China's attempt to kill Bitcoin failed — Here are 3 reasons why

China's attempt to kill Bitcoin failed — Here are 3 reasons why

Bitcoin’s hashrate recovery, steady peer-to-peer markets and the steady volume exhibited by Asia-based exchanges suggest that China’s attempt to ban BTC was ineffective.

Bitcoin (BTC) might have suffered its largest coordinated attack over the last couple of months, but in this instance, the investor community did not capitulate. China outright banning mining in most regions after giving BTC miners a two-week notice and this caused the single largest mining difficulty adjustment after the network hash rate dropped 50%.

The market sentiment surrounding Bitcoin was already damaged after Elon Musk announced that Tesla would no longer accept Bitcoin payments due to the environmental impact of the mining process. It remains unknown whether China’s decision was influenced or related to Musk’s remarks, but undoubtedly those events held a negative effect.

A couple of weeks later, on June 16, China blocked cryptocurrency exchanges from web search results. Meanwhile, derivatives exchange Huobi started to restrict leverage trading and blocked new users from China.

Finally, on June 21, the People’s Bank of China (PBoC) instructed banks to shut down the bank accounts of over-the-counter desks and even their social networks accounts were banned. OTC desk essentially act as a fiat gateway in the region so without them it would be difficult to exchange from Bitcoin to stablecoins.

As these events unfolded, some analysts were reluctant to describe the tactics as nothing other than meaningless FUD, but in hindsight, it appears that China launched a very well-planned and executed attack on the Bitcoin network and mining industry.

The short-term impact could be considered a moderate success due to the collapse in Bitcoin price and the rising concerns that a 51% hashrate attack could occur.

Despite the maneuvers, China's attack ultimately failed and here are the main reasons why. 

The hashrate recovered to 100 million TH/s

After peaking at 186 million TH/s on May 12, the Bitcoin network hash rate, an estimate of the total mining power, started to plunge. The first couple of weeks were due to restrictions to coal-powered areas, estimated at 25% of the mining capacity.

However, as the ban extended to other regions, the indicator bottomed at 85 million TH/s, its lowest level in two years.

Bitcoin estimated hashrate. Source:

As the data above indicates, the Bitcoin network's processing power recovered to 100 million TH/s in less than three weeks. Some miners had successfully moved their equipment to Kazakhstan, while others shifted to Canada and the U.S.

Peer-to-peer (p2p) markets carried on

Even though the companies involved in crypto transactions have been banned from the country, individuals continued to act as intermediaries—some of these recorded over 10,000 successful peer-to-peer transactions according to data from the exchange’s own ranking system.

Huobi Global peer-to-peer market advertisement. Source: Huobi

Both Huobi and Binance offer a similar marketplace where users can trade multiple cryptocurrencies including USD Tether (USDT). After converting their fiat to stablecoin, transacting on a regular or derivatives exchange becomes possible.

Asia-based exchanges still dominate spot volume

A complete crackdown on trading from Chinese entities would likely be reflected in the exchanges previously based on the region, like Binance, OKEx, and Huobi. However, looking at the recent volume data, there hadn’t been a meaningful impact.

Weekly spot volume, USD. Source:

Take notice of how the three 'Asia-based' exchanges remain dominant, while Coinbase, Kraken, and Bitfinex are nowhere near their trading activities.

China's ban on Bitcoin mining and transactions may have led to some temporary hiccups and a negative impact on BTC price, but the network and price have recovered in a way that is better than many expected.

Currently, there is no way to measure the OTC transactions where larger blocks are traded but it is just a matter of time until these intermediaries find new gateways and payment routes.

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.

Wells Fargo Now Offers Bitcoin & Crypto Exposure To Wealthy Clients

Wells Fargo Now Offers Bitcoin & Crypto Exposure To Wealthy Clients

Business Insider reports that wealthy Wells Fargo clients can now get Bitcoin & crypto exposure through the bank.

High-net-worth Wells Fargo clients can now get Bitcoin & crypto exposure, a company spokesperson informed Business Insider, making Wells Fargo the latest in a long line of traditionally conservative financial institutions to venture into Bitcoin.

In May, it was reported that the investment-research division of Wells Fargo Wealth and Investment Management was going to implement an actively managed Bitcoin and crypto strategy to its qualified investors.

The firm’s wealth and investment management arm oversees about $2 trillion in assets, making them among the largest wealth managers in the United States.

According to the research division’s president Darrell Cronk, the firm has been searching for "a professionally managed solution" for months, Business Insider reports. At the same time, Wells Fargo has been publicly wary of Bitcoin and other cryptocurrencies due to their regulatory vagueness.

In May, in an interview with Business Insider, Darrell Cronk commented, "We think the cryptocurrency space has just kind of hit an evolution and maturation of its development that allows it now to be a viable investable asset."

Cronk went on to allude that the massive market cap of Bitcoin combined with other cryptocurrencies lent them legitimacy in his view.

However, Cronk told Business Insider he views crypto as an “alternative investment” instead of a “strategic allocation”, but one which “can be a nice diversifier to portfolio holdings.”

It is unclear at this time how exactly wealthy clients at Wells Fargo are going to get exposure to Bitcoin, whether it is through outright purchasing Bitcoin or through a second order of price exposure, such as Grayscale Bitcoin.

Wells Fargo’s Bitcoin venture comes just days after traditional banking giant JPMorgan’s CEO said clients “see bitcoin as an asset class and want to invest,” and before them, in March, Morgan Stanley announced that they too would offer clients solutions for owning Bitcoin.

Notably, Wells Fargo’s global-investment-strategy team’s report on the investment rationale for cryptocurrencies is a testament to their understanding of Bitcoin’s supply and scarcity dynamics.

Cronk commented, “Anytime you reduce the supply of anything, even if demand holds constant, it should increase the price. Over time, as people become more familiar with these and as they become more mainstream, I think it will naturally go up."

Until the SEC approves a Bitcoin ETF, we can expect the actively managed crypto strategy at Wells Fargo to remain limited to qualified investors, namely, “an individual with an annual gross income of more than $200,000 or a net worth of more than $1 million,” according to Business Insider.

