Top News Stories from the Month – August
The US Commodity Futures Trading Commission (CFTC) denies approval of LedgerX bitcoin futures after LedgerX announced it had launched the first physically-settled bitcoin futures contracts. The company unveiled its Omni platform with unique contracts which not only pays out traders in bitcoin but also allows deposits in bitcoin, rather than U.S. dollars, and will be available to both institutional and retail investors. Following the announcement, CFTC quickly moved to shoot down the claims, stating that LedgerX had “not yet been approved by the Commission” to offer physically settled bitcoin futures.
New York based digital asset management fund, Grayscale Investments announces tranfer of its cryptocurrency holdings worth nearly $3 billion to Coinbase Custody. In July, Grayscale had reported that its Bitcoin Trust was up 300% in 2019. Speaking of the deal, seen as a major coup, Coinbase Custody chief executive Sam McIngvale said, “As a NY State-chartered trust company, Coinbase Custody is held to the same fiduciary standards as national banks. We also offer some of the broadest and deepest insurance coverage in the crypto industry.”
Apple walks back on plans to allow cryptocurrency purchases with Apple credit card. Apple’s partner in the project, Goldman Sachs posted a customer agreement to its website which said that “the card cannot be used to purchase cash advances or cash equivalents that include cryptocurrencies.” Further, it was revealed that use of the credit card with jailbroken Apple devices will also be prohibited and any users attempting to modify their devices will be locked out of their credit card accounts.
Coinbase to face negligence lawsuit over controversial Bitcoin Cash listing in December 2017. US District Judge Vince Chhabaria of the Northern District of California denied Coinbase’s motion to dismiss the claims and compel arbitration, stating “the fact that Coinbase halted trading within three minutes of the launch is indicative of dysfunction. It is plausible that the company breached its duty to maintain a functional market.” Coinbase will be required to prove that it adhered to a standard of reasonable care to avert foreseeable harm to users.
North Korea has stolen $2 billion from banks and cryptocurrency exchanges around the world, according to a confidential UN report seen by Reuters. Operating under the country’s military intelligence, Reconnaissance General Bureau, North Korean cyber hackers used “widespread and increasingly sophisticated” cyberattacks to generate funding for its weapons of mass destruction programs. UN experts said they are investigating “at least 35 reported instances of attacks on financial institutions, cryptocurrency exchanges and mining activity designed to earn foreign currency” in some 17 countries.
An unidentified individual leaks Binance KYC data through various social media channels. Binance released a statement claiming that the individual had threatened and harassed the exchange, demanding a ransom of 300 BTC for withholding 10,000 photos dated from February 2018 that bear similarity to Binance KYC data submitted by their users for verification purposes. The exchange categorically refuted the authenticity of the leaked images, as they did not contain the digital watermark imprinted by their system.
Blockstream reveals institutional Bitcoin mining services with enterprise colocation service centers in Quebec and Georgia. The two data centers account for a combined 300 megawatts of energy capacity, which while fully populated with the latest mining rigs could represent over 7% of the Bitcoin network’s overall hash rate. Announcing Fidelity as an early customer, Blockstream also noted in a blog post that the mining pools would be the first to use BetterHash protocol, which allows individual miners within a pool, rather than pool operators, to determine which transactions are included in newly mined blocks.
China’s central bank, People’s Bank of China (PBOC) reveals that it will soon launch its own state-backed cryptocurrency following five years of research. Mu Changchun, deputy director of the PBOC, said the national cryptocurrency was “close to being out” at an event held by China Finance 40 Forum. The new currency would rely on a “two-tier” system, whereby the PBOC would retain control over the currency’s issuance while regional banking and financial institutions interfaced with the public in the role of fiat ramps for users to exchange their yuan for the digital currency.
Blockchain security firm CipherTrace reports that scammers have netted $4.26 billion in aggregate for 2019, with insider thefts accounting for a majority of losses. Besides the QuadrigaCX collapse, which is believed to have been a Ponzi scheme, Plus Token app, another alleged Ponzi scheme based in South Korea which came to light recently, appears to have defrauded millions of users out of $2.9 billion in crypto assets. Exit scams which are still under investigation, such as Coinroom and Bitsane, were not included in the report.
