CryptoAM: SEC delays, Bots be Hot & Voting on the Chain

Avi Felman@AviFelman

Bitcoin retesting 7k rn. Long-term support @ $194. stay woke

May 28, 2018

3 things you need to know:

One: Bots are hot, mans not. Duo Security’s research team has identified a secret underground Twitter botnet facilitating widespread cryptocurrency scams, and it’s exactly as insane as it sounds.

  • Fully auto: The research team used machine learning algorithms to identify ‘pure-play’ fully-automated bots in the twittersphere. The botnet is comprised of roughly ~15,000 malicious accounts preying on unsuspecting users by spreading ‘giveaway’ scams across the social media platform.

  • The domino effect: Researchers also discovered that the spam tweets were being ‘boosted’ by other bots, creating a positive feedback loop of malicious scam posts. To make matters worse, Twitter’s recommendation algorithm has started to recommend scam/bot accounts to users in its ‘who to follow’ sidebar.

  • Don’t accept candy from strangers: To our readers, we recommend constant vigilance – remember, if someone is offering you crypto for free, more likely than not, it is a scam.

  • Read more…

Two: SEC delays CBOE Bitcoin ETF to September 30th, so the market had a panic attack. The decision was originally scheduled to come out on August 16th, so this announcement came out of left field for most investors. Immediately after the announcement BTC slid down 7% to 6.6k, telling us the market had priced in some possibility of acceptance.

  • Completely irrational: The reaction of the market to the Bitcoin ETF delay is dead giveaway that this market is still in it’s infancy. There was an close to zero probability that the SEC would approve the ETF without taking more time to considering, something we’ve pointed out often here on CryptoAM. The fact the market reacted so violently is a reflection of the massive information asymmetries and inefficiencies that still exist in this market.

  • Sobering thought: The wording of the delay is almost identical to the wording used when the SEC delayed the Winklevii ETF. The outcome of that ETF was a 3-1 against ruling, with the SEC stating that BATS Global Market’s BZX stock exchange failed to meet the requirements under the Exchange Act–specifically “the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.”

  • Read more…

Three: Voting on the blockchain. The state of West Virginia recently announced plans to facilitate mobile-phone voting on a blockchain powered platform called Voatz.

  •  So much for those meddling kids:  This new voting initiative comes on the back of the recent Russian election interference scandal. A blockchain powered voting platform could vastly increase the difficulty of interference and introduce security, transparency, and immutability to the state’s existing voting infrastructure.

  • Critics have valid concerns: Naysayers think mobile voting is a bad idea; they claim that a blockchain based cellular voting system is insecure and difficult to manage without a paper trail, citing our horribly secured networks and devices as a key vulnerability.

  • Key takeaway: Blockchain unlocks potential for a transparent, immutable, and secure voting infrastructure. It will take small-scale trials from early adopters, such as West Virginia, to truly prove out the concept and iron out inefficiencies and vulnerabilities. I personally foresee blockchain becoming a pillar of voting infrastructure in the coming years. The next few years will see municipalities and voting platforms adapt as trial runs continue to be executed by first-movers.

  • Read more…

Also in the news:

What I’m reading today:

Chris Burniske@cburniske

1/ #Bitcoin's been falling for 9 months now (Dec 2017 - Aug 2018). From 2013-2015, $BTC fell for 14 months (Dec 2013 - Jan 2015) before bottoming.

August 7, 2018
Chris Burniske tweeted an interesting comparison between the current bear market and the previous bear market, and walked through what makes this time a little different.

Bitcoin consolidated during Q1-Q3 of 2015, making it a ~2 yrs bear market in the eyes of investors. This time around, we are witnessing a slightly worse market with a $100 invested at the beginning of the crash being worth about 40% more at this point in the cycle. What’s interesting this time is the dampened volatility of BTC over time, and the more linear decline.

This is likely due to the fact the bear market of 2013-2015 was caused in part by the meltdown of the Mt. Gox exchange, an exogenous shock to the stem. We saw a similar gradual decline starting at day 150 in the first bear market.

Something happy: I believe this market is fundamentally different than the market of 2013-2015. There is far more interest in Bitcoin and related cryptocurrencies, with many major players buying in and promoting Bitcoin. While the technicals look worse, adoption has never looked better.

Around the corner:

Market Outlook:

Quick Take

Ugly day for all. Some alts are down more than 20%, which is an indication that the market views BTC as very weak right now. Alts are a leading indicator of market sentiment, and are showing people are incredibly fearful right now.

Technicals indicate that we are likely to trend down towards 6.2k, and I’m shorting here at 6.46k to reduce exposure.

Daily Chart

Fear & Greed

We’re fearful as hell, but not fearful enough to call for a bounce based on these bearish technicals.

Here’s a reminder of what these criteria mean

Overall Picture

Chart speaks for itself. Right now the best move is to begin reducing exposure to cryptocurrencies if you’re a trader, and to just soldier on if you’re a holder. The few plays that can make money in this environment are event driven plays. Accumulating Coinbase picks such as ZRX, XLM, or BAT, or paying close attention to events such as the Sept 30th Bitcoin ETF decision may generate alpha in this market. (I personally believe it will be delayed again).

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