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As Political Unrest Unfolds, Bitcoin Tests $10k Again–Will it Stick?

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Yesterday, the price of Bitcoin briefly passed over $10,000–shooting up from roughly $9,700 to around $10,120 over the course of several hours, in the first stage of what turned out to be a nearly perfect ‘Bar pattern,’’

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As described by user ‘JamesRKaye’ in a post on Trading View, a Bart pattern is “characterized by its sudden rise in price, sideways movement, then sudden drop,” forming a line that resembles the hairline of Homer Simpson’s only son.

However, before the latter half of the pattern was formed, Bitcoin enthusiasts across Twitter started making their predictions that this time–surely this time–would be the end of Bitcoin below $10k forever.

“I don’t usually make predictions. But this is too obvious not to call. We will never see Bitcoin below $10k again,” wrote Twitter user @hodlonaut around 10.30 CEST on June 2nd.

Not quite as bullish, Mati Greenspan, market analyst and founder of Quantum Economics, also tweeted that “this MIGHT be your last chance to buy Bitcoin under $10k.”

(It wasn’t.)

$10k is still a sticking point for BTC

Still, BTC’s brief and most recent foray over the $10,000 mark and back again begs the question: why does this keep happening?

Indeed, Bitcoin has been on a trajectory to sustain a pass over $10k for quite some time; however, each time Bitcoin does make it over the $10,000 mark, a similar pattern of events seems to follow: there’s a bit of hullabaloo about how this time is the time that Bitcoin will stay over $10k, and then Bitcoin falls back under $10k (where it stays for weeks, or even months.)

Alex Mashinsky, founder and chief executive of Celsius Network, told Finance Magnates that this pattern of rising and falling around the $10k mark is par for the course–we could be in for a longer period of false starts: “I flagged several times [that] we will ‘kiss’ $10k and go back,” he said.

However, Mashinsky said that in the greater scheme of things, the crypto world has never had such polarized views about where Bitcoin is headed next: “in the past four years, I have [never] seen more contradicting views betting all they have with such conviction [than now],” he said. “At Celsius, we see record borrowing of both dollars to go long and BTC to go short, as the bulls and the bears battle it out.”

Did political unrest briefly drive the price of Bitcoin past $10,000?

What drove Bitcoin past $10k this time around?

With the coronavirus pandemic still keeping nations in quarantine and protests raging in Hong Kong and the United States, geopolitical unrest has certainly had a major effect on financial markets over the past several months; some have argued that as this unrest grows, more and more people will turn to Bitcoin as a way to protect their assets from possible economic crises and hyperinflation.

However, there is little evidence to show that the world’s major fiat currencies–the USD, in particular–will enter crisis mode anytime soon; and thereby, little evidence that people will be buying Bitcoin en masse as a result of the political unrest in America or elsewhere in the world (in spite of what this guy might think.)

In fact, in the most economically perilous moments of the coronavirus fallout, the USD was temporarily driven to highs that haven’t been seen in several years as a result of the effects of the coronavirus, though it seems to be returning to pre-corona levels.

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Still, fear of possible economic chaos is a strong motivator. Alex Mashinsky, chief executive and founder of Celsius network, told Finance Magnates that “news of riots and possible curfew in major cities [have] convinced many to buy coins.”

Alex Mashinsky, founder and CEO of Celsius.

In a statement shared with Finance Magnates, Mathew Ficke, head of market development at cryptocurrency exchange OkCoin, also noted that “BTC’s move back above $10,000 coincides with civil and economic unrest throughout the US.”

“Some argue the environment reminds the market that BTC can act as a hedge against excessive government influence. As equities are near pre-shelter-in-place levels, many seem to view crypto as relatively attractive.”

BTC hodlers hope to profit off of short-term BTC gains during times of political unrest

And even if the political unrest isn’t a strong motivating factor for buying coins in and of itself, the belief that more people will be buying coins as a result of the protests can be a powerful incentivizing force for investors hoping to profit off of short-term gains.

Matthew Ficke, Head of Market Development at OKCoin.

A similar phenomenon occurred when tensions arose between the United States and Iran at the beginning of 2020. In addition to an increase in the price of BTC, data from Google Trends during the week ending on January 8th showed that the search term “Bitcoin Iran” had spiked several times–by the end of the week, searches for “Bitcoin Iran” had risen a total of roughly 4,450%.

