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‘The cryptoruble is the future’ says Russian policymaker

Anatoly Aksakov, the head of the Russian parliament’s Financial Markets committee, had some good news for blockchain fans in Russia. According to Aksakov, there are “no anti-blockchain voices” in the government and he believes that a digital ruble pilot will start in 2021.

During a panel held on October 21 as part of the Blockchain Life 2021 conference, the policymaker said that the central bank had already started consultations on the feasibility of launching ‘cryptoruble’ pilots. He considers it “the future of all our money circulation.”

Local media reports have pointed out the possibility of seeing a digital ruble in circulation in late 2021, which could be used on DLT platforms, and businesses could be able to leverage it to track goods and payments.

Aksakov also told the approximate 3,000 people in attendance:

“I know that a large number of serious businesspeople are preparing to issue digital assets. The Central Bank has taken a big step forward by announcing that it is starting consultations on the matter of digital assets.”

As Cointelegraph reported on October 16, at least five Russian banks are interested in taking part in Russia’s non-public digital ruble pilots in the first half of 2021.

The list of banks includes state-backed Promsvyazbank, the Credit Bank of Moscow, commercial bank Zenit, mortgage bank Dom.RF, and Crimea’s Russian National Commercial Bank.

However, Aksakov clarified that the Russian government draws a clear distinction between blockchain and cryptocurrency. For blockchain, he calls it the “technology of the future,” but for crypto, he commented:

“There are currently two equal positions on cryptocurrencies. The main opposition to cryptocurrencies is coming from the high-risk it poses for financial institutions, ordinary people. This side is trying to foresee all the risks involved and possible reactions to them.”

Here’s what traders expect after Bitcoin price rallied to $13,217

On Oct. 21 Bitcoin (BTC) price overtook the $13K mark to reach $13,217 after traders took out key resistance levels at $11,900, $12,000, and $12,500 in the last 48-hours. While there are various technical reasons behind the abrupt upsurge, there are three key factors buoying the rally.

The three catalysts are a favorable technical structure, PayPal enabling cryptocurrency purchases, and Bitcoin’s rising dominance rate.

PayPal’s crypto announcement adds to BTC’s momentum

Earlier today, PayPal officially announced that it is allowing users to buy and sell cryptocurrencies, including Bitcoin.

Throughout the past year, speculations on PayPal’s potential cryptocurrency integration continuously intensified after various reports claimed the company was working on it.

In an official statement, Dan Schulman, the president and CEO of PayPal, confirmed the cryptocurrency integration. He wrote:

“We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”

Following PayPal’s statement, the price of Bitcoin immediately rose from around $12,300 to as high as $12,900.

Sui Chung, the CEO of CF Benchmarks, a subsidiary of Kraken exchange, told Cointelegraph that bullish sentiment is likely returning to the crypto market. According to Chung:

“Bitcoin passing $13,000 today, a 16-month high, demonstrates that this trend is only picking up pace. That PayPal, a household name, has received a conditional BitLicense is likely propelling bullish sentiment. Today is significant as a signpost for further price appreciation in the future… the point by which mainstream media and ‘mom and pop’ retail investors may soon start to show interest in the asset, as they did in late 2017.”

Bitcoin dominance is rising

In the past week, Bitcoin has outperformed alternative cryptocurrencies, decentralized finance (DeFi) tokens, and Ethereum.

The dominance of Bitcoin. Source: Josh Olszewicz

Josh Olszewicz, a cryptocurrency technical analyst, said the dominance of BTC is above a key moving average. Technically, this suggests that Bitcoin could continue to outperform altcoins in the near term. Olszewicz said:

“BTC dominance back above the 200-day moving average for the first time since May, king corn is back.”

BTC shows a bullish high time frame structure

Throughout October, traders have pinpointed the favorable technical structure of Bitcoin on the higher time frames.

Bitcoin’s weekly chart, in particular, has shown a breakout and surpassed the previous local top achieved in August.

BTC/USD weekly chart. Source: TradingView.com

Two months ago, BTC topped out at $12,468 on Binance and proceeded to fall below $10,000. As mentioned earlier, today’s high volume surge took the price to a new 2020 high at $13,217, which is well above the previous local top.

In the short-term, traders anticipate that the market will cool down after such a strong rally. Flood, a pseudonymous crypto futures trader, said:

“I think we are quite overextended on $BTC for now. I’d imagine seeing a bit of a retrace where we try to find support in the 12.2-12k range. Not saying we can’t run further, but hedged a bit here.”

