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Four myths about the use of bitcoin in the market


As the use of bitcoin (BTC) and other cryptocurrencies has increased, a series of false beliefs about their functioning in the market have been built around them. These myths can lead you to move closer to or away from cryptocurrencies for the wrong reasons.

With this article, CriptoNoticias seeks to expose the truth or falsehood that lies behind some of the following assumptions.

Bitcoin does not serve as a safeguard of value

In a recent debate, several Argentine economists questioned the possibility that bitcoin actually serves as a safeguard of value. They said about it that the cryptocurrency works as a speculative asset that only “sometimes” serves to protect value.

As the main cause of this assumption, they referred to the volatility of cryptocurrencies. And it is that, seen from a short-term perspective, the constant rises and falls in price show that it is not possible to safeguard value. However, when this situation is observed in the longer term, the functioning of bitcoin as a refuge of value is notorious.

A review of the price of bitcoin throughout its history accounts for its revaluation over time. The history of BTC quotes is available since August 2010, on the charts on the BuyBitcoinWorldwide site. There it is observed that for 2010, bitcoin was only priced at 0.5 cents.

btc crypto 2013 2020
The price of bitcoin in April 2013 was $ 133.5. For August 2020 it is trading around $ 11,600. Source: CoinMarketCap

The evolution of the price continues to grow over the years. By February 2011, the price of 1 BTC for the first time exceeded 1 dollar. Then, the cryptocurrency ended 2012 with exceeding $ 13. By 2013, 1 BTC was already over $ 100. The escalation continues in advance the following years to a record high of nearly $ 20,000 in 2017.

Although after this big rise the price of bitcoin fell sharply in 2018, its price remained significant compared to its initial price. As of this date, August 2020, BTC is trading at about $ 11,900. This price compared to 0.5 cents in 2010 represents a large appreciation.

The same cannot be said for most fiat currencies, which are subject to constant devaluation. The dollar, for example, he has lost more than 90% of its value since 1913.

The tendency to devaluation It has been accentuated in 2020 due to the crisis generated by the coronavirus. According to recent Goldman Sachs reportThe fourth largest bank in the United States, the US dollar could be on a dangerous path to losing its position as the dominant currency in world markets.

Meanwhile, contrary to what is doubted, bitcoin has preserved its value in more than 10 years of existence. In this period the price has increased by more than 20,000%.

Bitcoin tends to a deflationary spiral

This myth is related to the way the economy has been run for years: with inflation. The concept of inflation refers to the general increase in the prices of goods and services, as a result of the loss of purchasing power of a currency or, in short, its devaluation.

It is difficult for many to imagine a world without inflation because we are used to it. It has become a tradition for governments to issue currencies that soon after they must be spent or invested in another good so that they do not lose their value.

The excessive printing of money by central banks is usually one of the causes of inflation. An experience that is being repeated today, given that the response of governments to the crisis generated by the coronavirus pandemic has prompted the issuance of more money.

But the way Bitcoin works is different. Being a rare good, with only 21 million coins to exist, which enter circulation at a predetermined rate, the cryptocurrency has a disinflationary trend until all coins are finished issuing.

This trend that seeks to avoid inflation is reinforced by a reduction in the miners’ reward (halving). This means, in other words, that the injection of new currencies into the economy falls by half every four years. It started at 50 BTC every 10 minutes and goes for 6.25 BTC in the same time interval.

Thus, it is expected that the less cryptocurrencies there are, the demand and the price increase. This fact can generate, over time, that there are more users with the intention of buying and selling, but few currencies with which to trade. People are also expected to book cryptocurrency more for its appreciation.

high emission rate btc
Bitcoin’s issuance rate (blue line) starts with a relatively high level of inflation (orange line). It slowly levels off over time until it reaches the maximum issue limit of 21 million coins. Source: Breaking News

Faced with this scenario, many Keynesian economists they are concerned that cryptocurrency will generate economic deflation. By this they mean the possibility of a decrease in the supply of money or money substitutes. This monetary phenomenon sometimes it causes a decrease in prices.

Keynesians think that the digital asset can drive what they call a “deflationary death spiral” (money grabbing spiral). They argue that it is very negative for the economy that people hoard a currency, because without an incentive to spend the economy would go into chaos, with fewer jobs and a decrease in the supply of products and services.

From a macroeconomic point of view, it is believed then that there would be a supply without demand. In times of recession it has been like that because people have not had money to spend; in the case of Bitcoin it happens because people prefer to treasure it.

On this approach, the Austrian School economists argue that, even if deflation occurs, people still need to spend money to meet their daily needs. They consider that a currency that generates deflation would likely find a constant stabilization point over time.

Unlike the Keynesian economic prosperity proposal, whose foundation is to borrow and mortgage the future in favor of the present, in an economy based on hard money the foundation of prosperity and value creation is saving and maintaining purchasing power, something impossible in these times with inflationary currencies.

euro Btc fiat currencies
Coins issued by governments must be spent or invested in another good so that they do not lose their value. Source: Harry Strauss / pixabay.com

In this sense, the Keynesian assumptions can be countered by remembering the possibilities of Bitcoin technology, designed to reach a price cap and stabilize.

It is anticipated that, as adoption progresses, the volume of transactions increases enough to maintain price equilibrium. This will not prevent bitcoin from fulfilling its price variation cycles in short periods, as is currently the case.

It is also expected that with the adoption there will be a greater decentralization of the cryptocurrency between different holders, something that is already happening. Recent studies indicate that it is underway a gradual transfer of available cryptocurrencies towards smaller users, as the little hodlers increase. It is foreseeable that more and more people own even a small amount of bitcoins.

Trades cannot accept BTC due to volatility

It is thought that the constant rises and falls in the price of bitcoin prevent its use as a means of payment, which is not true considering that about 19,612 businesses they accept cryptocurrency. It is a still low figure, but an indicator that the cryptocurrency is valid as a form of payment.

Generally, the operating expenses of the shops are calculated in dollars or another fiat currency. The estimate in that currency is maintained even if the business accepts bitcoin or other cryptocurrencies as a payment method. Despite this, the volatility of the cryptocurrency does not prevent its use in the cancellation of goods and services.

If a merchant’s operating expenses were made in bitcoins, the exchange rate would be irrelevant. As this is not possible at the moment, what many merchants that accept BTC do is modify prices regularly according to latest market exchange rates, reflected in the exchange platforms. Thus they automatically update the prices on their websites, adapting the price to the amount of satoshis (minimum fractions of bitcoin).

Currently more than 19 thousand businesses in the world accept bitcoin. Source: Free-Photos / pixabay.com

One of the modalities most used by businesses to accept bitcoin are the payment processors or points of sale (PoS), applications created not only to reduce the waiting time that must be met to confirm a transaction, but also in order to reduce the incidence of volatility of cryptocurrencies.

Currently there are various services that offer mobile devices or applications to facilitate the adoption of cryptocurrencies for businesses. Some resemble traditional PoS pass-throughs or terminals. Many of them offer direct change to fiat currency, so that traders don’t have to worry about volatility.

It is expected that as bitcoin adoption increases, the cryptocurrency prices will stabilize. Therefore, it is possible that future volatility will decrease, in proportion to the increase in the size and depth of the market.

There is a single price of bitcoin

When someone asks about the price of Bitcoin, they may think of a certain number. Still, the real answer to this question should be: it depends. This is valid in the markets of any type of asset. There is no single price for oil, for example, but it varies depending on the market.

The same goes for bitcoin. Therefore, a local exchange in one part of the world may offer a different price than that indicated by another platform on another site or country.

The variations tend to be mostly a few percentage points apart, for reasons related to the dynamics of local supply and demand. The number of users of each exchange and its liquidity are other factors that influence the price. Usually the platforms with less liquidity have more unfavorable prices.

bitcoin-Latin America
The price of bitcoin is different depending on the market. Composition by CriptoNoticias. Jgjml / piqsels.com Addicted04 / Wikipedia

The price of bitcoin is also not unique in time either. It is constantly changing. The variety in the price also occurs between currencies. The value of BTC changes at its parity against any other currency or asset, in addition to the dollar. It varies with respect to pesos, yuan, and gold, among others.

As a result, price differences can lead to arbitrage, a common practice in cryptocurrency trading that consists of buying and selling an asset in order to benefit from the difference in prices that these have in the markets. This allows you to profit from price differences in different markets.





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Proptech Latam Summit in its ONLINE version will expose the use of technologies such as Blockchain in the real estate sector



The next event organized by Proptech will be held 100% online on August 13 and 14, involving new technologies such as Blockchain, Big Data and Machine Learning among others, as working tools in the real estate sector.

Although the incorporation of technologies such as Blockchain in the real estate sector is not something new, innovations continue to emerge to boost the sector, hence, technologies such as Blockchain, Big Data and Augmented Reality play an important role.

The incursion of the real estate sector into cutting-edge technologies has not been long in coming, therefore spaces such as the Proptech Latam Summit offer an opportunity for Startups to develop new ways of coping with the business.

With a post-pandemic time that has forced the re-dimensioning of traditional business schemes, the sector does not escape this new reality and must adapt to the new winds that blow in a direction totally opposite to the one we knew until now.

In this new normal, both entrepreneurs and consumers have had to evolve just like a caterpillar does in the cocoon before becoming a butterfly. The real estate sector has been evolving throughout this time, inserting new tools that allow you to continue the business safely and efficiently.

According to a study by EY and CREtech, Proptech (technology companies focused and dedicated to the real estate business) have received at least $ 75 billion in investment programs over the last five years.

This sector is already thinking about how to adapt to the new normal, to the post-covid era, therefore, the implementation of new technologies is the fundamental axis of this type of innovation.

The use of Blockchain for sale and purchase transactions, not only financial but ownership, the tokenization of real estate projects, the use of IoT, Big Data and Machine Learning are some of the advances and innovations that startups bring to these meetings.

It has already been a fact that the use of Blockchain networks for the transfer of ownership through Smart contracts, as well as the use of tokens for various real estate projects, but this time it is not only about blockchain and ensuring a stable price through a tokenized ecosystem, it is also about improvements in the sector with other types of technologies that have allowed the growth of the sector and provide today , a range of options to visit, inquire, rent, auction, arrange a mortgage, buy and sell real estate without the need to leave home.

“Technologies such as Artificial Intelligence, Internet of Things and Big Data are essential to better understand the spaces and the uses we give them. Concepts such as the sharing economy come with new business models. The Fintech and the Real Estate Fintech integrate the real estate offer with the transaction, the use of blockchain, tokenization and crowdfunding, which open up new possibilities to the investor. And, finally, smart, more efficient and more sustainable buildings and cities are the present we need ”, Held Andrea Rodriguez Valdez, founder of PropTech Latam Summit.

In the event that will take place this time online, the startups in the real estate sector will demonstrate the advances in technology, that they are implementing to keep the business at the forefront and here are some examples of what it will look like on August 13 and 14.

With the use of Big Data, Zilow, a Proptech implements the data left by users looking for a home, plus the data provided by sellers to offer a wide range of information to users, offers, real estate advisers, purchase and rental of homes, including vacation services. This platform collects the data and crosses them by sectors to filter the information and thus be able to offer a better experience in the search for properties.

