Bitcoin Plunges After Plans for Split Called Off

Bitcoin continued its retreat from a record high after traders weighed in on the cancellation of a technology upgrade that threatened to disrupt the biggest cryptocurrency.

Investors who were expecting the extra coins stemming from a split of the chain may be taking profits, while others who are disappointed the update was scrapped earlier this week may be switching to alternative coins, according to Charlie Lee, founder of litecoin, the fifth-largest cryptocurrency by market value.

While bitcoin soared to a record $7,882 within minutes of news that it would avoid another split on Wednesday, the gains have evaporated. Bitcoin is now trading more than $1,000 below where it was after a faction of the community scrapped plans for a so-called hard fork. Bitcoin was down 8 percent to $6,575 at 2:19 p.m. in New York.

Some speculators are disappointed they won’t get the additional coins that would have been created by a hard fork. While bitcoin splits are potentially disruptive, they’ve so far amounted to free money for holders of the cryptocurrency. Bitcoin Cash, the result of a hard fork in August, has climbed to about $900 from as low as $565 on the day the split was canceled, while bitcoin has slipped almost 10 percent after touching a record right after the news.
The main architects behind a change to its underlying software, known as SegWit2x, canceled their controversial plans Wednesday, saying they wanted to avoid deepening divides in the developer community.

Bitcoin developers, users and miners — those running computers that crunch the complex math required to verify transactions — have been trying to agree on ways to make transactions faster, as the network’s growing popularity has led to congestion. After an initial upgrade in August known as SegWit, short for Segregated Witness, a group in the bitcoin community was calling for SegWit2x. The second upgrade hadn’t gained as much support and was only a week away from confronting bitcoin with one of its hardest tests ever.

Bitcoin had climbed from about $6,00O since CME Group Inc., the world’s largest exchange owner, said on Oct. 31 that it wants to offer bitcoin futures by the end of the year, only a month after dismissing such a plan. Cboe Global Markets Inc. said in August that it wants to sell futures. Both need approval from the U.S. Commodity Futures Trading Commission.

Skeptics of the digital currency ranging from billionaire Warren Buffett to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon have warned that the unregulated asset is a speculative bubble in danger of bursting after its almost sevenfold increase this year.

    Read more: www.bloomberg.com

    How to Make Money Off Bitcoin Without Actually Owning It

    It’s the equity investor’s conundrum: how to get access to the skyrocketing returns of bitcoin and blockchain without actually owning the tokens.

    To Thomas Lee, a major bitcoin bull who heads research for Fundstrat Global Advisors, a dozen stocks should do the trick.

    “We believe investors should have exposure to blockchain, particularly given bitcoin has essentially zero correlation to equities, bonds and commodities —- hence, as a portfolio strategy, bitcoin is a good diversification tool,” Lee wrote in a note to clients Friday. “But this is impractical for many equity managers, given the parameters of their mandate or because of practical issues (custody of tokens, etc.).”

    Investors recently have sought ways to participate in the eye-popping bitcoin rally without having to purchase the cryptocurrency on the unregulated exchanges that have proven susceptible to hacks. Absent from Lee’s list are bitcoin futures, regulated derivative products that will debut on Cboe Global Markets Sunday and CME Group Dec. 18.

    Lee has long been one of Wall Street’s biggest advocates of the cryptocurrency. Two weeks ago he doubled his price target on bitcoin to $11,500 by the middle of 2018. It went for $15,552 as of 10:31 a.m. in New York on Friday, according to Bloomberg composite pricing.

    He suggests equity managers look to these ideas to leverage blockchain in their portfolios:

    • Bitcoin Investment Trust (GBTC)
    • MGT Capital Investments Inc. (MGTI)
    • HIVE Blockchain Technologies Ltd. (HIVE)
    • U.S. Global Investors Inc. (GROW)
    • DigitalX Ltd. (DCC)
    • NVIDIA Corp. (NVDA)
    • Advanced Micro Devices Inc. (AMD)
    • CME Group Inc. (CME)
    • Cboe Global Markets Inc. (CBOE)
    • Overstock.com Inc. (OSTK)
    • Goldman Sachs Group Inc. (GS)
    • Square Inc. (SQ)

    The looming availability of futures weighed on these equity proxies this week, as speculators may be shifting away from stocks of companies that have benefited as bitcoin’s price rose more than 15-fold this year. Both HIVE Blockchain Technologies and U.S. Global Investors are down near 10 percent this week. Nvidia and Advanced Micro Devices have also suffered losses in the five days ending Dec. 8.

