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In a potentially risky move, the 15 member nations of ECOWAS – Economic Community of West African States – have agreed to launch Eco, a “common currency” similar to the method the EU uses. Eco is expected to make its debut in January 2020. In an attempt to create more frictionless trade, West African leaders […]
Blockchain Expert Reveals Everything You Wanted to Know About Tokenization
An interview with Pavel Kravchenko, Founder of Distributed Lab.
CryptoNews had the opportunity to sit down and talk with Pavel Kravchenko, one of the world’s leading experts on blockchain and decentralized systems. We discussed the intricacies of tokenization in an interview setting. Together we have created a short, but comprehensive guide to understanding tokenization in the blockchain industry.
Pavel Kravchenko is a leading expert in blockchain development and cryptography, who does a lot of activity in the space. For over 4 years, he and his team have been working on projects to implement blockchain on an enterprise level.
As a result, they have obtained vast expertise, which they continuously invest in conducting education in the space (conferences, workshops, online courses, etc.).
Mr. Kravchenko is the founder of a software company which has launched a solution for fast deployment of blockchain applications for businesses and enterprises called TokenD.
Also, Pavel is a published author who has written a great book for understanding blockchain technology. It has been recently posted on Amazon and is called “Blockchain and Decentralized Systems”.
Most of our readers are well versed in everything that has to do with blockchain, but it’s always good to start at the beginning. For starters, let’s define the term. What is tokenization?
This is a good question. Most people consider tokenization as the process of issuing tokens, which are backed by some asset, on a blockchain. While this is particularly true in the context of today’s trending blockchain-and-tokens-related topics, the value that the tokenization concept brings to businesses is, evidently, higher than simply issuing a nominal unit backed by something on a blockchain. Understanding what is tokenization is essentially about knowing this value.
In a single, strict definition, tokenization is the process of transforming the accounting and asset management processes that involves the usage of cryptography for protection of digital records and the consensus mechanism for the real-time settlement of financial transactions. In fact, this combination (cryptography + consensus mechanism) is essentially what blockchain is all about. Hence, you can make a conclusion that tokenization uses blockchain; it’s not really strict but could quite work on a superficial level of understanding.
In fact, to understand new concepts, people always find it much easier when you add context—to see what this concept presentes from different viewpoints. Therefore we have formulated four different perception levels on which tokenization can be reviewed.
At the business level, tokenization is the transformation of accounting that is aimed at introducing a number of benefits to business; some of them are:
Increase of asset liquidity as a result of reduced trading frictions (sometimes the result could even be an increase in the price of the asset itself, but that’s a separate topic, which we can talk about in the future.
Improvement of investment attractiveness of an asset, which as a result of a number of factors (easier control, transparent provenance tracking, lowered investor threshold, etc.)
Ability for instant audit for regulators and compliance procedure
Reduction of total cost of ownership of an accounting system
At the user experience level, a user (asset owner) is provided with a legal title to a corresponding asset and is also able to quickly and reliably transfer this right to other users directly (via their digital key) without having to transfer the asset physically. Unlike traditional systems of ownership rights, tokenization systems allow for a better level of user experience: all types of assets can be stored in one user wallet and are interchangeable, avoiding the need for a user to have separate applications for each system.
At the IT infrastructure level, tokenization presumes that there are separate entities, each having their nodes (servers), which all perform only the permissioned set of functions (e.g., one of the consortium companies has a node that maintains the system and performs the decision making, while an auditor only conducts an audit of the system and cannot change the records in the database; etc). This allows building a sustainable system which is reliably maintained by the needed parties and which is cheaper to maintain thanks to the new technological solutions.
At the technological level, tokenization presumes that—unlike traditional systems, where there is a single party maintaining an accounting whom every other should entrust the entire process—the system can be maintained by the needed parties mutually (this is highly valuable for the business world, where obviously entities do not trust each other to maintain the financial accounting). To make this possible, parties use cryptography for the protection of digital data and consensus mechanism to settle and reconcile the financial data in real time.
