It took less than 24 hours for the bitcoin price to recover from a 30 percent drop. Earlier today, on December 23, the price of bitcoin recovered from $11,500 to $15,000, as the cryptocurrency market began to demonstrate optimistic signs of growth.
Factors of Potential Short-Term Rally
Since yesterday, the market valuation of cryptocurrencies has increased from $480 billion to nearly $600 billion. Every single cryptocurrency in the market, which previously recorded major corrections, rallied, with bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin and other cryptocurrencies in the market recording large gains.
Bitcoin in particular demonstrated a rapid increase in demand from global marekts including the US, Japan, and South Korea, as the daily trading volume of the cryptocurrency achieved $15 billion. That is, a daily trading volume that is larger than that of most stock markets.
Analysts such as billionaire hedge fund legend Mike Novogratz and RT’s financial analyst Max Keiser stated that with the recently acquired momentum, the bitcoin price could rally to $24,000 in the short-term.
“Bitcoin pullback very healthy for this bull market. $28,000 now in play,” said Keiser, as the cryptocurrency market rebounded and showed speedy recovery after a substantial decline in market valuation.
In the short-term, there are several driving factors that could lead to a bitcoin price surge. This week, it was reported that the Chicago Board Options Exchange (Cboe), the largest futures exchange in the global finance market which listed bitcoin futures in partnership with Gemini, and the New York Stock Exchange (NYSE) have filed bitcoin exchange-traded fund (ETF) applications to the US Secruties and Exchange Commission (SEC).
The main difference between futures and ETFs is that the latter is more accessible to individual investors and traders in the stock market. With a bitcoin ETF, any investor in a major stock market such as NYSE or the Nasdaq can trade bitcoin with ease, through existing accounts.
“Given the success of the launch of our bitcoin futures, several partners are very interested in moving forward with the development of an exchange-traded product.”
Last week, NYSE revealed the filing of its ProShares bitcoin ETF, announcing that investors in the ETF will benefit from long Bitcoin futures contracts.
“By being long Bitcoin Futures Contracts, the Fund seeks to benefit from daily increases in the price of the Bitcoin Futures Contracts. The Fund will not be benchmarked to the current price of bitcoin and will not invest directly in bitcoin. When the price of Bitcoin Futures Contracts held by the Fund declines, the Fund will lose value,” the SEC filing of the NYSE bitcoin ETF read.
More Institutional Money, More Liquidity
By quarter 1 of 2018, Nasdaq will list bitcoin futures into its exchange and the bitcoin ETFs of Cboe and NYSE will likely be approved by the US SEC, given the government’s enthusiastic approach with the bitcoin futures market.
In the mid-term, the entrance of more institutional money into the market will enable bitcoin to further solidify itself as an emerging asset class.
Bitcoin price has made marked gains in the early days of April as prices reach a high of $1,133 on a global average, gaining over 3% in a 24-hour trading period.
As bitcoin gains recognition as a legal method of payment in April, the beginning of a new fiscal year in many regions around the world has coincided with marked gains by the world’s most popular cryptocurrency with renewed interest amid traders.
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Data from the Bitstamp Price Index (BPI) reveals bitcoin prices starting the month on Saturday at $1,070. Flirting with $1,100 throughout the weekend, bitcoin breached the level with a leap in the early hours of trading on Monday (UTC). Bitcoin price began the day at $1,076 on the BPI before a positive 60-minute trading period helped prices scale to $1,107 at 01:00 UTC.
The bullish trend stuck, with gains made through the early half of Monday to reach 2-week BPI high of $1128.9 at 06:00 AM.
Despite a brief dip, the rising trend sees bitcoin price trading near the high as it pushes toward $1,130 on the BPI.
At this time last month, bitcoin prices were trading at record all-time highs, reaching the $1,300 milestone in the lead-up to the SEC’s decision concerning the Winklevoss brothers’ bitcoin ETF. Ethereum, the second biggest digital currency after bitcoin, also made remarkable gains, as both cryptocurrencies spurred the digital currency space on to scale a combined market capital of over $24 billion. On the day of the ETF decision, bitcoin spiked to an all-time high of $1,350 on Bitstamp. However, the SEC’s rejection resulted in bitcoin prices crashing below $1,000.
