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XMR workgroup says IRS should study Monero — not try to break it

The United States Internal Revenue Service has better ways to spend taxpayer dollars than offering bounties to break Monero’s (XMR) privacy, a Monero working group says.

After the IRS announced it is offering up to $625,000 to anyone who can break Monero, a major Monero-focused workgroup expressed their take on the matter.

A spokesperson for Monero Outreach — an independent workgroup focused on XMR awareness and education — told Cointelegraph that the IRS should learn how Monero actually works instead.

Monero Outreach’s representative emphasized that the crypto’s features in fact provide users with a certain level of transparency, stating:

“$625,000 would be better spent by the IRS to hire a few consultants to teach their staff how Monero works and how its features allow users to opt-in to transparency.”

The spokesperson said that Monero is “designed to function just like cash,” highlighting that the U.S. dollar also has a certain amount of privacy:

“The U.S. dollar is used for a majority of the world’s nefarious activities and yet, it is what denominates the IRS’ balance sheet. […] The IRS doesn’t know how much cash you earned unless you report it, but you don’t see them trying to break the U.S. dollar.”

The IRS announced its bounty program to trace transactions on Monero and Bitcoin’s (BTC) Lightning Network in early September 2020. The authority stressed that the program is driven by a lack of investigative resources for tracing transactions involving privacy coins used by illicit actors.

The IRS is not the only institution that wants to break Monero’s privacy. In August, a major cryptocurrency intelligence firm, CipherTrace, reportedly claimed that their crypto tracking tool is capable of tracing Monero transactions. Previously, Russia’s Federal Financial Monitoring Service announced that its new crypto tracking tool will “partially reduce anonymity” of Monero transactions.

While authorities and companies worldwide are apparently racing to crack Monero’s privacy, the coin’s protocol has some built-in transparency features.

According to a Sept. 15 report by American law firm Perkins Coie, Monero enables users and virtual asset service providers, or VASPs, to disclose certain transaction details associated with a given account to a third party. According to the firm, these features are part of the key functionality built into the Monero protocol:

“This enables users and VASPs to disclose certain transaction details associated with a given account to a third party without publicly disclosing that user’s transactional information. In addition, VASPs can require up-front disclosures as part of their registration process and on an ongoing basis to meet their obligations.”

Designed to provide a private and untraceable cryptocurrency, Monero is the top privacy-focused coin by market capitalization at publishing time. According to Monero Outreach, the coin also has the third-highest number of code contributors of all cryptocurrencies, behind only Bitcoin and Ether (ETH). Monero is currently trading at $91.41 with a market cap of $1.6 billion.

Kind of a big dill: Pickle.Finance TVL exceed $347M in 4 days

Food-related DeFi projects have slowly taken over crypto in the last quarter, with many of these projects suffering from contentious issues, like the Uniswap fork, SushiSwap’s vampire attack, and the market dump of $13 million worth of Ether (ETH) by lead developer Chef Nomi

Then there’s the infamous Hotdog DeFi meme coin which dumped 99.9% hours after listing. These quick pump and dump style projects have the capacity to give DeFi a bad name but taking a closer look at the list of food themed projects reveals that not all of the offerings are rotten. 

On Sept. 11 a new project called Pickle Finance emerged from a pantry stuffed with food-themed DeFi tokens. The project works like other popular DeFi protocols that reward users who provide liquidity with high interest and additional token rewards. 

To date, the project has accrued more than $347 million in total value locked and one of the primary liquidity pools is offering up to 4,500% APY.

The project aims to bring price stability to the four biggest stablecoins in the crypto sector and it has quickly risen to become the 13th largest DeFi protocol in terms of total value locked

Demand for the project is also reflected in the platform’s native token, (PICKLE), which quickly rose from $4.41 on Sept. 12 to $70.21 at the time of writing.

‘Off peg bad, on peg good’ 

The Pickle Finance protocol allows users to earn interest and PICKLE, Ether, and stablecoin pairings as a reward for providing liquidity for DAI, USDC, USDT, and sUSD. While doing so, the seemingly Rick and Morty-inspired project aims to correct the pegs of these stablecoins which have often fluctuated several percentage points above their peg throughout 2020. 

As so, more rewards are given to below-peg stablecoins and less to above-peg stablecoins, incentivising users to buy and stake the former, and to sell the latter. This system tries to balance market conditions that push the peg of stablecoins away from their underlying asset, thus setting them in the right direction through an incentive structure.

On Sept.16, Pickle.Finance also introduced pJars (formerly known as pVaults). Based on Yield.Finance’s yVaults, pJars will use deposited funds to arbitrage between stablecoins and leverage several protocols in order to bring rewards to token holders and further push stablecoins towards their peg. 

Pickle Jars may pump token price

Pickle token has seen great returns in its first week of trading, with approximately $50 million in daily volume recorded in the days following the launch. 

