On Friday (August 7), the U.S. Dollar Index (ticker: DXY) went up 0.60 (or 0.65) to close at 93.39 due to better-than-expected U.S. jobs growth in July.
On Friday, a press release (titled: “Employment Situation Summary”) by the U.S. Bureau of Labor Statistics, which is part of the U.S. Department of Labor, revealed that “total nonfarm payroll employment rose by 1.8 million in July, and the unemployment rate fell to 10.2 percent.” This report went on to say that “these improvements in the labor market reflected the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it.”
According to a report by Reuters, despite the dollar’s bounce on Friday, last week marked “a seventh straight week of declines” for the world’s reserve currency. In fact, since March 19, the U.S. Dollar Index has fallen 9.17%, as you can see in the chart below by TradingView:
The Reuters report says that Ronald D. Simpson, who is Managing Director for Global Currency Analysis at Action Economics, wrote in a note to clients:
The employment report allayed the market’s downside job fears, allowing the Dollar to rally broadly through the N.Y. session.
It seems reasonable to assume that this slight strengthening of the U.S. dollar could have been at least partly responsible for the small declines in the prices of gold and Bitcoin that we witnessed on Friday, with gold closing 1.38% lower at $2,034.80 and Bitcoin currently (as of 11:10 UTC on August 9), trading around $11,685, down roughly 0.75% since just before the release of the U.S. jobs report for July.
However, it appears that most analysts are not worried by small price pullbacks for either of these asset classes, and they seem content to remain bullish on both precious metals and Bitcoin as long as we continue to have the current macro environment.
Daniel Pavilonis, a senior commodities broker at RJO Futures, provided the following explanation to Kitco News for why gold and silver are going up (and his explanation also applies to Bitcoin which more and more people are starting to view as “digital gold”):
“One of the reasons why the metals are going up is due to the printing up of money. It pushed the real yields into the negative territory down the road. Investors are looking at precious metals as a piece of a longer-term puzzle. As interest rate go lower or negative, investors have money in the bank that will be essentially taxed as they’d have to pay interest on it. What’s the another alternative? This is why people are buying gold, taking delivery of gold bars, and buying futures.”
Interestingly, it is not just that precious metals and bitcoin that have been performing very well since around mid March: U.S. Treasuries, oil, and U.S. stocks have also recorded impressive gains during the past few months, with the S&P 500 up 49.8% since March 23.
Christopher Stanton, Chief Investment Officer at Sunrise Capital Partners, told Reuters that we are in a “bull everything” market:
There are very few losers. Only laggards.
And with the amount of money printing that is going to be needed to fight economic impact of the raging COVID-19 pandemic, it does not seem surprising that investors worried about the debasement of fiat currencies and the increasing potential for high inflation in the future would want to hold almost any asset class except cash.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
Bitcoin Difficulty Ribbon Could Indicate Imminent Price Increase
One is called the difficulty ribbon, and it has just broken out of the green buy zone for the first time since March in terms of compression. The metric was reported by analytics provider Glassnode, which added that historically, these had been periods characterized by a positive momentum indicating significant price increases.
#Bitcoin Difficulty Ribbon Compression is trending up and broke out of the green buy zone for the first time since March.
Historically, these have been periods characterized by a positive momentum indicating significant $BTC price increases.
— glassnode (@glassnode) September 28, 2020
Historical Bitcoin Buy Signal
The Bitcoin difficulty ribbon was created by chartist Willy Woo. It consists of simple moving averages of network difficulty enabling the rate of change of difficulty to be easily seen. Periods of high ribbon compression, such as the current situation, have been historically good buying opportunities.
There have been several significant price increases over Bitcoin’s lifespan that followed this ribbon compression breaking out of the green zone. The most recent was around April 2019 when BTC prices surged from below $5k to top out over $13k just three months later.
It was also observed that there had been a massive divergence in difficulty ribbon compression and Bitcoin price over the past six years. However, the chart has used a logarithmic price chart, which may have caused that anomaly.
Bitcoin’s hash ribbon is a similar metric, and CryptoPotato reported that it was flashing buy signals back in July. In the five weeks that followed, BTC price surged 34% to make its 2020 high.
BTC Price Action Update
Looking at the shorter term, Bitcoin’s price chart has just printed another ‘Bart Simpson’ pattern with a sharp 2.3% decline in just over an hour, wiping Monday’s gains.
Prices had recovered to $10,725 at the time of writing, and sentiment appears to be bullish for BTC, according to a recent poll by analyst and trader Josh Rager.
What kind of prices do you think we see with Bitcoin and the stock market this week?
— Josh Rager 📈 (@Josh_Rager) September 28, 2020
Bitcoin is currently trading right on the 50-day moving average, which is acting as resistance at the moment. The next step above this is a break above $11k, while on the low side, there is strong support at the $10k level. Analyst ‘CryptoHamster’ added:
“After the breakout the resistance line became support. Now it is getting tested. If it holds, it would be a very nice sign. But it has to hold, otherwise the whole growth is just a short squeeze.”
