Trade against the Machine

Jihuana Xu and Benjamin Livshits developed machine-learning models to predict upcoming pump and dumps.

The Bitcoin trader looked at coins that are listed at Cryptopia

“On average, we have 358 Bitcoin trader for a pump, according to onlinebetrug and one of which is the actually pumped crypto currency. The number of coins taken into account varies for each event due to the constant listing and delisting activities of the exchanges. The full sample contains 47,487 pump and coin observations, a total of 133 pump and dump cases were observed […]”.

In total, the researchers fed their models with data from 46 categories, such as the market capitalization of the coin, whether it had ever been pumped, the age of the currency, the transaction fees on Cryptopia and the volatility of the price. They used both the Random Forest classification method and general linear modelling approaches. The training was successful with various models. Between October 31 and November 4, Jiahua Xu and Benjamin Livshits were able to correctly predict five out of six pumps.

From this, they developed a trading strategy in which the weighting of a portfolio is based on the probability of a pump of the individual components:

“[…] a simple but effective trading strategy that can be used in combination with the forecasting models. Out-of-sample tests show that a return of up to 80 percent can be consistently achieved over three weeks, even under conservative assumptions.”

Those who would like to deal more intensively with the interface of machine learning and crypto-trading should warmly recommend reading the work of Jiahua Xu and Benjamin Livshits.

The Anatomy of Crypto trader currency

This is a fascinating read for those crypto trader who want to learn more about the predictions of crypto courses. Pump participants are generally aware that admins benefit most from a pump. Usually the admin is able to sell his previously hoarded coins to other group members at an inflated price during the pump.

The participants trust in the “theory of the greater fool”, that there is still a dumber one to whom one can sell one’s inflated coins profitably.

ETH course analysis – breathing and down again

The price oscillated throughout the week and did not rise or fall overall.

By June 27th, the Ether price had dropped to a minimum of 0.095 BTC (203.78 EUR), testing the existing upward channel.

Thereafter, the price could rise again to a maximum of 0.125 BTC (268, 13 EUR), but then entered a downward channel and now stands at 0.108 BTC (231.66 EUR).

The support held – I think this is the big positive Bitcoin news of the week

The support on the 240min chart mentioned last week stopped the downtrend at the second bounce, which caused the price to rise to 0.125 BTC (268, 13 EUR). Unfortunately, this Bitcoin news about the rise came to an end as it encountered a resistance to be addressed later. Since then, the price has been in a stable downward channel, but at least it was able to overcome EMA24 again. According to the Bitcoin news this is not a scam.

The MACD (second panel from above) is negative, but the MACD line (blue) is above the signal (orange) if it holds this position, a bullish zero line crossing may occur soon.

The RSI (third panel from above) stands at 49 and is thus neutral to slightly bearish.

Overall, the 60min chart is neutral to bearish on price, trend and indicators. The MACD gives some hope that it may not stay that way, but currently the price is determined by the downward channel.

The long-term price development of the Bitcoin formula

The medium- and long-term charts are again taken into consideration for further assessment of future price movements of the Bitcoin formula. Let’s start with the 240min chart: Is Bitcoin Formula a Scam? Read This Review Before You Sign Up! For the sake of clarity, two trends that were viewed last week have been slightly pale. We see that the downtrend that dominated last week has been breached, yes, there is even a slight uptrend overall. However, we also see the formation of a resistance where the maximum prices are getting lower and lower. With the support rising, we can see a symmetrical triangle pattern.

The MACD is negative, also the MACD line is below the signal. The RSI rounds off the bearish picture with a value of 43. Overall, the 240min chart is therefore also rather bearish.

Let’s take a closer look at the 1D chart:

The long-term upward channel continues to hold, which is good news in any case. However, we can also see a triangle pattern on this time scale, which is very negative. Although the MACD is still positive, the MACD line is well below the signal and is approaching zero. The RSI is currently at 46 and is therefore slightly bearish.

The long-term forecast is bearish according to price, trend and MACD: Although the support of the upward channel has not yet been tested, you can see from the price developments in the 60min and 240min charts that the signs are bearish in the short to medium term – which can lead to a test of the support in the 1D chart. For the further price development it will be important to see how the two triangle patterns on the 240min and 1D chart behave. In order to make a positive exit, however, the price must leave the downward channel on the 60min chart – and here the signs do not look clearly negative, but there is currently no reason to hope.

Bitcoin: Blockchain hype and a mature ecosystem

Many investors are still suffering from the price drop and consolidation of Bitcoin in 2015, but under the bonnet hides a huge potential and an engine that is starting to roar.