New Zealand becomes the first country to legalize salary payments in Bitcoin. The country’s tax agency, Inland Revenue Department, ruled salaries and wages may be paid in cryptocurrencies so long as the preferred digital coin is pegged to at least one standard, or fiat, currency. This would allow Bitcoin to serve as a form of payment for New Zealand workers when the law goes into effect on September 1. Companies paying workers in Bitcoin can deduct income tax through the country’s pay-as-you-earn plan.
Samsung adds support for Bitcoin and multiple altcoins in its decentralized app (DApp) store, Blockchain Keystore. The Keystore, first released in July as part of Samsung’s blockchain and decentralized application (DApp) Software Development Kit (SDK), comes preloaded on all Galaxy S10 and Note10 variants, accessible in six jurisdictions – Canada, Germany, South Korea, Spain, Switzerland, United States and United Kingdom. When using a DApp or wallet integrated with Samsung Blockchain Keystore SDK, users will be able to securely make transactions from the Keystore.
Coinbase outbids Fidelity to acquire the custody business of Swiss cryptocurrency wallet provider, Xapo, in a deal worth $55 million. Xapo’s founder, Wences Casares, revealed that the company will retain its exchange and mobile wallet app businesses, turning their focus to retail exchange business which had always been their core focus. The acquisition could result in the Coinbase storing approximately 860,000 bitcoins in its custody, which would represent nearly 5% of all Bitcoins in circulation.
Bakkt announces regulatory clearance to launch its highly anticipated physically delivered Bitcoin futures, scheduled to launch on September 23. Having already obtained a green light from the U.S. Commodity Futures Trading Commission (CFTC) under a self-certification process, Bakkt was granted a charter by New York State Department of Financial Services, enabling the Bakkt Trust to hold custody of customers’ bitcoins. Bakkt CEO Kelly Loeffler enthused in a blog post that this “offers customers unprecedented regulatory clarity and security alongside a regulated, globally accessible exchange in a market underserved by institutional-grade infrastructure.”
Japanese e-commerce giant, Rakuten launches cryptocurrency exchange through its smartphone wallet app, Rakuten Wallet. Through the smartphone app, customers can deposit/withdraw Japanese yen or a cryptocurrency and transact between different cryptocurrencies without fee. The app will support three cryptocurrencies – Bitcoin (BTC), Ethereum (ETH), and Bitcoin Cash (BCH). To ensure security of funds, all crypto assets owned by customers will be held offline in cold storage and private keys will be managed through a multi-signature scheme.
The European Union’s antitrust regulators launch probe into Facebook’s Libra over its use of consumer data. The European Commission sent out a questionnaire earlier this month to various parties involved in Libra, giving respondents two to three weeks to provide feedback. According to the questionnaire, the Commission specifically concerned about “possible competition restrictions that may result from the Libra Association, especially with regard to information that will be exchanged and the use of consumer data.” In July, the US Federal Trade Commission had launched a formal antitrust investigation into the company.
Financial Times reports that Facebook’s partners in the Libra project are looking to cut ties over intensifying regulatory scrutiny. According to the report, at least three of the founding members of Libra had privately discussed ways in which to distance themselves from the project over concerns that publicly supporting Facebook’s digital currency project may attract undue attention from regulators tasked with overseeing their own business. In its second quarter report back in July, Facebook had warned its investors that it may never launch Libra and the company was said to be growing tired of the lack of public support from its founding partners.
Craig Wright loses Kleiman lawsuit and is ordered to pay more than 500,000 bitcoins to Kleiman estate. District court of Florida Judge Bruce Reinhart ruled that half of the bitcoin mined and half of the intellectual property held by Wright before December 31, 2013 belonged to the Kleiman estate, represented by Dave Kleiman’s brother, Ira Kleiman. Reinhart dismissed all of Wright’s testimony during the trial as inconsistent and evasive, on several occasions holding him in contempt of court. At the start of the ruling, Reinhart clarified that the court “is not required to decide, and does not decide whether Wright is Nakamoto, or how much bitcoin Wright controls today.”
