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Blockchain for Bankers & Bitcoin Speculators

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By now, most technically minded people agree that blockchain technology is good. The big question I’ve been asking myself lately is…. good for who?

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The blockchain was developed to level the playing field between Wall Street and Main Street and through the power of the Internet narrow the gap between rich and poor.

However, lately, it seems that cigar smoking banksters of the world are getting their grubby hands all over the blockchains in ways that are a bit unsettling.

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Just yesterday, it was announced that IBM will be taking charge of an ongoing project known as HyperLedger, which is Wall Streets version of a Blockchain for Bankers.

IBM has a particularly nefarious history when it comes to misusing technology, but that was a long time ago. We sincerely hope that they’ll get it right this time.

Mati Greenspan
eToro, Senior Market Analyst

 

Please note: All data, figures & graphs are valid as of June 29th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

For the first time since the financial crisis in 2008, the Fed has declared all big banks to be safe in their annual stress tests.

This is a huge follow-up to Janet Yellen’s statement that we will likely not see another financial crisis in our lifetimes.

The banking sector is having a party at the moment and has managed to pull up the rest of the markets. Many firms have announced that they will be rewarding their shareholders in celebration with things like extra dividends and share buybacks.

As of yesterday, the @TheBigBanks copyfund that we set up 12 months ago is now up 43% since inception. With this good news, it will likely see even further gains when Wall Street opens for business today.

Even the tech stocks, who were performing very poorly this month managed to pull off some gains. Here’s the Nasdaq since the beginning of May.

Carney Flipping

During the last meeting of the Bank of England, it was surprising to see that many members actually voted to raise the interest rates in the UK.

The BoE has kept rates on the floor for a while like many central banks since the crisis. Following the brexit, they lowered their rates even further to encourage lending and spending during this uncertain time.

The President of the BoE, Mark Carney, was one of the biggest advocates of keeping the rates low, but it seems that even he has now bowed to the pressure and signaled that it may be time to get inline with the rest of the globe and start thinking about raising the rates gain.

For those of you who are reading this far, you’ll now find out why this is so important.

Here’s a chart of the GBPUSD since the last BoE meeting on June 15th.

So despite Brexit and despite Theresa May’s terrible display in the elections of June 8th, investors feel that the chance of higher rates is enough to push the Pound higher. Now imagine if it actually happens what the effect could be.

Bitcoin Bounce

It looks like the bitcoin dip did indeed find some major buyers but not the usual kind. Looking at the volumes over the last 24 hours we can see that the number one customer is the Korean exchange bithumb.

This is the first time that I’ve seen the Korean’s trump volumes of Poloniex.

We need to keep in mind that at this time Koreans do not have any practical use for bitcoins. They don’t have many stores that accept them, and the new government has more important things to deal with at this time than a regulatory framework for digital assets.

The only country that does have a rapidly growing number of vendors accepting bitcoin is Japan. As we can see above, bitFlyer is currently number 10. Not that they’ve gone down recently, but they certainly haven’t increased their buy orders since the peak.

Therefore, we can probably conclude that the reason bitcoin has been rising lately is due to speculation. Now, that’s not necessarily a bad thing, just something to keep in mind.

As always, please feel free to contact me directly with any questions, comments, and feedback. Have a spectacular day ahead!

This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.

Past performance is not an indication of future results. All trading carries risk. Only risk capital you’re prepared to lose.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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1 Comment

1 Comment

  1. getdemtokens

    June 29, 2017 at 1:25 pm

    I think your image for the various exchanges is incorrect as of the posting of this comment (8:25 am est)

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Bitcoin

Bitcoin’s Offensive Continues as Prices Breach $3,400

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Bitcoin’s value jumped to a new record on Tuesday, a clear indication that the bull market was back in vogue following a month of turmoil.

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$3,000 & Beyond

The virtual currency (BTC/USD) rose 2.4% to $3,468.00 in overnight trading, according to Bitstamp. Before the weekend, the BTC/USD had crossed the $3,000 mark only once.

At current prices, the market value for all bitcoins is more than $57 billion – the highest on record.

While post-fork exuberance shows no signs of fading, traders are reminded that bitcoin’s recent leg up has been accompanied by decreasing volume. In fact, a similar trend has been observed during every leg up from $1,800.

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Zooming out to the 1-day Bollinger Band, the market appears to be overbought. A historical analysis reveals that, more often than not, a puncturing of the Bollinger Band in either direction leads to a broad pullback in the market.

The daily RSI also adds credence to the view that the market is approaching overbought territory.

Bitcoin Cash Trading Well Below Its Peak

Bitcoin’s surge followed the creation of a spin-off digital currency – Bitcoin Cash (BCH) – last week. The newly minted coin spiked above $700.00 on Aug. 2 before a series of volatile moves dragged prices back toward $200.00.

BCH was back above $300 on Tuesday, having gained more than 27%. Its total market is valued at more than $5 billion.