The Bitcoin code was quite cautious

With a limited rise in speculative interest and more than 3,600 freshly unified Bitcoin code available to the market every day, the price was quite cautious throughout 2015. Many major investors sold shares of their Bitcoin assets out of necessity rather than personal interest like this Thus many of these Bitcoins were placed in the hands of new interested parties and investors and were thus scattered among the people.

Many startups, driven by inexperienced businessmen, did not make it through 2015 and had to close their doors. The risk capital invested in 2014 will not last a lifetime, especially not if one does not manage to generate sufficient sales on one’s own. This was the case for many companies in 2015 and the wheat gradually separated from the chaff. To get an idea of what a serious situation some Bitcoin companies were in, I talked to a manager who wanted to partner with a Bitcoin company.

At some point the managing director of the Bitcoin code company admitted

“You know, we are at a stage where we are seriously considering whether we should continue our Bitcoin code business”. Meanwhile, many private hobby miners are throwing in the towel in favour of the large mining farms because the difficulty is too great and the revenues can no longer cover the costs. Mining farms often have a geographical advantage with a cooler climate for chip cooling or pay many times less for electricity. Due to a newer generation of mining chips, the hashrate increased from 300 to more than 600 petahashes.

The currently low price also has a positive feature – mass acceptance has increased steadily in 2015 and the transaction volume is currently around 3 transactions per second (the network can currently process a maximum of 5-7 transactions). In the summer, due to the natural transaction limitation, a hot debate was sparked that lasted until the Hong Kong Scaling Conference in December. Here the appearance of a consensus arose, if perhaps only in part: “This is not about Bitcoin, it’s about the blockchain.”

The idea that Bitcoin may be too volatile and too radical for the financial world is increasingly calling for more institutions to create private and malleable blockchains with their own tokens.

Nine banks, including Goldman Sachs and Barclays, have already announced a “blockchain partnership”. IBM has already started to develop a blockchain without Bitcoin applications and supports several blockchain projects: Ethereum (USD 15 million), Chain (USD 30 million) and Ripple Labs (USD 32 million).

On June 9, a company called Blockstream released the first open source code for “sidechains”, a technology that allows Bitcoins to be transferred from the blockchain to a sidechain from where they can be equipped with new features such as high-speed transactions, smart contracts or for issuing shares.

The technology gained more and more attention in the press and the price per BTC finally broke through the resistance at 300 US dollars on 27 October. As a result, media interest was further fuelled by the alleged identification of the Bitcoin founder and the price rally continued beyond the 400 dollar mark.

What is the potential of 2016?
Here is my assessment for the year 2016:

1. the Bitcoin network will scale up
After months of discussions, there will be a decision in 2016 for the future scaling of Bitcoin.

There are already prudent and effective proposals on the table, such as Pieter Wuille’s Segregated Witness and Adam Back’s BIP248.

I think some proposed solutions will be implemented by summer.

2. Bitcoin will shine as a safe asset
I again expect high volatility in the global marketplaces and as a result I think there will be unexpected liquidity problems.

As a result, investors will be looking for low counterparty risk assets. I think Bitcoin Bitcoin will be one of those assets, even more than in previous years.

3. sidechains will prove to be a technical breakthrough
Just as Bitcoin had to defend itself against the accusations of a snowball system, the sidechains of scepticism

Saving the world’s oceans – Possible with the Blockchain?

Plastic waste in the oceans is one of the most urgent environmental issues of our time. Nevertheless, the countries of the world in particular have not yet found a way to deal with this issue – not least because none of them feels responsible. The Plastic Bank initiative presents a solution based on blockchain technology. Could this be the salvation of the oceans?

In many areas, blockchain technology is already in the focus of authorities, companies and NGOs. Environmental organisations, on the other hand, are often less euphoric about decentralised technology. This is primarily due to Bitcoin, the first and still most important application of the blockchain. The mining process, in which transactions are processed and new units of the Bitcoin are created, consumes an extremely large amount of energy. Depending on how the energy is generated, this can be a burden on the environment.

Everyone can help to make the Bitcoin profit review

The proposal presented by Shaun Frankson and David Katz at the Me Convention in Stockholm on 5 September could change this. The two Canadians are the founders of the Plastic Bank initiative, which has set itself the task of saving the world’s oceans. They want to use blockchain technology to gradually break down the Bitcoin profit review plastic waste that has been spread across the oceans in recent decades by human consumption.