For its part, Hausy.Mx, a Mexican company implements the use of Machine Learning for buyer advice. The software recognizes the user’s tastes and based on the data it collects from a form that must be filled out when accessing the platform, Machine Learning detects what the client may like.

Javier Romero, CEO of the platform described thus: “Our service begins with a questionnaire, through which the system deciphers the buyer’s profile and begins to generate recommendations. As time passes and the user interacts, the software generates more and more personalized options, like a Netflix session would, but for the home “

Due to this type of platform, the client is prevented from using multiple platforms to search for the properties that interest him, and the platform does it for him, offering suggestions that adapt to previously saved searches.

Another great challenge that real estate companies must overcome is close contact with customers, therefore, visits to properties are an essential point in the business. In view of this, the use of augmented reality as an alternative method to visiting buildings, makes it an excellent innovative idea.

The photo and video display is already a thing of the past, Real estate companies that understood the effects of the pandemic have begun to give virtual tours to properties, in which they can alternate with the visits of the clients to the properties or not.

Companies such as Holii.Mx or Inmo360 are already implementing these opportunities to do business with clients in an innovative way and thinking that this coronavirus can no longer stop the freedom to buy or sell real estate, which has been a ancestrally face-to-face business.

Innovation in technologies such as Blockchain is becoming more necessary every day, adapting to new needs shows that we are at the technological height of providing an alternative that allows interaction in a safe and efficient way in these times of pandemic.

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5 things to know


Bitcoin (BTC) celebrates another week with a boost to $ 12,000 and its biggest weekly close since hitting $ 20,000Will that price come back?

Cointelegraph takes a look at five things that will affect BTC price performance in the next five days.

A record weekly close of two and a half years

The fact that Bitcoin hit $ 12,000 again early Monday was more than a relief for traders.; In doing so, BTC / USD established its highest close in weekly timeframes since January 2018.

This means that no week of price action has ended at such high levels since then., including the heyday of last year’s bull market.

Having pleased analysts for several short-term months, Bitcoin continued like this with longer terms, a crucial move to consolidate the upward trajectory.

Now, Investors seeking confirmation that the bull market will continue may have received itCompared with daily and hourly events, a multi-year maximum weekly closing is significant.

BTC / USD is up 2.4% on the day, with weekly earnings of 7% and monthly returns of more than 30%.

Regarding prices, $ 12,000 represents the highest Bitcoin has reached since June 2019, three months after the second quarter bull market took the cryptocurrency from $ 4,000 to $ 13,800, a level this cycle has yet to reach.

BTC / USD 7-day price chart

BTC / USD 7-day price chart. Source: Coin360

The triumph driven by the instability of the Fiat

Bitcoin’s price surge comes a week after the president of the United States, Donald Trump added to existing geopolitical tensions the ban of the Chinese social media platform TikTok.

The resulting escalation of ties with Beijing adds to the existing weakness in the US dollar and continued concerns about the Coronavirus., a perfect storm for a flight to safe haven assets.

At the same time, Trump signed a series of executive orders on the stimulus for the Coronavirus, something that now has a curious impact on markets that are already subject to strong intervention from the Federal Reserve.

This time, however, the measures will have less of a direct effect on the average American.. A delay in payroll tax, for example, is not enough in the eyes of critics.

This bogus tax cut would also come as a huge shock to workers who thought they were getting a tax cut when it was just a delay.“, Bloomberg quoted Democratic Senator Ron Wyden as saying in a statement.

“These workers would be hit with much larger payments in the future.”

It is this lag in the inevitable financial cost to personal wealth that is at the heart of the probitcoin argument., high-preference economic behavior ultimately costs much more in the long run than the immediate benefit to the target audience.

Bitcoin correlation: stocks or gold?

Where Bitcoin could be heading in the short term is less clear now when its historical performance against other macro assets is considered.

The period since March, in which there was a fall in cross assets, was marked first by a correlation with stock markets, and then with safe havens, and specifically gold.

Gold reached its all-time highs in US dollar terms weeks before Bitcoin started to gain significantly, and its rise has continued, until now.

A slight correction pushed XAU / USD toward $ 2,030 from the highs near $ 2,075.; If the trend continues, Bitcoin could equally cool its bullish momentum.

However, as Cointelegraph reported, incoming action from the Federal Reserve looks set to further propel the precious metal into a “wildly bullish” policy shift to expand inflation well beyond its current rate of 0.6%.

Stocks also seemed less stable– Analysts warned of consequences for developing markets thanks to Turkey’s currency crisis, and China’s sanction of US officials on Hong Kong increased pressure.

Futures gaps open lower for BTC / USD

Another volatile weekend has opened up a classic feature for the short-term Bitcoin price forecast., a “gap” in the CME Bitcoin futures markets.

The volatility over the weekend means that futures ended at $ 11,680 on Friday and started again at $ 11,750. The resulting gap provides a key price target; historically, Bitcoin fills such “gaps” in days or even hours.

Last week such a setup took place; volatility aided the trend after weeks of flat price action that eliminated market gaps completely.

Another lower gap, at USD 9,700, has continued since July.

CME Bitcoin futures chart showing recent latest gaps

CME’s Bitcoin futures chart shows the latest recent gaps. Source: TradingView

All on time

For the PlanB analyst, creator of the Bitcoin stock to flow price forecast model, the bullish action of the last few weeks is exactly what was expected.

In early August, PlanB indicated that BTC / USD was filling in the stock to flow chart in accordance with historical precedents.Since the May halving, the points have confirmed that the current behavior is within the norms.

Bitcoin stock-to-flow chart as of August 10

Bitcoin’s stock to flow chart as of August 10. Source: Digitalik

On the subject of big players shifting to a bullish stance, meanwhile, added last week what “When Bitcoin was at $ 4,000 in 2019, many large accounts were pessimistic; predicting a price of $ 1,000”.

Behind the scenes, however, there were signs that if $ 6,000 showed up, the mood would shift to favor the bulls.

“That seriously happened, we pushed the price through $ 6,000. Now many were pessimistic even at $ 9,000 … $ 13,500 will be interesting“wrote PlanB.

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Is gold a tailwind for bitcoin?


Markets al día is an exclusive summary of the news that moves the bitcoiner economy. It is sent in advance by email to a list of subscribers and then published every Monday on CriptoNoticias. If you want to have the information in advance, subscribe to the listhere.


Amid global economic uncertainty, this week the ounce of gold reached a new all-time high, reaffirming the role of this asset as a store of value. This Thursday, August 6, gold reached $ 2,081 an ounce and then retracted to $ 2,035.

The rebound in gold in recent months is a reflection of the economic crisis caused by the Covid-19 pandemic, as well as the monetary and fiscal policies that can have a negative impact on the dollar, in the medium and long term.

How is this gold boom related to the price of bitcoin? In the context of the current crisis, bitcoin has responded in a similar way to gold on several occasions- This could be interpreted as a sign that investors, driven by economic uncertainty and a vulnerable dollar, They also see value store attributes in bitcoin.

The prices of bitcoin and gold have already shown a high degree of coincidence this year, as reported by CryptoNews last April. This Thursday, August 6, in Skew data, the 30-day correlation between these two assets reached 68.7%, as can be seen in the following graph:

The effective 30-day correlation between bitcoin and gold prices peaked last Thursday. Source: Skew.

But beyond this similarity between the evolution of the two price curves, Bloomberg analyst Mike McGlone introduces an interesting hypothesis. The price of gold and the rise of daily active Bitcoin addresses These are two indicators that could affect the price of the leading cryptocurrency, says the analyst.

Our analysis shows that the directions used and the price of gold are among the best indicators for a bitcoin price outlook. It would take a sustained drop in those markers for something similar to happen with bitcoin.

Mike McGlone, Bloomberg Intelligence.

Indeed, in the following graph, bitcoin is seen following these two variables

It can be seen that, in 2020, bitcoin (white candles) is influenced by the active addresses of Bitcoin (blue) and the price of gold (gold). Source: Bloomberg Intelligence.

Other Bitcoin fundamentals hit new highs, such as active addresses, both for small balances (for example, those below 0.01 and 0.1 BTC) and for addresses with balances greater than 1,000 BTC. This, according to figures from Glassnode.

The fact that all three categories have reached all-time highs implies the growth of adoption in the various segments of Bitcoin users.

Bitcoin approached $ 12,000 this Thursday but declined this Friday and is now fluctuating around $ 11,990.

Featured tweet of the week

Control of bitcoin supply has been moving steadily to entities with lower balances, blockchain analytics company Glassnode says in this tweet.

The percentage of the supply in the hands of entities that have less than 10 BTC, grew from 5.1% to 13.8% in 5 years, while the percentage of BTC in the hands of entities with funds of between 100 and 100,000 BTC declined from 62.9% to 49.8% in the same period.

CryptoNews carried out an analysis of this modification in the distribution of bitcoin holdings, which was interpreted by some analysts as something “very healthy” for the cryptocurrency.

Adjusted prediction

The well-known market analyst Willy Woo assured that we are already in the beginning of the main phase of a bull market for bitcoin. CriptoNoticias addresses Woo’s model, published on June 27, which warned at that time that the model suggested an upward run, which could start a month later.

For the analyst, there are signs such as the 365-day relative strength indicator (RSI) that shows that the compression in the initial phase of the bull cycle is about to be completed, once the resistance of USD 11,000. Among other indicators favorable to bitcoin at the moment, Woo mentions the Miners’ Difficulty Tape (MDR) and current highs of the mempool, the memory where transactions pending confirmation are stored.

The “approximate” supply of ETH

The supply of a cryptocurrency is a key variable in calculating its value in the market. This Friday, the discord was revealed through discussions on Twitter. between various sources on the supply of ether (ETH).

The amounts reported by the main block explorers and sites such as CoinMarketCap or Messari show different versions of the supply and with divergences of up to 3%. At the time of writing, for example, CoinMarketCap notes that there are 112,107,128 ETH issued, while Messari reports 111,536,574 ETH.

Apart from the bitcoiners who highlighted the transparency of Bitcoin regarding its supply, available through a specific function of its API, it caused surprise Vitalik Buterin’s answer, co-founder of Ethereum, to a question about why his community didn’t seem to mind those discrepancies. «Because we know approximately what it is [el suministro] according to the rules of the protocol… ». This somewhat carefree reaction from Buterin fueled discussions on Twitter and other social media.





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Bitcoin and Ethereum 2.0 Halving Bring Big Changes for Cryptocurrency Miners



Although it has been more than two months since the Bitcoin network halving occurred, the cryptocurrency mining industry is still agitated by the hectic pace of events that have followed suit. The rollercoaster of hash rates made Bitcoin prices (BTC) and Ether (ETH) will skyrocket and provoke mixed feelings among cryptocurrency miners.

The COVID-19 pandemic has also left its mark on the industry, forcing dozens of groups to have to shut down their computers or change their focus from Bitcoin with increasing difficulty of mining, towards altcoins with less difficulty that are behind the Big Daddy of cryptocurrencies.

The imminent launch of Ethereum 2.0 is giving food to all miners in your effort to maintain profitability in light of the challenges facing the mining hardware market. After the Bitcoin halving and the start of the coronavirus pandemic, private miners staggered, but the big manufacturers were also affected. Will the upcoming Ethereum update make the situation worse for mining equipment producers, or is it just another milestone that will be easy to adapt to?