Bitcoin prices’ newest influencer stems from the ongoing scalability debate that has spurred on talk of a possible hard fork of the cryptocurrency’s core. The uncertainty resulted in bitcoin trading below $1,000 after mid-March. However, there appears to be renewed confidence among traders with over $700 million in bitcoin traded over the last 24 hours.
Years after the Mt. Gox debacle that engulfed the now-defunct Tokyo-based bitcoin exchange – the largest in the world at the time- into controversy, Japan’s recognition of bitcoin as a legal payment method is a resounding vote of acceptance for the cryptocurrency ecosystem as a whole.
Bitcoin has encountered fierce resistance at the 4th arc for the past 2 days. (A reminder that my charts are taken off the Kraken exchange. Other exchanges have charts that are a bit different.)
Let’s start with a look at the daily chart:
Since the last time I wrote, price was able to overcome the 1st arc of the pair. It was then stopped by the 2nd of the pair, rather mercilessly. I remained a bit optimistic about the immediate future, until I saw that price closed below the arc pair a few hours ago. This is hardly bullish and suggests that prices will likely be flat to lower for the immediate future.
The 8-hour chart yields a similar picture, with a bit more detail:
There is a tiny bit of good news for bulls on this chart however. At the swing high, price closed ever-so-slightly above the 2nd arc of the pair. This suggests that the 2nd arc is vulnerable. However, there is no guarantee that it will surrender anytime soon.
Finally, let’s look at a 2 hour chart for more detail still:
Here, as you can see, the 4th arc has been insurmountable ever since it was encountered by pricetime 2 days ago. I am a bit concerned by the fact that price (briefly punctured the 1×1 angle (blue line) recently. If we see a close below that angle, this will be quite bearish.
To get a look at the bearish argument, let’s look at a bear setup on the 2hr chart:
Here we see that the low of the last candle just passed the 1st arc and the 2×1 angle, and found support there – at least temporarily.
This is not, imho, a time to open any new positions, either long or short. If one is already holding a position either way, it might sense to keep it open just a bit longer to see which happens first – a close below the 1st arc (quite bearish) or a close above the 1×1 angle (bullish).
Happy trading!
Remember: The author is a trader who is subject to all manner of error in judgement. Do your own research, and be prepared to take full responsibility for your own trades.
It is rare that the London sky shines so bright you can’t find one cloud, but that was the weather yesterday in the capital that once used to run an empire where the sun never sets. In Washington DC, which has in many ways taken on that banner, the weather was more somber, just slightly less rainy than during the vote for Brexit, reflecting in both cases the seriousness of a monumental task that now faces the world and the country.
“We assembled here today are issuing a new decree to be heard in every city, in every foreign capital and in every hall of power. From this day forward, a new vision will govern our land.”
So thundered the newly elected president, putting to rest any speculation that he might soften his tone. Instead, both implicitly and explicitly, the speech indicated that Trump is now to go full speed ahead with what he has promised. That suggests current market trends will probably continue as somewhat confirmed by bitcoin’s recent $40 rise.
Bitcoin’s Price Rises Following Trump’s Inauguration – Image from BitcoinWisdom
Traders are betting that Trump’s plans are good for the economy. The already revamped White House website promises a “return to 4 percent annual economic growth,” through a one trillion infrastructure spending stimulus, “lower rates for Americans in every tax bracket,” and, somewhat directly relevant for our space, a “moratorium on new federal regulations” which “cost the American economy more than $2 trillion.”
With the republicans now controlling all legislative branches, the above economic plan is likely to go through in a relatively easily manner compared to his other aims. Moreover, it is doubtful any of it will be much diluted as Trump has seemingly made it clear in his speech that there won’t be any uturn:
“The establishment protected itself but not the citizens of our country. Their victories have not been your victories. Their triumphs have not been your triumphs. And while they celebrated in our nation’s capital, there was little to celebrate for struggling families all across our land. That all changes starting right here and right now… [w]hat truly matters is not which party controls our government but whether our government is controlled by the people.”
