According to this article: https://www.investopedia.com/articles/stocks/10/5-steps-of-a-bubble.asp, there are 5 steps going to a bubble:

1. Displacement 2. Boom 3. Euphoria 4. Proffit taking 5. Panic

I think we are in step no. 2 Boom, as the global MCAP is not even in the trillions. Also, the mainstream adoption is still in its infancy (1% or so), but the idea is that we need to stay alert about the first signs of a bubble burst.

In which step do you think that we are in now?
What do you think that those first signs will it be?
What contingency plan would you implement?

Thanks

News follows nation’s clampdown on cryptocurrencies as exchanges are raided over alleged tax evasion and fears of gambling addiction

The value of bitcoin plunged 13.5% in the early hours of Thursday after news hit that South Korea is planning to ban cryptocurrency trading.

News of the ban follows the raiding of local cryptocurrency exchanges by police and tax authorities over alleged tax evasion, as one of the key nations driving the demand for bitcoin and other virtual currencies attempts a clampdown.

“There are great concerns regarding virtual currencies and [the] justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” justice minister Park Sang-ki said.

The news sent bitcoin prices tumbling $2,000 from midnight UK time from a high of $14,890, according to data from Coinbase, before beginning to recover in the early hours of the morning.

In South Korea, where bitcoin trades at around a 30% premium compared to other countries, the local price plunged as much as 21% after the minister’s comments.

Once a bill is drafted, legislation for an outright ban of virtual coin trading within South Korea will require a majority vote of the total 297 members of the National Assembly, a process that could take months or even years.

Once enforced, South Korea’s ban “will make trading difficult here, but not impossible,” said Mun Chong-hyun, chief analyst at EST Security.

“Keen traders, especially hackers, will find it tough to cash out their gains from virtual coin investments in Korea but they can go overseas, for example Japan,” Mun said.

There are more than a dozen cryptocurrency exchanges in South Korea, according to the Korea Blockchain Industry Association. Bitcoin’s 1,500% surge since January 2017 has spurred huge demand from many demographics, from college students to housewives, stoking worries of a growing gambling addiction in the country.

By Thursday afternoon, more than 55,000 South Koreans had signed a petition asking the presidential Blue House to stop the crackdown on the virtual currency, bringing the government website to a halt.

The South Korean-prompted market fluctuation came a day after billionaire investor Warren Buffett said he would never invest in Bitcoin or other cryptocurrencies, and predicted the wildly popular assets are in for a fall.

But many do not share Buffet’s scepticism, with companies such as Kodak rocketing in value by launching new cryptocurrencies and some simply by putting the word blockchain in their name.

https://www.theguardian.com/technology/2018/jan/11/bitcoin-drops-value-south-korea-trading-ban-cryptocurrencies-tax-gambling

Say cryptocurrencies take off and people hold more of their savings in crypto instead of bank deposits. Currently everyone's savings is in bank accounts which is being lent out to businesses and hence stimulating the economy. What is going to happen if bank deposits drastically decrease?

On the one hand, maybe it will not have much effect on the economy because since lending will become tighter, businesses will need to justify the loans more (vs. if there is easy access to money) and will create stronger proposals. On the other hand, could it have a detrimental effect on the economy?

Hello Guys,

I recently just thought of an idea. I want to create a group which thousands of cryptocurrency investors. All of our money combined may equal a million or more. With all this money we can invest at the same time causing a noticeable increase or decrease in prices. If we all buy one at a time the prices will slowly go up causing others to join us. Once we all bought we wait for the price to reach its peak and all sell at once. We could make a lot of profit off of this because we could then predict the market more accurately.

