Veteran Trader Shares Tips on how to Profit from Bitcoin and Altcoin investing

Successful traders treat trading like a business and part of treating your trading like a business involves keeping a journal. While everyone has a different format and preference, I generally use an Excel spreadsheet to help with calculations and provide organizational clarity.

Crypto investors are always curious about each other’s positions and typically these conversations take place in private DMs and telegram chats. The goal here is to provide some transparency on my trading routine and I hope traders find the process of observing each step of every trade educational. 

Trading position sizes are redacted, but they are always calculated based on a 1% portfolio loss using the stop loss and entry as a guide. 

Chainlink (LINK)

Entry: .00016499 Satoshis (sats)

Targets: .00018564 (sats) for an 11% gain near the top of weekly demand zone and .000224 (sats) for a 26% gain near the bottom of blue resistance (see chart). 

I’ve placed a stop loss at .00016064 (sats) which equates to a -2.6% loss.

It’s also good practice to consider the risk to reward ratio when making an investment, especially with altcoins given Bitcoin’s current dominance rate. The risk to reward ratio measures the difference between a trade’s entry point all the way to the stop-loss and sell or take-profit order. 

Comparing these two provides the ratio of profit to loss, or reward to risk. For this trade, it is roughly 4.5 at first target 12.6 at the second target.

As mentioned earlier, position sizes are redacted and each trade exposing the total portfolio to a 1% risk. 


General analysis 

LINK caught my attention on Sept. 9 as it was in a clear corrective downtrend since hitting an all-time high. The blue zone was providing strong support and was effectively the bottom of a descending triangle. LINK price broke down from this zone and retested it a number of times as resistance before moving away. 

The altcoin then bounced off of the key support at .00016499 (sats) and eventually broke down, which became my first area of interest to trade. The green zone was an area of daily demand (.00014863 to .00018564 (sats)) and a break below this would be bearish, and likely lead to further price depreciation.

LINK/BTC Daily Chart. Source: TradingView

LINK/BTC Daily Chart. Source: TradingView

Entry ideas 

If it breaks down here, the first interesting entry would be a breakthrough .00016499 (sats) which would recapture the former support. Ideally one would like to catch a retest, but being willing to potentially trade the breakout with a tight stop was the thought, as LINK tends to really move and punish traders waiting for a clean retest. 

In hindsight, I wish I could have shorted this down as I was very confident that price would drop after losing the blue zone.

If LINK price broke the descending trendline it would be something of a definitive end to the downtrend. A break or retest of this area would become a second trade. 

How it worked out

By Sept. 19 the trade proved to be a success. There were 2 consecutive swing failure patterns (SFP) below the previous swing low at the bottom of the green range with tweezer bottoms on the daily chart. 

Swing failure patterns are identified when price quickly moves to a key swing low (or high for a short), wicks below and closes above. This is an indicator that a whale has pushed price to that level to find liquidity to fill their orders and often referred to as “engineered liquidity.”

LINK/BTC Daily Chart. Source: TradingView

LINK/BTC Daily Chart. Source: TradingView

This was interpreted as a strong reversal signal and was a sign that LINK was about to pump. A full position buy order fired as price broke through the red line and as mentioned before, I chose to play the break out with a preset limit order. 

Sell orders had been set at .000185 (sats) (50%) and .00022 (sats) which was the remaining 50% of the position. I’ve found that putting sell orders lower than the targets helps to avoid being front-run and this is a strategy I employ with all my trades.

LINK/BTC Daily Chart. Source: TradingView

LINK/BTC Daily Chart. Source: TradingView

Overall the trade went great. Both targets were hit and closed 50% of the position at each target. LINK appeared to have more gas in the tank but I chose to stick to the plan. 

I wasn’t looking for re-entry at this time but I would consider a re-entry with a retest of the red line, or a break of the descending line mentioned earlier. This trade produced an 18% profit. 

Bitcoin (BTC)

Since topping out at $13,800, Bitcoin (BTC) has been on a bit of a roller coaster but this doesn’t mean intraday and swing trades can’t be capitalized on. My targets were set at $9,700 through $10,028 and idea entries were at $9,367 and $9,321. 

The risk to reward was 3.1 for the first target and 11.5 for the second target. A stop-loss was placed at $9,260 which equates to a 1.14% and 0.65% loss if that region is hit.

BTC/USD 4hr Chart. Source: TradingView

BTC/USD 4hr Chart. Source: TradingView

General analysis

I chart Bitcoin (BTC) more than any other asset, so I am well tuned to its general movement. Importantly, as an American, I do not trade on any leveraged exchange since I don’t trust them. This means I lack the ability to short even though Kraken readily available. I simply don’t trust the availability of margin or the “scam wicks” that are often seen liquidating and stopping out unassuming traders. 

Bitcoin price has been slowly dropping for days and around Sept 24 it looked ready to fall off of a cliff. That said, there is a very good risk/reward for a long if this is the bottom but one would need a tight stop. 

This is a clear situation of “buying support.” The only issue is that the support has been tested multiple times which tends to make it weaker. The closer to support the better entry to tighten up the stop loss. The channel is also unconfirmed at the bottom and the resistance at the top is clear. 

The red line represents a previous swing low and I want nothing to do with any candle closes below this line because it will clearly invalidate my premise. 

BTC/USD 4hr Chart. Source: TradingView

BTC/USD 4hr Chart. Source: TradingView

Entry idea

The confluence of a key support from the previous swing low ($9,321) and the bottom of the potential channel represents a do or die point and it is very easy to cut bait with a tight stop if this goes the wrong way. 

The risk is having a stop loss fire and this level turning into an SFP with just a wick below the red line. That would be brutal and has happened many times. Setting the stop at $9,260 gives about $60 of leeway below the support for an errant wick.

I decided to spread the orders in a circle and the first wick down filled about 70% of the orders and was followed by a nice bounce. I thought that may have been the end of the dump there, but the rest of my orders filled at the red line. 

Not ideal, I would have rather had the orders all fill on the first drop. The fact that the price bounced and returned to support is bearish but I am sticking to my plan.

BTC/USD 4hr Chart. Source: TradingView

BTC/USD 4hr Chart. Source: TradingView

How it worked out 

The trade was a total train wreck. That was the fastest that I have been stopped out of a trade in a long time, probably under 5 minutes from the second entry. Bitcoin price hit the red line and dumped through it in epic fashion. 

Clearly this was an absolutely awful read on the chart, but luckily a tight stop loss helped to mitigate losses. This would have been extremely ugly without a tight stop, as it ended up being one of the largest red candles in recent Bitcoin memory. This trade led to a loss of 0.9%.

One thing that can be taken away from this experience is that keeping a journal allows a trader to backtest and review candle patterns and support / resistance levels without confirmation bias. This improves the ability to execute and manage future trades.

The views and opinions expressed here are solely those of the (@scottmelker) 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.

