Bitcoin battles the Barbarians at the gate

What to make of the weekend carnage and recovery of bitcoin?

If I dare to make the comparison of bitcoin as the blue chip of cryptos, then I open myself up to criticism from the Initial Coin Offerings and block chain proponents. Continue reading

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Bitcoin needs to distance itself from failed ICOs

The bitcoin benefits from all the positive talk about the blockchain by financial institutions. Bitcoin pricing is also pushed higher from all the buzz around new initial coin offerings (ICOs). Continue reading

Bitcoin & other cryptos soar on North Korean hostilities

Asian investors have been driving the bitcoin price to all-time highs over the last few days on fears North Korea will provoke regional hostilities with its missile launch actions.

Bitcoin hit $4,705 overnight Wednesday morning with Japan and South Korea investors binge buying the cryptocurrency. For August the price has risen 70% despite the technical split within the crypto community over the handling of blockchain, which is the underlying code enabling the digital currency to function as it does. For 2017, bitcoin has soared roughly 450%.

Bitcoin cash, which is the new crypto that forked off of bitcoin in the beginning of this month, is trading around $575. The alternative version of bitcoin is still up about 170 percent from a debut low of $210 on Aug. 1.

Another digital currency, ethereum, climbed nearly 5 percent Tuesday, to around $364. Ethereum is up more than 4,400 percent this year and has gained nearly 79 percent this month.

Bitcoin still seems to be blue chip in crypto market

Here’s what stumps me. Why would you invest in a newer derivative of volatile newish alternative investment?

I have written extensively on bitcoin. I’ve told readers about its soaring run up in price and its less than equally roller coaster rides down. Pointed out it reaching $3,000 and the $500 drop in the span of 18 minutes soon after.

Also questioned the exchanges that seem to have outages as prices begin to fall.

However when I wrote of the other cryptocurrencies that have popped up in response to bitcoin, such as litecoin and ethereum I was a bit more skeptical. Some of these digital currencies are not currencies at all and are based off bitcoin pricing, but not 100% correlated.

You can see this in their pricing over the last 10 days, while bitcoin is in a range between 2,550 and $2,700, these alt coins are falling faster on a percentage basis.

I still have a somewhat conventional investing philosophy, stay in the best-known entity in the space. While bitcoin’s pedigree is somewhat questionable, it still has a far longer track record of trading than any of these other instruments.

Oh, and one other thing, ethereum has an instrument attached to it called “gas”, which you can purchase with the crypto to enhance your ethereum investment. Gas is something that vaporizes quickly and that may be what happens to your investment in these other digital instruments.

Ethereum exchanges need to right flash crash losses

The cryptocurrency market suffered a major flash crash on Wednesday losing 96% in value in 10 seconds, before bouncing back.

Ethereum — which is a derivative off of bitcoin — plunged from $315 to $0.10 on massive volume created by a deluge of stop-loss orders and margin squeezes.

A stop-loss order is a trade that is executed automatically once a security – in this case ethereum – hits a particular price.

Again as I wrote earlier, the culprit in the crash is the exchanges, which could not correctly process a large sell order. Of course the exchange alleges that there could be market manipulation behind the crash, due to a large sell order.

Adam White, the vice president of GDAX which is an exchange run by Coinbase, posted on the firm’s blog, outlining what took place at around 12:30 p.m. PT on Wednesday. According to White, the multimillion dollar market sell order resulted in a number of orders being filled from $317.81 to $224.48.

“Our initial investigations show no indication of wrongdoing or account takeovers. We understand this event can be frustrating for our customers. Our matching engine operated as intended throughout this event and trading with advanced features like margin always carries inherent risk,” White said in a blog post.

“We are continuing to conduct a thorough investigation and will keep customers updated with any resulting actions.”

Some investors point the  initial coin offering (ICO) demand on Ethereum to a funding launch for an ethereum-based messaging app called Status which took plenty of processing power off of the network.

Message boards point to Ethereum buy orders at $0.10, which were fulfilled and as the price soared back to $300, made millions on the crash.

When stock exchanges flash crashed in May 2010, trades such as the one above were cancelled. It is still unclear what will happen to crypto investors who had their Ethereum was sold for pennies on the dollar, due to stop-loss orders that were executed at far lower levels than the contract specified.

Ethereum is trading at $328 Thursday morning.