Bitcoin price witnessed the second leg of its rally that originated on July 20 but failed to produce a convincing close above a crucial support level. Moreover, a technical indicator is flashing a sell signal, further supporting a downswing.
Axie Infinity price has been a rebel coin due to its relatively recent launch and its breathtaking performance. While the exponential rally has not yielded gasping corrections, investors can continue to be bullish on AXS price.
Dogecoin price could see further consolidation before continuing its rally. A technical indicator suggests that DOGE has printed a local top, and the canine-themed token could retest critical support levels before making its next big move.
Matthew Tweed learnt his first valuable lesson about cryptocurrency six years ago, when he was just 14 years old.
“I got into investing in crypto because I found an interesting token that was meant to be for online marketplaces, and I moved from that to bitcoin,” Tweed told Insider. “I can’t remember what the project was called – it didn’t go anywhere, but that showed me that there’s a lot of cool projects, but a lot of projects won’t end up working out.”
Tweed now runs his low-latency trading firm, Pine Financial, from his family home in Woking, a medium-sized commuter town, 25 minutes from London. He believes 100% annualized gains are possible in that area of cryptocurrency trading.
Low-latency, or market-making, trading refers to the use of algorithmic trading to increase profitability. Tweed’s bots execute trades on crypto exchanges like Deribit.
“I managed to get into the market-making space without eight figures behind me, but it’s not very accessible,” Tweed said. “You have to put in a lot of time to become competitive.”
Tweed has spent a significant amount of that time on Reddit. He said his first break in market-making trading came from an interaction with another user on the social networking site.
“At the very end of 2018, I got into low-latency trading,” he said. “That came from someone I met on Reddit – to be honest, 90% of what I’ve done and the people that I’ve met has come from the various sub-reddits on algo-trading.”
“I frequent r/algotrading for a lot of my work,” Tweed added, referring to a Reddit forum with 1.2 million users that focuses on quantitative trading and automated strategies. “The specific subreddits are good, but places like r/cryptocurrency don’t have much good content, so I barely look at it.”
Tweed embarked on a career in algorithmic trading just as his classmates were beginning to apply to college. For him, a formal education had limited appeal, given his success with cryptocurrency trading.
In terms of which cryptos he likes the most, Tweed said he believes the ethereum network’s superior technological capabilities will enable its ether token to surpass bitcoin.
“Ethereum will be far more scalable – that should lead the way for being able to make much better applications, so you can have a proper smart contract based decentralized system,” he said. “You’d never be able to build smart exchanges on top of bitcoin – there’s not a platform for it.”
“Long-term, I think there’s a good chance ethereum will become the king cryptocurrency,” Tweed added.
Ether has been volatile this year, surging from $730 to a peak of almost $4,000, before collapsing to under $2,000 weeks later. The token has risen by around 10% to $3,140 since last week’s implementation of the so-called “London hard fork” upgrade, which initially burned around $8,900 worth of coins per minute.
“I think Ethereum 2.0 is going to be great for scalability in the crypto space,” Tweed said. “Many smart contract platforms claim better scaling than Ethereum, but they’re often extremely centralized, or make other fundamental trade-offs, which defeats the purpose of crypto.”
However, despite his own success as a relative outsider, Tweed said investors need to be careful before throwing themselves into the cryptocurrency space.
“Cryptocurrency is fairly small and specialist – I wouldn’t recommend people just throw money at it,” he said. “There’s a lot of ways that retail investors can lose money.”
“There’s a need for regulators to have knowledge of the industry, but in general, I’m in favor of exchange regulation, risk disclosures, and education to protect retail investors,” he added.
Tweed pointed to ‘sh*tcoins’, such as the highly volatile dogecoin, as an example of an area where retail investors could potentially lose money without tighter regulation.
“[Sh*tcoins] are amusing, and I enjoy watching them, but I wouldn’t invest in them or hold them,” he said. “The price may go up in the short-term, but there’s no reason it would in the long-term. In the short-term it’s just supply and demand – people jumping on the meme-coin.”
Ethereum has gained over 1,200 points since Jul. 22.
Multiple indexes now anticipate a correction given the significant gains.
Transaction history shows that ETH’s downside potential might be capped at $2,770.
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Market participants have rushed to buy ETH following Ethereum’s much-anticipated London hardfork. Although prices have risen due to the growing demand, some technical and on-chain metrics suggest that a spike in profit-taking is underway.
Sell Signals Appear for Ethereum
Despite the bullish momentum, Ethereum could be facing an imminent correction.
ETH has enjoyed an impressive run-up after breaking out of a descending triangle on Jul. 22. Since then, the second-largest cryptocurrency by market cap has surged by nearly 60% to reach a high of $3,200. Now that the projected target has been met, multiple red flags are beginning to pop up.
