Category: Economic World News

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The bitcoin-to-dollar exchange rate has dipped close to 1 percent on Thursday, now trading at 6470-fiat.

The outcome of the US midterm elections with Democrats sweeping a sharp win in the House had certainly shaken the US dollar yesterday. The greenback nevertheless sustained its overall bullish momentum ahead of the Federal Reserve policy meeting today. It looks to hold on to its crucial supports owing to optimistic wage, price, and labor market data. Bitcoin, at the same time, could find it difficult to push through its critical resistance areas if the dollar remains strong.

The BTC/USD trading pair is already hinting at bearish correction action upon pulling back from the 100-period simple moving average (SMA). Let’s have a look at the following daily chart to understand it further.

The bold curve depicted in sky blue represents the 100-period SMA. BTC/USD has tested it as resistance on three separate occasions recently. The current pullback action also visibly originates upon testing the blue curve on daily charts. A medium-term descending trendline is also capping the upside action; therefore, intensifying the selling sentiment that is already there.

The RSI momentum indicator, in the meantime, has undergone a breakout action after invalidating the upper trendline of the descending triangle formation. This uptrend is more visible on the lower timeframe charts, so let’s have a look at the 4H one instead.

We are forming a rising wedge pattern which typically results in a large downside correction from the top. That said, we are now retesting the top line resistance of the wedge, which could yield some decent long opportunities. In the RSI indicator, we can already see a double top formation that attests a near-term run towards the upside resistances (plural, because the descending trendline is also acting as a wall between the pair and its extended long action).

BTC/USD Intraday Analysis

We are pretty much placing our positions according to the levels inside the rising wedge. That said, a pullback from the top resistance trendline will have us enter a short towards the lower support trendline, and a bounce back from the lower support will allow us to enter an intermediate long position towards the descending trendline. On both the positions, maintaining stop orders some 4-pips opposite the direction of the price action defines our risks, overall.

A breakdown below the lower support trendline of the rising wedge would have us aim the 200-period SMA (on 4H TIMEFRAME) as our potential downside target. As we enter a short, we will maintain a stop loss order just 3-pips above the entry point to minimize our losses should there be an unexpected bounce back action.

A breakout above the descending trendline in black will have us enter a long position towards 6600-fiat, our primary upside target for our intraday strategy. A stop loss just 2-pips below the entry point will define our risk management outlook.

Trade safely!

Featured Image from Shutterstock. Charts from TradingView.

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The US Securities and Exchange Commission (SEC) has charged Zachary Coburn, a co-founder of decentralized crypto exchange EtherDelta, for operating an unregistered national securities exchange.

SEC Charges EtherDelta Founder With Operating an Unregistered Exchange https://t.co/KYRBmn2UHw

— SEC_News (@SEC_News) November 8, 2018

In its official statement, the SEC also emphasized that EtherDelta illicitly distributed unregistered securities by allowing users to trade tokens considered as securities under US laws.

“According to the SEC’s order, EtherDelta is an online platform for secondary market trading of ERC20 tokens, a type of blockchain-based token commonly issued in Initial Coin Offerings (ICOs). The order found that Coburn caused EtherDelta to operate as an unregistered national securities exchange.”

Unregistered Securities: Precedent for the Market

EtherDelta was considered a decentralized exchange ever since its launch in 2017, mainly because orders were processed on the Ethereum mainnet.

But, the platform was run by a single entity led by Coburn, and if there exists a single point of failure, then the exchange cannot be considered a decentralized platform. Rather, a more accurate description of EtherDelta is a non-custodial platform on which users have complete control over their private keys and funds.

If the US SEC continues to go after non-custodial trading platforms that are not fully decentralized, such as IDEX, then virtually every single platform that calls itself a “decentralized” exchange could be taken down for the distribution of unregistered securities.

As such, on November 2, as CCN reported, IDEX began to integrate a Know Your Customer (KYC) system and block IP addresses from several locations.

There are a few completely decentralized and peer-to-peer exchanges like Bisq, which can be run similarly to a Bitcoin or an Ethereum node in that users download the Bisq software from GitHub and simply run it to use the exchange. Hence, because it is run by an open-source developer community, Bisq cannot be taken down by the authorities.

But, the vast majority of “decentralized” exchanges have development teams and entities in place that govern them, leaving the exchanges vulnerable to potential SEC’s investigations.

In regards to EtherDelta, the SEC stated that ERC20 tokens, many of which are considered securities, were being actively traded on the platform for nearly two years, which is applicable to many other decentralized exchanges in the space.

“Over an 18-month period, EtherDelta’s users executed more than 3.6 million orders for ERC20 tokens, including tokens that are securities under the federal securities laws. Almost all of the orders placed through EtherDelta’s platform were traded after the Commission issued its 2017 DAO Report, which concluded that certain digital assets, such as DAO tokens, were securities and that platforms that offered trading of these digital asset securities would be subject to the SEC’s requirement that exchanges register or operate pursuant to an exemption.”