On the element of risk to Wells Fargo clients exposed to Bitcoin and other cryptocurrencies:

“There's a whole element of consumer protections and regulations that have to still evolve with the changing landscape," Cronk concluded, “we think there can be a viable investable option for those clients who show an interest."

NCR Corporation plans to purchase Bitcoin ATM company LibertyX

NCR Corporation plans to purchase Bitcoin ATM company LibertyX

LibertyX currently services 20,000 retail stores in the U.S. with 9,500 crypto ATMs.

Enterprise technology provider NCR Corporation has announced an agreement to buy LibertyX, the company that launched one of the first retail Bitcoin ATMs.

In a Monday announcement, NCR said it expected to purchase LibertyX later this year depending on regulatory licensing consents and approvals. The firm said it planned to offer LibertyX’s capabilities as part of its solutions for banks, retailers and restaurants, implying NCR clients could see crypto withdrawals, purchasing, and payment features after the deal is finalized.

“Our customers require a complete digital currency solution, including the ability to buy and sell cryptocurrency, conduct cross-border remittance and accept digital currency payments across digital and physical channels,” said NCR chief technology officer Tim Vanderham.

Related: LibertyX launches Bitcoin-to-cash sales at ATMs in United States

LibertyX has allowed users to make purchases with crypto at a variety of retailers in the United States using its mobile app or through its network of Bitcoin (BTC) ATMs. According to the firm, it currently services 20,000 retail stores in the U.S. with 9,500 crypto ATMs.

According to data from CoinATMRadar, there are more than 24,481 crypto ATMs in the world at the time of publication, with the market having experienced exponential growth in 2021. Bitcoin Depot, one of the largest holders of the Bitcoin ATM network, recently announced a partnership with Circle K, resulting in the installation of more than 700 Bitcoin ATMs in the U.S. and Canada.


Bull Bitcoin’s Pleb.Hodl On The Importance Of Orange Pills

Pleb.Hodl, Bull Bitcoin’s new head of marketing, discussed his rabbit hold journey and the importance of welcoming precoiners.

Watch This Episode On YouTube

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In this episode of Bitcoin Magazine’s "Meet The Taco Plebs," I sat down with Bull Bitcoin’s newest head of marketing, Pleb.Hodl (@btcplebeian on Twitter) to discuss his unique Bitcoin rabbit hole story, his new position at Bull Bitcoin, the effect Bitcoin has on one’s mindset and much more.

Pleb.Hodl went into detail about his experience being “fiat pilled” coming out of university and the awakening that he had after being around people that advocated for bigger government. Along with this, we discussed the effects that believing in the ideals around Bitcoin has on individuals and society in general.

To finish, we delved into his new position at Bull Bitcoin and the excitement he has for the opportunity to work with the team there and build a phenomenal platform for true Bitcoiners.

Below are some more insights from Pleb.Hodl about his Bitcoin journey.

What’s your Bitcoin rabbit hole story?

My story starts with studying monetary economics at university and getting completely fiat pilled. It's embarrassing to admit being that lazy, ignorant and/or gullible now, but I bought it all. By the time I finished university, I very much believed in the idea of enlightened government by experts. When I first heard about Bitcoin, I was still under this spell and thought it was a suboptimal solution to our problems. I always thought the focus should be on making the government less corrupt and more competent. I would say the beginning of my path to Bitcoin was when I joined the board for the liberal party in my local riding. Being around people who believed in bigger governmentt, I got to see how they think and how hopelessly flawed my views were. That was 2015 and was the beginning of my red pill journey, which was a necessary precursor for my orange pill.

In 2016 to 2017, I started becoming more open to Bitcoin but still wasn't taking it seriously. I was also held back by my commitment to only investing in my own businesses... I was pretty cocky and didn't believe any investment had a better risk/return. By early 2018, a couple of things had happened:

One, bitcoin had crushed my returns over the previous year, even after a 60% drop from its all-time high. And two, something like five to 10 people that I respected were telling me I was wrong about Bitcoin.

One day, I just decided that, at least as an exercise in critical thinking, I needed to steelman my argument. Obviously, as anyone who has ever undertaken that task knows, I failed. I fell down the rabbit hole and didn't do much other than read about Bitcoin and listen to podcasts for the next year.

How has Bitcoin changed your life?

I mean, the most obvious way it has changed my life was by shifting my investment philosophy 180 degrees... I went from only investing in myself to committing my wealth and future savings exclusively to bitcoin.

It's a nearly impossible benchmark to beat unless you're starting a Bitcoin business, and I didn't have the financial or technical background to pursue anything like that. I've never known how to describe myself but it would be something like “analog entrepreneur”... I like building brick-and-mortar businesses where you get to interact with people and communities. As an entrepreneur, that made it difficult to expand my business or start new ones because they needed to be entirely funded by someone else. Investor discussions were always kind of awkward too because — although not explicitly — implicitly the discussion always rests on the investor asking the question "if you were me, would you make this investment?" and the entrepreneur answering "YES!" whereas my answer was, "No, you should put it all in bitcoin but you won't, so yes."

Beneath the surface my heart was in Bitcoin and in hindsight it was inevitable that my path would lead me to working in Bitcoin.

This is a really obvious and basic way that it's changed me but obviously, Bitcoin has this ability to change the way you see everything in life. It's been far more all encompassing than investing, too.

What is the most amazing thing about Bitcoin to you?

By far, the most interesting thing about bitcoin is its capacity to completely change individuals. A significant part of my worldview is that life is psychedelic. Everything from books to conversations to everyday experiences alters our consciousness... who we are and how we see the world. I've become obsessed with “Bitcoin as psychedelic” — I think it's inevitable that everyone in the world will be orange pilled. Whether it's consciously or subconsciously, Bitcoin will transform human consciousness on an individual level. This ability to shift all of humanity toward all of the values associated with low-time preference and away from high-time preference fiat values is what makes me completely obsessed... I really believe it's the most hopeful thing humanity has ever seen.

What are you most looking forward to in the Bitcoin space?

