Bitcoin could be at the start of a “massive transformation” into the mainstream and on the path to become “the currency of choice for international trade,” according to leading investment bank Citi, which noted the cryptocurrency’s meteoric rise in value in recent years and a growing interest from institutional investors as potentially setting the stage for widespread success.
In a report published Monday, Citi analysts said the world’s most popular cryptocurrency was at a “tipping point” between widespread adoption or a “speculative implosion.”
Bitcoin’s growing use as a payment tool, the increasing availability of digital wallets, and institutional interest from the likes of Tesla and Mastercard have all helped buoy confidence in the cryptocurrency and could see it become the leading medium for international trade in the future, Citi said.
The analysts described Bitcoin as the “North Star” of the blockchain ecosystem, with its underlying technology launching an entirely new domain of the digital economy around it.
However, there are a number of risks and obstacles that could see the Bitcoin bubble burst, the analysts warned, and widespread changes to the market would be required for Bitcoin to be adopted more widely.
Dampened institutional investment in the post-Covid-19 world would remove a key pillar of support for Bitcoin, Citi said, and anticipated regulation and oversight—which runs counter to the anti-establishment ideology underpinning the cryptocurrency—could also “cause many of the most innovative developers and entrepreneurs to exit the ecosystem,” the analysts wrote.
Key Background
Bitcoin is one of the most volatile asset classes around. It has a bumpy and storied history since it was outlined in a paper in 2009, moving from practically worthless to an all time high of over $58,000 a coin in February 2021 (the price has since dropped to around $47,000) with several significant troughs and peaks in between. At its highest, Bitcoin’s market capitalization exceeded $1 trillion. As with the bulk of its history, Bitcoin is still driven by retail investors, who billionaire philanthropist Bill Gates warned not to get drawn in by the “mania” and enthusiasm of Elon Musk who has money to spare should things go wrong.
Crucial Quote
“I think bitcoin is really on the verge of getting broad acceptance by sort of the conventional finance people,” Tesla CEO Elon Musk said on Clubhouse earlier this year.
Tangent
In October, PayPal finally welcomed cryptocurrencies to its platform, believed by many to be a precursor to it moving into the mainstream. PayPal will support four different cryptocurrencies—bitcoin, ethereum, litecoin and bitcoin cash—and will expand the service to Venmo in 2021.
I am a London-based reporter for Forbes covering breaking news. Previously, I have worked as a reporter for a specialist legal publication covering big data and as a freelance journalist and policy analyst covering science, tech and health. I have a master’s degree in Biological Natural Sciences and a master’s degree in the History and Philosophy of Science from the University of Cambridge. Follow me on Twitter @theroberthart or email me at rhart@forbes.com
Lily, just 3 years old, has her own program in which she explains simple things to her followers on Facebook and Twitter (for now). In her fifth chapter, she explains howBitcoin works with the help of sweet Skittles , her stuffed animals and of course, her parents.
She started Lily’s Show in August 2020, but on February 2 she posted a video of just over two minutes explaining the basics of Bitcoin , something that many adults still have doubts about.
The information is based on Michael Caras’ children’s book, ” Bitcoin Money: A Tale of Bitville Discovering Good Money.”
The little girl begins by saying that Bitcoin is “decentralized digital money!” In other words, it does not need a bank to exist, in addition to the fact that there are only 21 million of them in the world and it was created by Satoshi Nakamoto, whom he identifies as “a mystery”.
To explain how a transaction works, he uses wallets with sweets and pieces of wood, which represent bitcoin wallets and the blockchain . The various purses belong to her, her Teddy bear, a unicorn and Dolly, her stuffed animals.
In this way, each that a sweet ( Skittles ) passes from one bag to another, it represents a transaction that generates a piece of wood and when several of them are stacked it symbolizes the blockchain , which no one can see because it is anonymous.
Lily wonders “why is it so expensive?” . So he explains that it is because of the security he has; Money cannot be stolen, bank accounts cannot be hacked, only you have access with a 12-digit code, but if you lose it you are in “trouble” and you can lose all your money .