Cointelegraph News

Crypto Carnage, Zuckerberg Admission, Royal BTC Scam: Hodler’s Digest, Sept. 23–29

Coming every Sunday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Crypto carnage: Bloodbath for altcoins as Bitcoin crashes

It’s been a week to forget in the crypto world. Bitcoin (BTC) prices crashed hard on Tuesday — rapidly dropping from $9,800 to $8,150 over the course of the day. The double-digit percentage losses saw the overall crypto market cap lose a whopping $20 billion in less than an hour. While some analysts blamed Bakkt’s sluggish launch for the downturn, others said BTC’s weak market moves may be linked to the political turmoil in the United States, where news of impeachment proceedings against President Donald Trump spooked markets. Altcoins were not immune from Tuesday’s pain — Bitcoin SV (BSV) took a massive hit of more than 34% on the day, while Ether (ETH) sustained heavy losses of 24%. Later in the week, BTC/USD dipped to $7,736 — the lowest price since May 2019. Although some ground was recovered, Bitcoin entered the weekend trading sideways in the low $8,000s.

Zuckerberg: Libra is “sensitive for society” and has no launch date

Facebook CEO Mark Zuckerberg appeared to show a rare display of fear as regulatory scrutiny surrounding the Libra stablecoin intensifies. He admitted the project was “very sensitive for society” and said his company was determined to work through issues before launching. The billionaire also acknowledged this is a very different approach to what Facebook might have done five years ago. In other Libra news this week, reports emerged that the social network’s chief operating officer, Sheryl Sandberg, is in talks to testify in front of the House Financial Services Committee. Meanwhile, Calibra wallet head David Marcus — who has already faced a grilling in front of Congress — asserted in a blog post that blockchain-based payment networks can address inefficiencies in existing payment systems.

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Kik founder: We’ll fight SEC “until we don’t have a dollar left”

The CEO and founder of Kik, the Canadian social media and messaging app, had a defiant message for U.S. regulators this week: We’re not going down without a fight. The company has been mired in a costly legal battle with the Securities and Exchange Commission (SEC) over the initial coin offering for its Kin cryptocurrency — with the SEC claiming the $100 million sale was unregistered. Kik’s CEO, Ted Livingston, told a conference in Toronto on Wednesday: “We have to keep going. Until that’s it, we don’t have a dollar left, a person left. We will keep going no matter how hard it is.” Also this week, Livingston confirmed that the company will shut down the Kik app and reduce its headcount from 151 to 19 as it fights for Kin’s survival. The embattled company is hoping to go to trial in May 2020 and is raising $5 million to fund its lawsuit against the SEC.

France: 25,000 major retail stores to accept Bitcoin in 2020

Paris Retail Week brought the news that support for BTC payments is going to be launched at more than 25,000 sales points for 30 French retailers next year. Big brands such as the sportswear giant Decathlon and cosmetics chain Sephora are among those involved in the project. Global POS, the company providing the technology, described it as an “important symbolic step in the evolution of payment methods in France” that will allow businesses to “safely enter the world of Economy 3.0.” Even as thousands of stores embrace crypto, European Central Bank President Mario Draghi continued to be pessimistic about the future of crypto assets — insisting they “are not designed in ways that make them suitable substitutes for money.” On Wednesday, a new survey by Big Four auditor KPMG suggested that 63% of U.S. customers perceive blockchain tokens to be an easy form of payment.

Tron’s Justin Sun to reschedule Warren Buffett launch “very soon”

Justin Sun’s buffet with Buffett has been delayed for some time now. The Tron founder had paid $4.56 million for the privilege during a charity auction in June, but postponed due to medical reasons. Now, Sun is saying he plans to schedule his brunch with the billionaire “very soon” — and he even wants to add other esteemed individuals to the guest list. In a tweet to President Trump, a crypto skeptic, Sun wrote: “Mr. President, you are misled by fake news. #Bitcoin & #Blockchain happens to be the best chance for US! I’d love to invite you to have lunch with crypto leaders along with @WarrenBuffett on July 25. I guarantee you after this lunch, nobody will know crypto more than you!” He hasn’t had a reply yet.

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Winners and Losers

At the end of the week, Bitcoin is at $8,058.19, Ether at $167.93 and XRP at $0.24. The total market cap is at $213,108,859,392.

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The top three altcoin gainers of the week are Custody Token, XTRD and Tellurion. The top three altcoin losers of the week are Pandacoin, Bitcoin God and Oxycoin.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis. 

Most Memorable Quotations

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“We have to keep going. Until that’s it, we don’t have a dollar left, a person left. We will keep going no matter how hard it is.”

Ted Livingston, Kik CEO

“Mr. President, you are misled by fake news. #Bitcoin & #Blockchain happens to be the best chance for US!”

Justin Sun, Tron founder

“The risk is high for a rapid descent down to $4,000 or lower!”

Peter Schiff, gold bug

“Combining the internet with Bitcoin gives us a real chance of achieving the original promise of the internet; freedom of speech, commerce and finance.”

Kim Dotcom, entrepreneur 

“If Libra is introduced, it could have a huge impact on society.”

Haruhiko Kuroda, Bank of Japan governor 

“When we do things that are going to be very sensitive for society, we want to have a period where we can go out and talk about them and consult with people and get feedback and work through the issues before rolling them out.”

Mark Zuckerberg, Facebook CEO

“Bakkt, first day volumes: 71 bitcoin. CME, first day volumes: 5298 bitcoin. That’s a 75x difference.”

Alex Kruger, trader

Prediction of the Week

Peter Schiff: Bitcoin price now at “high risk” of $4,000 or lower

A cheery prediction of six-figure BTC prices somehow doesn’t seem appropriate this week. Gold bug Peter Schiff, who has never knowingly passed up an opportunity to bash Bitcoin, has a rather gloomy forecast for the world’s dominant cryptocurrency. After BTC shed $1,800 in a matter of hours, he warned: “The risk is high for a rapid descent to $4,000 or lower!”

FUD of the Week

China’s central bank: Digital currency has “no timetable” for launch

Contradicting previous statements, the People’s Bank of China has now denied that Beijing is ready to launch its digital currency. The state-run Global Times said the delay is because the bank “needs to research, test, evaluate and prevent risks.” Back in August, Deputy Director Mu Changchun had suggested that the project was complete and awaiting launch — perhaps even before the end of 2020. Those comments had sparked suggestions that Beijing was in a race to beat Libra to the punch. With Facebook’s stablecoin bogged down in regulatory red tape, these latest remarks indicate the social network may have a little bit of breathing space.

Fake royal letter asks for $2.5 million in BTC to save U.K.’s economy after Brexit

We’ve seen some audacious scams in our times at CT Towers, but this one takes the cake. Fraudsters have sent out letters in the post to British consumers, posing as senior servants to the Queen, to ask for $2.5 million in BTC to help the United Kingdom maintain the local economy after Brexit. The letter says those who send cryptocurrency will be rewarded with a 30% interest rate for three months — as well as, get this, the honor of becoming a Member of the Royal Warrant Holders Association. Naturally, the letter includes a plea to keep this exclusive offer secret. 

