Top Cryptocurrency News and Trading Insights: November Edition

Nov 1 — BitMEX mishap leaks email addresses of tens of thousands of its users. While sending users a general update email regarding changes to the weighting of indices, the exchange accidentally revealed many of its users’ email addresses by inserting them in the CC: field instead of the BCC: field. The mishap exposed 30,000 unique email addresses to various attack vectors including targeted phishing attacks. BitMEX issued a statement blaming software error and assured users that no personal data or account information was compromised. However, users were angered that a KYC verification was required for changing their email address exposed by the exchange’s irresponsible management of private data. To further compound the exchange’s PR woes, BitMEX’s official Twitter was hacked later in the day.

Nov 2 — UK tax authority, Her Majesty’s Revenue and Customs (HMRC) updates cryptocurrency taxation guidelines. A year on from publishing its report on interpretation of crypto assets for individual holders, the HMRC issued comprehensive tax guidance for both businesses and individuals for exchange tokens such as Bitcoin. The guidance defined crypto assets as commodities, rather than money or currency, and distinguished exchange tokens from utility tokens and security tokens, for which a separate guidance will be issued at a later date. While corporate holders and miners incurred both capital gains tax and corporation tax, individual at-home mining will not constitute a taxable event. While employees are allowed to be paid in crypto assets, the new laws forbid the use of crypto assets for pension funds.

Nov 4 — Forensic study of on-chain activity finds that Bitcoin’s late 2017 surge was due to a single large player. Finance professors John Griffin and Amin Shams, from the University of Texas and the Ohio State University respectively, who published a paper in 2018 examining Tether’s impact on Bitcoin price, came out with fresh allegations that Bitcoin’s monstrous bull run in late 2017 was attributable to a single entity. After poring over 200 GB of on-chain data comprising transactions between Bitcoin and Tether, the professors identified a set of unique patterns that significantly affected the price by manipulating demand and attributed the patterns to a large account at Bitfinex. Tether rejected the study, arguing that it was “foundationally flawed” due to its reliance on an insufficient set of data.

Nov 5 — A consortium of businesses including Microsoft, IBM, Intel, and JP Morgan publish a uniform tokenization standard for businesses. Overseen by Enterprise Ethereum Alliance (EEA), the new specification known as Token Taxonomy Framework v1.0 (TTF) aims to allow businesses to create regulatory compliant blockchain-based tokens for international trade and finance in a multitude of scenarios. It establishes a set of reusable, cross-industry components to create usable tokens and a common set of terms and definitions. Microsoft’s Marley Gray, a member of the EEA board said,

“A business user or consortium can select a base type of token and choose from contributed lists of behaviors and properties and assign them to the token, just as you might drag and drop icons on a screen. The framework enables a business person to create a token visually using a design tool without writing any code whatsoever.”

Nov 6 — Square’s Q3 report reveals first-time Bitcoin buyers doubled from the second quarter. Publishing its earnings results in a quarterly investor letter, Square reported revenues of $1.27 billion for the third quarter between July 1 and Sept 30, of which the Cash App accounted for $307 million in revenue. Revenue generated from Bitcoin sales constituted $148 million, which represented a 244% increase year-on-year, up from $43 million during the third quarter of 2018. However, despite surging sales, Square has struggled to generate significant profits. Owing to $146 million in costs incurred, the company only saw a net profit of $2 million from Bitcoin sales, which remains unchanged from the second quarter. A new fee structure for bitcoin purchases was introduced to address the issue going forward.

Nov 7 — China scraps plans to prohibit Bitcoin mining. In its finalized Catalog for Guiding Industry Restructuring, China’s economic planning agency, the National Development and Reform Commission (NDRC) omitted Bitcoin mining as an industry to be phased out of the country. In its initial draft back in April, the NDRC, charged with advising economic reform strategies and policies to local governments within China, had recommended “virtual currency mining, such as the production process of bitcoin” as an industry that needed to be eliminated. The agency stated that a revision of its original plans was made following several months of public consultation, taking into consideration over 2500 suggestions it had received since the release of its original draft.

Nov 8 — Indeed study finds 1457% growth in share of cryptocurrency jobs since 2015. Despite nearly half of the companies in the study citing regulatory uncertainty as a major barrier to blockchain adoption, employers were found to be eager to invest in both blockchain tech and talent. Although searches for bitcoin, blockchain and cryptocurrency have declined recently, employer demand and the share of crypto jobs per million have skyrocketed, from roughly 30 jobs per million back in September 2015 up to almost 500. This was attributed to companies outside the cryptocurrency ecosystem beginning to adopt blockchain for use in traditional finance, supply chain management, eCommerce, telecommunications and other applications, reflected by Deloitte, IBM and Accenture being the top three companies hiring blockchain talent.

Nov 10 — Former president of the European Central Bank (ECB) dismisses Bitcoin’s merit as a currency. Speaking at a conference in Beijing, Jean-Claude Trichet, who led the ECB from 2003 to 2011 after a decade as governor of the Bank of France, was the latest banker to pour scorn on Bitcoin. Trichet said that although he recognized that physical currencies may be outmoded, he was uncertain of cryptocurrencies ever being widely used money in the future as they were “not real” and lacked the characteristics of a currency,

“I am strongly against bitcoin, and I think we are a little complacent. The currency itself is not real, with the characteristics that a currency must have. Even if the currency is supposed to be based on underlying assets, I am observing a lot of speculation. It is not healthy.”