Like other governance tokens, Pickle token can currently be used to vote on community proposals through a unique quadratic voting mechanism that reduces the control that whales have over most decentralized governance systems. The unusual governance system has even caught the attention of Vitalik Buterin, founder of Ethereum. 

One challenge that many of the DeFi upstarts face is liquidity providers withdrawing all their funds and moving on to the next lucrative farming project once the high APY rewards of their current plantation ends. This is a reality and challenge that Pickle Finance may have to contend with as it’s high APY pools are set to ‘mature’ in the coming days. 

It’s possible that the addition of rewards through pJars will have a positive impact on the token price and similar models have proven effective with projects like Aave and Yield.Finance. 

Furthermore, the rewards come from the fees applied to pJars, 1.5% of which will be used to buy Pickle tokens and to burn them. This reduces the total token supply and in theory, should help to stabilize the price of Pickle.

‘Other companies will follow’ — MSTR stock up 9% after buying Bitcoin

The Nasdaq-listed firm MicroStrategy (MSTR) is continuing to purchase hundreds of millions of dollars worth of Bitcoin (BTC), resulting in its company stock price to gain over 9% on Sep 16. 

MSTR stock recovers to pre-Covid levels after buying Bitcoin 

MicroStrategy first announced the firm is purchasing Bitcoin on Aug. 11, after which its stock price surged by over 10%. 

Now, MSTR price has once again risen in a similar fashion after confirming yesterday that it doubled down on adopting a “Bitcoin standard,” buying over 38,000 BTC worth $425 million at an average price of $11,111. 

“We just had the awful realization that we were sitting on top of a $500 million ice cube that’s melting,” CEO Michael Saylor told Coindesk. 

“This is not a speculation, nor is it a hedge. This was a deliberate corporate strategy to adopt a bitcoin standard.”

MSTR stock price

MSTR stock price. Source: TradingView.com

Datavetaren, a pseudonymous software engineer, said other companies will follow MicroStrategy. He wrote:

“MicroStrategy is adopting a #bitcoin standard. Other companies will follow. Finally, central banks will follow (Switzerland likely to be the first.) A new gold standard for the digital age. A neutral store-of-value will create more check and balances for governments.”

What are the risks of MicroStrategy’s Bitcoin accumulation strategy?

According to Joe Weisenthal, the host of “What’d You Miss?” on Bloomberg, the revenue of MicroStrategy steadily declined since 2013.

The revenue of MicroStrategy since 2011

The revenue of MicroStrategy since 2011. Source: Joe Weisenthal

The company needed new ways to vamp up and gaining exposure to Bitcoin and making BTC its primary treasury asset is quickly becoming one of its major strategies.

Typically, safe-haven assets like gold and real estate are perceived as a hedge against inflation. They are like insurance rather than investment, providing balance to the portfolio.

Bitcoin has the potential to achieve both; it could act as a hedge against inflation and potentially outperform many asset classes over time.

Barry Silbert, the CEO of Grayscale, said the purchase might become the worst or the smartest CEO decision of all time.

There is an enormous amount of risk MicroStrategy is taking to secure such a large holding of BTC. But if BTC explosively grows over the long term, it could be a significant catalyst for the stock. Silbert said:

“This will go down in history as one of the smartest or worst CEO decisions of all time. Case studies and books will be written about it. Either way, it took enormous guts for a public company CEO and I commend him for the courage.”

Don’t celebrate MSTR stock like an ETF

One problematic sentiment around MSTR stock is that some celebrate it as a loophole for an exchange-traded fund (ETF). 

While the company has a large exposure to Bitcoin, Compound Finance’s general counsel Jake Chervinskey said such a loophole is non-existent. He also noted that if the firm continues to buy more BTC, the U.S. Securities and Exchange Commission (SEC) could begin inquiring about it. He said:

“No, there isn’t a loophole in the federal securities laws allowing a publicly traded company to convert itself into a bitcoin ETF without SEC approval. The more bitcoin $MSTR buys, the more likely the SEC is to start asking questions that @Nasdaq doesn’t want to answer.”

Tassat will be able to launch Bitcoin swaps after all, says CFTC

The United States Commodity Futures Trading Commission will still be allowing New York-based fintech firm Tassat to proceed with its Bitcoin swap contracts after failing to meet regulatory requirements.

According to a Sept. 15 statement from the CFTC’s Division of Market Oversight (DMO), the regulatory body will not stop Tassat from launching a swap execution facility (SEF) in Q4 2020, even after the firm failed to renew its registration following 12 consecutive months without trading.

“DMO will not recommend the CFTC commence an enforcement action against Tassat for failing to reinstate its SEF registration,” the DMO stated. The regulatory body’s decision extends to Tassat listing certified Bitcoin (BTC) swap contracts and participants who trade the contracts.

After applying to become a regulated crypto derivatives exchange with the CFTC in November, Tassat failed to launch its swaps exchange by Aug. 1, when the regulatory body labeled the firm as “dormant.” Tassat has reportedly claimed the oversight was due to delays caused by the current pandemic, and requested to be exempt from applying to reinstate its status as an SEF.

