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Tuesday Inferno market update

TL;DR is it crunch time – again?!

 

Well folks, the hour is once again upon us. Much as we hate to resort to memes and cliches (ok, so we don’t hate them that much…), the next 24 hours are critical.

 

Sometime over the coming day or so we’re expecting a big move for bitcoin. Take a look at the chart, four-hourly scale, and you’ll see why.

 

That nice, high-volume green candle on Saturday faltered right at resistance, with the top wick perfectly touching the 200 moving average (4h) and the daily candle closing just under the 50-day moving average. With such a confluence of factors, the writing was really on the wall, and sure enough it wasn’t long before we saw a rapid fall to $3,470 (Stamp). That was a lower low in this recent leg of the market, wrecking any hope that we might be painting higher lows and on the way up.

 

And so here we are, sitting in the low $3,500s, waiting for the other shoe to drop. And while we might well see more short squeezes and sudden moves up, the most likely medium-term scenario is a retest of that 200 weekly moving average and the support we know is layered around $3,200 and the psychologically important $3,000.

 

There are three scenarios.

 

  1. We crash hard into the 200 WMA, perhaps deep below it, but huge buying pressure sends BTC soaring back up as traders pick up bargains. It’s a high-volume move and it effectively puts the bottom in: capitulation. The market consolidates a while and then gradually starts moving up again.
  2. We bounce off the 200 WMA, but not with enough force to demonstrate a convincing bottom. Instead, we fall into another descending wedge pattern or trade in a range, until it’s time to make a decision – the most likely one of which is back down below $3,200.
  3. BTC drops cleanly through the 200 WMA and enters a range with very little support between around $2,200 and $3,000, where it stays and consolidates much as happened when it dropped below $6k.

 

We can’t call what will happen at this point, but the reaction to retesting the 200 WMA will give us useful information as to the condition of the market and traders’ overall confidence. For what it’s worth – and this is not trading advice – we expect a short-term bounce at least at ~$3,200. Long-term, we think that’s going to be a good price. But over the next few weeks, we might well find that the real bargains are to be had in the $2,xxx range.

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Predictions for 2019

It’s still near enough the beginning of the year for some inspired guesswork…

 

A couple of weeks back, Venturebeat published a list of 10 crypto predictions for this year. They weren’t the only ones – it’s the start of the new year, and taking wild shots in the dark about what might happen is all the rage. While the list is worth a read, there are some predictions that are almost foregone conclusions. We’ll survey a few from Venturebeat, then make one or two of our own.

 

  1. A large bank will enter into the crypto custody business

VB gives this event 100% confidence, and it’s not hard to see why. Virtual cash is obviously going to be huge business, and banks exist to make money. One of them will doubtless acquire a large exchange and/or wallet company. With the launch of Bakkt (soon…) we already have a model of crypto custody. Secure crypto custody is one of the main factors holding back retail money – and banks love retail money. So it’s just going to happen, like it or not, and with it the further convergence of the legacy and digital financial ecosystems.

 

  1. ‘Legacy’ financial institutions will become digital asset infrastructure buyers

Following from the first point, this is also a foregone conclusion. It’s been a brutal bear market, but these are the times when infrastructure is built and tested – so that during the next bull run, it’s hardened and capable of withstanding the onslaught of users. Basically, the companies that put in the hard work now will be the rock stars of the next bull run. Financial organisations will pick up struggling or distressed assets now, or take over strong ones, in order to profit from a market that still has a long way to go.

 

  1. Ethereum will lose ground as the predominant platform for the next generation of coin offerings

This, again, is almost a foregone conclusion. Ethereum is a great platform, but it’s had some problems – scaling and numerous exploits, in particular. The scheduled hard fork was delayed for security reasons. Its smart contracts may be too powerful – and mistakes are costly. Just as bitcoin lost market share as alts arose, so too will Ethereum as competitors arise. Like bitcoin, though, Ethereum can still remain the largest in its class and continue to grow while others are launched and tested by the market.