Facing opposition, within and outside his own party, he’ll need to maintain the support of the people. So far, he has not disappointed them. In fact, he has offered them hope and optimism for the future, promising in his speech that “we will bring back our dreams,” further stating:
“We stand at the birth of a new millennium, ready to unlock the mysteries of space, to free the earth from the miseries of disease and to harness the energies, industries and technologies of tomorrow.”
It is still just words, but how anyone will retain trust in the political system if those words are not maintained after being told “[t]he time for empty talk is over. Now arrives the hour of action,” is unclear. Perhaps, therefore, we may shift and consider the new reality as well as the biggest question now facing the world with the answer having a significant effect on bitcoin’s behavior.
Confrontation or Cooperation?
“We will seek friendship and goodwill with the nations of the world, but we do so with the understanding that it is the right of all nations to put their own interests first. We do not seek to impose our way of life on anyone but rather to let it shine as an example… We will reinforce old alliances and form new ones. And unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.”
From China to Arabia, Europe and South America, a defining question is preoccupying glittery halls. Do they risk confrontation, or opt-in for co-operation?
For Arabia, any proxy wars between America and Russia, exemplified by the former’s support for Saudis and the latter’s for their geopolitical rival, Iran, will hopefully be brought to an end. How, exactly, is not clear as what little is now officially stated is far too general:
“Defeating ISIS and other radical Islamic terror groups will be our highest priority. To defeat and destroy these groups, we will pursue aggressive joint and coalition military operations when necessary. In addition, the Trump Administration will work with international partners to cut off funding for terrorist groups, to expand intelligence sharing, and to engage in cyberwarfare to disrupt and disable propaganda and recruiting.”
“Peace through strength will be at the center of… foreign policy.” – his administration now says. Whether showing great strength in the middle east will be the right decision, probably in cooperation with Russia as well as maybe all of NATO, is difficult to judge impartially, but what is easier to say is that the longer this continues, the more a minority on both sides will be radicalized, at a great cost for both, increasing the urgency for a quick end to this confrontation.
The Trump administration has a strong mandate regarding ISIS, so referring to them throughout the campaign, but whether he can end this 15-years long war which, in the process, would restore the reputation of the vast majority of Muslims, remains to be seen. If he does, markets are likely to very positively react both within and outside the blockchain space.
On China, they have recently softened their tone and have suggested a desire for co-operation. Trump will probably accept their offer and begin negotiations, with the two countries’ strong economic dependence towards each other likely leading to an agreeable outcome for both, but, whether that will indeed be the case or whether they instead repeat the mistakes of almost exactly a century ago, remains to be seen.
Domestically, the left in America likewise has to decide whether to co-operate or confront the new administration. President Trump and Bernie Sanders share in common some views, especially on trade, but much of the opposition has been regarding more cultural aspects. To that, he said:
“It is time to remember that old wisdom our soldiers will never forget: that whether we are black or brown or white, we all bleed the same red blood…”
There is a minority of racists in all colors who use it as an excuse to gain power and subjugate others, as there are small minorities who want their country to rule the world or to impose their religion upon others, but, by far, the vast majority of America, and, in my view, certainly Trump, do not see color, or gender, or sexual orientation, or nationality, so knowing there are people of good and bad character in all those groups. The left may, therefore, eventually, save their resistance for when it actually matters and has a chance of gaining the support of independents.
The Rise Once More of the Cross-Atlantic Alliance
It was almost 40 years ago that Ronald Reagan and Margaret Thatcher undertook structural reforms that shaped and still shape the world. Securing their place in history as, after a difficult period of transition, peace and economic prosperity followed.
Trump is no movie star and May is no Thatcher, but the people of Britain and the people of America have clearly once more ushered in a new era. Partly due to economics, but also, in my view, as a backlash against an elite that has given us 15 years of war and appeared to have no intention of ending it.
The very close decision by the free people of both Britain and America in the EU referendum and in the presidential election reflects the difficult choice that was to be made. Some may still fear, but our space, in particular, is a great example of the global world we live in. We interact with bitcoiners from Argentina, China, Dubai, Russia, South Africa, all over Europe and all over the world. Many of us have grown up chatting to individuals from countries across the globe. We see no color, no nationality, no religion. We consider all those qualities irrelevant wherever there is injustice. We just want back the peace and optimism of the 80s and 90s and, who knows, maybe we now might get it as Trump clearly indicates we are to move full speed ahead.