Bitcoin has consumed most of my time and energy since it first clicked for me in 2018. I guess the thing I'm most looking forward to (beyond the shift in human consciousness) — though it's already begun — is having an outlet for all of that energy... having started at Bull Bitcoin last month as the new head of marketing, I'm unbelievably excited to have the resources to start orange pilling on a large scale. One obvious thing we're focused on is customer acquisition, i.e., orange pilling no coiners. But Bull is such a unique company in terms of its commitment to using Bitcoin in the right ways... I'm really excited about being able to not just pursue surface-level orange pilling for bitcoin as an investment but deeper orange pilling with bitcoin as censorship-resistant money, freedom tech, etc. We have lots of projects in the works that will allow us to better educate our existing clients on self custody and privacy best practices that will hopefully nudge them further down the rabbit hole. It really feels like a unique opportunity for me to contribute to the Bitcoin project in a meaningful way.

Price prediction for the end of 2021, and the end of 2030?

For 2021, I'm going to be super boring and guess the middle of the range I have in mind... $85,000. I think anything can happen short term, especially if we see another round of lockdowns in the fall which I fully expect. With that being said, I think the ten-year bull run is far from over and I wouldn't be surprised to see $500,000 within 12 months.

For 2030, I would be surprised if we're still under $5 million. At that point, nominal predictions are kind of useless so let's say $5 million in 2020 purchasing power.

How cross-chain liquidity aggregation can shape the future of DeFi

How cross-chain liquidity aggregation can shape the future of DeFi

What will ease the burden of DeFi users and remove some of the barriers to entry for newer market participants? This project sees the future of DeFi as multichain co-existence.

As decentralized exchanges now represent a significant amount of crypto trading volume, it is vivid that these platforms will play a big role in the smart economy of the future.

Automated market makers, in particular, changed the game by eliminating the need for order books entirely and replacing them with liquidity pools. This model was a win-win for both traders executing swaps and liquidity providers incentivized to supply their tokens and earn fees from traders.

Even the sporadic liquidity issues on DEXes, brought about by a sometimes fragmented marketplace, were addressed by the emergence of DEX aggregators – platforms that would essentially pool together fragmented liquidity onto a single platform.

For the most part, however, these DEX aggregators are limited to connecting liquidity pools on Ethereum. This obviously limits the level of multi-chain accessibility actually possible while trading on a DEX. Moreover, as things stand, trading volume on DEXes still pales in comparison to most centralized exchanges.

And while Ethereum might be the most prominent network in the industry, it isn’t for everybody. It is no secret that network congestion and the lack of scalability have caused high transaction fees on Ethereum.

Traders have looked to Layer 2 solutions and sidechains such as Binance Smart Chain, HECO, and Polygon as alternatives, but the transaction barriers between them still limit their choices considerably.

In some instances, the convoluted nature of actually performing a trade coupled with these liquidity issues has driven DeFi traders right back to centralized exchanges.

Clearly, interoperability between blockchains is the need of the hour. Cross-chain liquidity aggregators address these issues prevailing on decentralized exchanges by aggregating liquidity sources from various DEXs across chains and their own cross-chain pools.

O3 Swap is one such cross-chain DEX aggregator that works on expanding available token markets and increasing liquidity and trading volumes, easing cross-chain transactions for users all around.

O3 Swap describes itself as the first cross-chain aggregation protocol that enables free trading of native assets between heterogeneous chains by deploying ‘aggregator + asset cross-chain pool’ on different public chains and Layer 2 granting users access to cross-chain transactions with one click.

The project sees the future of DeFi as multichain co-existence. For the moment, it supports Ethereum, BSC, HECO, Polygon, and NEO cross-chain transactions and four cross-chain pools: USD Pool (ERC20-BEP20-HRC20), ETH pool (ERC20-BEP20-HRC20), BTC Pool (ERC20-BEP20-HRC20), and USDC Pool (ERC20-BEP20-Polygon).

With the use of special algorithms, cross-chain DEX aggregators identify the most optimal routes to fulfill trade orders across blockchain ecosystems. This important functionality will not only ease the burden of existing DeFi users but also remove some of the barriers to entry for newer market participants.

Learn more about O3 Swap

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

Price analysis 8/2: BTC, ETH, BNB, ADA, XRP, DOGE, DOT, UNI, BCH, LINK

Price analysis 8/2: BTC, ETH, BNB, ADA, XRP, DOGE, DOT, UNI, BCH, LINK

Bitcoin price has hit a few barriers but many altcoins appear positioned for continuation.

Bitcoin (BTC) dropped back below $39,000 on Aug. 2, suggesting that short-term traders were booking profits after the price failed to close above $42,451.67. 

However, lower levels could again attract buying as seen in late July. Data from Santiment showed that Bitcoin held on wallet addresses storing between 100 and 10,000 Bitcoin rose to a new all-time high at 9.23 million Bitcoin on Aug. 1. The previous all-time high for this group of investors was recorded on April 5, just over a week before Bitcoin hit an all-time high of $64,854 on April 14.

Santiment highlighted that the “addresses have accumulated approximately 170,000 more Bitcoin” in the last four weeks. A similar pace of purchase was seen in late December 2020, just before the start of the strong bull move in 2021.

Daily cryptocurrency market performance. Source: Coin360

CoinShares data showed that the assets under management in Bitcoin-focused funds dropped by $20 million last week, its fourth successive weekly decline. Over the past month, Bitcoin funds have witnessed cumulative outflows of $67.8 million.

The data was not all bearish because multi-asset funds attracted cumulative inflows of $7.5 million last week and $11.9 million over the past month.

Could Bitcoin break out of its range and lead the crypto markets higher? Let’s study the charts of the top-10 cryptocurrencies to find out.


Bitcoin peeked above the overhead resistance at $42,451.67 on Aug. 1 but the bulls could not sustain the higher levels. This shows that bears are attempting to keep the range-bound action intact.

BTC/USDT daily chart. Source: TradingView

The upsloping 20-day exponential moving average ($36,968) and the relative strength index (RSI) above 62 suggest that the sentiment is positive. If the price rebounds off the 20-day EMA, the bulls will again try to push and sustain the price above $42,451.67.

If they succeed, it will signal the start of a new uptrend. The first target on the upside will be a move to the overhead resistance zone at $50,000 to $51,500 where bears may again mount a stiff resistance.

