Your dose of crypto news and analysis from @BTO and @Goldfinger

Here we go — Issue No. 2 of Crypto Wars...

WTF did I miss this week in crypto?

NextBlock scraps plans to go public in wake of controversy

This was a major story this week at the intersection of the crypto and capital markets. The go-public transaction for NextBlock, a crypto/blockchain VC fund, was expected to occur in early 2018 and was hotly anticipated. The company was in the midst of raising pre-RTO capital when a story broke that in marketing materials sent to potential investors, it had named four people as advisors who had not agreed to do so. It’s lead underwriters for the financing, CIBC World Markets and Canaccord Genuity, then pulled their support when the falsehoods came to light. Alex Tapscott, CEO of the company, sheepishly admitted: “We have stumbled in our efforts to take our company public and we will work hard to rebuild the trust of those we have disappointed.”

Ethereum Security Lead: Hard Fork Required to Release Frozen Parity Funds

On Tuesday this week, a smart contract developer claiming to be a noobie to Ethereum, “accidentally” deleted the code library that corresponds to a widely-used wallet, Parity, rendering the software useless. More than $150 million worth of Ether is frozen as a result and the only known fix to free up the funds is to trigger a hard fork of the Ethereum blockchain to deploy a technical change known as the ethereum improvement protocol (EIP). If implemented, the EIP would allow the reclaiming of Ether from stuck accounts.

The market didn’t seem to mind, which the price of Ether subsequently climbing to a three-week high. In related news, it has become apparent that funds raised in ICOs are among the millions frozen in Parity wallets.

'Young' ICOs: Nasdaq Exec Says Exchange Still the Place to Raise Capital

Surprise, surprise! A NASDAQ exec says the best place for a company to raise money is the exchange — not through token offerings, or ICOs.

“Buy Bitcoin” More Googled than “Buy Gold”,%22buy%20bitcoin%22

There were various news article on this that came out this week, but I think it is more interesting to take a look at the charts and maps themselves on Google’s site. One is pasted below — red for “buy bitcoin” and blue for “buy gold” — but click the link above and take a look.

Coinbase Escalates Showdown on U.S. Tax Probe as Bitcoin Surges

I think we will continue to see headlines like this one. Tax authorities around the world are not going to sit idle watching their tax base shift to crypto. In the U.S., the IRS has been seeking to compel Coinbase, one of the largest crypto exchanges, to hand over records on its thousands of users. The IRS believes that gains on crypto trading are going unreported and thus falling outside the tax net. Coinbase and industry trade groups are fighting back in court, claiming the government’s concerns about tax fraud are unfounded and that its demand for information is a threat to privacy.

Malaysia's Securities Watchdog Plans Cryptocurrency Regulations

In a trend that is probably very healthy and constructive for the long-term sustainability of the crypto sector, yet another country — Malaysia in this case — has come out stating that it is working on “relevant regulations and guidelines” for functional use cases of digital assets, including “secondary market trading of established cryptocurrency and digital assets”. The country had previously given indications that it was considering a ban on the trading of cryptocurrencies before the end of 2017, so this news is a step in the right direction.

NO2X: Next Week’s Hard Fork Has Been “Suspended” Due to a Lack of Consensus

In what was probably the biggest story of the week, the main organizers behind the SegWit2x project announced that they had “suspended” their efforts, killing a hard fork of Bitcoin (BTC) that was expected to occur next week. The SegWit2x project sought to increase block size in order to increase Bitcoin’s transaction capacity. As the hard fork date drew closer, it became increasingly clear that SegWit2x would spawn a new currency rather than constitute an upgrade of the Bitcoin protocol. Due to lack of consensus among stakeholders, the organizers of the SegWit2X movement opted to suspend their plans in favour of retaining a united community. Bitcoin had seen gains in the couple of weeks leading up to the proposed hard fork — as was the case with the Bitcoin Cash hard fork — and the abandonment of the 2X hard fork resulted in a pullback in price of the leading cryptocurrency, from highs of close to US$8,000 down to below US$7,000. For more, go here and here.

Coins and tokens and stocks, oh my!

[Note — Net change and % change figures are from the close last Friday to the close today.]