PayPal to offer crypto payments starting in 2021

PayPal announced on Wednesday its entry into the cryptocurrency market, according to multiple reports.

PayPal customers will be able to use cryptocurrencies to shop at any merchant in its large network starting from early 2021, the company said.

The payments will be settled through fiat currencies, similar to many existing crypto merchant solutions like BitPay. This means that the merchants will be receiving fiat, as PayPal will take care of the conversion. 

The coins initially supported will include Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC), the company said. The payments giant partnered with Paxos to deliver the service, and it obtained a conditional cryptocurrency license from the New York State Department of Financial Services, commonly known as the BitLicense.

In addition to cryptocurrency payments, PayPal users will also be able to purchase crypto directly through the app. PayPal will thus feature a cryptocurrency wallet, letting users buy, sell and hold crypto via the PayPal apps.

PayPal is one of the largest global payment providers, with 346 million active accounts and $222 billion in volume processed in Q2 2020. It was one of the initial founding members of the Libra association, though it subsequently dropped out after regulatory pressure mounted for the project.

Related: Bitcoin breaks above $12.3K after PayPal confirms Venmo to become BTC wallet

Rumors of a planned crypto integration surfaced earlier this year. The company is nevertheless often criticized in crypto circles due to perceived unfair practices and the amount of control it has within its own network.

Bitcoin average transaction value increases 500% since July

The average value of Bitcoin (BTC) transactions has increased dramatically since July this year. 

The average transaction value was sitting at approximately $25,000 per transaction four months ago, but posted a yearly high on Oct 20 at $151,000 per transfer — representing an increase of more than 500%.

Average Bitcoin transaction value. Source: BitInfoCharts

The latest spike, as shown by crypto analytics platform BitInfoCharts’ data, saw the average value of a transaction increase almost $50,000, up from $105,000, in the last 48 hours. This surge in transaction value comes shortly after Bitcoin’s trading dominance rose to levels not seen since 2017.

The $151,000 average value is 190 times more than Ethereum’s average transaction value of $793, suggesting a significantly greater institutional presence in the Bitcoin markets.

However, the number of daily Ethereum transactions increased by 30% amid the DeFi boom in August, reaching a 2-year high of 1.29 million on Aug 10. Over the same period, Bitcoin transactions consistently hovered between 300k and 350k, suggesting the Ethereum ecosystem was the primary magnet for new crypto users.

The number of Bitcoin active addresses also showed no significant changes, fluctuating between 650k and 970K over the last 4 months.

Number of daily Bitcoin transactions. Source: BitInfoCharts

Accumulation figures show that institutional investors are starting to take notice as large investment firms, like Grayscale and Microstrategy, increased their accumulation of large amounts of Bitcoin and other cryptocurrencies over the last few months.

By the end of September, Grayscale controlled at least 449,900 BTC or 2.4% of the current supply of Bitcoin, and Microstrategy owned 38,250 BTC.

Two weeks later, Jack Dorsey’s Square purchased 4,709 BTC (approximately $50 million) in Bitcoin.

Bitcoin price nears final hurdle at $12K before bull market euphoria

The price of Bitcoin (BTC) had to hold the crucial support level between $11,100-11,300, and it did. After this support test, the price of BTC continued to surge upward on Oct. 20, reaching the crucial resistance area between $11,900-12,200.

This upward move came along with weakness in the dollar, as the U.S. Dollar Currency Index (DXY) dropped substantially. A correlation that’s been effective throughout 2020 already. 

However, other cryptocurrencies haven’t been following in Bitcoin’s footsteps as altcoins are selling off heavily. Is the attention shifting back to Bitcoin? 

The weekly level at $12,000 is the crucial level to break 

XBT/USD 1-week chart

XBT/USD 1-week chart. Source: TradingView

The weekly is showing one massive crucial level that’s been a hurdle for Bitcoin in the previous years. It’s the resistance area between $11,700-12,300. If that level is broken to the upside, a strong move toward $17,000 is likely to occur.

It would also mean the start of the new cycle with more and more arguments to be made at the beginning of a new bull cycle. 

However, it doesn’t mean that a breakthrough is imminent as the construction is ripe for further range-bound movements. The main argument for a breakout upward would be the weakness of the U.S. Dollar.

The U.S. Dollar has been showing weakness since the massive crash in March 2020, causing the prices of gold, silver and Bitcoin to surge heavily.