It seems that tokenization has a lot more depth than simply creating digital certificates for assets. What does it make sense to tokenize then?
Tokenization makes sense when you deal with any tradable assets which it makes sense for you to own in the form of a title and not necessarily having to own it physically.
The most evident examples are gold, dollars, etc. The less evident are real estate and art pieces. Interestingly, tokenization could allow making previously illiquid assets (such as, again, artwork and real estate) liquid. This is generally achieved through two advances: the ability of fractional ownership (e.g., splitting the ownership of an art piece into thousand fractions decreases the investor entry threshold, effectively introducing new players to the market) and an efficient secondary market.
The word efficient in such context means faster transactions on the secondary market. For example, a traditional transaction for selling a piece of the real estate property requires an in-person meeting, tons of stamped paper, etc.; this can take up from a couple of days to weeks or months. At the same time, a digital transaction can be processed within seconds. Worth noting, tokenization doesn’t enable a secondary market (it existed long before it and would have existed without it as well), but rather it creates the necessary conditions (provable provenance, fully-fledged digital identity, easily and reliably regulated digital environment, etc.) that make the secondary market efficient.
What are some bad examples of tokenization?
Bad examples are 99% of ICOs, which use the newest technological basis of blockchain and try to fit it to an unviable business model of a utility token for a centralized business: in most cases, what they do could be compared to as if Apple would sell iPhones with 50% discount for those who pay with Apple stocks.
In which aspects can a company expect savings by implementing blockchain?
Specific figures are extremely dependent on the size and current inefficiencies in a particular company whose assets you are trying to tokenize. It’s much better to focus on two very important parts of one company, whose efficiency is severely improved by tokenization. Those two parts are security and automation.
What I mean is that things have changed since, for example, 2005 when the internet was no more than about exchanging emails, chatting on social media and googling things. Now the internet is where we do most of our social activity (buy/sell commodities, send money, etc.). So, at one moment, it turned out that traditional methods of providing security lag behind the expansion of the internet.
As a result of this, the amount of money an entity spends on providing security increases dramatically, while the effectiveness of this security decreases.
“Annual online payment fraud losses from e-commerce, airline ticketing, money transfer, and banking services, will reach $48bn by 2023; up from the $22bn in losses projected for 2018” (Juniper Research)
Such a situation is a clear indicator that something has to be changed. What will be changed is that online security will no longer be focused only on the straightforward methods of protection.
To understand the basic idea, take a look at Bitcoin. It is the first ever accounting system which is secure, but which doesn’t use direct protection—having bypassed which you gain access to controlling the system—(physical vaults, firewalls, security administrators, crocodiles etc.). Instead, it uses cryptography for data protection, while the entire database is maintained by parties who are dispersed in different places.
Similar techniques could be applied to the business world (ERP systems, logistics, supply chains, identifications, etc.), and more on that, with even higher efficiency since in the business world you don’t have to provide the features of the full anonymity and permissionless operation, which are the basic reasons of why Bitcoin consumes an immense amount of energy.
In our case, many things will be automated, but one of the primary ones is the process of the financial data reconciliation, which, thanks to tokenization, will occur in real time and without trusted parties.
What reconciliation means. Reconciliation of banks is needed when Alice who is the customer of Bank A sends money to Bob who is the customer of Bank B. Since these are two different systems, they have to somehow both update their accountings accordingly: Bank A needs to decrease the money balance on Alice’s accounts, while Bank B needs to accordingly increase it on Bob’s account. This is a problem since banks do not trust each other.
So, having armed with traditional methods, which are being used today globally, banks technically have two options:
Reconcile in real time but via a third party they both trust (e.g., Swift), who will pass messages about who owns how much in real time.
