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Central Banks are Feeling Threatened by Bitcoin: Optimistic Sign For Long-Term Price Growth

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A growing number of governments, financial regulators, and central banks are beginning to feel threatened by the increasing adoption of bitcoin and the decentralized financial network it provides.

Bitcoin is decentralized in nature as it operates on a peer-to-peer protocol and a transparent ledger called the blockchain. Every transaction processed by the Bitcoin network can be seen on the blockchain network through platforms like blockchain explorers. The Bitcoin network also relies on a unique monetary policy in which the maximum supply of bitcoin is fixed at 21 million.

The price of bitcoin is solely dependent on the demand from the global bitcoin and cryptocurrency markets. If the demand toward bitcoin from casual investors, institutional and retail traders increases, since the supply of bitcoin is fixed, the price of bitcoin surges. The independence and decentralization of bitcoin allows the network to operate as its own economy without the influence of global markets volatility and economic uncertainty.

As the Bank of Finland, the central bank of the nation, explained in its research discussion paper entitled “Monopoly without a monopolist: an economic analysis of the bitcoin payment system,” bitcoin is not and cannot be regulated. The Bank of Finland further encouraged economists to study the marvelous structure of bitcoin. The paper read:

“Bitcoin is not regulated. It cannot be regulated. There is no need to regulate it because as a system it is committed to the protocol as is and the transaction fees it charges the users are determined by the users independently of the miners’ efforts. Bitcoin’s design as an economic system is revolutionary and therefore would merit an economist’s attention and scrutiny even if it had not been functional. Its apparent functionality and usefulness should further encourage economists to study this marvelous structure.”

While many central banks including the Bank of Finland, the Bank of Japan, and the Bank of Korea are taking the right approach in regulating trading activities and businesses around bitcoin efficiently with practical policies, several central banks in regions such as China and Russia are still against bitcoin because it remains as a threat against the global banking industry and existing financial networks.

For the most part, the fear from central banks and major financial institutions is understandable; the presence of bitcoin renders the necessity of banks useless because it provides an alternative financial system which users can facilitate payments within a peer-to-peer manner.

Earlier this week, the president of OPORA Russia public association, Alexander Kalinin, stated:

“Elvira Nabiullina said that the central bank is against, because this is actually a loss of control over the money flows from abroad.”

Governments and financial regulators are limited in what they are capable of regulating in bitcoin and cryptocurrency markets. Evidently, the protocols themselves such as the Bitcoin and Ethereum blockchain networks cannot be regulated or censored. But, trading activities and businesses around the cryptocurrencies can be regulated and so far, the Central Bank of Russia and the People’s Bank of China have created a restricted and challenging environment for businesses and investors.

However, for long-term growth, bitcoin is at a perfect position. Several central banks are encouraging economists and bankers to study the structure of bitcoin and its capability of offering a decentralized financial system while others such as Russia and China remain threatened by the cryptocurrency.

It is an optimistic indicator for long-term growth that central banks and major financial institutions fear the exponential growth of bitcoin because that demonstrates the potential of bitcoin to surpass and overtake the world’s largest financial systems including fiat money, reserve currencies, and gold.

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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3.4 stars on average, based on 3 rated postsJoseph Young is a finance and tech journalist based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.




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3 Comments

3 Comments

  1. Chris G

    September 24, 2017 at 4:34 pm

    Agreed

  2. ivanb

    September 24, 2017 at 5:24 pm

    winter is coming

  3. mvppvm_07

    September 25, 2017 at 3:27 pm

    Regardless of the decentralization, anonymity and populist “management” of bitcoin, from mining to hodling, have many analysts offered their reasoned views on ways central banks / governments can/might/will either dilute or destroy the threat of bitcoin based crypto?

    In what ways do they think they can kill this non-regulated economic model?

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Altcoins

XRP Price Analysis: Reports Indicate National Bank of Kuwait (NBK) is Set to Go Live With xCurrent

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  • Sources suggest National Bank of Kuwait (NBK) are moving closer to going live within Ripple’s xCurrent solution.
  • Despite current XRP/USD selling pressure, a bullish technical set up is still seen as a potential.