Less, but still in business

The Bitcoin halving resulted in a serious cleanup in the mining market, with the little miners losing all sense of permanence, but the near extinction of private farms it was not followed by a significant reduction in the main mining groups.

Alejandro De La Torre, vice president of the mining group, Poolin, stated that between 15% and 30% of the private miners that produce the Bitcoin hash rate are under immense pressure to stay afloat and are gradually withdrawing. I also know wait a Short-term hash rate decline of up to 20%, with an average daily drop of 6.5%. Total, hash rate plummeted after halving from highs of 135 EH / s to 98 EH / s, or a decrease of 27%. But that did not affect the interest in cryptocurrency, as institutions entered the derivatives market, and the open interest of Bitcoin options increased by 1,200% for two weeks.

The Chinese factor in the statistical field cannot be ignored, Chinese groups account for up to 65% of the total Bitcoin hash rate. The pandemic has had its impact on the local mining industry, forcing more than 40 production facilities to stop deliveries. The delays have had a major effect on all miners, as previous versions of mining rigs could not be replaced with newer equipment which could have increased the hash rate and compensated for the halving of the reward and increased difficulty requirements.

Bitcoin’s price drop in May from $ 10,500 to $ 8,100 saw nearly 2.3 million Antminer S9 mining rigs shut down, this was clearly reflected in the drop in hash rates in China, where most old mining equipment became unprofitable and sold for scrap.

Not everything is bad

Although the rapid spread of the coronavirus pandemic in early 2020 affected supply chains and stopped the operations of major mining equipment manufacturers, this interruption did not last long, Since companies in China and South Korea, home to the largest manufacturers, they resumed quickly deliveries. Bitmain delivered from Malaysia its chips produced in Taiwan and Korea, while Whatsminer launched a new model on the market to make up for lost time and profits.

After resuming business in February, Hangzhou-based Canaan, too ad the launch of AvalonMiner 1066 Pro, its latest model chip with a computing power of 55 TH / s.

Powerry, a cryptocurrency mining operator with 100 megawatts of capacity, ad expanding its capabilities by placing a $ 20 million order for new mining hardware. Equipment will be provided by Bitmain and MicroBt, while the farm’s energy will be delivered to Genesis Mining’s cryptocurrency farm enterprise software, HEXA.

Thus, It is possible to conclude that even the expansion of the effects of the pandemic in the world will not have a significant impact on mining software manufacturers, who will be under pressure to deliver newer mining equipment to miners looking to keep up with industry requirements. The most that can be expected in the event of a second wave of the pandemic are delays in deliveries and an increase in equipment prices, something that only producers could benefit from.

The pandemic has not affected the operations of China’s largest mining farms, as any disruption would have buried the hash rate of the Bitcoin network. But even the worst case scenario from a China-wide shutdown probably won’t result in serious losses, as other miners will seize the opportunity and keep the hash rate stable. A possible drop in the hash rate of the major currencies due to the closure of Chinese farms would make digital money about twice as easy to mine and the profitability of mining would double.

What about Ether and altcoins?

On the one hand, the volatility of altcoins can favor miners. With the rise in the price of Bitcoin, other digital assets follow it even faster, thus significantly improving the economy of its production.

Experts believe that Bitcoin will remain the most suitable cryptocurrency for mining in the long term, despite his recent halving, because its price is more stable than that of altcoins, that can be devalued very sharply. Those who are still willing to stay in the mining game can choose tosafer assets with high liquidity and capitalization, as Litecoin (LTC) and Dash.

Rashit Makhat, co-founder of Powerry, stated:

“As a result of the Bitcoin block halving that took place on May 11, 2020, the reward per block […] it was cut in half. To stay ahead in the market, miners must quickly upgrade their equipment fleet. The most popular machines until 2020, the S9 became unprofitable for miners in almost any region, including regions with low energy costs such as China. “

Are we migrating?

The price of BTC seems to be of little comfort to many, as Valarhash, which operates some of the largest mining pools in China, decided to switch to altcoin mining.

Despite from the recent 33% increase in Bitcoin’s hash rate, Valarhash reduced its contribution to the network 4,000 to 200 PH / s in March. The company’s mining pools Bytepool and 1THash, which at one time accounted for 9% of Bitcoin’s total hash rate, have redirected their mining power to other currencies.

The transition to altcoins may require a significant upgrade from mining farms. Investments in equipment to mine ETH and LTC have longer payback periods compared to BTC mining rigs. ETH and LTC mining requires higher operating margins and the equipment is more expensive. Scrypt-based altcoins like LTC, can’t compete with Bitcoin in terms of profitability and return on investment. As such, the next transition is unlikely From Ethereum to Proof-of-Stake usher in a revolution within the industry.

Miners and manufacturers are still afloat

Despite the technical setbacks generated by halving, Bitcoin is likely to remain the cryptocurrency of choice for mining for years to come. The main reason is the relative stability of its price compared to altcoins, that are too volatile to be reliable as fixed income generating assets.

In the long term, miners will be less dependent on events like halving. With the development of the currency infrastructure, the reward for processing transactions on the network will increase, and over time, it may exceed the reward for mining blocks.

As for the manufacturers, They will continue to produce equipment and offer attractive prices and upgrades to stay afloat and adapt to the rapidly changing requirements of various networks.

The views, thoughts and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Sarah austin She is head of content for Kava Labs, a DeFi cryptocurrency startup based in Silicon Valley. Sarah is the host of the web show Decentralized Finance. She is an entrepreneur, author, and television personality who previously worked with Forbes, MTV, and Bravo, and was a marketing manager for Oracle, SAP, and HP.

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Yield farming increases noise around DeFi, but fundamentals are lagging


The excitement surrounding decentralized finance (DeFi) is sometimes attributed to triggering a broader rise in market prices in July, when new protocols started releasing tokens that they immediately posted earnings many times higher than their initial value. Despite the undeniable price growth, however, it is not immediately clear whether the sector as a whole has grown, since reliable metrics for Measuring the fundamental performance of DeFi protocols are incredibly difficult to achieve.

The projects lend themselves to fairly rigorous analytical methods, since they will often have well-defined income and expenses. But the growth of liquidity mining, or yield farming *, is throwing the metrics out of balance in some way. The protocols reward their users with their own government tokens, essentially as a payment for using the platform. A frantic move to maximize the performance of these tokens it skewed DeFi’s predominant success metric, Total Locked Value, or TVL.

A clear example of this is the Compound protocol, where the value of Dai supplied to you exceeds your total amount of tokens by almost three times, USD 1.1 billion vs USD 380 million in stock at the time of writing. This is because Compound users enter leveraged positions in Dai, something that normally doesn’t happen with stablecoins. While this led the community to discuss the merits of the TVL, some other similar measures they have also been distorted.

Evaluating a DeFi Loan Project

Valuation metrics they will change slightly depending on the type of project. In the case of loan protocols like Compound and Aave, The TVL represents the liquidity on the supply side of the project or the sum total of all the deposits they currently have. It is worth noting that the TVL only takes into account chain reservations. Agree with DeFi Pulse, there is only about 220 million Dai locked in Compound, not 1,100 million.

DAI locked in Compound

DAI locked in Compound. Source: Defipulse.com

However, loan providers usually they are valued based on book value or how much is borrowed. Since that is what generates income, is considered a measure much more direct for protocol finances.

Due to the distribution of the network currency, COMP, however, all tokens except Tether (USDT) and 0x (ZRX) have negative effective interest when borrowing, according to the Compound panel, which means that users get paid to do it. The Compound protocol currently it’s offloading that cost to COMP buyers and holders through dilution.

Although it can be difficult to filter how much liquidity is there just to speculate on COMP returns, this may not be necessary. The purpose of evaluating the income of the bank or the loan protocol is to measure how much of that value can be captured through the shares or the token, but since the token is used To subsidize the cost of loans, the value is effectively extracted from their holders. This can be seen through the price of the COMP token. Since its launch, its value has continued to decline due to dilution and selling pressure from the newly mined tokens.

COMP token price chart

COMP price chart. Source: TradingView

Due to this phenomenon, a strategy of evaluation for Compound could easily be to ignore, or even subtract, the part of book value that extracts value from token holders. Even in the first case, the book value of Compound it would only be USD 25 million of the claimed USD 1 billion: the total sum of USDT and ZRX that is on loan.

Although obviously not all assets are there just for yield, Cointelegraph previously reported that only $ 30 million in Dai was loaned just before it became the currency of choice for liquidity extraction. Andre Cronje, the founder of the protocol yEarn, told Cointelegraph that the market has not been taking these nuances into account: “We have this strange mentality that TVL equals evaluation, which I don’t understand at all, where if TVL is USD 100M, then the market capitalization (current, not completely diluted ) should be $ 100 million. “ Although he finds “completely crazy” ignoring income, he continued his mental exercise:

“So if the circulating market capitalization is equal to the TVL, what is the best way to increase it? Increase the TVL. How do you increase the TVL? Token rewards. The token’s value increases due to TVL speculation and the cycle repeats. “

Effects on other protocols

Compound started the trend of yield farming, but it was not the only protocol that registered considerable increases due to this activity. Decentralized exchanges like Uniswap, Balancer and Curve have seen their trading volumes increase dramatically since June. The volume in Curve, a DEX focused on exchanging stablecoins with each other, it was up when yield farming started in June.

Monthly volume across decentralized exchanges

Monthly volume on decentralized exchanges. Source: DuneAnalytics

Uniswap has a much more varied offer, and most of its volume comprises Ether pairs (ETH) to stablecoins, especially Ampleforth, which experienced a powerful boom-bust cycle. Also absorbed much of the volume of new tokens like YFI, which is often the first place they are listed.

MakerDAO nearly saw its TVL triple from $ 500 million. Most of it is due to the increase in the price of Ether, although it also grew in terms of ETH and Bitcoin (BTC). As Cointelegraph previously reported, the community decided to increase the total amount of Dai that could be created in an effort to bring its price back to $ 1.

While at first glance, Dai’s growth can be considered a success story, the Maker community decided to set interest rates for virtually all liquid assets to zero, forgoing any income from growth. At the same time, Compound has been the main recipient of the new Dai, with a locked value that increase from approximately USD 140 million to USD 210 million as of the end of July, more than 55% of all Dai.

Is the growth real?

The boom in liquidity mining had an undoubtedly positive impact on some general metrics, specifically the volumes of visitors for the DeFi platform websites and the number of users interacting with the protocols. The data from SimilarWeb show that he traffic a Compound has quadrupled from June to around 480,000, While for Uniswap has more than doubled to 1.1 million, and Balancer established a strong presence in two months with 270,000 monthly visits.

Additionally, DeFi’s exchange aggregator, 1inch.exchange almost tripled his traffic in the last two months. Protocols with a weaker relationship to yield farming also benefited, with MakerDAO and Aave recording more modest but equally significant growth.

In terms of user volume, Compound saw the number of monthly average unique wallets using it quadruple to 20,000 in June, although that number has been decreasing since then. It is also worth noting that more than 80% of recent activity has been from just 30 wallets, according to data from DappRadar.