Reconcile without a third party but not in real time: This is how it mostly occurs today: both Bank A and Bank B independently of one another compose files where they specify who owns how much and then, at the end of the day, they exchange these files. If the files match, the reconciliation process can be considered successful. If not, then, Houston, we have a problem:)
Today, the entire banking system works in such a way. This consumes a lot of time and money. The usage of blockchain would allow these two banks in our example to both agree on who owns how much in real time and without a trusted third party.
You’ve done a lot of work with helping companies and businesses take their first steps towards tokenizing their process or assets. What are the most promising results for tokenization?
There are many results that we are looking to see when supporting our clients with their tokenization efforts. The variety is based on the nature of a particular business or organization. Anyway, before I outline some of the basic innovations of tokenization, it’s worth noting that not all of them will be manifested right off, due to a number of challenges (I believe we will cover some in this interview).
Creation of the necessary conditions for the secure digitization of processes and ownership rights (leading to much higher automation within an organization, company, etc.)
Introduction of the new security standards, which will not only make the digital ledger maintenance more secure but also cheaper
Increasing the liquidity of assets (not all but many)
Democratization of finances by introducing smaller investors to markets that were previously controlled by whales (real estate, art, etc.)
Possibility to work in a consortium mode where all data is securely synchronized between companies in near real time, without a trusted party in-between;
Real-time audit with an ability to check the authenticity and integrity of the received data (i.e, an auditor will be able to make sure that he/she doesn’t receive counterfeit data from the system, for example, that Alice has balance “3”, while in reality, she has “30”)
Storing and transferring assets in different systems with the guarantee of authenticity and finality of transaction;
Transparency and higher automation of decision-making as well as of other business processes;
Implementation of a full-fledged digital identity.
Technological basis for the introduction of entirely new business models (sharing economy is one example)
Blockchain technology and tokenization are helping international shipping providers and customers get more data regarding the shipments, conditions, and can help save a lot of time and effort along the supply chain.
There is a lot of excitement around tokenized assets. What do you think, what kind of role will tokenized assets play in the future?
I would say that it’s not about the role of tokenized assets but about the role of tokenization itself.
In some sense, you could say that it will play the role of a “bridge” in the process of transformation of digital systems backed by stamped papers (the way things are today) and digital systems which are no longer backed by papers and which become the primary source of information for people. This is a period in the future when authenticity of data is being proved not by a piece of paper with a signature on it, but by a sustainable shared digital ledger with transparent provenance history.
This will lead to the higher automation of processes which are currently manually performed. Interestingly, even today, many of these processes can already be transformed, but there are many challenges preventing this step in societal evolution.
What are the main challenges for implementing tokenization?
They mostly relate to the legal aspects. Tokenization is only the technological basis for the bridge I was talking about in the previous question. As it always happens with such technological enhancements, it takes time for people to accept the “new rules” both in legal and conceptual terms (especially when we talk about decentralization in the decision making process).
Tokenization and blockchain have a place in real estate. There are already existing implementation which have enabled real estate owners to make their property available to a variety of investors, both big and small, with the help of tokenization.
Would you be available to answer future questions from our community regarding the topic?
Yes, I would be happy to support your community with more targeted insights into anything related to this topic.
Thank you very much for your time Mr. Kravchenko. It’s been a pleasure speaking with you today! We are sure that many of our readers appreciate learning more about tokenization from such an experienced and knowledgeable individual in the industry such as yourself.
You are welcome. It’s been a pleasure to share my experience with you, and I am grateful that you have invited me to do so. We are looking forward to any and all questions about tokenization, and hopefully we have started a beneficial discussion which will attract many of your crypto and blockchain enthusiastic readers.
As we mentioned in the beginning, Mr. Kravchenko is a real expert in the field. Today, together with his team at Distributed Lab, they are using all of this experience to create a white label product that takes away the complexity of implementing blockchain solutions for enterprises as well as for small and medium businesses. If you want to learn more about his latest project, feel free to visit TokenD’s official website.