The CFTC’s decision grants Tassat relief from the reinstatement requirements, and brings it closer to launching a crypto derivatives exchange with full regulatory oversight. The fintech firm reportedly hopes to list physically-delivered BTC derivatives for institutional investors starting in Q4 2020.

Tassat had not responded to Cointelegraph’s request for comment as of press time.

Russia’s largest bank joins blockchain trade finance platform

A subsidiary of Russia’s largest bank, Sberbank, has joined a blockchain-based platform for commodity trade finance.

Sberbank Switzerland AG has signed an agreement with Swiss trade finance platform Komgo to apply its blockchain-powered trade finance service.

Representatives from Sberbank Switzerland AG told Cointelegraph that the collaboration with Komgo addresses the growing digitization of trade finance.

Evgeny Kravchenko, head of trade finance at Sberbank, outlined that commodity trade finance is a strategic business of Sberbank Switzerland AG. According to the executive, Russia and the Commonwealth of Independent States’ countries are the company’s key markets, while Sberbank Switzerland AG also supports trade flows globally.

“In recent years, trade finance digitalization has accelerated dramatically, following the needs of market players,” Kravchenko said, adding that Komgo’s trade finance will further expand the efficiency of Sberbank’s operations.

As previously reported, Komgo is a decentralized trade financing startup that is developing a commodity trade finance platform based on the Ethereum blockchain. One of its purposes is to accelerate trade finance transactions as well as allow stakeholders to track a deal with instant success to commodity trade information.

Sberbank has been aggressively tapping the blockchain industry recently. As Cointelegraph reported in August, Sberbank is working with a major Russia-based airline company, S7 Airlines, to introduce a blockchain-based ticket sale system. The bank is also reportedly considering launching its own stablecoin pegged one-to-one to the Russian ruble.

U.S. Presidential candidate served for alleged securities fraud at rally in NYC

Presidential candidate Brock Pierce was served for his connection to alleged securities fraud during his campaign rally in New York City earlier today.

Source: Twitter.

James Koutoulas, the lawyer leading this case, told Cointelegraph that Pierce was served legal documents in connection with a class action case against Block.One — a company that Pierce co-founded. Block.One was the company behind EOS’ $4 billion initial coin offering. The project’s ICO was the largest such offering to date.

Brock Pierce has co-founded a number of crypto projects including Block.one, Tether, and Blockchain Capital. The first two have been subject to ongoing legal actions for a number of years.

Pierce announced his long-shot candidacy for U.S. President in July, hot on the heels of Kanye West. His campaign site states that he is a pioneer digital currency and has raised more than $5 billion for the companies he has founded.

This story is developing and will be updated.

Apple forces Coinbase to change its crypto products, says CEO

Brian Armstrong, the CEO of United States cryptocurrency exchange Coinbase, alleges that Apple is stifling innovation in crypto and sidelining DeFi to protect itself from competition.

In a Twitter thread published on Sept. 11, Armstrong doubled down on his earlier claims that Apple continues to block some functionalities for cryptocurrency developers. 

The CEO alleged that other cryptocurrency firms are “reluctant to speak out on these topics for fear of retaliation,” but that he feels the need to speak out as Coinbase has exhausted regular channels for dialog with Apple and has reached a “dead end.”

According to Armstrong, Apple has told Coinbase that it is prohibited from adding two specific functionalities to its iOS apps: the ability to earn money using cryptocurrency and access to decentralized finance (DeFi) apps.

The first restriction, which affects the exchange’s Coinbase Earn product, has reportedly led to Coinbase having to modify its app in a way that is significantly less user friendly. 

The CEO claimed that these restrictions are specific to cryptocurrency users, stating, “Why would Apple want to prevent people from earning money during a recession? They seem to not be ok with it, if it uses cryptocurrency.” For iOS users, Armstrong claimed, crypto apps lack features not because of developers’ inactivity but because those features are “being censored by Apple.”

In addition, Apple reportedly bars Coinbase from providing app users with a list of decentralized applications or DeFi apps, both of which “are really just websites.”

Apple’s justification for this has apparently been that “”Your [the Coinbase] app offers cryptocurrency transactions in non-embedded software within the app, which is not appropriate for the App Store.” 

Noting that DApps and DeFi apps can regardless be accessed via a web browser on any smartphone, Armstrong claimed that Apple’s decision is motivated by a “conflict of interest.” 

While these restrictions “are ostensibly designed to protect customers, it increasingly looks like they are also protecting Apple from competition,” he wrote.

By compelling users to use the Apple App Store instead of DApps, or In-App Purchases instead of crypto payments, Armstrong claimed that Apple’s actions have a parallel in Microsoft’s past antitrust issues when it compelled Windows users to use its proprietary browser, Internet Explorer.