    As for the totality of Lee’s picks, an equal weighted basket of these stocks is up 136 percent this year, according to the note. But as impressive as that may seem, he points out that it still lags bitcoin’s 1,685 rise in 2017.

      Read more: www.bloomberg.com

      Crypto-Linked Stocks Sink With Bitcoin on South Korean Warning

      The rout in bitcoin is also taking down stocks with ties to cryptocurrencies.

      Pareteum Corp. dropped 26 percent as of 1:13 p.m. in New York, while Digital Power Corp. and LongFin Corp. each slipped more than 6 percent after South Korea’s government said it wanted to clamp down on speculation, potentially by shutting down some exchanges. The warning sent bitcoin below $14,000, leaving it down 29 percent from last week’s record.

      Overstock.com Inc., On Track Innovations Ltd., and Riot Blockchain Inc. also traded lower Thursday, in relatively light volume during a holiday-shortened week.

      The crypto space has been on a wild ride this month, with the digital token bitcoin soaring to record highs before a dramatic selloff last week. The assets rebounded earlier this week, before resuming their slide lower in a test for investor enthusiasm in the asset class.

      Such volatility isn’t new for bitcoin or its proxies. The digital coin has seen many peaks and valleys over the course of its history. This year, it’s climbed 1,300 percent and once reached more than $19,500. Related assets have largely moved in tandem with the cryptocurrency. Shares of Riot Blockchain and Digital Power, while taking a hit today, are still up 611 percent and 475 percent this year, respectively.

      For related news and information:
      XBT Curncy GP for bitcoin
      VCCY for a cryptocurrency monitor

      For more on cryptocurrencies, check out the podcast:

        Read more: www.bloomberg.com

        Bitcoin Finds Floor After Worst Selloff Since 2015

        Bitcoin rebounded on Saturday along with most of the major cryptocurrencies, halting a four-day tumble that drew worldwide attention to the unregulated $500 billion market that’s frequently called a bubble.

        The double-digit bounceback was strongest with second-tier digital coins. Bitcoin cash soared 21 percent and litecoin gained 12 percent as cryptocurrency traders regained optimism. They weren’t put off by comments published Saturday from a central banker in Germany that “the risk of rapid losses” is obscured in cryptocurrencies.

        “The enthusiasm hasn’t been destroyed,” Marc Ostwald, global strategist at London-based ADM Investor Services International, said by phone from Warsaw. “It’s a volatile market, and investors are hungry for that. They say everything else is boring.”

        The broad recovery on Saturday coincided with a pause in bearish news that had snowballed since Monday and shaved 24 percent off bitcoin’s value, its biggest four-day selloff since 2015. Comments by central bankers, a decision by litecoin’s founder to sell all his holdings and investors’ wishes to cut stakes before the holiday season fueled the plunge.

        “With holidays approaching, some people want to step away from the table, and take their chips with them,” Ostwald said about the selloff. “Still, I wouldn’t want to put it down too much to rationality, because this is not a rational market.”

        While bitcoin wasn’t the most volatile crypocurrency in the past week, it’s the largest, and it shook the world of digital-coin trading on Friday when its interday plunge reached 30 percent. That was the steepest dive since Jan. 14, 2015, back when its market value was just $2.4 billion. On Saturday it was about $260 billion.

        Bitcoin advanced 10 percent to $15,530 at 4:21 p.m. New York time on Saturday, compared with 24 hours earlier, according to data on coinmarketcap.com.

        In a late-week comment that undercut confidence, Michael Novogratz, the former Goldman Sachs Group Inc. and Fortress Investment Group LLC macro trader, said he’s shelving plans to start a cryptocurrency hedge fund. He predicted that bitcoin may extend its plunge to $8,000. Earlier this month he predicted it could reach $40,000 within a few months.