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Ethereum Hits Milestone Amid Crypto Boom, Where’s ETH Going Next?
Ethereum Passes One Million Daily Txs
Ever since Bitcoin (BTC) passed $10,000, Ethereum (ETH) and its altcoin brethren have fallen out of favor with crypto investors. You see, where the leading cryptocurrency heads will dictate the price action seen in the rest of the market.
But, investors and analysts have begun to eye Ethereum — the second seat — once again, with news that the asset’s blockchain has seen a massive uptick in usage, an uptick that resulted in the achievement of a large milestone.
As first spotted by crypto-friendly business news outlet Trustnodes, the number of transactions seen on the popular blockchain network recently surpassed one million per day — a figure not seen since December 2017. This figure is over 2.5 times higher than it was when Ethereum transactions/day count bottomed in late-2018 at around 380,000. But, 1,000,000 is still shy of the 1,300,000 all-time highs seen in January 2018.
Anyhow, the achievement of this seven-figure milestone isn’t the only positive sign. The number of active addresses has hit over 400,000, a level that signals continued interest in Ethereum applications and the use of Ether as a medium of exchange.
All this comes as Ethereum has seen a number of positive fundamental news. As reported by this outlet previously, researcher Justin Drake, a prominent figure in the cryptocurrency’s community, revealed in a recent developers call that phase zero of Serenity (Ethereum 2.0) is finally being confirmed spec-wise.
Phase zero is the activation of the so-called Beacon Chain, which will bring basic Proof of Stake features to the blockchain. With this, developers confirmed that they intend to launch this iteration of the project by early-2020, potentially on January 3rd, which will be the 11th anniversary of Bitcoin.
Also, Grayscale, the investment fund subsidiary of Digital Currency Group, has just released its second publicly-tradable product — the Ethereum Trust (ETHE). Like its Bitcoin Trust, which owns over 1% of all BTC in circulation (and that will ever be mined), this new financial product is an “open-ended trust” that is backed by its namesake: Ethereum. The product, per a previous release, allows investors to gain “exposure to the price movement of ETH through a traditional investment vehicle without the challenges of buying, storing, and safekeeping”.
What’s Next for ETH?
Interestingly, most expect for Ethereum to fall against Bitcoin. As SalsaTekila points out, the ETH/BTC chart is about to print a quintuple bottom, which he claims is a sign of a “slow bleed”.
With each bottoming pattern, the support level which Ethereum bounces off on becomes weaker. This means that unless there is a strong bounce, ETH may be susceptible to dwindle to lower lows against Bitcoin, implying that investors should cash out of their positions.
Some have been a tad more bullish, however. Most notably, promient analyst Mitoshi Kaku claims that should his use of Gann Theory (market is cyclical theory) be accurate, ETH may be poised for a 52-day bull run, which may see it bounce strongly off the levels seen now.
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Bitcoin is on fire this year but you can’t quite call it a “crypto comeback”… just yet, as The Wall Street Journal points out. Investors are starting to doubt a corresponding return in alternative cryptocurrencies, and for good reason. Altcoins are still well off their 2017 highs. Many alts have, in fact, gone to zero […]
Ethereum Transactions Surge as Analysts Predict an Imminent “52-Day Bull Run”
Ethereum and the aggregated crypto markets surged yesterday just prior to Bitcoin incurring a sudden influx of selling pressure that sent the markets reeling down. Despite this, ETH is still in a clear uptrend, and improving fundamental conditions could help it surge higher.
Additionally, Ethereum’s transaction volume is surging as of late, which may be one improving fundamental aspect of the cryptocurrency that could help incubate a possible “52-day bull market” that one analyst is anticipating.
Ethereum Drops Below $300, But Bulls Are Still in Control
At the time of writing, Ethereum is trading down just less than 3% at its current price of $298.8, which is down from its daily highs of $320 that were set yesterday.
Although Ethereum’s recent drop is by no means marginal, it is important to remember that the cryptocurrency is still up from its one-month lows of $230 and is up significantly from its three-month lows of $140.
