Archive for the ‘Crypto Corner – Bitcoin, ETC’ Category

Why do you need a Bitcoin ETF when they already made you one?

 

Why do you need a Bitcoin ETF when they already made you one?

Courtesy of 

Chart via Piper Sandler’s new note on Coinbase. They don’t think it’s trading as a proxy for Bitcoin but I know it is. Here’s their take:

COIN shares have performed in-line with bitcoin since reaching an all-time closing high on 11/9/21. COIN shares and the price of bitcoin (which we use as a proxy for broader cryptocurrency prices) have fallen 46.4% & 45.5%, respectively, since COIN reached a record closing high on 11/9/21. While this is certainly a significant move to the downside, we believe it has more to do with investors pricing in future rate hikes across fintech/growth investments as a whole and less to do with the expected trajectory of cryptocurrency/digital asset adoption.

Anyway, here’s my take: There is absolutely no chance that Coinbase works as a stock so long as crypto prices, BTCUSD in particular, remain in a 50% drawdown. And – obviously! – a Bitcoin rally back the highs virtually guarantees a much higher COIN price. It also works the other way – if Coinbase finds itself in a massive regulatory problem, Bitcoin prices will feel that pressure. If there’s a big data breach or hacking event for Coinbase, Bitcoin will fall out of fear for the security of crypto in general.

So yes, I understand it’s not literally a Bitcoin ETF. But it’s close enough, no?

Source:

A Top Pick Among Those Impacted By The Risk Asset Pullback
Piper Sandler – January 25th, 2022





The metaverse is money and crypto is king – why you’ll be on a blockchain when you’re hopping

 

The metaverse is money and crypto is king – why you’ll be on a blockchain when you’re virtual-world hopping

In the metaverse, your avatar, the clothes it wears and the things it carries belong to you thanks to blockchain. Duncan Rawlinson – Duncan.co/Flickr, CC BY-NC

Courtesy of Rabindra Ratan, Michigan State University and Dar Meshi, Michigan State University

You may think the metaverse will be a bunch of interconnected virtual spaces – the world wide web but accessed through virtual reality. This is largely correct, but there is also a fundamental but slightly more cryptic side to the metaverse that will set it apart from today’s internet: the blockchain.

In the beginning, Web 1.0 was the information superhighway of connected computers and servers that you could search, explore and inhabit, usually through a centralized company’s platform – for example, AOL, Yahoo, Microsoft and Google. Around the turn of the millennium, Web 2.0 came to be characterized by social networking sites, blogging and the monetization of user data for advertising by the centralized gatekeepers to “free” social media platforms, including Facebook, SnapChat, Twitter and TikTok.

Web 3.0 will be the foundation for the metaverse. It will consist of blockchain-enabled decentralized applications that support an economy of user-owned crypto assets and data.

Blockchain? Decentralized? Crypto-assets? As researchers who study social media and media technology, we can explain the technology that will make the metaverse possible.

Owning bits

Blockchain is a technology that permanently records transactions, typically in a decentralized and public database called a ledger. Bitcoin is the most well-known blockchain-based cryptocurrency. Every time you buy some bitcoin, for example, that transaction gets recorded to the Bitcoin blockchain, which means the record is distributed to thousands of individual computers around the world.

This decentralized recording system is very difficult to fool or control. Public blockchains, like Bitcoin and Ethereum, are also transparent – all transactions are available for anyone on the internet to see, in contrast to traditional banking books.

Ethereum is a blockchain like Bitcoin, but Ethereum is also programmable through smart contracts, which are essentially blockchain-based software routines that run automatically…
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OpenSea, Web3, and Aggregation Theory

 

boredapeyachtclub.com, screenshot

OpenSea, Web3, and Aggregation Theory

Courtesy of Ben Thompson, Stratechery

This was originally sent as a subscriber-only Update.

From Eric Newcomer:

The NFT-marketplace OpenSea is in talks to raise at a $13 billion valuation in a deal led by Coatue, sources tell me. Paradigm will also co-lead the $300 million funding round, according to a spokesperson for the firm. Kathryn Haun’s new crypto fund, which is currently operating under Haun’s initials “KRH,” is also participating in the funding round, sources tell me. Dan Rose at Coatue is spearheading the round and may take a board observer seat.