National Bank of Kuwait Ready to Use xCurrent

One of the largest banks in the Middle East, National Bank of Kuwait (NBK), is readying to move forward with xCurrent. It is reported this could be in place within the next few weeks. xCurrent is Ripple’s enterprise software solution that facilitates banks to instantly settle cross-border payments, providing end-to-end tracking.

The latest suggested is that the NBK are currently awaiting to receive the green light from the Central Bank of Kuwait. Sources close to the matter, are said to note that NBK are currently preparing for its first transaction with the xCurrent solution. In terms of time frame, the suggestions are for the back end of October, or by early November. These sources are being cited by the newswire, Crypto Briefing.

Earlier this year, in May, the National Bank of Kuwait mentioned Ripple via their official Twitter account. They tweeted, “NBK leads the way in Kuwait in a partnership with RippleNet to offer instant cross-border payments to customers Ripple.” Nothing further on this, from either the NBK or Ripple was noted.

It is important to note that the xCurrent solution does not use XRP tokens, unlike xRapid, which enables banks to send payments using XRP. It can then be transacted back into the appropriate fiat currency by the receiver. On the basis of the above noted, it is likely to have a direct influence on the value of XRP.

Technical Review – 4-hour Chart

XRP/USD 4-hour chart

Despite the consistent downside pressure observed with XRP/USD, a potential bullish technical set up can still be eyed. As seen on the 4-hour time frame, price action has been moving within a bullish flag pattern. The lower support has recently been penetrated by the market bears.

Near-term support eyed immediately at $0.4660-40 area, the below trend line. Further south, a demand zone is seen running from $0.4535 down to $0.4350. This was an area that caught the price during some hard selling at the back end of September. Bulls managed to kick started a recovery at this low area on 25th September. Should this technical set up fail to play out, eyes will then be on $0.4000 for support. Last traded down here on 15th October. Lastly, looking at resistance, this is seen just ahead at $0.4650, upper trend line of the flag. Ahead, there is heavy supply heading into and within the $0.5000 territory.

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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4.5 stars on average, based on 33 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Crypto Update: Altcoin Season Is On The Horizon

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Altcoin season is a term used in social media and other online communities to describe the part of the market cycle where altcoins, such as Ethereum or Ripple, experience a meteoric rise in value against Bitcoin and the US Dollar. During this period, many altcoins enter a parabolic state that enables them to grow anywhere from 200% to 3000%. This was the case in the last alt season, which was from December 2017 to January 2018.

While this highly anticipated season can bring a lot of profits, it can also end in disaster to those who fail to correctly time the market. During the last season, many were slaughtered as they entered only after news of market explosions. Little did they know that they were already buying the top. Therefore, it is crucial to enter positions just before the season starts. The price movements in the last two months have given us reasons to believe that altcoins are preparing for a bull run.

In this article, we reveal why we believe that the altcoin season is on the horizon.

Altcoin Market Cap Appears to be Bottoming Out

The altcoin market cap is the market capitalization of all cryptocurrencies minus Bitcoin’s market capitalization. We use this measure to track the amount of capital going in and out of all altcoins. The largest altcoin market cap ever recorded was at $554.916 billion in January 2018. Since then, the numbers have nosedived and even touched $78 billion in September. That’s an 85% devaluation.

The good news is $78 billion may have been the bottom as the entire altcoin market is working hard to generate a bullish higher low setup.

Altcoin market cap daily chart

A quick look at the daily chart reveals that the altcoin market chart is creating an inverse head and shoulders pattern. This structure is one of the most reliable patterns to indicate that the bottom is in. The higher low (right shoulder) tells us that participants are willing to buy at a higher price.

Bitcoin Dominance Looks Toppish

The Bitcoin dominance chart monitors the percentage of the cryptocurrency capital that can be attributed to Bitcoin. Bitcoin dominance has been on the up and up ever since it bottomed out at 32% on January 12, 2018. It climbed as high as 58% on September 9, but it has been sputtering since. This is a very good sign for altcoins.

A look at the chart reveals that Bitcoin dominance is toppish. It is moving near the apex of a rising wedge. More importantly, it appears to have created a bearish lower high setup. As we always say, the lower high kills bullish momentum.

What does it mean for altcoins and the alt season?