ETH is now approaching $280, which is a price point at which it previously found support after falling from its weekly highs of $360 that were set earlier this week.
Importantly, through the course of Ethereum’s recent bull run, its transaction volume has climbed significantly, running from February lows of 380,000 to highs of over 1,000,000 this past Friday.
The increasing transaction volume does appear to be emblematic of improving fundamental conditions, which may signal that the cryptocurrency’s price action in the foreseeable future which reflect this.
Could ETH Soon Have a 52-Day Bull Run?
Assuming that the improving fundamental conditions do actually translate into positive price action in the near-future, analysts are now noting that Ethereum may soon incur a multi-month bull run.
Mitoshi Kaku, a popular cryptocurrency analyst on Twitter, spoke about this possibility in a recent tweet, explaining that a bullish technical formation that is likely to form in the coming week could spark a massive rally.
“Gann pivot for $ETH (BTC) this week. – Could potentially have a 52 day bull run,” he noted.
Furthermore, Kaku also explained that this formation will likely be formed sometime in the first week of July.
“A little explanation to those that want to understand the analysis in a better way. These are the levels I am looking for, and the signals are there already. The next time that Chikou line goes above and retest the cloud it will be bull time. Plan accordingly. Maybe 7/5-7/7,” he explained.
A little explanation to those that want to understand the analysis in a better way. These are the levels I am looking for, and the signals are there already. The next time that Chikou line goes above and retest the cloud it will be bull time. Plan accordingly. Maybe 7/5-7/7 $ETHpic.twitter.com/IXzTWwbTwc
Although Bitcoin’s near-term price action will likely guide the markets, the culmination of bullish fundamentals and bullish technicals could help lead ETH significantly higher in the coming days and weeks.
Ethereum’s Daily Transaction Volume Is Over 1 Million
The Ethereum network is popular. According to Etherscan, the volume of daily transactions exceeded one million for the first time since May 2018.
Etherscan is a site which analyzes ETH data. It shows that on June 28th, a total of 1,004,170 transactions got confirmed on the ETH blockchain. While this is a high number, it still does not match the record of 1,349,890. It happened on January 4th, 2018. That said, it is significantly higher than the all-time low of 1,329 transactions. That happened on August 9, 2015. However, the trend did not last for long. Yesterday, for example, the respective number was only 733,337.
The ambition is promising, as ETH is steadily rising in price. Back in May, Altcoin Buzz reported that it hit its highest level since September 2018. It traded at $288. Now, its price fluctuates within the boundaries of $300.
Kakao Launches Klaytn Blockchain, Receives Support From Top Firms
Kakao’s blockchain arm, Ground X, announced that Klaytn’s aim is to bring about the mass adoption of blockchain services and substantiate the value and utility of blockchain technology.
More blockchain projects
Based on feedback from partners in a public testnet trial in October, the network is said to have a speedy response time on the level of legacy web services.
According to the firm, stability has been confirmed by different security companies using high-intensity testing. The blind testing for developers and users also helped Ground X improve the Klaytn user experience. Ground X also announced that nine blockchain projects including HintChain, Antube, and Pibble, would be released simultaneously on Klaytn in July. In addition, some blockchain-powered game services, developed by three major game studios would join Klaytn.
Based on the white paper, the Klaytn blockchain takes a hybrid approach. The approach adopts the concepts of consensus nodes (CNs) and ranger nodes (RNs) to achieve both scalability and transparency. The CNs are invited partners on the network, they form a private blockchain to batch and confirm transactions by running a Byzantine fault-tolerant (BFT) consensus algorithm. Therefore, public users can connect to the network and participate as an RN, who is assigned the duty of double checking blocks that have been propagated by CNs. In today’s press release, Ground X explained new details of the consensus mechanisms, stating: “Further, in order to encourage service providers to maintain a stable network, Klaytn features transparent evaluation and incentive mechanisms called Proof of Contribution (PoC) and Klaytn Improvement Reserve (KIR). PoC assesses the contribution level of all economic entities within the Klaytn ecosystem and provides KLAY token that correspond to each entity’s level of contribution. KIR, on the other hand, is allocated to anybody committed to maintaining sustainable ecosystem growth through various activities such as platform research or community events.”