Similarly, this time around, the number of searches for “Bitcoin protests” has risen significantly in the last week.

Collin Plume, chief executive and founder of Noble Gold Investments, told Finance Magnates that many investors still see Bitcoin as a place to make fast income, and as economic and political unrest continues, the need for ‘quick’ income increases: therefore, he believes that Investors’ short term interest in the currency causes the rapid increase and decline in its cost: “when you have something that can move so quickly and the return can be so high for a short period of time, people sell,” he said.

Regardless of whether the protests in America or elsewhere in the world are having any kind of direct effect on the price of BTC, Alex Mashinsky pointed out that the role that news plays in Bitcoin prices should not be underestimated.

Any news–good or bad–moves the whole market in an exaggerated way,” Mashinsky said. For example, in addition to the riots in America, “recently, coin movement in an old dormant BTC account spooked the longs.”

Collin Plume, chief executive and founder of Noble Gold Investments.

However, when it comes to BTC buying and selling behavior, the news may have a larger effect on institutional investors–and those concerned with the opinions of institutions: “a bad review from Goldman Sachs tanks the market, and [the entrance of] new fund managers like Paul Tudor Jones lifts it,” Mashinsky said.

$10k could be a “psychological barrier” for crypto investors

However, if the unrest in America was indeed the primary reason for the short push past $10k, why couldn’t Bitcoin sustain the move past $10k this time?

Collin Plume told Finance Magnates that in the greater scheme of things, one of the factors keeping BTC under $10k could have to do with investor psychology.

Indeed, “the $10,000 mark is a psychological barrier for crypto investors,” Plume told Finance Magnates.

The number 10,000 has also been observed as a psychological barrier in other financial markets as well.

Indeed, in an article for Business Insider, CNBC Senior Editor John Carney wrote of “The Curse Of Dow 10,000”. This phenomenon describes the way that from 1999-2003, every time the Dow seemed to have reached the 10,000 level, it would “succumb to a bear market and fall below it every time.”

While it’s possible that something about the way that ‘$10,000’–a “big round number”–looks on the page could be somehow intimidating to investors, the curse of 10,000 seems to have more to do with $10,000 being a marker at which BTC (and other financial markets) tend to have stalled out in the past.

“If the markets have in the past displayed a tendency to pull back at a certain level, rational investors can anticipate this and begin selling at that level,” Carney wrote.

Therefore, if $10,000 seems to be the place where BTC has stalled out before, then investors may plan to sell once $10,000 is reached in order to avoid a loss; this could be the reason that Bitcoin seems to dance around the 10,000-mark before falling back down.

Carney called these investors ‘psychological arbitrageurs’, or ‘Psych Arbs’: these traders “[reinforce] what otherwise might be an irrational market behavior, as the traders try to make money by betting that the market will gyrate when it hits key psychological points.”

What’s next?

Still, while the tendency to get stuck around $10,000 may be frustrating, Mashinsky argues that it could be good for the industry in the longer term: that every time BTC hits $10k, more traders and miners could enter into the Bitcoin ecosystem for the first time.

“When BTC spikes to recent highs (like $10,500) it gives a good entry point to shorts and mining guys who want to lock in gains,” he said.

Therefore, eventually, “we will break the $10k levels”–but this is only the first in a long line of upward movements.

“Then we need to get through $12k and $14k, which represent further resistance. After that, we are good to test new highs,” he said, adding that he believes that “it will come faster than anyone thinks, as violence and anarchy escalates with over 40 million Americans out of a job.”

Source: https://www.financemagnates.com/cryptocurrency/news/as-political-unrest-unfolds-bitcoin-tests-10k-again-will-it-stick/

Finance Magnates

Judge Tosses $53M Fraud Case Against Ikon Finance and Hantec Market

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A judge in the UK high court dismissed a breach-of-contract suit against both Ikon Finance and Hantec Markets where a heavyweight retail client was seeking $53.0 million in damages over the allegedly misappropriated funds.

Ikon Finance exited the retail forex market in 2017 following regulatory restrictions by the UK Finance Conduct Authority (FCA). At the time, Hantec acquired the retail client base of IKON Finance after the regulator said that the rival broker has inappropriate human and operational resources in place.

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Following this, a Jordanian resident named Hafez Fakhri Taji Al Farouqi accused IKON Finance of moving his account to Hantec without his consent, seeking nearly $11.6 million in misappropriated funds and damages. He also filed a lawsuit against Hantec for $42 million in civil damages, alleging the migration of his account took place without prior authorization.

