BITCOIN PRICE NEWS
On July 21. Bitcoin Improvement Proposal (BIP 91) was officially locked in, confirming the activation of the Bitcoin Core development team’s transaction malleability fix and scaling solution Segregated Witness (Segwit).
Prior to the lock-in of BIP 91, its 80 percent activation threshold was achieved on July 16 and since then, the market has been reacting optimistically to the future of bitcoin and its scalability moving forward. Within a 5-day period, bitcoin price increased from $1,850 to $2,750, recording a $900 increase.
Bitcoin wallet service providers and trading platforms including Coinbase experienced a rapid increase in user growth, as Coinbase recorded 100,000 new users in the past three days. Trading volumes of bitcoin trading platforms also increased, as investors and traders regained trust in bitcoin and its upward momentum.
Altana Digital Currency Fund’s investor Alistair Milne revealed:
In June, bitcoin price achieved its new all-time high at $3,095 and as bitcoin price increased exponentially, new investors emerged on platforms such as Coinbase to purchase bitcoin. However, as bitcoin and the entire cryptocurrency market endured a major market correction, many traders panic sold, due to the fear of an upcoming hard fork.
With Segwit activation in sight, in the foreseeable future, the execution of a hard fork and chain split, or the creation of another bitcoin blockchain, is highly unlikely. Bitmain, the most influential bitcoin mining equipment manufacturer and parent company behind the market’s largest bitcoin mining pool Antpool, threatened to execute a hard fork and create a new bitcoin called Bitcoin Cash earlier last month.
As of now, Bitmain remains as a strong supporter of BIP 91 and the Digital Currency Group-led Segwit2x. It is likely that the mining community will encourage a hard fork execution to increase the bitcoin block size by 2 MB in the upcoming months but depending on the Bitcoin Core development team and the industry, the hard fork could result in a secure, safe and clean protocol update.
Still, despite the rising demand toward bitcoin and the confidence from traders and investors, Bitcoin Core developer Peter Todd told the community that BIP 91 lock-in does not guarantee the activation of Segwit.
Bill Miller, the prominent investment guru behind Bill Miller’s Opportunity Trust and Legg Mason, has invested 1 percent of his net worth in bitcoin.
Sources including Zerohedge have revealed that Forbes declined to reveal the net worth of Bill Miller back in 2014. However, a few years back, Miller bought stake from three hedge funds operated by the $3.6 billion investment firm Legg Mason, terminating his 35-year relationship with the investment firm.
Currently, Legg Mason manages $728 billion assets and the split between Miller and Legg Mason led to the emergence of Bill Miller’s Opportunity Trust, which is managing over a billion dollar worth of assets this year.
Since early 2017, Miller and his team at Bill Miller’s Opportunity Trust has made strong returns from the company’s investment in Apple Inc., JPMorgan Chase & Co. and Restoration Hardware. Technology companies including Apple, Amazon, Microsoft and Facebook have been some of the best formers in the US stock market, with J.P Morgan Chase, one of Miller’s “hot picks” recording an overwhelming performance along with other financial service providers.
Miller has seen tremendous success since his leave from Legg Mason, including his bitcoin investment in 2014. Miller attributed his success to the fact that he does not have to pitch his investments and receive approval from Legg Mason executives.
More to that, Miller is the largest investor in all of the three funds the company manages, which further increased the trust of investors toward Miller’s Opportunity Trust.
In 2017, most of Miller’s stocks have made over 50 percent in return. With Segregated Witness, the transaction malleability fix and scaling solution developed by the Bitcoin Core development, activation in sight, Miller’s bitcoin investment is also set to see huge returns throughout this year.
Although Miller’s exact net worth has not been disclosed, analysts predict it to be at least a few hundred million dollars. Hence, if Miller had invested 1 percent of his net worth in 2014, he bought a few million dollars worth of bitcoin in 2014, when the price of bitcoin was around $400.
At the moment, the price of bitcoin is close to $2,400, which means a 500 percent gain for Miller within a three year period. In 2014, Miller told analysts and the media that he is looking for a 1,000 percent gain with his multi-million dollar investment in bitcoin.
As bitcoin continues to mature, an increasing number of institutional and high profile investors will invest in bitcoin. Investors are acknowledging bitcoin as a safe haven asset, long-term investment and digital currency.