This bullish view will invalidate if the price turns down from the current level and breaks below the $36,670 support. That will indicate that the BTC/USDT pair could extend its consolidation between $28,805 and $42,599 for a few more days.


Ether (ETH) broke above the downtrend line on July 31, invalidating the descending triangle pattern. The bears sold at higher levels on Aug.1 as seen from the long wick on the day’s candlestick but the positive sign is that bulls did not allow the price to drop below the downtrend line.

ETH/USDT daily chart. Source: TradingView

The upsloping 20-day EMA ($2,273) and the RSI in the overbought territory indicate that bulls are in control. The ETH/USDT pair could now rally to the psychological level at $3,000 where the bears may again mount a stiff resistance.

Contrary to this assumption, if the bears pull the price back below the 20-day EMA, it may trap the aggressive bulls. This could result in long liquidation, which may sink the pair to $2,000 and then to the critical support at $1,728.74.


Binance Coin (BNB) rose above the overhead resistance at $340 on Aug. 1 but the long wick on the day’s candlestick suggests that bears are attempting to defend this level.

BNB/USDT daily chart. Source: TradingView

Although the price dipped back below $340 on Aug. 1, the positive sign is that the bulls have not given up much ground. If the price consolidates between the moving averages and $340, it will improve the prospects of a break above $340.

If that happens, the BNB/USDT pair will complete a bullish ascending triangle pattern. This setup has a target objective at $454.58 but the climb may not be easy because the bears will erect roadblocks at $380 and then again at $433.

On the downside, if bears sink the price below the moving averages, the pair could drop to the trendline. This is an important support to watch out for because if it cracks, the next stop could be $211.70.


Cardano (ADA) rose above the downtrend line on Aug. 1 but the long wick on the day’s candlestick suggests that bears are defending the resistance aggressively.

ADA/USDT daily chart. Source: TradingView

The marginally rising 20-day EMA ($1.27) and the RSI above 56 suggest that bulls have a slight advantage. If buyers can push and sustain the price above the downtrend line, it will invalidate the descending triangle pattern.

The ADA/USDT pair could then rise to $1.50 where the bears may again pose a stiff challenge. If buyers can overcome this resistance, the pair could start its journey toward $1.94.

This positive view will be negated if the price turns down and plummets below $1.20. That could open the doors for a further slide to $1.14 and then $1.


XRP has been consolidating near the overhead resistance at $0.75 for the past few days, which suggests that bulls are not booking profits as they anticipate the relief rally to extend further.

XRP/USDT daily chart. Source: TradingView

The moving averages have completed a bullish crossover and the RSI is above 63, suggesting the path of least resistance is to the upside. If buyers drive and sustain the price above $0.75, the XRP/USDT pair will complete a double bottom pattern, which has a target objective at $1.

If bulls fail to sustain the price above $0.75, short-term traders may close their positions. That could drag the pair down to the moving averages. A break below this support will suggest that the pair may extend its stay inside the $0.50 to $0.75 range for a few more days.


Dogecoin (DOGE) has been consolidating near the overhead resistance at $0.21 for the past few days. This suggests a state of uncertainty among the bulls and bears.

DOGE/USDT daily chart. Source: TradingView

The flat 20-day EMA ($0.20) and the RSI near the midpoint indicate a balance between supply and demand. Usually, a tight consolidation near the stiff resistance resolves to the upside. If buyers thrust the price above the $0.21 to 50-day simple moving average ($0.22) resistance zone, the DOGE/USDT pair could rise to $0.28 and then to $0.33.

On the contrary, if bulls fail to clear the overhead hurdle, it could attract profit-booking. The pair could then gradually slide down to the critical support at $0.15. A bounce off this level may keep the pair range-bound between $0.15 and $0.21 for some more time.


The $16.93 level had acted as a stiff resistance between June 22 to July 8 but the bulls propelled Polkadot (DOT) above it on Aug. 1, which is a positive sign.

DOT/USDT daily chart. Source: TradingView

The moving averages are on the verge of a bullish crossover and the RSI is just below the overbought territory, suggesting that buyers have the upper hand. If bulls flip $16.93 to support, the DOT/USDT pair may continue its journey to $26.50.

On the other hand, if the bears pull the price below $16.93, the pair could drop to the 20-day EMA ($15.21), which may act as a support. If the price rebounds off this level, the buyers will again attempt to resume the relief rally. A break and close below the 20-day EMA could result in a retest of $13.


The long wick on Uniswap’s (UNI) candlestick on Aug. 1 suggests that bears are defending the overhead resistance at $23.45, but the positive sign is that bulls have not given up much ground.

UNI/USDT daily chart. Source: TradingView

The moving averages have completed a bullish crossover and the RSI is close to the overbought zone, indicating that buyers have the upper hand. A break above $23.45 will clear the path for a possible rally to $30.

If the price again turns down from the overhead resistance, the UNI/USDT pair is likely to find support at the 20-day EMA ($19.55). If the price rebounds off this support, it will improve the prospects of a break above $23.45.

Conversely, if the price turns down and breaks below the moving averages, it will suggest that the range-bound action may continue for a few more days.

Related: There’s no reason not to hold Bitcoin for 100 years, Michael Saylor says


Bitcoin Cash (BCH) has been trading between the 50-day SMA ($498) and the overhead resistance at $546.83 for the past four days. A tight consolidation near a stiff resistance suggests that buyers are not closing their positions as they anticipate a move higher.

BCH/USDT daily chart. Source: TradingView

If bulls sustain the price above $546.83, the BCH/USDT pair will complete a double bottom pattern. This bullish reversal setup has a target objective at $710.13. The moving averages are on the verge of a bullish crossover and the RSI is in the positive zone, which suggests that the path of least resistance is to the upside.

This bullish view will be invalidated if the price turns down from the current level and breaks below the moving averages. Such a move will suggest that the pair could extend its range-bound action between $383.53 and $546.83 for a few more days.


The bulls pushed Chainlink (LINK) above the overhead resistance at $22.07 on July 30 but the bears are not allowing the buyers to have a runaway rally.