Bitcoin Fundamentally Bullish, But Near-Term Technical Forecast Could Be Gloomy
Bitcoin and the aggregated crypto markets have once again faced a bout of downwards pressure today that have led most cryptocurrencies to drop several percent, with BTC briefly falling below $11,000 before finding some buying pressure that allowed it to climb higher.
Now, analysts are noting that BTC is currently facing some levels of technical weakness, but its fundamentals have never been more bullish, which may ultimately translate into an extension of the positive price action it has incurred over the past few months.
Bitcoin Finds Buying Support in $10,000 Region
At the time of writing, Bitcoin is trading down approximately 6% at its current price of $11,320 but is up slightly from its daily lows of $10,900 that were set earlier today.
Bitcoin’s recent volatility first began earlier this week when BTC hit highs of $13,800, at which point the crypto was unable to find enough support to maintain its parabolic surge, which subsequently led it to fall to lows of $10,500.
In the time since, BTC has been oscillating between its recent lows and highs in the lower-$12,000 region, which has proven to be a level of relative resistance for the cryptocurrency.
This newly established trading range has held for the past few days, and unless buyers or sellers step up and begin forcing a large move in one direction or another, it is highly likely that this trading range will persist for the near-future.
DonAlt, a popular cryptocurrency analyst on Twitter, shared his thought on Bitcoin in a recent tweet, explaining that he believes it will ultimately drop towards his near-term target of roughly $9,400.
“$BTC update: Green level toast, good news for bears.We’re now chilling at the last swing low before a major breakdown. If that doesn’t hold we’ll most likely go straight to my target. I could see a tiny bounce from green into red but ultimately I expect my target to be hit,” he explained.
Despite Near-Term Weakness, BTC is Technically Strong
Although in the near-term it does seem as though BTC will soon face increased selling pressure that could send it reeling to below $10,000, while keeping in mind that macro uptrend and its increasingly bullish fundamentals, it does seem as though bulls have nothing to worry about.
Alex Krüger, a popular economist who focuses primarily on cryptocurrencies, spoke about some of these bullish fundamental developments in a recent tweet, noting that they could ultimately help lead to positive price action.
“Fundamentally, many bullish catalysts still ahead: Fidelity, Bakkt, Ameritrade, Etrade. Bakkt would begin testing its futures Jul/22. Retail interest is steadily climbing, and so is institutional interest, which has been piqued due to $BTC’s performance and macro narratives,” he explained.
Although it remains somewhat unclear as to where Bitcoin is heading in the coming days and weeks, once the price begins catching up with the positive developments that have been occurring over the past year it is likely that long-term investors will be rewarded.
With Altcoins on the Rise, do Analysts Expect For Bitcoin (BTC) to Outperform?
Ever since Bitcoin (BTC) began to rally in April, altcoins fell out of favor with most in the crypto community. No longer were people looking for the next winner, they were instead trying to determine where the leading crypto asset would top out.
And top Bitcoin did earlier this week. After rallying by 20% in a single day — a daily gain not seen since early-April — BTC collapsed by over $3,000 in the following 36 hours, showing an uncharacteristic bout of weakness amid a wider uptrend.
With this move, altcoins, for some reason, have become the talk of the town once again. In fact, as popular cryptocurrency trader Nik Patel has pointed out, worldwide “search interest” (as defined by Google) for the term “altcoins” is expected to reach 12-month highs this week.
It isn’t clear why exactly this is the case, but it could mark a migration of Bitcoin profits into smaller digital assets, many of which have suffered greatly as BTC has found itself up week-over-week. But, do analysts expect for altcoins to outperform the market leader?