During the coronavirus crisis, when underbanked or unbanked populations may face even greater difficulties accessing traditional financial services, Armstrong accused Apple of placing yet a further barrier to financial inclusion

Coinbase is reportedly planning to submit a formal request to Apple to amend its App Store policies.

Top 5 cryptocurrencies to watch this week: BTC, BNB, NEO, YFI, LINK

This week Digital Assets Data CEO Mike Alfred told Cointelegraph that mainstream investors are still “skeptical of Bitcoin and the ecosystem.” 

However, Alfred believes that this “skepticism and disbelief” will turn out to be a positive for Bitcoin (BTC) because when the “traditional folks capitulate, they will be forced by their clients and partners to get involved at significantly higher prices.”

While Bitcoin has struggled to start a sustained uptrend in the past few weeks, select altcoins and tokens in the DeFi space have been in a strong bull run. This shows that traders attention has shifted away from Bitcoin.

Crypto market data daily view

Crypto market data daily view. Source: Coin360

Pantera Capital founder and CEO Dan Morehead believes that the DeFi space will outrun Bitcoin in the next five years and grow by about 100x. 

In the long-term, most analysts are uber bullish on the crypto space but what can traders expect in the next few days? 

Let’s have a look at the cryptocurrencies that could offer short-term trading opportunities and spot the critical levels on each of them.

BTC/USD

Bitcoin completed a bullish inverse head and shoulders pattern on July 27 when it closed above $10,500 and usually the price retests the breakout levels of such reversal patterns.  

BTC/USD daily chart

BTC/USD daily chart. Source: TradingView

In ideal conditions, the price should not dip below the neckline of the inverse H&S pattern, but trading is anything but ideal.

Although the bears pulled the BTC/USD pair below the neckline on Sep. 3, there has not been much follow up selling, which suggests buying by the bulls at lower levels. However, this buying dries up when the price tries to move up above the $10,500 level.

Due to this, the pair is currently stuck in the $9,835–$10,625 range. After the bears failed to sink the price below the range on Sep. 8, the bulls today attempted to push the price above the overhead resistance but failed.

The 20-day exponential moving average ($10,719) is just above the resistance of the range, hence, the bears are likely to defend it aggressively. 

However, if the bulls can propel the pair above the 20-day EMA and sustain the higher levels for three days, it will suggest that the correction is over. That could result in a retest of $12,460 and if this resistance is crossed, the uptrend is likely to resume.

This bullish view will be invalidated if the pair breaks and sustains below the $9,835 support. 

BTC/USD 4-hour chart

BTC/USD 4-hour chart. Source: TradingView

The 4-hour chart shows that the bears are aggressively defending the $10,625 resistance but if they fail to sink the price below the $10,200 support, the bulls will once again try to clear the overhead resistance of the range.

If they succeed, aggressive traders are likely to jump in, which could result in a quick move to $11,400 and possibly $12,000.

Contrary to this assumption, if the bears sink the price below the $10,200 support, a drop to $10,000 and then to $9,835 is possible. 

BNB/USD

While most major cryptocurrencies are searching for a bottom, Binance Coin (BNB) has resumed its uptrend and made a new 52-week high, which is a sign of strength.

BNB/USD daily chart

BNB/USD daily chart. Source: TradingView

Although the relative strength index was showing the formation of a bearish divergence, the sharp move on Sep. 12 invalidated this bearish setup.

Currently, the BNB/USD pair is facing stiff resistance at the $32 level but if the bulls do not allow the price to dip below the critical support at $27.1905, a retest of $32 is likely. A break above this resistance could push the price to $38.

Contrary to this assumption, if the bears pull the pair down below $27.1905 it will indicate that the current move might have been a bull trap.

BNB/USD 4-hour chart

BNB/USD 4-hour chart. Source: TradingView

The bears are aggressively defending the $32 level as seen from the long bearish candle on the 4-hour chart. However, the positive sign is that the bulls are not panicking and they continue to purchase the dip.

They will now again try to push the price above the $32 resistance. If they succeed, the momentum is likely to pick up but if the price again turns down from $32, the pair could remain range-bound for a few days.

NEO/USD

The failure of the bears to sink and sustain NEO below the breakout level of $16.72441 attracted buying by the bulls who pushed the price to $21.97869 today.

NEO/USD daily chart

NEO/USD daily chart. Source: TradingView

The bears are defending the $22–$22.82612 resistance zone aggressively but if the NEO/USD pair rebounds off the 20-day EMA ($18.54), the bulls will once again attempt to push the price above the resistance zone.

If they succeed, the next leg of the up-move is likely to begin. There is a minor resistance at $25.23 above which the momentum is likely to pick up.

However, if the bears sink the price below the 20-day EMA, the pair might drop to $16.72441. A breakdown and close below this support will be a huge negative. 

NEO/USD 4-hour chart

NEO/USD 4-hour chart. Source: TradingView

The failure to break above the $22 level could have attracted profit booking by the short-term bulls. This has pulled the price below the 20-EMA.