Short term charts suggest price could go either way, but longer-term on-chain analytics, such as the difficulty ribbon, are more bullish.
Bulgarian National Convicted For His Role in a Bitcoin-Related Crypto Exchage Scam
The owner of a cryptocurrency exchange has been recently convicted in a transnational scheme of defrauding people through an online auction fraud. Court says the scam reached a multi-million dollar scale.
At Least 900 Americans Victimized
As per a recent report, people who suffered from the fraud were probably more than 900 American citizens. According to the official statement, 53-years-old Rossen Iossifov, formerly of Bulgaria and reported owner of a Bulgaria-based Bitcoin exchange R.G. Coins, was convicted of both conspiracy to commit racketeering and money laundering. After a two-week trial, the jury in Frankfort, Kentucky and U.S. District Judge Robert E. Wier scheduled the sentencing to Jan 12, 2021.
Reportedly, some of the Romania-based members of the group posted a false advertisement to promote an online auction and sales websites, among which Craigslist and eBay. The ad promised its victims high-cost goods (typically vehicles) that did not exist.
As per the release, members of the scam would use stolen identities to promote and convince their victims to send money for the advertised items via “persuasive narratives”. For example, some of the ads had impersonated a military member in need of selling the advertised item before deployment.
The scammers also provided invoices with trademarks of reputable companies to their victims, making the transactions seem legit. The legal document also reveals that members of the conspiracy set up call centers, offering customer support. This way they would provide advice to client questions and “alleviate concerns over the advertisements”.
Converting The Stolen Funds Into Crypto Assets
According to the official statement, once Iosiffov received the victims’ funds, he and his fellows would convert them into crypto assets and transfer them to off-shore money launderers.
As per the court documents, “since at least September 2015 to December 2018, the Bulgarian exchanged crypto assets into local fiat currency on behalf of his Romania-based partners in the scam, knowing that Bitcoin presented the proceeds of illegal activity.”
According to the court statement, in just two and a half years, Iossifov exchanged more than $4.9 million worth of Bitcoin for only four of the members of the criminal team.
A total of seventeen defendants have been convicted in the case. Three others are fugitives. Police departments in the U.S. and Romania have led the procedures on the case.
It’s worth noting that the US DOJ is becoming increasingly active in pursuing crypto-related fraud. As CryptoPotato reported earlier, it went after 280 cryptocurrency accounts related to hackers from North Korea.
Aave Governance is Now on Mainnet: Incoming 100:1 Token Split For LEND?
The Aave Money Market DeFi protocol is now about to be more decentralized than ever. In an announcement published on its official blog on 25th September 2020, the team reported on the successful launch of the Aave Governance on the mainnet.
This means that users of the protocol will now be able to vote on critical decisions for the project’s future. As Aave explains, the governance implementation was active in the Kovan and Ropsten testnets, giving users the ability to experiment with how to participate in the voting process for various improvement proposals, known as AIP.
Bye LEND Welcome AAVE tokens: Aave’s First Proposal
Unlike testnet implementations, the effects of launching governance on the mainnet are now more formal and reflect the commitment of the development team to empowering the community. The first AIP for which users will be able to vote involves a token migration and the total supply reconversion.
Should the first AIP be approved, the LEND tokens will become AAVE tokens, and the total supply will drop by 100:1. While this may give the impression of less liquidity, the reality is that the value or market cap should, in theory, remain the same as the AAVE holdings in the owners’ wallets would also decrease proportionally.
Aave Governance is officially on mainnet, giving the decisional power to the community! Now it’s time to vote on the very first Aave Improvement Proposal (AIP) for the token migration from $LEND to $AAVE.
Thread on how to vote⬇️
Blog post for details: https://t.co/Z09ajBmb2Y
— Aave (@AaveAave) September 25, 2020
“The major benefits of the migration is that we activate the Safety Module, meaning that AAVE token holders can stake their AAVE and earn,” told us Aave CEO, Stani Kulechov.
These modules are created to secure the protocol and would be used to recapitalize the platform in case of a deficit.
Will exchanges support the Lend – Aave migration? According to Kulechov, “Major exchanges will support after the migration is complete; however, they will separately announce on the support.”
More Incentives for the Community
The Aave team also plans to put under consideration the possibility of including part of the fees within these Safety Modules. In this way, it is guaranteed that the security of the protocol increases with its usability.
“The SM will act as a recapitalization mechanism, so in the case of a shortfall event, your stake may be slashed up to 30% to cover the deficit. The idea behind “safety mining” is to reward community members who stake their AAVE to promote the safety of the protocol.
In addition to the Safety Incentives, users would have the opportunity to earn Ecosystem Incentives (EI) for supplying and borrowing assets from within the platform. They hope that the community will also be able to decide how to distribute specific incentives in the near future.
Aave is one of the longest-running DeFi protocols in the ecosystem. It allows users to lend and borrow certain assets, putting others as collateral. However, interests are automatically determined by supply and demand according to parameters coded within the protocol.
Besides, Aave became famous for allowing flash loans. This mode allows a person to take an unsecured loan on the condition that it is repaid before the next block is mined.
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