To finish little Lily takes off her glasses and tells her mother that she doesn’t need them to look smart, “silly mommy .” Besides mentioning that he loves bitcoins… and skittles .
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Bitcoin futures contracts allow traders to take advantage of the price movement of Bitcoin without necessarily having to own and hold the exact amount of it. They are a derivative product that gained serious popularity in the past years.
Traders often use Bitcoin futures open interest as an indicator to confirm trends and trend reversals for both the futures. Open interest is calculated by summing up all the opened positions, regardless of whether they are long or short, and subtracting those that have been closed.
The following chart exemplifies how open interest (OI) changes as a result of user activity.
Open interest indicates the capital flowing in and out of the market. The more capital flows into the Bitcoin futures market, the open interest will be higher. Vice versa, the open interest will decline.
Bullish
An increasing open interest in a rising market
Price and open interest increasing during the uptrend means new money coming into the market, and new buying power is taking the control.
A decreasing open interest in a declining market
Price and open interest decreasing during the downtrend indicates that long position holders are being forced to liquidate their positions. And the downtrend will end once all the sellers have sold their positions.
Bearish
An increasing open interest in a falling market
It means all bulls who bought near the top of the market are now in a loss position. Their panic to sell keeps the price action under pressure.
A decreasing open interest in a rising market
If prices are in a downtrend and open interest is on the rise, this pattern shows aggressive new short selling, which will lead to a continuation of a downtrend and a bearish condition.
Data from the widespread monitoring resource Skew tracks the open interest for Bitcoin futures since the beginning of the year. Below is a chart that reveals how it relates to the price.
As seen in the picture, Bitcoin’s price tends to correlate to its open interest on the way down and when it’s increasing. The drop in both is particularly evident on March 12th – 13th when Bitcoin lost almost 40% of its value.
To conclude it, along with price and volume, open interest can determine the current market sentiment and signal a coming market trend. Take good use of it, you can easily make trading decisions and profit from the market fluctuations.
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What are Bitcoin futures and what are some examples that show how they work? In this video, I explain Bitcoin futures in a beginner-friendly way and also provide examples of how futures work in other real world markets. I also explain going short vs. long on a futures contract, how futures prices track spot prices, how they are used to hedge against price fluctuations, how they are daily settled and leveraged, and how Bitcoin miners and speculators can use this financial instrument in the Bitcoin/crypto world (since the introduction on CME and CBOE regulated exchanges).
The much-anticipated bitcoin halving is upon us, an event that sees the BTC reward that miners receive for processing transactions on the bitcoin network divvy up for the third time in history. In theory, the value of the most prominent cryptocurrency should rise following the halving event since it means that new units would be harder to produce. That narrative has received support from the bull runs pre and post the first two halving events — 2012 and 2016.
Within a year after the first halving, bitcoin rose over 90X from the $10 region to a peak of about $1,180. For the second halving, bitcoin went as high as $2,800 from around $600 within a year before peaking at nearly $20,000 in Dec. 2017.
However, the crypto market has notably matured compared to 2012 and 2016. For one, bitcoin derivatives including futures and options are relatively more predominant these days, allowing for a more advanced price discovery among market participants. By implication, the narrative of a rally driven by the supply-squeeze might not play out so simply, at least not in the short term.
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“It is a very different world in 2020 than it was during the last two halvings, the derivatives market is much larger and more important,” said Garrick Hileman, head of research at Blockchain.com
“One way I would say the market has changed is that historically the trading market was more lopsided toward upward transactions because there were not as many ways to speculate on the price going down, for example, the ability to borrow and sell short,” he added. “That’s something that now exists through futures and options. So all these products have created a more level playing field for people who want to bet on the price going down”
An example of how a more robust price discovery system can overpower the demand and supply narrative is the alleged role that the introduction of CBOE and CME bitcoin futures played in the sell-off from bitcoin’s high of nearly $20,000 in 2017. Although it’s yet to be proven, some believe that the introduction of CBOE and CME futures afforded cash-flush institutional traders an opportunity to bet against BTC, influencing spot market behavior in the process.