However, if the bulls can keep the price above $19.27244, (50% Fibonacci retracement level), then another attempt to clear the overhead resistance is likely.

A break below the $19.27244–$18.63376 support could weaken the momentum and result in a drop to $16.72441.

YFI/USD

The correction in Yearn.finance (YFI) that started on Aug. 31 found support close to $21,345, which was the 50% Fibonacci retracement level of the entire run-up from $3,000–$39,690. 

YFI/USD daily chart

YFI/USD daily chart. Source: TradingView

Repeated attempts by the bears to break below the $21,345 support failed and the range shrunk between Sep. 5 and Sep. 8, which suggested indecision among the bulls and the bears.

This uncertainty resolved to the upside with a sharp up-move on Sep. 9, which indicated that the bulls had reasserted their dominance. The target objective of this next leg of the uptrend is $46,632.46 and then the psychological resistance at $50,000.

However, the bears are attempting to stall the rally at $43,966.31. If they can sink the YFI/USD pair below the 50% Fibonacci retracement level of the most recent leg of the rally at $31,011.37, the momentum is likely to weaken. 

The developing bearish divergence on the RSI warrants caution but if the pair rebounds from the $34,068.74–$31,011.37 support zone, the bulls will make another attempt to resume the uptrend. 

YFI/USD 4-hour chart

YFI/USD 4-hour chart. Source: TradingView

The bears have pulled down the pair below the 20-EMA, which suggests that the short-term momentum has weakened. The next support on the downside is $31,011.37.

If the pair rebounds sharply from $31,011.37, the bulls will make one more attempt to push the price above the overhead resistance at $43,966.31.

LINK/USD

Chainlink (LINK) has thrice turned down from the $13.28 levels since Sep. 6 but the positive sign is that the bears have not been able to sink the price below the trendline, which shows buying at lower levels.

LINK/USD daily chart

LINK/USD daily chart. Source: TradingView

If the LINK/USD pair again rebounds off the trendline, the bulls will make one more attempt to push the price above $13.28. If they succeed, the pair is likely to pick up momentum and rally to the downtrend line.

This level is again likely to act as a resistance but if the bulls can push through it the pair could rally to $17.7777.

However, if the bears sink the price below the trendline, it will suggest weakness, which could result in a drop to $8.908. Such a move will be a huge negative and it will hurt sentiment.

LINK/USD 4-hour chart

LINK/USD 4-hour chart. Source: TradingView

The 4-hour chart shows that the bears are aggressively defending the $13.28 levels but the positive sign is that the bulls have not allowed the price to dip below the $11 level. 

If the pair rebounds off the current levels or from the trendline, the bulls will make one more attempt to push the price above the $13.28 resistance. If they succeed, momentum is likely to pick up and a quick move to $15 is likely.

This bullish view will be invalidated if the bears sink and sustain the price below the trendline.

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.

Bitcoin whale cluster at $10,570 is the most important level right now

According to Whalemap, an on-chain analysis firm that focuses on Bitcoin (BTC) whale activity, short-term clusters are present at $10,570.

Whale clusters are shown at $10,570 and $11,288 for Bitcoin

Whale clusters are shown at $10,570 and $11,288 for Bitcoin. Source: Whalemap

Whale clusters form when whales accumulate Bitcoin and do not move the BTC. Areas that have large amounts of unspent BTC become an area of interest, typically a resistance level. Analysts at Whalemap explain:

“Bubbles show locations where unspent bitcoins were accumulated. The larger the bubble, the more unspent bitcoins are located there. P.s. Unspent means these bitcoins have not been moved since they were ‘inflowed’ to a whale wallet.”

Whales, or individuals holding large amounts of BTC, like to sell either at breakeven or at profit, depending on the market trend. If whales deem the current trend to be bearish, the $10,570 level could serve as an area where whales breakeven.

The two biggest whale clusters line up with technicals 

The two biggest whale clusters in the short term are found at $10,570 and $11,800. Unsurprisingly, the two levels are also key resistance areas for BTC in the immediate term.

Based on the recovery of Bitcoin above $10,000, some traders foresee BTC retesting the $11,000-$11,300 resistance range. 

According to the cryptocurrency trader Edward Morra, Coinbase’s order book has consistently shown decent buying demand at the $10,000 area. He said on Sept. 11:

“In case bitcoin dips, coinbase has some fat orders below. Coinbase added bids, from 10200 to 10000, there are ~2500 BTC in bids now.”

The strength of the $10,000 support level could allow BTC to retest $10,570, and potentially surpass it. For now, many traders appear to be cautiously optimistic, at least until the mid-$10,000.

Most short-term bullish and bearish cases also center around the $10,570 to $11,000 resistance range. A rejection from the range raises the probability of downside in the near future.