Hedge fund

A hedge fund is an investment fund that pools capital from accredited individuals or institutional investors and invests in a variety of assets, often with complex portfolio-construction and risk-management techniques.[1] It is administered by a professional investment management firm, and often structured as a limited partnership, limited liability company, or similar vehicle.[2][3] Hedge funds are generally distinct from mutual funds, as their use of leverage is not capped by regulators, and distinct from private equity funds, as the majority of hedge funds invest in relatively liquid assets.[4][5

https://en.wikipedia.org/wiki/Hedge_fund]

Next week the popular cryptocurrency event, The North American Bitcoin Conference (TNABC) will be hosted in downtown Miami at the James L Knight Center, January 18-19. However, bitcoin proponents got some unfortunate news this week as the event organizers have announced they have stopped accepting bitcoin payments for conference tickets due to network fees and congestion.

Bitcoin settlement times, and the fee market associated with transactions, have become a hot topic these days as on-chain fees have risen to $30-60 per transaction. These issues have made it extremely difficult for businesses to operate, and many merchants have stopped accepting bitcoin for services and goods altogether. Just recently the tech giant Microsoft announced temporarily removing the “redeem bitcoin” button from the account services payment option. Now this week, due to the same related issues with the Bitcoin network, TNABC organizers have ceased accepting bitcoin payments for tickets. 

“Due to network congestion and manual processing, we have closed ticket payments using Cryptocurrencies — Hopefully, next year there will be more unity in the community about scaling and global adoption becomes reality,” explains the TNABC ticketing page.

Bitcoin Blockchain Settlement Fees Exceed $30 USD At Certain Times of the Day

Earlier this morning news.Bitcoin.com spoke with the Keynote Events-TNABC organizer, Moe Levin about the recent announcement concerning ticket purchases. Levin tells us in a conference call that his firm is “scrambling” to get bitcoin cash or a digital asset with cheaper fees integrated into the ticketing system. 

“We have and will always accept cryptocurrencies,” Levin tells us. “Up until fourteen days before the event, we accepted cryptocurrencies and manually processed all transactions which became labour intensive.” 

We wish this was easier, but no ticketing options exist which can handle large volumes of ticket sales, and transaction fees on the Bitcoin blockchain exceed $30 at certain times of the day.

Getting ticket service operators to integrate alternative cryptocurrencies is a difficult task for an event that’s taking place in two weeks. Keynote Events is trying its hardest to get another digital asset accepted for tickets and its hopeful businesses in the crypto-space can help issues like this in the future.

“Ticket service providers like Eventbrite or others do not have crypto integrations yet. I think within a year companies like Coinpayments, and other payment providers will have better tools, and we will instantly integrate,” Levin tells news.Bitcoin.com.

There have also been a couple initial coin offerings in the last couple months that have tried to tackle ticketing and crypto, and we are optimistic that these will yield good results.

What do you think about TNABC in Miami not being able to offer tickets to the cryptocurrency-centric conference for bitcoin? Let us know what you think about this issue in the comments below.

https://news.bitcoin.com/miami-bitcoin-conference-stops-accepting-bitcoin-due-to-fees-and-congestion/

Many people out there don´t believe that Ethereum can be a long term hodling, they simply use it participate in ICOs, sell and buy bitcoin again with the profit. Do you think that may change this year and ethereum can be seen as the choice to hodl?

As you know, banks can lend more money than they have in deposits, however you currently cannot do that with cryptos. Do you think that it is a decisive advantage or it could be somehow countered?

The number that you're thinking about isn't 3000, it's $10000. That's the number that financial institutions in the United States make you fill out forms to know what you're doing with this money, as they want to know what the hell is going on with that big sum of money being transferred around.

But no, this isn't the case when it comes to ICOs and KYC as you're buying Bitcoin and not transferring that large sum of money to somebody -- you're actually buying something. Though I must say that it's pretty crazy the amount of ICO's are complying with the KYC regulations by the SEC.

What is everybody thinking about the fact that the total market cap of crypto is about 1% of the worldwide stock market cap. I would argue that viewing it that way, it’s hard to avoid talking about a bubble. I would suspect a huge correction at some point. Do you guys share that view or do you think I am missing something?

Employing a concept called proof-of-time, as opposed to proof-of-work, Chia relies on a two-step block authentication method.

