In an unexpected turn of events, a new report by the University of Texas has found that ‘stablecoin’ Tether could be being used to manipulate the price of Bitcoin and thus, change the direction of the markets. This research stems from an extensive study into the freak performance of cryptocurrencies at the end of 2017 and the start of 2018. If the findings are accurate, not only could this explain an awful lot, this could help to shift the way the entire world see’s currencies such as Bitcoin.
Tether is a stable coin that follows the price of the US Dollar, in essence. It is a highly traded coin, sitting at the time of writing with a market capitalisation of $2,527,598,611.00, sitting in 11th place just behind TRON, and now, ahead of NEO. At the time of writing, Tether is valued at $0.01, up 0.29% but generally, as it is a stablecoin these latter figures are irrelevant.
So, according to the study, during periods of large Bitcoin movements, Tether shows patterns of being spent on Bitcoin in large amounts. Therefore, there seems to be a correlation between Bitcoin price movements and Tether spending volumes, on Bitcoin especially.
The study, by John M. Griffin and Amin Shams from the University of Texas Department of Finance, published today, can be found here- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066
Within the abstract of the paper, Griffin and Shams state:
“Using algorithms to analyze the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies. The flow clusters below round prices, induces asymmetric autocorrelations in Bitcoin, and suggests incomplete Tether backing before month-ends. These patterns cannot be explained by investor demand proxies but are most consistent with the supply-based hypothesis where Tether is used to provide price support and manipulate cryptocurrency prices.”
In all honesty, this is huge news. Whilst the news is so fresh, it is difficult to actually understand the implications of this, a few scenarios do however spring to mind here.
Most of all, if these Tether movements are correlated with the Bitcoin movements, is it the same people doing it each time? If so, what sort of questions does that raise?
As this is such a new report, things are a bit uncertain at the moment. As this news gets out though, we expect conclusions to become a little clearer. For now, we will monitor this story and bring you the news as it comes.
This could be a very big deal indee
Bitcoin Price Showing Hidden Signs of Reversing — Next Target $8.2K
This week Bitcoin (BTC) continued to trade within a tightly defined range and at the time of writing the price is flat. The bulls and bears have been throwing the market back and forth with moments of high volatility on the lower timeframes, all of which are often a sign of a larger move simmering beneath the surface.
The wider market remains in a similar position, although some altcoins like XRP have slightly outperformed Bitcoin over the past 24 hours.
Cryptocurrency market daily view. Source: Coin360
Watch the weekly chart
BTC USD Weekly chart. Source: TradingView
Analyzing the weekly chart shows that Bitcoin has fundamentally been locked in a bearish posture for close to six months and this is defined by the downward sloping diagonal resistance.
Major resistance was found at $11,500 and the $9,500 and $7,500 support eventually turned into resistance. Support has now been found at $6,500 which was a critical bullish rejection level in the first half of the year and is demonstrative of a high volume node on the VPVR.
Bitcoin is currently trading up against previous support which has flipped to resistance and the Doji candlestick is a clear sign of indecision in the market as traders are pushing price within a clear range and coming back to the center.
This shows that the bulls and bears are struggling to find a direction. Bitcoin price can either reverse course or find continuation of the previous candle but ultimately, the current price action defines the week to date quite nicely.
Moving averages provide useful insight
The 50 and 100-week moving average (WMA) are in the process of crossing bullish which has only occurred a few times in Bitcoin’s history and has signaled an impending upside move. It is important to note that moving averages do not drive a market, they lag the market but can help to identify macro changes in the market’s direction.
The 200-WMA is situated in the $5,000 range where there is also some historic volume interest at this price range. Many analysts are calling for a retest of the 200-WMA which would likely be a last line of defense for bulls. This would also be unprecedented at this stage in the Bitcoin market cycle.
Generally, volume on spot exchanges has been decreasing through the circa six-month decline which is typically a sign of sellers becoming exhausted as each push lower entices fewer participants to sell.
The moving average convergence divergence (MACD) has crossed the zero line to the bearish side, meaning that the underlying moving averages are now crossed bearishly. However, there is a higher low forming on the histogram which is an unconfirmed bullish divergence.
Thus, on a macro level, it seems as though the market is either at a turning point or it is looking to prepare for continuation; unlike previous weeks, it is a less clear picture.
BTC USD daily chart. Source: TradingView
The daily chart clearly shows the downward trending channel in which Bitcoin has spent months trading, defined by lower highs and lower lows. The lower 25% of the channel has acted as support and resistance throughout the downtrend and is once again being tested.
The outcome is normally an explosive move up or a retest of the bottom of the channel. The 50% retracement of the channel is currently at $8,200 and would represent a reasonable breakout target. A retest of the channel could possibly occur at $6,500.
The MACD histogram shows that there is bullish divergence forming and the MACD line itself has crossed bullish and plotted a higher low which is also a sign of bullish divergence.
The on-balance volume indicator (OBV), a tool that is demonstrative of the directional strength of cumulative volume, also shows a bullish divergence which is concurrent with the decreasing volume on the weekly chart. The OBV is however still trending down and a break out may imply a turn in the market.
Overall, the daily chart shows a reasonable case for the bulls but is strongly defined by the downtrend which must be respected.
BTC USD 4-hour chart. Source: TradingView
The 4-hour chart shows that Bitcoin is trading within a horizontal range between $7,900 and $6,500 and the digital asset has found support at the equilibrium of the two local extremities. At present, the 50% Fibonacci retracement ($7,200) is acting as support.