On-chain metrics swaying cautiously bearish

For now, several on-chain metrics are supporting the near-term bearish case for Bitcoin. Data from Glassnode, for example, shows BTC miner fee deposits to exchanges have increased to levels unseen since 2017. The researchers said:

“Currently, almost 10% of all #Bitcoin miner fees are spent on transactions that deposit $BTC to centralized exchanges. This is a 2x increase since the beginning of the year, and levels we haven’t seen since late 2017.”

However, the rise in miner fees and the record-high hash rate of the Bitcoin blockchain network indicate an overall rise in network activity. But if miners sell the fees, then it could impose additional selling pressure on the BTC/USD pair.

Bitcoin fees are being sold on exchanges

Bitcoin fees are being sold on exchanges. Source: Glassnode

Historically, many analysts have used various network activity metrics to measure the short to medium-term trend of Bitcoin. 

CNBC’s Brian Kelly, as an example, has consistently utilized the unique address activity of Bitcoin to assess the BTC price trend.

Why we need evolutionary, not revolutionary, regulatory initiatives

This July, Luxembourg — the world’s second-largest domicile for investment funds behind the United States — submitted a draft law updating a law from March 1, 2019 that allowed for the registration and transfer of securities by custodians. With this draft law, issuance itself can be based on distributed ledger technology, thereby introducing truly dematerialized DLT or blockchain-based securities.

Furthermore, a central “issuance account” keeper (transfer agent) is required to assume responsibility, and the account keeper has to be authorized by any member state of the European Economic Area, which means that non-Luxembourg credit institutions and investment firms can be the central account holder.

Two weeks later, on Aug. 11, Germany’s Federal Ministry of Finance and its Federal Ministry of Justice and Consumer Protection submitted a draft bill for the introduction of electronic securities. The bill intends to revamp both Germany’s securities law and the corresponding supervisory law, with a focus on blockchain strategy.

The draft differentiates between the keeping of a central electronic securities register by a central securities depository and the keeping of registers for issuing electronic bonds made possible by distributed ledger technologies. It also provides greater regulatory clarity: The Federal Financial Supervisory Authority will track the launch and upkeep of “decentralized registers” as new financial services in agreement with the Electronic Securities Act, the German Banking Act Kreditwesengesetz and the key securities depository rule.

The proposed changes to the legal framework, by adopting blockchain and other new technology, aims to bolster Germany as a hub of business and magnify “transparency, market integrity and investor protection.”

For now, the draft bill is limited to bonds, but it can be extended to any security, including stocks and investment funds. The aim is to receive comments from the German states by Sept. 14 and to pass the regulation later in 2020.

The draft law also provides several changes to the prospectus law, the custody account law and other rules so that all electronic securities are treated like legacy nondigital securities. With this, the draft law clears a major regulatory hurdle to the mass adoption of digital assets.

What does it mean for the industry?

Germany’s very conservative government is taking the digital transformation of its securities markets extremely seriously and recognizing the advantages in terms of speed, settlement times and transparency that blockchain technology has to offer. Having first updated existing Anti-Money Laundering/Combatting the Financing of Terrorism legislation to allow banks to store and sell cryptocurrencies to both institutional and retail customers (effective on Jan. 1), it has now turned its attention to dematerializing securities with the use of permissioned DLT or permissionless blockchain technology (e.g., public Ethereum). In effect, the draft law states that an electronic security in the form of a token, for instance, carries the same rights and legal investor protections as a paper certificate.

This new draft galvanizes the philosophy that there is no need for radical new legislation — rather, legislation should be technology-neutral — while clarifying the legal tie between a real-world asset and its representative digital token. More can be done, of course — for instance, introducing machine-readable policies that can update compliance software with zero or minimal manual intervention.

At the same time, projects in the blockchain space continue to provide thought leadership and remove technology hurdles by combining secure digital identity with strong online privacy (e.g., private transactions on public chains) and compliance oracles that tie digital attributes and attestations to automated policy enforcement in both the area of cryptocurrencies (e.g. compliance with the Financial Action Task Force’s Travel Rule) and digital securities.

Ultimately, digital transformation with the use of blockchain technology will lead to significant cost reductions through the elimination of many error-prone manual processes, better compliance and more effective crime-fighting through increased transparency, greater global accessibility to high-quality assets and, hence, greater financial inclusion.

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

Manuel Rensink is the strategy director at Securrency. He oversees strategy and business development, focusing on industry partnerships and commercialization of the firm’s IP in the areas of digital assets, identity management and exchange protocols. He has over 20 years of experience in institutional capital markets across all major asset classes. Prior to Securrency, Manuel worked as a strategy consultant, head of MENA at index and analytics firm MSCI in Dubai, and head of EMEA at JPMorgan spin-off RiskMetrics Group in London.

Bullish pennant hints at Bitcoin price breakout to $11,300

Bitcoin (BTC) price appears to have entered the weekend on the good foot after a relatively uneventful Friday saw the price continue to fluctuate between $10,200-$10,400. 