In agreement with the SEC’s findings, EtherDelta co-founder Zachary Coburn consented to pay $300,000 in disgorgement, $13,000 in prejudgment interest, and a $75,000 penalty without any additional penalty for his cooperation with the SEC.

Setting an Example

The SEC’s cooperation with Coburn to takedown EtherDelta with a minimum penalty imposed on its co-founder can be acknowledged as the effort of the commission to set an example across the board and in the decentralized exchange market of crypto.

Throughout the upcoming months, the SEC is expected to target more platforms, especially decentralized exchanges run by the citizens of the US that have no KYC, transaction monitoring, or license in place.

Images from Shutterstock

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Square, the merchant payment service provider which thrives on its mobile card readers and applications, has posted its third-quarter shareholder report, and it includes $43 million in bitcoin revenue.

Slim Margins on Bitcoin

Overall, they’ve made 51 percent more than they did last year up to this point, and revenue is 68 percent better than they did during the same quarter of last year. BTC sales are one of its smallest components, but they still represent a notable portion of total revenue — around 5 percent.

They mention that their adjusted revenue figures reflect a deduction of bitcoin transaction costs, noting that:

“We deduct bitcoin costs because we consider our role in the bitcoin transactions to be facilitating customer access to bitcoin. Since we only apply a small margin to the market cost of bitcoin when we sell bitcoin to customers, and we have no control over the cost of bitcoin in the market, which tends to be volatile, we believe deducting bitcoin costs is a better reflection of the economic benefits as well as the Company’s performance from the bitcoin transactions.”

Actual profits on the BTC revenues were therefore roughly $500,000, about 20 percent more than what they made in the previous quarter on the same product. Square has yet to add a variety of cryptos to its offerings, but when or if it decides to do so, we expect these revenues to increase as they can likely have higher margins on cryptos that are perceived as harder to acquire using traditional means.

Square on Pace to Become Leading Crypto Provider

Square’s Cash App allows people to digitally transact money much like PayPal, and also allows users to invest in the most prominent cryptocurrency. They secured a patent for their payments network earlier this year, potentially locking themselves in as the premier bridge between legacy payment rails and cryptocurrencies.

As CCN reported, Square brass have previously noted that cryptocurrency and BTC, in particular, is a “transformational” technology.

Given that Square is used for many purposes besides investing in or holding BTC, it’s likely to continue growing as a premier crypto provider and gives the added benefit of exposing its massive user base to cryptocurrencies.

The firm’s Cash App has more than 10 million installs on the Google Play store and provides a seamless crypto purchasing experience. In this respect, they are light years ahead of PayPal, who have yet to integrate cryptocurrency in any meaningful way, despite several notable rumors over the years. As of now, one can still not simply purchase crypto through his or her PayPal wallet, a feature that Square Cash now has.

Featured Image from Shutterstock

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Three individuals are currently out on bond in Zambia after being arrested over charges related to a cryptocurrency investment scheme they had operated.

The three suspects — Hilda Agnes Raubenheimer, Orient Rio Zekko, and Tapiwa Chirwa — are directors of cryptocurrency investment firm Heritage Coin Resources Limited, per the Zambian Watchdog. They allegedly collected more than 28 million Zambian kwacha (approximately US$2.4 million) from prospective investors who were promised that the money would be invested in cryptocurrency.

According to the Anti-Money Laundering Investigations Unit of Zambia’s Drug Enforcement Commission, the trio collected “K28,346,800.00 by purporting that the company was investing the money collected as partnership fees from the public into Cryptocurrency trade on the web on behalf of the partners when in fact not.”

The three now face charges of engaging in money laundering activities, obtaining money by false pretenses, participating or conducting a money circulation scheme, and operating an unlicensed financial business between June and mid-October.

Bitcoin Not Legal Tender

This comes less than a month since Zambia’s central bank indicated that cryptocurrencies are not legal tender in the country, as CCN reported.

Bitcoin is Not a Legal Tender in Zambia, Says Central Bank https://t.co/acdhDVaEfK

— CCN (@CryptoCoinsNews) October 14, 2018

While issuing the statement on cryptocurrencies, the Bank of Zambia disclosed that it had done so in public interest after receiving inquiries related to the legal status of bitcoin in the southern African country:

“Cryptocurrencies are not legal tender in the Republic of Zambia; Secondly, BoZ does not oversee, supervise nor regulate the cryptocurrency landscape. Consequently, any and all activities related to the buying, trading or usage of cryptocurrencies are performed at owner’s risk,” the Bank of Zambia said in a press release.

Public Interest

At the time, the apex bank of the landlocked African country claimed it was issuing the statement to “safeguard the interests of members of the public and to maintain the integrity of the financial system in Zambia.” Among the risks the bank claimed it was protecting Zambians from included fraud and hacking attacks for which no legal recourse is available in the country.

To its credit, however, the BoZ added that it would ensure that regulation does “not constrain but enable innovation.”

