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Bitcoin Developer Jimmy Song Bought Bitcoin at $30: It is a Sound Investment and Money

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In an interview with Valentin Schmid of The Epoch Times, Bitcoin developer and Paxos Principal Architect Jimmy Song offered his insights into the advantages and merits of bitcoin as money, a store of value, long-term investment, and a safe haven asset.

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According to Song, one of the most important aspects of bitcoin as sound money is its unique monetary policy. Unlike most assets and reserve currencies which can be manipulated and controlled, bitcoin’s maximum supply will always remain at 21 million. Because bitcoin has a fixed supply limit and demand towards bitcoin from casual investors, institutional and retail traders are always increasing at an exponential rate, logically and mathematically, the value and price of bitcoin have to increase.

Song admitted that he was first exposed to bitcoin and a new asset class in cryptocurrencies when the price of bitcoin broke the $1 mark. But, Song purchased his first bitcoin when it was valued at $30. Today, despite the recent major price correction of bitcoin caused by the Chinese government’s nationwide ban on local bitcoin exchange, bitcoin price remains above $3,600. For Song, that is a 120-fold return on a long-term investment.

“You’re not going to be able to inflate it in any way. Bitcoin is sound money because there is a fixed supply limit and demand is always increasing. That creates a really good investment, at least from my perspective, and so I bought some at around $30. I do wish I bought a lot more but everybody in Bitcoin does,” explained Song.

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Hence, as many prominent and early investors in bitcoin including Tone Vays, WhalePanda, and Tuur Demeester explained, the most stable, secure, and smart method of trading bitcoin is trade less, hold longer, and do not overreact to short-term volatility.

But, apart from its limited supply, there are various aspects of bitcoin which provide the digital currency value. In a study, JP Vergne, a professor at Ivey Business School, discovered that the best indicator of the short-term price development of bitcoin and cryptocurrencies, in general, is developer activity around it. Vergne wrote:

We found that the best predictor of a cryptocurrency’s exchange rate is the amount of developer activity around it.

Bitcoin is a decentralized financial network and a peer-to-peer protocol in nature. Thus, it is immutable to attacks and operates on top of a transparent ledger. But, bitcoin’s decentralization also makes it difficult to reach consensus. It is challenging for developers to integrate innovative software such as Segregated Witness (SegWit), the BItcoin Core development team’s scaling and transaction malleability solution because almost everyone within the network including miners, node operators and developers have to agree to it.

Song reaffirmed a similar point to Vergne. During the interview, he explained that active developer activity around bitcoin which provides the network security value ultimately drive the bitcoin price upwards and provides it with fundamental value.

“Things like the Bitcoin software just aren’t smart enough to handle stuff like that. It has to be people that actually fix it and that’s what I think gives Bitcoin a lot of security value — because you have all these people watching it and not just like computer software that’s running on its own. It’s developers, it’s the people that are actually checking the code or watching the network figuring out low probability scenarios and how to immunize against those. That’s what gives it value. That’s what gives us security. That’s what makes it a great store of value,” said Song.

Bitcoin is still a $60 billion financial network. Many respected financial analysts including RT’s Max Keiser and Wall Street analyst Tom Lee believe bitcoin could evolve into a multi-trillion dollar financial network in the upcoming years, given that conditions are met and developer activity around it remains vibrant.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Technical Analysis: Bitcoin Hits First Correction Target as Volatility Reigns Supreme

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The violent correction that created a full-on panic in the cryptocurrency segment continues to unfold in a rather orderly way from a technical standpoint, reflecting the extreme nature of the preceding rally. That said, the percentage losses in some of the coins are huge, and the collapse of Bitconnect accelerated the process, spreading uncertainty among investors, and sentiment quickly got bleak.

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Bitcoin remains in the center of attention, and the most valuable coin finally breached the $10,000 level today, causing another strong wave of liquidation in the majors, that could be the base of a more durable bottom, and a consolidation in the coming days after the crazy last couple of days.

The coin is now oversold from a short-term perspective, and although further losses are likely before the end of the cycle, given the still only neutral long-term momentum readings, a counter-trend move is possible in the coming days. Below, $9000, strong support levels are still found at $8200 and near $7650.

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BTC/USD, 4-Hour Chart Analysis

Altcoins got slaughtered in the two-day crash with Ripple leading the way lower, while Ethereum also lost its relative strength amid the broad sell-off and its recent trendline break. ETH got close to the next major support level at $740 during today’s move, and as the short-term momentum is now oversold, a bounce to the zone around $1000 could be ahead. We still expect the correction to continue in the token, as the long-term momentum remains overbought, with key support at $625 and near $575.

