Last Week Today: Bitcoin And Cryptocurrency Weekly Digest June 10 – 17

  • Bitcoin is the best performing asset in 2019. What drives the latest rally?
  • New study examines deleterious environmental impact of Bitcoin mining
  • Coinbase launches cryptocurrency debit card in six countries across Europe
  • Facebook’s GlobalCoin represents a seminal watershed for cryptocurrencies

Could another economic crisis lead to Bitcoin adoption?

Uncertainty over interest rates effected losses in all financial sectors towards the end of last year. But 2019 has thus far seen green shoots of recovery sprouting all around.

The Dow Average, S & P and Nasdaq 100 have gained 12%, 17% and 24% respectively, propelled largely by rebounding tech stocks. Gold is up 6% and Crude oil has risen by nearly 30%.

It has certainly been a profitable year to date across the board. However, Bitcoin has vastly outperformed every major asset in the last 6 months. A debilitating bear spell throughout 2018 has done little to rein in traders’ penchant for the world’s pre-eminent cryptocurrency.

Bitcoin was changing hands for less than 4000 USD at the start of 2019. At the time of this writing, it’s trading at just under 9300 USD, which represents a new 13-month high and an YTD gain of 133%. This is not the first time Bitcoin has recovered so spectacularly after seemingly fizzling out, inviting wailful lamentations and premature obituaries.

From the perspective of a technical analyst, the 50-day moving average crossing over the 200-day moving average, referred to as the golden cross, is impetus enough to account for Bitcoin’s rampant recovery. But there’s perhaps more to it.

While the spotlight from Facebook’s imminent launch of its own cryptocurrency, GlobalCoin, and Bitcoin’s next halving looming closer have unquestionably taken a hand, it stands to reason that escalating tension over trade tariffs between the US and China has been the major leg-up for Bitcoin.

Both countries have managed the situation poorly and with two such economic powerhouses, an impasse tends to hurt both parties. China has resorted to immediate quantitative easing, devaluing the Renminbi, to retain value for their exports.

The Renminbi, as a result, is now less valuable, which hurts the Chinese people who’ve spent years saving up for the future. Since April, an inverse correlation has been observed between Bitcoin and the Renminbi.

If indeed a loss of faith in capital control by bumbling governments were to usher people towards Bitcoin as the only safe haven, all that separates us from global Bitcoin adoption is another macroeconomic crisis.

Clean energy key to Bitcoin’s long-term viability

Whenever a study about Bitcoin’s energy consumption emerges, cryptocurrency enthusiasts get tetchy and defensive, dismissing its impact as inconsequential in the grander scheme of things.

Oftentimes, these studies parrot the same hackneyed diatribe on the subject. A study published this week by researchers from the Technical University of Munich and the Massachusetts Institute of Technology is a little more substantial.

According to the study, carried out in late 2018, the Bitcoin network accounted for 23 megatons of carbon dioxide emission per year, which it notes is roughly equal to the carbon footprint of Sri Lanka.

Using IP addresses of miners from major mining pools, the study also discovered that 68% of computing power in the network is concentrated in Asia, while 17% comes from Europe and 15% from North America.

The study suggests restricting mining operations to places where mining is powered by renewable sources of electricity to prevent Bitcoin driving new demand for fossil fuels. Bitcoin’s energy consumption is currently 0.30% of all the world’s energy consumption.

The argument that Bitcoin’s carbon footprint pales in comparison with a myriad other industries is a fallacy. Bitcoin is far from a mainstream currency, with fewer active wallets than there are people in Sri Lanka.

Countries such as Brazil, Canada, Austria, Iceland, Norway and Sweden generate a high percentage of electricity from renewable sources. Even China, where most of the mining operations take place, generates roughly 25% of its energy from renewables.

Way back in 2009, Bitcoin OG, the late Hal Finney, was worried about the impact of Bitcoin’s carbon footprint if it became widely adopted. There’s an opportunity here and now for Bitcoin to be at the forefront of clean energy.