LINK/USDT daily chart. Source: TradingView

The bears are attempting to pull the price back below $22.07 but the bulls have held the support for the past three days. The moving averages have completed a bullish crossover and the RSI is near the overbought territory, indicating that buyers have the upper hand.

If bulls drive the price above $24, the LINK/USDT pair could rise to $26.48. A break above this resistance could clear the path for a possible rally to $32.

Alternatively, if the price breaks below $22.07, the pair could drop to the 20-day EMA ($19.17). A strong rebound off this support will suggest that sentiment remains positive as traders are buying on dips. The bears will have to sink the price below the moving averages to gain the upper hand.

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.

Hodl Hodl Resurfaces With Explanations After Announcing Forced Liquidations, Lacking Communication

Hodl Hodl Resurfaces With Explanations After Announcing Forced Liquidations, Lacking Communication

After arousing confusion with incomplete communication and forced liquidations on lending contracts, Hodl Hodl explains what happened.

On August 1st, peer-to-peer bitcoin trading and lending platform Hodl Hodl tweeted that the company was upgrading its security measures and contacting users individually through email. A few hours later, the firm shared it was force-liquidating some contracts in its lending platform, without further explanations. But today, Hodl Hodl released a PGP signed statement explaining the events and apologizing for the lack of proper communication.

“[We] have started migration/liquidation of user contracts to prevent the potential loss of funds,” the statement read. “Unfortunately, our recent internal and external audit identified that some user payment passwords might have been compromised. This affected a limited number of contracts, but we are taking proactive measures to ensure that everyone is safe.”

Hodl Hodl’s escrow-based lending system has three keys; the lender’s, the borrower’s, and another held by the company itself. These keys comprise the platform’s 2-of-3 multisignature escrow, where two signatures, and thus two keys, are required for spending funds locked in a lending contract’s multisignature address.

User private keys, from both lender and borrower, explained @6102bitcoin, “are generated using a user-specified ‘payment password’ in combination with a client-side random number generator.” If this password is weak, Hodl Hodl or a man-in-the-middle could discover what one or more keys are through brute-force attempts and steal the funds.

Additionally, Hodl Hodl’s platform was down for some time, stopping users from releasing funds since the company’s decryption mechanism is not yet public. If it was, users could decrypt the lend contract key using their own payment password and make a release transaction, sign it, and broadcast it in situations like this. Hodl Hodl previously said it planned to make the decryption tool public in Q3 2021.

It is still unclear, however, what the specific compromise has been. HodlHodl said that the company is still investigating these issues and building tools to facilitate the migration of funds from old escrows to new ones. Hodl Hodl said it is “going to publish a transparency report” once it finishes the investigations.

Brad Garlinghouse's lawyers file request for Binance documents in 'international' challenge to SEC lawsuit

Brad Garlinghouse's lawyers file request for Binance documents in 'international' challenge to SEC lawsuit

"The offers and sales that the SEC challenges did not occur in this country and are not subject to the law that the SEC has invoked in this case," said the legal team.

The lawsuit between Ripple Labs and the U.S. Securities and Exchange Commission, or SEC, now involves major crypto exchange Binance after a recent filing on behalf of Ripple CEO Brad Garlinghouse.

According to court documents filed in the Southern District of New York on Monday, Garlinghouse’s legal team has requested documents “relevant to the case and unobtainable through other means” from Binance Holdings Limited, the Cayman Islands-based subsidiary of the major cryptocurrency exchange. The filing cited U.S. laws concerning the Department of State and the Hague Convention and asked the court to issue a letter of request for the Central Authority of the Cayman Island to compel evidence from Binance.

“Mr. Garlinghouse seeks foreign discovery on the basis of his good faith belief that [Binance Holdings Limited] possesses unique documents and information concerning this case, and specifically, concerning the process by which transactions in XRP allegedly conducted by Mr. Garlinghouse on foreign digital asset trading platforms were conducted,” said the filing.

Specifically, the lawyers seem to be challenging claims from the SEC that the Ripple CEO sold more than 357 million XRP tokens on “worldwide” crypto trading platforms to investors “all over the world.” The team cited Section Five of the Securities Act of 1933, stating the alleged illegal XRP sales applied only to domestic sales and offers of securities. The documents requested of Binance may contain evidence in support of that claim.

“As the SEC knows, Mr. Garlinghouse’s sales of XRP were overwhelmingly made on digital asset trading platforms outside of the United States [...] the discovery that Mr. Garlinghouse seeks will be relevant to demonstrating that the offers and sales that the SEC challenges did not occur in this country and are not subject to the law that the SEC has invoked in this case.”

Related: Judge allows Ripple to depose SEC official who decided ETH is not a security

The request is part of a lawsuit the SEC filed against Ripple in December, alleging the firm, Garlinghouse and co-founder Chris Larsen had been conducting an "unregistered, ongoing digital asset securities offering" with their XRP token sales. Ripple’s legal team had previously claimed that XRP is more like Bitcoin (BTC) or Ether (ETH) — which the regulatory body has classified as commodities rather than securities.

However, the firm seems to be switching gears — or trying to augment its case — by challenging allegations of domestic versus international token sales. Garlinghouse and Larsen filed a motion in June petitioning international authorities to request documents from several non-U.S.-based crypto exchanges including Bitstamp, Huobi, and Upbit. The case will reportedly end the pre-trial discovery process on Oct. 15.

COC#3: Squeezed Supply, Shorts and Bitcoin Lemonade

COC#3: Squeezed Supply, Shorts and Bitcoin Lemonade

This third edition of Cycling On-Chain takes a closer look at bitcoin’s ongoing supply squeeze and recent short squeeze.

Cycling On-Chain #3: Lemonade

Dilution-proof, August 1, 2021

Cycling On-Chain is a monthly column that uses on-chain and price-related data to better understand recent market movements and estimate where we are in bitcoin’s larger market cycle. After providing a broader look back and forward in the first edition, and discussing how Bitcoin has entered the geopolitical stage in the second edition, we’ll now take a look at the current, ongoing supply squeeze that recently led to a short squeeze in the bitcoin market that drove prices up steeply.