The speed in which bitcoin transactions are approved, confirmed and verified by miners across the globe largely depend on the size of the bitcoin mempool and blocks. The optimal or recommended fee also depends on the size of the bitcoin mempool. Users may spend only a fraction of the usual transaction fee if the size of the bitcoin mempool significantly decreases.
The size of the bitcoin mempool represents the aggregate size of transactions waiting to be confirmed. In essence, bitcoin mempool is the holding area for all transactions waiting to be picked up and confirmed by bitcoin miners.
Over the past few months, since the beginning of 2017, bitcoin fees have increased substantially, to a staggering $2 average fee. Various bitcoin fee estimators including 21 Inc’s Bitcoin Fees show that the fastest and cheapest transaction fee at the time of reporting is 74,580 satoshis or 330 satoshis/byte, considering the size of median bitcoin transaction which currently stands at around 226 bytes.
In January, the recommended fee for bitcoin transactions remained below $1. Over the past six months, the bitcoin mempool demonstrated a strange development trend. The mempool, which often cleared the majority of transactions over the weekend, started to struggle in clearing transactions. The size of the mempool surpassed 100 million bytes and for a substantial period of time, the size of the bitcoin mempool stayed in the 100 million-byte region.
Many analysts and investors have stated in the past that the explosive growth of the bitcoin mempool is likely manufactured and filled with spam transactions. Bitcoin Core developers including Luke Dashjr also stated in the past that there are some activities within the community to intentionally spam the bitcoin network to increase bitcoin block size and push an agenda for scaling.
A chart shared by Alistair Milne, a bitcoin investor at Altana Digital Currency Fund, revealed that the year-long trend of the bitcoin mempool size and development has been disproportionate and irregular. An increasing number of analysts have begun to speculate that the development of the bitcoin fee market and mempool size have been manipulated.
This is Bitcoin's mempool since the beginning of the year— Alistair Milne (@alistairmilne) June 19, 2017
Was the backlog since May fake/manufactured? I'll let you decide! pic.twitter.com/hL0VBWIqRO
As the size of the bitcoin mempool began to drop, recommended bitcoin fees also started to decrease, making it easier for bitcoin users to send and receive transactions. The average recommended fee dropped back to the $1 region and bitcoin fee estimators of most wallet platforms are recommending a fee that is lower than 300 satoshis / byte, which usually results in a fee of around $1.5.
Bitcoin is being traded at above the $1,700 margin and in some markets such as South Korea, it is being traded at over $1,900. Meanwhile, the market cap of alternative cryptocurrencies or altcoins including Ethereum, Ripple and Litecoin have fallen significantly over the past 24 hours.
As seen in the chart above, every altcoin on the global top 10 cryptocurrency chart by market capitalization fell significantly. With the exception of bitcoin, the other nine cryptocurrencies including Ripple, Litecoin, NEM and Ethereum Classic experienced heavy fluctuation in a relatively short period of 24 hours, decreasing by nearly 20 percent in price.
Ripple for instance took over Ethereum to become the second largest cryptocurrency by market cap on May 8 briefly. However, due to its short-term fall in price, RIpple’s market cap declined by nearly $3 billion in the past 48 hours.
While there exists no conclusive evidence to prove the relationship between the price trend of bitcoin and altcoins, it is quite evident that the decline in altcoins often lead to the rise in bitcoin price. One unique component of this hypothetical yet evident relationship between bitcoin and altcoins is that the altcoin market is benefiting from bitcoin’s explosive growth in countries as Japan, the US and South Korea. In other words, when altcoins increase in value, most times, bitcoin also demonstrates a slight surge in its value because the entire cryptocurrency market is seeing a rise in demand.
Specifically, when Litecoin at last activated the highly anticipated and long awaited Segregated Witness (Segwit), the transaction malleability fix and scaling solution developed by the Bitcoin Core development team, bitcoin price gained an upward momentum with Litecoin, due to the community’s optimism toward bitcoin. Perceiving Litecoin as a testbed for bitcoin, which conceptually is appropriate due to the similarity between the two cryptocurrencies’ structure, an increasing number of investors stated to invest in bitcoin.
However, today’s short term decrease of altcoins seems to have stemmed from security issues of Poloniex, the largest altcoin exchange in the global market. Earlier today, Poloniex fell victim to a DDoS attack and was force to mitigate the attacks to continue its services. More to that, bitcoin enthusiast Charlie Shrem harshly criticized Poloniex at the Toronto bitcoin meetup, calling Poloniex “the biggest danger” in the cryptocurrency space.
