Historically significant bitcoin hash ribbon fires a buy signal!

Hi everyone,

In this edition, we’ll take a look at Brian Armstrong’s defence against a deluge of criticism on his selling of data to the US Secret Service, which is in contrast to Jesse Powell’s ethos that places user interest first.

Meanwhile, the bitcoin hashrate has tapped another new all time high as the bitcoin hash-ribbon — which signals the start of a bull cycle — flashes a green buy signal. Finally, we’ll explore the technical data which speaks to the fact that bitcoin’s slumber is about to get a shot of volatility pumping adrenaline.

Let’s dive right in!

Brian Armstrong defends secret service contract

Coinbase CEO Brian Armstrong took to Twitter in an attempt to set the record straight following reports showing that the exchange sold user information to the US secret service.

As per this contract on USASpending.gov, the official source for government spending data in the US, Coinbase has a four-year contract worth $183,750 which will end in May 2024. The record reveals that Coinbase will allow the Secret Service to access its analytics software, and while no additional details are provided, it’s safe to say that the analytics are on their own users.

Taking to Twitter, Armstrong argued that this has “been around a long time — it uses publicly available data to try and track crypto transactions — usually to catch bad actors.”

He continued: “There is an existing market for blockchain analytics software, so we sell it to a handful of folks as well,” he said, adding that working with law enforcement firms is “important to growing crypto.”

Normally, blockchain analytics firms such as Chainalysis have used their tools to track the movement of cash from dark web wallets to deanonymize users, so the reason for the move just speaks to the fact that Coinbase does not act in the interests of its users. Today, privacy concerns for ordinary users are now circling Crypto Twitter.

In fact, not everyone agrees with Brian. Jesse Powell — the CEO of Kraken exchange — echoed wide dissatisfaction with Armstrong’s justification, tweeting:

.@gronager left @krakenfx to start @chainalysis. We chose not to develop this business internally, and we chose not to invest in analytics firms because I never wanted to have a conflict of interest with our clients. I didn’t want to profit from selling out your financial privacy

- Jesse Powell (@jespow) July 12, 2020

One commenter said: “Coinbase collect[s] private information about their customers due to AML regulations, track customer transactions before and after exiting Coinbase, and then onsell that private information and public data to law enforcement”.

The same way the dwindling supply of physical cash allows for financial privacy, arguments for financial privacy in the digital age are increasingly becoming a common theme due to outside interest in personal transactions.

A few weeks ago, Author of the Black Swan, Nassim Taleb, closed his Coinbase account after the exchange went offline during a fresh bitcoin pump. Nassim said that the reason for closing his account was bad customer service but the timing is interesting to say the least.

Check out the full story here!

Bitcoin hashrate hits all time high — hash ribbon fires buy signal

As bitcoin meanders in limbo, the underlying fundamentals indicate that network activity is surging as retailers and institutions act on the open secret that this thing is on the verge of another prolonged rally.

In fact, bitcoin’s daily hash rate on a monthly average has continued its upward trajectory, revealing that mining operations are expanding as was widely expected post-halving (due to supply and demand economics).

Speaking to this narrative, the founder of the bitcoin “hash ribbon” indicator, Charles Edwards, took to Twitter once the signal was confirmed.

#Bitcoin Hash Ribbons “Buy” signal just confirmed.

The post-Halving signal is particularly special.
It will probably be a very long time until the next occurs.

…and so the great bull run begins. https://t.co/l90SDYs8kC

- Charles Edwards (@caprioleio) July 13, 2020

Earlier this year, you may recall that in a previous newsletter I suggested that miner capitulation won’t have the same effect as it did with prior capitulation signals, largely due to the fact that miners have less daily supply than before the halving (and therefore less influence), but also due to derivatives trading and various financial products which help to mitigate the need to sell block rewards to keep the gig going.

It will be interesting to see the relationship between this signal and price evolve in the coming weeks to months, but if history is any indication of future behaviour, there’s reason to be optimistic.

Technically speaking

When you stare long enough at a chart — if you pay enough attention — you’ll see it stare right back. Indeed, bitcoin is at that point in time where your impulse to analyse leads you to change things around in an attempt to find new information. This impulse is just a symptom of being absolutely bored and has no bearing on the price of course.

So let’s just keep it simple.

Bitcoin is trading within a bullish continuation structure as it continually tests $10,000 within an ever tightening range. Notably, bitcoin has touched the upwards trending support line about 18 times (depending on how you draw the chart), with buyers consistently stepping in to pick up some relatively cheap bitcoin within this range.

Notably, both the RSI and MFI have printed lower lows as the price trended higher, revealing a developing bullish divergence for the better part of two and a half months. At the time of writing, bitcoin broke out of the falling wedge structures on both these indicators but with limited percentage change — if any at all. In fact, bitcoin has seemingly become a stablecoin.

In any case, the probability for a bitcoin move higher from this structure is higher, but that does not mean bitcoin won’t revisit lower levels first. Both the bottom of the horizontal range at $8,600 as well as the $7,500 breakout level are still possible.

However, provided external forces such as stocks do not see a major correction — which isn’t likely to happen before the US elections — then this tail risk is significantly lower. Mind you, bitcoin will ultimately decouple from the S&P, but it must first demonstrate its capability to do this before future SPX-induced downside risk is mitigated.

Zooming in on a lower time frame, we can see bitcoin trading on the $9,300 pivotal price point. Notably, this price-action is at a slight premium in relation to other exchanges since Bitfinex prices are used.

Should the downwards-sloping resistance and horizontal support be reclaimed, bitcoin will likely re-test the highs of this range. On the flip-side, should the upwards-trending RSI support be broken while bitcoin creeps sideways, then a fresh sell-off should be expected on the 4-hour time frame.

Levels to watch are $9,300 and the RSI trendline at this point, which if broken would inform a move to $10,000 or $8,600 respectively.

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Best regards,
Christopher Attard
Founder of Chris on Crypto
Contributor to www.cityam.com
Insight. Content. Consultancy.

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Originally published at https://mailchi.mp.