Bitcoin’s Long Overdue Correction, Drops 30 Percent Just Before Christmas: Week in Review Dec 25
The price of bitcoin dropped from it’s all-time high of over $20,000 in the week prior to trade in the $13,000s at the end of the week as volatility came back with a bang as futures trading has taken off on both the CBOE and the CME.
New bitcoin investors, especially those who bought bitcoin using debt, were spooked by the steep price drop, which fed into the volatility, while seasoned cryptocurrency investors took this as a chance to get a “Christmas discount” on bitcoin. After all, many financial experts, such as Jim Cramer and James Altucher, agree that bitcoin still has substantial upside and could see highs of up to $1 million per coin.
As bitcoin corrected so did much of altcoin market, which has had an incredible run in the past few weeks. Leading altcoins such as ether, litecoin, and monero all retreated from their recent all-time highs and corrected by seven percent, 16 percent, and eight percent respectively in the past seven days.
Bitcoin cash (BCH), on the other hand, had a fantastic week and rallied by over 50 percent. On Wednesday, bitcoin cash even touched the $4,000 mark briefly before closing the week in the high $2,000’s. Also, the “banks’ cryptocurrency” ripple (XRP) rallied by over 40 percent as rumors that it will be added to Coinbase soon have started to circulate.
This week’s review is compiled from contributions by Nigel Dollentas, Ogwu Osaemezu Emmanuel, Priyeshu Garg, and Robert DeVoe.
Japan-based GMO Internet, an internet and technology conglomerate, has officially kicked off its cryptocurrency mining operation. The company has not disclosed the exact location of the new mine but acknowledged that it is based somewhere in Northern Europe.
GMO formed its first mining unit in September 2017 and planned on making it operational sometime during the first quarter of 2018. This is not the first-of-its-kind investment by the company in the rapidly expanding realm of virtual currencies. It has launched several other cryptocurrency-related ventures since 2016, including an exchange platform and a bitcoin-focused payroll service, among others.
Following closely behind the CME and CBOE, which were the first exchanges to offer Bitcoin futures, NYSE Arca looks to make a similar move with its filing with the SEC on December 19 to propose a rule changing for allowance of listing two ETF’s (exchange-traded funds) tied to Bitcoin futures.
The two ETF’s of interest are the ProShares Bitcoin ETF and the ProShares Short ETF. The ETFs were originally proposed in September, with the rule change proposed on December 4. ProShares is aimed to be priced at $25 per share, with a maximum aggregate offering price of $1 million. Like the Chicago offerings, none of them have direct exposure to cryptocurrency, and instead, make value by tracking the index of bitcoin prices from several exchanges.
Despite bitcoin’s crash to new lows around $15,800, bitcoin cash seems to be going on a surge right now, up over 50 percent at one point during December 20. Coupled with two tweets Coinbase recently sent out, as well as bitcoin cash’s price on the exchange, many are beginning to suspect Coinbase may be guilty of insider trading or other malicious financial activities.
About 70 minutes after that first tweet was sent out, Coinbase tweeted something rather suspicious relating to the exchange’s policy regarding trading for its employees.
As Bengaluru-based startup entrepreneurs Niti Shree and Prashant Sharma started planning out their wedding, they had a rather unusual idea in mind. The couple decided that they didn’t want bouquets, bedsheets, dinner sets, or other similar boring and mundane stuff in gifts. Instead, they decided to accept bitcoin as their wedding present.
Prashant and Niti informed their parents about the decision who, according to the couple, were “very receptive.” Interestingly, the wedding took place on December 9, 2017, merely three days after India’s central bank issued its third warning urging people to refrain from investing in bitcoin. But that didn’t discourage the couple or their families from going ahead with their plan.
According to Emil Oldenburg, bitcoin is not an investment that anyone should be making right now. Not all bark and no bite, the CTO of Bitcoin.com claims to have sold all his holdings in the digital currency and invested wholly in Bitcoin Cash.
According to Oldenburg, the slow transaction speeds and ever-increasing transaction fees are the reason for his bitcoin break-up. His complaints are not unjustified, as it is not unusual for bitcoin transactions to take up to five hours to complete. Additionally, the transaction fees may increase by up to 100 percent four times a year, with fees reaching $26 per trade.
Bitcoin Cash has notably lower fees, coupled with quicker transaction processing ability and greater scalability. As was Bitcoin’s intended purpose outlined by Satoshi Nakamoto argues Oldenburg, it can be considered an upgrade in many ways. “The old Bitcoin network is as good as unusable,” iterated Oldenburg, not one to mince words.
Charlie Lee, the founder of Litecoin, has announced that he has now sold or donated all of his litecoin (LTC), excepting a few litecoin in physical collectibles.
Lee went to Reddit to talk about his predicament, and why he chose to liquidate all of his holdings in a coin that he created, “Over the past year, I try to stay away from price related tweets, but it’s hard because price is such an important aspect of Litecoin growth. And whenever I tweet about Litecoin price or even just good or bads news, I get accused of doing it for personal benefit.”
Lee argues that it was a conflict of interest, to both hold and tweet about Litecoin due to the amount of influence he holds. While he assures that he would refrain from buying or selling the altcoin before or after any major tweets, there was no way to be sure of that, and only Lee himself would only know. Regardless of his intentions, there would always be questioning of his intentions, and whether it’s for his personal wealth or success for the cryptocurrency in general he concludes.
The South Korean digital currency exchange Youbit has announced that they will be ceasing all operations and shutting down the service. The cease operation comes as a result of the second hack to target the company in 2017. The first hack, which occurred back in April, resulted in the loss of 4,000 bitcoin. The first hack on the country’s second largest exchange has also been tied to North Korea.
The second hack to successfully target the company reportedly managed to extract 17 percent of the funds contained within the site. As a result, the company has declared bankruptcy and halted all trading activity. While promising to return as much money as possible to traders, the site admitted that the balances of every account had been cut by 25 percent.