The cryptocurrency stance of the central bank of Zambia is similar, if not a little better, to that of its neighbor to the south, the Reserve Bank of Zimbabwe. This is despite the country formerly known as Southern Rhodesia having the ripe environment for cryptocurrencies as it is not only undergoing a cash crunch but currently uses a variety of foreign currencies including the South African rand and the US dollar.

Earlier this year, the Reserve Bank of Zimbabwe banned all commercial banks and financial institutions in the country from processing crypto transactions for exchanges, traders and investors. But despite the High Court lifting the ban, crypto exchanges in the country still face numerous obstacles.

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Partisans in the looming Bitcoin Cash civil war now have the opportunity to put their money where their mouths are, and that money is quickly piling up on one side of the debate.

Poloniex Opens Pre-Fork BCH Market

Earlier today, cryptocurrency exchange Poloniex became the first crypto trading platform to allow users to trade coins on both sides of the contentious hard fork, which is scheduled to activate on the BCH network on Nov. 15.

From the announcement:

“We believe the responsible thing to do in this case is remain neutral and allow the community to decide which chain to support, and we want to empower the community to demonstrate their support through trading activity. This is the first time we are offering pre-fork trading and it is part of a broader effort to make Poloniex one of the most innovative exchanges in the world. Going forward, we will evaluate each hard fork individually and decide whether to support the fork or to offer pre-fork trading.”

The bitcoin cash price had risen considerably in the lead-up to the fork, as investors clamored to position themselves to receive the “BCH airdrop.” Now, even before the fork activates, they can begin to cash out.

To trade the pre-fork tokens, users must deposit bitcoin cash on the Poloniex platform and then use the conversion tool to split the coins into an equivalent number of “Bitcoin Cash ABC” (BCHABC) and “Bitcoin Cash SV” (BCHSV). Users can also convert back into BCH and withdraw their coins, but for obvious reasons, BCHSV and BCHABC may not be withdrawn until sometime after the fork.

Initially, each BCH token will trade against bitcoin (BTC) and USD Coin (USDC), the stablecoin backed by Circle, Poloniex’s parent company. Notably absent is tether (USDT), the controversial-but-highly-liquid stablecoin.

Following the fork, Poloniex will support both BCHABC and BCHSV, stating in the announcement that “the responsible thing for an exchange to do is remain neutral.” The firm said that it would manually implement replay protection for withdrawals to prevent attackers from stealing funds from the exchange.

However, such replay protection — which prevents a malicious user from broadcasting a transaction on both sides of the fork — does not exist in the wild, so users should be careful about moving their funds if they intend to hold coins on both sides of the fork. That’s particularly true since SV backer Craig Wright — whose firm, nChain, is leading the development of the SV software — has suggested that SV miners could blacklist certain addresses that spend funds on the ABC chain.

Nov. 15 Bitcoin Cash Hard Fork: a Rundown

As a heads up…

Any DSV spend will eventually be blacklisted on SV.

You support DSV, then, you will have unspendable coin.

Watch.

2 years. That is my limit for now, No sale unless this ends or it remaims bitcoin

— Dr Craig S Wright (@ProfFaustus) November 2, 2018

According to its development roadmap, Bitcoin Cash hard forks semiannually to ensure that developers have a regular opportunity to introduce new upgrades into the protocol, including those that would render the new software incompatible with previous versions.

These planned hard forks were intended to stave off disagreements about whether and when the cryptocurrency should activate these protocol upgrades, which require all full node operators to upgrade their software to the latest version. Nevertheless, the Nov. 15 hard fork — just the second since BCH forked away from Bitcoin — has been hotly debated, as various development groups have significant disagreements about which upgrades should, and should not, be activated on the network.

One particular subject of contention is the manner in which Bitcoin Cash should accommodate smart contracts and BCH-based crypto tokens. Unable to reach a compromise, two development groups, Bitcoin ABC and Bitcoin SV, have launched competing BCH implementations that will be incompatible once the fork activates on Nov. 15.

Traders Place Their Bets on BCHABC

While Poloniex’s new trading pairs allow investors early access to their “crypto dividend,” these pre-fork markets are useful for more than just allowing traders and investors to double down on their bets about the outcome of the fork. They also, in the aggregate, provide valuable information about which chain the market believes has more economic viability.

Such pre-fork markets were popular prior to both the original hard fork that split Bitcoin Cash away from the main Bitcoin network last August, as well as the planned SegWit2x fork that failed to activate on Bitcoin last December.

This fork will not activate for a full week, but early returns show that traders are much more confident in BCHABC’s ability to retain its value, at least over the short-term. At present, BCHABC is trading at $535 against USDC, nearly six times above BCHSV, which is priced at just $90.

Notably, the pre-fork tokens are collectively trading at $625, almost $40 above the value of BCH itself, which stands at $587 as of the time of writing. That should change as these markets grow more liquid.

Images from Shutterstock

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