Bitcoin profit scam makes it possible

Founded in 2013 in Vancouver, Canada, by environmental activists Shaun Frankson and David Katz, Bitcoin profit scam is committed to stopping the flow of plastic into the oceans. To do this, it wants to persuade a billion people to actively combat the production of plastic waste. The name Bitcoin profit scam is not chosen by chance – Frankson and Katz want to monetarize plastic waste in the style of a bank. The collectors of plastic waste should be made aware of the value of the good by being compensated for the amount of garbage with a countervalue.

This is where the blockchain solution comes into play. To illustrate the value of the plastic, collectors should be able to convert it into blockchain-based assets or tokens. In order to get the most out of it for the environmentalists, the reward for plastic waste is significantly higher than the usual retail price. The exchange of plastic waste for money helps with recycling. At the same time, the poverty of the local population is being combated, especially in countries and regions that suffer particularly from plastic waste.

Environmental protection and poverty reduction in one: The initiative wants to finance the plastic purchases with a surcharge on the recycled product. This, in turn, is labelled Social Plastic and thus labelled as supported by the Plastic Bank. Anyone who purchases a product that contains a piece of Social Plastic not only contributes to saving the world’s oceans, but also to fighting poverty. The more people who take part in the campaign, the greater the incentive for collectors of plastic waste.

The initiative has already achieved its first successes. The project started in Haiti in 2015, and one year later they expanded their field of work to the Philippines. In order to put the project on a sound footing, Plastic Bank also worked with the US technology group IBM at an early stage. This allowed them to benefit from IBM’s blockchain expertise and build their own blockchain application on the LinuxOne system.

Ethereum reaches $400 mark – we look back

Ethereum changed the rate from 300 to 400 US dollars. About a year ago, the blockchain revolutionary’s young history almost failed. But now growth seems to have no limits.

Record breaker

Just to remind you: A month ago today, the price of ether (ETH) was still around 90 US dollars. So anyone who bought a month ago is already recording a plus that is seldom found in this form on any traditional financial market. Around 344 % growth in one month – you can already hear some calling for a “bubble”!

The chart above shows the growth of the Ethereum addresses since the early beginnings at the end of 2015. Even those who found mathematics difficult at that time, and I count myself among them, notice something in the graph. Its growth is increasing – exponentially. The slope “seems to amplify itself”, to put it in lay terms. That at least somewhat explains the current increase. But those who have been following Ethereum for some time are astonished and ask themselves at least one question: Why has nothing changed in the middle of 2016?

The DAO disaster

A year ago something began that resembled the “Tower of Babel” on the Ethereum block chain. The DAO, or Decentralised Autonomous Organisation, was to take full advantage of Ethereum’s new top function: the Smart Contracts.

The DAO was to be a huge smart contract, a program that could manage itself and unite the votes of thousands of investors. The DAO was supposed to support the early Ethereum development. Investors could buy DAO tokens (see picture below) to get a voting right in the DAO. The DAO served like a huge voting machine: Everyone could vote for a pre-determined startup project. Then the DAO counted the votes. There is no electoral fraud, as the block chain is not fraudulent. A perfect democracy and the best catalyst for a young market – at least that’s how it should be.

But the DAO has been hacked!

At the beginning of June 2016 there were still about 12 million ethers in the DAO Smart Contract. At that time it was already an investment that set records! On 17 June, however, there were strange debits in the Smart Contract. An alarm was sounded and within hours 3 million ethers were transferred to an address by the attacker. An error in a so-called Split() function was exploited by the hacker. In response to criticism from the community, Ethereum boss Vitalik Buterin made it clear:

“This is an incident that specifically affects the DAO, Ethereum itself is perfectly secured.”

The hack brought the DAO and the Ethereum blockchain to their knees. It is the reason why we now have Ethereum (ETH) and Ethereum Classic (ETC). When the Ethereum Foundation team intervened in the source code to shut down the DAO, part of the community saw the immutability of the blockchain in danger. The community split into two camps:

ETH – According to the motto: “The blockchain is unchangeable, but as soon as the law is broken, the status can be changed – ‘Law is Code'”.
ETC – According to the motto: “The blockchain is unchangeable, even if the law is broken, the status must not be changed – ‘Code is Law'”.
About 3.6 million ethers were finally stolen at that time – today about 1.44 billion US dollars…

And Ethereum did not break. It remained silent for months around the Smart Contract blockchain. Since its price of 18.59 US dollars in June 2016, it has experienced a tremendous growth of 2,051%!