Al Farouqi also claimed that both brokers secretly deducted unauthorized commission and introducer fees from his account. Another argument was that Hantec Markets closed his account without sending cancellation terms, giving reasonable notice, or enough time to make alternative arrangements.

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The litigation began in December 2019, but after a six-month investigation, a judge acquitted both brokers, saying it was “fanciful” to believe they had faked trades that caused Al Farouqi to incur substantial losses. The case was entirely tossed out because the evidence was too weak to support a conviction that IKON and Hantec conned the Jordanian investor or breached regulations when they closed out.

Hantec Markets responds

Back in October, Hantec Markets has strongly refuted all claims of Hafez, and the FCA-regulated broker is fighting back against each allegation. Specifically, the company said it’s neither obliged to continue their relationship or to explain for what reasons it closed any client’s account. It also denied that the retail trader had suffered any loss or damage as a result of its decisions and that it gave him a “reasonable” nine days’ notice before the closure of his account.

After doing a background check, Hantec added in its defense that it did not charge any commission from Al Farouqi’s accounts. The UK-based FX trading brand also tried to dismiss the suit on the grounds that the investor agreed to move his trading account after he ticked a dialogue box to accept Hantec’s terms and conditions.

Al Farouqi reiterated in its December that the broker didn’t follow good practices as a nine-day notice period did not give him an opportunity to respond if they misunderstood the facts of his situation.

As widely known, IKON Finance managed to avoid several lawsuits against its operations around the world, including those suing its NFA-licensed subsidiary in the US, IKON Global Markets.

Source: https://www.financemagnates.com/forex/brokers/judge-tosses-53m-fraud-case-against-ikon-finance-and-hantec-market/

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Finance Magnates

Vitalik Buterin Says Ransom Hackers Behind $5M-Fee ETH Transactions

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Two transactions spotted on the Chinese mining pool Spark Pool have stunned everyone in the Ethereum community over the last two days. While nearly 20,000 ETH worth $5.2 million was paid as the transactions fees, the value transferred was only 350 ETH worth less than $90,000 — and one of them was only 0.55 ETH or $133.

At glance, the crypto community suggested that the sender mistakenly mixed up the fields on the value of the transfer and the fee. Today, however, Ethereum’s Co-Founder Vitalik Buterin and China-based blockchain analytics company PeckShield floated the idea that a yet-to-be-disclosed exchange is being held to ransom by hackers who gained unauthorized access to its wallets.

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Criminals are thought to have captured partial permissions, such as server management or something similar. But since the exchange’s private key has a multi-signature verification, which help protect against theft by requiring multiple private keys to sign each outgoing transaction, they were unbale to send crypto holdings to their own wallets.

So, the unusual transactions that grabbed the community’s attention were carried out by the ransomware gang to blackmail the exchange and force them to send their chunk, otherwise they would continue to burn their assets though paying excessively high transaction fees.

Ethereum’s Co-Founder further explained that “Similar situations could happen in “scorched earth” games, including scorched-earth vaults aka “Moeser-Eyal-Sirer” vaults, as well as scenarios where hackers can slash but not steal staked funds”.

While the story is yet to be confirmed, the human error theory doesn’t make sense any more as if it was true with the first transaction, the second one might invalidate this assumption. In addition, it can easily be noted that wallet address sending the few ethers and paying generous gas price belongs to a crypto whale. The shipper’s wallet had over 21,000 ETH left in the address, worth more than $5 million, even after the $5.2 million transaction fee was paid out.

Further, the sender’s wallet has been very active all the time, showing several transactions almost every minute, which matches operations carried out by a trading venue.

Blackmail campaigns are not uncommon in the crypto space. A few months ago, Binance revealed that a pro-claimed hacker previously demanded 300 BTC from it for “withholding 10,000 photos that bear similarity to Binance KYC data.” After he refused to give the team any irrefutable evidence regarding the source of breach, Binance ended conversation, but the hacker then started distributing the KYC data online and to media outlets.

Source: https://www.financemagnates.com/cryptocurrency/news/vitalik-buterin-says-ransom-hackers-behind-5m-fee-eth-transactions/

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Finance Magnates

Estonia Tightens Checks on Crypto Firms, Cancels 500 Licenses

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The Estonian regulators have revoked licenses of 500 cryptocurrency firms, roughly 30 percent of total approved providers, as it continues to tighten its grips on risky activities.