 

And now for a couple of our own…

 

  1. Game-changing new tech will launch

We’re seeing some very interesting new protocols being released right now. We’ll be looking at MimbleWimble, Grin and Beam over the coming weeks in our ‘Inferno Picks’ articles, but suffice to say that these are some of the few projects that have got us really excited. The tech is a step-change up from Bitcoin and other blockchains, including existing privacy protocols. It enables digital cash that is actually fit for purpose. But this does not mean that bitcoin will disappear – far from it. And it will take years for them to gain a real foothold.

 

  1. Price will not reach ATH again this year

And what set of predictions would be complete without some price guesswork? This is real finger-in-the-wind stuff, but remember we’ve been here before in the 2014-15 bear market. We expect to see a bottom to the bitcoin downtrend in the next 3-6 months, with a period of consolidation. We’ll see a significant lift in prices by the end of the year, though not to previous highs. If forced to guess, we’d say we’ll end the year at $6k per BTC. But as ever, that’s not trading advice!

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Bakkt update

The launch of Bakkt, an Intercontinental Exchange-backed platform offering physically-settled bitcoin futures, has been delayed. What’s going on?

 

One of the most hotly-anticipated developments in the crypto sphere has been Bakkt, an initiative launched in partnership with NYSE owner Intercontinental Exchange (ICE). Bakkt has taken over from a bitcoin ETF as the great hope to drive the next bull market. The platform was originally supposed to launch in December, but was delayed until 24 January – allegedly due to ‘the volume of interest in Bakkt’.

 

However, this was dependent on regulatory approval by the CFTC, and it looks like Bakkt’s launch has been another victim of the US government shutdown, which has stretched on far longer than any previous shutdown and longer than most critics imagined possible. It’s currently unclear when Bakkt will open its doors. The company made a point of developing its platform in strict secrecy for 14 months, and keeps its cards close to its chest; it makes occasional major updates but doesn’t pander to the day-to-day ‘when moon?’-type clamour from the crypto faithful (and who can blame them?).

 

In the meantime, Bakkt have been busy raising money – $182.5 million, from 12 strategic partners including Pantera Capital, Microsoft’s VC arm and ICE itself. They are also in the process of acquiring ‘certain assets of Rosenthal Collins Group (RCG), an independent futures commission merchant with nearly 100 years of earning clients’ trust.’ These assets will ‘enhance our risk management and treasury operations with systems and expertise. Other aspects of the transaction will contribute to our regulatory, AML/KYC and customer service operations as we help enable digital asset acceptance by bringing more choice and control to buyers and sellers.’

 

Bakkt themselves have not said when they expect to launch, and presumably they’re not prepared to guess; it’s ‘awaiting CFTC approval’, and that’s out of their control thanks to the spat over a very long wall along the border with Mexico. (That hasn’t stopped other sources trying.) ICE’s last update on 31 December read, ‘The launch had previously been set for January 24, 2019, but will be amended pursuant to the CFTC’s process and timeline.’

 

Right now, the best guess is: wait for the US government to reopen, and expect an update within days of that. There is a 30-day public comment period, but until 22 December, when the shutdown started, Bakkt was still tentatively working to its 24 January schedule. Given the previous timeline, we can probably expect Bakkt to launch a little over month or so of the shutdown ending – whenever that is.

 

As a final point, it’s worth noting the continuing uncertainty in the cryptocurrency markets. It’s unclear whether bitcoin has bottomed. By the time Bakkt is able to launch – very likely some time in March or possibly April now – the situation could be very different, sentiment will likely have shifted and the platform could leverage renewed confidence to get off to a flying start. The shutdown hasn’t been great for Bakkt, but there could be a silver lining.

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Friday Inferno market report

TL;DR waiting patiently for breakout…

 

We have been stuck in a very narrow range for a week now. There has been some movement outside of it, briefly, but price keeps coming back to a band between $3,650 and $3,570. Volumes are unimpressive and significantly down from their recent peaks.