        For a look at whether Goldman is building a cryptocurrency trading desk, click here.

        Growing pains in the digital-coin world and warnings emerged all week, adding to volatility.

        Coinbase, one of the larger trading platforms, on Friday said all buys and sells were temporarily unavailable before they were re-enabled, according to its website. There were no incidents reported Saturday.

        In South Korea, Yapian, the owner of bitcoin exchange Youbit, said Tuesday it would close and enter bankruptcy proceedings after a cyberattack that claimed 17 percent of its total assets.

        ‘Bitter Losers’

        There’s been a string of warnings by regulators for investors in digital coins.

        “We are seeing a rapid rise in value, which hides the risk of rapid losses,” Bundesbank board member Carl-Ludwig Thiele said in a Euro am Sonntag report. He said there is a wide debate going on about the use of digital central-bank money in a closed system, but that he doesn’t currently expect it’s introduction.

        Felix Hufeld, president of German banking supervisor BaFin, advised consumers that trading in bitcoin would produce “bitter losers” and could result in a “total loss,” in an interview with German newspaper Bild.

        EU Warning

        That echoed comments three days ago by the European Union’s financial-services chief, Commissioner Valdis Dombrovskis, who asked the heads of the EU’s three financial supervisors to update their warnings to consumers “as a matter of urgency” in light of recent market developments, according to a letter seen by Bloomberg.

        In past years, central banks and the commercial lenders they oversee have made strides to curb money-laundering through greater transparency rules, only to see anonymous transactions explode in the nascent cryptocurrency industry — under names like Verge and Zcash. Their admonishments this month haven’t stopped double-digit rebounds.

        “Huge rises and sudden, spectacular setbacks wouldn’t surprise me going forward,” ADM’s Ostwald said. “The worry is going to be, at some point, the pips are going to start squeaking. Retail investors losing money will ask, ‘Why aren’t you intervening to help me? And the answer is going to be, ‘Well, this is a casino. On your head, be it.’ ”

        For related news and information:
        XBT Curncy GP <GO>
        VCCY <GO> for a cryptocurrency monitor

          Read more: www.bloomberg.com

          Bitcoin Mania Interrupted, for Now, After Outage Triggers Selloff

          It takes a lot to startle fans of bitcoin, the digital gold of the moment. But Wednesday was, well, a lot — a wild run of exuberant peaks and white-knuckled declines that left even diehards breathless.

          The dizzying rally in bitcoin, a bull market with few precedents in investing history, was abruptly interrupted by a market outage in the U.S. that seemed to captivate Wall Street even more than the day’s selloff in high-flying technology stocks.

          Only hours after soaring past $11,000 — a price that represents a gain of more than two-fold since September — bitcoin plunged nearly 20 percent in less than 90 minutes.

          Whether the swoon represented a brief setback or the start of something worse, the wild ride underscored just how volatile the cryptocurrency has become in what some warn could be one of the biggest bubbles of all time.

          “Bitcoin trading isn’t for the novice investor,” said John Spallanzani, chief macro strategist at GFI Securities LLC in New York, who does technical analysis on the cryptocurrency. “Corrections are fast and furious and you can get run over just like in the movie.”

          The day started with a touch of frenzy in the air, as the digital currency took its first trip past $10,000 and yet another celebrity — this time, pop icon Katy Perry — tweeted about her fascination with the rally. But things suddenly seized up during U.S. hours when traffic swelled on on-line exchanges.

          Confusion reined in the market for hours. Investors fearful of missing out on the frenzy were greeted instead with service outages and delays. Coinbase tweeted that traffic on its platform hit an all-time high at eight times the peak demand experienced in June. Access remained unavailable to some users.

          The selling reached furious levels shortly after 1 p.m. in New York, when bitcoin fell back below $11,000 and didn’t stop until $9,009. It hovered just below $10,000 as of 4:30 pm.

          “Issues in the exchanges add to it without a doubt,” said David Mondrus, chief executive of Trive, a blockchain-based research platform. “When you have a lack of ability to exit, then people dump in order to exit faster.”