The last three months have been pretty rough for bitcoin from a price perspective. You could make a good case that, fundamentally, things have never looked better. But a period of over-leveraged speculation and (mostly irrational) fear in the markets have left their mark — particularly on the newer market entrants. Those times might be scary but are actually where the wheat is separated from the chaff or, in bitcoin terms, the weak hands are shaken out and the bitcoin ends up in strong hands. These HODLers of last resort don’t budge when price drops a double-digit percentage, but rather see it as an opportunity.

When life gives you melons, make lemonade – Elbert Hubbard, 1915

Lemonade. That is what this third Cycling On-Chain is all about. Times have been tough, but there are currently all kinds of squeezing going on that ensure that much of the available bitcoin supply will end up in strong hands in preparation for the next micro-, meso- or macro-cycle.

Squeezing Supply

A supply shock, sometimes also called a supply squeeze, is an event where the supply of a product or commodity that is actively being traded on the market changes and causes a price move. In Bitcoin, the halving events that occur every 210,000 blocks (roughly every four years) are the most famous supply shocks. During a halving the new supply issuance via the block rewards that miners receive when creating a new block is halved, triggering a large price increase in the subsequent year that is known as Bitcoin’s four-year cycle.

Bitcoin’s halvings are programmed into the software, but a supply shock can also occur when previously illiquid supply becomes liquid or vice versa. It is therefore interesting to assess to what extent supply is in the hands of entities that are or are not selling.

Using the data in the Bitcoin blockchain, it is possible to look at the ages of all the unspent transaction outputs (UTXOs) that have ever existed. Glassnode analyzed these “coin ages” and found that roughly 155 days is a historic cut-off point when the probability of a UTXO being spent becomes very low. Based on this, they created metrics for the short-term holder (STH) and long-term holder (LTH) supply.

Figure 1: Bitcoin price (black), circulating supply (blue), short-term holder supply (red) and long-term holder supply (green) (source)

As is evident, the STH and LTH supply fluctuate over time. An easier way to view the historical data is to divide the LTH supply by the circulating supply, which then represents the portion of the circulating supply that is estimated to be in the hands of LTH.

This Long-Term Holder Supply Ratio is displayed in the green line in Figure 2. The green color overlays represent periods in which the LTH Supply Ratio rises, which usually occurs during market downturns where price (black line) decreases or bottoms. The red color overlay shows the opposite: LTH Supply Ratio usually decreases when price rises, illustrating that long-term holders tend to sell against market strength and accumulate during market weakness. Long-term bitcoin holders are therefore usually seen as “smart money.” Being able to follow their economic behavior via the blockchain may hold valuable information about the state of the bitcoin market.

Figure 2: Bitcoin Long-Term Holder (LTH) Supply Ratio (green) and price (black) over time (source)

The LTH Supply Ratio also allows us to compare how current values for the portion of the total supply that is held by long-term holders compares to historical values. Figure 3 illustrates that the lowest LTH Supply Ratio reached during this latest $65,000 market top was not as low as those reached during previous market cycle tops. Of course it does not have to reach these levels, but shows that if $65,000 does end up being a larger macro market cycle top, it was characterized by lower LTH sell pressure than previous market cycle tops.

Figure 3: Bitcoin Long-Term Holder (LTH) Supply Ratio (green) and price (black) over time (source)

Since the Bitcoin blockchain is a public ledger, it is also possible to forensically assess to what extent unspent transactions come from or move to certain types of entities, such as exchange wallets. While this is unfortunate from a privacy perspective (make sure to check out @BitcoinQ_A’s privacy guide to learn how to optimally deal with this yourself), it allows Glassnode to improve upon the STH and LTH supply metric.

Using a proprietary algorithm to apply clustering based on forensic analysis of Bitcoin’s UTXO set, they created metrics for the illiquid, liquid and highly liquid supply. For the remainder of this column, the latter two are combined as “liquid supply” to keep the analysis simple.

Figure 4: The bitcoin price (black), circulating supply (blue), illiquid supply (green) and sum of the liquid and highly liquid supply (red) (source)

If you compare the original STH and LTH supply (Figure 1) with this illiquid and liquid supply chart (Figure 4), you’ll see that the changes in the latter are much more nuanced. This is likely the result of the applied clustering, as young UTXOs can still be held by illiquid entities with little to no history of selling.

Therefore, it is more helpful to look at the monthly net changes within these metrics, which is what Glassnode offers in their “Illiquid Supply Change” and “Liquid Supply Change” metrics. Figure 5 displays the illiquid supply change over time. The large amount of previously illiquid supply that became liquid around early May is clearly visible here, as well as the illiquid supply increases that have returned since the May 19 capitulation event.

Figure 5: The monthly (30-day) net change of bitcoin supply held by illiquid entities (source)

Because the bitcoin supply is increasing by every block and these increases are changing over time due to the halving-based supply issuance schedule, these values cannot be accurately compared to historical values. After all, a 200,000 bitcoin illiquid supply decrease was much more impactful when there were only 2 million bitcoin circulating (10% of the total) than it would be when there are 20 million coins circulating (1%).

This problem can be solved by dividing the illiquid supply by the circulating supply, creating a metric called the circulating supply-adjusted illiquid supply changes,” which is displayed in Figure 6. During the early years, the illiquid supply increased massively, a lot of which was likely related to coins being forgotten about or lost, as well as some of the early HODLers stacking sats before that became a thing. The relative illiquid supply decrease seen during the recent market downturn was the largest since the 2017 market cycle top, which was preceded by two more similar episodes during that bull run. The current illiquid supply increase is also the largest since mid-2017, before that cycle reached its final blow-off top.

Figure 6: The bitcoin price (black) and 30-day illiquid supply changes (green), adjusted for bitcoin's circulating supply (source)

Recently, Will Clemente and Willy Woo introduced the “illiquid supply ratio,” a metric that is calculated by dividing Glassnode’s illiquid supply by liquid and highly liquid supplies. An alternative version that is best labeled as “illiquid supply percentage” can be calculated by dividing the illiquid supply by bitcoin’s circulating supply. The latter metric therefore represents the portion of the circulating supply that is currently labelled as illiquid by Glassnode. Likewise, the liquid supply percentage can be calculated by dividing the liquid supply by the circulating supply, representing the inverse of the illiquid supply. Both metrics are displayed in Figure 7.