Coinbase card makes its foray into Europe

After making its debut in the UK on April 11, coinbase card was introduced in six European countries this week – Spain, Germany, France, Italy, Ireland, and the Netherlands.

Coinbase card is a Visa debit card which is funded by users’ coinbase balance and can be used to spend Bitcoin, Ethereum and Litecoin currencies in any supported country as easily as spending money from one’s bank account. Coinbase users from supported countries can apply to receive a card for an issuance fee of 4.95 GBP.

Zeeshan Feroz, CEO of Coinbase UK, said at the launch this week that demand for the card has been higher than expected, without revealing how many cards have been issued thus far. However, some users in the iOS and Android app stores seemed less than impressed and cited issues with funding their cards.

Coinbase is planning to introduce the card in more countries across Europe in the coming months and is also working towards obtaining ratification to introduce it across the pond in the US.

While novelty factor could drive reasonable adoption for cryptocurrency credit/debit cards, the future of cryptocurrency payments is more likely to take the shape of wallets housed within hermetically secure 5G mobile devices.

A familiar Orwellian nightmare

In the latest update regarding Facebook’s GlobalCoin, scheduled to be unveiled on June 18, we learned this past week that Uber, PayPal, Visa and Mastercard are backing the project, known internally as Libra.

According to reports, these companies are among a dozen primarily American companies who have been roped in to function as validating nodes on the Libra network.

It has been rumoured that Facebook had signed them up at least 6 months ago and the project has been in the works for 18 months. However, the company opted to keep the project on the QT until it remedied its reputation.

Cryptocurrency fans are unsure on the effects of GlobalCoin, with some denouncing it as unbecoming of the term cryptocurrency, while others expect it to bring more exposure and accelerate broader adoption.

To be able to previse the effects of GlobalCoin, which wants to mediate peer-to-peer money transfer, we may need to jog our memories back 20 years.

The early Internet era in the late 90s was rife with laxity and uncertainty over policing and regulation. Popular peer-to-peer file sharing service, Napster, had 80 million users in 1999 and made music accessible to everyone, including copyrighted material. Recording companies were less than pleased and thus began a war on peer-to-peer file sharing which resulted in the termination of Napster in 2001.

The Napster episode gave way to Internet’s original sin – centralised intermediaries we entrust with our data and privacy that we’re saddled with to this day.

Last year’s appraisal of Facebook’s data security standards was long overdue and highlighted its incompetence and lack of fiduciary duty. If Facebook cannot be trusted with our data and personal profile, should it be trusted with our money and monetary profile?

Unlike 2001, Internet and AI capabilities have evolved sufficiently today to allow us to dispense with the Orwellian ‘big brother’ and take control of our data and money.

Regardless, GlobalCoin is going to be a tough sell in major Asian jurisdictions in the current macroeconomic climate.

Trading Insights

Bitcoin was the best performing cryptocurrency among the top 20 currencies last week.

Last Monday, it was noted that Bitcoin was forming a potential bullish engulfing pattern. The pattern was confirmed by last Monday’s close and Bitcoin gained steady ground throughout the week, registering a first daily close above 9,000 yesterday for the first time since May 2018.

The daily chart, below, shows a strong breakout from a 4-week rectangle continuation pattern, with attendant volume and sharp bullish MACD divergence. The weekly chart is also looking good with last week’s close forming a bullish engulfing.

Bitcoin’s short-term support has now shifted to 8780. The next immediate targets for Bitcoin are 9845 and the psychological resistance of the five-figure mark, 10000.

Altcoins gains were relatively modest last week after being dealt a blow by the news of Binance restricting access to altcoins for US-based customers from September. Ethereum, Ripple and EOS were the biggest gainers among top altcoins.

Lamps Toujours
Lamps is a British economist and Bitcoin evangelist with an elusive ken for all things blockchain. A writer by avocation, Lamps' suasive opinions and analyses evince a quenchless passion to promote the integration of blockchain as the new economic and commercial infrastructure on a global scale.


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