In this week’s edition, we have some good news to present as analysts are now more optimistic than ever about BTC’s not-so-distant rise, we talk about what caused Ripple to double in value over the course of two days, discuss a potentially devastating bug in Bitcoin Core that could have spelled doom for crypto markets had it not been caught in time, and review a couple of coins that somehow managed to not fare so well during last week’s solidly optimistic market movements.

Has 2018’s Price Bottom Finally Been Reached?

In a sign that the worst may finally (finally) be over for bitcoin in 2018, prices veered upward close to 2.5% across the week, managing to rise in spite of the SEC’s announcement to postpone their decision regarding approval of the Van Eck Solid X Bitcoin ETF. Along with it, the total crypto market cap rose almost 10% and bitcoin’s dominance declined from 55% to 51% of the total capitalization value, suggesting that perhaps investors were ready to jump back into the altcoin markets for the first time in a long time.  Several top-tier coins experienced double-digit gains, among them were Ripple (XRP) (98%), Stellar Lumens (XLM) (28%), Cardano (ADA) (25%) and TRON (TRX) (13%).

7-day price and volume of BTC. Source: bitcoinity.org

 

In a statement filed Sept 20th, the SEC noted that it had received over 1,400 letters from proponents and opponents of a Bitcoin ETF approval, using this as a rationale to request more time to make their decision on the matter. They also outlined how the value per share of the ETF would be maintained, with each share being roughly the price of one bitcoin, updated every 15 seconds using a well-established price index as reference. Surprisingly, announcement of the delay did little to negatively effect the price of BTC, which managed to surge $300 over the next 24 hours, leading technical analysts to speculate that a long-awaited price reversal was finally in store for the near future.

Mike Novogratz, founder of cryptocurrency asset management firm Galaxy Digital Capital Management is one of the financial media personalities currently leading the charge for a crypto resurgence to carry prices into the green for the end of the year, laying out terms of overcoming resistance points of $6,800 and $8,800 as key obstacles that are likely to be overcome so that bitcoin could end the year with a $10,000 price tag. Novogratz had called a market bottom last week, noting that BTC was now at the same price it was roughly one year ago, right before it started its massive ascent upward.

Novogratz is one of many in the camp that believe the prices of BTC and many other coins now have nowhere to go but up for the remainder of the year, due to enjoy something of a “renaissance” in newfound popularity after being largely oversold. Whether bitcoin’s bounce back is the result of an increased level of adoption and newfound relevance or purely based on trader-adhered technical price movement, the fresh clamor of positivity in the media is no doubt enjoyed by many long-time HODLers and bitcoin enthusiasts.

Ripple Enjoys Massive Surge

Banker coin Ripple (XRP) is now up over 215% for the year, thanks to a combination of positive news events that hit it over the course of the last week. Ripple’s 100%+ rise in price over a 2-day period briefly propelled it ahead of Ethereum (ETH) in terms of market capitalization and is considered largely to thank for crypto’s positive momentum over the course of the last week. The reasons behind Ripple’s rise are many and vary from new product developments to new partnerships with U.S. banks to a general atmosphere of FOMO, or “Fear of Missing Out.” In addition, a new social media tipping service named Coil is using Ripple to allow content creators to receive micropayments from fans and general users, chosen because of its ease of conversion factor and ubiquity among the largest crypto exchanges.

7-day price movement of XRP (blue) as compared to BTC (yellow) and ETH (green). Source: coingecko.com

 

From the get-go, Ripple’s existence has been laden with controversy. Developed with finance industry use and regulatory compliance in mind, it has sometimes been viewed as the antithesis of what cryptocurrency was meant to be, as it is somewhat centralized and does not espouse the libertarian ideals set forth by Satoshi Nakamoto during his creation of bitcoin. Nevertheless, it still aims to solve real-world problems; in its case, helping speed up the exchange of one form of fiat currency to another, which can sometimes take days to process.