User activity on Compound

User activity in Compound. Source: DappRadar

The total number of DeFi users, based on a visualization from DuneAnalytics, increased by about 50% from June 1 to August 1. This is in contrast to the previous two month period from April 1 to May 31, which registered a growth of 30%.

The vast majority of these new users come from decentralized exchanges, with Uniswap doubling its total user base since June to 150,000. However, this metric shows all users that have interacted with the protocols, not just those that are active at a specific time.

Total DeFi users

Total DeFi Users. Source: DuneAnalytics

What will be left?

In short, DeFi’s growth over the past two months is something multifaceted. While the liquidity mining hubbub and subsequent price increases have likely helped to capture additional attention, fundamental metrics were greatly distorted due to speculation.

Decentralized exchanges seem to have benefited the most from this hype, both in terms of new users and volumes, but that seems to be an acceleration of an already positive trend. Whether growth will continue remains a very important question. Kain Warwick, co-founder of Synthetix, an issuer of cryptocurrency-backed assets told Cointelegraph:

“It is always possible for people to cultivate performance and then find a new field, so initial liquidity is not a guarantee that your protocol will retain users. […] But starting liquidity with some kind of incentive is a great way to attract newcomers because if you have something that looks like the product market, some users are likely to stick around. “

Cronje was something more negative, using an agricultural analogy to describe what could happen, saying: “All performance chasers just walk up to the performance farm and then leave,” which for he is a negative, for acting like a swarm of locusts. added: “But after they’ve ruined the crops, sometimes a stronger crop can grow, and some locusts remain, and they end up being symbiotic rather than the initial parasite.”

Cronje believes that the initial effects of yield farming are unsustainable, which creates a false perception among newcomers that 1,000% returns are the norm. Once that is no longer the case, users will be left with a bad taste in their mouths, argues: “Right now, it’s overrated; soon, it will be hated; and what’s left after that, I think, will be very good.”

Distribute tokens in a new way

Warwick described the purpose of liquidity mining how to incentivize early participation with partial ownership. Cronje was much more skeptical and said: “Currently all liquidity mining is paid for by the underpinned TVL.” Still, he ran a liquidity mining program himself, though he emphasized that it was just a way to distribute tokens.

“My goal was to achieve an active and committed community. And I think yEarn achieved that. “ Cronje concluded. Conversely, yEarn’s forks like YFFI and YFII were “mines of pure liquidity, and all that happened was sales by people”, said. The price of YFII collapse 90% from its July 30 peak.

Warwick noted that “Possibly there is a better way to distribute the property while the growth begins”, although he does not know how. Still find it preferable to initial coin offerings, since users only need to temporarily compromise their liquidity: “Obviously, they are taking some platform risk, but it is still preferable than losing their capital using it to buy tokens.” But While the risks to liquidity miners may be low, the YFII example clearly shows that the effects of dilution and speculative demand can turn catastrophic for buyers of these tokens.

* The terms are own in English of the DeFi ecosystem

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Ethereum Options Data Suggests Professional Traders Expect ETH Price To Break Above $ 400


The open interest of Ethereum options (ETH) multiplied by 5 during the last three months to reach USD 337 million.

Although this figure is very pale compared to the current Bitcoin options market (BTC) from $ 1.8 billion, Ether options grew to the same size as the BTC options market about 15 months ago.

ETH options open interest in USD terms

Open open interest in Ethereum options in USD terms. Source: Skew

The options are divided in two basic instruments: call options, mainly aimed at bullish strategies, and put options, used mainly in bearish operations.

This is a very simple overview, but it provides an overview of the expectations of professional traders, as large trades weigh more on the index.

ETH options open interest put / call ratio

Selling / buying relationship of the open interest of ETH options. Source: Skew

This sale / purchase ratio touched 0.37 in mid-March, which indicates that the open interest of put options (bearish) was 63% lower than call options (bullish). All of this changed after the cryptocurrency market crash on March 12, when the price of Ether collapsed by more than 40%.

Traders began to build protective positions at an impressive rate, and the sale / purchase ratio reached 1.04 at the beginning of June, indicating that Put options had a higher open interest than call options.

How Ether (ETH) failed to break the $ 250 level, open interest receded a bit to 0.84 in mid-July.

Interestingly, despite the recent 64% rally to the current $ 390 since July 20, Option markets continue to add more bearish put options. This indicator should not be analyzed independently, as these options could be worth pennies if your odds are deemed low.

Prices above $ 400 are not common

Another widely used indicator It is the comparison of open interest above and below current market levels.

To reduce the impact of the USD 400 maturity concentration, Open interest should be analyzed 6% below the current $ 390 price of Ether and 6% above, thus excluding those levels.

Open interest in options by price (thousands)

Open interest in options by price (thousands). Source: Skew

There are currently 530K ETH options below the expiration of USD 370, versus 280K ETH options priced above $ 400. That shows 65% of option prices regardless of the call or put options, below current market levels.

Such an indicator could show that most traders did not expect such a strong move, although this necessarily it does not translate into a downtrend.

With enough time, more deals should go through maturities above $ 400, and this relationship could balance out.

Not all indicators are bearish

Option bias measures how much more expensive call options are relative to put options of similar risk. A practical approach to measurement compares the price of a call option 10% above the underlying futures benchmark with a put option 10% below.

In a neutral market, the marked (fair) price for both should be very similar. If the purchase option is more expensive, indicates that market makers are demanding more money for upside protection.

This is a bullish signal, while the opposite happens with a more expensive put option equates to a downtrend.

Deribit Ether (ETH) options for September 25 expiry.  Source: Deribit

Ether (ETH) options on Deribit expiring on September 25. Source: Deribit

On August 8, ETH markets relative to the underlying September futures of $ 400 are signaling optimism. Upside protection (call options) 10% above trading at 0.082 ETH while downside protection (put options) at 0.0693 ETH, therefore 15.5% cheaper.

This is undoubtedly a bullish indicator and should not be biased by recent price changes, as market makers continually reassess bids and offers based on volatility and market conditions.

Futures contracts also favor bulls

The most important indicator of a futures contract is the base level. This is measured comparing the 1 and 3 month contracts with the current spot price.

A healthy market should show a contango situation, with futures traded at an annualized premium of 5% or more.

Bear markets will show a neutral basis, below 5% annualized or even worse in a situation known as “backwardation”, as the base turns negative.

ETH 1-month futures annualized basis

Annualized basis of 1-month ETH futures. Source: Skew

Currently, the annualized ETH futures base has held its levels above 10% for the past two weeks, which indicates a very bullish tone from a futures trading point of view.

It should be noted that the current contango of 20% It could indicate excessive leverage on the part of buyers, but this is not necessarily dangerous. If most of your leveraged futures positions have been created below current price levels, buyers are comfortable enough to pay the high maintenance cost.

Past performance is not a guarantee of future results

Many technical analysis traders they only analyze the daily and weekly charts to provide information on the future possibilities of an asset, but this generates an incomplete view of the asset situation.

Monitor how market makers are currently pricing options markets and the premium status of current futures contracts seems like a better way to measure sentiment from professional traders.

Both options, the sell / buy ratio and the amount held at each price level, appear to be contaminated by volumes that occurred more than two weeks ago, when Ether was trading below $ 300.

At the moment, trading data on the options and futures markets point to a strong bullish outlook from professional traders. This is a good sign that the resistance at $ 400 may break through in the coming weeks.

The views and opinions expressed here are solely those of the Author and do not necessarily reflect the views of Cointelegraph. Every investment and business move involves risks, you must do your own research when making a decision.

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Yield farming increases noise around DeFi, but fundamentals are lagging


The excitement surrounding decentralized finance (DeFi) is sometimes attributed to triggering a broader rise in market prices in July, when new protocols started releasing tokens that they immediately posted earnings many times higher than their initial value. Despite the undeniable price growth, however, it is not immediately clear whether the sector as a whole has grown, since reliable metrics for Measuring the fundamental performance of DeFi protocols are incredibly difficult to achieve.

The projects lend themselves to fairly rigorous analytical methods, since they will often have well-defined income and expenses. But the growth of liquidity mining, or yield farming *, is throwing the metrics out of balance in some way. The protocols reward their users with their own government tokens, essentially as a payment for using the platform. A frantic move to maximize the performance of these tokens it skewed DeFi’s predominant success metric, Total Locked Value, or TVL.

A clear example of this is the Compound protocol, where the value of Dai supplied to you exceeds your total amount of tokens by almost three times, USD 1.1 billion vs USD 380 million in stock at the time of writing. This is because Compound users enter leveraged positions in Dai, something that normally doesn’t happen with stablecoins. While this led the community to discuss the merits of the TVL, some other similar measures they have also been distorted.

Evaluating a DeFi Loan Project

Valuation metrics they will change slightly depending on the type of project. In the case of loan protocols like Compound and Aave, The TVL represents the liquidity on the supply side of the project or the sum total of all the deposits they currently have. It is worth noting that the TVL only takes into account chain reservations. Agree with DeFi Pulse, there is only about 220 million Dai locked in Compound, not 1,100 million.

DAI locked in Compound

DAI locked in Compound. Source: Defipulse.com

However, loan providers usually they are valued based on book value or how much is borrowed. Since that is what generates income, is considered a measure much more direct for protocol finances.

Due to the distribution of the network currency, COMP, however, all tokens except Tether (USDT) and 0x (ZRX) have negative effective interest when borrowing, according to the Compound panel, which means that users get paid to do it. The Compound protocol currently it’s offloading that cost to COMP buyers and holders through dilution.

Although it can be difficult to filter how much liquidity is there just to speculate on COMP returns, this may not be necessary. The purpose of evaluating the income of the bank or the loan protocol is to measure how much of that value can be captured through the shares or the token, but since the token is used To subsidize the cost of loans, the value is effectively extracted from their holders. This can be seen through the price of the COMP token. Since its launch, its value has continued to decline due to dilution and selling pressure from the newly mined tokens.

COMP token price chart

COMP price chart. Source: TradingView

Due to this phenomenon, a strategy of evaluation for Compound could easily be to ignore, or even subtract, the part of book value that extracts value from token holders. Even in the first case, the book value of Compound it would only be USD 25 million of the claimed USD 1 billion: the total sum of USDT and ZRX that is on loan.

Although obviously not all assets are there just for yield, Cointelegraph previously reported that only $ 30 million in Dai was loaned just before it became the currency of choice for liquidity extraction. Andre Cronje, the founder of the protocol yEarn, told Cointelegraph that the market has not been taking these nuances into account: “We have this strange mentality that TVL equals evaluation, which I don’t understand at all, where if TVL is USD 100M, then the market capitalization (current, not completely diluted ) should be $ 100 million. “ Although he finds “completely crazy” ignoring income, he continued his mental exercise:

“So if the circulating market capitalization is equal to the TVL, what is the best way to increase it? Increase the TVL. How do you increase the TVL? Token rewards. The token’s value increases due to TVL speculation and the cycle repeats. “

Effects on other protocols

Compound started the trend of yield farming, but it was not the only protocol that registered considerable increases due to this activity. Decentralized exchanges like Uniswap, Balancer and Curve have seen their trading volumes increase dramatically since June. The volume in Curve, a DEX focused on exchanging stablecoins with each other, it was up when yield farming started in June.