Well, to answer the aforementioned question, yes and no. Yes in that some altcoins will likely outperform Bitcoin; no in that many are likely to underperform BTC, and may even be wiped off the face of the cryptocurrency market.
What this writer is referring to is the bifurcation between “good” altcoins and “bad” altcoins. Over 2016 and 2017’s crazy bull run, which saw Bitcoin appreciate by 2,000%, but altcoins simultaneously gain tens of thousands of percent, there were countless digital assets created.
Each startup tried to fit a cryptocurrency into their business model, even if the viability of the asset or blockchain wasn’t there. Despite the array of uninspired coins, most rallied anyway, catalyzed off good marketing, social media manipulation tactics, and what is best known as “The Fear of Missing Out”, FOMO.
But, with the crypto asset market now maturing, especially in terms of institutional involvement, most analysts expect for a large rift to grow between those projects deemed promising and those deemed horrid.
For instance, in a recent interview with BlockTV, a Binance executive explained that in the coming market cycle, investors will start to determine the good assets from the bad, hence why many cryptocurrencies are performing differently.
Bitcoin, for instance, is up over 200% from the bottom; Litecoin, some 600%; Binance Coin, at least 400%. And at the same time, many assets have dwindled, losing traction for some reason or another. This bifurcation may continue according to notable commodities analyst Peter Brandt.
He says that the uptrend in Bitcoin dominance could continue, quipping that “crypto maniacs” who believe altcoins will “benefit from bull runs in Bitcoin… may be very disappointed.”
Backing his point, Brandt likens the previous bull run to the Nasdaq’s Dotcom boom and bust, but this surge to the subsequent rally, during which “altcoms” died out and “dotcoms with real value exploded.”
20,000 Bitcoin (BTC) Short Claimed on Bitfinex: Bullish or Bearish?
Bitcoin Short Worth $200M+ Claimed
On Sunday, a trader on Bitfinex claimed, not liquidated, 20,000 Bitcoin (BTC) worth of shorts — a position that was collateralized by over $200,000,000 worth of the cryptocurrency if unlevered. It is important to note that prior to the claim, there was a mass inflow of Bitcoin onto Bitfinex.
For those unaware of the complexities of Bitfinex’s long-short trading system, the “claim” means that the trader (assumed to be one entity due to the speed of the claim) used funds in his/her/their margin wallet to settle the short. Unlike liquidations, which happens when shorts or longs are forced to close their positions after a large move, all this activity occurs off the order book. As Bitfinex writes:
Claiming a position is essentially converting from a margin trade into an exchange trade; closing the position by buying it yourself and settling your funding costs to the lender. Because of this, there is no trading activity on the order book.
Due to this, the number of BTC shorts on Bitfinex fell to 9,686 BTC, which is a far cry from the 30,000 BTC that the figure was sitting at prior to this claim. What do analysts have to say of this movement in the market, which seemingly didn’t lead to a direct bout of buying or selling pressure?
The Bear Case
As a number of individuals have pointed out, there now remains an imbalance of long to shorts on Bitfinex. In fact, the long to short ratio now sits at 67% to 33%, meaning that buyers and outweighing sellers at current.
With many in the cryptocurrency trading community believing that they should go against the grain, selling instead of buying into a long-heavy market could occur, leading to downward price action. Interestingly, the value of BTC has fallen slightly since the claim, potentially corroborating the theory that traders are selling as a result of this shift on Bitfinex.
Another reason why this may be seen is bearish is that due to there being fewer shorts open, Bitcoin has less of a chance to experience a short squeeze. You see, when shorts are liquidated when Bitcoin shoots higher, they are forced to buy BTC on the spot market, resulting in cascading price action to the upside. With there being fewer shorts open now than before, the chances of a squeeze and the potential of said squeeze have dropped.