          For many, the retreat was overdue after bitcoin had rallied 20 percent in just four days in a run-up that drew increased warnings it was headed for a sharp retreat. The cryptocurrency ended September at $4,171.25.

          “It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down,” Nobel Prize-winning economist Joseph Stiglitz said in a Bloomberg Television interview Wednesday. “Bitcoin is successful only because of its potential for circumvention, lack of oversight. So it seems to me it ought to be outlawed.”

          He joins a host of economists and financiers who’ve denounced the crypto rally as a craze, including most recently Vanguard Group Inc. founder Jack Bogle, who advised investors to “avoid bitcoin like the plague.”

          Proponents have heard those warnings for years, and watched bitcoin’s price rise 935 percent this year alone. Those kind of gains have grabbed Wall Street’s attention, evident Tuesday as buttoned-up financiers and analysts piled into CoinDesk’s cryptocurrencies conference in Manhattan, turning the event into a standing-room-only affair.

          Still, Wednesday’s jarring reversal had Spallanzani reminding investors that the ride down might not be over, at least for now.

          “If bitcoin can’t hold above $10,000, a technical correction could be underway, with a drop to as low as $8,400,” he said. “Asian trading tonight should be an interesting session.”

            Read more: www.bloomberg.com

            NYC Brothel Customer? The Feds Now Have Your Number

            Eleven Manhattan Korean ‘massage parlors’ that allegedly offered girls up for explicit sex acts were busted on Wednesday in a widespread sting.”>

            Depending on the neighborhood in Manhattan, a person could go to Fantasia on the Lower East Side, Asian Flower in Murray Hill, Rose House in Midtown or eight other massage parlors offering a premium-priced girlfriend experiencemeaning condom-less sex acts, priced at a premiumaccording to charges the feds unsealed Wednesday.

            And if your phone number was one of the 70,000 different ones that called any of the 11 places, all of them knew about youand now the government does, too.

            The places operated as a sort of fetish franchise, with owners sharing information on customers and warnings about cops. The women who worked there came from South Korea, often rotating between the parlors to appeal to customers looking for new girls, according to the 30-page criminal complaint filed in New Yorks Southern District Court, which charged 11 owners, workers and ad placers with money laundering and conspiracy.

            The Brothels were independently owned, but assist each other, the complaint reads. For example, the Brothels share a customer list, employed overlapping groups of women, and exchanged information regarding law enforcement.

            As to the 70,000 numbers, those were on a list [that] was divided into multiple categories, including, among other things, approved customers and suspected law enforcement. In addition the list contained notes about the customers.

            A person with personal knowledge of many of the establishments and people named in the charges, and who asked to remain anonymous, praised the government papers for accurately describing the mechanics of the sex business, and elaborated on that list:

            If you call up, they have a laptop with a database and they tap in the last four numbers and youre blue, yellow or redfor good, marginal, or no wayso they all have it and its very accurate. Plus brief notes.

            If it were you for example, the person told a reporter, and you divulged who you are, it would say Daily Beast editor, dark hair, beard, nice guy. Or asshole, depending on how you acted.

            They log whatever name you give them unless youre stupid enough to have your name on your phone but a lot of these guys use burners. The guys who are married and the guys who are important, they get trick phones specifically for this.

            The federal investigation tracked $1.4 million in allegedly laundered funds over five years, with much of it washed through Bitcoin, gift cards and other difficult-to-trace transactions. But thats likely a small fraction of the money the operations brought in, the person with knowledge of the businesses said (and back of the envelope math also suggests).

            I would say that at $1,000 a day, they break even, the person said. And bear in mind that often the owner also works in the room, so when she gets booked shes getting it all. For other workers, the house usually take $100 from each customer, with them paying $200 an hour, or $350 for a girlfriend experience. A good place will bring in 20 to 30 guys on a good day. After the first ten, its all profit.

            The GFE thing, the house still gets $100. Bear in mind that most of the owners work in the room so theyre respectfullike, nobody wants to do that shit so let the girls make the extra money.

            South Koreans can travel to the United States fairly easily with a visa waiver, the criminal complaint notes, so the women can arrange for their travel themselves for the most part, with no need for the brokers who once facilitated bogus tourist and student visas for women they then connected with brothel owners here.