Disclaimer: The views expressed in the article are solely that of the author and do not represent those of, nor should they be attributed to CCN.
On a traffic laden Tuesday, when the sky seemed a bit undecided, swinging between the sunshine and rain, a man was preaching about Bitcoin and its ‘magical powers’. Since I was struggling to stay awake in that sleep enhancing weather, I missed the first part of the message. However, at the mention of the miraculous power of this coin to make one recession-immune, my grogginess disappeared.
The Bitcoin evangelist continued reeling out examples. The one that stood out in my memory was the testimony of how a man used a few Bitcoins to purchase a land in Ajah, Lagos. Wow! After 30 minutes of testifying, he asked all those who might be interested in knowing more to call a number and that registration for its training costs just a token.
It is interesting to note that Bitcoin is not only trending in Nigeria, there have been several questions on Quora about it. This suggests a misunderstanding or outright ignorance of the concept and its proposed benefits.
Since a ‘token’ may rank between a few hundreds to several thousands of precious Naira in present economic situation, this explainer may come in handy for the interested and MMMers (who allegedly, will be paid in Bitcoins).
What is Bitcoin?
It is also known as internet money, a digital currency that can be used to conduct business outside the typical financial system. It is not printed. It is more like “cash for the internet”. This means that it is not controlled by banks or the government.
It was first processed in 2009, by an anonymous person using the alias Satoshi Nakamoto.
How is it produced?
Bitcoin mining
While conventional currencies may be mined in gold, silver or copper, Bitcoin is not physically printed. It is produced based on a network of open source software programs which follow a mathematical formula.
How does it work?
To get started, one has to install a Bitcoin wallet (kind of the equivalent of a bank account) on a computer or mobile phone. It will give you a Bitcoin address, which should only be used once. This address can be shared with your friends so that they can pay you or the other way round. The wallet keeps a private key, which is used to sign transactions. The private key provides a mathematical proof that the transactions were performed by the owner of the wallet.
Once a transaction is signed, it is broadcast between users and will be confirmed in 10 minutes by the network.
The challenge with digital currency
Imagine this; I just downloaded Olamide’s hottest single on my phone and you want to have it too. I send you the track via Bluetooth, so you now own the song right? Yes, you do, but I still have a copy on my phone too. I can send the same track in the same way to Toyin, Chidinma and Hauwa without losing the version on my phone.
Now imagine the same scenario for a financial transaction. Say I sent you the equivalent of ₦1 million in digital money to pay for a service you rendered, how can you be sure I’m not creating and sending copies of the same amount to everyone else? That would give me practically unlimited purchasing power.
So how do ensure that this does not happen?
All Bitcoin operators use a shared public triple entry ledger known as the blockchain. Every transaction is contained in the blockchain. Entries in the block chain are entered in a chronological order and it is enforced with cryptography, which ensures transparency and authenticity. It is like a ledger.
A physical ledger
Remember what ledgers are? For those that don’t, it is a book used by accountants where records of money received or money spent is recorded. In real life, when the money spent does not belong to you anymore, however, it is not that simple digitally without the threat of duplicity.
Therefore, the transaction between you and I would have been recorded in the blockchain, so it no longer belongs to me. The blockchain is shared publicly so I cannot lie or be fraudulent with the track.
What is the value of Bitcoin in Nigeria?
According to BTC Nigeria, a Bitcoin-focused newspaper, on January 18, 2017, one Bitcoin was worth $895.26, which is equivalent to ₦284,304.93. On its website, BTC advocates for bitcoin, calling it “a high-profit investment.”
Last year 5 Bitcoins was worth $1,000, because each Bitcoin was about $200. The equivalent Naira rate for 5 Bitcoins was about ₦220,00 because each dollar was worth $220 on the black market. Fast forward a year later, the same number of Bitcoins now worth about $2,915 since the value of each bitcoin has gone up from $200 to about $583, and the equivalent Naira rate for 5 Bitcoins would now be ₦1,078,550. Can you imagine the profit margin.