Monthly volume across decentralized exchanges

Monthly volume on decentralized exchanges. Source: DuneAnalytics

Uniswap has a much more varied offer, and most of its volume comprises Ether pairs (ETH) to stablecoins, especially Ampleforth, which experienced a powerful boom-bust cycle. Also absorbed much of the volume of new tokens like YFI, which is often the first place they are listed.

MakerDAO nearly saw its TVL triple from $ 500 million. Most of it is due to the increase in the price of Ether, although it also grew in terms of ETH and Bitcoin (BTC). As Cointelegraph previously reported, the community decided to increase the total amount of Dai that could be created in an effort to bring its price back to $ 1.

While at first glance, Dai’s growth can be considered a success story, the Maker community decided to set interest rates for virtually all liquid assets to zero, forgoing any income from growth. At the same time, Compound has been the main recipient of the new Dai, with a locked value that increase from approximately USD 140 million to USD 210 million as of the end of July, more than 55% of all Dai.

Is the growth real?

The boom in liquidity mining had an undoubtedly positive impact on some general metrics, specifically the volumes of visitors for the DeFi platform websites and the number of users interacting with the protocols. The data from SimilarWeb show that he traffic a Compound has quadrupled from June to around 480,000, While for Uniswap has more than doubled to 1.1 million, and Balancer established a strong presence in two months with 270,000 monthly visits.

Additionally, DeFi’s exchange aggregator, 1inch.exchange almost tripled his traffic in the last two months. Protocols with a weaker relationship to yield farming also benefited, with MakerDAO and Aave recording more modest but equally significant growth.

In terms of user volume, Compound saw the number of monthly average unique wallets using it quadruple to 20,000 in June, although that number has been decreasing since then. It is also worth noting that more than 80% of recent activity has been from just 30 wallets, according to data from DappRadar.

User activity on Compound

User activity in Compound. Source: DappRadar

The total number of DeFi users, based on a visualization from DuneAnalytics, increased by about 50% from June 1 to August 1. This is in contrast to the previous two month period from April 1 to May 31, which registered a growth of 30%.

The vast majority of these new users come from decentralized exchanges, with Uniswap doubling its total user base since June to 150,000. However, this metric shows all users that have interacted with the protocols, not just those that are active at a specific time.

Total DeFi users

Total DeFi Users. Source: DuneAnalytics

What will be left?

In short, DeFi’s growth over the past two months is something multifaceted. While the liquidity mining hubbub and subsequent price increases have likely helped to capture additional attention, fundamental metrics were greatly distorted due to speculation.

Decentralized exchanges seem to have benefited the most from this hype, both in terms of new users and volumes, but that seems to be an acceleration of an already positive trend. Whether growth will continue remains a very important question. Kain Warwick, co-founder of Synthetix, an issuer of cryptocurrency-backed assets told Cointelegraph:

“It is always possible for people to cultivate performance and then find a new field, so initial liquidity is not a guarantee that your protocol will retain users. […] But starting liquidity with some kind of incentive is a great way to attract newcomers because if you have something that looks like the product market, some users are likely to stick around. “

Cronje was something more negative, using an agricultural analogy to describe what could happen, saying: “All performance chasers just walk up to the performance farm and then leave,” which for he is a negative, for acting like a swarm of locusts. added: “But after they’ve ruined the crops, sometimes a stronger crop can grow, and some locusts remain, and they end up being symbiotic rather than the initial parasite.”

Cronje believes that the initial effects of yield farming are unsustainable, which creates a false perception among newcomers that 1,000% returns are the norm. Once that is no longer the case, users will be left with a bad taste in their mouths, argues: “Right now, it’s overrated; soon, it will be hated; and what’s left after that, I think, will be very good.”

Distribute tokens in a new way

Warwick described the purpose of liquidity mining how to incentivize early participation with partial ownership. Cronje was much more skeptical and said: “Currently all liquidity mining is paid for by the underpinned TVL.” Still, he ran a liquidity mining program himself, though he emphasized that it was just a way to distribute tokens.

“My goal was to achieve an active and committed community. And I think yEarn achieved that. “ Cronje concluded. Conversely, yEarn’s forks like YFFI and YFII were “mines of pure liquidity, and all that happened was sales by people”, said. The price of YFII collapse 90% from its July 30 peak.

Warwick noted that “Possibly there is a better way to distribute the property while the growth begins”, although he does not know how. Still find it preferable to initial coin offerings, since users only need to temporarily compromise their liquidity: “Obviously, they are taking some platform risk, but it is still preferable than losing their capital using it to buy tokens.” But While the risks to liquidity miners may be low, the YFII example clearly shows that the effects of dilution and speculative demand can turn catastrophic for buyers of these tokens.

* The terms are own in English of the DeFi ecosystem

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Cryptocurrency mining profitability in 2020: is it possible?



Mining profitability metrics are based on a handful of factors that regulate difficulty and issuance, these are encoded in the attributes of the blockchain, so they are predictable to work with. While predictability is not always an immediate synonym for profitability, gives a blockchain certain parameters to trust by predicting when cryptocurrency mining will become profitable, at what price level, and at what level of difficulty during the issuance cycle.

Some cryptocurrencies, like Bitcoin (BTC), go through emission cycles with events such as halving, or halving the reward per block mined. In the case of Bitcoin, halving occurs once every 210,000 blocks, approximately every four years, until it has been mined the maximum supply of Bitcoin set at 21 million.

This characteristic, of self-adjusting difficulty, provides an incentive for an individual miner to join or leave the network based on the current Bitcoin price level. Together these incentives create a logarithmic price regression curve, which represents an average exchange rate of Bitcoin and thus the predictability of profitability in the current issue cycle. If the price of Bitcoin falls below this regression curve where the end result is roughly around the 200 week moving average in this issuance cycle, almost all miners should have a net loss. If the price holds above this figure, at least some of the miners should make a net profit.

The difficulty of Bitcoin mining is currently at an all-time high between 110 and 120 million terahashes per second (TH / s), indicating that a large amount of new mining capacity has been added to the network, but since the price has not fully recovered from the drop caused by the emergence of COVID-19, we should expect that most miners are temporarily recording losses. However, if the price of Bitcoin increases again in the current issuance cycle and go into a bull run, the economic risk that the miners would have taken at the time should be largely rewarded.

Ethereum mining has, for some time, been among the most profitable in the altcoin space mainly due to the high average price of its token. However, Ethereum as a network it has a primary focus on building a blockchain with a slightly different purpose compared to Bitcoin. Ethereum is a smart contract platform. While mining has previously supported the network in the phase where it was not widely used for transactions, in the future, the network will be forced to take on staking nodes as validators to provide enough capacity to perform transactions. In the long term, this can have a positive effect on mining if we assume that mining will be phased out. A substantial amount of coins is predicted to be locked in staking, which will make the price go up.

Participation is a mechanism that allows users to deposit some of your coins in a staking address owned by a validator node and it blocks them for a period of time. The validator node then it secures the network by producing blocks in relation to the number of coins deposited in it. Blocks are produced according to a coded voting mechanism which calculates the participation reward from the total number of coins within the network for each node.

The price of electricity is a determining factor in the profitability of mining. Currently, most industrial miners reside in countries with cheap electricity in power purchase agreements with electricity producers ranging from hydroelectric to solar energy. However, most retail miners they depend primarily on fluctuations in retail prices and should calculate this factor in their investments. Also, the price of electricity it is not a factor in mining profitable altcoins with GPU-based rigs.

Equipment prices (for mining) they tend to fluctuate based on price cycles. At the bottom of each cycle, buying equipment is relatively affordable, but towards the peak of each cycle, the equipment may not be affordable if not available either. At this point it would probably be profitable take a moderate risk in mining, especially in GPU mining. Only when it comes to profitability, Bitcoin mining would likely require an investment beyond the reach of most retail miners at the initial cost to be noticeable at the peak of this emission cycle.

In addition to just generating profit, mining is a way to produce coins without the need to have a previous history. For users who care about their privacy, mining represents economic freedom, making a means of payment accessible without links to a specific entity. This unique feature is only present in proof of work (PoW) cryptocurrencies and connects many people on the fringes of society with often legitimate use cases for the world at large, acting as guarantor of human and social rights.

For some organizations, holding a blockchain at a nominal loss can act as an investment, either by supporting profitable services or by maintaining the infrastructure to run services for public use. In legacy systems, this type of arrangement is comparable to the public service or a utility company.

While offering a utility It can be an advantage for a network of entities running on a licensed blockchain or a PoW blockchains intended for well defined use, on open public blockchains, in the long run, miners can be assumed to be operating for profit. With difficulty settings and profitability On public blockchains with significant utility value like Bitcoin, mining can be seen as a profitable business for the foreseeable future.

The only credible factor that can alter the status quo into PoW-based cryptocurrency mining right now seems to be the theoretical introduction of quantum computing widespread with enough accessible tools to create an incentive to attack public blockchains. However, this type of risk can be exaggerated because quantum computing test algorithms do exist and are likely to be developed precisely to mitigate a risk arising from this fairly predictable factor.

In this sense, mining will probably not be profitable in the next bull market, but it will be more relevant in ways that are not only cheap.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, readers should do their own research when making a decision.

The views, thoughts and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Iskander Khasanov he is a cryptocurrency trader and miner. He first established himself as a real estate entrepreneur and then became involved in the cryptocurrency business in 2016. Iskander is the Community Director, Crypto Accelerator, and shares insights on the mass adoption of cryptocurrencies.

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Division or consensus? Groups clash over control of Bitcoin Cash


In recent weeks, controversy has reigned in the Bitcoin Cash environment, developer groups do not reach consensus on technical decisions. Such is the division that many have come to think that bifurcation is the only valid way.

After months of intense debate on proposals to improve the difficulty adjustment algorithm, an old controversy that was believed to be buried resurfaced last Thursday. It is a measure that imposes a 8% contribution on rewards by new block created. A kind of tax that was previously called the Infrastructure Financing Plan (IFP) and that now reappears as a rule in the coinbase coin issuance parameter.

The measure itself is rejected by the majority of the community, not only because they doubt the destination of the funds generated, but also because of the way in which it was approved: without a voting process to know the opinion of the majority.

On Thursday, Amaury Séchet, leader of the ABC team surprised the community with a statement in which he stated that, to the next network update, scheduled for November 15, the new rule will be activated in the coinbase.

“While some may prefer that Bitcoin ABC not implement this enhancement, this announcement is not an invitation to debate. The decision has been made and will be activated in the November upgrade. The code will be released before the code freeze date. The Coinbase rule is as follows: All newly mined blocks must contain an outlet that maps 8% of the newly mined coins to a specific address ”.

Amaury Séchet, leader of the Bitcoin ABC team.

Hours later, miners from the ASICseer mining pool or group rejected Séchet’s announcement. In a statement Together they set out the reasons why they consider such a proposal to be detrimental to the Bitcoin Cash ecosystem.

Among the points specified in the statement, the miners state that Activation of the Coinbase rule would alter the stability of the Bitcoin Cash economy and disproportionately penalizes miners.

They also point out that they reject the arbitrary formula used by Bitcoin ABC to enforce a rule that will allow funds to be diverted from miners to some developers. They add that the imposition of rules “creates additional division and stifles healthy communication between parties with vested interests in BCH,” as the ad reads.