The Tom DeMark (TD) Sequential indicator has presented a sell signal on ETH’s daily chart. The bearish formation developed as a green nine candlestick, anticipating a one to four daily candlesticks correction or the beginning of a new downward countdown.
Ethereum’s Market Value to Realized Value or MVRV adds credence to the pessimistic outlook. This on-chain metric quantifies the average profit or loss of all addresses that have purchased ETH within a specific period.
The 30-day MVRV ratio is currently hovering at 26.58%, suggesting that all addresses that have bought ETH in the past 30 days sit at an average profit of 26.58%. According to behavior analytics platform Santiment, the higher the MVRV ratio, “the higher the risk that Ethereum holders will begin to sell and reduce their exposure.”
Given the significant unrealized profits among ETH holders, Ethereum is currently in a danger zone. Historical trends indicate that a spike in profit-taking may be underway, translating into a short-term correction.
Ethereum Sits on Top of Stable Support
IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model reveals that Ethereum is sitting on top of multiple demand barriers that could prevent it from a sudden downswing.
The first significant interest area is between $2,960 and $3,050, where nearly 320,000 addresses have previously purchased over 1.4 million ETH. The second and most crucial support barrier lies between $2,670 and $2,860. Around this price point, more than 1.12 million addresses have acquired 2.63 million ETH.
Such a critical support wall suggests that a spike in selling pressure could be short-lived as the bears may struggle to push prices down.
On the other hand, the IOMAP model shows no supply barrier will prevent the second-largest cryptocurrency by market cap from advancing further. There is only one area of interest between $3,340 and $3,430, where over 360,000 addresses are holding nearly 390,000 ETH.
This supply zone may have the ability to absorb some of the recent buying pressure, but if ETH can slice through this hurdle, it could climb to $3,500.
This news was brought to you by Phemex, our preferred Derivatives Partner.
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The regulatory scrutiny of blockchains and cryptocurrencies is increasing. From the cryptocurrency mining ban in China to President Joe Biden’s Working Group on Financial Markets, convened by Treasury Secretary Janet Yellen, the economic activities that support and are enabled by blockchains have become a significant concern for policymakers. Most recently, a provision in the proposed 2021 infrastructure bill amends the definition of a broker to expressly include “any person who […] is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”
The stated goal of this “miner-as-broker” policy change is to improve the collection of tax revenues on cryptocurrency capital gains by enhancing the ability of tax collectors to observe cryptocurrency trades. Since cryptocurrency miners regularly validate transactions that transfer digital assets, such as cryptocurrencies, on behalf of cryptocurrency holders, these miners would appear to satisfy this definition of a broker. Unsurprisingly, many in the cryptocurrency industry have raised concerns.
One key feature of blockchain technology is competitive decentralized record-keeping. The pros and cons of this new form of record-keeping relative to traditional centralized financial databases are an active debate. But the new regulation might produce a premature end to this debate.
What are the direct consequences of defining miners as brokers?
First, miners — at least those located in the United States — would be subject to significantly enhanced requirements for reporting to the Internal Revenue Service. The cost to miners of complying with such requirements is likely to be large and largely fixed. Miners would need to bear these costs, regardless of how much mining power they have and before they mine a single block. This will deter entry and likely cause more centralized control or concentration of mining power.
Second, these broker-miners would be responsible for satisfying Know Your Customer regulations. Given the pseudo-anonymous nature of most cryptocurrencies, such a policy would limit the types of transactions broker-miners would be able to process to non-anonymous transactions. How would this work? Presumably, I would register with a miner (linking my driver’s license with a Bitcoin address, say), and miners would only validate transactions on behalf of their registered users. But if that miner happens to be small (have small mining power), then my transactions are less likely to be processed on the Bitcoin (BTC) network. Perhaps, it would be better if I (and you) register with a larger miner. Or perhaps, we should all just use Coinbase and allow a miner to handle transactions on behalf of Coinbase. Again, the impact here is a greater concentration of mining power.
Combined, this policy is likely to increase the concentration in U.S. cryptocurrency mining while raising the costs of mining and possibly reducing the overall amount of mining that takes place; that is, the policy would shift mining within the U.S. away from the “shadowy faceless groups of super-coders” recently described by Sen. Elizabeth Warren, but perhaps increase the reliance of users on such faceless super-coders outside of the United States.
What are the global consequences of defining miners as brokers?