OpenSea confirmed the news on their blog:

In 2021, we saw the world awaken to the idea that NFTs represent the basic building blocks for brand new peer-to-peer economies. They give users greater freedom and ownership over digital goods, and allow developers to build powerful, interoperable applications that provide real economic value and utility to users. OpenSea’s vision is to become the core destination for these new open digital economies to thrive, building the world’s friendliest and most trusted NFT marketplace with the best selection.

This is, of course, a story about NFTs, at least in part, and by extension, a story about the so-called Web 3 née crypto economy that its fiercest advocates say is the future. But there are two other parts of this story that are very much at home on the Internet as it exists in the present: $13 billion, and “core destination.”

OpenSea’s Value

First, two more OpenSea stories from over the break. From Be In Crypto:

NFT marketplace OpenSea has frozen $2.2 million worth of Bored Ape (BAYC) NFTs after they were reported as being stolen. The NFTs on the marketplace now have a warning saying that it is “reported for suspicious activity.” Buying and selling of such items are suspended…

Meanwhile, there is a bit of a squabble happening over OpenSea over the Phunky Ape Yacht Club (PAYC). The NFT platform banned this NFT series because it was based on the Bored Ape Yacht Club NFTs. PAYC is virtually identical to


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How The Geopolitics Of 2021 Will Shape The Year Ahead For Bitcoin

Courtesy of ZeroHedge View original post here.

Authored by Nick Fonseca via BitcoinMagazine.com,

Developments around the global regulation, hash rate and adoption of Bitcoin made for a unique year in 2021. So how will 2022 play out?

This past year was certainly a unique one for bitcoin. We saw the first bitcoin exchange-traded fund (ETF) get approved in the United States, the largest-ever Bitcoin conference in Miami, the much anticipated Taproot upgrade, all-time highs nearing $70,000, oh, and a nation state made bitcoin legal tender. Despite all this exciting news, some things never change — the FUD was as prevalent as ever. Bitcoin saw a variety of bans throughout 2021 and, to no one’s surprise, China stole the show in this regard.

Below is a list of bitcoin bans in 2021 alone:

With 2021 nearly in the rearview mirror, I’ve been thinking a lot lately about what geopolitical bitcoin moves will occur throughout 2022. Below, I offer up a few questions to think about as we approach the new year:

  • On a global scale, will we see bitcoin regulation turn friendly or grow increasingly hostile?

  • Will hash rate continue to accumulate in the U.S. (possibly eclipsing a 50% share) or will we see a greater distribution moving forward?

  • Will another country adopt bitcoin as legal tender? And if so, which one? There couldn’t be multiple throughout 2022, could there?

These questions fall into three categories: hash rate, regulation and adoption. I’ve addressed each below in more detail.

REGULATION

If we step back and look at 2021


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Goldman: Bitcoin’s Price May Rise Above $100,000

Courtesy of ZeroHedge View original post here.

As part of a "bonus question" asked in Goldman's listing of the bank's five top FX questions for 2022 (available to pro subscribers in the usual place), Goldman FX strategist Zach Pandl speculates on the fate of bitcoin – yes, according to the most important bank in the world, bitcoin is a currency – and predicts that the token frequently cited as digital gold will continue to take market share from gold as part of broader adoption of digital assets, suggesting that the often touted price prediction of $100,000 a distinct possibility.

In response to a rhetorical question whether "Bitcoin take additional market share from gold" (one which JPM answered affirmatively back in October when it found that "Institutions Are Rotating Out Of Gold Into Bitcoin As A Better Inflation Hedge"), Goldman's Pandl takes a hint from the iconic analysis penned by Paul Tudor Jones back in May 2020 which quickly became a bible to crypto advocates, and which looked at the absolute value of various hard assets…

… and writes that according to the World Gold Council estimates, the private sector owns 44,000 metric tonnes of gold for investment purposes (i.e. privately-held bars and ETFs, excluding jewelry, official sector holdings, and industrial uses).

So, at the current market price of $1,800 per troy ounce, this implies that the public owns about $2.6 trillion of gold for investment purposes. By comparison, Bitcoin’s float-adjusted market capitalization is currently just under $700BN. Therefore, Pandl writes, "Bitcoin currently commands a roughly 20% share of the “store of value” (gold plus Bitcoin) market"

Looking ahead, the Goldman strategist thinks that Bitcoin’s market share will most likely rise over time as a byproduct of broader adoption of digital assets, and possibly due to Bitcoin-specific scaling solutions although, as he admits, "the network’s consumption of real resources may remain an important obstacle to institutional adoption.