Fake Bitcoin investment platform from “Elon Musk” promises 4,000% ROI

And here’s one more scam that’s worthy of a FUD mention this week. Scammers are using fake mainstream news articles to advertise a nonexistent and potentially dangerous Bitcoin investment platform. The ruse uses celebrity endorsements from the likes of actress Kate Winslet — and even boasts that it has backing from Richard Branson, Elon Musk and Bill Gates. The fraudsters claim that each star bought $10,394 worth of BTC and netted a return of $421,226 — a growth of 4,110% — in the space of a week. Winslet responded angrily to news that her image was used in this way, describing the promotion as “completely disingenuous and categorically false.”

Best Cointelegraph Features

VanEck, SolidX drop Bitcoin ETF race, SEC approval until 2020 unlikely

The Chicago Board Options Exchange’s BZX Equity Exchange has withdrawn its proposal for a VanEck–SolidX Bitcoin exchange-traded fund. The Securities and Exchange Commission still had another month to greenlight or reject the financial product. Stephen O’Neal follows up on the story.

BTC and quantitative easing: What’s the correlation in crypto?

According to some, there’s a connection between Bitcoin and the government’s use of quantitative easing — with crypto prices rising whenever this monetary policy is enforced. Will Heasman explores whether this idea is entirely out of the realm of possibility.

First week of Bakkt: Slow start unlikely to dampen long-term prospects

Kirill Bryanov examines how Bakkt, the first federally regulated platform for Bitcoin futures trading, has performed in its first week.

Cointelegraph News

Crypto in Cuba Faces Challenges Despite Growing Adoption, Overview

Following the roll-out of mobile internet across the country in 2018, many ordinary Cubans are increasingly using cryptocurrencies to bypass economic sanctions imposed by the United States and access the global marketplace.

Despite growing adoption, cryptocurrencies still face a number of challenges in Cuba, including limited access to crypto exchanges, lack of a pertinent regulatory apparatus and the growing popularity of a gold-backed MLM stablecoin.

10,000 Cubans use crypto

On Sept. 12, a report published by Reuters included excerpts from an interview with Jason Sanchez, a 35-year-old Cuban who describes virtual currencies as “opening new doors” for ordinary citizens. The Havana resident runs a cell phone repair shop and uses Bitcoin (BTC) to purchase hardware online from China.

According to members of CubaCripto, a Telegram group boasting 600 members and considered to be among the first crypto-oriented online communities in Cuba, cryptocurrencies are increasing in popularity for several utilities. 

While the primary utility of cryptocurrencies cited is their capacity to allow Cubans to circumvent economic sanctions and make purchases online, other members of the local crypto community are looking to virtual currencies for trading and investment purposes, seeking to profit from Bitcoin price volatility. 

Despite Bitcoin’s price fluctuations, some Cubans are also using crypto as a means to store value. Many of CubaCripto’s members also emphasize the privacy benefits to Bitcoin, highlighting that their financial activities are less easily traced by the local government.

Alex Sobrino, the founder of CubaCripto, estimates that 10,000 Cubans regularly use cryptocurrency. According to Alex, ordinary Cubans are using crypto to purchase phone credit, buy goods online, and even make hotel reservations.

Cubans blocked by crypto exchanges

While cryptocurrency is increasing in popularity across cryptocurrency in Cuba, the island’s residents are barred from accessing many virtual currency exchanges. As of July 1, 2020, Binance DEX’s website began to geoblock users with IP addresses originating from 29 countries, including Cuba. 

During May 2018, Bittrex also updated its terms of service to formally block residents of Cuba alongside four other nations subject to U.S. sanctions. In July 2017, a programmer based in the United Kingdom visited Cuba and, upon arriving home, found that his Coinbase account had been blocked after having accessed the account while on the island.

In November 2018, a report published by found that 19 of 44 cryptocurrency exchanges restricted Cubans from accessing their platform, making Cuba the sixth-most blocked jurisdiction by crypto exchanges, followed by the United States, which is blocked by 30 exchanges, Iran and North Korea with 24, Syria with 23 and Sudan with 20.

CubaCripto members report that there are no traditional exchanges facilitating virtual currency for Cuban fiat currency. As such, many Cubans seeking to purchase crypto must do so via direct face-to-face transactions with local traders in exchange for cash or phone credit.

Accessing crypto in Cuba

Fusyona, a company founded in 2018 seeking to bill itself as Cuba’s first cryptocurrency exchange, does not offer typical order-matching services. Instead, the company acts as a broker between cryptocurrency buyers and individuals located outside of the country who are seeking to remit funds to Cuba, charging a fee of up to 10 percent.

The founder of Fusyona, Adrian Leon, states that for citizens living in developed countries, virtual currencies are “just another option,” while for Cubans, cryptocurrencies comprise a needed solution to Cuba’s “exclusion from the global financial community.” 

At the start of the year, Havana was struck by a devastating tornado that resulted in 3 deaths, 172 injuries and wholesale damage to local properties and infrastructure. Due to the financial embargo maintained against Cuba, GoFundMe and Facebook campaigns seeking to distribute aid to the island’s citizens were shut down.

In response, Fusyona launched a platform through which donations in the form of Bitcoin could be accepted and used to fund the provision of basic goods, including toiletries, water, canned food and powdered milk. The company also donated its profits to the platform during the campaign. Leon estimates that the platform currently has a user base of 1,300 — nearly double its previous count of 700 in July.

Cryptocurrencies are not regulated in Cuba

Despite the growing popularity of crypto in Cuba, no regulatory apparatus exists to legitimize the operations of businesses operating with cryptocurrencies on the island. Fusyona’s founder expressed concerns that his partners who receive and transfer cash might be suspected of engaging in illicit financial activities and has engaged Cuban Central Bank officials for regulatory approval. Due to the lack of regulatory architecture for crypto in Cuba, Fusyona is currently registered in Brazil. 

Professor Alexi Masso Muoz of Havana University’s cryptography institute told Reuters that while no Cuban virtual currency laws currently exist, “it is possible” that the island may soon seek to develop crypto regulations. However, many Cubans fear the government may move to prohibit virtual currencies. On this, CubaCripto’s Alex Sobrino stated:

“We worry the government will restrict us, prohibit things, start to say this is illicit enrichment.”

Crypto gains momentum in Cuba during 2015

While last year’s roll-out of mobile internet was a catalyst for the recent growth in Cuban crypto adoption, virtual currencies have been slowly taking root in Cuba for at least four years following the introduction of public Wi-Fi networks in 2015.