Whether the short term fluctuation of altcoins had to do with issues of Poloniex or was just simply daily volatility is not an important discussion point to lead. What needs to be discussed is the extreme volatility which altcoins demonstrate on a regular basis. It is difficult to justify the market cap and actual value of cryptocurrencies such as Ethereum and Ripple, the second and third largest cryptocurrencies, if their market cap fluctuations by billions overnight.
At the Bitcoin Cologne meetup in Koln, Germany, bitcoin and security expert Andreas Antonopoulos stated that the mainstream adoption of bitcoin will most likely take 15 to 20 years.
Previously, extreme changes in monetary policies and financial ecosystems took decades or even centuries for people to adopt. As noted by Antonopoulos, the replacement of gold with paper certificates of gold ownership, which the world now recognizes it as fiat money or cash, took over 400 years to be broadly deployed and accepted by the mainstream society.
The next revolution of money emerged upon the introduction of the concept of credit cards. Although the fundamental concept of credit cards was based on an existing financial and monetary structure in cash, the mainstream adoption of credit cards took over 50 years or five decades.
Bitcoin has been growing an exponential pace which analysts failed to predict. Bitcoin’s market cap is currently at $23.7 billion and has consistently proven to be the best performing currency in the world. In the starting of 2017, bitcoin price averaged at $1,017 and its market cap was at $16.3 billion. Within a five-month period, bitcoin increased by over 30 percent in value.
The Bitcoin network is at an ideal position to grow and to target mainstream adoption for various reasons. Some of these include the rise demand for bitcoin from institutional developers, legalization of bitcoin in countries such as Japan and the Philippines, active development community and low volatility rate. Due to bitcoin’s decreasing volatility rate, more businesses have begun to adopt bitcoin and offer the digital currency as a method of payment.
Most notably, Japan’s Bic Camera started to provide a bitcoin payment option for its customers in Japan. As a result, bitcoin received nationwide mainstream media coverage and rapid industrial growth.
With governments already aggressively pushing the concept of a private network of transactions to build a centralized digital currency platform, the race as Antonopoulos explained has been initiated. People now have to make a choice. Either be forced to adopt a centralized, unsecure and opaque in the long run or adopt cryptographic, decentralized, transparent and secure digital currency in bitcoin for financial independence and privacy.
George Kikvadze, the executive vice chairman of Bitfury, believes the delay in the activation of the Bitcoin Core team’s Segregated WItness (Segwit) is costing the bitcoin industry $40 to 50 billion.
On April 30, Kikvadze and the rest of the executives at Bitfury led a meeting with its investors and other potential high profile investors. According to Kikvadze, investors who participated in the meeting unanimously agreed to invest in bitcoin and its businesses only if bitcoin is scaled with viable solutions such as Segwit. Kikvadze wrote:
For the most part, Kikvadze’s request to both the mining community and industry to support the activation of a scaling solution for the greater good of bitcoin is reasonable and understandable. There exists many users and investors looking forward to enter the realm of bitcoin and the cryptocurrency industry who are held back by bitcoin’s current scalability issues.
Blockchain congestion, transaction delays and the development of a fee market are contributing to the stall of development in terms of bitcoin’s codebase, user base, and industry.
Earlier last month, one of Japan’s most influential brand and electronics retailer Bic Camera began to accept bitcoin payments at their physical locations located in the most expensive, vibrant and lively parts of Japanese cities. Bic Camera’s bitcoin campaign led to nationwide coverage of the digital currency and such positive press synergized with the Japanese government’s decision to recognize bitcoin as legal tender.
Bitcoin is currently in urgent need of a scaling solution. Its mempool often reach 80,000 to 100,000 transactions, which means that the majority of bitcoin transactions remain delayed and unconfirmed. Although most delays can be attributed to the attachment of disproportional and low transaction fees, the development of the fee market raised the optimal bitcoin transaction fee significantly over the past few months, sometimes costing users up to $1 per transaction.
If bitcoin scales with solutions such as Segwit, Extension Blocks or Bitcoin Unlimited and gains both substantial on-chain capacity expansion as well as infrastructure for two-layer solutions including Lightning and TumbleBit, bitcoin price will most likely surge due to the emergence of millions of new users and large groups of investors.