This is a positive sign for the bulls who hope to retest the upper $7,000s. However, failure to hold above $7,000 will almost inevitably lead to a retest of $6,500 which is in line with the downward channel on the daily chart. At present, the price action is leaning bullish but only marginally.
If the bulls can reach out and close in the upper $7,000s, Bitcoin price will complete an Adam and Eve pattern, which would imply that a move well into the $8,000s and as high at $9,000 would be possible. This would be quite significant and does make sense as it would mean Bitcoin reclaimed the previous weekly trading range, but at this stage is just pure conjecture rather than a direct prediction of an imminent move.
On the 4-hour timeframe, the MACD is reaching out towards the zero line, painting a higher high on the histogram, both of which are supporting the bullish case in the market. Trading volume is also declining within the range which implies that the market is winding up to make a definitive move.
BTC USD 4-hour chart. Source: TradingView
In summary, the market remains in a downtrend so any bullish signs must be taken somewhat lightly. However, it is clear across all timeframes that Bitcoin’s price action is attempting to flip to the bullish side.
There are signs in the trading volume and the momentum in which the decline has somewhat subsided. The likely outcome is that there will be more volatility within this current consolidation before Bitcoin makes more of a definitive move to retest previous critical weekly support and resistance levels.
The views and opinions expressed here are solely those of the (@filbfilb) and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Turn Of Events: General Manager of BIS Urges Central Banks To Embrace Digital Money
The General Manager of the Bank of International Settlements (BIS), Agustin Carstens, has urged for central banks to embrace digital money. He added that the financial world is going through a revolution at the moment, and banks, being trustworthy establishments, should be in control.
The Digital Money Revolution
The head of BIS, Agustin Carstens, appears to be taking a new stand regarding digital money: He said in a recent speech that central banks need to take control over digital assets so that they can establish specific standards.
In his words, central banks deliver the needed basis for trust in the system because they can ensure security and liquidity. Besides, the responsibility falls on them to remain at the center of global payment systems; otherwise, they will fall back, and “events will overtake us.”
Despite the above, he believes that there’s a brighter future if banks work together with the private sector for better technological innovations:
“Central bank public goods improve the functioning of the monetary system. They do this by
giving the private sector greater scope to innovate, for everyone’s benefit. Central banks amplify the efforts of private-sector innovators, by giving them a solid base to build on.
This is where central banks need to focus their efforts. Today’s technological advances can certainly help to build a more efficient and more inclusive financial system, and central banks need to embrace that innovation. At the same time, their traditional functions are tailor-made for the many innovations on the horizon, including central bank digital currencies (CBDCs).”
Pro Digital Money, But Against Bitcoin
Agustin Carstens’s views against Bitcoin and its purpose are well-known within the crypto community. In his latest speech, he is still unfavorable towards the most significant cryptocurrencies and other projects from big tech companies, such as Facebook’s Libra:
“A gleaming skyscraper is an awesome sight. But when we admire one, we often overlook its foundations. These are out of sight, below ground level. But just because they are not visible, it does not mean that they don’t matter. On the contrary, they matter a lot.”
Additionally, he was even harsher in another interview from last year. While he was answering a few questions regarding cryptocurrencies, saying that “they are not money […], they cannot assume the functions of money for the simple reason of how they are created.”
Moreover, Carstens expressed further negative feelings towards their usage, and his message to young people was – “Stop trying to create money.”
Bitcoin Bulls All Set To Charge Ahead
Way before when the falling wedge that we now see on the BTC/USD chart was a thing, we discussed in one of our video analyses from last month that people are going to gradually start talking about it and it will become common sight to see traders posting about it. That has finally happened and even though some think the falling wedge has yet to be broken, we believe that has already been broken and tested as support. The price is now ready to rally higher soon as it breaks out of the symmetrical triangle. This triangle now has just a few hours left before which it will have to make the decision to breakout either to the upside or to the downside. The EUR/USD forex pair has a very important role to play in this regard. We have seen the cryptocurrency market dance to the moves of this pair more strongly than before in the past several weeks. This is because the next move in this pair is going to be game changing for many markets. The cryptocurrency market is a very small one, but the EUR/USD forex pair or the S&P 500 (SPX) have had a pull on most markets for a very long time and this is why we see BTC/USD waiting for its next marching orders. If the EUR/USD forex pair ends the week below the trend line resistance but above the 38.2% fib extension level, we can expect another inconsequential week in BTC/USD but if we see this pair close above the trend line resistance then BTC/USD might rally higher over the weekend.
Ethereum (ETH) is in a similar situation as Bitcoin (BTC) and we can see on the 4H chart for ETH/USD that it has round two days to make a decision. If it breaks to the upside, we can expect a rally past $150 and eventually towards the $170 mark which would coincide with the 50% fib extension level. At a time when Bitcoin dominance (BTC.D) seems ready to decline further, Ethereum dominance (ETH.D) seems better placed to take advantage of the current situation and rally higher. If it ends up breaking past the 38.2% fib extension level, we can expect a similar rally that followed after it bottomed in a similar manner the last time. The Fear and Greed Index has turned from “extreme fear” to “fear” but there is still plenty of fear in the market. Until and unless the EUR/USD forex pair declines below the 38.2% or BTC/USD declines below $7,000 we have no reason to bearish on the market near term.