DXY Index on the tipping point of further downwards momentum

U.S. Dollar Currency Index 1-day chart

U.S. Dollar Currency Index 1-day chart. Source: TradingView

The DXY is a great indicator to derive momentum on other “safe haven” assets like gold, silver and Bitcoin. Of course, when there’s a definite crisis occurring on the markets, the run to cash and the dollar is expected. 

However, in the recent period, there’s been a run out of the dollar. One of the primary arguments for this DXY weakening is the infinite QE provided by the FED, announcing trillions in new stimulus packages. 

As the dollar has been showing weakness, Bitcoin continued to climb since the March crash. Similarly, the U.S. Dollar Currency Index rejected at 94.64 points in recent days and continued its freefall. 

The last support level to hold is the 93 points area. If that is lost, new lows will be imminent for the U.S. Dollar currency index, which would only add momentum for Bitcoin. 

Gold has been doing extremely well in times of USD uncertainty

Gold vs. DXY Index 1-week chart

Gold vs. DXY Index 1-week chart. Source: TradingView

As the chart shows, the dollar has been showing weakness ever since the Dot.com bubble popped and started to retrace heavily.

During this period, the strength of gold intensified and the price surged 600% amid the USD’s weakness. In the first part of the crisis (2000, which also saw a run toward cash), gold dropped 30%, but then its strength increased after this dropdown. 

Such a correlation has also been seen in Bitcoin recently as BTC has been moving in lockstep with gold in recent months. A conclusion can be drawn that investors seek safe assets as a hedge against a weakening U.S. Dollar.

What about altcoins?

BTC Dominance 1-day chart

BTC Dominance 1-day chart. Source: TradingView

Altcoins are getting crushed by the recent moves in Bitcoin. Whether BTC goes up or down, it doesn’t matter. Altcoins are dropping like stones.

That’s not entirely a strong signal for the markets as it indicates that the focus is around Bitcoin. The moment that Bitcoin goes up while altcoins are getting sold off means that there’s money flowing from altcoins into Bitcoin. If that occurs and Bitcoin makes a small move, it doesn’t show much strength. 

In that regard, markets move in cycles where the fourth quarter of the year is typically a terrible quarter for altcoin investors. History shows that the dominance chart of Bitcoin moving up in that quarter and topping out in December.

This chart aligns with the Ether (ETH) chart against Bitcoin, as this one frequently bottoms out in the December period. 

Moving forward, It’s very likely to see Bitcoin’s market dominance surge upward from here, with altcoins selling off further. Critical indicators for the markets in the short term are the strength of Ether, and thus altcoins, against Bitcoin and the overall movements of the U.S. Dollar Currency Index. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Ethereum 2.0 deposit contract to launch this week: ConsenSys dev

ConsenSys developer Ben Edgington has published an update that predicts the ETH 2.0 beacon chain genesis will happen within the next six to eight weeks.

In a post announcing the launch of ‘V1.0.0 release candidate 0’, Edgington revealed the protocol’s deposit contract address feature should be announced this week. The deposit contract allows ETH to be sent between Ethereum and ETH 2.0, and is one of the few remaining updates needed to facilitate the roll-out of ETH 2.0 phase 0:

“As I understand it, we are good to go: deposit contract in the next few days; beacon chain genesis 6-8 weeks later.”

However, the PegaSys engineering group developer emphasized his prediction “is not an official statement.”

To complete phase 0’s launch, 500,000 Ether will need to be locked for staking after the beacon chain goes live, followed by a week-long genesis delay to give the network time to prepare.

According to Edgington, the new release also strengthens Ethereum against denial-of-service attacks, implements the genesis delay and a temporary quadrupling of penalty fees.

Penalties were increased in response to the “slightly bumpy” genesis “dress rehearsal” on the Spadina test network at the end of September, and what is now “very low participation” on the Medalla testnet.

The developer described the fee hike as “a temporary measure to give stakers more confidence in case we hit trouble.” Despite low testnet participation, Edgington firmly believes the network is ready to transition into phase 0:

“I think people are getting a bit bored of testnests. It’s time to move on […] we need to launch Phase 0 asap.”

Edgington’s post comes after a successful trial on the Zinken testnet last week, which Set Protocol’s Anthony Sassano described as the “second last dress rehearsal testnet before we finally set an ETH 2 phase 0 mainnet launch date.”