The move comes as a series of scandals in Europe have undermined trust in authorities’ ability to tackle money laundering.

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Estonia, a Baltic state in north-eastern Europe, came under the spotlight after Danske Bank, Denmark’s biggest lender, was accused of watching $230 billion through a tiny Estonian branch.

Estonia was among the first jurisdictions in Europe to legalize crypto-related activities back in 2017. In less than three years since the country introduced licensing for companies operating in the cryptocurrency industry, the number of licenses issued has surpassed 1400.

The Estonian Financial Intelligence Unit (FIU), the regulator issuing the licenses, said the regulatory crackdown is not meant to curb cryptocurrency industry but rather regulate the field more thoroughly to prevent risks related to money laundering.

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So far, the FIU dropped the hammer largely on crypto firms that failed to start operations in Estonia within six months of getting a permit, Bloomberg reported, quoting Madis Reimand, who heads the Baltic country’s intelligence unit.

“This is a first step in tidying up the market, allowing us to take care of the most urgent issues by permitting operations only for companies that can be subjected to Estonian supervision and coercive measures,” Reimand added.

The regulator said that authorities in the Baltic country have learned lesson from the banking sector the hard way, and that they must now deal with new international risks, and cryptocurrencies are amongst the most urgent of these.

Furthermore, the Estonian government has passed a bill that tightens the regulation on granting licenses to crypto providers. Among other things, the application processing time was extended from 30 to 90 days, and the license fee has been increased from EUR 345 to EUR 3,300.

Crypto entities registered in Estonia will also need to incorporate in the country or open an Estonian branch of a foreign company.

Source: https://www.financemagnates.com/cryptocurrency/regulation/estonia-tightens-checks-on-crypto-firms-cancels-500-licenses/

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Finance Magnates

Japan Court Upholds Mt. Gox Ex-CEO Conviction for Tampering Records

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Mark Karpeles, the former CEO of the notorious Mt.Gox, has suffered a new blow after Japanese high court threw out his petition and upheld the conviction on charges of manipulating electronic data.

Another Japanese court cleared Karpeles last year of embezzlement and breach of trust charges, but was found guilty of the dubious data charges. In both cases, however, the court handed him a suspended sentence, meaning he wouldn’t have to serve jail time.

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While the French citizen claimed that he was just trying to reduce risks for the exchange’s users, Tokyo’s court said Karpeles had manipulated data to harm his clients, betraying their trust and abusing his engineering skills.

Japanese prosecutors had initially demanded 10 years in prison as they said Karpeles was guilty of mixing his personal finances with Mt.Gox’s assets in order to conceal the exchange’s losses to hackers. The court handed him down a two and a half years jail sentence, but he doesn’t not have to serve this term unless he commits another offence within four years.

Mt. Gox ex-CEO asks US to toss fraud lawsuit

Karpeles also tried to shut down the class action lawsuit against him in the US which was filed by the last remaining plaintiff, Gregory Greene.

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Karpeles argued the court to dismiss the last remaining fraud charge on the grounds that the ex-Mt. Gox customer has changed the factual basis underlying his claims. Greene voluntarily dismissed two other claims over Karpeles’ handling of the exchange and leaving major security holes that led to future hack attempts.

Gregory Greene filed a complaint on behalf of bitcoin users in a US district court in Philadelphia, accusing Mt. Gox and its CEO Mark Karpeles of negligence and fraud for not protecting the exchange from theft.

Greene, who claimed his own bitcoin holdings were about $25,000, said Mt. Gox failed to provide its users with the level of security protection for which they paid.

However, Karpeles claimed the court lacks jurisdiction and filed a motion asking the judge to dismiss the lawsuit.

Mt. Gox went offline in 2014 in the single biggest setback in the history of Bitcoin after 850,000 bitcoins were stolen in a hacking attack. Under suspicious circumstances, the Japanese exchange claimed it had lost track of about 750,000 bitcoins belonging to customers and another 100,000 of its own, but later said it had found 200,000 bitcoins.

Mt. Gox is now undergoing bankruptcy rehabilitation in Japan, overseen by court-appointed trustee Nobuaki Kobayashi.

Source: https://www.financemagnates.com/cryptocurrency/news/japan-court-upholds-mt-gox-ex-ceo-conviction-for-tampering-records/

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