Author: Mark Hartley

A recent article by New Money Review delves into the complex world of cryptocurrency data collection and analysis, featuring several interesting interviews with experts in the field.

Following 2018’s ongoing bear market, the crypto data analysis industry is one of few in the space that remains profitable, with many companies still hiring new staff. It would appear that in these troublesome times, the need for accurate forecasting is more pertinent than ever. However, the difficulties of gathering relevant data within an unregulated and chaotic market do not go unaddressed.

Some of the comments from those involved highlight the often-times immature nature of the cryptocurrency industry and the many hurdles that are holding back development. The lack of market data structure is pointed out by CryptoComposite technical lead Mark Griffiths. When compared with traditional financial markets it’s “unregulated chaos”, he says.

“The whole space is full of religious wars, vendettas and many, many tribes.”

The problem of unregulated exchanges

He goes on to point out the controversial topic of inflated volume that many crypto exchanges are believed to be guilty of. In order to try and normalize data, Kaiko’s Ambre Soubiran says the company provides “millisecond-level precision” on trading pairs from over 100 exchanges from around the world.

When you take into consideration mitigating factors such as the increasing number of hard forks and the fact that new cryptocurrency exchanges are being created almost weekly, you can see how keeping up with the industry is a never-ending job.

Last November’s Bitcoin Cash hard fork is one such example. During that time, two competing factions caused havoc across the cryptocurrency space, attacking each other’s blockchains and shredding millions of the crypto market value.

“There was a full cyberwar raging,” says Griffiths.

So is regulation a benefit or barrier?

The topic of cryptocurrency regulation is as controversial and divided as it gets. Hardline traditionalists believe regulation goes against the very core values of Satoshi Nakamoto’s Bitcoin whitepaper, while many traders and investors see it as necessary to safeguard their capital.

Widespread adoption is often considered key to further cementing cryptocurrency into mainstream culture, but at present that seems unlikely without better protection for consumers. However, crypto day traders who profit largely off the industry’s high volatility would likely lose out to the calm brought by increased regulation.

One thing is for sure though – if big names in the cryptocurrency “wild west” can’t learn to work together, the industry is at risk of being hijacked by those who can.

The Danish Tax Agency, known locally as the Skattestyrelsen, or SKAT, has announced its intention to begin collecting the data of crypto traders from several exchanges.

The move follows stricter cryptocurrency regulations coming into force in the country and the agency receiving permission from the Danish Tax Council to access the data stores of cryptocurrency exchanges.

The type of data to be collected includes the identity of customers and all purchase and sales of cryptocurrency for the two years between the beginning of 2016 until the end of 2018. A customer identification will include their name, address, and CPR numbers, which is the Danish tax ID number.

The Skattestyrelsen has reportedly already begun contacting three cryptocurrency exchanges to discuss the acquisition of the required information. It is the first time such access has been granted to a government agency in Denmark. Karin Bergen, Director of Personal Income Tax at the Skattestyrelsen, said the move will improve Denmark’s control over the emerging cryptocurrency market:

“This gives us new opportunities with respect to exerting control in the field.”

Prior Warnings

In December last year, the agency launched an investigation into 2,700 Bitcoin traders who it believed were secretly trading on a Finnish crypto exchange. At the time, Bergen warned citizens that they would be hearing from the agency regarding unpaid taxes on any “winnings”.

At the time, lawyer and Bitcoin expert Payam Samarghandi confirmed that cryptocurrency is a taxable asset in the nation, similar to that of expensive art or antiquities.

The Bigger Picture

Bergen went on to note that the agency does not underestimate the size of the cryptocurrency market and appreciates that it may be faced with large amounts of data to review.

“..it’s still too early to tell how many traders are out there and how much money has been traded,” she said.

Denmark is still refining its cryptocurrency tax legislation and has previously instigated rules similar to those applied to stock market gains. However, with a recent survey from the National Tax Board revealing that almost 10 percent of the population have considered shopping with cryptocurrency, greater urgency has now been placed on defining proper regulation.

The University of Bahrain is set to become one of the first educational institutes to begin issuing blockchain-based certificates using the Blockcerts system.