Coinbase Caves to Investor Demand

U.S. cryptocurrency exchange Coinbase has announced that it plans to support BCH as of January 2018. Initially, the exchange said it would not support the new coin, triggering outrage among users and a surge in withdrawals.

A contingency of Coinbase customers also threatened to sue the exchange for not supporting BCH, equating the decision to a brokerage withholding new shares from its investors.

“We are planning to have support for Bitcoin Cash by 1 January 2018, assuming no additional risks emerge during that time,” the leading exchange said on its blog.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Blockchain

Bulletproof

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Hi Everyone,

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One of the things that’s been bugging me about blockchain technology is another technology that is on the rise just as fast and could possibly make it irrelevant.

Quantum computing is currently under development by some of the biggest tech players in the world. IBM, the NSA, and Google are all working hard to make everything that we know about computers irrelevant within the next decade.

The idea is quite simple, in the world of quantum physics anything is possible. For example, throwing a basketball through a brick wall is not a very probable thing to occur but the odds of it happening are greater than zero.

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In computers, it means rather than making one calculation at a time in a sequential order, a quantum computer could theoretically just calculate all the possibilities at once.

So things like passwords or private keys, for example, could theoretically be reproduced in a matter of moments. This of course, threatens not just Bitcoin but all digital payments, online banking, and virtually all areas of encryption and cyber-security.

Now, we’re still several years away from this becoming a real concern. So now is the right time to start building the infrastructure to protect ourselves against it.

A company called Droplex, who’s pre-ICO is just entering its final hour aims to build a bullet proof blockchain that will be impervious to future Q-hackers. Now, I haven’t personally looked too deep at this project as of yet but I am extremely comforted by the fact that somebody is building a fix for this already.

Perhaps in 5 years or so we can have another debate about the best way to upgrade Bitcoin for Q-safety.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Stocks are down

Bezos Briefly Best

August 1st BTC Deadline

Please note: All data, figures & graphs are valid as of July 28th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

Problems pursue in Washington for the precarious President.

The newly appointed communications director Anthony Scaramucci is now taking swipes at the chief of staff and Trump himself has been lashing out at his own attorney general Jeff Sessions.

Some speculate that Trump is getting ready to fire Sessions in order to get the special prosecutor Robert Muller off his back.

Meanwhile, the bill to repeal Obamacare was just shot down in the Senate as the notable Republican and previous presidential candidate (2008) John Mccain voted no.

Stock markets have not been performing well so far in Asia and the European markets just opened with a notable gap down.

At least the USD seems to be getting some support.

This chart showing USDollar support was posted by @4exPirate Dawid Kowalski in Poland who is arguably one of the most consistent traders on the eToro network.

Congratulations to Jeff Bezos

…for briefly becoming the world’s richest person. Jeff managed to snag the top spot off Bill and kept it for almost 3.5 hours.

Most of Bezos’ fortune is in Amazon shares, so when the market opened with a significant gap up his net worth reached $90 Billion. However, a sour earnings report from Amazon sent the stock back down.

Turbulence in Crypto

If he times it right, Bezos may just be able to buy all of the cryptocurrencies currently in circulation, which is now holding steady at about $90 Billion.

Or not, the sale of 17% of all AMZN shares along with word that the founder is selling would probably push the price significantly down before he could offload most of them. Of course, that much buying pressure would also move the cryptos up.

In any case, if anybody were considering to buy that many digital assets they might want to wait until next week. Given that August 1st is coming up this Tuesday and still nobody really knows what’s about to happen to Bitcoin.

For those of you looking to trade this event, make sure to get your orders in as early as possible as there may be some downtime on BTC depending on the way it plays out.

Wishing you and yours a very pleasant weekend.

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Featured image from Shutterstock.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Bitcoin

Valuing Cryptocurrencies and Blockchain Applications

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Arguably the most interesting financial trend of 2017 is the spreading of cryptocurrencies, especially in the Ethereum ecosystem. With the ICO boom of this year, a lot of different business models have been connected to tokens or blockchains of their own. This brings up several questions in the mind value-conscious investors, as given the special properties of these coins, and especially considering the various distribution and usage schemes of the tokens, valuing them is tricky, to say the least.

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Whether or not we are in a bubble currently is a layered question, as we are definitely in a huge speculative wave that will end badly for several coins, but the segment is in the early phase of adoption, and the market as a whole will likely multiply in the coming years.

As I concluded in my comparison with the Dot-Com bubble, selective investing in the ICO-boom is vital for long-term investors. To make things more complicated, traditional valuation models generally fail with cryptocurrencies, because of the hybrid stock-commodity properties of them and the novelty of the technology, coupled with the questions regarding the future usage patterns.

Is it possible to set up a framework to analyze all the different business models and value the connected coins? Or is it possible to, at least, determine hard guidelines to follow when selecting the coins to hold or forget? I will answer that question below and in the coming second part of the article.

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