The three “weightiest histories” found by full nodes are relayed to “farmers,” not miners. These find “the best proof of space they have,” after which proof-of-time servers begin validation and publish a verified block to the network.

This procedure should take away mining power from a select few miners, as occurs with Bitcoin, Cohen says.

how would bitcoin hold up during a financial crisis.

TANCÍTARO, Mexico — The road to this agricultural town winds through the slums and cartel-controlled territory of Michoacán, ground zero for Mexico’s drug war, before arriving at a sight so strange it can seem like a mirage.

Fifteen-foot stone turrets are staffed by men whose green uniforms belong to no official force. Beyond them, a statue of an avocado bears the inscription “avocado capital of the world.” And beyond the statue is Tancítaro, an island of safety and stability amid the most violent period in Mexico’s history.

Local orchard owners, who export over $1 million in avocados per day, mostly to the United States, underwrite what has effectively become an independent city-state. Self-policing and self-governing, it is a sanctuary from drug cartels as well as from the Mexican state.

But beneath the calm is a town under tightfisted control, enforced by militias accountable only to their paymasters. Drug addiction and suicide are soaring, locals say, as the social contract strains.

Tancítaro represents a quiet but telling trend in Mexico, where a handful of towns and cities are effectively seceding, partly or in whole. These are acts of desperation, revealing the degree to which Mexico’s police and politicians are seen as part of the threat.

Visit three such enclaves — Tancítaro; Monterrey, a rich commercial city; and Ciudad Nezahualcóyotl, just outside the capital — and you will find a pattern. Each is a haven of relative safety amid violence, suggesting that their diagnosis of the problem was correct. But their gains are fragile and have come at significant cost.

They are exceptions that prove the rule: Mexico’s crisis manifests as violence, but it is rooted in the corruption and weakness of the state.

Tancítaro: ‘A Million or Two on Weapons’
It began with an uprising. Townspeople formed militias to eject both the cartel, which effectively controlled much of Michoacán, and the local police, who were seen as complicit. Orchard owners, whose families and businesses faced growing extortion threats, bankrolled the revolt.

This left Tancítaro without police or a government, whose officials had fled. Power accumulated to the militias that controlled the streets and to their backers, an organization of wealthy avocado growers known as the Junta de Sanidad Vegetal, or Plant Health Council. Citizens sometimes call it the Junta.

Nearly four years in, long after other militia-run towns in Michoacán collapsed into violence, the streets remain safe and tidy. But in sweeping away the institutions that enabled crime to flourish, Tancítaro created a system that in many ways resembles cartel control.

Their rule began with a purge. Young men suspected of involvement in the cartel were expelled. Low-level runners or informants, mostly boys, were allowed to stay, though the cartel murdered most in retaliation, a militia commander said.

Though violence eventually cooled, the wartime power structure has remained. The militias now act as the police, as well as guards for the town perimeter and the avocado orchards.

https://www.nytimes.com/2018/01/07/world/americas/mexico-state-corruption.html

In retrospect, the launch of bitcoin futures one month ago has proven to be a modestly disappointing event: while it helped send the price of bitcoin soaring as traders braced for the institutionalization of bitcoin, the world's most popular cryptocurrency has stagnated since the beginning of December when first the Cboe then CME started trading bitcoin futures, trading in a range between $12,000 and $17,000.

And while bitcoin futures markets volumes have been lower than most had expected, the past 4 weeks have provided enough data to observe how volumes and open interest have evolved.

We discussed previously  that Bitcoin futures were off to a slow start in the first week of trading, with volumes of CBOE Bitcoin futures averaging just around $40MM per day, despite intense media hype helping fuel heavy trading when both contracts launched, at least in the first hours of trading.

Since then, volumes spike briefly in the following week coinciding with the launch of the CME futures, with volumes of on both exchanges at relatively similar levels.

Then, as JPM's Nikolaos Panagirtzoglou shows, after a spike in volumes to around $200mn on 22 December, which saw sharp swings in underlying Bitcoin prices, volumes have averaged around $50mn and $60mn per day on the CBOE and CME futures, respectively.