In any case, in a hypothetical scenario, the Goldman strategist notes that if Bitcoin’s share of the “store of value” market were to rise to 50% over the next five years – with no growth in overall demand for stores of


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How to Learn About Crypto

 

Merry Christmas & Happy Holidays to All! (Image by Monicore at Pixabay)

 

How to Learn About Crypto

Courtesy of 

I didn’t grow up with a passion for the markets. When I first developed an interest in it, I started from level 0. I knew absolutely nothing. So you could imagine how much I retained from the first book I picked up, The Intelligent Investor, written in 1949. All of the concepts were new to me, but the chapter on Mr. Market clicked and inspired me to keep going.

I’ve used this analogy in the past, that learning is like when you get a new iPhone, and it has to read your thumbprint. Every time you lift your thumb and put it back down, the phone gets better at recognizing your thumb. It’s the same thing with learning. The more you do it, the more the gaps get filled in.

An email that we’re getting more and more in the Animal Spirits inbox is “I don’t know anything about crypto. I want to educate myself but don’t know where to start.” I’ve struggled to come up with an answer because it’s such a complicated monster, but the solution I’ve landed on is pretty simple. Just start somewhere. I shared some specific things I’ve done in this post that have helped me learn.

In the beginning, I struggled to understand what was going on. It’s not just new concepts. It’s a whole new language. Proof of work and proof of stake are native to crypto. You don’t use these concepts in other fields. With crypto, you don’t just have to learn new words. You have to learn a whole new alphabet.

The good news is there are a ton of resources out there, like this incredible research report from The Block. If you’re brand new to crypto, much of this won’t make sense to you, the same way your thumb didn’t make sense to your iPhone. But the more time you put into it, the less foreign things will sound. I am still a complete novice, but I’m way ahead of where I was just 12 months ago. No shortcuts,…
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What is Log4j? A cybersecurity expert explains the latest internet vulnerability, how bad it is and what’s at stake

 

What is Log4j? A cybersecurity expert explains the latest internet vulnerability, how bad it is and what’s at stake

A vulnerability in Log4j, a humble but widespread piece of software, has put millions of computers at risk. SOPA Images/LightRocket via Getty Images

Courtesy of Santiago Torres-Arias, Purdue University

Log4Shell, an internet vulnerability that affects millions of computers, involves an obscure but nearly ubiquitous piece of software, Log4j. The software is used to record all manner of activities that go on under the hood in a wide range of computer systems.

Jen Easterly, director of the U.S. Cybersecurity & Infrastructure Security Agency, called Log4Shell the most serious vulnerability she’s seen in her career. There have already been hundreds of thousands, perhaps millions, of attempts to exploit the vulnerability.

So what is this humble piece of internet infrastructure, how can hackers exploit it and what kind of mayhem could ensue?

a woman with long dark hair wearing eyeglasses speaks into a microphone

Cybersecurity & Infrastructure Security Agency director Jen Easterly called Log4Shell ‘the most serious vulnerability I’ve seen.’ Kevin Dietsch/Getty Images News

What does Log4j do?

Log4j records events – errors and routine system operations – and communicates diagnostic messages about them to system administrators and users. It’s open-source software provided by the Apache Software Foundation.

A common example of Log4j at work is when you type in or click on a bad web link and get a 404 error message. The web server running the domain of the web link you tried to get to tells you that there’s no such webpage. It also records that event in a log for the server’s system administrators using Log4j.

Similar diagnostic messages are used throughout software applications. For example, in the online game Minecraft, Log4j is used by the server to log activity like total memory used and user commands typed into the console.

How does Log4Shell work?

Log4Shell works by abusing a feature in Log4j that allows users to specify custom code for formatting a log message. This feature allows Log4j to, for example, log not only the username…
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After a big year for cryptocurrencies, what’s on the horizon in 2022?

 

After a big year for cryptocurrencies, what’s on the horizon in 2022?

A bitcoin symbol is seen on an LED screen during the closing ceremony of a gathering of cryptocurrency investors in Santa Maria Mizata, El Salvador, in November 2021. President Nayib Bukele announced his government is building an oceanside Bitcoin City. (AP Photo/Salvador Melendez)

Courtesy of Erica Pimentel, Queen's University, Ontario; Bertrand Malsch, Queen's University, Ontario, and Nathaniel Loh, Queen's University, Ontario

The year 2021 was marked by several major breakthroughs for cryptocurrencies.