Bahrain is a small middle-eastern country in the Arabian Gulf situated between Qatar and Saudi Arabia. It’s famous for its oil exports and wealthy ruling family, the House of Khalifa, who are estimated to be worth $4 billion. The country has recently begun a drive to advance technology within the nation.

Professor Riyad Hamzah, president of the University, spoke of the institute’s enthusiasm for the project: “We at UOB are delighted to be the trailblazers in using blockchain in the Mena region in order to better serve our students.”

Blockcerts is a globally recognized open standard for recording certificates or other information on a blockchain in a secure, verifiable manner. Any data stored on the system is securely signed using cryptography and is freely available to view and share online. The University of Bahrain has partnered with Learning Machine to integrate the Blockcerts system into its operations.

The system is part of a wider drive by the University to digitize its processes and make ownership and portability easier for mobile and remote students. Cameron Mirza, Head of Strategy at the University, referenced the institutes 2016 transformation plan which included the adoption of emerging and disruptive technologies as part of its roadmap.

“The potential of blockchain goes far beyond cryptocurrency and its potential use within education is both fascinating and exciting,” he said.

The Learning Machine Issuing system has become an integral part of the deployment and growth of the Blockcerts technology. Beyond the Middle East, several government offices, academies and private organizations across America, Europe, Australia, and the Carribean have all adopted the technology as a way to issue secure, online certificates.

A recent new development highlights the strange ways in which differing blockchains interact and re-ignites the old age question of what constitutes ethical behavior in a permissionless ecosystem.

The CTO of CasaHODL, Jameson Lopp, a long time blockchain enthusiast and outspoken voice on ‘crypto-twitter’, recently pointed out that a company called VeriBlock are creating one-fifth of all transactions on the Bitcoin network. For a relatively unknown company, the figure at first seems bizarrely high. However, when you dig a little deeper, the reason for the high traffic is revealed.

VeriBlock is a new startup that came about as a way to offer small, unsecured blockchains protection against 51% attacks. The networks of smaller cryptocurrency startups often have so little hashrate that they are very easy to attack and ‘double-spend’ on – a method of essentially printing and stealing new coins and devaluing the project.

VeriBlock uses a Bitcoin transaction called OP_RETURN to enable altcoins to piggyback on Bitcoins hashrate, thereby keeping them safe from attacks. The concept is known as proof-of-proof (PoP), whereby Bitcoin is providing the proof for another blockchain. The problem is that the method pushes up the cost of Bitcoin transactions for genuine Bitcoin users in order to assist other altcoins which, some might say, are its competition.

If Veriblock can afford to pay the Bitcoin transaction fees and its customers are happy to pay for the service, then it could present a profitable business model. Since Bitcoin is an open-source permissionless blockchain, everybody is free to use it as they please. This means Veriblock has the right to continue operations as it pleases but it does pose the question – should cryptocurrency businesses have any moral responsibility in a trustless environment?

According to a press release from PR Newswire, crypto index fund Bitwise Asset Management has filed for another exchange traded fund (ETF) with the U.S. Securities and Exchange Commission, this time a Bitcoin ETF. The firm has previously applied for an ETF that covered 10 cryptocurrencies on July 24th last year which remains pending. Since then several other crypto-related ETF’s have been rejected.

The new product that Bitwise has put forward will only track the Bitwise Bitcoin Total Return Index, which measures the full value of a BTC investment including any ‘meaningful’ Bitcoin hard forks. Bitwise aim to have the new product listed on the New York Stock Exchange (NYSE) Archipelago Exchange (Arca).

On the developments, John Hyland, Global Head of Exchange-Traded Funds for Bitwise, said:

“While there can be no assurance that [] the SEC will review and ultimately accelerate the registration statement, we are optimistic that 2019 should be the year that a bitcoin ETF launches.”

Matt Hougan, Global Head of Research, states that Bitwise have listened to responses from the SEC regarding the quality and reliability of the cryptocurrency market and spent the past year researching solutions to relevant issues.

“We have spent the past year researching these questions and look forward to discussing those findings with the SEC staff in connection with the filing and listing application,” he noted.

During 2018, Bitcoin ETF stories dominated the headlines, not least of which included the VanEck/SolidX Bitcoin ETF which the SEC have delayed a decision several times. Other notable Bitcoin ETF’s that have faced defeat include that of Gemini Exchange founders the Winklevoss Twins and two Bitcoin Futures ETF’s from ProShares.