During March 2015, CoinTelegraph interviewed members of Club Anarcocapitalista de Cuba (Cuban Anarchocapitalist Club, or CAC). The group is believed to have been the first entity to accept BTC payments in Cuba, starting from February 2015. The group’s co-founder, Jois Garcia, stated:

“We believe that Bitcoin has an essential role to play within the context of renewed relations between Cuba and the USA. This currency would not be punished like the dollar is today; the dictatorship makes holding dollars a burden, but the introduction of Bitcoin would allow us to potentially dodge this problem.”

Garcia was introduced to Bitcoin by Fernando Villar, a first-generation Cuban American based in New Jersey and the administrator of BitcoinCuba. At the time, Villar described the softening relations between Cuba and the U.S. as providing the catalyst for Bitcoin to “begin to flourish in Cuba,” highlighting that the presence of U.S. telecommunication infrastructure was improving “phone and internet services on the island.”

Despite his optimism regarding Bitcoin’s potential in Cuba, Villar acknowledged that the island’s cryptocurrency scene was in its nascent stages, stating that he was aware of only a single Cuban Bitcoin miner.

Despite the launch of public Wi-Fi, internet access was extremely expensive, with an hour of heavily-censored internet costing $4.50 — nearly 20% of the average Cuban wage at the time. While 37% of Cubans were estimated to have access to the internet in 2015, Freedomhouse found that less than 5% of the island’s residents had access to uncensored internet.

CAC co-founder Nelson Chartrand described the low rates of internet access as the principal barrier to Bitcoin adoption in Cuba during an interview with Vice in June 2015: “A lot of people in Cuba have never actually been online—that’s the big obstacle right now.”

When visiting Cuba during July 2015, Villar was involved in the first publicly executed Bitcoin transfers between Cuba and the United States. In an interview two months later, Villar spoke to the increasing penetration of communication technology in Cuba, stating that more Cubans owned “iPhones and Androids sent from families abroad than have bank accounts.”

Recent reports estimate that 1,400 WiFi hotspots are operational in Cuba, while 80,000 homes have internet access and 2.5 million Cubans have access to 3G mobile internet, the latter equating to nearly 22% of the population.

Gold-pegged stablecoin MLM emerges in Cuba

In addition to leading cryptocurrencies like BTC and Ethereum (ETH), the gold-pegged cryptocurrency and multi-level marketing scheme KaratGold Coin (KBC) is circulating Cuba.

According to a report published by, the members of CubaCripto frequently discuss the price of gold and KBC, with users arguing over whether KBC is a “pyramid scam, multilevel company,” or a source of “residual income for life.” The report describes KBC alongside BTC, ETH and Litecoin (LTC) as among the most popular cryptocurrencies in Cuba. 

Cuba explores state-backed Crypto

At the start of July 2019, Cuba’s government announced via state TV that it was exploring cryptocurrency among other economic measures as a means to boost production and bolster growth. President Miguel Diaz-Canel announced that the new economic measures would raise incomes for a quarter of Cuba’s citizens in addition to facilitating access to foreign investments and the circumvention of U.S. sanctions. Cuba’s economy minister, Alejandro Gil Fernandez, stated: 

“We are studying the potential use of cryptocurrency […] in our national and international commercial transactions, and we are working on that together with academics.”

Related: McAfee on BTC, Exile & the US: ‘No Way the Current System Can Survive’

Upon hearing of Cuba’s interest in blockchain technology, founder of McAfee and U.S. tax fugitive John McAfee, offered free assistance to the country in developing a virtual currency. In one interview, McAfee stated that creating a coin that is tailored to the economic needs of the country is not an easy task and that he is one of the very few people who can make it happen. Speaking to Cointelegraph while residing in Cuba, McAfee stated:

“Keep in mind Cuba is a very unique country. It’s the only communist country in the Caribbean area — the closest communist country to America. Cryptocurrency has had very little impact on the economy here, on the people. And very few people understand it or know anything about it.”

According to state-backed website, the Central Bank of Cuba is currently examining the risks and benefits associated with virtual currencies.

Cointelegraph News

LedgerX Claims Ex-CFTC Chairman Stalled Approvals Due to Personal Bias

Cryptocurrency derivatives firm LedgerX alleges that former United States Commodity Futures Trading Commission (CFTC) chairman Christopher Giancarlo obstructed the approval of its amended Derivatives Clearing Organization (DCO) registration because of personal bias against the firm’s CEO Paul Chou.

As Industry news outlet Coindesk reported on Sept. 28, LedgerX made the allegations in two letters obtained via a Freedom of Information Act request. The first letter — dated July 3 — states:

“We have strong reason to believe that this unreasonable delay that is in clear violation of the Commodity Exchange Act is related to the Chairman’s animus towards a blog post written by our CEO.”

Preferential treatment

Per the report, while Giancarlo did not answer the outlet’s request for comment, Chou confirmed that the letters are real, accurate and are only some of the messages sent by the firm to the CFTC. LedgerX claims that in January Giancarlo called one of its board members, explaining:

“[Giancarlo] told him that he was going to make sure our DCO order was revoked within two weeks, due to a blog post written by myself the previous year implying that preferential treatment was being given to larger companies so he could ‘cement his legacy.’ This refers to the ICE / Bakkt approval, which was running into issues that were frustrating the chairman.”

While the topics in the letter are quoted, it is unclear which blog post exactly he refers to.

Auditors “never seen this kind of thing before”

Per the outlet’s report, LedgerX was asked by the CFTC to acquire insurance and conduct a SOC 1 Type 2 audit. Furthermore, the company claims that one of the CFTC staffers tried to interfere with LedgerX’s audit. The company also reportedly notes that some auditors were “saying they had never seen this kind of thing before.” Chou claims that he later received apologies:

“Previous chairman wanted to revoke LX license bc Bakkt efforts not moving along. Having no legitimate reason to revoke our license, staff resorted to contacting our independent auditors to tamper with audit to give commission reason to revoke license. Staff admitted & apologized.”

In the second letter, dated July 11, the firm also notes that its application has been pending for nearly 250 days — now it is over 300. Per the report, the CFTC has now has 180 days to approve or deny an application under federal laws.

Reliance on the direct competitor

The letters also note that the CFTC’s swap data repository requirements force LedgerX to report to the Intercontinental Exchange’s ICE Trade Vault, and the latter company has already launched its own competing service — Bakkt. In the July 3 letter, LedgerX claims to have an audio recording of a call with ICE, adding:

“Later, we have on voice recording, when ICE staffers thought they had muted their side, that they were instructed to delay support for our SDR reporting so that we could not start trading — something we consider incredibly anticompetitive. We filed a formal complaint regarding this anti-competitive aspect which was not answered at all. A division head later admitted, in person, to our COO that I was correct in stating that certain entities were being preferentially treated by the Chariman’s office.”

Lastly, Chou also told the outlet that he has been excluded from the CFTC’s Technology Advisory Committee. He said:

“They didn’t tell me why but I think it’s pretty obvious why they did it. […] One of the issues they were going to talk about… was custody and LedgerX is essentially the only member that does custody right now so we were about to send Juthica.”