HIVE Blockchain (TSXV:HIVE) — $HIVE — Net Change: -$0.64; % Change: -13.6%

Following a crazy finish to last week’s trading where HIVE announced that pooled stock totalling 24.6M shares would come free-trading on Nov. 8, instead of the planned Nov. 15 — see Crypto Wars Issue No. 1 — this was the week to watch how the stock responded to an approximate doubling of the free-trading float. Not surprisingly, there was some selling pressure, sending the price down 13.6% on the week, but the stock showed quite a bit of strength numerous times around the $4.00 level before finishing the week at $4.07. We learned this week that the the early release of the shares was prompted by queries from regulators and was done in an attempt to add liquidity and create a more balanced market. More on this can be read in @tommy’s article here. With the company in the midst of completing a financing and build-out of a large expansion in Sweden, the coming weeks and months for HIVE should be exciting to watch. Genesis CEO Marco Streng says he is helping HIVE expand their business and diversify into Bitcoin mining (HIVE is currently focused on mining Ethereum).

Mogo Finance (TSX:MOGO) — $MOGO — Net Change: $0.24; % Change: 4.3%

This week was another good one for Mogo. The stock rose 4.3% from the close last Friday to the close today, finishing the week at $5.88. In its Q3 financials released this week, the company boasted more than 60% growth in other product revenue and fees and confirmed a member base of more than 500,000, with a new target to grow its membership to between 800,000 and 1,000,000 by the end of 2018. New products on the company’s near-term roadmap include an identity fraud protection product called MogoProtect, as well as the recently announced crypto account, which will enable Canadians to buy and sell Bitcoin within their MogoAccount. CFO Greg Feller appeared on BNN to discuss the company’s foray into the blockchain world, which you can check out here: Mackie Research has raised its price target for the company to $12/share from its previous target of $9. (NASDAQ:OSTK) — $OSTK — Net Change: US$8.55; % Change: 19.2%

This week, Overstock released its Q3 results and held a lengthy and very interesting earnings call, which can be viewed here. On the call, the company went through the ways it has become exposed to the blockchain/crypto space, which it has done by making investments, through its blockchain-focused subsidiary Medici Ventures, in the following companies: bitt; ripio; spera; PeerNova; factom; symbiont; IdentityMind; and SettleMint. This is in addition to its main focus — which it owns more than 80% of — tØ or tZERO, an SEC-compliant alternative trading system (ATS) that will provide a platform for the exchange of cryptographic tokens categorized in the U.S. as securities. The stock has responded nicely to the Q3 results and clarity on the company's blockchain initiatives, closing out the week at US$53.10.

MGT Capital (OTC:MGTI) — $MGTI — Net Change: US$0.00; % Change: 0.0%

Backed by John McAfee, MGTI is a cyber security firm that has a growing Bitcoin mining operation in Washington state. On Nov. 9, the company reported its Q3 results, with revenues from Bitcoin mining of US$515,000, up 33% sequentially over Q2. The company also reaffirmed its projections for 2018: an increase of monthly revenue to US$2.0 million and EBITDA to US$1.1 million.

Other crypto/blockchain-related stocks riding the wave:

  • LeoNovus (TSXV:LTV) — $LTV — Net Change: -$0.13; % Change: -20.6%
  • Global Blockchain (TSXV:BLOC) — $BLOC — Net Change: $0.01; % Change: 0.4%
  • BTL Group (TSXV:BTL) — $BTL — Net Change: $0.73; % Change: 12.8%
  • NetCents Technology (CSE:NC) — $NC — Net Change: -$0.19; % Change: -16.7%
  • 360 Blockchain (CSE:CODE) — $CODE — Net Change: -$0.045; % Change: -13.8%
  • Glance Technologies (CSE:GET) — $GET — Net Change: $0.47; % Change: 41.2%

The CryptoTechnician Report

Bitcoin had a big week, nearly reaching $8,000 before pulling back ~15%:

The next area of potential support of significance is near $6,000 which lines up with resistance from October and the 38.2% retracement of the September-November rally.

2017 is the year cryptocurrencies went mainstream and captured the imagination of a much larger audience as can be seen by the expanding volume on the Bitcoin price/market cap chart below:

While many are calling Bitcoin and cryptocurrencies as a whole a bubble, the price and volume action of Bitcoin is not indicative of a bubble. There is a difference between an emerging bull market and an unsustainable bubble.

The #2 crypto, Ethereum, attempted to breakout this week and alas it was not to be as price settled back down to its $300 price magnet:

A couple of other cryptos worth noting are Bitcoin Cash (BCH) and ZCash:

Bitcoin Cash (#3 crypto by market cap) ‘forked’ off from Bitcoin in August and today it is rallying nearly 40% as BCH prepares for its own hard fork next week:

At yesterday’s peak ZCash (#16 crypto by market cap) had rallied nearly 40% in the last three weeks, however, the carnage in the crypto space today has erased about ½ of those gains:

Topping tails above $265 in ZCash.

A funny thing we saw this week

This is only sort of funny, because I actually happen to think it’s pretty cool. An entrepreneur in Siberia is building homes that are kept warm for free by mining Bitcoin:



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