion valuation, which compared to its competitors may make it slightly over-valued. Coinbase, a crypto exchange with a stronger foothold in the space, is also planning to go public soon but with a possible $28 billion valuation. Although the Coinbase IPO will be taking place at a valuation 12 times higher than Bakkt, Coinbase has a daily transaction volume of $4 billion compared to Bakkt’s most recent daily volume of around $20 million.

 We’ll see you next week for another BeInCrypto Weekly News Roundup.

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Harrison is an analyst, reporter, and lead specialist at BeInCrypto based out of Tel Aviv, Israel. Harrison has been involved in the cryptocurrency space since late 2016 and is passionate about decentralized ledger technology and its potential.

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Source: https://beincrypto.com/beincrypto-weekly-news-roundup-january-16-2021/

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