Nov 11 — China’s state-run media outlet publishes front-page story on Bitcoin. Xinhua News Agency, the highly influential official press agency of China and the largest news agency in the world, acknowledged Bitcoin as the first successful application of blockchain technology and went into detail about how bitcoin and its underlying blockchain technology works, dubbing it “one of the hottest topics in recent years.” Although it ostensibly marked a paradigm shift in the country’s disposition towards Bitcoin, much of the story focused on highlighting some of Bitcoin’s oft-cited criticisms, such as use in money laundering and dark web transactions. Discerning observers viewed this as an effort to distinguish blockchain from Bitcoin ahead of the launch of a digital currency developed by China’s central bank.

Nov 12 — Bakkt expands custody services for institutional clients. Two weeks after announcing the launch of a consumer app for retail clients and options on its Bitcoin futures contracts, Bakkt COO Adam White revealed in a blog post that Bakkt’s custodian, the Bakkt Warehouse, was expanding custody services for clients beyond those trading futures contracts. White remarked that the ability to offer general warehousing services represented a critical link in the institutional adoption of Bitcoin,

“When investors have ready access to regulated custodians whose security and processes they trust, the full potential of this emerging asset class and technology can flourish.”

Pantera Capital, Galaxy Digital and Tagomi were roped in as initial customers with other marquee clients lined up to join in the weeks ahead.

Nov 14 — Ohio’s Bitcoin tax program deemed illegal by Attorney General. Republican Ohio Attorney General, Dave Yost found that the Bitcoin tax program initiated by then-Treasurer Josh Mandel in November 2018 was against state law. The program, which allowed Ohioans to make certain tax payments in cryptocurrency, was abruptly shut down in October by fellow Republican Treasurer Robert Sprague, who succeeded Mandel in January 2019. Yost opined that the state’s third-party processor, BitPay, was functioning as a “financial transaction device,” which meant that a competitive selection process, as well as the sign-off of the state Board of Deposit, was required to hire them. Sprague had said at the time he shut down the program that although he recognized that it was vital for Ohio to explore innovative new technologies, they must be “established in accordance with Ohio law.”

Nov 16 — BRICS coalition discusses creating a common cryptocurrency to take down US dollar. Brazil, Russia, India, China and South Africa, a bloc of major emerging economies known as BRICS, agreed to develop a common payment system, including the creation of a cryptocurrency for mutual payments between the member nations. Kirill Dmitriev, the head of the Russian Direct Investment Fund (RDIF), made the proposal at the BRICS summit in Moscow as a way of tackling “increasing non-market risks of the global payment infrastructure” created by US sanctions against various allied nations and the US-China trade tussle. The BRICS countries also deliberated the establishment of an alternative to SWIFT for mutual payments and seek to further diminish dollar’s role in foreign trade, which has fallen from 92% to 50% in the last few years.

Nov 19 — Coin Metrics study on lost bitcoins estimates that Bitcoin’s active circulating supply is roughly 16 million. The market data provider accounted for provably lost coins, assumed lost coins and stolen coins from 600,000 blocks worth of network data to measure the true supply of bitcoins available in the market. 182 coins were estimated to be provably lost, including 50 coins locked in the first block, unclaimed rewards and duplicate coinbase transactions. Bogus addresses, bugs in script, and zombie coins accounted for 1.5 million bitcoins which are assumed lost, while 197,047 bitcoins were stolen and have remained inactive since. In total, roughly 1.7 million coins, just under 10% of all bitcoins mined, are estimated to be out of circulation, leaving the total number of bitcoins in liquid supply at 16.3 million.

Nov 20 — Elliptic discover roughly $400 million worth of Ripple tokens (XRP) tied to illegal activities. London-based crypto crime investigator Elliptic published the findings after announcing the launch of its XRP transaction monitoring system. Chief scientist and co-founder of Elliptic, Tom Robinson said that the $400 million worth of XRP tokens identified by the company to have been used in illicit transactions represented only 0.2% of all transactions on the blockchain, less than the 0.5% of all bitcoin transactions being used for dark web activities, primarily scams, Ponzi schemes, thefts and sale of credit card details. The research concluded that despite the findings, the firm did not see much darknet activity for XRP owing to the token’s image as a tool for financial institutions and limited liquidity compared to Bitcoin.

Nov 21 — Reed Smith releases a whitepaper on global legal landscape impacting blockchain technology. The global law firm, headquartered in Pittsburgh, Pennsylvania, published the latest update to its “Blockchain – Distributed Ledger Technology and Designing the Future”, focusing on numerous applications of blockchain and distributed ledger technology (DLT) across a variety of industries, including cryptocurrencies. The white paper addresses the complex and uncertain legal and regulatory environment related to cryptocurrencies and ICOs. The Chamber for Digital Commerce described the work as “an important resource for participants in the blockchain ecosystem.” Reed Smith’s Herbert Kozlov said that the white paper would serve as

“an invaluable tool for anyone evaluating the impact of blockchain and digital assets to their future business.”