As Cointelegraph reported at the end of July, the CFTC has reportedly confirmed that LedgerX’s physically-settled bitcoin futures product has not yet been approved by the Commission.

Source Cointelegraph

How Crypto Gambling Is Regulated Around the World

The Japanese House of Representatives recently passed new crypto asset regulation affecting exchanges and custodians — the Payment Services Act and the Financial Instruments and Exchange Act. However, the country’s crypto gambling industry still endures strict gambling regulations. 

“Japan has very strict rules regarding gambling and the same applies to crypto gambling,” Joseph D. Hugh, CFO of international cryptocurrency betting platform Jukebucks, told Cointelegraph, adding:  

“Although it is very difficult to restrict players who play, the government keeps a close tab on crypto transactions originating from Japan using taxation as an excuse.” 

Yet, Japan passed a federal law in July 2018 that allows physical casinos in the country: “Japan is opening up its offline casino license to major players after next year’s Olympics,” Hugh pointed out, “It is uncertain who will receive licenses for Tokyo, Osaka, Okinawa and Hokkaido. We believe online casinos will follow only after offline casinos start operation.”

Japan’s approval of “integrated resorts” has yet to be felt by the cryptocurrency industry. An integrated resort is a comprehensive entertainment complex with casinos, shopping malls, theaters, hotels and theme parks. While Prime Minister Shinzo Abe has introduced such pro-casino legislation as part of his overall growth strategy, Japan has not been so welcoming of crypto gambling.

Crypto gambling in Japan

Cryptocurrency gambling in Japan isn’t as prevalent as one would think given the country’s track record of implementing cryptocurrency regulations early, which is perhaps due to its experience with the collapse of Mt. Gox, a Japanese-based crypto exchange that went bankrupt in 2014.

Early in 2019, Blockchain network Tron, which claims to be building the infrastructure for a truly decentralized internet, blocked gambling apps on its decentralized app (dapp) store in Japan following pressure from Japanese regulators. 

Tron proactively blocking access to certain dapps led Tron’s Chief Technology Office (CTO) and co-founder Lucien Chen to leave the team. He cited the inconsistency between Tron’s dedication to being decentralized and its actions, which Chen said were more inherent to those of a centralized entity.

How does cryptocurrency gambling work? 

Blockchain-based gambling, for the most part, takes place in two ways: on-chain and off-chain.  

Off-chain cryptocurrency gambling involves physical and online casinos accepting cryptocurrency, mostly Bitcoin (BTC), as a deposit method into an internet casino account.

These establishments will often use a third-party custodian, such as BitPay, to convert Bitcoin or another cryptocurrency to a local fiat currency. There are online casinos that purely operate without fiat denominations, though, and pay out in Bitcoin. 

On-chain gambling occurs on a blockchain via smart contracts that comprise a decentralized application (Dapp), which has a backend code running on a blockchain network instead of traditional centralized servers. 

It is much easier for governments to go after off-chain casinos. Crypto gambling website casinos often ban IP addresses, preventing access from certain countries. When attempting to use on Bitcoin-accepting gaming sites from within the United States, the users will most likely be blocked. 

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On-chain casinos and other more decentralized or distributed methods of online gambling are not entirely immune to the effects of government regulation either, as we’ve seen with Tron’s refusal to show gambling dapps to Japanese users, as reported by Cointelegraph. Japanese internet users, however, can use a VPN to access Tron’s gambling dapps or blocked dapps from anywhere. Cryptocurrency gambling indeed remains a topic of hot debate in Japan. Nevertheless, no official guidelines have been put into place yet. 

A global snapshot of crypto gambling regulation

While most countries have official regulations in place regarding online gambling, only a handful of nations regulate crypto gambling.They include the United Kingdom, Italy, The Netherlands, Greece, Poland and Belgium. 

In many countries, Bitcoin is not considered a legal payment method under existing guidelines, so therefore shouldn’t be used in gambling. More clarity on that matter is evidently needed in various countries. Japan is perhaps the most notable example, where the gambling industry exceeds that of Nevada by over $4 billion and is estimated to be $15.8 billion.

Top-10 countries by gambling losses

In the U.K., numerous online gambling platforms and service providers accept cryptocurrency. Cryptocurrency-oriented service providers must adhere to the existing gambling laws active in the United Kingdom. There, sports betting is an extremely popular activity, having grown into a 700-million-GBP industry. Several crypto-focused sports betting websites can also be found online. 

While the U.K. Gambling Commission allows Bitcoin gambling, it also issued a warning on its website against untrustworthy service providers. Users are advised to “be cautious when using Bitcoin due to the associated risks.”

Yet, the benefits provided to gamblers by cryptocurrencies cannot be overlooked. Bitcoin provides a degree of privacy, though not anonymity. No personal information is transmitted when conducting a Bitcoin transaction, but a person attempting to convert BTC to fiat must be identified in most countries through know your customer (KYC) and anti-money laundering procedures (AML). 

On the other hand, privacy coins such as Monero (XMR) and Zcash (ZEC) give their users a greater amount of identity protection and, although less widely-accepted than Bitcoin, are known to be an impediment to law enforcement’s investigative abilities. Joseph Hugh believes that tighter crypto regulations will help those using the digital currency for legal purposes: 

“It is the role of all governments to try to regulate any and all financial activities of its citizens and nobody can blame them except for people who are in the grey and fishy businesses. I strongly believe that dapps are here to stay as country boundaries cannot stop people from getting around to them eventually.”

Despite the numerous regulatory and technical challenges faced by successful adoption in casinos, the world’s gambling industry is becoming increasingly friendly to cryptocurrency. Online casinos and even well-known Las Vegas establishments are starting to accept Bitcoin and other cryptocurrencies, which is a trend that we will likely continue seeing in the future.

Source Cointelegraph

Government of Uzbekistan Triples Tax on Electricity for Crypto Miners

The government of the Republic of Uzbekistan has ordered a 300% increase on electricity tariffs for cryptocurrency miners.

According to a Sept. 27 announcement, the Cabinet of Ministers of the Republic of Uzbekistan has decreed that cryptocurrency miners must pay three times more the existing electricity tariffs. 

The provision follows an Aug. 22, 2019 decree from President Shavkat Mirziyoyev entitled “On Accelerated Measures to Improve Energy Efficiency of Economic Sectors and the Social Sphere, Implement Energy Saving Technologies and Develop Renewable Energy Sources” and to further motivate the rational use of electrical energy by consumers.

Uzbekistan’s approach to crypto and blockchain

Last September, Mirziyoyev ordered the establishment of a state blockchain development fund called the “Digital Trust.” The fund’s primary goal is to integrate blockchain into various government projects, including healthcare, education and cultural areas. The organization is set to be responsible for international investment in the Uzbek digital economy.

Earlier the same month, a decree legalizing crypto trading — also making it tax-free — and mining in the country came into force. According to the law, foreign nationals can only trade cryptocurrencies in Uzbekistan by creating a subsidiary in the country.