The first version of this rule, the IFP, also generated controversy earlier in the year, when Bitcoin ABC tried to activate it without majority approval. However, at the time it was disabled after heated debates that threatened a fork. At that time, to reverse the IFP, the Bitcoin Cash Node group introduced changes in the software in direct replacement of the update carried out by ABC.

Consensus? And more conflicts in Bitcoin Cash

For months the developers of Bitcoin Cash were arguing with the idea of ​​determining the pros and cons of the proposals presented to improve the Mining Difficulty Adjustment Algorithm (DAA). The need to improve this difficulty arose when it was discovered that there are variations in the algorithm intervals that were produced longer than usual and also faster than normal.

bitcoiner fork misunderstanding
Some members of the Bitcoin Cash community believe that fear and division are instilled in the collective as a formula for exercising control. Source: Szilárd Szabó / pixabay.com

These variations in the ranges of the difficulty algorithm are supposedly taken advantage of by some miners switching from BCH to BTC. Some workers would be playing with the DAA waiting for the difficulty to decrease so that mining is more profitable again in BCH. An article by CriptoNoticias explains details of this practice.

To resolve the variation in DAA, the groups evaluated the ASERT and Grasberg proposals. The asserti3-2d (ASERT) is an initiative of developer Jonathan Toomim. It was supported and tested by most nodes after the Bitcoin Cash Nodes group hosted the implementation code on the spec page update. But it did not have the backing of the ABC group, nor of its leader Séchet.

The other approach, called Grasberg, was defended by Séchet, but rejected by most of the developers because they believed that it had not passed the revision of all the nodes. Criticisms of this proposal focused on the fact that ABC had not provided enough data to support it.

Discussions around the DAA proposals intensified on July 23 when, Séchet and ABC announced who had made the decision to move forward with Grasberg to implement it in the next network upgrade. The decision, which did not have the consensus of the majority, was answered by the group “Consortium of Node Implementations”.

The publication of the consortium, endorsed by a list of digital signatures, indicates that it will be the ASERT difficulty adjustment algorithm that will be implemented on November 15. After this announcement, Séchet changed his mind and issued a release in which he expressed his decision to lean towards what everyone had approved, but fought back with the new version of IFP.

Séchet’s announcement, although it rekindled the debate on the implementation of the IFP, closed a period of discussions and division of the community on the two proposals put forward to correct defects in the DAA.

The resolution of conflicts through imposed decisions has generated new concerns in the community that revolves around Bitcoin Cash. Even some developers have indicated working on ideas to solve this new difficulty.

However, a user two days ago left a publication on the community blog. In it, she reflects on recent events and analyzes how a golden rule that exists in politics may be using: “divide and conquer” or “divide and conquer”.

The user suspects that division and fear are elements that Séchet would be using to exert control. He adds that there is no conflict within the community in which the word division or bifurcation is not constantly mentioned, something that most fear and for which they would be giving in to the decisions imposed by a group just so that their fears are not made. reality.





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Unfortunately, cryptocurrency-demanding ransomware attacks are here to stay



Year after year, the ransomware landscape changes dramatically. In 2019, there was a new resurgence of attacks when companies and government institutions became the main targets of ransomware, given its ability to generate higher payments.

The most recent attack was against Garmin, a navigation systems company, on July 23. Due to the attack, many of its online services, such as customer support, website functions and company communications, were affected. Reportedly, Russian “cyber gang” Evil Corp launched the attack, demanding $ 10 million in cryptocurrency to restore access to Garmin services.

Overall, according to a report by anti-malware software firm Malwarebytes, there was a increase of 365% in ransomware attacks against companies between Q2 2018 and Q2 2019.

Other reports show than 948 United States government agencies and health and education institutions were affected by ransomware attacks in 2019. In addition to the cost of paying attackers for ransomware, US government institutions also they spent at least $ 176 million to rebuild and restore their networks, investigate attacks, and take preventive action.

Increase in attacks in 2020

So far, 2020 has seen an increase in the number of attacks, in part due to the coronavirus pandemic. Government institutions, health, private companies and educational establishments have already spent a whopping $ 144 million to tackle ransomware attacks. Most worryingly, the US Federal Bureau of Investigation recently reported a 75% increase in ransomware attacks on healthcare entities. Most of these attacks are carried out via email-based phishing exploits, with the attackers demanding crypto as payment.

Alberto Daniel Hill, a white hat hacker and cybersecurity consultant, told Cointelegraph that “Attacks on medical providers / hospitals are something that cybercriminals are targeting, as that type of company is very likely to pay.” Hill further added: “Being the victim of a security incident for medical providers is really serious and complicated for the company to recover in terms of image, as well as reputation and therefore they have to pay.”

The rapid spread of ransomware attacks

Rapid technological advancements in the ransomware landscape make it extremely difficult for law enforcement to investigate and solve crimes related to ransomware. In particular, cryptocurrency is one of the technological developments stigmatized for use by hackers as payment. In the event of a ransomware attack, strong encryption is used to lock down an institution’s data, which is only decrypted after payment confirmation. Since cryptocurrencies have pseudo-anonymous transactions built in, attackers can choose to demand crypto instead of fiat money.

In the first quarter of 2020, there was a 300% increase in so-called “cryptojacking” attacks in Singapore. These ransomware attacks are mainly carried out against a user’s device, so that device is “hijacked” to mine cryptocurrencies. Hill agreed that the use of crypto by ransomware attackers it will stain the image of cryptocurrencies. However, he added, “The lack of knowledge about cryptocurrencies is what causes people to link cryptocurrencies to crime as they don’t know all the good things that cryptocurrencies entail.”

With that in mind, here is a list from some of the most notable ransomware attacks of the most recent past.

Attack on the Salisbury Police Department

On January 9, 2019, ransomware attackers they encrypted the files of the entire Salisbury, Maryland police department, rendering them unusable. Officials reportedly attempted to negotiate an undisclosed amount of money with the attackers in exchange for the key to decrypt the data. However, negotiations quickly ceased. This was not the first time that the agency suffered a ransomware attack.

A $ 400,000 payment in Jackson County, Georgia

Throughout 2019, barely a month passed without news that a local government institution was the victim of a ransomware attack. In March 2019, Jackson County, Georgia, was attacked by a ransomware that demanded a payment of USD 400,000 in Bitcoin (BTC), which officials agreed to. Ryuk ransomware that was used in the attack affected a large number of county offices and agencies. Jackson County Manager said than “They had to decide whether to pay,” as the damage would result in a loss of money and time rebuilding the system.

Baltimore attack

In 2019, hackers seized thousands of government computers belonging to the city of Baltimore. The attackers used a variant of the Robbinhood ransomware and they demanded the payment of around 13 Bitcoin (around $ 100,000 at the time). Although reports suggest that Baltimore City Council officials they refused to pay, It took weeks for affected systems to come back online and cost around USD 18 million to repair the damage.

Two Florida cities attacked

In a series of attacks against local government entities, two Florida cities were taken hostage in 2019. Lake City had to pay 42 Bitcoin (about $ 426,000 at the time) to end a 15-day showdown. The second city, Riviera Beach, voted to pay the requested 65 Bitcoin (around $ 600,000 at the time) after hackers disabled the city’s online services. In a turn of events, despite paying the ransom, the reports show that it took Lake City weeks to get its data back.

Attacks escalated in 2020

While attackers focused more on public institutions throughout 2019, this year there has been an escalation in hacking tactics as well as increased lawsuits. In mid-May, the REvil group hacked into the computer systems of an entertainment and media law firm.

REvil claimed to have possession of hundreds of gigabytes of private data belonging to public figures like Lady Gaga, Nicki Minaj, Mary J. Blige and Madonna, to name a few. While the hackers initially asked USD 21 million, doubled their demand for payment to USD 42 million and they announced that They would also target the president of the United States, Donald Trump. According to reports, the law firm did not negotiate with the hackers.

University pays 30 Bitcoin ransom demand

In February, Maastricht University in Amsterdam agreed paying hackers a 30 Bitcoin ransom after an attack that threatened to damage the work of their students, staff, and scientists. According to the vice president of the university, the decision to pay the hackers was made to avoid the high costs of rebuilding the entire IT network.

Attacks on health and medical institutions

During the first half of 2020, the reports show that at least 41 hospitals and healthcare organizations were successfully hacked in ransomware attacks. Despite the devastating effect of the coronavirus pandemic, experts predict that the attack rate will increase as more employees return to work.

Given the sensitivity of medical data, victims have had to comply with exorbitant payment demands to protect their data. For example, the University of California at San Francisco paid Recently 1.4 million dollars in ransom after several of his medical school servers were hacked.

Dealing with ransomware attacks

As various industries, including healthcare, finance, and government, face increasing threats from hackers, experts recommend that public and private organizations invest more in ransomware prevention and response. Hill suggested that the first step in protecting yourself against hackers is to know how phishing attacks are carried out as they are becoming popular with hackers. Hill added that a good backup policy is also important.

Ransomware attacks have proven to be a lucrative business for most cybercriminal groups. A 2016 study shows whateu the number of new ransomware families increased by 172% only in the first half of that year, and hackers brought increasingly sophisticated tools and expanded their pool of potential victims. Given the high costs of rebuilding a network, Hill recommends, contrary to popular opinion, that “it might be smart to have some cryptocurrencies as a last resort.”

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Inflation !: Folly, myths and nonsense



When an American who complains about his inflation of 2% or 3% per year in the same way that a Venezuelan does with an inflation rate of three digits or more, you wonder. What the hell is wrong with them? In my days as a university student in the United States, 20 years ago, I had a modest monthly budget whose amount I still remember. Two decades have passed. And the funny thing is that a student today could live on the same budget. Personally, that seems admirable.

In Venezuela, today you cannot live with last month’s budget. Prices increase in a matter of hours. Sometimes you buy something in the morning and in the afternoon the price is different. In Venezuela, economic growth is negative and inflation is through the roof. In the United States, there is a crisis and the offers are everywhere. Many opportunities open up, because everything is at a discount. And what about libertarians talking about inflation and hyperinflation? What world are they living in? They look like the tantrums of a spoiled child.

One understands that politics is politics and sometimes you attack yourself for attacking. But here you also have to have a bit of good sense. The period known as the Great Moderation, which began in the mid-1980s and is still felt today, has been characterized by the control of inflation. In other words, developed countries have been keeping their inflation under control for decades. Even the libertarian wing of the Republican Party has all but disappeared. And it has been reduced to a few individuals. Because when it comes to the role of the Federal Reserve in the economy right now there is a bipartisan agreement.

Read on: Pompiliano Says Getting Out of Cash Is Key to Wealth and Inflation Protection

This Great Moderation has been achieved thanks to the independence and modernization of the central banks. This has not happened in Latin America or in other regions, but in most developed countries it has. Today the problems are other. Today’s world is different from the world of the 70s and early 80s. We have problems of all kinds. The level of public and private debt is alarming. Fiscal deficits, inequality, and trade imbalance are through the roof, but inflation is under control.

The trick to controlling inflation and obtaining stability is to increase money supply in the same way as production. However, What is inflation? It is the general increase in the prices of goods and services. Currency issuance is not inflation. The stimuli are not inflation. Inflation is measured by measuring the price of goods and services.