ETH/USD, 4-Hour Chart Analysis

Ripple fell as low as the $0.85 support level during the crash, and although the coin rebounded above $1 afterward, it remains 70% off its recent all-time highs. Long-term investors could already accumulate small positions on the short-term sell-offs, although the correction will likely continue, and a prolonged consolidation phase might also be ahead. Key support levels are now found at $0.85 and $0.68, while resistance is ahead at $1.25.

XRP/USDT, 4-Hour Chart Analysis

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Market Update: Bitcoin at $10,000, Ripple at $1, Ethereum below $1000 as Carnage Continues

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Yesterday’s China induced technical breakdown led to an unmitigated disaster in the crypto segment, as all of the majors crashed, erasing hundreds of billions of market cap in the process. The collapse of the alleged Ponzi scheme of Bitconnect added insult to injury and caused another wave of selling in late trading, driving the price of Bitcoin to $10,000, a bit earlier than expected.

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BTC/USD, 4-Hour Chart Analysis

The most valuable digital currency rebounded as much as 15% after the late-session crash, but the selling pressure remained strong and today BTC briefly traded below yesterday’s low, with most of the majors holding up above the crash low.

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That said, the sell-off is unlikely to be over and volatility is probably here to stay for the week, with violent swings in both directions. The coin is still likely to push lower, with a possibly lengthy bottoming phase, so a quick recovery to the record highs is unlikely, but strong support is found below $10,000 at $9200, $8200, and $7650.

Traders should be aware of the elevated risk in short-term positions here, while long-term investors could slowly accumulate positions on the sell-offs, as the coins are headed to oversold territory.

A Little Perspective

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Altcoins

Fears of Regulatory Crackdown Flush $190 Billion Out of Crypto Market

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Bitcoin, Ethereum and every other major cryptocurrency collapsed on Tuesday, as fears of regulatory clampdown in South Korea triggered a mass exodus from the digital asset class. The collapse comes as mainstream media reports continue to push the idea of an imminent ban on cryptocurrency exchanges even as lawmakers cautioned no decision had been reached.

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Cryptocurrency Market in Free Fall

The cryptocurrency market declined rog $190 billion on Tuesday, marking one of the biggest single-day drops on record. At its lowest, the market was valued at $510 billion,  which was than $200 billion below its peak earlier this month.

The top 20 coins were each down in excess of 17%, according to data provider CoinMarketCap. Nearly $49 billion worth of cryptocurrency exchanged hands over the past 24 hours.

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Bitcoin plunged below $12,000, reaching its lowest level since early December. Ethereum, its biggest rival, fell back toward $1,000, while Ripple bottomed out at $1.23 after peaking above $3 just a few weeks ago.

South Korea Jolts Market

It was mainly regulatory issues that jolted cryptocurrencies on Tuesday, with South Korea mulling new legislation to stamp out excessive risk from the market.

South Korea’s finance minister Kim Dong-yeon reportedly told local radio that an all-out ban on cryptocurrency trading was a “live option, but that government officials still need to “seriously review it.” Seoul’s biggest issue with cryptocurrency trading is the level of speculation in the market and the role of anonymous accounts in spurring volatility. New regulations have already banned anonymous trading on domestic exchanges and barred foreigners from participating in the market.

Last week, some of South Korea’s busiest crypto exchanges were raided by police and tax agents over alleged tax evasion. The raids were confirmed by an employee at Coinone, who spoke to Reuters anonymously.

Seoul’s financial authorities had previously indicated they were investigating six banks that offer cryptocurrency accounts. In addition to speculative risks, authorities are also concerned about the link between cryptocurrency trading and organized crime.

South Korea is a major center for cryptocurrency and is home to some of the largest exchanges. Local traders have been the main catalysts behind some of the crypto market’s biggest gainers, including Ripple.

Some analysts believe that further regulatory crackdown will be ineffective given the borderless nature of cryptocurrencies. When China banned cryptocurrencies, traders there migrated their accounts offshore to Hong Kong or Korea. This suggests that a regulatory crackdown can only succeed with broad international cooperation, which does not exist at the time.

Chinese regulators know that their measures have done very little to limit virtual capital flight from the country. That’s why they are moving to block domestic access to offshore exchanges, according to a recent Bloomberg report.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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