The law also specifies a minimum capital requirement of roughly $710,000 to establish a crypto exchange. Furthermore, crypto traders will not fall under Uzbek stock market regulations and will be relieved of their obligation to pay taxes on trading revenues.

Mining regulation in other countries

In June, the Iranian government announced that they would cut power to crypto mining operations until new energy prices were approved. Iran’s Ministry of Energy reportedly revealed that the country had seen a 7% spike of electricity consumption over a monthly period ending on June 21, 2020. The Ministry believes that the surge was caused by the growing number of crypto mining activities in the country.

China’s Bitcoin mining scene is a major player in the global hash rate, with China-based mining pools reportedly mining potentially 70% of all the coins created yearly. However, in April, the Chinese government said that it was considering the elimination of crypto mining in the country.

Source Cointelegraph

SegWit, Explained | Cointelegraph


SegWit is associated with Bitcoin and its core principles, so its strengths and weaknesses will vary depending on who is observing it.

SegWit’s ability to give blocks more weight, or transaction density, relies on the idea that some blockchain data will be kept off the original chain, which is instead used as a sort of reference or index. Some believe that offloading data from the blockchain is already a failure, as it’s like admitting that blockchain alone can’t function. 

From this perspective, SegWit itself is a weakness infecting Bitcoin, and that’s why rather than implement SegWit, a piece of the community hard forked into a new blockchain called Bitcoin Cash in 2017.

Bitcoin Cash is essentially legacy Bitcoin before SegWit, and its scaling strategy is simply to increase the block size and keep all data on-chain. This is a decentralization strategy opposite that of the Bitcoin Core group, which sees SegWit as the first stack atop a multilayered blockchain. 

There are countless more ideas that riff off Bitcoin or Bitcoin Cash, or take a new tack. SegWit is simply one step in what the largest developer group of the largest cryptocurrency believes is the right path.

Cointelegraph News

The Story Behind the Explosive Growth of Crypto Funds

The explosive growth of crypto funds is a compelling story, especially when you consider that the concept has only been around for six years. Today, crypto funds have become the engine powering the thriving crypto industry. Compared to the 224 funds launched in 2017, 2018 showed unprecedented growth as 239 new crypto funds entered the fray. 

However, many have projected that the number will drop in 2019. Yet, according to proprietary research by Crypto Fund Research, there are reasons to believe that the crypto fund industry will continue to make strides, even as the crypto market recovers from a grueling bearish run.

As expected, the rise of crypto funds has directly impacted the crypto space, with several talking points trailing its emergence as a crucial part of the crypto economy. 

Crypto funds are typically crypto hedge funds or venture capital funds

According to the same research, the 812 crypto funds presently operating across the world comprises of 369 crypto hedge funds and 421 venture capital funds, while the remaining are either crypto exchange-traded funds (ETFs) or private equity funds. One could argue that the influx of venture capitalist funds has translated to more funding options for blockchain startups, as it is now a common trend for traditional VC firms to launch blockchain funds.

While this is a given, the growing and maturing blockchain/crypto landscape has attracted private equity funds to crypto investment funds. On the part of crypto hedge funds, it’s a matter of maximizing all the investment opportunities made available by the volatile nature of the crypto market. And so, they mostly function as hybrid funds that invest in Initial Coin Offerings (ICOs) and cryptocurrencies. As such, they employ long-term investment strategies with longer lockup periods — similar to how venture capitalists operate.

Crypto funds

Crypto funds are not as big as their traditional counterpart

Although crypto funds are on the rise, a PwC and Elwood joint 2019 report shows that over 60% of existing crypto funds have assets under management (AUM) that is less than $10 million. Therefore, this means that many crypto funds are small-scale firms with fewer than five employees. However, top crypto funds which have more than $50 million in AUM do exist, and only two funds have AUM that is worth $1 billion and above.

Crypto fund assets under management (AUM)

As impressive as these stats are, they do not even come close to the value of assets that traditional hedge funds control. All crypto fund assets combined represent a meager 1% of hedge funds assets.

Crypto funds outperform Bitcoin

It is not every day you see hedge funds outperforming their benchmarks. A reality that holds in the traditional asset markets is redundant in the digital assets market, as crypto funds continue to perform beyond expectations. The Crypto Fund Research Cryptocurrency Fund Index (CFR Crypto index), which tracks over 40 crypto funds, managed to outperform the 100% increase experienced in the Bitcoin market from January 2017 to June 2019, gaining more than 1400% during the same period.

Related: Biggest Crypto Hedge Funds and What They Tell About the Market

Crypto Fund Index vs. Bitcoin

The data from CFR Crypto index is more impressive when considering that crypto funds lagged behind many of the single digital assets performance in 2017 and overtook the market at a time when many feared the worst — the bear market. Nonetheless, this does not mean that investors did not lose money, rather that crypto funds returning -46% in 2018 compared to the -76% return of Bitcoin is, in itself, a success.

Crypto funds and bear market 

The gruesome effect of 2018’s bear market — after the leading cryptocurrency’s price hit record highs at around $20,000 per coin — would have crippled the development of the crypto space if not for the unwavering optimism of crypto funds. Venture capitalists and crypto hedge funds utilized this period to pick out interesting blockchain projects and fund them. There is no doubt that without this funding, developments would have stalled.

Crypto fund launches by year

Experience is one factor that should determine the profitability of investment funds, right? This belief is less potent in the hedge fund industry according to a recent Loyola Marymount University (LMU) report showing that hedge funds’ performance dipped as they aged. The research stated that the average age of conventional hedge funds is 52 months, and returns in the first year of operation are more than triple that of the fifth year. For crypto funds in the CFR index, their median age is 16 months. Applying the information garnered in the LMU report, one could argue that crypto fund managers are currently in their prime, and this has helped them generate fantastic returns.

America is still home to a large percentage of crypto funds

According to PwC and Elwood’s joint 2019 crypto fund report, 64% of crypto funds are based in the United States. Other countries that boast a booming crypto fund space are the Cayman Island, the United Kingdom, Singapore, Liechtenstein, Luxembourg and Australia. It seems that crypto funds generally prefer cities, which house traditional hedge funds. 

Crypto funds by country

In the past, the small size of many crypto funds excluded them from the spotlight. However, things are changing, as the U.S. Securities and Exchange Commission (SEC) and other regulatory bodies across the world are establishing guidelines for ICOs and security tokens. And since crypto hedge funds are heavily linked with security tokens, it is looking more likely that they will be required to meet stiffer registration requirements. A telling factor is the case of Pantera Capital, which disclosed in December 2018 that it might pay refunds and fines for investing in ICOs that violate U.S. securities laws. SEC-registered crypto funds

A typical cryptocurrency fund could either be a hedge fund or a venture capital fund. Meanwhile, crypto funds are not as big as their traditional counterparts and are not so significant yet in the financial market. Nonetheless, on average, crypto hedge funds outperform Bitcoin, the leading cryptocurrency in the world. Crypto funds did good work in the bear market as the industry’s inexperience continues to propel its impressive run. To a large percentage of the world’s crypto funds, the U.S. remains to be home, and so, the regulatory uncertainties of this region is still a major talking point that needs to be clarified for future improvements of the industry.

