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The MT Gox trustee has sold half a billion worth of bitcoin and bitcoin cash between December 2017 and February 2018 it was revealed today.
Blockchain data analysis suggests the time of sale correlates considerably with the timing of the December crash and subsequent price falls in bitcoin.
MT Gox’s bitcoin addresses are well known as blockchain detectives spent months analyzing them. One such address shows 2,000 bitcoin held by the trustee were moved on December 18th.
On that very day, bitcoin’s price stood at $19,000, briefly fell to $18,000, then continued to fall in subsequent days:
On December the 22nd, the trustee moved 6,000 bitcoin. That’s the big red daily candle above labeled 2, sending price from nearly $16,000 to a brief low of $10,800.
It appears he gave some time for the market to recover, then on the 17th of January at 3AM he sold 8,000 bitcoins. Crashing the market again.
He then sells another 6,000 on the 31st of January, but the vast majority was sold on the 5th of February, 18,000 in total. Sending the price to its recent bottom from which it then went on to recover and nearly double as the selling finally stopped.
This suggests the trustee has sold it all on exchanges, rather than Off The Counter (OTC), sending price down some 75% by perhaps placing market orders.
Moreover, since the addresses are public and probably watched, other market participants would have been aware of the move, but it might have not been clear these were going to an exchange.
Of course the price crash could have been caused by other reasons, but ethereum – which has its own fiat pipelines – did not move much for a long time, and even went on to a new brief all-time high in January, until sentiment turned.
The bitcoin sell-off therefore appears to have been specific to the coin as the sale of half a billion would have placed significant pressure on the price.
Which means this is arguably the fourth time now that MT Gox crashes bitcoin. The first time was in 2011 when MT Gox was hacked out of some half a million bitcoins.
Then in March 2013 when it was DDoSed, then in February 2014 when it went bankrupt, and now in 2017-8 following the peculiar decision of the trustee and the Japanese court to sell 35,000 bitcoins and bitcoin cash.
As cryptocurrencies across the board once again take a hit, bitcoin is exploring the downside below $8,000.
The sharp recovery in prices on CoinDesk’s Bitcoin Price Index (BPI) from the Friday’s low of $7,695 ran into offers at a high of $9,471.46 at 21:59 UTC on Saturday. In the subsequent hours, the bears pushed the cryptocurrency back to $8,000.
Bitcoin dropped further to a low of $7,876.69 at 02:30 UTC today and was last seen at $7,995. The world’s largest cryptocurrency by market capitalization has depreciated by 12 percent in the last 24 hours, according to data source CoinMarketCap.
A similar price action has been seen across the market. Bitcoin cash (BCH), Ripple (XRP) are down 14 percent each, while ethereum’s ether (ETH) token has dropped 13 percent in the last 24 hours.
The biggest loser in the top 100 cryptos by market cap is the ethereum-based token called dent (in 75th place). The company aims to liberate mobile data by enabling users to sell or donate excess data via the ethereum blockchain.
The price of dent has depreciated by 26 percent in the last 24 hours, according to CoinMarketCap. It is worth noting that dent was leading the cryptomarket recovery over the weekend. As of writing, it is changing hands at $0.023647, having clocked a high of $0.033194 over the weekend.
Currently, the total market capitalization of all currencies taken together stands at $397 billion – up 14 percent from Friday’s low of $348 billion.
Michael J. Casey is chairman of CoinDesk’s advisory board and a senior advisor of blockchain research at MIT’s Digital Currency Initiative.
Every year at the World Economic Forum, a handful of timely, hot-button issues overshadow the myriad other topics consuming the chatter of the attending businessmen, government officials, development professionals, celebrities, journalists and multiple other breeds of wannabe “Davos men.”
This year, as with last, a guy called Trump was on everyone’s mind. But that was hardly unexpected.
What was truly remarkable, at least for anyone who has been interested in blockchain technology since its relative obscurity only a few years ago, was the degree to which it became one of the uber-themes of #WEF2018.
In the wake of last year’s huge price surge for bitcoin, ether and many other digital tokens, and amid high-profile media coverage of the “crypto boom,” everyone wanted to know what all the fuss was about.
The newly curious trudged through piles of fresh snow to the various “blockchain lounges” set up outside the security perimeter of the main conference by outfits such as the Global Business Blockchain Council and ConsenSys.
There, they were served valuable insights into how this technology works but also, perhaps, a realization that blockchain technology’s promises of decentralized record-sharing and disintermediated trust have sweeping implications for everything from payments, international development and financial markets to the Internet of Things, energy, environmental management and identity.
But while light bulbs went off in some people’s heads, there were equally strong signs in the lead-up to and during the World Economic Forum that these concepts are still far from wide acceptance among the broad financial, economic and political establishment.
The many recent instances of people from the economic powers-that-be dismissing this technology’s relevance and over-emphasizing its risks over its potential are a reminder that those of us who believe in it still have work to do to get these influential people into the comfort zone.
