Weekly Bulletin (Jan 13, 2019)

CoinSheet #238

Whether you think that you can, or that you can't, you are usually right.

— Henry Ford (1863-1947)


Weekly Bulletin

Kunyi, myself, and another person are somewhere in the middle of Texas, in a small cabin, with about half-a-bar of service.

We’re on an indefinite road trip across the country, spending 4+ hours in a car each day.

Apologies for any late delays in emails/responses. We’ll get acclimated quite soon and start writing more.

If you’re interested in what we’re doing, we’ll send something out next week.

ETC gets 51% attacked

Ethereum classic has decent daily volume, and has a relatively low cost to perform an attack.

The attack was inevitable.

(You can check approximately how much it costs to 51% attack a coin here)

Coinbase@coinbaseOn 1/5/2019, Coinbase detected a deep chain reorganization of the Ethereum Classic blockchain that included a double spend. In order to protect customer funds, we immediately paused movements of these funds on the ETC blockchain. Read more here: https://t.co/vCx89dz44m

(Here’s a link to the Coinbase article about Ethereum Classic)

Coinbase says they have identified a total of 15 reorganizations, 12 of which contained double spends, totaling 219,500 ETC (~$1.1M).

They also wrote that no Coinbase accounts have been impacted by the attack (Coinbase identified the double spend attacks, but they had not been the target so all customer funds are unaffected).

You might be thinking, how can Ethereum Classic be worth anything at this time? Post attack Ethereum Classic has seen very little price movement. What’s up with that?

Preston Byrne@prestonjbyrneHow is Ethereum Classic still worth anything right now
nic carter@nic__carter@prestonjbyrne could ask the same of BTG, Monacoin, Verge, BTCP. All 51% attacked or suffering from a serious vulnerability. the truth is that a lot of these assets have dogmatic diehard communities that refuse to submit, and most tokens are held by them anyway.

TL;DR - Shitcoins gonna be shitcoins


Misc news from last week

  • Brave surpasses 5.5 million monthly active users

  • Thailand’s SEC approves four new crypto exchanges

  • Bitwise Asset Management files with SEC for new Bitcoin ETF

Dj Khaled And Another One GIF

Market Sentiment

Technicals


Bitcoin (Daily Overview)

I'm still expecting price to range (between S2 and R2, see support levels below) until we learn more about what's going on with the Bakkt futures launch.


Bitcoin (4h Volume)

Seeing some bullish divergence on the CMF and OBV.


Bitcoin (4h Support/Resistance Levels)

Resistance 2: ~4,380
Resistance 1: ~4,200
Pivot point: ~3,920
Support 1: ~3,750
Support 2: ~3,450

(I’ll post the new weekly levels for next week in the Telegram chat tomorrow)


Bitcoin (Macro Overview)

Below are the 3 most common bottom scenarios.

  • Option 1: Fractals analysis bottom (2,300 - 2,600)

  • Option 2: Fib extension bottom (1,700 - 1,900)

  • Option 3: Retest support of 2017 rally bottom (900 - 1,200)

As of Jan 13, 2019 my confidence level for a bottom between 1,700 and 2,600 is about 80%.

I think there is about a 15% chance that we've already bottomed.

And a 5% chance we'll retest 900-1,200.


Recommended Readings

The real Bitcoin FUD

Bitcoiners are asking critical questions about Bitcoin’s security model. And along those lines, the best way to engage in fud with Bitcoiners is to focus on how the changing landscape of Bitcoin will shape its incentive structures and security model in the future. After all, the best new fud will involve how bitcoin’s network adapts to its inevitable monetization. Although it may seem like Bitcoiners are a monolith of sound money propaganda, there is a lot you can learn through this community. In the end, serious Bitcoiners are willing to discuss their concerns and the importance of those concerns in pushing Bitcoin to the next level; you’d just have to look away on purpose not to see that.

Check it out the full article here.


The end

If you think something important happened last week and we missed it, let us know!

Continue the discussion in our Telegram group.

That’s all for now.

See you later space Cowboy

Weekly Bulletin (Jan 6, 2019)

CoinSheet #237

The road uphill and the road downhill are one and the same.

