Things have not changed too much in terms of the market situation since we took stock of the crash in our analysis yesterday.
Bitcoin price has slightly climbed up, though, so that is a relief for those who were fearing further falls immediately. Some will believe however that this weak bounce just means we’re in for deeper retracements. Volatility has also picked up: after days and weeks of trading in extremely narrow USD 200 ranges, there is double that range in today’s high and low of USD 8,637 and USD 8,259 respectively (CoinDesk). And at a lower price, this is a 5% range of trading. Hello volatility.
Yesterday’s scapegoat, Bitcoin hash power, turns out after all not to be the culprit for this week of red charts. We can see now that many of the same websites promoting the flash crash as the reason are now also reporting that the incident was unlikely to have actually happened. But, then, we did say this yesterday already, didn’t we? BitcoinNews.com reported on technical discussions in bitcointalk.org, but now Decrypt is publicizing that “experts say that it’s a problem with the yardstick, not the network“.
The explanation is that hash rate is difficult to measure and is only as estimate based on statistics of blocks being mined versus current network difficulty. It’s not at all a perfect formula and depending a lot on the point of data taken, crashes, as well as spikes, can seem to happen. In summary, like we said.
Let’s now look on to other scapegoats and arrive at poor old Bakkt. The Next Web reports that despite such a weak showing on launch, scammers have wasted little time in launching their own phishing sites and trap websites in the hopes that they could lure unsuspecting crypto investors wanting to cash in on Bakkt futures.
bakktlaunch.com is one such site, copying the legitimate Medium page of Bakkt and offering all visitors a chance to get in on the action with the “Bakkt official BTC and ETH giveaway.”
We could joke that this could be the whole reason why there was so little trading activity on the Bakkt platform on opening day, but one wonders if institutional investors are really as naive to fall for phishing website and blatant scams. Some would argue, buying futures (backed by actual Bitcoin or not) instead of buying real Bitcoin already qualifies people as naive, but futures traders have always been in it for the speculative nature of gambling on price.
There is a glimmer of good news in between all the doom and gloom of price markets, in the form of a Lightning Network update. According to data analytics site 1ml, the last month has seen a 3.1% increase in nodes to breach its highest ever total of over 10,000 Lightning Network nodes.
The second-layer Bitcoin solution, which hopes to achieve fast, cheap and high-volume Bitcoin micropayments that bypass the normal on-chain confirmation mechanism for fees as low as 1 satoshi (1 cent is now currently 114 satoshi), is widely regarded as the future of Bitcoin scalability.
Though now still in trial mode, there are already many clients that can be used. It has the potential to support millions of users and payments in a day, is rolled out properly. It is a significant milestone for Lightning to have hit 10,000 nodes. It is only 10% of Bitcoin’s number, but for a technology still in its trialing stages, it’s worth noting the rapid pace of growth and adoption.
Nodes on the Lighting Network pass transactions through payment channels, and get a tiny fee in return. While more nodes helps strengthen and secure the Bitcoin network without making it more efficient, Lightning Network nodes help things get more efficient as they increase in number, since payments jump from node to node until they find the intended recipient. More nodes theoretically means more links, leading to quicker and more reliable payments.
To close off today, we look at some more speculation published by Forbes, who says that some experts are showing new research that identifies a “striking systematic trend” in the movements of Bitcoin price movements. According to the article Bitcoin is down much more than average ahead of CME bitcoin future contracts expiration which happens every last Friday of the month.
The data, produced by analysts Arcane Research, claims that the puppet masters could be institutional investors. Analyst Bendik Norheim Schei said that it is statistically highly unlikely to be coincidence that the price falls happened just before CME settlement:
“The figures thus support a hypothesis that the bitcoin price is manipulated in advance of CME settlement. However, the figures do not say anything about deliberate manipulation or, for example, only a result of investors’ strategy of hedging… [other factors could] potentially explain the pattern, or show that it is even stronger.”
So are we ready to shift the blame now to investors with deep pockets? Are they then no longer waiting for Bakkt but already playing the market?
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