In an interview with Bloomberg in Davos, U.K. Prime Minister Theresa May said she was looking “very seriously” at taking action against cryptocurrencies “precisely because of the way they are used, particularly by criminals.” In South Korea that same week, the government announced new rules requiring cryptocurrency traders to identify themselves.
But what struck me most was a pre-Davos tweet storm by Paul Krugman, one of a triumvirate of high-profile Nobel laureate economists who’ve been highly critical of cryptocurrencies and blockchain technology, the others being Joseph Stiglitz and Robert Shiller.
Responding to what I thought was a very enlightening cover piece in The New York Times Magazine, Krugman laid out what he thought the technology was all about and then came to this conclusion:
So the blockchain in interesting, but not yet clear whether it’s useful for anything. And investing in Bitcoin still looks a lot less reasonable than investing in cold fusion 12/
— Paul Krugman (@paulkrugman) January 21, 2018
Predictably, the crypto community immediately dismissed the economist as an ignorant dinosaur. The favorite put-down was to remind him of his now notorious 1998 prediction that the “Internet’s impact on the economy [would be] no greater than the fax machine’s.”
Let’s make one thing clear: Paul Krugman is no idiot. Let’s forego the ad hominem. I think it’s more constructive to think about the ingrained mindset of otherwise intelligent mainstream economists that leads people like him to misunderstand the new social structures created by open-source communities, distributed consensus models and programmable tokenized incentive systems.
Krugman and his cohort are trapped by a rigid worldview, one that remains entrenched within the economics fraternity, despite the crisis of 2008, which painfully revealed the deep flaws of the profession’s quasi-scientific models of “rational” human behavior.
When it comes to understanding the value proposition of blockchain technology and drawing conclusions that “it’s not useful for anything,” the biggest problem of this blinkered mindset is that it fails to recognize the cost of trust.
Let me explain what I mean by that, because I think it’s key to getting skeptics to see why these ideas are so important. A few of us in the crypto community started playing with this logic in Davos. See if it works for you.
Hidden cost of trust
First, Krugman is right to say that expensive mining and the need to retain multiple copies of the same transaction record across distributed networks are “clunky” and “costly” aspects of blockchain technology. One answer to that is to say that innovations such as the Lightning Network will eventually fix the problem, but I think the better rejoinder is: “Compared to what?”
The “what” in this case is defined as the explicit and implicit costs that organizations pay to resolve shortfalls of trust. It turns out that that the cost of trust, which is passed onto consumers via higher prices and access restrictions, is very high indeed.
I don’t have a dollar number for it, but just think about the world’s skyscrapers, each filled with accountants doing endless checks and audits of other companies’ invoices, purchase orders and financial reports, and you get the idea.
They’re all trying to reconcile across each other’s separate, centralized ledgers, and all because they don’t trust each other’s records. That’s a cost of trust.
The cost of trust can also be conceived of via the old adage about electricity blackouts: that the highest cost of energy is the energy you can’t access. There are all sorts of potentially enriching transactions that we aren’t able to conduct because we can’t resolve the trust problem.
We can’t yet do peer-to-peer microtransactions between devices on the internet of things, for example, without passing them through some gatekeeping institution, be it a bank or a major cloud-service company like Google or Amazon. That not only adds costs and friction, it also constrains innovation.
And if you step outside the bubble of the developed world and consider the pervasive financial exclusion of the developing world, the cost of trust for 2 billion “unbanked” is especially high. (This is where Krugman is at his most myopic. Unable to leave the developed-world bubble, he claims that the only reason you would want to conduct electronic transactions in cryptocurrencies rather than via a bank account or some other third-party-trusted tool such as a debit card or PayPal is if “you’re buying drugs, assassinations, etc.”)
The perfect moment?
But the developed world is not at all immune from trust shortfalls.
The results of public relations firm Edelman’s “Trust Barometer,” which were released during the World Economic Forum, were scary, at least for Americans.
This annual survey showed that trust in the U.S. among the general population plunged 9 points, the largest-ever fall in the survey’s history, and by 23 points for the so-called “informed public” to post the lowest level of all 28 countries surveyed, below even Russia and South Africa.
As for what this means, let’s go to Breitbart, which many liberal Americans might argue is partly responsible for this breakdown.
It cited the PR firm’s CEO, Richard Edelman, as saying that the main factor behind the drop in trust was that “we lack common facts and have a fundamental difference of interpretation of facts.”
Common facts requires a common record of truth. I know a technology that can help with that….
Champagne image via Shutterstock.
“Bullion’s rally faltered in the past two months as the dollar strengthened and global equities set new records, while concerns over Brexit and Catalonia’s push for independence failed to drum up notable haven demand. Now, bitcoin’s surge is attracting investor interest toward the cryptocurrency and away from the metal, the biggest online vaulting service said.
According to Google Trends, global searches for “buy bitcoin” have overtaken “buy gold” after previously exceeding searches for how to purchase silver. Last month, the amount of gold changing hands on BullionVault’s online trading platform dropped by almost a third from the 12-month average.”
Full story here:
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