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.

Constantin Kogan is a venture partner at BitBull Capital, a board member of ABOTMI and has been a cryptocurrency investor since 2012. He has 10+ years of experience in corporate leadership, technology and finance. He contributes to the digital asset space, sharing and value economies.

Cointelegraph News

The Original Sins of Cryptocurrencies

The crypto industry is on its way from the epic early days, when it was a technological phenomenon exclusive to a limited group of techs, scientists and enthusiasts, to its final destination: a financial commodity intended for use by everyone. Of course, the journey has just begun, and it is riddled with potholes, traps and a high level of resistance.

The extent of the crypto revolution is total, disruptive, world-wide and irreversible. But its final destination is pretty neat: a screenshot of an average day on planet Earth by 2050 shows clearly showing human beings using a financial commodity called “cryptocurrency” through physical wallets residing on their smartphones and connecting everyone directly through a solid and shared ecosystem that is backed by traditional financial institutions (i.e., banks). The output will cast aside the old, centralized and controlled fiat system for a new, cheaper, decentralized, easier and faster structure, able to potentially connect everyone.

Try to remember how socializing was before the arrival of Facebook and other social networks, and you will have a fresh feeling of crypto’s potential reach. The world as we know it will never be the same.

The speculative sin

A few frictions are lagging crypto’s mass adoption process. The first one is certainly the financial speculation rooted to the early days and still thriving to this day. Financial speculation is an ideal way to make a large quantity of money in a short period of time, but in a high-risk environment and at the expense of somebody else. It remains an attractive option for speculative large traders, who will do anything in their power to maintain the crypto market’s current conditions, with major coins able to rise or fall by 1,800% in less than one year, as they did in 2017 when the leading cryptocurrency’s price hit record highs at around $20,000 per coin. 

But speculation is not the reason for which crypto was created. As perfectly outlined by Marc Andreessen, co-creator of two of the internet’s first browsers, Mosaic and Netscape, who outlined: “This is the distributed trust network that the Internet always needed and never had.” Or, to say it like Don and Alex Tapscott in their brilliant book, “Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World,” cryptocurrencies are based on a new technology — blockchain — that is a “protocol that enables mere mortals to manufacture trust through clever code.” Don and Alex write:

“They have been created to ensure trusted transactions directly between two or more parties, authenticated by mass collaboration and powered by collective self-interests, rather than by large corporations motivated by profit.” 

In other words, crypto is intended to make currency transactions easy, cheap, sure, fast and available for everyone — and not to speculate on! And, most importantly, to be used and not merely stored somewhere. 

Traditional and crypto financial markets

The inclination is progressively torn by traditional financial institutions like banks. From one side, they are fiercely struggling against the crypto world, but from the other side, and under the deepest silence, they are fighting key positions. They are painfully following the era of crypto, aware that sooner or later it will become massive, yet slowing it down while occupying as much space in the industry as possible in preparation for the moment when large adoption comes about.

Related: What Does Mass Adoption Mean Relating to Crypto? Experts Answer

The market is becoming increasingly regulated, with the launch of derivative instruments by some of the more well-known and reliable exchanges, indexes and cryptocurrency lenders, while from the other end, institutional investors, financial public bodies and traditional investment funds are coming out of the woodwork.

Unfortunately, my analysis shows that the speculative phase is hard to die, as it is a fantastic opportunity for specialized traders to make a huge quantity of money in a very short time. That means a very dense resistance to changes, pulling in the opposite direction to where the crypto area is moving.

The role of the traditional banking system

The relationship between the bank system and the crypto environment is vague and heavy with conflict. The crypto ecosystem is potentially in a position to snap a good chunk from the bank. But from another perspective, the bank system is sitting on an astronomic market cap, is managing a breathtakingly high stockpile of financial assets, and is used by billions and backed by almost all governments. It’s a David and Goliath story. 

As the recent history of Bitcoin (BTC) invention has clearly taught us, all digital revolutions coming from the people are unstoppable. Bottom line: the powers that be can slow it down but they cannot stop it. And the strategy of the banking system is coming out: Make things hard for crypto during daylight, but work under the surface at night to grab as many positions as possible in the crypto area in order to control and occupy the space. 

The final destination

From financial speculation to a stabilized financial market to finally becoming a financial commodity used by all. The point of arrival is probably the secret dream of the founders of the first cryptocurrency ever: to democratize and provide humanity access to a smarter, cheaper, decentralized and not-controlled means to exchange value between individuals, corporations and public bodies.

Related: Should Crypto Stay Decentralized or Are CBDCs Better? Experts Answer

As a recent survey shows, the average person at present doesn’t have any idea how to buy, sell or use cryptocurrencies. The majority of people don’t have the necessary skills to understand what an exchange is, how an external wallet works, or how to figure out all the needed technicalities to trade and store the most common cryptocurrencies. To them, the crypto area is still an unknown and scary world to be suspicious about.

Whoever will guide, hand-in-hand, billions of people through all of this — contributing to create the necessary environment and making the needed technology and hardware accessible — will not only make a true mark in human history, but will also develop the most profitable business in the world of all time. 

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.

Marco Beffa is a Dubai-based serial entrepreneur, CEO of a leading U.K.-based fintech company, part of the advisory board of a fully authorized European crypto investment fund, and a skilled cryptographic asset expert and strategist.

Cointelegraph News

Crypto Traders Hope for Relief Rally

Subsequent to the recovery of the Bitcoin price (BTC) movement from $7,700 to around $8,200 in the past 24 hours, technical analysts anticipate Bitcoin and other major crypto assets to recover in the short term.

Speaking to Cointelegraph, crypto trader Nick Cote said that there are plenty of times when the price history was at $7,600, which is likely to hold as a level of strong support for traders in the upcoming days. Technical analysts remain divided on the Bitcoin price trend and the rest of the crypto market, but most generally agree that there is strong demand to buy BTC in the mid-$6,000 to $7,000 region.

Bitcoin price sees short-term relief

On Sept. 28, the Bitcoin price critically recovered beyond $8,200 across major crypto trading platforms — including BitMEX and Coinbase — preventing a further drop to the low $7,000 region.

As said by Josh Rager, a crypto technical analyst, the breakdown of key support levels at mid-$7,000 is likely to result in BTC spiraling down to the $6,100 to $6,500 range, which has seen lots of price actions in the months prior. Rager said:

“IMO, the best and wisest move is to continue to scale in at major support areas While many are now targeting $6,100 to $6,500 as the ‘bottom’ — I can certainly see this level be front-run like every other major target this year. Another potential opportunity to get <$8k $BTC.”

