Binance, one of the largest cryptocurrency exchanges in the world, was the main highlight of the crypto-space this week after the platform reported a loss of 7,000 BTC due to a security breach. More so, this news took an interesting turn when Changpeng Zhao, the co-founder, and CEO of Binance, stated that he would consider a blockchain reorg.
This resulted in several influencers speaking up against the idea, including influencers like Mike Novogratz, Udi Wertheimer, Adam Back, and Andreas Antonopoulos. Additionally, Changpeng Zhao stated that they had decided to drop “reorg approach” after consulting Jeremy Rubin, Jihan Wu, James Prestwich, Brandon Curtis, and Hasu. He also listed down the reasons leading to the conclusion, with the cons being damage to Bitcoin’s credibility and a possible split in the network and the community.
Andreas Antonopoulos, the author of Mastering Bitcoin and a well-known Bitcoin proponent, recently opined on the consideration of a Bitcoin reorg. He said,
“A reorg to recover exchange losses is like a bail-out for a bank mismanaging risk. Fortunately, it’s so hard to pull off and so likely to fail that unlike banks, there won’t be a bailout here. Those who fail security get to eat the cost. #NotYourKeysNotYourCoins”
Notably, Zhao apologized for using the term “reorg” in a blog post, detailing an update on the security breach. He said, “Given how much I talk, I sometimes say the wrong stuff, dirty words like ‘reorg’, for which I apologize”.
He further stated,
“It is my strong view that our constant and transparent communication is what sets us apart from the “old way of doing things”, even and especially in tough times. Tentatively, we are looking to resume withdrawals and deposits early next week.”
Udi Wertheimer had this to say about the episode,
.@cz_binance apologizes for saying the word “reorg”.
I feel like I owe him an apology too, maybe I was too harsh.
I think the technical community failed him in a way, with researchers promoting bad ideas as Binance was in crisis mode. Binance wouldn’t actually try this. Onwards! pic.twitter.com/jZ2Lg7N3tO
— Udi Wertheimer (@udiWertheimer) May 10, 2019
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Bitcoin’s on-chain/off-chain valuation indicators the key point of focus as coin heads to $13,000
With the rise in Bitcoin’s price, the rest of the cryptocurrency market has followed suit by displaying a green trend across the board. In a recent series of tweets by popular cryptocurrency analyst Adam Tache, users were informed about the top Bitcoin on-chain and off-chain valuation indicators, derived from on-chain valuation models.
The analysis touched on the Mayer Multiple created by dividing the price by the all-important – 200 day moving average. The current average Mayer Multiple stands at a figure of 1.39, which may climb higher. Looking at previous figures, the normal Mayer Multiple figures stated that if the value shoots up to 2.4, then Bitcoin eventually retraces back to a comfortable 1.5. The Mayer Multiple is usually considered as the original indicator used to clock the valuation of Bitcoin.
Another major indicator discussed in the thread was the NVT Ratio invented by Willy Woo, Partner at Adaptive Fund. The indicator is used to calculate Bitcoin’s prominence or value in the cryptocurrency space by evaluating the amount transacted on the blockchain as a “proxy for investment flow and bear and bull market cycles.”
At the moment, the NVT ratio for Bitcoin is in an abnormal region compared to the start of previous bullish patterns. The NVT ratio was above the “bear market” separator, which meant that the cryptocurrency was overbought. When Bitcoin is overbought, it usually means that the buying pressure is much higher than the selling pressure. Adam Tache opined,
“NVT signaling overbought is likely due to a number of factors — namely the proliferation of exchange-based, purely off-chain txs driving short-term price action.”
The analysis also pointed out the liveliness of the Bitcoin indicator created by Tamas Blummer. The indicator showed the inverse count of lost or ‘HODLed’ Bitcoin, while stating that when the ratio increases, long-terms holders of the cryptocurrency decrease their positions. The indicator conveyed accumulation of Bitcoin when the ratio decreased.
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