— Heraclitus (535-475 BCE)


Weekly Bulletin

No yearly predictions from us.

Our general thoughts are that things will start picking up steam toward the end of the year as we get close to the next bitcoin halving.

Genesis block

On January 3, 2009 Satoshi Nakamoto launched the Bitcoin network by creating the genesis block (the first block of a blockchain).

It includes the following text: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."

(This mostly serves as a timestamp to prove the genesis block was created on the same day the network was released, and that there was no secret premine.)

Fast forward 10 years

BitMEX has taken an advertisement out on the front page of January 3rd, 2019 edition of The Times thanking Satoshi Nakamoto for Bitcoin.

BitMEX Research@BitMEXResearchHappy 10th Birthday Bitcoin!

10 years ago Bitcoin made a reference to The Times, and exactly 10 years later there is a Bitcoin reference in The Times.

Pretty cool.


DX Exchange launching next week

Security tokens are hot.

Starting tomorrow, DX Exchange will begin offering tokenized stocks on the Ethereum blockchain via smart contracts.

This will enable investors to trade companies like Apple and Facebook Inc outside of the U.S. even when the stock markets are closed.

The launch will make DX the only exchange licensed to offer tokenized stock products in the EU.

You can read more about this here.

Personally, I’m not very interested in security tokens.


Ethereum Constantinople hard fork

Just a reminder that the Ethereum Constantinople hard fork has been scheduled for sometime around January 16 (target block height of 7,080,000).

Binance and a few other exchanges have already announced their support.


Market Sentiment

Technicals


Bitcoin (Daily Overview)

The meme is real. The January pump is here.

Price broke through the 50-SMA. A daily close at this price would be a relatively strong short-term bullish signal.

Besides that, I’m also still waiting to see what happens with the Bakkt futures launch.


Bitcoin (4h Volume)

One warning here is that volume isn’t looking too strong. Even seeing some bearish divergence on the OBV.


Bitcoin (4h Support/Resistance Levels)

Resistance 1: ~4,200
Pivot point: ~3,875
Support 1: ~3,520

(I’ll post the new weekly levels for next week in the Telegram chat tomorrow)


Bitcoin (Macro Overview)

Below are the 3 most common bottom scenarios.

  • Option 1: Fractals analysis bottom (2,300 - 2,600)

  • Option 2: Fib extension bottom (1,700 - 1,900)

  • Option 3: Retest support of 2017 rally bottom (900 - 1,200)


Recommended Readings

Bitcoin Anonymity Guide 2019: How to use BTC like a straight up G

I’m always getting questions about Bitcoin and anonymity.

This is a good read that should answer most of your questions.

Check it out here.


Bitcoin By the Numbers: 2018 Recap

Jameson Lopp gives us a wonderful recap of 2018.

Check it out here.


The end

If you think something important happened last week and we missed it, let us know!

Continue the discussion in our Telegram group.

That’s all for now.

See you later space Cowboy

Weekly Bulletin (Dec 30, 2018)

CoinSheet #236

The first forty years of life give us the text; the next thirty supply the commentary on it.

— Arthur Schopenhauer (1788-1860)


Weekly Bulletin

As we approach the New Year, let us remember to celebrate the empirically observed anti-fragility of Bitcoin.

Bitmain confirms ‘adjustment to their staff’

Looks like Bitmain management wanted to curtail redundancies in the human resources area so many people are no longer viable members of the workforce (RIP George Carlin).

It was reported that Bitmain is dismissing almost half of its entire workforce in an attempt to restructure itself in order to "build a long-term, sustainable and scalable business."

Dovey Wan 🦖@DoveyWanMaybe this is THE LAST AND BIGGEST Bitmain drama of the year ⚠️⚠️⚠️ Local source said “ BOTH Jihan and Zhan will step down” !!! 🚨🚨🚨 The original plan according to IPO filing is Jihan & Zhan will be co-CEOs, but now the source said “The successor maybe Mr. Wang” �sfbbSp

You see that?

Those are folks talking about all that mining centralization (told you it was a meme).


Market Sentiment

Technicals

Bitcoin (Daily Overview)

There is a this meme going around that we’re going to see a green candle on January 1st (because folks are capitulating, funds are finished realizing their yearly loses, etc…).