For one, new crypto applications like non-fungible tokens (NFTs) gained ground, with sales of these digital assets setting new records at major auction houses. Secondly, Bitcoin made strides towards mainstream acceptance with major websites like Expedia and Microsoft accepting the coin as a means of exchange. Third, in September, El Salvador became the first country in the world to accept bitcoin as legal tender.

There are many more examples of how the market for cryptocurrencies has expanded just in the last year. With this uptick of activity, what’s ahead in 2022 for cryptocurrencies?

We believe there are three main areas where cryptocurrencies will gain steam in the next year: greater acceptance of Bitcoin as a means of payment, increased regulatory scrutiny and a rise in NFT activity.

The embrace of Bitcoin

Understanding what motivates individuals to adopt Bitcoin has been a challenge for researchers. A recent study suggests five main factors contribute to someone’s likelihood of using Bitcoin:

  • Trust in the system
  • Online word of mouth
  • Quality of the web platforms available for transaction
  • Perceived riskiness of the investment
  • Expectations about Bitcoin’s performance

Other studies have added more nuances to this argument by considering gender, age and educational level as equally important factors.

The conditions in the crypto space have made it increasingly likely that Bitcoin will become mainstream in the near future.

An orange and blue ad for Bitcoin is seen on the side of a tram.

An advertisement for the cryptocurrency Bitcoin is displayed on a tram in Hong Kong in May 2021.


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Stablecoins: these cryptocurrencies threaten the financial system, but no one is getting to grips with them

 

Stablecoins: these cryptocurrencies threaten the financial system, but no one is getting to grips with them

Safe as houses? iQoncept

Courtesy of Jean-Philippe Serbera, Sheffield Hallam University

Cryptocurrencies have had an exceptional year, reaching a combined value of more than US$3 trillion (£2.2 trillion) for the first time in November. The market seems to have benefited from the public having time on their hands during pandemic lockdowns. Also, large investment funds and banks have stepped in, not least with the recent launch of the first bitcoin-backed ETF – a listed fund that makes it easier for more investors to get exposure to this asset class.

Alongside this has been an explosive rise in the value of stablecoins like tether, USDC and Binance USD. Like other cryptocurrencies, stablecoins move around on the same online ledger technology known as blockchains. The difference is that their value is pegged 1:1 to a financial asset outside the world of crypto, usually the US dollar.

Stablecoins enable investors to keep money in their digital wallets that is less volatile than bitcoin, giving them one less reason to need a bank account. For a whole movement that is about a declaration of independence from banks and other centralised financial providers, stablecoins help to facilitate that. And since the rest of crypto tends to go up and down together, investors can protect themselves better in a falling market by moving money into stablecoins than, say, selling their ether for bitcoin.

A substantial proportion of buying and selling of crypto is done using stablecoins. They are particularly useful for trading on exchanges like Uniswap where there is no single company in control and no option to use fiat currencies. The total dollar value of stablecoins has shot up from the low US$20 billions a year ago to US$139 billion today. In one sense this is a sign that the cryptocurrency market is maturing, but it also has regulators worried about the risks that stablecoins could pose to the financial system. So what’s the problem and what can be done about it?

The problem with stablecoins

Initially introduced in the mid-2010s, stablecoins are centralised operations – in other words, someone is…
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Bitcoin and Inflation

 

Bitcoin and Inflation

Courtesy of 

So this happened today. Technically, it happened in October, but you get the point. Today we found out, officially, what we already knew. Prices of goods and services are going up only.

 

If you stare hard at this chart, you can see when the highest inflation print in 30 years hit the tape.

I’m all for not confusing correlation with causation, but in this case, it’s kind of hard to make any interpretation other than inflation up bitcoin up.

I wanted to see how bitcoin has responded to other high inflation prints, so I asked Nick Maggiulli to fire up his data machine. This chart shows bitcoin’s performance in the 24 hours after CPI numbers were released.

Just eyeballing this, it doesn’t seem like there’s much of a relationship between inflation and bitcoin, at least not in the very short term. Inflation has been running at 5% for the last five months. On four of those five occasions, bitcoin fell 1.5% or more. One more chart to add some color to the situation. The red dots show CPI releases.