In a similar display of determination as Bitwise, the Winklevoss twin’s Cameron and Tyler have recently reiterated their plans to file for another Bitcoin ETF, stating they “are committed as ever to making an ETF a reality.”

Earlier today the cryptocurrency market suffered a massive decline in price, losing approximately $10 billion in the space of a few hours. The market currently sits at around $124 billion, down from $134 billion early this morning.

Ethereum appears to have been worst affected, suffering a massive nine percent loss within the first hour and then continuing a gradual decline to an eventual 13 percent in total losses.

The digital asset is now priced at only $130 after trading sideways at around $150 for the majority of this year. As a result of the loss, Ethereum has moved back into third place on market cap charts. The overall Ethereum market cap is now only $13.6 billion – $40 million shy of Ripple’s XRP cryptocurrency which only suffered 6 percent losses and took over second place.

The sudden selloff appears to be largely unexpected in cryptocurrency circles. While some analysts foresaw a possible decline, it appears to have surprised many and left even fewer with an explanation. However, eToro senior market analyst Mati Greenspan doesn’t see the drop as particularly worrying.

“While Bitcoin was unable to hold on to Sunday’s momentum, it’s important to remember that this price decline still remains within the broader $3,000 – $5,000 range, meaning the significance of this should not be overstated,” he said.

Not all analysts are as optimistic though. Speaking to Bloomberg news, founder of Ikigai crypto hedge fund Travis Kling, said: “It’s unlikely that the bottom is in for Bitcoin [] ..evidence leads us to believe that we’ll see more lows before we head higher.”

A recent report from China’s state-run media publication National Business Daily suggests that as much as 87 percent of all Bitcoin (BTC) is controlled by 1 percent of addresses, indicating increased potential for market manipulation. While a large percentage of that is held in official exchange wallets, the existence of Bitcoin “whales” continue to pose a threat to market movements.

A few days ago we reported on Litecoin (LTC) and Tron’s incredible performance so far this year. Since then, Litecoin has leveled out along with most other coins in the cryptocurrency Top 10, but Tron just keeps going up. TRX recently took over 8th place in the top 10 from Tether and is already up over 50 percent in value just this year alone. At the current rate, it will likely have doubled in value by February.

As 2019 started Tron was trading at $0.018 and now sits at almost $0.029, about a 52 percent increase – making Tron the best performing major digital asset this year so far.

The growth comes as Ton founder Justin Sun tweeted that Tron will enable mass blockchain adoption via its side project, the now tokenized BitTorrent (BTT) platform, one of the largest peer-to-peer file-sharing networks in the world. When you think about, integrated blockchain technology into BitTorrent makes perfect sense but whether or not users will adopt the token remains to be seen.

Praise from Binance

Justin Sun has been known to make sweeping statements in the past, but with many now coming to fruition, it seems crypto enthusiasts are finally starting to pay attention. Even Changpeng Zhao, CEO of the cryptocurrency exchange and trading platform Binance, has voiced his interest in the BitTorrent tokenization project. In response to a Tweet from Techmeme announcing the BTT token launch, he said:

“The grandfather of Dapp finally finds its decentralized currency and business model. Should be a very interesting case study.”

For a project that started out with a rather unclear mission and has faced a slew of criticism regarding its whitepaper, Tron now appears to one cryptocurrency that might actually deliver.

Over the past year, the small island nation of Malta has become synonymous with cryptocurrency due to its positive outlook and support of the industry. After the cryptocurrency exchange giant Binance opened offices there last year following heavy regulation in China, the country further cemented its claim as ‘Blockchain Island.’

However, more recently the Maltese government appears to have curbed its enthusiasm for the emerging digital assets market. The leader of Malta’s opposition party The Nationalist Party, Adrian Delia, is a vocal critic of cryptocurrencies and has used the sudden silence to voice his opinions.

“Malta was touted as Bitcoin Island by the government but the government has been completely silent over the Christmas holidays on practically everything,” he said in a recent interview on local broadcaster NetFM, mistakenly referring to it as Bitcoin Island instead of Blockchain.