            Make sure you put in that nobodys trafficked and that everyone was doing it of their own volition, the person with first-hand knowledge of the business said. If it was a shithole and it was dirty and the girls were doing cocaine all day, thatd be one kind of thing. But thats not the case here. These girls are here to work, and make money.

            Or, as the charging papers detail, most women now make their own way to the States, with no need for brokers and at least (s)ome of the women fully intending to work illegally as prostituted women upon their arrival.

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            Among the 11 people charged were son-and-mother duo Ryan Lion King Kim and Hoi Ham, who allegedly discussed how to hide their money on the chat app KakaoTalk and quoted in the charging papers. At one point, Ham says shes worried that the website the brothel advertises on leaves evidence. Kim tells "mom" that she should use that evidence when filing taxes. As teaching piano.

            Even after this law enforcement bust, there are still a lot of piano teachers working in Manhattan. Along a stretch in Midtown, ground level is all sandwich shops, bank branches, hotel lobbies, and kitsch gift shops. One story up, its clairvoyant parlors, tailor shops and a lot of Asian spas.

            On Wednesday evening, another spa, which advertises massage services on the sex-work website Backpage, had its marquee posted above a ground-floor hobby shop, where a clanging train bell played on constant loop in the buildings lobby.

            Hot Lips, another massage parlor on the same block, which was named in the Southern Court indictment, could not be reached by phone or doorbell.

            Still another massage parlor on West 45th St. was also charged. To get to that onewhich, the person with knowledge of the parlors said, was exceptional in that it also provides actual massagesyou need to know where to find it. Located in a narrow, nondescript office building, the Manhattan Rainbow Spa posts no signage or advertisements outside or in the lobby. The building security guard operating the elevators quickly surmised that a Daily Beast reporter (the one without the beard) did not have an appointment upstairs.

            The reporter then called the spa from the lobby and heard voice on the other end. It was the only time any of the brothels had answered a call all day.

            The reporter asked: Have the police been there?

            No, no, the woman on the other end replied. A long pause, and then: Are you calling for a massage?

            Read more: www.thedailybeast.com

            Bitcoin Soars Past $8,000

            Bitcoin’s relentless and volatile rally shows no sign of abating, with the world’s largest cryptocurrency defying growing bubble fears to hit yet another milestone.

            Bitcoin rose as much as 7.7 percent to a record $8,290 as of 2:47 p.m. in New York. It’s been a tumultuous year for the virtual currency, with three separate slumps of more than 25 percent all giving way to subsequent rallies.

            Even the most bullish analysts can’t keep up with bitcoin’s rally. Standpoint Research’s Ronnie Moas, who says bitcoin’s market cap will one day catch up to gold at $8 trillion, is raising his 2018 price target for the digital currency to $14,000 from $11,000. He had increased it from $7,500 last month.

            “The inflation in this thing is massive,” Luke Hickmore, a senior investment manager at Aberdeen Standard Investments in London, said in an interview with Bloomberg TV. “When will it collapse? Who knows. It will cause a lot of pain.”

            Even as many skeptics call the asset a bubble waiting to pop, it’s becoming too big for many on Wall Street to ignore. CME Group Inc., the world’s biggest exchange, will start offering futures trading on bitcoin next month, while senior executives at Goldman Sachs Group Inc. and Citigroup Inc. have said they are researching cryptocurrencies and the blockchain technology that underlies them.

            Terminal users can read more on bitcoin and bitcoin cash with our Q&A.

            Recent volatility has stemmed from a pickup in people switching to alternative virtual currencies, notably bitcoin cash. That’s gaining popularity due to lower transaction costs and faster speed. New cryptocurrency iterations are springing up as disagreements over bitcoin’s design persist and opportunities for making a quick buck prove hard to pass up.

            Bitcoin cash dropped 0.6 percent on Monday to trade at $1,189, down from a high of $1, 388 on Nov. 12, Coinmarketcap.com prices show. Bitcoin has advanced more than 700 percent this year and now boasts a market value of more than $130 billion.

