Bitcoin is still struggling to recover from the weekend bears and their profit-taking runs. Although there was a brief return above the resistance of USD 9,000 in the heat of North American bullishness, Asian traders once more chipped away at gains throughout Monday afternoon.
Selling pressure has taken its toll, creating a new daily low at USD 8,613 during Europe morning hours. Price right now, just after London noon is at USD 8,700 (CoinDesk).
Altcoins are showing a lot of resistance, although they have also given up their recent climbs, ignoring Bitcoin’s troubles. Ethereum has lost a little over Monday, though, but at -0.49% it is not causing panic in the ranks just yet. Only a few others are also performing more or less at par: DASH at -0.22%, NEO -0.76%, and ZEC -1.26%, but in general, the rest of the market is seeing around 2.5% losses.
The Asian sell-off does seem strange, given that the day started with very bullish news coming out of Beijing. Today, state-managed Xinhua News Agency, often the Chinese government’s media mouthpiece, published a report that acknowledges Bitcoin as “the first successful application of blockchain technology”.
The report will have raised many eyebrows, since the current public stance of China is strictly against cryptocurrency, especially now that a two-year ban on ICOs and crypto exchanges is still in place. The publication was uncharacteristically positive about Bitcoin, detailing the historical developments and evolution of the world’s most used digital asset.
The article’s introduction also asks if Bitcoin is a representation of the “inevitable trend of future currency development or just another ‘tulip’ hype”. It then goes on to talk about blockchain’s fundamental principles as immutable and trustless, with a decentralized system for transfer of value from peer to peer. It then goes into mining, digital scarcity, and even pseudonymity traits. It is at this privacy feature where the positivism stalls, as the publication argues that one of Bitcoin’s many potential risks is that it become the preferred currency for criminal activity. It says:
“…the most important uses of Bitcoin payments are black market transactions and ‘dark net’ transactions.”
There’s an article titled “ Bitcoin: the first successful application of Blockchain technology “ on xinhua daily news (a newspaper owned by communist committee) , first time bitcoin got such positive exposure from gov… pic.twitter.com/IsfKhEtSjN
— molly (@molllliy) November 11, 2019
What is surprising about the article isn’t its criticism, but its objective viewing of Bitcoin, neglecting to portray Bitcoin as anything more than its technological descriptions. Some readers are already commenting at how unexpected the news is, with user “molllliy” Tweeting that this is the “first time Bitcoin got such positive exposure” from the state.
Just weeks ago, President Xi Jinping himself endorsed blockchain technology, urging the country to boost its research and adoption of the emerging tech. This was quickly followed up by the creation of new national legislation that would regulate cryptography and govern various blockchain effects, due to enter into force on 1 January 2020. The news had prompted huge swings for Chinese tech stocks and widespread interest online, leading to the state asking for people to calm down.
Meanwhile, there is some less than enthusiastic news about Bitcoin fundamentals, with crypto influencer Alistair Milne pointing out that Bitcoin’s difficulty in the network had readjusted, dropping by 7% due to blocks being discovered at a lower rate than average in the past 14 days.
Bitcoin mining difficulty dropped the most since Dec 2018 after the last adjustment on 8th Nov 2019 (-7%)
… seems to confirm the cost of mining (on average) is ~$8000 https://t.co/vKiJgaxzZh
— Alistair Milne (@alistairmilne) November 11, 2019
Difficulty is the term used to refer to the level of complexity in cryptographic problems given to miners to solve by the Bitcoin algorithm. As more computers join the network, adding hashing power, these equations are solved more quickly. Conversely, as hash rate drops, equations take longer to solve, hence producing blocks longer than the average 10 minutes.
Every fortnight, the block average time is calculated and difficulty is adjusted to ensure a 10-minute average. This also represents Bitcoin’s way of self-stabilizing, ensuring network security is sufficient even when price or network activity dips.
The most recent low was recorded at 5.1 trillion in December 2018, corresponding also to the year’s low at USD 3,100. As price recovered throughout this year, so has difficulty, reaching an all-time high of 13.7 trillion late last month. Monitoring site Blockchain shows difficulty is now at 12.7 trillion. Milne noted:
“Seems to confirm the cost of mining (on average) is ~$8000.”
Another related piece of news is that major Bitcoin mining power provider, Argo Blockchain, has purchased 500 units of the new Antminer S17 rigs from mining rig manufacturer Bitmain. Once switched on, the British miner would be in possession of some 7,000 miners, with this number to increase by March next year to 17,000.
If that isn’t bullish, we don’t know what is.
Image Courtesy: Pixabay