Better to get it right than to be first with CBDC, says US Fed chair

The United States will not be issuing a digital dollar until the Federal Reserve resolves all questions around a potential central bank digital currency, or CBDC, according to the Fed’s chairman, Jerome Powell.

Powell claimed that he is not worried about other countries having a first-mover advantage when it comes to issuing CBDCs.

Speaking at a Monday panel on cross-border payments hosted by the International Monetary Fund, Powell said:

“We have not made a decision to issue a CBDC, and we think there’s a great deal of work yet to be done. […] In fact, I actually do think that CBDC is one of those issues where it’s more important for the United States to get it right than it is to be first.”

Powell elaborated that “getting it right” means that the U.S. is not only looking at the potential benefits of a CBDC but also the potential risks — particularly given the fact that the U.S. dollar is the world’s reserve currency.

The official noted that countries around the globe will have their own motivations for issuing a CBDC. He contended that the main focus for the U.S. would be determining “whether and how a CBDC could improve an already safe and active dynamic domestic payment system.” Powell continued:

“Unlike some jurisdictions, here in the United States we continue to see strong demand for cash. Moreover, we have robust and mature financial and banking sectors, and we have a highly banked population, so that many, although not all, already have access to the electronic payment system.”

The Fed chair emphasized that the bank will not make a decision on issuing the digital dollar until it resolves CBDC-associated risks involving cyber attacks, financial stability, privacy and security. He stated:

“In addition to assessing the benefits, there are also some quite difficult policy and operational questions. […] Just to mention a few, I would mention the need to protect a CBDC from cyber attacks and fraud; the question of how a CBDC would affect monetary policy and financial stability; and also, how could CBDC prevent illicit activity while also preserving user privacy and security.”

Powell’s remarks come amid a number of global jurisdictions actively exploring and piloting CBDCs. Countries such as Russia and Japan are among the latest countries to jump on the CBDC bandwagon, while jurisdictions such as China and Sweden began testing their forthcoming digital currencies in 2020.

Despite the technology’s growing popularity across the globe, citizens in the U.S. are also skeptical about the idea of the digital dollar. According to a recent survey, more than 50% of Americans are opposed to the U.S. Fed issuing such an asset. In late September, the Federal Reserve Bank of Cleveland revealed details of the Fed’s ongoing research into a potential digital dollar.

Top 5 cryptocurrencies to watch this week: BTC, XLM, CRO, BNB, LTC

Data from Skew shows Bitcoin’s (BTC) spot volume on LMAX Digital, an exchange that mainly caters to institutions, has overtaken retail-oriented exchanges. This signals that institutional investors could be building up positions as they expect the price to move higher in the future.

Along with spot purchases, institutional investors’ participation in the derivatives market has also increased. Data from Arcane Research shows that a record number of investors are taking delivery of Bitcoin from the Bakkt Bitcoin exchange.

Another metric that can be useful for traders is volatility. Bitcoin options data shows that the implied volatility of at the money options has dropped to a 16-month low. This suggests that traders do not expect a large down move in the near future, hence, they are not willing to pay a greater amount to hedge their positions.

Although data suggests that institutional investors are positioned for an upside move, retail traders should keep a close watch on the price action and take large bets only after a trending move starts.

Let’s study the charts of the top-5 cryptocurrencies that could start a trending move next week.

BTC/USD

Bitcoin (BTC) has been holding above the 20-day exponential moving average ($11,137) for the past few days. The buyers purchased the dip to the $11,165 support on Oct. 20, which suggests accumulation at lower levels.

BTC/USD daily chart. Source: TradingView

If the bulls can push the price above the downtrend line, the BTC/USD pair could retest the $11,719 resistance. A breakout of this level may resume the up-move with the first target at $12,000 and then $12,460.

Both the short-term and the long-term moving averages are sloping up and the relative strength index is above 61. This suggests that the bulls are in control.

This positive view will be invalidated if the pair turns down from the downtrend line and plummets below the 20-day EMA. Such a move could pull the price down to the next support at $10,500.

BTC/USD 4-hour chart. Source: TradingView

The 4-hour chart has formed a bearish descending triangle pattern that will complete on a breakdown and close (UTC time) below $11,165. This bearish setup has a pattern target of $10,611.

However, if the bulls can propel the price above the downtrend line, the bearish pattern will be invalidated. Such a move could attract short covering by the bears, resulting in a rally to $12,000.

The gradually upsloping 20-EMA and the RSI in the positive territory suggests a minor advantage to the bulls.