Diego Gutierrez Zaldivar, CEO of IOV Labs, the company behind bitcoin smart contract platform RSK, argues that the possibility of this dynamic playing out makes this halving event different from the first two.
“While the reduction in bitcoin’s renewed supply due to the halving introduces the possibility of a sharp rise in BTC price,” he said “it is possible that smart institutional money will push prices down in the short-term, as it did when CME and CBOE introduced their futures in Dec. 2017.”
BTC currently has a bearish market sentiment despite halving
In the meantime, certain bitcoin market data shows that traders have a bearish sentiment around the halving event. Hileman pointed at the high demand for put options.
“When you dig into the options data, it looks like the market is placing a premium on contracts that are below the current prices,” he said. “The options market seems to be suggesting that there is more concern over prices moving downwards.”
The Bitcoin BTC put-call ratio data from crypto analytics firm Skew echoes to this sentiment. As indicated in the chart below, the ratio has been trending north. A rising put-call ratio suggests that there is a mounting demand for put contracts.
Despite bitcoin halving, the bitcoin options market shows a bearish sentiment.
Skew.com
Emmanuel Goh, the CEO and co-founder of Skew, which recently raised $5 million and launched a trading product, explains that bitcoin options skew, another metric that tracks the price of put options relative to their call counterparts, is also worth monitoring.
With regard to the halving period, “if the options skew is positive for a sustained period of time, it indicates more concerns in the marketplace on the mining being potentially negative for mining companies and potentially having a negative impact on the price of bitcoin,” said Goh.
The BTC skew metric provided by Goh’s firm shows a positive trend.
And there may be some real-world proof that miners aren’t particularly optimistic in the short-term post-halving.
Meltem Demirors, the chief strategy officer at CoinShares, in a Zoom call, referenced her firm’s observations of miners’ activities.
“I think miners are looking to opportunistically offload some of their bitcoin inventory to add operating capital to their balance sheet,” Demirors said. “We’ve been talking to a number of miners on CoinShares’ capital broker-dealer side who are looking at raising capital to build out new facilities, to buy new machines and to extend their capacity.
“And we’ve seen a lot of miners engaging with our capital market trading desk looking for ways to manage and hedge their risk and lock in sort of an OPEX and develop a risk hedge portfolio strategy for the bitcoin they have on their balance sheet so that they can meet their operating cost and reduce some of the inevitable volatility that is going to come to miners around this event.”
SFOX, a Y Combinator-backed digital assets trading platform that provides a single point of market access to institutional participants, have seen similar trends. Some miners are despondent on holding crypto in order to cover their overhead costs, the startup’s head of growth Daniel Kim said.
For context as to why miners might be more cautious, consider that the bitcoin halving event would typically raise the breakeven price for miners.
John Todaro, the head of research at institutional trading tools provider Tradeblock, said mining breakeven price for bitcoin will rise nearly 100% post-2020 halving, citing internal research.
“We have current mining breakeven price between $5,000 and $6,000 per BTC, but immediately after the halving, assuming hashrate stays where it is today or even rises a little bit, you’re going to see the average mining breakeven jump to about $10,000 to $13,000 per BTC,” Todaro said. “You need to see the market price of bitcoin get above those levels or miners are going to be unprofitable, which could see a decline in hashrate, as miners exit the space.”
The changes coming to mining operations could spur some bearish narrative in the short-term based on the mining death spiral story. Therefore, this could potentially be the first time in the network that the market price of bitcoin would stay below mining breakeven points for a considerable amount of time, Todaro added.
BTC also remains correlated to stocks
There’s been wide media coverage on how the price of bitcoin is tied closely to equities. Demirors, Kim and Todaro all believe bitcoin is indeed tracking stocks right now and that it is probably a bigger driving force than the halving event in the short term.
Kim’s firm, SFOX, recently published a report, saying that BTC has sustained a “notably positive” correlation of 0.40 with the S&P 500 — despite the increased focus on the block reward halving event.
