Cryptocurrency news round-up 24 September 2018
Big market moves, bitcoin's deadly bug, and a 700 million people to adopt bitcoin... in a way.
Markets are surging after an impressive weekend of trading saw XRP leading the charge, followed by a host of alt-coins which shared their generous gains with bitcoin to see the market rise by $20 billion over the weekend.
Despite the alt-surge BTC dominance is still above 50% - we'll explain why that is in a moment.
Bitcoin had it's first bull break-out in a while over the weekend. Things kicked off on Friday when the price broke through $6,700, going on to reach a 16-day high of $6,802 on Saturday according to data from CMC.
Bitcoin has defended its gains, with price now moving sideways in the range of $6,600 to $6,750.
Now that price looks to consolidate above $6,600, analysts are suggesting a bullish trend reversal is possible. According to CoinDesk, the next price point for bulls to focus on is $7,050.
The rise in price was likely due to the altcoin rally late last week that set the market up for a good weekend when alt-trading is often highest. As most alts are traded against BTC or ETH, any alt-rally is a good rally for BTC too, as market gains are often partially absorbed by the two coins.
This occurs because most fiat-crypto gateways only allow for a very small range of fiat-cryptocurrency pairs, with bitcoin the most popular pairing. So for new fiat to enter the market and make its way to alts, it must first go through a fiat-paired crypto like bitcoin first.
CoinDesk notes that if the alt-rally continues over the next week, we may expect to see the price of BTC follow accordingly.
XRP is the talk of the town right now - price skyrocketed over the weekend and saw the market cap double from where it was only one week ago. In fact the market cap rose so high - to over $30 billion USD - that it toppled Ether as the second most valuable coin by market cap. This was short-lived however, as profit taking saw the coin return to its third position only a few hours later.
According to data from CMC, XRP reached a high of 76 cents on Friday, following a weekly low of 26 cents. That's an increase of 192% in a single week.
Price has since consolidated around the 55 to 60 cent range, where it is now trading for 56 cents - up 115% from the weekly low.
So what caused all of this?
Well last week we reported that the upcoming launch of Ripple's xRapid product, which uses the XRP token to transfer liquidity, was having an upward effect on the token's price. Following the initial rise at the end of last week, things went parabolic on Friday.
This sort of price movement seemed too much for several-day old news, so we've dug a little deeper and investigated some of the possible reasons for the rise.
FOMO is back
Given the current bear market, there has been little discussion or evidence of investors FOMO'ing in to the market. For those not up to date on the lingo - FOMO stands for Fear Of Missing Out and is used in trading to refer to emotionally driven decisions, where traders buy-in due to a fear of missing out on the next big thing or looming profits.
Given that there were several days of sustained XRP price increases, where each days rise was bigger than the last, despite the absence of any more news, the FOMO theory certainly seems plausible.
PNC join RippleNet:
On Wednesday news came out that one of the 10 largest banks in the US, PNC Financial Services Group Inc, had signed on to be a part of RippleNet, which includes settlement technology such as xCurrent.
However xCurrent does not use XRP, and Ripple has been making that point increasingly clear to XRP speculators.
So you might think this shouldn't have affected price the same way the xRapid news did, since xRapid uses XRP.
However follow the yellow-brick road to the original Reuters article which reported the news, you will find an interesting quote from Asheesh Birla, Ripple’s senior vice president for product management.
When discussing the adoption of xCurrent by banks, he had this to add about subsequent adoption of the XRP-related xRapid.
"[xCurrent is] a way to get their toe into the water," Birla said. He added that the next step would be "...get them to use xRapid which is our liquidity product."
Another popular theory that is being shared on reddit and twitter is that the sustained and sudden price increase eventually triggered a short squeeze on XRP shorts.
A short squeeze occurs when the amount of short-sellers betting on a currency to decline in price builds up, reaching a sizeable amount of liquidity. When the price then goes the other way to which they were betting - in this case upwards - all the short sellers are forced to liquidate and buy the asset.
This creates a sudden increase in price, which forces other short sellers to also close their position, increasing the upward pressure on price. In fact John Bollinger - the creator of technical analysis indicator bollinger bands - joked on twitter that the term short squeeze should be renamed to XRP.
All-in-all though, this XRP bull-run was unusual and difficult to understand. There has been a slew of good news about Ripple lately, which investors may have confused as news about XRP. Combining this with actual news about XRP at last, may have had a cumulative effect on those already eyeing the Ripple affiliated asset XRP.
Then the liquidation of shorts following each round of buy-ins, may have served to push the price even higher each time, causing more people to FOMO-in thinking the bull-run was going to continue. Price was eventually allowed to consolidate, still up 100% from where it started, no doubt maintained by the recent good news and positive sentiment.
XRP's cousin XLM also had a great weekend, with the price pushing ahead from 19 cents upto 29 cents over the past week. That's a gain of 43% over the week, which saw it push past EOS to take the place of 5th largest coin by market cap.
The price may have been influenced by the news that investment platform, Circle invest added XLM to it's platform allowing the cryptocurrency to be bought individually through the app.
Bitcoin's near-fatal flaws
Last week a potentially fatal bitcoin network flaw was identified and patched.
The DDoS vulnerability was identified on Monday, with a patch being delivered the next day and miners being asked to apply it ASAP to protect the network. The patch has since been rolled out and tensions have settled.
However Monday's event were not all that they seemed - it has since been reported that there was another exploit revealed, but it was so dangerous that the developers who found it chose not to inform anyone about it. Instead hiding the patch for this more serious issue within the DDOS patch, allowing them to fix the bug without revealing it.
This bug was considered far more serious, as it would have allowed for the total supply of bitcoin to have been increased. Satoshi set the total supply of BTC 21 million. Increasing this amount would have let to inflation and the devaluation of bitcoin.
BTC glyphs come to iOS 12
Is this the kind of adoption we've all been waiting for?
Apple's iphone software update, iOS 12, now features a bitcoin glyph. A glyph is not quite an emoji, but instead is a symbol which can be used to create custom tiles and logos on the phone.
While it seems minor, it's an acknowledgement from the world's biggest tech firm that bitcoin has gone mainstream, and is important enough to be included in a software update that will be available to an estimated 700 million people worldwide.