XLM/USD

Stellar Lumens (XLM) broke below the 200-day simple moving average ($0.077) on Sep. 21 but the bears could not capitalize on this move and sink the price below $0.066841. This shows buying by the bulls at lower levels.

XLM/USD daily chart. Source: TradingView

The XLM/USD pair has formed an ascending channel and the bulls are attempting to push the price above the overhead resistance at $0.084584. Although the bears defended the overhead resistance on Oct. 17, the bulls have not given up much ground.

If the pair stays above the moving averages, the buyers will make one more attempt to drive the price above $0.084584. If they succeed, the pair could start a new uptrend that may rally to $0.10.

The gradually upsloping moving averages and the RSI in the positive zone suggest that the bulls have the upper hand.

XLM/USD 4-hour chart. Source: TradingView

The pair had broken above the channel but the bulls could not clear the hurdle at $0.084584. However, on the downside, the bears have not been able to drag the price below the 38.2% Fibonacci retracement level of $0.079239.

This suggests that the bulls will again try to thrust the price above the overhead resistance. If they succeed, a rally to $0.091042 will be on the cards.

Contrary to this assumption, if the bears sink the price below the 20-EMA, a drop to $0.076546 is possible. A break below this level could result in a decline to the support line of the channel.

CRO/USD

The descending triangle completed on Oct. 14 when Crypto.com Coin (CRO) plummeted and closed (UTC time) below the $0.144743 support. This bearish setup has a target objective of $0.10607.

CRO/USD daily chart. Source: TradingView

However, the bulls might attempt to defend the 200-day SMA at $0.121. A bounce off this level could retest the breakdown level at $0.144743. In a downtrend, traders sell on rallies to the 20-day EMA ($0.144) as the path of least resistance is to the downside.

Hence, if the CRO/USD pair turns down from the 20-day EMA, it will suggest that the sentiment is bearish. The sellers will then again try to sink the price below the 200-day SMA. If they succeed, the decline could extend to $0.10607.

The 20-day EMA is sloping down and the RSI has plummeted deep into the oversold territory, which suggests that the advantage is with the bears. However, a relief rally cannot be ruled out in the short-term.

CRO/USD 4-hour chart. Source: TradingView

The RSI on the 4-hour chart has also plunged deep into the oversold territory. This suggests panic selling and usually, after such a round of such intense selling, a minor pullback occurs.

Any relief rally is likely to face selling at the 20-EMA as bears will try to consolidate their advantage.

This bearish view will be invalidated if the pair rises and sustains above the breakdown level of $0.144743. Until then, every rally is likely to be viewed as a selling opportunity.

BNB/USD

Binance Coin (BNB) turned down from $31.9798 on Oct. 16 but the bulls purchased the dip to the immediate support at $29.5646. This suggests that the previous resistance level has now flipped to support.

BNB/USD daily chart. Source: TradingView

The upsloping 20-day EMA ($29.06) and the RSI above 61 indicates that bulls have the upper hand. The 200-day SMA ($19.95) has also started to turn up, which suggests that the long-term trend is also tilting in favor of the bulls.

If the buyers can thrust the BNB/USD pair above the $32– $33.3888 resistance zone, the momentum could pick up and a retest of the all-time highs will be on the cards.

Contrary to this assumption, if the bears sink and sustain the pair below the 20-day EMA, it will signal weakness.

BNB/USD 4-hour chart. Source: TradingView

The bears are defending the $31–$32 zone aggressively. The flattened 20-EMA and the RSI just above the midpoint suggests a balance between supply and demand.

This balance will tilt in favor of the bears if they can sink and sustain the price below $29.5646. If this support cracks, a drop to $28 and then to $26 is possible.

Conversely, if the bulls propel the price above the overhead resistance zone, it will signal the resumption of the uptrend.

LTC/USD

Litecoin (LTC) is attempting to form an inverse head and shoulders pattern that will complete on a breakout and close (UTC time) above $51.50. The flat moving averages and the RSI below the midpoint suggest a balance between supply and demand.

LTC/USD daily chart. Source: TradingView

However, the long tails on the candlesticks on Oct. 2 and Oct.16 show that the bulls are buying the dips to the trendline. If the bulls can push the price above the moving averages, the LTC/USD pair could again rise to $51.50.

A breakout and close (UTC time) above this level could start a new uptrend. The pattern target of the reversal setup is $61.50.