The long-term outlook for bitcoin post-halving remain positive
Given the somewhat docile market reaction to the halving event at present, it raises the question of if the event has been priced in. The answer depends on who you ask. That said, most of the experts interviewed believe that the market hasn’t fully priced the halving event, with expectations of higher BTC prices over the long term.
Based on a positive outlook for the three D’s of depletion (halving-driven supply cut), demand and dollars, CoinShares believe that the market price for BTC will be “materially higher” than present levels in 12 to 18 month, Demirors added, cautioning that the timing of a sustained bullish run will depend on soon the bitcoin decouples from the macro narrative.
On the qualitative aspect of things, RSK’s Zaldivar believes that the strength of the bitcoin network is underappreciated and expects that more people will realize this with time.
“Bitcoin is fundamentally strong with an unmatched security thanks to its computing power, financial incentives and network effect, and it is the most reliable and scarce digital asset in the world,” Zaldivar added. “With the economic uncertainty we are witnessing today, it would be no surprise to see the bitcoin ecosystem grow to attract institutional investors who perceive it as a store of value and a hedge.”
With regard to demand, U.S. based digital asset manager Grayscale Investments reported in the first quarter that it saw a record of over $500 million in new investments from its clients. Michael Sonnenshein, the firm’s managing director said during a call that his firm is finding that more people are looking to diversify their portfolio to tap into the potentials of blockchain.
“We are seeing that more investors are eager to either have some exposure for the first time or increase their exposure to bitcoin in a world that is characterized by quite a bit of economic uncertainty,” said Sonnenshein. “I think there is a large group of investors that are excited by the long-term potential of the applications being built around bitcoin weather it’s payments or leveraging the bitcoin blockchain for cost savings.”
I am a financial, cryptocurrency and blockchain writer. I have nearly a decade of experience covering the financial markets and about three years of experience demystifying the world of cryptocurrency and blockchain. My work has appeared on leading online financial publications including Investopedia, TheStreet, Motley Fool and Cointelegraph just to name a few. I previously worked with trade bodies to help industry executives save time by curating the stories they should care about in daily newsletters. Disclosure: I occasionally hold and trade Bitcoin and Ethereum.
The Bitcoin Halving 2020 is happening in 2 days! The Bitcoin halving event happens essentially once every 4 years, so this is a topic that needs to be discussed and analyzed. Whether you believe Bitcoin is worth owning, I definitely think that it should be at least a small part of your over portfolio as a speculative asset. In this video we are going to break down the following to give you a better understanding of the 2020 Bitcoin Halving along with some price predictions. 1. Bitcoin Blockchain 2. Bitcoin Mining 3. Bitcoin Supply 4. What is Halving? 5. Why does it occur? 6. Bitcoin Price Predictions post-halving The reason the Bitcoin halving is such a popular topic is because the number of Bitcoin that miners are rewarded with are essentially getting cut by 50%. So instead of earning 12.5BTC per block, they will be earning 6.25BTC. This is essentially designed to prevent inflation. This is a huge event and could lead to an enormous increase in the price of Bitcoin…AFTER a price decline. If you would like to buy and get $10 worth of Bitcoin for FREE, sign up for Coinbase HERE: http://bit.ly/CoinbaseWBF M1 FINANCE – INVEST FOR FREE! (Yes, Really) 😎 https://m1finance.8bxp97.net/D61Zq ————– My FREE M1 Finance Training Video! 🤑 http://bit.ly/FreeM1Training ————– SCHEDULE A COACHING CALL WITH ME! 🤝 https://bit.ly/MarkoCoaching ————– THE BEST CREDIT CARDS TO USE RIGHT NOW! 📚 https://bit.ly/creditcardsWBF ————– CIT BANK – SUPER HIGH YIELD SAVINGS ACCOUNT 😮 https://bit.ly/citbanksavings ————– GET MY FREE INVESTING GUIDE HERE: 😎 https://bit.ly/FreeInvestingGuideWBF ————– FOLLOW ME ON INSTAGRAM 📷 https://www.instagram.com/whiteboardf… ————– Instrumental Produced By Chuki: http://www.youtube.com/user/CHUKImusic ABOUT ME 👇 My mission is to provide my viewers with actionable content that enables them to create financial wealth. My videos are a reflection of my real-world experience as a real estate investor, stock market investor, student of finance, and entrepreneur. This channel allows me to share my passion for personal finance, stock market investing, real estate investing, and entrepreneurship. I produce content that I would want to watch, and because of that, I give 100% effort in every video that I make. I also believe in complete transparency and open communication with my audience. Subscribe if you are interested in: #Investing#PersonalFinance#Entrepreneurship#StockMarket DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments. AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning, at NO additional cost to you, I may earn a commission if you click through and make a purchase and/or subscribe. However, this does not impact my opinion.
