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Bitcoin Price Fell 11% in 24 Hours: What Triggered the Drop and What Lies Ahead?

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Many analysts and mainstream media outlets including Bloomberg and the Wall Street Journal attributed the recent drop in the Bitcoin price from $7,500 to $6,700 to the hacking attack suffered by Coinrail, a minor cryptocurrency exchange in South Korea.

However, the reasoning behind attributing the latest correction to Coinrail is incorrect, given that Coinrail is a small exchange with a low daily trading volume used by a small portion of investors in South Korea. Bithumb, UPbit, and Korbit remain the three biggest cryptocurrency trading platforms in South Korea, and Coinrail is not considered a major exchange.

Analysts tend to apply any negative event or news to explain declines in the value of Bitcoin and the entire cryptocurrency market because, for general readers and investors, it is difficult to accept the fact that the market moves based on supply and demand, and that the price of Bitcoin has fallen by such a large margin overnight without a solid trigger.

$6,700 Isn’t New

For many weeks, prominent analysts and cryptocurrency researchers including Willy Woo have emphasized that the downward trend of Bitcoin is simply too strong to be influenced by indicators such as the Relative Strength Index (RSI) and moving averages. In late May, Woo noted that it was likely that Bitcoin would experience a slow bleed out to the higher end of the $6,000 region and eventually make its way down to $5,700.

Woo explained:

“So in summary my best guess is slowish bleed down to $6,800, then a steeper slide to $5,700, then a levelling out of the drop. then a flat zone. This is an educated guess based on volume profile and fundamental data framing the rate of movement.”

He further emphasized that the price movement of Bitcoin was nearly identical to its correction in 2014, the biggest correction in its history. If the chart of Bitcoin from 2014 and mid-2018 are placed side by side, price movements seem unrealistically similar.

“This is like 2014 but Y-axis is just 20x. In some ways the markets are more reliable to forecast in 2018 than in 2014. Data on fundamentals should map more reliably to price as we ain’t in the early phase of a few whales randomly pushing things around anymore,” added Woo.

The price movement of Bitcoin in mid-2018 is similar to the 2014 correction because both periods saw a correction triggered by retail investors or individual traders. While major financial institutions such as NASDAQ, Goldman Sachs, JPMorgan, and Morgan Stanley have announced their entrance into the cryptocurrency sector and the demand from institutional investors has increased significantly, the amount of capital currently coming from institutional investors in the cryptocurrency sector is close to zero.

Bitcoin price movement in 2014. Chart from TradingView.com

Bitcoin price movement in mid-2018. Chart from TradingView.com
What Lies Ahead?
Even short-term bears and skeptics see a bright mid-term future for Bitcoin, especially in late 2018, as institutional investors are planning to enter the cryptocurrency market when custodial solutions from companies like Coinbase, Gemini, and Fidelity are ready. If billions of dollars start to come into the cryptocurrency market, as billionaire investor Mike Novogratz previously stated, FOMO (fear of missing out) could be triggered by large-scale pensions and hedge funds, leading Bitcoin and the rest of the market to experience exponential growth.

In the short-term, however, it is highly likely that Bitcoin will dip below the $6,000 mark before recovering, due to its low volume and demand from retail investors.

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Australians Can Pay Utility Bills With Bitcoin (BTC)

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Bitcoin (BTC)–In terms of adoption for cryptocurrency, being able to pay for real world goods and services with the digital currency has long been viewed as the gold standard. The bear market of 2018 has led to a shift in focus away from the fundamentals of crypto and the usability of blockchain transactions in favor of wild price speculation. However, an Australian-based partnership is attempting to provide a solution for customers looking to pay their utility bills with cryptocurrency.

Cryptocurrency exchange Cointree announced a joint-venture with billing platform Gobbill to give Australian customers the opportunity to pay their utility bills with cryptocurrency. The goal of the union is to provide a solution for automated billing via crypto, with Gobbill functioning as the intermediary in the exchange, taking user funds in crypto and making the payment in fiat.

Using the Cointree wallet, users of the cryptocurrency exchange will be able to convert stored coins automatically into utility bill payments, giving customers the opportunity to pay in BTC, XRP, and nearly 40 other currencies. While Australian utility companies will not be accepting crypto directly for payment (the exchange involves a conversion to fiat), it does represent a way for Australian crypto users to get around having to cash out of their denomination on exchanges to free up funds for utility payment. The service is being aimed at small businesses and average investors, with the co-founder and CEO of Gobbill, Shendon Ewans, expounding upon the planned form of payment,

“We anticipate a surge in the number of customers who would like to pay their bills in crypto in the coming years. Our partnership with Cointree will cater to this market and ensure Gobbill continues to remain ahead of the curve when it comes to allowing our users to pay their bills automatically, while knowing they’re protected from fraud and scams.”