This bullish view will be invalidated if the bears sink the pair below the trendline. Such a move could keep the pair range-bound for a few more days.

LTC/USD 4-hour chart. Source: TradingView

The 4-hour chart shows that the rebound off the trendline is struggling to sustain above $47.7845. This suggests that buying dries up at higher levels. The 20-EMA is sloping down and the RSI is in the negative zone.

Therefore, the bears may take one more shot at breaking the trendline support. If they manage to do that, the pair could drop to $42.

Conversely, if the bulls can sustain the price above $47.7845, a move to $50 and then to $51.50 is likely.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Fool’s gold? Peter Schiff’s bank under investigation in tax evasion probe

This morning, millionaire broker and noted Bitcoin skeptic Peter Schiff awoke to find his bank under renewed scrutiny due to an international criminal investigation. 

According to reporting from Australian newspaper The Age and The New York Times, the J5 — a joint task force of tax authorities from major Western governments convened in the wake of the bombshell publication of the Panama Papers — have placed “hundreds” of accounts at Schiff’s Puerto Rico-based Euro Pacific Bank under investigation for tax evasion and other financial crimes. 

The reports detail what appears to be a comically inept organization responsible for harboring the fortunes of a cast of shady businessmen and criminals. Employees hired after a quick Google search screening were tasked with attracting clients such as Simon Antequetil, the noted Australian fraudster and tax avoidance maestro.

The reports also shed light on how Euro Pacific may have tainted public holdings of Schiff’s favorite asset: gold. 

Former Australian Federal Police (AFP) investigator John Chevis discovered in 2017 that West Australian government-owned Perth Mint had a relationship with Euro Pacific. 

“I was very surprised,” Chevis told The Age. “I think there’s a significant risk that some of the gold held within the Perth Mint by customers of the Euro Pacific Bank may be held beneficially for criminals in other parts of the world.”

In an interview with The Age last month, Schiff denied wrongdoing on the part of Euro Pacific, saying the bank “turns down far more accounts than we approve because our compliance is so rigorous”. 

“It’s got nothing to do with reality,” he said of the allegations.

He later stormed out of the interview.

But nestled amid the reports is a key detail which may shed some light on why Schiff has been such a virulent critic of the world’s most popular cryptocurrency, Bitcoin. 

From The Age:

“The bank’s security was also a problem […] at one point, Russians tried to extort the bank for a ransom of 1000 bitcoins, worth millions of dollars.”

While Schiff was criticizing Bitcoin as early as 2013, the attempted extortion scheme might explain why he’s been particularly vocal as of late, most notably in a Twitter spat with Gemini co-founder Tyler Winklevoss.

Schiff has also demonstrated a history of paranoia regarding hacks, especially cryptocurrency-related hacks. In July, Schiff augured that the hack of multiple Twitter accounts by an American teenager might be a “harbinger” for a Bitcoin hack, and in April he tweeted about “the potential for improvements in technology to hack the blockchain and counterfeit Bitcoin.”

Despite Schiff’s concerns over the potential hacking of the Bitcoin blockchain, there is no equivalent in the digital asset world to iron pyrite. Unless we count BSV.

Calm before the storm? Analyst says $20K Bitcoin possible in 3 months

The price of Bitcoin (BTC) has been consolidating within a tight range for several months. If the top cryptocurrency successfully breaks out, Bitazu Capital founding partner Mohit Sorout says a record-high would be imminent.

Since July 2020, Bitcoin has been ranging between $10,200 and $11,800, a 15% range. It has seen subdued volatility for a prolonged period, except for some short instances of a volatility spike.

When Bitcoin stays stable for a long time in a tight price range, a major price movement typically occurs. 

Whether a breakout would occur in the near term or not remains an uncertainty. But if it happens, Sorout says it would take three months for BTC to hit $20,000.

The daily Bitcoin chart with a trendline

The daily Bitcoin chart with a trendline. Source: TradingView.com, Mohit Sorout

Why three months for a Bitcoin all-time high following a breakout?

Based on previous price cycles, Bitcoin tends to move fast after existing a long-range. The pattern historically applied both breakouts and breakdowns.

From May 1 to July 20, Bitcoin ranged between $8,800 to $9,800, stabilizing at around $9,100. After two months of consolidation, it took BTC 12 days to record a 32% rally to $12,123 on Binance.