Figure 7: The bitcoin price (black), circulating supply (blue), illiquid (green) and liquid supply (red) percentages (source)

Next we’ll zoom in on the illiquid supply ratio percentage, which is visualized in figure 8. After Bitcoin’s genesis almost all of the bitcoin supply was considered illiquid, as network participants were CPU mining on laptops and desktops and mostly just toying around with the new software. When bitcoin started getting a market price and saw some early adoption as a neo-money, a larger portion of the supply started to become liquid, as these coins could now actually be spent. During the earlier years miners also may have been selling their newly mined bitcoin to cover overhead costs — especially after the introduction of GPU mining and later ASIC mining.

Figure 8 also shows that after each Bitcoin halving (vertical black striped lines), the rate of contraction in the illiquid supply slows — even turning into a positive growth rate immediately after the last two halvings. More simply put: as the bitcoin supply issuance declines and it becomes scarcer, its holders appear to become less and less inclined to part with their bitcoin. Will the low 70% illiquid supply ratio percentage that we saw during the previous bear market be the lowest ones that will ever be reached in Bitcoin’s existence?

Figure 8: The bitcoin price (black) and illiquid supply ratio (green) over time (source)

Figure 9 shows this same illiquid supply ratio percentage, but zooms in on the last year. Since the start of July, the illiquid supply ratio percentage increased drastically, as coins were being scooped off the market at a discount by holders with a history of being strong hands. Current illiquid supply ratio percentage values haven’t been seen since the bitcoin price was hovering just below all-time highs at around $55,000. This short-term trend suggests that the recent dump is now over and a new supply squeeze may be underway.

Figure 9: The bitcoin price (black) and illiquid supply ratio (green) over time (source)

Squeezing Shorts

The supply wasn’t the only thing being squeezed recently. Since the May 19 capitulation event, the bitcoin price has been in a downward consolidation and market sentiment was predominantly bearish. Bitcoin Twitter was actually so salty that you could mine salt by scrolling through the responses under the tweet of any on-chain analyst. This was also noticeable in the funding rates of bitcoin perpetual futures contracts that were mostly negative since then, which means that shorting bitcoin was so popular that you would basically need to pay a premium to go short. The increasing open interest since the May 19 capitulation while funding stayed negative further substantiates this.

These circumstances lined up to be ideal for a short squeeze to occur. A short squeeze happens when a relatively large portion of the futures market is going short with inappropriate risk management and a sudden price increase causes the collateral under these positions to become insufficient, triggering exchanges to liquidate these positions. This is particularly troublesome if a large portion of the open positions are naked shorts, which means that they use a different form of collateral to borrow the asset they’re shorting against. In the case of bitcoin, when fiat currencies or stablecoins are used as collateral for a short position that is then liquidated, the fiat or stablecoin collateral is used to buy the bitcoin that is needed to pay off the debt, which actually drives its price up further.

This is exactly what happened over the last two weeks. Figure 10 illustrates that since the May 19 capitulation event, price declined (black) while open interest (blue) increased, as funding remained negative (light green). When price resiliently bounced off the recent $30,000 lows, open interest actually increased further at increasingly negative funding, showing that the bears were basically doubling down. However, the bitcoin price just kept surging, liquidating a large number of these naked shorts, creating an over $10,000 price move over the course of about a week.

Figure 10: The bitcoin price (black), perpetual futures funding (light green), perpetual futures open interest (blue) and short liquidations (red) (source)

Squeezing Out The Weak Hands

During this recent bounce off the lows, the Average Spent Output Lifespan (ASOL) per entity on the network remained low, which means that the coins that moved on the bitcoin blockchain throughout this period were mostly relatively young. The Spent Output Profit Ratio (SOPR) per entity on the network did increase though, illustrating that the coins that were moved did so at a profit. This combination of trends is visualized in figure 11 and suggests that younger market entrants that were sitting on underwater positions might have jumped on this opportunity to sell some of their positions at a profit. This is once again an example of coins moving from weak-handed entities with low conviction to strong-handed new owners.

Figure 11: Entity-adjusted Spent Output Profit Ratio (SOPR) and Average Spent Output Lifespan (ASOL) over time (source)

When using terms like “smart money” and “weak hands,” we tend to consider institutional players to be the former and retail investors to be the latter, but this is not necessarily the case. Figure 12 displays the bitcoin supply that is held by entities with balances up to 1,000 bitcoin and shows that entities with balances of up to 1 bitcoin have been rigorously stacking sats throughout this entire bull run and never had a significant selloff. Entities with a balance between 1 and 100 bitcoin were selling portions of their stack since bitcoin broke its prior $20,000 all-time high until the May 19 capitulation event. But these smaller entities have been accumulating again since then. Entities with a balance of 100 to 1,000 bitcoin were mostly stacking when the bitcoin price neared its recent all-time high and have mostly sat on their positions ever since.

Figure 12: Bitcoin supply held by each entity tier, up to 1,000 bitcoin (source)

By definition, whenever there are buyers there are also sellers. On average, entities with balances up to 100 bitcoin were accumulating throughout the recent market downturn. They were therefore slowly depleting the highly liquid supply that was actively being traded on the markets, as we already saw in the illiquid supply changes. Since this last bounce off the $30,000 lows, almost 112,000 bitcoin have been withdrawn from exchanges (Figure 13), adding fuel to the fire that we may be in the midst of another supply squeeze.

Figure 13: Bitcoin balances on exchanges (source)

A Not-So-Sour Sentiment

The recent market turnaround seems to have had a noticeable impact on the market sentiment as well. In an informal monthly market sentiment poll, respondents were very clearly bullish on all timeframes, as can be seen in figure 14.

Figure 14: Bitcoin market sentiment poll, ending on July 31, 2021 (source)

These poll results appear to align with the Fear & Greed Index that scrapes multiple social media platforms and algorithmically assesses the sentiment in bitcoin-related posts. Throughout the recent downwards price consolidation it consistently signaled very high levels of fear and anxiety, but has now actually flipped to greed for the first time in a while (Figure 15).