With the launch of xRapid, inter-currency and cross-border exchanges of money are set to become even faster, spurring a partnership between Ripple and American bank PNC. Over 120 banks and financial institutions are already partnered with Ripple, with at least a dozen more expected to come on board after the xRapid system has been thoroughly tested and rolled out. Ripple is also a popular crypto choice for crypto traders when moving in and out of USD because of its extremely fast confirmation times, and while fears of its centralization may have been significant in the past, it is proving itself to be a popular financial utility among those who value it for the reasons it was created.

Potentially Serious Bitcoin Bug Fixed

A recently deployed version of bitcoin’s main software client, Bitcoin Core was found to contain a new bug which could potentially put the entire Bitcoin Network in danger of “critical failure.” On September 20th, a developer by the title earlz discovered the vulnerability independently and reported it to the Bitcoin Core security team via email. The bug was accidentally introduced during the client’s last update and theoretically allowed anyone mining a bitcoin block to create a “double-spend” transaction which, upon confirmation, could basically cause the whole network to seize up and crash altogether.

While this could likely throw the blockchain offline for a certain period of time, it would just cause a temporary inconvenience in the network rather than leading to its complete demise. It was immediately rationalized that whoever decided to exploit the bug would have to be willing to sacrifice their mined 12.5 BTC (approx. $80,000) in order to temporarily disrupt the Bitcoin Network, and therefore not likely to be exploited. Bitcoin developer Pierre Rochard explained the situation succinctly for other developers and curious onlookers at Bitcoin’s GitHub repository:

“Upgrade to Bitcoin Core 0.16.3 to fix denial-of-service vulnerability: a bug introduced in Bitcoin Core 0.14.0 and affecting all subsequent versions through to 0.16.2 will cause Bitcoin Core to crash when attempting to validate a block containing a transaction that attempts to spend the same input twice. Such blocks would be invalid and so can only be created by miners willing to lose the allowed income from having created a block (at least 12.5 XBT or $80,000 USD).” – Pierre Rochard, Founder of Bitcoin Advisory

It was later reported that the bug was actually far worse in nature than it initially appeared, because if such a double-spend was actually added to the record of the blockchain then it could lead to an artificial inflation in the total amount of bitcoin created by the software, above and beyond the programmed cap of 21 million bitcoin ever to be mined. This in itself could cause a huge loss of confidence in bitcoin as the foolproof virtual currency it has been assumed to be over the last 9 years and cause deep, long lasting damage to its reputation. Lucky for all bitcoin owners, the bug was patched before any damage could be done, but the way in which it was handled and presented to the community has been the subject of much criticism by those who feel the true nature of the problem was not disclosed to the public in an adequate fashion.

Coins Bucking the Trend

Not every coin managed to come out ahead for the week, failing to be lifted by rising tides created by the likes of BTC and XRP. As a matter of fact, there were some pretty dismal under performers in a week that saw the majority of the top 100 coins rising in value. Today we look at a couple of them in particular which were not only down significantly during what was supposed to be an up week but down on relatively heavy volume as well, identified by our Goodness Index (GI) formula as particularly dismal crypto contenders. We will evaluate whether they were down for good reason, or whether they may just be crushed by forces not worthy of their underlying fundamental value; the latter scenario would render them as potential “buy” opportunities going into the next week. As a point of reference, last week’s average GI score was 6.64, meaning most top coins performed slightly better than bitcoin.

Waltonchain (WTC) (GI = -16.7)

Waltonchain is a China/Korea partnershipped IoT (Internet of Things) company with the goal of incorporating physical assets into a blockchain automatically. It aims to accomplish this by providing a product management service combining radio-frequency identification (RFID) technology, which allows digital data encoded in “smart labels” to be captured by a reader via radio waves, with blockchain-based logistics, thus making it easier to manage and track shipments of various good worldwide. In January 2018, the market cap value of WTC managed to climb above $1 billion, and though it still retains a ranking in the top 100 of all coins, its price has shrunk considerably throughout the remainder of the year.