 

These are conditions that are perfect for big moves. Price consolidates, Bollinger Bands squeeze, like a spring coiling; traders are waiting for their cues and when they come, the move could be violent. And it could be either way; the low volumes means the market can be moved hard and whales are in the habit of clearing out shorts or longs from time to time, only to send the price in the other direction when they’re done.

 

The overall picture is still somewhat bearish, with BTC trading below the 50-day moving average, RSI on the higher timeframes below 50 and bitcoin constantly making lower highs. Until that changes, it’s easier for price to move downwards than up. That does not preclude short squeezes, of course. It just means that, all things being equal, traders will ultimately favour selling. And we haven’t yet seen the retest of the 200 weekly MA we’ve been calling for.

 

In other news, the markets have taken the hack of Cryptopia in their stride; there is no panic like there was when Bitstamp was hacked at the beginning of 2019 – this was not a capitulation trigger. It is a far smaller exchange, of course, with losses stretching to only a few million dollars – much of which has been frozen when it hit other exchanges. In the wake of the Cryptopia hack, Binance CEO ‘CZ’ has apparently suggested that the solution is… using trustworthy exchanges.

 

Store coins yourself. You fight hackers yourself, and guard from losing wallet yourself. Computer breaks, USBs gets lost.

Store on an exchange.  Only use the most reputable, proven secure, exchanges.

Or move to DEX, disrupt ourselves.

 

He gained much criticism for this, as can be expected. Meanwhile, Binance is launching a GBP and EUR crypto platform in Jersey, which is proving highly popular – potentially as traders hedge money against the effects of Brexit.

 

That’s all for now! Tomorrow we’ll be giving an update on what’s going on with Bakkt.

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‘Ex-chainers’: meet the men and women struggling to adjust to life after crypto

While bitcoin lost 85% of its value over 2018, the real tragedy of the bear market has been the human cost. In this series of guest posts, Inferno publishes interviews with former members of the blockchain scene who left the crypto sector for the real world. Names have been changed to protect privacy.

 

It’s a crisp January morning and I’m waiting outside the Starbucks in the concourse of King’s Cross station, London. It’s 10 am and the commuter traffic has slowed, but King’s Cross is far from quiet. It’s a constant hubbub of action that feels like it will never cease. But cease it will, at 1am, when the station locks its doors for the night. Then there’s a four-hour window of absolute desolation. Silence, like a scene from a post-apocalyptic movie. The analogy is poignant.

 

‘That’s what happened in the crypto world,’ Lenny tells me when he arrives, punctual to the minute. He’s not at all what I expect. I had been anticipating a skinny kid, maybe just out of college, hoodie and greasy hair, whose naive dreams of getting rich quick had been shattered by a brutal downturn in the cryptocurrency markets. But Lenny is in his mid-thirties, clean-shaven and wearing an M&S shirt and jacket. This is someone who still makes an effort about his appearance. Not because it will help him get a job, I later discover, but because right now these little rituals are the only things holding back the tide. He looks like he works out, something confirmed by his impressive grip when he shakes my hand. He’s strong – at least, physically. Emotionally, it’s a different story.

 

‘It was like 28 Days Later,’ he explains, when we’ve sat with our lattes inside the doorway. ‘One day everything’s normal, you’re going about your life, you have a fiance, a future, and it’s all good. Then you wake up and…’ He makes a nondescript gesture, but the meaning is clear. ‘It’s all gone. Almost overnight, your hopes and dreams. The wealth is one thing. But it’s the loss of identity that really destroyed me.’

 

Growing up with a father who turned to gold as a store of value during the high inflation of the 1970s, and a mother who was one of the first women to earn her economics doctorate from Cambridge, Lennie was exposed to the Austrian school of thought at an early stage. ‘It made sense, intuitively,’ he explains. ‘Deflationary monetary policy, gold-backed currencies – and bitcoin as the technological successor to all that. I was hooked.’

 

For a while, it worked out exactly as planned. Lenny started buying bitcoin mid-way through 2016. As the value began to rise, he increased his position and took out a loan. ‘The idea was to book some of the profits, pay off my debts and buy gold, and weather the storm that we all knew was coming,’ he says – his ‘all’ referencing the echo-chamber of the crypto forums, where talk of impending economic collapse are the bread and butter of daily conversation. ‘But it didn’t work out that way.’

