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Investments in Bitcoin [BTC] still remain highly speculative, and total loss is still possible – BaFin President’s speech

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Blockchain-mere hype, or disruptive potential? BaFin President
Source: Pixabay

Mr. Felix Hufeld, the President of Federal Financial Supervisory Authority [BaFin], talked about Bitcoin and blockchain and compares this infancy of blockchain with the advent of the internet. He says that even Bill Gates at that time did not pay close attention to that new phenomenon.

Trying to ensure that you do not fall on your nose might mean that you are crawling on your tummy, he said, quoting Heinz Riesenhuber, speaking about how valuable distributed ledger technology can be, yet it has a darker side as well, mainly the security and anonymity issues.

He begins by saying that the most well known blockchain applications are cryptocurrencies like Bitcoin, but he stresses that blockchain extends further. The decentralized nature of this technology lends itself very well to anonymity, making public blockchains vulnerable to abuses such as money laundering or terrorist activities. With countless applications for this technology, there is bound to be issues of this sort.

Estonia, the world’s most digitized country, has already integrated blockchain technology in many public administration services, while Switzerland has had a startup since last July, working on land registry entries.

How does one deal with the tension between innovation and security? Facing the risks of technology, one can not afford to deregulate their opportunities. Nor can regulators or investors be endangered by the risks of blockchain and cryptocurrency volatility, he said.

He reveals that he sees smart contracts as Janus-faced entities, somewhere between hype and success. Yet they have blatant weaknesses that make them inherently susceptible to cyber attacks, an ever-present threat in this digital world. These smart contracts are also not ‘smart’, at least not yet. They are computer codes, with a yes or no output. They can not be expected to retrospectively evaluate their instructions, nor can they ‘judge’ the contract and the principle behind it, making them inflexible.

However these smart contracts enable decentralized computer programs, ‘dApps’, which can be revolutionary. Some even consider this model the real economic alternative to the current centralization tendencies of banks.

The problem of anonymity is also being solved, with traders being required to identify themselves to meet crypto trading platforms’ requirements, to tackle problems like money laundering.



It is indeed a hype, even a bubble, that Bitcoin was priced so high at the end of last year. Investments in Bitcoin still remain highly speculative, and total loss is still possible, he warns.

He remembers the time when outmail was delivered by a mailman, and cable and dial telephones populated posh homes. Compare that to today’s smartphones. Perhaps, he muses, the day is not too far away when people look at blockchains and wonder how money transactions were even possible without this technology.





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A fourth year engineering student at SASTRA, working freelance at AMBCrypto. Writing and football are passions, and cryptos are an avid interest.

Analysis

Bitcoin [BTC]: King coin’s Golden Cross confirmed; Greenspan hints at bullish market

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Bitcoin [BTC]: King coin’s Golden Cross confirmed; Greenspan hints at bullish market
Source: Pixabay

Bitcoin’s much-awaited Golden Cross, which many analysts claimed will lead to a resurgence of a bullish market, has been confirmed. The intersection of the 200-day moving average and 50-day moving average, which indicates the Golden Cross, was achieved over the past few hours.

Earlier today, the top cryptocurrency saw a massive rise after days of sideways movement. Bitcoin’s ascendance saw it break the $5,350 resistance level, which eToro’s Mati Greenspan had previously suggested will consolidate “buying pressure.”

Source: TradingView

Additionally, a major psychological level of $5,500 was also surpassed less than three weeks after Bitcoin broke the $5,000 mark.

The Golden Cross theory holds credibility among analysts in the cryptocurrency realm as it infers that the coin’s average price is above its 200-day equivalent. For the first time in over a year, the cryptocurrency market has seen its 50-day MA move above the 200-day MA, which according to many is a sign of a bullish market.

On the opposing side of the Golden Cross indicator is the Death Cross, where two indicators cross over into a bearish market i.e. the 200-day MA moves above the 50-day MA. The Death Cross manifested in April 2018, after the prices went into a free fall following the December 2017 high.

In April 2018, BTC was priced at just over $7,000, following which it lost more than 50 percent of its price by the end of the year. The price of the king coin has recovered exceedingly well in 2019 however, winning back almost 50 percent of its lost value.

Many analysts, including Greenspan, agree that the crossing of the two moving averages is a clear testament to the return of the bull market. Although he didn’t quite use those words, Greenspan tweeted,

“Ladies & Gents… The Golden Cross!
Bitcoin’s 50-day moving average (gold) crossing above her 200-day moving average (blue). 📈
This is yet another sign that we’re back in a🐂market. 🚀🌛”

However, in an exclusive interview with AMBCrypto last week, Greenspan had stated that the Golden Cross theory is a “lagging indicator,” as the Death Cross was last seen in April 2018, months after the market took a bearish turn.



In his view, the 200-day moving average is the key indicator. On April 2, Bitcoin broke this mark for the first time since March 2018, by recording a massive 17 percent daily gain and rising above $5,000.

Based on historic price changes with reference to the Golden Cross, the last time the 50-day MA soared above the 200-day MA, price of Bitcoin rose by over 8000 percent from $246 in October 2015 to almost $20,000 in December 2017. Given past market movements, the current market scenario, and the optimism in the air, the Golden Cross may just have initiated the Bitcoin bull market.





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