Part of the global impact of the proposed provisions in the infrastructure bill depends on the relative importance of U.S. cryptocurrency mining operations with the context of mining worldwide. Recent history provides some perspective. In June, China stepped up enforcement of its Bitcoin mining ban. The result was far fewer miners. We can see this in the drop in mining difficulty observed at the beginning of July. The mining difficulty governs the rate at which transactions are processed (about 1 block per 10 minutes on Bitcoin). With few miners, the difficulty falls to keep the transaction rate constant.
The lower level of mining difficulty requires less electricity to mine a block. The block reward is constant. The price of Bitcoin did not fall with the decreased difficulty in July. Here are three things to note:
Mining profits for the remaining miners must have increased.
New miners did not replace the now off-line China miners swiftly.
Competition in mining fell.
These features are likely to lead to a consolidation or concentration of mining power. If the new regulation — particularly the broker designation of miners — goes ahead, we can probably expect a similar impact.
Much of the security thesis of blockchain technology is rooted in decentralization. No person has incentives to exclude transactions or past blocks. When one miner has substantial mining power — a high likelihood of solving multiple blocks in a row — they may be able to alter part of the blockchain’s history. This situation is called a 51% attack and raises concerns about the immutability of the blockchain.
There are two related consequences of the proposed policy. First, higher concentration, by definition, puts miners closer to the mark where they can effectively alter the blockchain ledger. Second, and perhaps more subtle, the profitability of an attack is higher when the cost of mining falls — it is just cheaper to attack.
As my co-authors and I argue in ongoing research, however, such security concerns stem entirely from Bitcoin’s mining protocol, which recommends miners add new transactions to the longest chain in the blockchain. We argue that the potential success of 51% attacks derives entirely from this recommendation for coordinating miners on the longest chain. We show how alternative coordination devices may enhance a blockchain’s security and limit the security consequences of increased mining concentration.
No competition, no blockchain
Whether the current provisions concerning digital assets in the 2021 U.S. infrastructure bill pass or not, policymakers appear ready to enhance regulation and the reporting of cryptocurrency trades. While the debate has mostly focused on the tradeoffs of an enhanced monitoring of cryptocurrency trading by the U.S. government and the potential harm to U.S. innovation in blockchain, it is critical for both policymakers and innovators to consider the likely impact of such policies on competition within cryptocurrency mining, as this competition plays a critical role in securing blockchains.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph, nor Carnegie Mellon University or its affiliates.
Ariel Zetlin-Jones is an associate professor of economics at Carnegie Mellon University. He studies the interaction of financial intermediation and the macroeconomy. Since 2016, Ariel has been researching the economics of blockchains — how economic incentives may be used to shape blockchain consensus and stablecoin protocols as well as the novel and economically large centralized markets that currently support cryptocurrency trading. His research has been published in the American Economic Review, the Journal of Political Economy and the Journal of Monetary Economics.
CEO Adam Aron and the folks over at AMC Entertainment (NYSE:AMC) sure know how to excite retail investors. The movie theater chain just announced second-quarter revenue that beat expectations. However, there is more to the AMC stock story than that. As InvestorPlace Assistant News Writer Brenden Rearick highlighted, news of AMC accepting Bitcoin (CCC:BTC-USD) is generating buzz.
This points to the fact that the first half of the year has been huge for AMC. The movie theater chain has been battling the impacts of Covid-19, fighting off debt, and becoming the star in a market-gripping story about short squeezes. Along the way, AMC and its CEO have embraced retail investors.
With this all in mind, Aron shared big news today of AMC accepting Bitcoin as a form of payment by the end of this year. He said the company would accept BTC at all U.S. locations. In addition to this, he also shared it would accept Google Pay and Apple Pay for online purchases.
Although he did not have many specifics, this clearly tickled retail investors. Another big announcement from the call is news AMC is working on some sort of partnership with GameStop (NYSE:GME), such as an in-theater gaming event.
What to Know About AMC Accepting Bitcoin
Right now, there is not a ton of detail around the latest AMC stock news. However, it comes at a key time for Bitcoin and other cryptocurrencies. Just as the earnings call was kicking off, the Senate shot down a compromise that would clarify a new tax proposal on crypto transactions.
But beyond that, it also comes at a time when companies like AMC are eager to cater to retail investors. Embracing Bitcoin… and a partnership with GameStop… are both great ways to do that.
So what is the bottom line? It is unclear yet what exactly will come of this news, but it may not be the end of the AMC-crypto story. Earlier this summer, Elon Musk signaled his support for AMC to start accepting Dogecoin (CCC:DOGE-USD).
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Sarah Smith is the Editor of Today’s Market with InvestorPlace.com.
Even though Bitcoin price continues to surge higher, investors are worried that regulation could erase the recent gains, but derivatives indicators show no sign of confidence from the bears.