So why was Waltonchain hit with a 16% loss during a week when bitcoin and most others faired pretty well? It’s a tale of mixed news that is not easy to readily decipher. On one hand, WTC was listed on Korean mega-exchange Bithumb earlier this month, giving it a 30% boost in price over the course of the following few days. It is also not short on partnership, of which it has formed many of recently. On the other hand, critics have taken note of changes made in a newly-revised version of the project’s whitepaper that leaves out some important descriptive features, such as the math behind assumptions made which fuel its plans for success, and how the project plans to enact partnership agreements without a fully-functional main net. Supporters of the project were quick to point out that this information could easily be found elsewhere, accusing its attackers of creating unnecessary fear surrounding its development.

Aurora (AOA) (GI = -11)

Aurora is another IoT blockchain startup with a slightly wider ambition that Waltonchain, in that it wants to link together industries is diverse as gaming, big data and artificial intelligence through use of its novel Delegated Proof of Stake (DPoS) / Byzantine Fault Tolerance (BFT) consensus algorithm. A newcomer to the crypto scene, Aurora was introduced in June 2018, bypassing the traditional ICO process and made available for sale directly on the KuCoin exchange. The price of AOA reached a low of less than a penny two weeks ago, falling to only 14% of its original $0.058 at the time of its release, but has since experienced a massive turnaround, shooting upward some 300% in the next few following days. While this type of volatility is not uncommon in cryptocurrency markets, it is rather unusual for a coin with this magnitude of a market cap ($78 million).

So why was AOA down 40% last week in what was a bull market for the majority of other coins? The explanation is pretty simple: in the days leading up to the release of its main net it became overbought, perhaps the victim of too much hype and its own success. Outside of its website, there doesn’t seem to be a whole lot of easily obtainable information on this coin, and it is suspiciously lacking an active community and social media presence. Nevertheless, its weekly reports list an impressive number of recently-formed partnerships and by all other accounts it seems to be an intelligently-designed, legitimate project on the up-and-up. Perhaps it is one of crypto’s “best kept secrets,” though with millions of investor dollars already tied up in it, its obviously not a secret to everybody.

Also in the News

  • David Chaum, the acclaimed cypherpunk and digital currency pioneer announced last week his building of the fastest blockchain ever, called Elixxir. More than a decade before the launch of bitcoin, Chaum introduced the world to Ecash, the first digital currency to successfully be used for the digital transmission of actual money. Though Ecash’s real-world use was confined to a single bank and did not last long, the premise on which it was built laid the cryptographic foundations for Satoshi Nakamoto’s bitcoin and all other cryptocurrencies to come. Now Chaum is claiming to have reinvented cryptocurrency by taking out time-consuming functions on which bitcoin relies, offering yet another radical new development for the idea of digital money.
  • Crypto malware attacks are on the rise as a joint analysis report reveals a 500% increase in malware cases this year alone. A departure from the WannaCry ransomware software that locked users out of their computers for a bitcoin ransom, most malware attacks these days come in the form of hijacking computer processing power to covertly mine the highly-anonymous Monero (XMR).
  • After being exposed as the home of Bitconnect fraudsters last month, authorities in the country of India seized $60 million worth of properties owned by another Ponzi scheme operator, Amit Bhardwaj, last week. Bhardwaj extensively promoted a “bitcoin investment program” known as GainBitcoin.com over a period of a couple of years, giving seminar after seminar to crowds largely ignorant of the inner workings of bitcoin, yet enticed by romanticized tales of extraordinary gains offered by the cryptocurrency. Some 8,000 “investors” were duped into giving Bhardwaj over $5 billion worth of cash and other assets in exchange for promised returns of which are only ever associated with a Ponzi scheme. Ponzi schemes statistically tend to be more effective in countries where financial literacy is low and whose citizens can be preyed upon by those offering unrealistic returns. While Bhardwaj has offered to repay his victims in Indian rupees, the deal is not sitting well with those who realize that their supposed bitcoin assets have jumped tremendously in value while the rupee has fallen somewhat significantly in the same period of time.