If the money supply is increased irresponsibly, we have inflation. If the demand for goods and services increases, we have inflation. And if the supply of goods and services decreases, we have inflation. Too much inflation hits purchasing power and weakens the currency. However, moderate inflation of 2% or 3% per year stimulates economic growth and generates employment.

On the other hand, deflation, which is the general decline in prices, occurs due to a shortage of liquidity, overproduction, or a drop in demand. Deflation generates economic growth, an increase in the value of the currency, and unemployment. That is, a crisis. Crises were very common when the gold standard was used, because there was no way to increase liquidity in the economy. Crises lasted several years and governments usually had to temporarily go off the gold standard in order to overcome them.

In Latin America, crises are generally not deflationary. Latin American crises are usually stagflation crises. In short, economic decline with inflation. And, of course, that happens when the country’s productive apparatus does not produce enough and the Government does not stop spending.

In the case of the United States, in effect, the issuance of currency is enormous and the public spending is enormous. However, they have a great advantage. The globalization. That is to say, the world continues to buy dollars. The hegemony of the dollar as the world’s reserve currency is the goose that lays the golden eggs of the United States. They print tickets and the world absorbs them. The world ships products and they ship paper. It is a round business.

With the fall in demand due to confinement by the coronavirus, a terrible deflationary picture was generated. As demand goes down, income goes down. And when income goes down, there are layoffs. As there is unemployment, consumption drops. And so we have a crisis.

Now, what to do in the face of a deflationary crisis? Economists and politicians have already learned the lessons of the past and they know exactly what to do. Deflation is fought with “reflation.” What is reflation? It looks like inflation, but it is not. Reflation is the issuance of inorganic money (monetary stimuli) to stop deflation and return to stability. And by stability we mean healthy inflation of 2% or 3% per year. The stimuli are the size of the crisis. Giant crisis, giant stimuli.

During the worst of the crisis, the dollar got too strong. So the stimuli are specially designed to weaken it. And, in fact, it is working. Here the mistake is to assume that this temporary increase in prices will continue indefinitely. In other words, if we take the data for July and start multiplying for each month of the next two years, we would hypothetically have an inflationary table. But this is absurd. Because the stimuli are designed to counteract the imbalance in the second quarter of 2020 and once that is achieved they are no longer necessary. We saw it in 2008.

Keep reading: Pompiliano: The Federal Reserve’s attempt to control inflation will have disastrous consequences

In a recent statement by well-known bitcoiner Anthony Pompiliano, he performs this absurd calculation using deflation data hinting that prices will continue to rise indefinitely. I invite you to read his statements. The link is up here. And they will notice an error. At the same time, I invite you to read the statements of the gold beetle Peter Schiff during the last crises. It’s the same libertarian speech from the 70s. Of all the problems we have now, they have chosen a problem that does not exist. They have chosen to speak of inflation during the worst deflationary crisis since the Great Depression of the last century. Frankly that’s crazy.

In my quest to find a rational explanation for so much madness, the only explanation that makes sense is that political dogmas play a very important role here. In other words, libertarians consider that the government’s influence on the economy is excessive and advocate a free market fundamentalism. They want a return to the gold standard, or the implementation of the Bitcoin standard, and deflation must be accepted as a “temporary pain” necessary to liquidate the bad actors. With the typical harshness of the Protestant ethic. Here is a debate that is worth having. But don’t tell me we have inflation when there isn’t. The defenders of gold are always sowing fear and pessimism, but it all ends in nonsense. How many gold beetles are on the Forbes list? How many billionaires does Wall Street have? Optimism always wins.

The economic disaster is not in the Federal Reserve. If there is a disaster, it is in the Government. Debt and deficit. Furthermore, the problem is not inflation, but inequality. Salaries have not increased and no one has savings anymore. Stimuli primarily enrich asset owners. The financial markets are the first beneficiaries, not the common people. The money is on Wall Street. And yes, it is in Bitcoin. Stimuli are inflating prices in financial markets and bitcoiners are eating this cake.

Keep reading: Tyler Winklevoss: It’s good for BTC when the Federal Reserve prints money

Libertarians complain a lot, because they are a reactionary minority without political representation. Like that or more clear? They are the grumpy people of the financial world always talking about the next catastrophe. Accumulating gold because the world is going to end. But the world comes centuries ending and it never ends. In fact, Wall Street has been a better investment than gold for more than a century. Although I would like to cry with the libertarians at this point due to the rise of Bitcoin, I am afraid I cannot. A sweet does not make me bitter.

Inflation is under control. The data is there for everyone to see. The worrying thing is not the stimuli, the worrying thing is the trade war between the United States and China that is holding back world trade. There we do have a problem. Because economic nationalism does increase prices. If prices rise, the Federal Reserve will have no choice but to raise interest rates and withdraw liquidity from the economy. That would be a severe blow to the financial markets (Bitcoin included). We have real problems and real concerns. Why create imaginary problems by 70s politicking? We don’t need any more follies, myths and nonsense.



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Demand for BTC and ETH derivatives continues, market is expected to grow further


The crypto options market has evolved rapidly during the second quarter of 2020. According to a report of the crypto derivatives industry, TokenInsight, Trading volumes are experiencing a 166% year-on-year increase compared to the second quarter of 2019.

The derivatives that drive these volumes are futures and options. While the futures grow with traders who are betting on a bullish price sentiment, both open interest and option volumes have reached their all-time highs.

All-time highs

On Wednesday, open interest in Ether options (ETH) reached an all-time high of USD 351 million in Deribit and USD 37 million in OKEx. In fact, open interest in options Ether is 2.5 times higher than in early July.

The day before the largest Bitcoin options expiration (BTC) seen on July 3, Bitcoin options interest reached an all-time high of $ 1.7 million in Deribit and $ 268 million in CME, while the daily volumes in Deribit doubled their all-time high. surpassing the 47,500 contracts traded on July 28.

This all-time high seen the day before expiration on the last Friday of the month could often signify the increasing acceptance of structured options and products, especially considering the record of open interest even in CME, which is the largest derivatives market in the world.

Total BTC / ETH Options

Luuk Strijers, commercial director of Deribit, talked about what open interest is the best indicator to measure the market and told Cointelegraph: “Open interest is the best indicator to assess market adoption and looking at the charts it is clear that we are close to the end of July highs.”. He added: “The open interest on BTC options is currently 116,000 contracts with a notional value of $ 1.5 billion.”

New horizons for investors

Options are financial instruments that allow investors to buy or sell an underlying asset depending on the type of contract they have. Call options give their holders the right to buy an asset at the exercise price within a specified period of time, while put options give their holders the right to sell an asset under similar conditions. Denis Vinokourov, head of research BeQuant, an institutional brokerage provider and a cryptocurrency exchange, told Cointelegraph:

“Options are a very efficient way to hedge exposure to the underlying product, be it Bitcoin or Ethereum spot (spot) or even futures / perpetuals. In addition to that, it is easier to structure products that offer ‘performance’, and this is what has been particularly attractive to market participants, especially in the awakening of lateral market price action. “

Lennix Lai, director of financial markets at the cryptocurrency exchange OKEx, told Cointelegraph that traders need to be careful, since “open high interest rates alone do not indicate that the market is bullish or bearish”, and added that investors lean towards long strategies:

“We have recognized that there are many more professionals who are taking advantage of the options to hedge their BTC portfolio for the long term only. And there are many more structured products available on the market that are designed for professionals in order to improve performance or for exotic gains. “

With the price of Bitcoin briefly topping the $ 11,900 mark on several occasions earlier this month, general interest in cryptocurrencies has been on the rise. Bitcoin increased 27% from July 1, what is the peak highest seen during 2020. Bitcoin options are currently primarily traded on Deribit, CME, OKEx and LedgerX, while Bakkt, a cryptocurrency exchange owned by the main traditional exchange Intercontinental Exchange does not see volumes of options despite having the product listed on its platform.

BTC Put / Call Ratios

Also, the sell / buy ratio increased from 0.52 each month to 0.76 on August 6, which means i know sold a higher proportion of put options compared to call options. This is a strong indicator of bullish sentiment currently held by investors. Lai added to this notion:

“Looking at the growing demand for Bitcoin options, open interest, and volume, it would seem to suggest that investors remain bullish on the price of Bitcoin, and with the more important macro factors such as the decline in the price of the US dollar and the all-time high. of gold, the demand for Bitcoin in general is increasing. “

Ethereum 2.0 and DeFi Drive Demand

More investors appear to be acquiring more exposure to ETH using options in 2020. Ether, being second behind Bitcoin in the cryptocurrency space, has become one of the top experimental labs for blockchain scalability backed by its large institutional and business development communities. Thus, it is natural for ETH to become a speculative asset as more decentralized applications are developed.

Ethereum’s upcoming proof-of-stake change to Ethereum 2.0 and the rapid growth of the DeFi space have proven to be big variables driving bullish sentiment while adding more credibility to the network. Seeing that Ether options are primarily traded by retail investors, at this point, as they are not yet traded on regulated exchanges such as CME and Bakkt, growth It is further proof of the community’s interest. Strijers elaborated further on the statistics for Ether options and futures traded on Deribit, saying:

“The number of ETH use cases continues to grow and investors are buying into this potential. The open interest on Deribit ETH options has increased sevenfold, from $ 30 million and $ 50 million six months ago to $ 350 million now, representing a market share of 90%. And while ETH spot prices are peaking, the same applies to the open interest on ETH futures, which is nearly reaching $ 1.5 billion, a new all-time high. “

Posting monthly gains of more than 60% and gains to date of over 200%, ETH broke the $ 400 price mark in early August. The impact of the launch of Ethereum 2.0 PoS Final Testnet “Medal” and the implications it will have on the DeFi space now they are being taken over by the market. Institutional interest has also been in the news, as Arca Labs launching an Ethereum-based fund registered with the United States Securities and Exchange Commission (SEC).

Is the cake growing?

While Deribit currently occupies the largest market share of the options space, there are new players who have been trying to capitalize on this surge in investor interest. While Strijers welcomed more competition in the space, as it would help the pie grow, There may be certain complexities involved, according to Lai:

“One of the prerequisites of a liquid options market is an equal or even more liquid futures market. Not to mention the complexity of handling the settlement, set price, and margin, which is much more complicated than delta products like futures. “

Vinokourov deepened this perspective by comparing the differences in running a crypto derivatives exchange versus a spot exchange. It revealed that the main challenges surround maintaining a liquid order book “across a variety of maturities and strike prices, with a matching engine robust enough to withstand sudden bursts of volatility”, plus a system Institutional grade to manage risk. Opinion:

“If all that was not enough, customer acquisition is much more difficult than the cash equivalent because there are fewer companies that market these products and they require institutional-grade customer management, something that crypto exchanges cannot always offer.” .

Regardless of how the options pie is divided, it is arguably only going to grow further in size, especially through exchanges like CME which is now becoming a very prominent player in the space. The bullish sentiment from BTC and ETH will serve to further support this growth by allowing investors more opportunities to speculate.

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Mobile DeFi and the shift towards self-sovereignty



Many speculate that Widespread adoption of cryptocurrency is solely dependent on improving ease of access and user experience. Actually, there is an even bigger obstacle: a change of mind.