 

Lennie gave up his job in the autumn of 2017, just as bitcoin began its parabolic rise –  and shortly before he opened a significant leveraged position. ‘I walked out of the office one day after yet another argument with my colleagues, who were calling bitcoin a scam. They laughed at me; none of them understood. And for the record, I still don’t think they were right. Not about the scam, not about the technology. I just told them I didn’t need to work again, ever, and to enjoy their lives. And I left.’

 

Barely six weeks later, the bubble had burst, and Lennie had lost his girlfriend, his flat and his dignity. ‘I was right about one thing,’ he continues ruefully. ‘Kind of. I haven’t worked since.’

 

Central to the extensive therapy and self-help work Lennie has done to rebuild his shattered confidence in the wake of bitcoin’s crash has been reading landmark works of conventional economics: Keynes, Smith and others, as well as studying the views of central banks on both crypto and the wider economy. ‘I avoided Milton Friedman,’ he admits. ‘I’m not strong enough yet. Maybe I never will be.’

 

When you look under the surface of the day-to-day ups-and-downs of the economy, he summarises for me, ‘there’s nothing wrong with our monetary system. People have used money for thousands of years and it’s always worked fine. And the economy isn’t broken either – the evidence is in the constant increase in spending and consumption, the growth of debt as consumers borrow against rising asset prices, the way the money moves round and round, facilitated by the banking system. And inflation’ – here, he almost smiles – ‘it actually helps power everything. Look at what happened with the gold standard; it nearly ruined America. Without inflation, none of this would work.’

 

The heating is turned up high in Starbucks but he hugs his half-empty mug tight to his chest – for comfort, I infer, not simply warmth. A strong man with a hopelessly inadequate security blanket. There is something terribly broken about Lenny, a lost-ness, as if he has come out of a relationship with a woman he truly loved who betrayed him. Perhaps who never was what he thought she was, which paradoxically makes the loss so much harder to bear.

 

‘So you don’t believe we’re heading for another crash?’ I try gently, pointing out of the door and across the concourse to the huge screens, across which are scrolling the red figures of the stock markets’ year-to-date performance.

 

This time, he actually does laugh. ‘Remember, I’ve lived through a crypto crash. I’m not scared by normal market cycles. Minus 6% is a good day.’

 

And, he omits to add, he has already lost everything anyway.

 

The author is an experienced financial journalist whose opinions and interviews have been featured in The Guardian, Forbes and the Financial Times. He writes here under the pseudonym Marcus Aurelius.

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Inferno picks: Brave and BAT

Brave, the privacy-centric browser, comes with blockchain-enabled rewards in the form of BAT: Basic Attention Token. This set-up is fantastic, for the simple reason that works beautifully – and we await full roll-out of BAT with interest.

 

There’s a war raging for your eyeballs, if not your soul, and there’s a good chance you’re losing it. Websites are cluttered with ads that sap your bandwidth, slow your UX and distract you at every turn. They’re how the web is monetised, and they ruin it.

Disclaimer

Crypto investment is risky and the markets can be highly volatile. Do your own due diligence before buying. No responsibility is accepted for investment decisions made on the basis of this analysis.

 

Brave is a browser that was designed to address these issues. It’s based on Chromium, so in one respect it’s nothing special. But then, Chrome is too, and it’s totally decent – and way ahead of Firefox or Explorer.

 

There are two massive benefits to using Brave: speed and privacy. The two go together. Brave blocks a load of ads, which means they’re not sucking your bandwidth to load data or send it back to their evil masters – so it’s a lot faster too. Up to 3x faster, according to their site. If you want additional privacy, you can open a Private window with Tor, which means: ‘Brave never remembers what you do in a Private Window. With Tor, your browsing is also hidden from your ISP or employer, and your IP address is hidden from the sites you visit.’ But don’t try to buy drugs from the darkweb, because drugs are bad, hmkay?