The Bull Case
On the other hand, there is a reason to believe that the 20,000 BTC claim may not be exactly bearish per se. Last time there was a large claim on Bitfinex, Bitcoin temporarily dipped. But then after that, BTC continued higher, returning to the pre-claim levels, to then set new year-to-date highs.
While analysts have been trying to interpret this statistic as a bullish or bearish indicator, one prominent researcher, Alex Krüger, explains that it may be unwise to rely on Bitfinex’s market data as a way to influence your trading. This is likely in reference to the fact that whales could spoof positions and that the crypto market can act irrationally, meaning not dependent on the number of longs or shorts open at any one time.
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Polkadot Protocol, the first project out of Web3 Foundation (W3F), closed its second private sale of tokens selling 500,000 DOT (five percent of the total supply). This operation confirms an evaluation of around $1.2 billion. This based on a report from crypto publication The Block June 27, 2019. Successful Round for Polkadot Polkadot, a future multi-chain
Bitcoin Must Break Above $12,444 Or Else Price Breakdown May Occur, Claims Prominent Analyst
Bitcoin and the aggregated crypto markets have been facing tremendous volatility over the past several days and weeks, with BTC oscillating between the $10,000 and $12,000 region, making relatively large moves between each of these two price regions.
Now, the prominent analyst who predicted Bitcoin’s recent bull run is warning investors that Bitcoin may be forming a dangerous chart pattern that historically results in price breakdowns across different markets, and that a surge is needed to invalidate this possibility.
Bitcoin Plummets Below $11,000… Again…
At the time of writing, Bitcoin is trading down nearly 8% at its current price of $10,960, which is down significantly from its daily highs of $12,200 that were set yesterday.
While looking at Bitcoin’s weekly price action, it is clear that BTC is once again nearing a region of historical support that must hold, as it previously found strong buying pressure in the low-$10,000 region.
Additionally, BTC will be closing out its weekly candle today, which means that bulls must step up the buying pressure over the course of the next several hours or else the downwards pressure could continue to extend due to technical weakness.
Josh Rager, a popular cryptocurrency analyst on Twitter, spoke about the importance of tonight’s weekly close in a recent tweet, explaining that he believes the next downside target exists at $9,500.
“$BTC – price just broke below $11,500. Want to see Bitcoin regain momentum and close above this level by weekly close tonight. Monthly close is looking good, strong month of June but BTC still has ability to retrace to $9500 in coming weeks. Keep an eye on this area,” he explained in a recent tweet.
Prominent Analyst: BTC May Break Down Due to Historically Bearish Technical Formation
Peter Brandt, a prominent analyst who predicted Bitcoin’s recent bull run, recently told his nearly 300k Twitter followers that Bitcoin is currently forming a historically bearish technical formation that has result in downwards breaks in other markets.
“The analogue concept is a foundational premise of chart analysis — that forms tend to repeat, even in different time frames. Nasdaq 100 in 1999-2000 vs. BTC currently. Advance above 12444 violates possible analogue $BTC Forewarned = fore-ready,” he explained in a recent tweet while referencing the below chart.
The analogue concept is a foundational premise of chart analysis — that forms tend to repeat, even in different time frames. Nasdaq 100 in 1999-2000 vs. BTC currently. Advance above 12444 violates possible analogue $BTC Forewarned = fore-ready pic.twitter.com/PzYr0MgG1v
As the weekend wraps up and a fresh week of trading kicks off, it is highly likely that this aforementioned chart pattern will either be validated or invalidated, so how BTC responds to its current downwards pressure in the near-term is critical for its near-term price action.
Who deserves this? Ross Ulbricht questions U.S. government’s intent toward privacy and freedom
Ross Ulbricht is best known for being one of the rare individuals to serve two life sentences without parole for creating and operating darknet website, Silk Road. Ulbricht shared a hand-written article named ‘Who Deserves This?’ from the other side of his cage, as an urge to the general public to fight for his freedom. While the […]