Portugese Tax and Customs Authority clarifies that both cryptocurrency trading and payments will not be subject to taxation in the country. In an official ruling document on the matter, the agency stated that the exchange of cryptocurrencies for fiat currency is free from VAT and that cryptocurrency users do not have to pay any income tax. Regarding the VAT exemption, the Portugese tax authority cited a 2015 ruling in the European Court of Justice that “Bitcoin is a means of payment and should therefore be exempt from VAT obligations.”
Hong Kong pro-democracy protests against Chinese interference spurs widespread Bitcoin adoption in the region. Reports emerged that the state of political turmoil exacerbated by China’s proposed extradition bill have driven local businesses and retailers to seek non-sovereign forms of payment in an act of defiance. Hong Kong department store, Pricerite announced that it will now accept bitcoin, ether, and litecoin at all its outlets, with measures being taken to further promote use of cryptocurrencies.
Coinbase survey finds that adoption of academic courses on digital currencies and decentralized technology is on the rise at the world’s leading educational institutions. The survey found that 56% of the top 50 universities in the world, according to the U.S. News and World Report, now offer courses on the decentralized technology, which represents a 10% rise from last year. Further, the survey estimated that 18 percent of students around the world took a class in cryptocurrency or blockchain this year.
Although the market seemed to be treading water for most of the month, August saw some significant developments on regulatory and adoption fronts.
Bakkt’s arrival at long last, a year on from the original announcement, has been widely reported as “the most bullish development in Bitcoin’s history.” That’s high praise for providing all the snot-nosed naysayers of Wall Street a reliable platform and institutional-grade infrastructure to finally bet against Bitcoin, would you not think?
Samsung and Apple have drawn the battle lines and made their stance unequivocally clear on cryptocurrencies. Samsung has endorsed the innovation in money by building support for major cryptocurrencies into their flagship smartphones, while Apple walked back on similar plans, prohibiting users of its virtual credit card from purchasing virtual currencies. Only one of them can be on the right side of history and given Apple’s diminishing revenues, it may not be Blackber… I mean Apple.
Since losing the court case in Florida, Craig Wright has claimed that he intends to challenge the ruling. He has two weeks to do so. Apparently, that’s not enough for Wright. Why? Hurricane Dorian. Wright has submitted a request seeking more time to prepare his arguments, blaming Hurricane Dorian’s approach for delaying his legal team from working.
Wright had 18 months to prepare his ‘arguments’ for the case, which were scornfully dismissed by the Judge as lies, accusing him of perjury. It was made clear in the ruling that no attempt was made to discover whether Wright was Satoshi. The case was brought to court solely based on Wright’s claim to being Satoshi. That now leaves Wright with two options – either come clean and admit he’s not Satoshi or cough up 500,000 bitcoins he doesn’t have and still not be recognized as Satoshi. The chickens have come home to roost for conman Craig.
August was quite the tease for bulls and bears alike, as Bitcoin dallied with breaking below 9300 as many times as breaking above 10800, which still prove to be the battle lines until a convincing daily close occurs one way or the other.
Despite a $3000 swing in the interim, the close price for the month was only $502 below the open price. Although the monthly close was in red for the second time in a row, volume has receded and we may see further attempts at breaking above 10800 early in September.
A clear descending triangle pattern has emerged on the daily chart with successive lower highs and even lows just above 9000. Although neutral, the pattern often portends a bearish reversal when it forms in an uptrend. A decisive close below the bottom of the pattern could result in a bearish avalanche.
In the daily chart, although DMI indicates a bullish convergence, there’s no attendant surge in ADX to confirm momentum behind the move. RSI is back above 40 after wicking briefly below. Keep a weather eye on the indicator for a failure swing or a divergence from price curve.
Weekly chart hasn’t been this bleak in several months, as the first bearish MACD crossover since November 2018 was confirmed with the weekly close on Sunday. RSI is also evincing bearish tendencies, completing a bearish divergence from the price curve, registering lower highs for higher price highs.
If you thought the altcoin bloodbath couldn’t get any worse after July, August played you for an April fool. Ethereum and Ripple lost further ground on Bitcoin this month, as did all other major altcoins. Bitcoin closed the month at an imperious 70% market dominance.