One month after their launch, futures trading volumes remain very modest compared to average Bitcoin trading volumes of around $15bn per day since futures contracts were launched according to coinmarketcap.com data. While open interest in both the CBOE and CME contracts has risen steadily, it too remains rather modest at around $60mn and $70mn, respectively.

Putting futures volumes in context, on Friday, the combined size of the bitcoin-futures markets at the two exchanges was roughly $150 million, measured in terms of the value of outstanding contracts, while the total value of all bitcoins in existence was around $290 billion.



Another factor behind the slow volume growth may be the reluctance of many Wall Street banks to touch bitcoin futures. Firms such as JPMorgan Chase & Co. and Bank of America Merrill Lynch haven’t offered their clients access to bitcoin futures.

Another notable observation: with both volumes and open interest between the two sets of futures contracts converging, it suggests that a large degree of arbitraging of price differentials has taken place between the contracts which initially showed significant divergence. As JPM further notes, when trading in the CBOE futures initially started, a striking feature was the wide basis between the futures contract and the underlying bitcoin prices, which intraday exceeded $2000 or more than 12% of the underlying price at the time. While traders provided numerous explanation for the spread, since then the difference between futures prices on both the CBOE and CME contracts and underlying bitcoin prices has narrowed significantly (chart below), and even turned negative briefly last week.



That covers bitcoin futures volumes, but what about positioning? Well, as many traders expected, it appears that institutions are using the futures product to slowly but surely build a short position in bitcoin. According to the CFTC Commitment of Traders report (available CBOE futures), non-commercial traders held a net short position of around $30mn as of Tuesday Dec 26, or around half of the total open interest.

Separately, the Traders in Financial Futures breakdown provided by the CFTC show that the leveraged funds category that consists largely of hedge funds and various money managers had a short of around $14mn, or around a quarter of the total open interest.

In other words, spec investors have used the futures contracts to establish Bitcoin shorts.

How does this compare with other asset classes typically used as a store of wealth such as gold and silver? As JPMorgan explains, for gold futures, non-commercial investors held as of Dec 26 a net long position of around 30% of open interest, of which the managed money category held around 80%, while in silver futures both the non-commercial and managed money categories were close to zero.



An analysis by the Wall Street Journal  confirms that while hedge funds and other large traders are betting that bitcoin will fall, small investors remain convinced that bitcoin prices will keep on rising.

As the WSJ reports, for traders who hold fewer than 25 of Cboe’s bitcoin futures contracts—a category that likely encompasses many retail investors—bullish bets are 3.6 times more common than bearish ones, according to the latest Commodity Futures Trading Commission data that cover trading through Tuesday.

Meanwhile, the big CBOE players in bitcoin futures tend to be short. For instance, among “other reportables”—large trading firms that don’t necessarily manage money for outside investors—short bets outweighed bullish “long” bets by a factor of 2.6 last week.



The historical data will probably not come as a big surprise: many skeptics on Wall Street have called bitcoin a bubble and would be more apt to bet on its decline. In a sign of how more conservative firms are keeping their distance, the CFTC data show near-zero trading in Cboe’s bitcoin futures by banks and asset managers.


And sure enough, presenting JPM's data in a slightly different context, COT data shows that hedge funds and other money managers had placed almost 40% more short bets than long bets last week.

Curiously, it is worth noting that that represented a less bearish outlook than they had in late December, when such funds had more than four times as many short bets as long bets.

To be sure, shorting bitcoin futures doesn’t necessarily mean a trader expects bitcoin to crash. In a natural hedge, a cryptocurrency trading firm with significant holdings of bitcoin might go short to hedge those inventories against a price fall. That would make the firm indifferent as to whether bitcoin goes up or down.


With the CFTC data, “you’re not seeing the full picture,” said James Koutoulas, chief executive of hedge-fund firm Typhon Capital Management, which trades futures in bitcoin as well as commodities. Typhon has swung back and forth, being long and short bitcoin futures at various times, Mr. Koutoulas said.