First, this chart doesn’t necessarily show that Bitcoin’s capital is decreasing. On the contrary, Bitcoin’s market cap is in the process of creating a higher low, which means money is flowing into the market. So if Bitcoin’s capitalization is not decreasing, then it would mean that new capital is being injected into altcoins. To be more accurate, altcoins appear to be growing at a faster pace than Bitcoin at the moment.

This would explain the bullish higher low setup of the altcoin market cap. Significantly more money is coming than leaving. Investments are flooding in that it threatens to send Bitcoin dominance into a downtrend.

Bottom Closely Resembles 2014 Bear Market

Technical analysis is the study of historical price movement. This is one of the reasons why we keep going back to the 2014 bear market. We study it to see if participants are behaving the way they did back then. What we discovered was surprising.

2014 altcoin bear market

During the 2014 bear market, altcoin market capitalization suffered a 86% devaluation in 38 weeks before it established a bottom. In today’s bear market, the altcoin market cap plummeted 85% in 36 weeks. From the looks of it, the bottom was already established on the 36th weekly bar on September 10, 2018.

2018 altcoin bear market

These are astonishing resemblances in terms of percentage loss and bear market length. If the resemblance continues, as clues suggest, then the altcoin season may be around the corner.

Bottom Line

The altcoin season can be profitable to people who enter the markets right before the explosion. In our analysis, we showed the stabilizing altcoin market capitalization, weakening of Bitcoin dominance, and mirroring to the 2014 bear market. All these clues tell us that alt season is on the horizon.

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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3.7 stars on average, based on 253 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Altcoins

Bitcoin Cash Price Analysis: BCH/USD Bulls Have the Potential to Capitalize, Following a Bullish Technical Set Up

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  • BCH/USD broke out and retested a long-running descending trend line, but has failed to capitalize on this further.
  • George Hotz, also known as Geohot, says “Bitcoin Cash is the real Bitcoin.”
  • CoinText.io expands its Bitcoin Cash payment SMS service to Brazil and further European countries. 

“Bitcoin Cash is the Real Bitcoin”

George Hotz, also known as Geohot, an American entrepreneur and hacker, was recently commenting on Bitcoin Cash. Following the BCH Devcon in San Francisco he attended, Geohot demonstrated how to generate a BCH private key from scratch using python coding.

During his python video, George spoke highly of Bitcoin Cash. He said, “I’m using Bitcoin Cash because it’s the real bitcoin.” His reasoning for the preference of BCH over BTC was due to it having significantly lower transaction fees. Stating, “Transaction fees are super low on bitcoin cash.”

Bitcoin Cash Being Used in Brazil with CoinText.io

SMS cryptocurrency payment service, CoinText, has launched their services in Brazil and three other European countries – Poland, Romania and Croatia. CoinText doesn’t require apps, logins or Internet, and users can send Bitcoin Cash via SMS. A new wallet is automatically created when people have received Bitcoin Cash via SMS.

Specifically commenting on the Brazilian expansion, CoinText founder and CTO said, “Brazilians have been suffering from corruption and bad monetary policy,” says CoinText founder and CTO Vin Armani. “Cryptocurrency offers a way for them to peacefully opt out of a corrupt system.”

A move in which is further helping the adoption of Bitcoin Cash, via the CoinText service, he further noted, “Adding Poland, Croatia and Romania brings us closer to connecting the entire continent of Europe,” Armani added. “CoinText’s end-of-year goal is to enable all 740 million European residents to text money to each other’s phones for pennies.”

Technical Review – Daily Chart

BCH/USD daily chart

BCH/USD price action of late has been very much mundane following a promising breakout from a long-running descending trend line. It had been contained below and rejected on several occasions, from the back end of July. Bulls managed to pull off a decent breakout to the upside, which took place between 26-27th September.

After observing the break above, then pullback for a retest of the breached trend line, it looked very promising. This as such played out to the textbook, however bulls failed to capitalize and drive further north. Instead, the price remained within a consolidation nature, a lack of commitment in either direction. Perhaps the bulls are sitting on the launchpad, ready to send this into orbit, time will tell here.

Looking at technical areas of interest, to the upside, resistance has capped upside well into $500 territory. Tracking from $455-80, which has been evident the past few sessions. A firm push higher, will allow $550 region to come back into play. In terms of buyers, they can be found from the current price, all the way down to $400 the round figure.

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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4.5 stars on average, based on 33 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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