The proposal mandates that digital asset transactions worth more than $10,000 are reported to the Internal Revenue Service, including validators, miners, and protocol developers. However, Senator Cynthia Lummis and Senator Pat Toomey are lobbying to focus those requirements exclusively on brokers and the exchanges.
Holders keep ‘hodling’ and inflation benefits the crypto market
On-chain analysis firm Glassnode highlighted that coins held for 12 months and longer are not being moved despite the strong rally, indicating a “holding behavior.” Meanwhile, the Crypto Fear and Greed Index, a well-known indicator that tracks volatility, volume, social media, dominance and Google searches, moved from “moderate” to “greed.”
The 74 point indicator reached on August 8 was the highest level since April 18, indicating that investors firmly believe that the bottom of this cycle is behind us. The index ranges from 0 (extreme fear) to 100 for maximum greed.
It is worth noting that the United States Bureau of Labor Statistics will release July’s inflation report on Wednesday, with markets forecasting a 0.5% increase. Cryptocurrency markets also reacted positively after Federal Reserve chairman Jerome Powell failed to explain how the 5.4% year-over-year increase on the consumer price index (CPI) would recede.
Margin and futures markets show little activity from bears
Analyzing derivatives indicators can help confirm whether these positive expectations are reflected in professional traders’ data. The first one is the Bitfinex margin long ratio, which drastically changes when bearish bets are made.
The above chart shows that after a brief period from July 9 to July 19, Bitfinex margin longs were back at 90% or higher. However, the ratio has not seen a downturn since then, displaying a lack of confidence from bears.
Bitfinex margin traders are known for creating positions of 20,000 or higher BTC contracts in a very short time, indicating the participation of whales and large arbitrage desks.
Next, analysts should evaluate the futures market by measuring the percentage of top clients either betting on the upside (longs) or downside (shorts). Keep in mind that the outstanding amount in longs and shorts contracts are balanced at all times in futures markets.
Bybt consolidates futures markets data from Binance, OKEx, and Huobi top traders. The current 1.14 indicator favors longs by 14% among those exchange’s largest users. Therefore, there has been a significant change over the last 12 hours because these traders were previously net short.
Both the Bitfinex margin and derivatives exchange futures markets point to a lack of confidence from bears right as Bitcoin breaks through the $45,000 resistance. This suggests that the recent 20% rally is well-founded and not simply a blip or the result of heavy liquidations.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Former Goldman Sachs executive Raoul Pal has revealed he believes Ethereum is the “greatest trade” setup that he has ever seen as the cryptocurrency’s fundamentals suggest it has a large upside ahead of it.
In a recent interview, first spotted by Daily Hodl, Pal revealed that Ethereum’s fundamentals are forming, in his opinion, a better setup than the one Bitcoin had in March 2020, when its price plunged over 50% to $4,000 before it recovered. Since then, the price of BTC surged to hit a new all-time high near $64,000.
While the flagship cryptocurrency endured a massive correction after hitting its new all-time high, it’s still trading above $45,000 according to CryptoCompare data. Pal’s words, as such, suggest he believes Ethereum could move up over 10x, from its current $3,000 level.
Pal said that around 13% of Ethereum’s free float is currently available, while everything else is “being staked, locked, and hoarded.” This, he says, reduces the supply of available ETH – something he says has been steadily happening.
Addressing the rollout of Ethereum Improvement Proposal (EIP) 1559 on the network’s London hard fork, he said most people are now going to start staking their ETH ahead of the launch of Ethereum 2.0, to the point there’s no more ETH supply available to meet demand.
Exponential demand meets fixed supply equals exponential price rise. One of the best setups I’ve ever seen.
EIP-1559 has introduced a transaction fee burning mechanism to the cryptocurrency’s network, designed to make fees easier to use and help it deal with high demand. Ethereum transactions now require a base fee to be burned, and users can tip miners if they want them to process their transactions faster.
The base fee rises when there’s higher demand, and lowers when demand drops. According to a burn tracker, over 17,600 ETH have been burned at press time, with a burn rate of about 2.81 ETH per minute. Around 5.5 ETH are being minted every minute.
As CryptoGlobe reported, Raoul Pal has in the past revealed he believes the price of Ethereum (ETH), the second-largest cryptocurrency by market capitalization, could go to $20,000 “this cycle,” based on Metcalfe’s Law.
Metcalfe’s Law, it’s worth noting, states the effect of a network is proportional to the square of the number of nodes in said network. Pal added charts showing that Ethereum’s growth is very similar to that of BTC and that Metcalfe’s Law “seems to be the key to price for both ETH and BTC.”
DISCLAIMER The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
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