Considering the tendency of Bitcoin to see large volatility spikes after prolonged consolidation periods, Sorout said:

“Calm before the storm. If $BTC was to break out today, it would most probably reach its previous ATH of $20k within 3 months.”

When asked about the reasoning behind the three-month span, Sorout said it is based on an observation of volatility.

According to Sorout, a price increase towards $20,000 could happen even earlier than three months. He noted:

“An observation based on how violent the rallies are after subdued periods of volatility. Could even be earlier.”

One important variable to pinpoint is the decline in futures open interest compared to previous bull markets. 

Particularly after the U.S. Commodities and Futures Trading Commission or CFTC’s charges against BitMEX, overall futures open interest has dropped. This could lead to a more stable and gradual uptrend for Bitcoin, unlike past bull cycles.

Year-to-date open interest of BitMEX

Year-to-date open interest of BitMEX. Source: btctools.io

Factors that could strengthen BTC’s momentum in Q4 and throughout 2021

A strong narrative around a Bitcoin bull cycle heading into 2021 remains the recent upsurge of institutional demand.

On Oct. 17, Grayscale CEO Barry Silbert said the firm hit record-high assets under management at $6.4 billion. Silbert emphasized that the firm saw “BIG inflows this week.”

Institutions that have been acquiring Bitcoin, like Square and MicroStrategy, said they perceive Bitcoin as a potential treasury asset. If so, that could mean that many institutional investors are accumulating BTC without the intent to sell in the near future.

The S2F model with its latest update

The S2F model with its latest update. Source: PlanB

The price of Bitcoin has been relatively stagnant throughout October despite the positive news around institutional inflows. But stock-to-flow (S2F) creator PlanB said asymmetrical returns are likely to occur over time. He stated:

“Why does #bitcoin price not go up with all this institutional buying? Who is selling? BTC price is exactly where it should be, holding firm above $10K, waiting for that one moment .. asymmetrical returns .. patience!”

Ascending channel Bitcoin price breakout possible despite OKEx scandal

Earlier this week Bitcoin (BTC) price entered a bullish breakout to $11,725 following the previous week’s news that Square purchased $4,709 BTC but since then the price has slumped back into a sideways range. 

Several rejections near $11,500 and the recent news of OKEx halting all withdrawals as its CEO ‘cooperates’ with an investigation being carried out by Chinese authorities is also weighing on investor sentiment and Bitcoin price.

Cryptocurrency daily market performance snapshot. Source: Coin360

The wave of negative news has pulled the majority of altcoin prices back into the red and extinguished the newly found bullish momentum Bitcoin displayed.

The daily time frame signals that losing $11,200 could open the door for the price to retest $11,100, a level which resides in a VPVR gap and would probably give way to a further drop to $10,900.

According to Cointelegraph Micheal van de Poppe, there is:

“Significant support at $11,000 is now a must-hold level to resume the bullish momentum, which may find difficulty clearing current levels as renewed coronavirus lockdowns are spooking investors.”

Van de Poppe suggests that if Bitcoin loses the $11K support there is a possibility of the price falling below $10K to the 200-MA at $9,750 which is near a CME gap.

Although the current price action is disappointing to bulls who want to see a retest of $12K, taking a bird’s-eye view shows that there are multiple factors playing out in Bitcoin’s favor.

The recent BTC allocations by MicroStrategy, Square and Stone Ridge are positive, especially considering the current economic uncertainties that exist as a result of the COVID-19 pandemic.

Furthermore, volumes are surging again at multiple BTC futures exchanges and on Friday Cointelegraph reported that Bakkt Bitcoin exchange reached a new record-high for BTC delivery.

Bitcoin has also largely ignored the majority of negative news over the past two months and held above the $10K level as buyers show consistent interest at purchasing near this level.

Support retests are expected

It’s also worth noting that only about 1.5 weeks have passed since Bitcoin exited a 24-day long compression phase which was followed by the most recent breakout to $11,750.

BTC/USDT daily chart. Source: TradingView

Since the bullish breakout occurred the price has retested the $11,200 level as support but a deeper pullback to the 20-MA to test $11K as support wouldn’t be out of the ordinary. Even a drop to the $10,650 level near the 100-MA would simply be a retest of the descending trendline from the 2020 high at $12,467.

For the short term it seems likely that Bitcoin price will trade in the $11,400-$9,700 area, a range which ideally would be a swing trader’s paradise.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Law Decoded: The rivalry between central banks and global stablecoins, Oct. 9–16

Editor’s note

Blockchain technology has attracted regulatory attention since its inception. The security of the Bitcoin network despite the value of BTC in play has consistently proved the resilience of blockchain technology in maintaining records across a vast range of parties.