I don’t know how I feel about that.

We’re probably going to see another attempt at that 50-SMA line.

I’m also still waiting to see what happens with the Bakkt futures launch.


Bitcoin (4h Volume)

Nothing too exciting on the volume (there was some CMF divergence on the daily candles).


Bitcoin (4h Oscillators)


Bitcoin (4h Support/Resistance Levels)


Bitcoin (Macro Overview)

Below are the 3 most common scenarios I’ve seen being discussed.

  • Option 1: Fractals analysis bottom (2,300 - 2,600)

  • Option 2: Fib extension bottom (1,700 - 1,900)

  • Option 3: Retest support of 2017 rally bottom (900 - 1,200)


Recommended Readings

Don’t trust, verify: a Bitcoin Private case study

Fascinating case study about a covert premine in project that had a ton of hype.

The folks at Coinmetrics started exploring the possibility of a convert premine after they found discrepancies between the supply data pulled from their Bitcoin Private node and the estimated outstanding supply of BTCP.

You can read the full report here.

Bitcoin Private (BTCP) is a fork-merge of Bitcoin and ZClassic (ZCL, a fork of ZCash that removed the founders’ reward). BTCP defined its initial supply according to the sum of the outstanding supply of Bitcoin at the time (16.8m), ZClassic (3.4m) and a small 62,500-unit miner program. This was intended to give it an initial supply of ~20.4m BTCP, with a decaying miner reward, capping the total supply at 21m units as with Bitcoin.

However, 2.04m additional units were covertly minted during the import of the Bitcoin UTXOs and sent to the BTCP shielded pool, bringing the initial supply to 22.6 million, contradicting the whitepaper and all of the materials published by the team. Three hundred thousand units of the covert premine were moved out of the shielded pool towards what appear to be exchanges. Ultimately the lack of uptake of BTCP by the recipients of the airdrop meant that those additional 300k transparent units today represent close to 10% of the BTCP supply in circulation, with 1.80M covertly minted units remaining in the shielded pool. 

And here are some relevant tweets from Nic Carter.

nic [proof of reserves] carter@nic__carterWe found the irregularity by looking at on-chain transaction volume and then running a few queries to audit the supply when it hit red flags. The extra 2.04m was hidden in plain sight, mostly held in the shielded pool.
nic [proof of reserves] carter@nic__carterInterestingly, running a full node wouldn't have exposed the premine through its typical validation checks - the reason being that the premine was inserted through the irregular BTC UTXO set import. The actual mining process on BTCP retained its integrity.
nic [proof of reserves] carter@nic__carterThe surprising thing here is that the third party data sources which supposedly audit supply failed in their duty, and that no one in the BTCP community independently audited the supply.
nic [proof of reserves] carter@nic__carterThis is a lesson not only to run full nodes AND perform additional supply audits, but to be extra careful when there are atypical chain initiation protocols. It's also cause to inspecting the usage of the chain to spot large movements. This is a common way to spot irregularities
nic [proof of reserves] carter@nic__carterSomething interesting I learned in the course of this investigation — bitcoin assumes supply starts at 0 and then checks that inflation is correct on a per block basis. There’s no “total supply check” it’s all in the issuance schedule + difficulty adjustment

If you think something important happened last week and we missed it, let us know!

Continue the discussion in our Telegram group.

That’s all for now.

See you all in the New Year.

Happy Holidays!

and a Christmas surprise

Christmas, children, is not a date. It is a state of mind.

— Mary Ellen Chase


A very merry Christmas

Allow us to wish you all a very merry Christmas!

May your hearts and homes be filled with all of the joys the festive season brings.

Let us remember to take time to slow down, enjoy the simple things, recharge and be thankful for those around us.

Wishing you much happiness not just today, but throughout the New Year.

-Dmitriy & Kunyi


Christmas surprise

We’re beginning to enter some very interesting times for Bitcoin and crypto so I’m bringing back the Market Sentiment (Example of what it will look like at the end of this letter).

It will be included once a week with the free Weekly Bulletin.

I need your help deciding

I’m contemplating whether or not I should send it out daily to subscribers (I’m thinking 5 times a week, usually before noon EST time).

This would be in addition to the regular letters.

