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Bitcoin – lower retracement to come!

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Inside the Mysterious World of Bitcoin’s Mempool

Blocknative’s Mempool Explorer lets you explore the transient space where Bitcoin transactions are suspended in limbo.

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In brief

  • Blocknative has launched its Mempool Explorer to help understand mempool data.
  • Transactions pass through the mempool before they reach the Bitcoin blockchain.
  • The Mempool Explorer promises to democratize access to mempool data.

Blockchain infrastructure firm Blocknative launched a Blockchain Mempool Explorer yesterday, enabling users to access data more easily from the mempool

But what is the mempool? It’s the gateway to Bitcoin’s blockchain and many others. Before any transaction is written on a blockchain, the information first enters the mempool. There it sits, almost in purgatory, waiting for a Godly miner to select it and inscribe it into a block—or discard it forever. But the very nature of this in-between world, which differs for each miner, has always made it challenging to analyse. And it is often exploited by bad actors with the expertise to see things the rest of us can’t.

“At a minimum, our platform represents sunrise in the Dark Forest. The alpha predators are still operating, but now everyone can monitor their actions,” Matt Cutler, CEO and co-founder of Blocknative, told Decrypt

The main problem is that the Bitcoin mempool is built upon the shifting sands of pending Bitcoin transactions. As there is no one central source of mempool data—each miner has their own version of events—it is difficult to gather and utilize this data. This, in turn, makes it hard to take a reliable snapshot of events, and present them to developers. 

“It is pre-consensus by definition. It is constantly changing—literally at a sub-second level,” said Cutler. 

How the Mempool Explorer works

The Mempool Explorer tries to make sense of the pre-consensus data found in the mempool, making it accessible and easy to analyze. 

In the mempool, pending transactions are ordered, fees are prioritized, and new blocks are sent to the blockchain. The Mempool Explorer examines this data and makes it available to developers. Using the Mempool Explorer, users can track pending transactions, monitor exchanges, and share mempool data with others. In other words, it is a purpose-built environment for crunching data before it hits the blockchain. 

The Mempool Explorer in action. Image: Blocknative

The Mempool Explorer works as a global network of nodes, all enabling the Explorer to detect and record data on the mempool in real time. The Mempool Explorer can record more than 7 billion Ethereum mempool events in just one month. That is over 2,000 events per second on a 24/7 basis. 

How mempool data fights frontrunning

While mempool data is tricky to get hold of, it’s very useful for several different purposes. 

One of its main, albeit shady, uses is for frontrunning. Frontrunning is a way of making trading decisions based on knowledge of future events, similar to insider trading. And traders use frontrunning to get ahead of people on decentralized exchanges, typically on the Ethereum blockchain.

Alex Svanevik, CEO at Nansen, told Decrypt, “There’s certainly demand for mempool data. Trading in traditional finance is often a latency game, and crypto is no different,”

Here’s how frontrunning works when blockchain is involved. Since blockchain data is public, someone watching the mempool can see a trade being made and then make the same trade, offering a higher transaction fee. Since miners tend to pick transactions from the mempool that have higher fees (so they make more money), this means the later transaction is more likely to get included in the block—and the person gets ahead of the trade.

Until now, only some individuals use such techniques. “Today, these techniques are the domain of a well-equipped, and well-financed, elite few. Everyone else is at best a spectator to their actions – at worse, unaware,” said Cutler. This means general people using decentralized exchanges are often subject to frontrunning—but may have no idea.

Now anyone who uses the Explorer will now be able to fight back. 

“Any adversarial action that goes on chain must—just like everything else—first traverse the mempool. So our platform can give concerned parties advanced warning that adversarial actions are underway,” Cutler added. 

It’s time to embrace the mempool.

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Fintech Firm Fasset to Launch Zero-Trade Fee Crypto Trading Platform for Countries in the Gulf Region

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A new cryptocurrency trading platform is gearing up to offer zero-fee trades to users in six countries in the Gulf Region. Announced on Thursday, the platform Fasset Exchange (FEX)  has started sign-ups for its private beta and is planning a public rollout later this year. 

Source: https://www.coindesk.com/fasset-to-launch-zero-trade-fee-crypto-trading-platform-for-gulf-regio

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Bitcoin short-term Price Analysis: 24 September

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After being rejected under the $11,000-mark, the last 48-72 hours have seen Bitcoin survive a period of bearish turmoil. With the cryptocurrency’s price consolidating near $10,300 at press time, some degree of recovery was observed on the charts. However, the resistance at $10,412 continued to hold out. A look at Bitcoin’s charts revealed that a period of high volatility may be incoming for the world’s largest cryptocurrency.

Bitcoin 1-hour chart

Source: BTC/USD on Trading View

The 1-hour chart for Bitcoin, particularly, pictured a rising wedge pattern, at the time of writing. However, the chances were that the pattern will not hold true in terms of a breakout over the next few hours. Following the drop at $10,200, it is more likely that the valuation will exhibit more sideways movement and possibly re-test the resistance levels at $10,412 and $10,562.

The 50-Moving Average needs to be considered with respect to being a strong overhead resistance, but a quick burst in buying pressure can lift the crypto’s price well above the Moving Average. Further, the Awesome Oscillator indicated that despite the presence of bullish momentum, it wasn’t enough to affect a reversal on the charts.

Bitcoin 2-hour chart

Source: BTC/USD on Trading View

While the 1-hour chart was riddled with confusion, more clarity was seen on the 2-hour chart. The two-hour chart explained the possible market structure for Bitcoin’s movement over the coming days, rather than plotting an accurate price movement. As observed in the attached chart, the market structure was hardly broken, at the time of writing, with Bitcoin possibly going to move between the parallel channel before registering another flash crash to the support level at $9980.

The transition might not follow exactly with respect to the green line, but structurally, a re-test at $9980 before another leap north should be expected.

The Stochastic RSI was completely bullish in the short-term, hence, the price can rise to $10,560, before heading south. After reaching its peak, the orange line should undergo a bearish crossover at the overbought position as the selling pressure takes over once more.

Source: https://eng.ambcrypto.com/bitcoin-short-term-price-analysis-24-september

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