Figure 15: The Crypto Fear & Greed Index (source)

During the last few months, an often-heard criticism of on-chain analysis was that it does not predict the future. While this is true, increased insight into what is happening under the hood of the system certainly helps us understand how the bitcoin market functions. Relatively unexpected events such as Elon Musk or Tesla suddenly speaking negatively on Bitcoin or China suddenly cracking down hard against it can impact the market at any point. However, these types of events occur during each four-year halving cycle, so zooming out and looking at the larger picture may be helpful in navigating the larger trends.

Several models have been developed to do so and use statistical approaches to predict the global direction of where the bitcoin price is headed, such as the S2F and S2FX models. Other indexes extrapolate price increases throughout previous halving cycles over the current period. Each of these approaches have their own methodological limitations, but together they provide a nice overview of where price may be heading if history either repeats or rhymes (Figure 16). On average, the bitcoin price was following those anticipated courses nicely throughout the current halving cycle, but has dipped below most of these models during the recent market downturn. Will this cycle end up being the one that breaks down several of these models to the downside or will the apparent ongoing supply squeeze drive up this cycle’s price in line with its predecessors?

Figure 16: The Bitcoin Halving Cycle Roadmap (2020-2024)

Previous editions of Cycling On-Chain:

Disclaimer: This column was written for educational, informational and entertainment purposes only and should not be taken as investment advice.

This is a guest post by Dilution-proof. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

Monero’s former maintainer arrested in the US for allegations unrelated to cryptocurrency

Monero’s former maintainer arrested in the US for allegations unrelated to cryptocurrency

An arrest warrant for Riccardo Spagni was issued on July 20, 2021, at the request of the South African government. He was apprehended the same day in the United States.

Riccardo Spagni, the former maintainer of the Monero (XMR) cryptocurrency, was arrested last month in Nashville, Tennessee on fraud charges tied to alleged offenses in South Africa between 2009 and 2011. 

Spagni was on board a private jet scheduled to fly to Los Cabos, Mexico when he was apprehended in Nashville during a scheduled refueling stop, according to court documents. His journey originally began just outside of New York City. He is currently in the custody of the U.S. Attorney General, according to court documents.

The arrest was made at the request of the South African government, which is seeking Spagni’s extradition on fraud charges. The charges, which are unrelated to Spagni’s role at Monero, are tied to his previous employment as an information technology manager at a company called Cape Cookies. Regarding Spagni’s alleged misdeeds, the court documents read:

“As an employee of Cape Cookies, SPAGNI intercepted invoices from another company, Ensync, relating to information technology goods and services it had supplied Cape Cookies. SPAGNI knowingly used false information to fabricate similar invoices purporting to be from Ensync, relying on details including this company's Value Added Tax (VAT) number and bank account information. SPAGNI then inflated the prices for the goods and/or services.”

Related: FBI arrests 24-year-old crypto trader for commodities and wire fraud

The Government of South Africa alleges that the invoices did not contain the real bank account of Ensync, but rather a bank account opened and controlled entirely by Spagni.

In the court filing, Acting United States Attorney Mary Jane Stewart requested that the court deny any bail requests by Spagni “pending resolution of this extradition proceeding.” The document describes Spagni as a flight risk with a strong motivation to flee to avoid facing charges. He’s believed to have “significant crypto-assets” as well as a watch valued at $800,000.

Spagni now faces a hearing on August 5 to determine whether he is held pending trial. If convicted in South Africa, Spagni could face up to 20 years in prison.

Spagni has been involved in the cryptocurrency market since at least 2011 and is active on Twitter under the handle @FluffyPony. He has not tweeted since the arrest on July 20, 2021. In December 2019, he stepped down as lead maintainer of Monero. 

Voyager Ventures Into Digital Payments With New Acquisition, But Should Focus On Bitcoin

Voyager Ventures Into Digital Payments With New Acquisition, But Should Focus On Bitcoin

Voyager acquired Coinify, but their focus on stablecoins might leave their customers behind while Bitcoin walks toward full monetization.

New York-based bitcoin and cryptocurrency trading platform Voyager announced today the acquisition of Coinify, a cryptocurrency payment platform with customers in over 150 countries, for $85 million. But their focus on stablecoins instead of Bitcoin might be a hurdle long term.

Coinify allows merchants to accept bitcoin and cryptocurrencies in their businesses while receiving payouts in fiat currencies. The payments platform supports more than 20 national currencies and is available in Asia, Europe, North America, and South America.

Voyager is breaking into digital payments through the acquisition, something its co-founder and CEO Stephen Ehrlich told Forbes “is the next frontier.” The trading company plans to integrate its systems with Coinify’s platform to allow traders to make and receive payments directly through their digital accounts. Voyager aims to cut out fees associated with traditional payment infrastructures and on-chain transactions.

“We believe the USDC stablecoin is the best stablecoin on the market and that customers want to receive payments in that,” Ehrlich said. “We see this vision of payments being the next frontier on top of trading and investing.”

Payments, the medium of exchange role of a currency, follow the store of value role as adoption of a currency increases. But since a stablecoin is pegged to the dollar, there is arguably little benefit added to transacting with and holding it, besides easier and potentially cheaper cross-border payments.

When Strike, which leverages dollars and the Bitcoin Lightning Network to allow instant and cheap payment transfers worldwide without intermediaries, started implementing its services in El Salvador, it had to use a stablecoin to achieve basic functionality.

But after El Salvador made Bitcoin legal tender, Strike started working towards making the country’s biggest banks interoperable on Lightning. Strike founder Jack Mallers said the resulting system would replace the equivalent of automated clearing houses in the U.S. with the Lightning Network.

Although stablecoins might bring short-term opportunities to solve some of the banking system’s inefficiencies and setbacks, only Bitcoin can deploy permanent changes and benefits. Moreover, as bitcoin progresses in its path to monetization, it is set to keep growing in purchasing power against fiat currencies.

Companies, developers, and users alike have the opportunity to embark early on the financial revolution started by Bitcoin by leveraging the Lightning Network. The second-layer protocol enables cheap, fast, and private payments to be made with the world’s hardest money. The sooner merchants start accepting and holding BTC, the more they will be able to reap the benefits of Bitcoin’s eventual full monetization.