According to Ewans, Gobbill views this partnership with Cointree as getting ahead of the curve, a refrain we have heard several times from tangential businesses attempting to capitalize on cryptocurrency. By offering a service that automatically takes payments in cryptocurrency, Gobbill is exposing itself to the growing, and vocal, userbase of cryptocurrency, in addition to paving a future for their company that involves a takeoff in the digital currencies.

Cointree also sees partnerships for bill payments and automatic drafting as a way to increase their customer base, with efforts already enacted for several years on the front of crypto-to-bill payment. Jess Rendon, operations manager of Cointree, reported that the company has processed $100 million in bills paid in 2017,

“Last year alone we had about AU$100 million of bills paid and saw ten times growth in this payment feature.

CCN reports that paying bills with cryptocurrency has seen an explosion in Australia over the last several years, having grown by 3300% in a three-year period. While the system devised by Gobbill is still a step removed from utility companies accepting Bitcoin and altcoins directly, it does provide another avenue for investors looking to use their coins outside of exchange speculation.

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Bakkt CEO: ‘With Our Solution, the Buying and Selling of Bitcoin Is Fully Collateralized or Pre-Funded’

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On Monday (20 August 2018), Bakkt, the new company announced by Intercontinental Exchange (ICE) on 3 August 2018, declared that with its solution, “the buying and selling of bitcoin is fully collateralized or pre-funded.”

ICE’s press release mentioned that Bakkt would be offering a one-day phsyically-delivered Bitcoin futures product:

“As an initial component of the Bakkt offering, Intercontinental Exchange’s U.S.-based futures exchange and clearing house plan to launch a 1-day physically delivered Bitcoin contract along with physical warehousing in November 2018, subject to CFTC review and approval. These regulated venues will establish new protocols for managing the specific security and settlement requirements of digital currencies.”

This is how Bakkt announced today’s news on Twitter:

Kelly Loeffler, the CEO of Bakkt, provided more details in a post on Bakkt’s Medium blog.

Loeffler started by saying that to achieve a “trusted infrastructure for trading, storing and spending digital currencies”, Bakkt would need to provide:

  • “a consistent regulatory construct”;
  • “transparent, efficient price discovery”; and
  • “an institutional quality pre- and post-trade infrastructure”

She then moved to the “meat” of Bakkt’s announcement:

“A critical element to price discovery is physical delivery. Specifically, with our solution, the buying and selling of Bitcoin is fully collateralized or pre-funded. As such, our new daily Bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset.”

She noted that this provided support for market integrity and differentiated them from other exchanges which “allow for margin, leverage and cash settlement.” She went on to say that once you take into account the fact that Bakkt also provides “a secure, regulated warehouse solution”, it was easy to see how this infrastructure could “help more institutions and consumers participate in the asset class.”

For many crypto traders/investors and analysts, what Bakkt announced today sounded great. However, not everyone was equally excited.

Caitlin Long, 22-year Wall Street veteran (including over eight years at U.S. investment bank Morgan Stanley) who has been active in Bitcoin since 2012, expressed her concern about “financialization” (i.e. when an asset class becomes investable by large institutional investors) of cryptocurrencies, and especially her worries about “leverage-based financialization” (which arises “either from the issuance of more assets out of thin air to dilute existing holders, or from the creation of more claims to the asset than there are assets”) in an article for Forbes published on 31 July 2018.

Upon hearing Bakkt’s announcement earlier today, she sent out the following tweets to explain that although the confirmation that Bakkt’s daily Bitcoin contract would not be traded on margin, use leverage, or serve to create a paper claim on a real asset” was a good thing, she still had a few reservations:

 

 

 

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Biometric Cryptocurrency Card Protects Bitcoin with Fingerprints

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Unikeys has officially announced its UKey cryptocurrency card.

In form, it’s shaped like any other regular payment card. But it’s designed to host multiple popular cryptocurrencies including Bitcoin, Bitcoin Cash, Ether, and Litecoin. What’s more, it features an embedded fingerprint sensor. Once a user’s fingerprint data has been registered and stored in the card’s Secure Element, the card is then able to biometrically authenticate the user for each transaction, ensuring a high level of security.

The biometric component is the product of a collaboration between Unikeys and Hong Kong-based MeReal Biometrics, which obtained its fingerprint sensor technology from Sweden’s Fingerprint Cards. Fingerprint Cards has been very busy in recent months seeking to secure a leading position in the biometric cards market as major financial services brands like Visa and Mastercard prepare for mass commercialization of this kind of technology; Unikeys, for its part, is ahead of the curve.

Of course, a key to success for the latter company will be establishing merchant support for its card’s cryptocurrency payments, and as RFID Journal reports, Unikeys is currently in talks with “several companies” concerning this issue. Unikeys’ CEO says the company is also planning to launch a pilot for its solution in Hong Kong, though details about the project are forthcoming.

Biometric Cryptocurrency Card Protects Bitcoin with Fingerprints

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