 

Downloading and setting it all up is incredibly easy. Brave will import all your bookmarks, forms and passwords from other browsers, if you want it to, meaning everything just works when you open the site (except, oddly, for Discord, where it demanded the password again). When you import everything, it encourages you to close the old browser, like you’re washing your hands of it. And you just might be, because with speed, privacy and ad blocking, there’s no reason to go back. (There’s also a mobile browser, which we haven’t yet tried out.)

 

Brave has proven very popular already, which perhaps isn’t surprising since it was co-founded by Brendan Eich, the creator of JavaScript, and raised $35 million in ETH in 30 seconds back at the height of the ICO boom in 2017. It had a strong userbase right from the start – but it’s built on that impressively, with 5x user growth over 2018 and now 5.5 million active users.

 

Brave’s most recent update is well worth a read, boasting new partnerships and integrations, and a steady increase in the potential market for BAT: the Basic Attention Token, which will be used to reward users for watching relevant ads from publishers – while maintaining the user’s privacy, and only if they opt in. Given that BAT is currently trading at an all-time low, the whole package is starting to look very attractive (not trading or investment advice). When Brave Ads launches properly and their full roll-out occurs, it could be like turning the taps on.

 

In short, Brave is one we’ve somehow missed until now, but are genuinely impressed. The browser has a great UI, and provides a far better experience without any obvious downside. Meanwhile, the BAT economic model is looking very compelling over the long term. Do your own research, but make sure you do take a look.

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Tuesday Inferno market update

It turned bloody over the weekend. Rothschild said to buy when there’s blood on the streets, but we think it needs to be more than ankle deep…

 

After the heavy falls we saw on Thursday, bitcoin stabilised, consolidating at that $3,600 support level. Then on Sunday afternoon we saw the start of the move we’ve been expecting: a sharp drop lower, below $3,500. For a while, it looked like BTC would be posting even greater losses, but the price again stabilised in the low $3,500s – before a dramatic bounce higher.

 

We’re used to short squeezes in this market, and the ‘Bart’ back up failed at the 50-day moving average line. It does not fundamentally change the picture; it’s part of the same ‘two steps back, one step forward’ narrative of the bitcoin bear market. Until we see something out of the ordinary, our view is the same. We are still expecting to test that 200 weekly MA once again, and hopefully experience some kind of decisive move one way or another.

 

Volumes are still down, which does not inspire great confidence in these moves. Looking back at the previous capitulation in 2015, the weekly volume was around 350,000 BTC (Stamp), or 820,000 BTC on Bitfinex, roughly equal to the highest volume since the bubble popped. We’d want to see that again – in this case, 200k BTC on Stamp and 600k BTC on Finex.

 

Overall, the fundamentals for Bitcoin overall are good. Average tx fees are less than $0.25, putting them back at 2015 levels. Hashrate is climbing again after its dip at the end of last year. Meanwhile OTC volumes are rising, according to one outlet: ‘Buying pressure has reportedly increased at many notable OTC crypto trading desks. One of the largest OTC traders, Cumberland, tweeted that the imbalance between buyers and sellers spiked by 60% over the last week. Galaxy Digital saw robust buy back from asset managers, who previously sold assets for tax purposes. The nature of most of Paxos’ trading activity this year was buy tickets from emerging markets traders. Circle’s OTC desk saw a “come back” in January after elevated sell pressure in December. Genesis OTC volume is up by 50% year-on-year. According to a director of the fintech research firm Tabb Group, Monica Summerville, the OTC market is about two to three times larger than trading activity across the whole of the retail exchanges.’

In breaking news, Cryptopia has experienced a security breach, which resulted in ‘significant losses’. We await further details of what that means in practice. Slightly better news is hackers have returned around $100,000 of funds stolen in the recent 51% hack on ETC, for reasons as yet unknown.

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‘Bitcoin will still bite the dust’

Kevin Dowd, Professor of Finance and Economics in the Business School at Durham University, stands by his 2015 paper predicting the failure of the #1 digital currency.