Nov 22 — Chinese law enforcement begins crackdown on cryptocurrency exchanges. Authorities in Shenzhen, the tech hub of China, identified 39 illegal cryptocurrency companies responsible for defrauding everyday consumers, including several exchanges. The businesses were issued a notice and are due to be investigated further for potential violations. China’s central bank followed up with a regulatory update to “strengthen regulation, control and clamp down on cryptocurrency trading,” which criminalized coin offerings, fund-raising activities and offering of services by overseas trading platforms to Chinese citizens. PBOC’s Shanghai headquarters issued a statement that it would crackdown on a resurgence of illegal activities around virtual currencies, and cautioned investors not to confuse such instruments with blockchain technology.

Nov 24 — Binance CEO Changpeng Zhao threatens to sue The Block. Crypto publication The Block published an article which claimed that Binance’s Shanghai office was shut down by authorities as part of the police raids on cryptocurrency companies in China. Zhao refuted the report as “fake news,” claiming that the company hasn’t had a Shanghai office for two years, accused the publication of taking money from competitors to write negative pieces on Binance and threatened to sue The Block for harming the exchange’s image. The Block responded that it stood by its report that Binance’s Shanghai office was shut down, producing images purported to show that the facility was recently operational and arguing that Zhao’s truculence was aimed at journalists who report facts that run contrary to the exchange’s business interests.

Nov 25 — Bank of France urges EU to build blockchain-based settlement system for the eurozone. Speaking at an Association for Financial Markets in Europe (AFME) conference, First Deputy Governor at Banque de France, Denis Beau recommended an open-minded approach to support technological innovation and argued that the eurozone had a responsibility to at least consider a central bank digital currency (CBDC) to avert “disorderly approaches and heterogeneous adaptations” which may arise from other sources. Beau added that a blockchain-based settlement system for cross-border payments within the eurozone would greatly diminish the cost for end-users and service an emerging consumer demand for quick and safe payment solutions available round the clock. The recommendations came after the European Central Bank (ECB) earlier refuted rumors of an ECB issued stablecoin for the eurozone.

Nov 28 — German parliament passes a bill to allow banks to hold customers’ crypto assets. The new law, set to take effect on New Year’s Day, will allow banks to treat cryptocurrency like any other traditional asset and enable cryptocurrency transactions on their online banking platforms, effectively allowing banks to operate as custodial cryptocurrency exchanges. Banks and existing cryptocurrency custody providers must acquire a license from Germany’s financial regulator BaFin by the end of the year to operate in the country under the new law. Sven Hildebrandt of DLC, a German crypto consulting firm welcomed the law as a huge leap in cryptocurrency adoption,

“Germany leads the way in crypto regulation, for sure. This leads to institutional investors coming to Germany, as they want security and regulation. Germany is well on its way to becoming a crypto-heaven.”

Nov 30 — Ethereum developer arrested for helping North Korea evade US sanctions. Creator of WikiScanner and research scientist for the Ethereum Foundation, Virgil Griffith, an Alabama native who resides in Singapore, once dubbed an “internet man of mystery” by The New York Times, was arrested and charged with flouting US law and traveling to North Korea to attend the Pyongyang Blockchain and Cryptocurrency Conference, where he is alleged to have given a presentation on laundering money and evading sanctions using cryptocurrency. According to a criminal complaint filed in federal court in Manhattan, Griffith visited North Korea despite being denied permission to do so and also recruited others to travel to North Korea to aid the government there. If convicted, Griffith could face up to 20 years in prison.

Trading Insights

After trading high early in November on the back of perceived positive sentiments from China, BTC/USD endured an exasperating month, sliding 17.5% to close at 7550. It was the worst monthly return since November 2018, when the pair suffered a 37% loss.

A falling wedge pattern in the daily chart offers slight promise of a recovery before the year is out. A breakout to retest 7700 levels could emerge if a bullish MA cross completes. However, ADX indicates a ranging market for the moment as volume remains sluggish.

The weekly chart evinced slight promise with a first green close in five weeks, but an evening star pattern, which needs confirmation with a close in red this week, seems to have put paid to any bullish momentum. The middle Bollinger band currently acts as resistance before bull market can resume, while the lower band offers support from further breakdown below 6500 levels. Crucially, RSI held above bull cycle floor of 40, which hasn’t been breached since March.

The monthly chart, which has remained bullish thus far, has turned a little sour for the first time this year, with November closing in a bearish engulfing as MACD seems likely to see a first bearish signal line cross in 18 months unless December closes in green. Be mindful that the MACD cross signal is not valid until December close is reckoned for.

Ether (ETH/BTC) completely fell apart towards the end of November, breaking below support at 0.02 BTC. So did Bitcoin Cash (BCH/BTC), as demand receded once the network’s biannual protocol upgrade was complete. The best performer among altcoins was Tezos (XTZ/BTC), gaining 94% against BTC. Bitcoin maintains a two-third market dominance of 66.6%, down 0.8% from a month ago.

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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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