However, many countries have determined that Bitcoin doesn’t behave as a currency at all, or at least not a replacement for their own. The nations behind the world’s most-used fiat currencies have in many cases pointed to Bitcoin’s volatility as a critical flaw. They have decided that the rise of stablecoins, especially over the past two years, poses a more clear and present danger.

New stablecoins, pegged to fiat or gold or baskets of currencies, can move value faster and more efficiently than existing monetary systems. Facebook’s announcement of Libra last year was a watershed moment. Monetary authorities quickly saw that Facebook’s user base is far larger than the population of any country. Practically overnight, Libra would conceivably be able to challenge every monterey authority on earth.

Some central banks had already begun work on their own digital currencies, but over the next year the U.S., EU, China, Japan and Great Britain — which issue the five leading currencies in the world — would all have active research into the subject of a CBDC. But while governments are trying to keep up in the race to upgrade their own currency, they remain suspicious of private entities like Facebook challenging them. While this has been going on for some time, the past week saw major flare-ups.

G7 and G20 will make Libra toe the line

The G20’s financial watchdog, the Financial Stability Board, published new guidance warning governments as to the dangers that global stablecoins pose to monetary sovereignty. The guidance comes on the heels of a drafted G7 statement that promised to block stablecoins like Libra from launching until they address all regulatory concerns.

The G7 and G20 both represent their respective number of countries, including the largest economies in the world. That wealth ensures that the countries involved have a stake in maintaining existing monetary norms. However, everyone seems to recognize that money could be so much better than it is right now.

As to concerns, the G20’s guidance rattles off a number of the classics, including anti-money laundering and terrorism financing. The overarching theme is that the key advantages of crypto are also its greatest risks: Cryptocurrencies can cross national boundaries far more freely than most money and reach way more people than existing financial systems. But these announcements are not aimed at crypto writ large. They put stablecoins in general and Libra in particular right in the crosshairs of future action.

If Facebook and the Libra Association want to continue — and they seem determined to — they have a long road ahead. Moreover, it really looks inconceivable that any Libra that boasts the global accessibility that its initial whitepaper promised has any chance whatsoever at hitting the market without being completely defanged. At least, that holds true in the most developed economies of the world.

European Central Bank dodges commitment to a digital euro

The ECB, which issues the euro, has invited the public to comment on the development of a digital euro.

In its announcement, the ECB made clear that it did not intend to replace cash. It also drew a fairly clumsy distinction between any potential digital euro and crypto assets. After pointing to crypto’s legendary volatility as a difference, the announcement turned to stablecoins, saying they they lacked the backing of a central bank. This is called moving the goalpost.

While the invitation to consultation did not many specific claims as to the mechanisms behind a digital euro, the ECB is clearly doing its best to distance its project from stigma associated with crypto. It is, therefore, revealing that the word “blockchain” does not appear in the announcement. It’s obviously under consideration, otherwise the bank would surely point to lack of a blockchain as a real, substantive distinction between crypto and its envisioned euro, but it’s also true that the word blockchain is still subject to a lot of the same stigma and skepticism that drew the ECB to draw distinctions with crypto in the first place.

Nonetheless, the ECB’s breakdown of priorities for a digitized euro is clearly fixated on deciding between privacy, speed, offline utility and security — the classic tradeoffs of crypto.

…with Russia close behind

Not to be outdone, the Central Bank of Russia released a public consultation remarkably similar to the ECB’s, both in its concerns for a digital ruble and in avoiding mention of blockchain technology.

The ruble is not the global currency that the euro is. That was the case even before a collapse in value since 2014, as sanctions and slipping oil prices took their toll on the Russian Federation’s engagement with the global economy.

That said, Russia has been trying to increase ruble usage among countries similarly isolated from the Western-led global economy. It’s no surprise then that the Central Bank of Russia’s announcement for the public consultation does not really dig into issues of money laundering. Which, honestly, could prove good for the prospective trade in a digital ruble.

Further reads

Attorneys for Baker Hostetler write on growing crypto precedent following the SEC’s courtroom victory over Kik.

Writing for Reuters, Francesco Canepa and Tom Wilson explain CBDCs as a tool to beat out crypto.

Coinbase publishes a new transparency report on its work with international governments and law enforcement over the first half of 2020.