Upon the activation of a scaling solution, Kikvadze believes $40 to 50 billion will be added to the industry and potentially, the market cap of bitcoin. Hence, Kikvadze predicts bitcoin price could achieve $5,000 with Segwit or any other scaling solutions that could emerge in the future.
Referring to Litecoin’s recent activation of Segwit, Kikvadze wrote:
On March 10, the US Securities Exchange Commission officially denied the proposal of the Winklevoss twins to introduce a bitcoin exchange-traded fund (ETF) in the public market. At the time, the SEC attributed the reasons of denial to the lack of surveillance on traders and regulation in the overseas market.
The SEC announced:
Prior to the official decision of the SEC, analysts and researchers noted that the likelihood of the bitcoin ETF being approved was relatively high and that 72 percent were in favor of approving the bitcoin ETF. Such predictions arose when the Winklevoss twins partnered with major financial and auditing firm State Street Bank & Trust to increase the transparency and legitimacy of the ETF.
Despite such efforts of the Winklevoss twins and other involved parties including BATS Global Markets and State Street, the SEC declined the proposal of the COIN ETF.
In response to the decision of the SEC, the majority of the community including bitcoin non-profit research center Coin Center executive director Jerry Brito reaffirmed that the reasoning behind the SEC’s decision was not sufficient to decline the COIN ETF. Brito said:
Some experts on ETF further explained that the SEC most likely did not approve the ETF due to the lack of incentives on the organization’s part. If SEC officials approve an ETF, they are wholly responsible for any damages it may cause to the public market. But, if the ETF performs well, there exists no incentives for SEC officials.
Although bitcoin price immediately declined from around $1270 to $980 within minutes, it recovered as the community, industry and market began to understand that bitcoin does not need an ETF to begin with. Security and bitcoin expert Andreas Antonopoulos explained that bitcoin was introduced to defeat the markets that have rejected to adopt bitcoin. Simply put, bitcoin was developed to replace the global financial system and its relevant parties such as the SEC.
Yet, on March 24, BATS Global Markets filed a petition to have the SEC re-examine the recent denial of the Winklevoss twins’ bitcoin ETF. On April 24, exactly a month after the petition of BATS Global Markets was filed, the SEC announced officially that the organization will be reviewed again and results will be revealed on or before May 15, 2017.
The SEC announced:
For the reasons stated above, it is hereby: ORDERED that the petition of BZX for review of the Division’s action to disapprove the proposed rule change by delegated authority be GRANTED; and It is further ORDERED that any party or other person may file a statement in support of or in opposition to the action made pursuant to delegated authority on or before May 15, 2017. The order disapproving such proposed rule change shall remain in effect. By the Commission.
The first quarter of 2017 has been a revelation, if you’re a digital currency investor. Whether you like a particular currency’s fundamentals or not, now is the time people are buying in and making a small fortune on most options on the market. Thursday, however, was a return of the bears to Bitcoin, as BTC dropped nearly 10% before rebounding 3%. Here’s why.
USD and The Fed were major factors
In the Bitcoin community, it has been quite a while, since early-2013, since the U.S. dollar has been the major player in exchange currency for Bitcoin. Chinese Yuan and now the Japanese Yen, have been the major forces investing in Bitcoin, but the USD is back on the scene. As the Coinhills chart below shows, at least for Thursday, this 24-hour currency exchange chart for Bitcoin shows there was major Western money moving on Bitcoin. The USD took up better than a third of the exchange market, apparently mostly out of it, as Bitcoin fell like a rock. Why?
With the announcement by Federal Reserve figurehead Janet Yellen of an interest rate increase on Wednesday, it seems that Americans with money in Bitcoin dumped it for Gold, as Gold took off in lockstep with BTC’s fall from over $1250 early on Thursday, according to GoldPrice.org. Here is Bitcoin’s activity versus the Gold market on Thursday, versus the Bitcoin price drop yesterday on BitcoinAverage.com:
Bitcoin did rebound about three percent in the evening, so Bitcoin is worth more than the $1140 it bottomed out at. One digital currency that is not bottoming out is Ethereum, which is crushing the market, a la Dash, over the last few week. Ethereum started Thursday trading at less than $35 USD and as of this writing, it had passed $45 USD for a better than 30% daily gain.