If you’re a subscriber and would like to start receiving the Market Sentiment, mention it in our Telegram chat, or feel free to just shoot me a one word email.

If you’re not a subscriber, I’m giving you 50% off our subscription so you can support CoinSheet and receive the Market Sentiment daily. (So it’s only $5/m)

It won’t be $5/m for much longer.

Subscribe now


Market Sentiment

Technicals


Bitcoin (Daily Overview)

Didn’t quite make it to the 50-SMA, but we did have a rejection.


Bitcoin (4h Volume)

(We’ll highlight any price/volume divergences we see)


Bitcoin (4h Oscillators)


Bitcoin (4h Support/Resistance Levels)


Bitcoin (Macro Overview)

Below are the 3 most common scenarios I’ve seen being discussed for a Bitcoin bottom.

  • Option 1: Fractals analysis bottom (2,300 - 2,600)

  • Option 2: Fib extension bottom (1,700 - 1,900)

  • Option 3: Retest support of 2017 rally bottom (900 - 1,200)

Weekly Bulletin (Dec 23, 2018)

CoinSheet #235

Great perils have this beauty that they bring to light the fraternity of strangers.

— Victor Hugo


Weekly Bulletin

Noticed some narrative crafting this week.

It’s along the theme of “Wall Street is leaving Bitcoin.




This narrative is stupid

This narrative is stupid because Wall Street isn’t here yet.

Folks on Wall Street make money by finding some sort of edge.

Sometimes they have better fundamental analysis.
Sometimes they have better high frequency algorithms.
Sometimes they’re quicker with event-driven plays.
Sometimes they have really good arbitrage model, etc…

How they don’t make money is by buying and holding Bitcoin (because it’s kinda hard being a hedge fund manager and telling your LPs that you’re going to buy some Bitcoin and just chillax for a few years).

Here’s an excerpt from a blog by Jack Liu.

In essence, Wall Street will be there when Bitcoin is big enough for them to take their cut or 'edge’ on the daily trading volumes. They will be there to provide liquidity and offer various investment vehicles. They are not going to be a pawn in the Bitcoin enthusiasts’ plan - as a source of significant speculative capital to pump Bitcoin up another 10x. 


Facebook to develop its own stablecoin?

It was reported a few days ago that Facebook is looking to develop its own stablecoin for money transfers.

It appears to be a stablecoin for remittance payments to be used in India via WhatsApp.

The keywords here are “looking to develop.

Which means this project is still in the planning stage, and might not even happen.

Vijay Boyapati made a good Twitter thread back in October discussing the potential entry of Facebook into the space and whether it’s a threat to bitcoin.

Let’s take a look:

Vijay Boyapati@real_vijay3/ But what is Facebook going to launch? I see three main possibilities and I want to consider whether each of them (A, B, C) pose a direct threat to #Bitcoin and what resources and comparative advantages Facebook might bring to bear in the cryptocurrency market.
Vijay Boyapati@real_vijay4/ A: FB launches a payment rail that allows their users to transfer digital currencies between each other, or perhaps allows merchants to accept them for payment. Such a service would directly compete with Square or Coinbase's merchant services.
Vijay Boyapati@real_vijay5/ The comparative advantage Facebook has if it pursued path A is its dominance in the messenger market (FB messenger & Whatsapp). There is a tremendous synergy between messaging and payments as can be witnessed by the success of WeChat Pay in China. https://t.co/1eqiXv8vjQ
Vijay Boyapati@real_vijay6/ Path A would be no threat to Bitcoin, however, because Bitcoin is nascent store of value, not a payment system. It is akin to how Visa and Amex do not compete with gold (gold, btw, has a much larger market cap than Visa and it only represents a fraction of the SoV market)
Vijay Boyapati@real_vijay7/ B. Facebook launches their own digital currency over which they maintain substantial control. An example might be something similar to XRP (which Ripple controls) or EOS.
Vijay Boyapati@real_vijay8/ Facebook could increase demand for such a currency by using the revenue stream they generate per user which they could issue as a dividend to holders of these tokens (or perhaps by buying up supply of the tokens and destroying them, as Binance does with BNB).
Vijay Boyapati@real_vijay9/ Path B, again, does not compete directly with Bitcoin because Bitcoin is a *non sovereign* currency that has no centralized control. A Facebook controlled currency would still require trust of Facebook itself.
Vijay Boyapati@real_vijay10/ FB has shown a worrying tendency to censor users and if it were to build its own currency it would need to comply with monetary regulations in all the jurisdictions in which the coin was used (i.e., everywhere). This would substantially increase their proclivity to censor.
Vijay Boyapati@real_vijay11/ C Facebook launches a currency over which they do NOT have control, but provides the source code to birth the currency and a means for distributing it. The major advantage FB has is their massive identity database (over 2 billion people).
Vijay Boyapati@real_vijay12/ Following path C, Facebook could undertake an airdrop far larger than anything anyone has ever done before. It could achieve a distribution of its token (FBCoin) across billions of people (BTC ownership in comparison is in the order of tens of millions of people).
Vijay Boyapati@real_vijay13/ Path C is by far the biggest threat to Bitcoin, if Facebook were to pursue it. However, distribution is not an overwhelming advantage. People who receive something for nothing are highly unlikely to value it; if FBCoin has any value at all most people are likely to dump it.
Vijay Boyapati@real_vijay14/ This is similar to the fact that early users of Bitcoin who obtained it cheaply and did not appreciate its underlying value dumped it:

Vijay Boyapati@real_vijay

2/ Consider, for example, this guy (and please don't be mean to him, most people were like this): https://t.co/7IAaA6orLS
Vijay Boyapati@real_vijay15/ Furthermore, the main attributes that would drive demand for FBCoin vs Bitcoin would be censorship resistance and monetary policy. Bitcoin already has the best monetary policy possible for a SoV (a strictly limited supply) and it has shown itself resistant to attack.
Vijay Boyapati@real_vijay16/ FBCoin, as the arriviste, would have to prove that it was superior to BTC along the important attributes that give BTC its value. Without a strong ethos of censorship resistance and sound money (definitely not present in Facebook's corporate culture) this threat is unlikely.

You can read my general thought’s on centralized organizations that accumulate substantial chunks of your personal data in CoinSheet #232 (The Internet identity crisis).

I’m interested in changing the way we think about money. I’m interested in open and borderless environments. I’m interested in open public blockchains that are about decentralizing trust.

Bitcoin is a currency that’s borderless, neutral, censorship resistant, open to all participants and is a trusted network despite having a lack of central governance.

I don’t have much faith in a Facebook-coin, Amazon-coin, or Google-coin because these companies have incentives that contradict with what I think we should be building.

I’m sure we’ll see something like a Facebook-coin in the future. And it will probably be some sort of payment service that competes with Square, Coinbase, Visa, Mastercard, Paypal, etc…

I’m just not sure I’ll care.


Market Sentiment

Bitcoin

I had a few questions asked in the Telegram chat about how folks are coming up with these “bottom” predictions. I thought it would be useful to share some thoughts here.

Below are the 3 most common scenarios I’ve seen being discussed.

  • Option 1: Fractals analysis bottom (2,300 - 2,600)

  • Option 2: Fib extension bottom (1,700 - 1,900)

  • Option 3: Retest support of 2017 rally bottom (900 - 1,200)


I don’t have a concrete opinion yet. I’m not that omniscient so I’m taking it one data point at a time.

I’m currently waiting to see how the daily 50-SMA holds up. My hunch is that we're going to see a rejection of the daily 50-SMA in ~48 hours or so.

The general consensus seems to be that if Bakkt’s futures launch, we will see some strong bullish price action for a few weeks leading up to the date of the VanEck ETF decision.

Of course, a disapproval of VanEck’s bitcoin ETF will probably crash Bitcoin prices 30% - 50%.

This is why I’m hesitant about calling a bottom until we know what’s going on with the ETF.

Last time the ETF was rejected, price dropped ~35%.


Recommended Readings

Four Crypto Gospels

Su Zhu writes about regulatory clarity.

What do people mean when they say that regulatory clarity will usher in a bull market?

You can read the article here.


If you think something important happened last week and we missed it, let us know!

Continue the discussion in our Telegram group.

That’s all for now.

Have a great week folks!

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