Self-sovereignty and personal autonomy are the end game of this technology, And with that goal comes a significant increase in personal liability for equity. This is totally at odds with people’s traditional financial experience so far; the legacy system takes away autonomy and replaces it with convenience, offering useful tools related to fraud protection and password management. By comparison, cryptocurrencies, decentralized finance, and other forms of distributed technology are at the other end of that spectrum, providing the ability to have true ownership of one’s value.

For many crypto beginners, the liberating elements of cryptocurrencies and financial freedom are promising but intimidating, as security passes from the hands of a third party directly into the hands of the consumer. To bridge the gap between comfort and safety, our industry it should place greater emphasis on user experiences and familiar tools to facilitate consumer mindset change.

The mobile boom and the gateway to cryptocurrencies

Smartphones were supposed to open up a world of autonomy that had never been seen before. Its adoption gave people the ability to connect and transact with people around the world, and with the launch of Apple Pay, Google Pay, Samsung Pay and the next wave of calls “Super Apps“, people can participate more freely in trade than ever.

This trend, however, is not permanent. Clear, mobile payments are popular, but have been monopolized by a handful of companies and governments. All who use these applications do so at the convenience of the parties interested in power. And when the financial interests of those in power are misaligned with those of the users, the sovereignty of the users is trampled, as it happened last month when the Central Bank of Brazil WhatsApp Payments closed across the country.

It’s no wonder then that the progressives among us have turned to cryptocurrencies and decentralized technology to regain the self-sovereignty that the mobile phone revolution promised us. Crypto, DeFi, and decentralized applications promise to fulfill the original vision of our connected future, in which users would be able to retain full ownership of their funds while transacting in a global marketplace.

The rise of stablecoins, DeFi lending protocols, and cryptocurrency ATMs around the world are signs of a growing awareness of the potential this technology could bring to our daily lives.

Building bridges

The adoption of cryptocurrencies so far has been in spite of, rather than because of, the user experience. While some mobile applications have clean user interfaces, the collective user experience it remains daunting for new people joining the market.

Most of us have grown up relying on third parties When it comes to securing our funds, and the notion that chargebacks, fraud protection, and password resets are not possible in this new world is often a difficult reality to accept.

Many have tried to connect crypto services with centralized banking services or government-insured deposits, offering what seems like a bridge between the present and the future. While this may be enough for some, As we further decentralize our services, the most important bridge to build is that of mindset: users must feel able to oversee their own funds, to become truly sovereign.

Building on the familiar

The best way to empower users is by giving them tools that are easy to interact with. Hardware wallets like Ledger and Trezor were the first innovative steps in user custody, but its user experience It’s still tricky for crypto newbies, and more importantly, the hardware is designed for use with a desktop or laptop. In an increasingly mobile world, what good is a USB-like hardware wallet to store my private keys offline if users will be transacting regularly on a mobile device?

Hardware wallets should be as simple as a card kept in a pocket, perhaps even resemble a more familiar product like a credit card. The key here is to offer family experiences online with best practices in cryptographic security so that the difficult but absolutely necessary mindset shift becomes more acceptable. Deciding to be personally responsible for your own wealth should be a burden of diligence, not a grueling learning experience.

In the absence of customer service, projects should also put a greater emphasis on customer support. That said, open channels should be available for users to ask questions, and educational resources should be plentiful. Fostering helpful and welcoming communities can also serve as an incredible resource for those who need help.

The fact that the industry has overcome so many obstacles is a clear sign of the potential of our space. Ownership of funds, messages and data is a desirable goal, although it is currently elusive for the average person. As stakeholders in this industry, we must redouble our efforts to provide simple tools to make this transition as simple as possible.

The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Corey Petty He’s the head of security for Status. Corey began his blockchain-focused research around 2012 as a personal hobby while pursuing his Ph.D. candidacy at Texas Tech University in computational chemical physics. He then went on to co-found The Bitcoin Podcast Network and is still hosting its flagship show, The Bitcoin Podcast, and a more technical show, Hashing It Out. Corey dropped out of academia and entered the blockchain data science security industry for a few years, attempting to fix vulnerabilities in ICS / SCADA networks before finding his place as head of security at Status, where he remains today.

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Bitcoin price continues to rise and positive sentiment is off the charts


In recent weeks, the price of Bitcoin (BTC) has re-emerged after months of apparent currency stagnation. Since July 23, the value of a single Bitcoin has increased about 20%. Not only that, having traded sideways since its supply cut in early May, The major currency broke its all-important psychological threshold of $ 10,000, prompting many casual investors to jump back on the cryptocurrency train.

Bitcoin’s recent price spike has also led to a boom in retail, with a whole host of trading platforms around the world that inform of soaring Bitcoin trading volumes. As a result of this bullish market activity, Joe DiPasquale, leading cryptocurrency expert and CEO of BitBull Capital, recently stated that this latest surge is once again creating an element of FOMO, which stands for “fear of missing out” and it could be translated into Spanish as fear of missing the opportunity, among occasional investors who believe they may be late for the cryptocurrency party.

Echoing a somewhat similar sentiment, Joshua Frank, co-founder and CEO of The Tie – a provider of data aggregation tools – commented to Cointelegraph that historically speaking, lVolatility has fueled significant new waves of interest and investors in Bitcoin, particularly with the most recent of $ 9,000 to $ 12,000. Frank highlighted that the 30-day average number of Twitter users talking about Bitcoin has increased from 24,000 to 30,000 in the last two weeks, adding:

“Bitcoin reached its highest daily tweet volume level since June 26, 2019 following the Twitter hack on July 16. While it is not clear that the prior period had any correlation with the hack, we have seen in the past that All things being equal, the more users talk about Bitcoin, the better the asset will perform. “

Price vs.  tweet volume

Denis Vinokourov, head of research at BeQuant, a cryptocurrency exchange and institutional brokerage service, told Cointelegraph that Since volatility increased, his company has seen trading volumes skyrocket 40% from where the summer daily averages were before this recent rally.

Major cryptocurrencies are mobilizing rapidly

Cointelegraph also discussed the recent market action with Adam Vettese, a market analyst at forex trading and investment platform eToro. He pointed out that since cryptocurrency prices began to rise in late July, the number of crypto positions that were opened increased 115% over the previous fortnight. During the same period, the trading volume in crypto instruments also increased by 162%. The number of open positions in Bitcoin increased by 222% with an increase of 421% for Ether (ETH) and 170% for XRP.

Most invested crypto assets on eToro

Christophe Michot, director of sales for digital asset trading platform CrossTower also stated that over the course of the past few weeks his company has observed a 219% increase in daily trading volume, as well as a 66% increase in the number of daily average registrations during the same time period.

Michot also noted that since the mid-March pullback, the market as a whole has seen a strong bullish pullback. For example, Bitcoin has recovered over 210% and Ethereum has bounced 364% since the “Black Thursday” crash of March 11, 2020.

The rally in the crypto market has come after positive news such as the recent clarification from the US OCC that allows banks to hold Bitcoin, as well as the announcement of another stimulus package that the Federal Reserve will issue in a near future, which some experts believe will continue to devalue the US dollar.

People’s sentiment towards cryptocurrencies is skyrocketing

On July 12, Bitcoin’s long-term sentiment score – a comparison of investor sentiment over the past 50 days versus the previous 200 – hit a new all-time high that led to Bitcoin’s rise at the end of the month. Similarly, The daily sentiment score represents a measure of how positive or negative Twitter conversations have been about a particular currency in the last 24 hours versus the previous 20 days.

Bitcoin price vs.  long-term sentiment score

The Daily Investor Sentiment Score has remained positive (above 50) every day from July 20 to August 1. Even after Bitcoin failed to break the $ 12,000 mark and fell back $ 1,400, investor sentiment fell below 50 for just about 28 hours, alluding to the fact that investors have remained extremely positive on Bitcoin.

Frank told Cointelegraph that about 68% of all tweets talking about Bitcoin’s long-term financial future over the past month have been positive. Similarly, Michot added that according to CrossTower media data, the market is in the early stages of a new bull run, adding: “Another positive sentiment comes from family offices and other traditional counseling firms. These companies are seeing increased demands from clients seeking exposure to cryptocurrency markets.“.

Other crypto-related offerings are also flying high

Since the beginning of the recent crypto surge, there has been a spike in the use of stablecoins along with a clear increase in demand for other DeFi- related tokens.. John Todaro, director of institutional research at TradeBlock, a trading platform for institutional investors, told Cointelegraph:

“Stablecoin’s circulating supplies have risen substantially in the last 6 months, with Tether seeing around $ 10 billion in deposits and USDC seeing over $ 1 billion. This may seem small, but those deposits make Circle and Tether, to some extent, are de facto banks with sizable customer deposits. $ 5-10 billion in customer deposits is equivalent to a small or medium commercial bank in the US. “

Todaro added that while adoption by traders remains limited in the case of stablecoins, There is a real demand for these assets in developing economies, as well as those with political instability, such as Latin America, parts of the Middle East and, to some extent, Hong Kong. He also noted that derivatives volumes have increased recently (in Deribit, CME and others), but a large part of it is linked to price action, as increased volatility almost always tends to drive higher prices. trading volumes.

Vinokourov believes that the recent period of low volatility and low trading volumes has turned into one of the busiest periods for digital assets in recent memory: “Spot volumes and derivatives venues spiked as Bitcoin traded over $ 11,000, and other big-cap assets followed suitVinokourov further opined:

“Particular attention should be paid to the evolution of Ethereum’s volatility profile which, despite having recently peaked, is still elevated relative to Bitcoin. This suggests greater potential volatility for the second largest cryptocurrency.”

The correlation of Bitcoin’s Fear and Greed Index with its price

Another aspect worth exploring is the relationship that may or may not exist between the Fear and Greed Index, translated into Spanish as the Index of Fear and Greed, of Bitcoin and its price, and whether the metric can suggest a possible price direction. Presenting your views on the matter, Todaro opined that the index is calculated based on a few variables that, to some extent, are affected by price, forcing the index to track certain elements such as the speed of price gains, high prices of all timing and price momentum, among other parameters.

2020 Bitcoin price vs Fear and Greed Index

For example, if there is a large drop in the market, volatility will increase and the index will conclude that the market is very fearful. By doing so, the index eventually follows the price. Additionally, the index captures Google trends, with a high interest in positive cryptocurrency terms signifying high greed. Thus, Todaro believes that the index can be used to make current and future investment decisions.:

“Although the price of Bitcoin has not returned to the all-time highs, this was the fastest price gain in a 10-day period in its history, which would read as extremely greedy, so perhaps it is time to sell. and wait for a rollback to come back in. “

Another correlation worth exploring is that between Bitcoin and the S&P 500. According to Quantum Economics founder Mati Greenspan, the previously high correlation between cryptocurrencies and the S&P 500 has declined:

“We can clearly see earlier this year where the correlation rose to 0.6 due to the anticipated sale of multiple assets by the pandemic. However, now we are back below 0.2, which basically means that already there is no correlation on a day-to-day basis. “

Furthermore, Greenspan noted that even a 0.6 peak only represents a very weak correlation, adding: “Many stocks have a very high correlation with each other, usually above 0.8, even if they are in completely different industries, and many altcoins are similar.“.

90- day pearson correlation between Bitcoin and S&P 500

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