Cryptocurrency daily market performance snapshot

Cryptocurrency daily market performance snapshot. Source: Coin360

At the time of writing the daily chart shows the top-ranked digital asset tightening into a pennant and since making a double bottom at $9,838, BTC has etched a pattern of higher lows which have now pinched the price into a tighter range. 

BTC/USDT daily chart

BTC/USDT daily chart. Source: TradingView

While trading volume still leaves a lot to be desired, the moving average convergence divergence indicator shows the MACD pulling closer to the signal line and the shorter bars on the histogram indicate that selling is slowing down. 

While encouraging, the RSI remains below the midline and even though BTC is now above the 100-MA a breakthrough the pennant to flip $10.5K to support is still the next step traders are looking for. 

As mentioned in the previous analysis, if the price can push through $10.5K, bulls will attempt to exploit the VPVR gap from $10,500-$11,000 but it’s likely that the 20-MA ($10,900) will act as resistance before moving higher toward $11,300. 

Bitcoin price daily performance

Bitcoin price daily performance. Source: Coin360

While Bitcoin price continues to consolidate toward a more decisive move, altcoins moved higher to test key resistance levels that just a week prior were strong supports. 

Yearn.finance (YFI) was a top performer, rallying 22.5% to $38,333. Binance Coin (BNB) gained 11.30% and Ontology ONT moved 13.19% higher.  

According to CoinMarketCap, the overall cryptocurrency market cap now stands at $334 billion and Bitcoin’s dominance index is currently at 56.8%.

Keep track of top crypto markets in real time here

Price analysis 9/11: BTC, ETH, XRP, LINK, BCH, DOT, BNB, LTC, CRO, BSV

The President of the European Central Bank (ECB) Christine Lagarde said that the coronavirus pandemic has acted as a catalyst in boosting the adoption of digital payments in the European Union. Lagarde expects the majority of the consumers to continue using digital services even in the future.

In order to support the digitalization, the ECB has formed a task force, which is “exploring the benefits, risks and operational challenges” of developing a digital euro and is expected to announce its findings within the next few weeks.

While a central bank digital currency might build up consumer interest in the short-term, it is unlikely to sustain because the stimulus measures announced across the globe since the start of the outbreak have reduced the confidence in fiat currencies.

Daily cryptocurrency market performance

Daily cryptocurrency market performance. Source: Coin360

This has driven investors towards other assets such as stocks, gold and cryptocurrencies. Bloomberg’s crypto newsletter shows that the correlation between gold and Bitcoin (BTC), when calculated on a monthly basis has hit a 10-year high. This indicates that several investors are viewing Bitcoin as a safe haven asset similar to gold.

However, every asset goes through periodic corrections. Let’s analyze the charts of the top-10 cryptocurrencies to ascertain whether the correction is over or not.

BTC/USD

The bulls are currently attempting to push Bitcoin to the top of the $9,835–$10,625 range. The price action inside a range is usually random and it is difficult to predict the direction of the breakout with certainty. 

BTC/USD daily chart

BTC/USD daily chart. Source: TradingView

It is generally assumed that the breakout will happen in the direction of the trend that was prevailing before the range formed. In this case, the BTC/USD pair had dipped from the recent highs of $12,460, which shows that the bears had the upper hand.

The downsloping 20-day exponential moving average ($10,798) and the relative strength index in the negative zone also indicate that the advantage is with the sellers.

If the bears can sink the pair below $9,835, a drop to $9,000 and then to $8,000 is likely. Such a move will be a huge negative.

However, if the bears fail to capitalize on this advantage, the aggressive bulls are likely to start accumulating and they will try to push the price above $10,625. If they succeed, a move to $11,000 and then to $12,460 is likely. 

ETH/USD

Ether (ETH) rose above the $366 resistance on Sep. 10 but the bulls are facing resistance at the 20-day EMA ($379), which is close to the 38.2% Fibonacci retracement of the most recent fall. 

ETH/USD daily chart

ETH/USD daily chart. Source: TradingView

However, if the bulls do not give up much ground, it will increase the possibility of a break above the 20-day EMA. If the ETH/USD pair sustains above this resistance, a move to the 61.8% Fibonacci retracement level of $419.473 is likely.

The bears will once again attempt to defend this level but if the bulls can overcome their challenge, a retest of $488.134 will be on the cards.

Contrary to this assumption, if the pair turns down from the current levels and dips back below $350, the bears will try to sink the price to $308.392. The selling is likely to intensify on a break below $288.

XRP/USD

The bulls attempted to start a relief rally on Sep. 10 but could not sustain above $0.245, which shows that demand dries up at higher levels. As a result, XRP has again dipped back to the $0.235688 support.

XRP/USD daily chart

XRP/USD daily chart. Source: TradingView

If the bears sink the XRP/USD pair below $0.229582, the next leg of the down move is likely to begin. The next support on the downside is the $0.19–$0.20 zone. 