The Bitcoin price recovery to reclaim $8,000 as support was important to avoid a steep pullback down to the low $7,000 region and potentially the mid-$6,000 area.

Caption: Bitcoin’s price has recovered slightly from $7,700 to $8,200 in 24 hours

Caption: Bitcoin’s price has recovered slightly from $7,700 to $8,200 in 24 hours.


According to Rager, the sell-off of Bitcoin in recent weeks was triggered by holders of newly acquired BTC, indicating that investors with a long-term thesis, known as “hodlers,” did not capitulate as a cascade of long contract liquidations on BitMEX, which intensified the downward movement.

When Bitcoin’s price initially fell below $9,000, crypto data aggregator Datamish showed that more than $650 million worth of long contracts on BitMEX were liquidated. In the days that followed — especially as BTC dropped below $8,000 — upward of $100 million worth of long contracts were liquidated, bringing the total to about $750 million.

Any positives to take from the price action?

According to Cote, Bitcoin’s price could tag the $7,600 level and initiate an upside movement afterward. Considering that $7,700 has also historically been a level of strong price action and support, as traders such as Scott Melker at Texas West emphasized, it is possible that the $7,700 level is acting as a short-term bottom for BTC, at least for awhile. Cote went on to add:

“I think the price will tag the $7,600 level. Plenty of price history there, serving both as resistance and support prior. I’d expect a bullish reaction at that level back up to the break down point of where we are consolidating currently.” 

In the medium to long term, most traders and technical analysts — despite the bearish short-term price movement — remain optimistic due to strong fundamentals. In mid-2020, BTC is expected to go through a mechanism called a block reward halving that would cut the rate in which new BTC is created by miners by half, reducing the circulating supply of BTC across exchanges and over-the-counter (OTC) desks. Cote said:

“I see price beginning to rally hard to new highs post having, but I expect this shake out to complete, followed by a grind back up to the previous consolidation levels that we broke down from earlier this week. My focus remains on the having next year, more so then this quarter.”

While the block reward halving may be priced into the market — as it occurs every four years until the fixed supply of BTC at 21 million is met — reports from investment firms like Grayscale indicate that the halving is still not known by the broader market of investors. This year, a Litecoin (LTC) halving took place, which some believe acted as a rehearsal for BTC. 

Related: Litecoin Halving Aftermath: LTC Price, Hash Rate, Community Reaction

Most investors Grayscale interviewed, which oversees nearly $2 billion in assets under management, said that they were not aware of the halving, suggesting that it could still have a major impact on the medium to long term price trend of BTC. A report from Grayscale reads:

“The halving is close enough that it’s time to start talking about it more seriously, but far enough out in the future that it’s unclear whether it’s priced into the market efficiently. In fact, based on anecdotal conversations with market participants, we were surprised to learn that many of them were not even aware of this event.”

Another positive factor for a potential relief rally for Bitcoin heading into October could be the recovery of the hash rate of the Bitcoin blockchain network. On Sept. 23, the hash rate of the Bitcoin blockchain network abruptly dropped to 23 exahash from 98 exahash, causing concerns about the stability of the mining industry.

Caption: The Bitcoin hash rate fully recovered after a 30% dip

Caption: The Bitcoin hash rate fully recovered after a 30% dip. Source:

Hash rate is considered to be an important fundamental factor of the long-term growth and stability of a blockchain network, as it demonstrates the amount of computing power that secures it. Samson Mow, the chief strategy officer of blockchain company Blockstream, said that it is difficult to say if the hash rate of Bitcoin actually dropped by 30%, given its swift recovery after the drop.

Mow noted that when it comes to measuring the hash rate, only changes in an extended time frame can be considered meaningful. “Only prolonged hashrate changes over statistically significant time periods — maybe two weeks — have meaning,” he said.

Jameson Lopp, the chief technology officer at a crypto key security firm CasaHODL, also said that the hash rate appears to not have actually dropped 30%, supporting Mow’s explanation. “It appears not, it was just regular random fluctuations in block times. The longer time period over which you estimate hash rate, the more accurate your estimate is likely to be… and vice versa,” he added.

With the drop in the hash rate being explained as a minor blip and not at any capacity a major factor to change the course of the trend of BTC, a relief rally for the dominant cryptocurrency is a strong possibility in the near term.

Most likely scenario and the worst-case scenario

Bitcoin’s price dropped violently below the $9,000 after a support level of $9,650 was weakened, as it was tested more than six times over the past few months, creating a weaker base for BTC to turn around and reverse the downtrend.

The most likely scenario for BTC — based on key technical indicators like the 200-day moving average convergence divergence and the Relative Strength Index on larger time frames — is that BTC will see a relief rally as a result of extreme conditions and will eventually test lower-level supports in the coming weeks. Crypto trader Scott Melker opined on Twitter, “There aren’t many clear levels on the monthly chart, but price bottomed out (thus far) exactly on one of them — $7,777.”

Strong lower-level supports are found between $6,100 and $7,700, and as Melker said, $7,700 was the first major support to be tested in months. A cryptocurrency trader known as DonAlt said:

“A range of 100 days just broke to the downside. If this is a bullish shakeout it’ll be obvious once BTC reclaims $10k. If this is bearish I don’t want to be long. Buying this feels like buying $5500 after the $6000 break. Something I’m not willing to do.”

In consideration of the weakened momentum of BTC, technical analysts generally anticipate a scenario in which BTC sees a relief rally to the $9,000 resistance level, which used to act as a strong support, and falling to test lower-level supports by October as the most likely.

Whatever happened to Bakkt?

Throughout 2019, traders and investors highly anticipated the launch of Bakkt, a Bitcoin futures market operated by ICE, the parent company of the New York Stock Exchange, and its potential effect on the price trend of BTC.

Related: First Week of Bakkt: Slow Start Unlikely to Dampen Long-Term Prospects

However, upon its launch, Bakkt saw minimal volume from investors — certainly not proportionate to the hype it has carried since early 2019. Su Zhu, the CEO of Three Arrows Capital, said that it would take time for brokers and investors to set up systems to process trades through Bakkt and that he expects the volume of Bakkt to increase in the months to come. He added in a conversation with Cointelegraph:

“Bakkt will be likely first a trickle and then a flood. The reality is that most regulated futures contracts get low adoption on day1 simply b/c not all futures brokers are ready to clear it, many ppl want to wait and see, the tickers are not even populated on risk systems, etc.”

Like the CME futures market eventually evolved into a large component in the global Bitcoin market as it established itself as a regulated platform for accredited and institutional investors, Bakkt is expected to see an increase in volume down the line.

Whether an increase in the concentration of the global Bitcoin volume to futures markets would be beneficial to the long-term price trend of BTC remains to be seen. So far, BTC has shown dependence on the CME Bitcoin futures market when it comes to short-term price movements, with expirations of futures contracts often coinciding with a relief rally for BTC.

Cointelegraph News