Bitcoin prices have floundered lately, failing to recover much of their losses after falling sharply on Saturday.
The digital currency fluctuated between $8,000 and $9,000 today, after losing more than 16% of its value yesterday, CoinDesk figures show.
The cryptocurrency rose to more than $9,800 on Saturday, before plunging below $8,200, additional CoinDesk data reveals.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
When explaining this recent price action, several analysts pointed to anxiety surrounding the upcoming halving, which is currently scheduled to take place tomorrow at roughly 7 p.m. ET.
“I think people are nervous before the halving,” said Marouane Garcon, managing director of crypto-to-crypto derivatives platform Amulet.
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“There’s a lot of hesitation and uncertainty surrounding the event and it shows,” he stated.
“People are waiting for a price jump after the event before they fully commit,” said Garcon, emphasizing that this is what is needed for bitcoin to “reach its previous levels.”
Denis Vinokourov, head of research for London-based digital asset firm Bequant, also spoke to this reluctance.
He noted that while “bulls” recently “managed to push Bitcoin above $10k level,” there was a “distinct lack of follow through action, which suggests hesitation and market nervousness ahead of key risk event.”
The upcoming halving is creating uncertainty, something considered anathema to many investors.
John Iadeluca, founder & CEO of multi-strategy fund Banz Capital, weighed in on this situation.
“On one hand, the Bitcoin halving offers an immensely bullish point of view in that miners will shift to a more pseudonymous network backend maintenance position with exchanges and institutions assuming a role in facilitating economic participation,” he noted.
“An environment of the like is frightening, and combined with the fact that miners receive less after the halving on May 11th, there could arise the possibility of drastic decrease in mining activity,” said Iadeluca.
“Alongside the halving is an influx of new interested investors and users who will flock to retail exchanges to start with Bitcoin, and with Coinbase, arguably the most popular retail crypto exchange, suffering outage once again with days left to the halving, new as well as institutional investors would feel fear,” he concluded.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.
I am a financial writer and consultant with strong knowledge of asset markets and investing concepts. I have worked for financial institutions including State Street, Moody’s Analytics and Citizens Commercial Banking. An author of more than 500 publications, my work has appeared in mediums such as New York Post, Washington Post, Fortune, CoinDesk and Investopedia. Previously, I created all the industrial finance training for a company with more than 300 people. I have spoken at industry events across the world and delivered speeches on financial literacy for Mensa and Boston Rotaract. I currently hold Bitcoin, Bitcoin Cash, Litecoin, Ether and EOS
Will other CryptoCurrencies see the 10,000x gain like Bitcoin? PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! Francis Hunt, stock market trader and educator comments. Besides Ethereum and Bitcoin, in which other cryptocurrencies should we consider investing? What are the most promising ones? So when we talk about when to buy, but when to sell? Is there any cryptocurrency apart from Bitcoin right now in which I can put in around $1k now with the possibility of a great return, say, of $10,000 in 5 years time? I would put my money on the first 10 and just keep an eye on the top 25. ICO’s by their very nature are highly speculative and can be risky. You can now actually buy things with Bitcoin and that’s practical. Ethereum is now also coming into practical things. On the bigger sums you probably don’t want to put a lot of money on new unproven cryptocurrencies.
cryptopotato.com – December 9, 2020
vancouverbitcoin00.xtgem.com – October 12, 2020
newbitcoinuser.com – November 30, 2019