            “I find it remarkable and somewhat frightening how, no matter how much bitcoin is pummeled by sellers, it simply bounces back even stronger,” said Lukman Otunuga, an analyst at currency brokerage ForexTime Ltd. “Will bitcoin hit $10,000 before year end? This is the question every investor is asking.”

              Read more: www.bloomberg.com

              Bitcoin Crashes and Then Surges in Wild Weekend Action

              Bitcoin is proving that investing in digital currencies isn’t for the faint of heart.

              After plunging as much as 29 percent from a record high following the cancellation of a technology upgrade on Nov. 8, the largest cryptocurrency came roaring back in early trading Monday before fluctuating between gains and losses.

              “Crypto trading is not for the novice investor,” said John Spallanzani, chief macro strategist at GFI Securities LLC in New York.

              While multiple reasons are being cited for the price volatility, one of the more viable is that some investors are switching to alternative coins. Bitcoin cash, an offshoot of bitcoin that includes many of the technical upgrades being debated by developers, has more than doubled in the same period.

              “We have seen similar steep falls in bitcoin throughout the year — specifically in June and September — but every time a considerable decline occurs, new investors jump in to experience the new asset class,” Hussein Sayed, chief market strategist at ForexTime Ltd., a currency broker that uses the brand FXTM, wrote in a note Monday.

              While markets had been focusing on bitcoin’s more than 500 percent surge this year, bitcoin cash was gaining popularity because of its larger block size. That’s a characteristic that makes transactions cheaper and faster than the original.

              When a faction of the cryptocurrency community canceled plans to increase bitcoin’s block size on Wednesday — a move that would have created another offshoot — some supporters of bigger blocks rallied around bitcoin cash.

              The resulting volatility has been extreme even by bitcoin’s wild standards and comes amid growing interest in cryptocurrencies among regulators, banks and fund managers. While skeptics have called its rapid advance a bubble, the asset has become too big for many on Wall Street to ignore. Even after shrinking as much as $38 billion since Nov. 8, bitcoin boasts a market value of about $110 billion.

              Supporters of bitcoin’s technology upgrade “are now switching support to bitcoin cash,” said Mike Kayamori, head of Tokyo-based Quoine, the world’s second most-active bitcoin exchange over the past day. “There’s a panic about what’s happening. People shouldn’t panic. Just hold on to both coins until we see how it plays out.”

              Read more: A QuickTake on the bitcoin community’s infighting

              The cancellation of last week’s bitcoin upgrade has left users to choose between the two versions of the cryptocurrency. On one side is the original bitcoin, powered by so-called SegWit technology, which aims to improve its performance by moving unessential data off of its underlying blockchain. On the other side is bitcoin cash, which allows its blockchain to handle eight times as much data as the original.

              Proponents of bitcoin cash believe their approach is simpler and closer to the original goal of bitcoin, which was described primarily as a payment system in its white paper. Supporters of the original bitcoin say that vision is too limited, and that by improving the blockchain with SegWit technology, bitcoin can become a new digital-asset class that not only supports payments but countless other functions.

              Upgrade Called Off

              While bitcoin cash has been around for months, it saw limited support as the community awaited last week’s technology upgrade for the original bitcoin, which promised similar features. Now that the upgrade has been called off, businesses that use the cryptocurrency primarily as a payment method are expected to increase adoption of bitcoin cash.

              While bitcoin cash surged over the weekend, it hasn’t been a straight line up. The cryptocurrency was trading at $1,300 at 4:45 p.m. in New York, down from a high of about $2,478 on Sunday, Coinmarketcap.com prices show.

              Bitcoin has been similarly volatile; it initially rose after news that it would avoid another split, but the gains were short-lived. Its plunge earlier Monday to as low as $5,605 compares with an intraday record $7,882 on Nov. 8.

              Volume across bitcoin exchanges jumped to 436,021 bitcoins on Sunday, the highest since September, Bitcoinity.org data show. BitMEX, an exchange for cryptocurrency derivatives that allows shorting, saw record activity on Sunday, Chief Executive Officer Arthur Hayes said.

                Read more: http://www.bloomberg.com/news/articles/2017-11-13/bitcoin-plunges-29-from-record-high-as-civil-war-intensifies