The downsloping 20-day EMA ($0.257) and the RSI in the negative territory suggest that bears are in command.

However, if the pair rebounds off the current levels and rises above $0.250, it can move up to the 20-day EMA and above it to $0.268478. A break above this level will suggest that the bulls are back in the game.

LINK/USD

Chainlink (LINK) had broken above the $12.89 overhead resistance but the bulls could not push the price above the 20-day EMA ($13.35), which suggests that the bears are aggressively selling on rallies.

LINK/USD daily chart

LINK/USD daily chart. Source: TradingView

If the bears can keep up the selling pressure and sink the LINK/USD pair below the trendline, a drop to $8.9080 is possible. A break below this support will be a huge negative.

Conversely, if the pair rises from the current levels or from the trendline, the bulls will once again attempt to scale the price above the 20-day EMA. If they succeed, a relief rally to the downtrend line is likely.

A breakout of this resistance will increase the likelihood of a rally to $17.77 and then to the highs at $20.1111.

BCH/USD

Bitcoin Cash (BCH) has roughly been trading in the tight range of $215–$231 for the past few days, which suggests indecision among the bulls and the bears about the next directional move.

BCH/USD daily chart

BCH/USD daily chart. Source: TradingView

The downsloping 20-day EMA ($248) and the RSI below the 40 level suggest that bears have the upper hand.

If they can sink the price below $215, a retest of the critical support at $200 is possible. A breakdown of this support will be a huge negative that can result in a fall to $140.

Conversely, if the bulls can push the price above $231, the likelihood of a rally to $245 increases. Above this level, a move to $260 and then to $280 is possible.

DOT/USD

The bulls could not push Polkadot (DOT) above the $4.9210 resistance on Sep. 10, which suggests that the bears are defending this level.

DOT/USD daily chart

DOT/USD daily chart. Source: TradingView

The bears will now try to sink the DOT/USD pair below the $4–$3.50 support. If they succeed, a drop to $3 and then to $2 is possible.

However, if the price turns up from the current levels or the $4 support, the bulls will again try to push the price above $4.9210. If they succeed, a rally to the 61.8% Fibonacci retracement level of $5.5899 is possible.

Between $4 and $4.9210, the price action is likely to be random. The longer the time spent inside the range, the stronger will be the eventual breakout from it.

BNB/USD

Binance Coin (BNB) turned down from the $25.8262 resistance on Sep.10, which shows that the bears are defending this level. The RSI has formed a bearish divergence, which suggests that the bullish momentum has weakened.

BNB/USD daily chart

BNB/USD daily chart. Source: TradingView

If the bears can sink the BNB/USD pair below the moving averages, it will be the first sign of weakness, which could result in a drop to $18.

However, both moving averages are sloping up, which suggests that the advantage is still with the bulls. 

The pair has currently bounced off the 20-day EMA ($22.95), which suggests buying on dips by the bulls. They will now again try to propel the price above $25.8262 and if they succeed, a rally to $27.1905 is likely.

LTC/USD

The bulls are struggling to push Litecoin (LTC) to the overhead resistance at $51, which suggests a lack of demand even at the current levels.

LTC/USD daily chart

LTC/USD daily chart. Source: TradingView

If the bulls do not push the price above the $51 resistance within the next few days, the bears will make an attempt to sink the LTC/USD pair below $45. If they succeed, a retest of the critical support at $39 is possible.

Conversely, if the bulls can push the price above the $51 resistance and the downsloping 20-day EMA ($52.8), it will signal strength. The next target on the upside is likely to be $56 and then $64.

CRO/USD

Crypto.com Coin (CRO) has broken above the $0.154322 resistance and has reached the 20-day EMA ($0.260), which is a positive sign as it shows a lack of selling pressure at lower levels.

CRO/USD daily chart

CRO/USD daily chart. Source: TradingView

If the bulls can push the CRO/USD pair above this resistance, a retest of the $0.183416–$0.191101 resistance zone is likely. A breakout of this zone could start the next leg of the uptrend.

Contrary to this assumption, if the bears aggressively defend the 20-day EMA, the pair could again dip back to the $0.144743 support. A break below this support could pull down the price to the 38.2% Fibonacci retracement level of $0.127459.

BSV/USD

The relief rally in Bitcoin SV (BSV) hit a wall close to the 20-day EMA ($179), which could have attracted profit booking by the traders who had purchased the recent dip to $150 levels.

BSV/USD daily chart

BSV/USD daily chart. Source: TradingView

If the bears can now sink the price below the immediate support at $160, a drop to the critical support zone of $146.20–$135 is likely. A break below this zone will be a huge negative that can result in a fall to $100.

Contrary to this assumption, if the BSV/USD pair rebounds off the current levels, the bulls will once again try to push the price above the 20-day EMA. If they succeed, a move to the downtrend line is possible. 

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.

Market data is provided by HitBTC exchange.