I’m not sure that bitcoin is a good inflation hedge. I get the thesis, and I’m open to it, but I’m not convinced. I also realize that showing returns over 24 hours and trying to draw a conclusion is pointless. I know that the market is smarter than me, and today it’s saying that bitcoin is a good hedge against inflation. You could also argue that the market has been saying this all year. Bitcoin was 30,000 in January. It’s 67,000 today.

There are several plausible explanations for why bitcoin doubled this year. Inflation is probably one of them.





 
 
 

Phil's Favorites

What Selloff?

 

What Selloff?

Courtesy of , at The Reformed Broker, originally posted on January 25, 22

Retail traders panicked yesterday. Not all, obviously, but they dumped their shares as a group. Here’s Bloomberg:

In a spasm of panicked selling early Monday, retail investors offloaded a net $1.36 billion worth of stock by noon, most of it in the first hour, according to data compiled by JPMorgan Chase & Co. strategist Peng Cheng. By his estimate, s...



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Politics

It's just a 'panic attack' - Russian media blames US for escalating Ukraine crisis

 

It’s just a ‘panic attack’ – Russian media blames US for escalating Ukraine crisis

A live broadcast of Russian President Vladimir Putin speaking is shown on Dec. 23, 2021, from a media control room in Russia. Eric Romanenko/TASS via Getty Images

Courtesy of Cynthia Hooper, College of the Holy Cross

As Western news outlets warn of a “countdow...



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ValueWalk

Bitcoin's Major Topping Pattern is Now Complete

By Louis Navellier. Originally published at ValueWalk.

For weekend reading, Louis Navellier offers the following commentary:

Q4 2021 hedge fund letters, conferences and more

A Head And Shoulders Top For Bitcoin

Two months ago, I saw a euphoric climax in bitcoin, which I didn’t like. The futures ETF had just launched, and they were running those commercials starring Matt Damon on CNBC for crypto.com invoking Fortuna,...



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Kimble Charting Solutions

Lumber Price Peak Would Raise Concerns For Equities!

Courtesy of Chris Kimble

The supply chain has dealt with several issues over the past couple of years, as consumers and businesses have been forced to navigate a tricky “COVID” landscape.

Commodity prices (in general) have risen, while enduring some big swings.

Today we look at a commodity that plays an intricate role for consumers, and perhaps the equities market as well. Lumber. When lumber prices are high, new homes and buildings cost quite a bit more.

Above is a “weekly” chart of lumber prices. As you can see, there have been times when a lumber peak/bottom have be...



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Zero Hedge

Canadian 'Freedom Convoy' Receives First GoFundMe Payment After Temporary Halt

Courtesy of ZeroHedge View original post here.

Update (Friday 0711ET): Organizers of the "Freedom Convoy" have "received confirmation that GoFundMe has released our first batch of funds" following reports Thursday, the c...



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Biotech/COVID-19

Is the omicron variant Mother Nature's way of vaccinating the masses and curbing the pandemic?

 

Is the omicron variant Mother Nature’s way of vaccinating the masses and curbing the pandemic?

Preliminary research suggests that the omicron variant may potentially induce a robust immune response. Olga Siletskaya/Moment via Getty Images

Courtesy of Prakash Nagarkatti, University of South Carolina and Mitzi Nagarkatti, University of South Carolina

In the short time since...



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Digital Currencies

Why do you need a Bitcoin ETF when they already made you one?

 

Why do you need a Bitcoin ETF when they already made you one?

Courtesy of 

Chart via Piper Sandler’s new note on Coinbase. They don’t think it’s trading as a proxy for Bitcoin but I know it is. Here’s their take:

COIN shares have performed in-line with bitcoin since reaching an all-time closing high on 11/9/21. COIN shares and the price of bitcoin (which we use as a proxy for broader cryptocurrency pric...



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Chart School

Bitcoin Swings Down to Support

Courtesy of Read the Ticker

Come on! Seriously do you think a 400% rally for Bitcoin was going to be given to the public easily. Without any pain! Come on muppets!



The uniformed (public) buy when price is rising or breaking new highs, the informed buy when price is falling or breaking lows.



The informed have to do it this way as they are large volume players and the only way they can buy large volume is to create chaos. The chaos brings to the market the weak holders and a forced sell. Price is moved to where the volume can be accumulated, in a bull trend that is down to critical support.



Of course if price is in a true bull market the 'chaos' created should not break critical long term trend signals, ...



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Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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