This can be attributed, at least in part, to the Enterprise Ethereum Alliance deal that we reported on last month. Some of the world’s top corporations will collaborate with Ethereum’s brand of blockchain technology, including Fortune 500 companies like Intel, Microsoft, J.P. Morgan and ING. Ethereum started the year trading at less than $8 USD.
Altcoin Dash has retreated since it’s $101 USD all-time high on Wednesday, stepping back about 10% overall to around $90. It has still had an unprecedented level of gains in Q1, beginning the year at just over $11 USD. As Bitcoin fork fear speculation has swelled over the last month, so has Dash’s market value.
This week may prove to be one of the most pivotal weeks in Bitcoin history. With the Bitcoin price set to climb, or fall, at a pronounced rate within the next few days, some experts are using this time to express their optimism. Two such experts can see Bitcoin price reaching as much as $3000, or £3000, before year’s end.
Bitcoin price is up almost 200% over the last years, and with the SEC’s Winklevoss ETF ruling still days away, it is a great time to swing forthe fences. Adam Davies, a consultant at Altus Consulting, is one of those who is very “bullish” on Bitcoin price speculation, at least before the SEC’s ruling.
Peter Smith, CEO of Blockchain, a bitcoin wallet, told CNBC by email that his company is seeing "unprecedented volume and sign ups", adding that at the current price appreciation, a £3,000 dollar price by the end of the year is "feasible".
Other experts, like Tone Vays, posited the idea last week on his YouTube channel this run up to the ETF ruling by the eleventh was a great time for a “pump-anddump” approach by investors, with prices falling sharply just before the announcement. The almost 10% drop in Bitcoin prices we have seen in the last 24 hours may have supported that prognostication.
In my humble opinion, the ETF will make a significant difference in what Bitcoin is value at the end of 2017. Without any ETF option in 2016, Bitcoin price rose over 125%, so the ETF will not make or break Bitcoin. It is just a multiplier I agree that $3000, or £3000, is a legitimate target, but only if the ETF goes through.
And remember, there are more ETF rulings in the pipeline after March 11th. Until an ETF goes through, it may be best to keep expectation to $2000 or less in 2017. Bitcoin doesn’t need its own version of PED’s to succeed, but it may get an injection anyway.
Bitcoin seems to be doing very well, to the untrained eye. ETFs are popping up like daisies, Bitcoin price is at an all-time high, and mainstream publicity is copious and almost positive. However, there are cracks in the foundation of the world’s premier blockchain network. The fees for processing a Bitcoin transaction are going through the roof, and BitPay’s CEO is sounding the alarm.
Bitcoin, we have a problem
Stephen Pair is Bitpay’s co-founder and CEO, and he wrote about his views on how the functionality of the global payment protocol is going in early 2017. His report was not very good. He ended the post ever-optimistically, but he is disturbed by this growing trend of ever-increasing fees that his business is paying, the cost of doing business, here in Q1 of 2017.
After checking into it on an average cost per transaction basis, you can definitely see prices for Bitcoin transactions have taken off. If you go back to January of 2016, fees were in the $0.15 range, but according to 21.co, the average nondelayed, non-mempool transaction is going through at almost 500 bits. This is equal to about $0.67 right now, or about a 350% increase in just over a year. That’s not a Venezuelan rate of inflation, but it is definitely a red flag.
The chart above clearly shows the more you apy, the more you play. The standard fee transactions at the top, the ones that actually worked fairly well a year ago, is seeing a 5-block, 40-minute delay, on average. I have definitely been seeing that, in the real world, and maybe you have too, unless you can adjust your fee settings skyward.
He also mentioned that more businesses and larger value transactions are coming through their system, which will create a de facto caste system for miners. They’ll want to do the larger transactions, with more bytes and higher fees, which will delay more small transactions into a backlogged mempool. He foresees a future where the larger transactions will happen on-chain, and the smaller one’s off-chain.
Optimistically, he sees the benefit of an off-chain Bitcoin processor, like The Lightning Network, being forced to market due to these growing fee-based issues. Pair is surprised the system is still stuck at 1 MB after all these years. He sees the sides of the issue looking like this:
Pair agrees with Bitcoin experts like Andreas Antonopoulos and others that the future for Bitcoin is very bright and these issues will sort themselves out, without the ecosystem imploding int he process. There are too many people with too much invested to not work this conundrum out. It may take Bitcoin to the brink of global mempool hell before the miners are cornered into action, but something’s gotta give.