Of course, it's not just bitcoin.

As JPM writes, any given cryptocurrency faces competition from other cryptocurrencies, posing risks to their individual valuations. Indeed, the market capitalisation of Bitcoin has risen by around $100bn to around $270bn since late November, while other cryptocurrencies have seen a significant increase in market cap from around $130bn to nearly $500bn currently.



Other cryptocurrencies - mostly ethereum and ripple - have benefited from the increased interest in Bitcoin amid the listing of exchange traded futures, as well as the sharp rise in Bitcoin average transaction costs from around $6 per transaction in early December to nearly $60 per transaction on Dec 22, before settling in a $25-$30 range in recent days.



By contrast, average transaction fees in Ethereum reached a high of $1.50 in early December and were around $1 on Jan 4, while average transaction fees in Ripple measure a few cents according to bitinfocharts.com. The one-third share of Bitcoin of the total cryptocurrency market cap of around $770bn represents a new low. In contrast, the market of $770bn for the total cryptocurrency market represents a new high.

* * *

And while we await futures contracts to be announced on other cryptos, most likely ethereum and ripple next, events which we believe will be catalysts for substantial price upside in both cryptocurrencies, the question for bitcoin is who will be right: institutions, who are short, or retail investors (especially those in Japan and South Korea) who remain fervently long. If the past 7 years - in which retail has consistently trounced "smart money" returns are any indication, bitcoin is about to soar as yet another major short squeeze develops in the coming weeks and months.

https://www.zerohedge.com/news/2018-01-07/bitcoin-futures-traders-are-quietly-building-short-position

Hi,
How to analyze a graph in terms of technical analysis?
What tools / strategies do you use?

Thanks!

Merrill Lynch bans clients from investing in Silbert bitcoin fund

NEW YORK (Reuters) - Bank of America Merrill Lynch banned clients from investing in one of bitcoin mogul Barry Silbert’s top funds last month, according to a memo seen by Reuters.

As of Dec. 8, the Wall Street brokerage stopped approving new orders for the Bitcoin Investment Trust due to concerns about the “suitability and eligibility standards of this product,” according to the memo sent to roughly 17,000 brokers at Merrill Lynch and Merrill Edge, a unit for clients who manage their own trades.

Bitcoin Investment Trust is run by Grayscale Investments, which is led by Silbert. A former Wall Street investment banker and prominent supporter of cryptocurrencies, Silbert’s role in the world of digital coins was the subject of a Reuters special report last month.

“We look forward to speaking with Merrill Lynch and addressing any questions or concerns they have about the Bitcoin Investment Trust,” Silbert told Reuters in an email. “We are unaware of any similar policies at other brokerage firms.”

Wall Street has taken a cautious approach to digital currencies, which are unregulated and have very volatile trading patterns. Last month, Chicago-based derivatives exchanges Cboe Global Markets and the CME Group launched bitcoin futures, but some banks and brokerages remain reluctant to trade them.

Millions of investors have piled into bitcoin and other digital currencies prompting warnings of a bubble from the likes of JPMorgan Chase Chief Executive Jamie Dimon, who has likened bitcoin to a “fraud” that will eventually blow up.

Shares in Bitcoin Investment Trust jumped over 1,550 percent last year, more than the 1,300 percent plus gain of bitcoin. The fund was created for investors seeking exposure to bitcoin and trades “over the counter” in less formal exchanges than those used for typical stocks.

Before last month’s ban, clients of Merrill Lynch’s brokerage and Merrill Edge were able to buy stakes in Bitcoin Investment Trust, which trade at a fraction of a bitcoin. The digital currency is currently valued at around $15,000.

Merrill Lynch brokerage clients with historic positions in the Bitcoin Investment Trust fund can maintain them, but clients with fee-based advisory accounts have to sell their holdings, according to the memo.

https://www.reuters.com/article/us-bank-of-america-merrill-lynch-bitcoin/merrill-lynch-bans-clients-from-investing-in-silbert-bitcoin-fund-idUSKBN1ET02N