 

A recent article by CoinDesk discusses research by an economist that suggests Bitcoin cannot survive long term, due to two key factors.  

 

Kevin Dowd reached his conclusion back when the price of bitcoin was less than $400 – but he stands by it now, more than 3 years and 10x in price later. ‘My reasoning is based on two simple economic arguments. The first is that the bitcoin mining industry is a natural monopoly and a natural monopoly undermines bitcoin’s core value proposition. The second is that in markets with zero regulatory entry barriers, an inferior product cannot survive long-term. Either of these arguments is sufficient to produce my conclusion that the price of bitcoin must go to zero in the long term.’

 

Dowd’s arguments are well-reasoned, as you’d expect. (He’s not the first to predict bitcoin’s demise, of course.) And he states that no one has been able to refute his conclusions. ‘I have also yet to hear a single intelligent challenge to this argument from the bitcoin community. Instead, the typical response has been personal abuse. Name-calling is no substitute for a reasoned response, however.’

 

Now, we find it almost unbelievable that Crypto Twitter would treat anyone with less than total respect, but we’ll let that pass for now.

 

At this point, we’ll explore just one of the points of Dowd’s argument: ‘the price of bitcoin must go to zero because an inferior product cannot survive long-term in the absence of regulatory barriers to entry’.

 

Dowd states that ‘I field tested my reasoning on various people who are economically literate. None disagreed.’ Given the apparent and shocking failure of Crypto Twitter to offer anything meaningful, we don’t pretend to have all the answers ourselves and will be satisfied simply to open a conversation around the second point for now:

 

Imagine you have a market with no entry barriers. The first firm to enter the market has 100 percent of the market share, as bitcoin once did. Competitors then come along and make inroads into the market.

Some of these offer products that are superior to the product produced by the first firm, not least because their producers have learned from some of the design flaws in the first firm’s product. And eventually superior rivals displace it completely and the market share of the first product goes to zero.

 

It’s a reasonable argument, and Dowd supports this argument by quoting bitcoin dominance figures, which have slipped from 94% when he first wrote his paper to 52% today. But we’ll make a couple of observations.

 

  1. Dominance, or percentage of market cap, isn’t a good metric for success or failure. Apple has lost its dominance in the smartphone market since it launched the first successful device back in 2007. That doesn’t make the company a failure. The proliferation of altcoins – useful or otherwise – necessarily detracts from bitcoin’s market share. It doesn’t mean bitcoin is becoming less useful or less-used. Bitcoin has grown in value 10x since Dowd’s first article, and hashrate and adoption have similarly soared. It’s just that the overall crypto ecosystem has grown more – and much of that is down to a ‘long tail’ of smaller, less worthy projects, many of which doubtless will not last the distance.
  2. It ignores the possibility of improvements to the Bitcoin Protocol and ecosystem. This might occasion a wry smile, because Bitcoin development and upgrades to the protocol are notoriously slow. But it’s not like Bitcoin is fossilised in time: updates do occur, the most significant of which recently was SegWit. That is arguably one of the strengths of Bitcoin: unpopular changes cannot be forced through easily.

 

We can’t discount Dowd’s arguments, and the history of technology suggests that – at some point – most products will be replaced by something better. Facebook replaced MySpace. Lambos replaced the Model T. Iron replaced Bronze. Mammals replaced dinosaurs. The issue isn’t If, but When. It’s just that ‘When’ – as products like gold demonstrate – can be a really long time in the future.

 

We’ll end by paraphrasing a quote from Fight Club: ‘On a long enough timeline, the survival rate for every investment drops to zero.’

 

We agree with Dowd. We just differ on the timeline.

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Age of moving coins as a predictor of the bottom

Research suggests that the age of coins being spent – in particularly the 1 year+ UTXO – is on the rise.

 

Holders are getting stronger: over half of all bitcoin hasn’t been moved in a year. 20% hasn’t moved for five years, and much of that may be lost. Delphi Digital uses this information to forecast the bottom of the market is close.