CNN money claims that Bitcoin can be used to buy pizza, web hosting services and manicures. However, apart from the man I heard on the radio who claimed that one can “buy land with Bitcoin in Ajah”, there seems to be no other place where this internet money can be spent.
Disclaimer
While Bitcoin seem to be the rave of the moment, the Central Bank of Nigeria has warned citizens to be wary of virtual currencies.
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Are you selling something we can buy with Bitcoin? Let us know in the comment section.
As bitcoin has gained attention as an asset, more people are considering it as an investment for retirement. The Bitcoin IRA came into being last year, a tool that can provide direct ownership in bitcoin. Jason Zweig, the author of The Wall Street Journal’s “The Intelligent Investor,” explored, in a recent article, using bitcoin as a retirement investment and concluded that people should be wary on account of the cryptocurrency’s volatility.
Had someone invested $5,000 in bitcoin at the end of 2011, that amount would be worth just under $1.2 million earlier this month when bitcoin reached its peak. In the past nine days, however, bitcoin lost more than 28%.
Bitcoin’s Investment Benefits
Among the experts Zweig interviewed, some pointed out that bitcoin’s change in value is not tied to the same factors affecting more traditional assets.
Edmund C. Moy, the former director of the U.S. Mint and Bitcoin IRA’s chief strategist, said all investors with retirement accounts should consider a bitcoin IRA since its movement is not correlated to the same factors affecting the U.S. dollar.
Because bitcoin is not part of the conventional financial system, it will not move up or down with the rest of an investment portfolio. For this reason, bitcoin is not extremely risky, according to Campbell Harvey, a Duke University finance professor. Should the stock market crash, bitcoin has no reason to crash with it, Harvey said.
The correlation between bitcoin and other assets could even be negative should a geopolitical disaster raise bitcoin’s demand, Harvey said.
Volatility Still An Issue
Nevertheless, bitcoin remains wildly volatile less than a decade after it was conceived. The price still moves up and down as regulators threaten to regulate trading, hackers continue to steal bitcoins, and investors move in and out of the market.
Since January 2012, bitcoin has fallen at least 10% in a single day 28 times, Harvey noted. By comparison, the U.S. stock market has lost over 10% in one day only once since 1957 – on Oct. 19, 1987. Harvey said bitcoin is at least five times more volatile than U.S. stock market indexes.
Wade Pfau, an American College of Financial Services professor of retirement income, said such volatility can be problematic for an IRA. Once a person retires, they go from saving to withdrawing money. Should one withdraw when the market value has taken a dive, the losses are locked in, making the money less likely to sustain itself through retirement.
Pfau, running a computer simulation for bitcoin’s past returns, estimated there is a one in 10 chance an investor could withdraw at least 4% of the portfolio’s value annually, which is a common standard for funding retirement.
Since bitcoin fluctuates so wildly, one cannot plan for a withdrawal rate of much more than zero percent, Pfau said. Should one withdraw money, there is a high chance of ending up with nothing.
Moy said bitcoin’s volatility should decline as it becomes more widely used.
Zweig concluded that at the present time, Bitcoin IRA is a costly bet. He noted the company charges a flat 15% set-up charge. This translates to $750 for a $5,000 investment to cover buying the bitcoins, placing them in a wallet and having a custodian keep them, according to Chris Kline, chief operating officer.
Taxes also need to be considered. Any increase in the value of assets in a traditional IRA accrues tax deferred, but it is taxed upon withdrawal at the ordinary income rate of up to around 40 percent. Non-IRA appreciation is taxed at capital gains rates, which are around 24% maximum.
Should bitcoin jump in value, the IRA investor could end up with a much bigger tax obligation than from a non-IRA account. Adam Chodorow, an Arizona State University tax law professor, said the difference could “swamp” any tax savings from the initial contribution deductions to the IRA.
This tax bite could be avoided by holding bitcoin in a Roth IRA, which offers tax-free withdrawals. Kline noted, however, that 70% of Bitcoin IRA investors have opted for the traditional IRA, not the Roth version.
Moy himself has opted for the traditional IRA. He said he has about 5% of his retirement savings in a bitcoin IRA as an insurance plan to offset losses on dollar-denominated assets.
Such assurance is speculation in its own right, according to Zweig. It could pay off, but it could also end in a complete loss.