In response to the claims, the Parliamentary Secretariat for Financial Services cited ongoing plans by the Maltese government to improve security and regulations regarding cryptocurrency and better inform citizens of the risks posed by them.

Despite allegations of involvement in domestic abuse cases and pressure to step down from his post, Delia has stated he has no intention of resigning and intends to continue serving as leader of the Nationalist Party.

Malta remains a popular destination for cryptocurrency firms, with several having moved operations to the island over the past year. In addition to Binance, both fellow exchanges OKEx and smaller Polish outfit BitBay have opened offices or are planning to open offices in the country. Recent research from financial powerhouse Morgan Stanley reveals that a large percentage of cryptocurrency trade volume flows through Malta.

Litecoin is the best-performing cryptocurrency in the Top 10 so far this year, up almost 30 percent since 2019 began seven days ago. LTC began the year slightly above $31 and has since grown to over $38, almost breaking $40 at one point yesterday.

Litecoin founder Charlie Lee has been in the new lately for his comments regarding Bitcoin maximalists – a term for crypto enthusiasts who believe Bitcoin will always be the dominant cryptocurrency. In a recent tweet, he accused Bitcoin Maximalists of actually being Bitcoin extremists who think all other coins will die.

“They think all other coins are scams and will go to zero. Maximalists think Bitcoin is and will remain the dominant cryptocurrency but there is room for altcoins to exist and even do well.”, he said.

Following up on the tweet, he included a poll asking users to vote how they feel they identify. The options included Bitcoin Extremist, Bitcoin Maximalist, Altcoin Maximalist and Nocoiner – someone who holds no cryptocurrency.

The poll has attracted over 28,000 votes, with the majority of users identifiying as Bitcoin Maximalists.

Despite the poll causing some controversy, Litecoin continues its upward trajectory. Technical analysis shows RSI in positive territory, indicating a bullish trend and predicting a potential target of $56 if the coin can break and sustain support above $47. However, a drop below $27 would indicate a trend reversal.

Tron (TRX)

Tron (TRX) is the second best performing coin so far this year, recently taking 9th position by market cap. Last year the Tron Foundation puchased hugely popular peer-to-peer file sharing platform BitTorrent and recently announced it will be launching its own BitTorrent cryptocurrency, BTT coin.

Tron founder Justin Sun announced the development on Twitter, noting how the new token will help grow mass adoption of cryptocurencies. Two days ago TRX crossed the significant resistance level of $0.024 but is expected to face strong resistance at $0.028.

Bitcoin’s dominance within the cryptocurrency market appears to be decreasing, with data from CoinLib showing the asset recently dropping to below 50 percent dominance for the second time in the past 30 days.

Historically, a decrease in BTC dominance usually indicates an incoming ‘altseason’ – a colloquial term used to describe a huge rally for altcoins. This is because when Bitcoin is sold-off it can only be for one of two things – either fiat currency (during which time the overall market value drops) or into altcoins, during which time market value maintains and BTC dominance drops. This appears to be what is happening now.

During the rise of altcoins in early 2017, Bitcoin’s dominance halved over a six month period, dropping from above 80 percent down to approximately 40 percent in June that year. Over the next six months, BTC dominance rose again to over 60 percent but then dipped sharply to almost 30 percent during the December 2017 bull run when altcoins saw a massive surge in price, with many experiencing huge gains.

Through 2018, the overall cryptocurrency market continued to dip in value with some altcoins experiencing only minor gains in April, during which time BTC dominance again receded. Since then it has clawed its way back up to over 50 percent and maintained that level of dominance since August last year.

Now, the repeated testing of the 50 percent dominance level could indicate another potential reduction for crypto’s king of coins. Coupled with a renewed interest in Ethereum, the platform which supports a huge amount of ERC-20 based altcoins, the stars certainly seem to be aligning for an impending altseason.

High-volume altcoins that are showing impressive movements today include HoloToken (HOT) with 24 percent gains, Cortex (CTXC), up 17 percent, and Bitshares (BTS) with a 16 percent increase.

Amongst the top 10 coins, Litecoin (LTC) is up 11 percent today, Stellar (XLM) up 10 percent and Cardano (ADA) up almost 8 percent.