 

Before we go further, a quick definition of terms is in order. Every time bitcoins are ‘spent’ – i.e. moved – new outputs are created on the blockchain. These outputs are chunks of coins that may be combined in a new transaction, or sent individually; it doesn’t matter. Every bitcoin transaction has inputs – coins owned by the sender – and outputs, or the result(s) of that transaction. The outputs are known as Unspent Transaction Outputs, or UTXO.

 

The UTXOs used for a new transaction may have been sat in their addresses for just a few minutes, or they could have been hodler coins left dormant for years. Thanks to the nature of the blockchain, and the fact that every transaction is timestamped, we can gain some very interesting insights from the ages of coins being spent. For example, if a coin hasn’t moved for five years, you know the owner acquired it back when prices were a fraction of what they were today. It’s not a precise science, but it gives us a broad sense of the initial value of coins being moved. And that, in turn, gives us a sense of whether hodlers might be tempted to sell at current prices.

 

As overall UTXO age drops, this indicates greater transaction activity as holders move coins to sell. As it rises, this indicates more coins are being squirrelled away for hodling. Delphi’s insights from the previous bear market of 2014-15 suggest that as 1 year+ UTXO rises back above 50% (i.e. more than half of bitcoin hasn’t moved in at least a year), BTC put in a bottom soon after. And that’s where we are again now. Key conclusions from the report include:

 

  • Selling pressure from long term holders, primarily those holding between 3-5 years, is almost exhausted.
  • We’re seeing another accumulation process by longer term holders begin, similar to the one at the end of 2014.
  • Using the timing of previous price bottoms relative to different bitcoin accumulation points, we are able to use current UTXO dynamics to strengthen our forecast of a rough date for a price bottom (sometime in Q1 2019).

 

Delphi use these patterns of coin movement to project the next cycle. Based on their findings, Delphi suggest the peak amount of 1-year+ holders in the next cycle will be around 68%. Using the growth rate of the slopes, they cautiously project that the peak of the next cycle will come in April 2020, just 15 months away, and will likely be aided by the May 2020 Halvening.

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Friday Inferno market update

TL;DR violent moves but still range bound, waiting for a breakout.

 

As we reported on Tuesday, bitcoin had spiked higher, back above $4,000, and was forming a potentially-bullish falling wedge. The move also lifted BTC above the key level of the 50-day MA. Looking on the daily chart, price has not stayed above the 50 DMA for more than a few hours or days at the most since August, so this could have been meaningful.

 

However, the wedge was invalidated after a failed upside breakout, after which it became increasingly clear that the momentum was going to be to the downside. $3,800 swiftly followed – right where the 50 DMA currently stands – and then another red candle down to $3,600, with a brief wick down to $3,500.

 

It was a heavy fall, over 10% in a day, but right now bitcoin is still stuck in a range. Zooming out to the daily, we see a band between around $3,600 and $4,100 where bitcoin is currently trading and has traded in the recent past. Bitcoin has made a series of lower highs, and was unable to break resistance at $4,250. Meanwhile there is (for now) relatively strong support at $3,600 – as this last dip shows.

 

Taking a longer-term view from the weekly chart, we can see a cross of the 50 and 100 WMAs is looming, which would be a further bearish signal. That will likely happen towards the end of January. Since we never tested the 200 WMA on volume, we also expect that to occur in due course – forming either a double bottom or sending us into the next phase of the bear market with sub–$3k prices.  

 

Meanwhile, it’s not all bad news. Daily transactions on the bitcoin network have reached a yearly high. Apparently, around 20 percent of these txs come from VeriBlock, and are used to secure other blockchains using Bitcoin’s massive network. Attacks on smaller PoW networks – most recently Ethereum Classic – show the utility of this approach. The state of altcoin blockchains is recorded at regular intervals on a more robust and tamper-proof ledger. It seems that Bitcoin is carving out for itself yet another use case.

 

In short, the long-term fundamentals are strong, while in the short-term sentiment is driving price action. Watch $3,600 and $3,200 closely.

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