Bitcoin recovers after market chaos – Weekly news 11/2020


After a week of dramatic drops and market chaos Bitcoin has again started a rocketing rise upward. But since it’s about Bitcoin it’s also possible that the chaos will continue and the price will plunge down again right after this text is published. Bitcoin is indeed quite an unpredictable rascal.

Our technical analyst provides a deeper look at bitcoin’s historical drop in his recent blog. We have also published an article on how to short bitcoins on the market.

This week we will take a look at bitcoin hodlers who hodl and most certainly were not behind the recent market crash. Meanwhile the raging coronavirus has inspired people to do good in the crypto scene, while also creating opportunities for scammers abusing the pandemic.

In other news we have Russia’s attempts at curbing cryptocurrencies, as well as the curious case of an alleged Bitcoin time traveller from the future.

Last week’s news can be found here.

Philosoraptor meme
Bitcoin is rising again and philosoraptor ponders.

Hodlers were not behind the market crash

Cryptocurrency prices have been swinging back and forth after crashing dramatically during the past week. One assumed reason was that so called “hodlers” who have long held their bitcoins would have started selling them in the chaos and uncertainty caused by the coronavirus.

However, fresh data reveals this assumption is wrong. According to a study by Unchained Capital, bitcoin hodlers – in this case defined as having held bitcoins more than five years – did not start transferring their coins.

In contrast it seems both last year’s bull market and the ongoing bear market are related to investors who have only held their bitcoins for a short time. Most of the recently sold bitcoins were ones held by investors for only 6 months or less.

“The volatility certainly didn’t come from the >5y HODLers. Are those coins lost or do those bitcoiners have hands of steel?”, Unchained Capital asked after publishing the results.

Just hodl it logo
Hodlers just hodl.

Russia wants to ban cryptocurrencies

According to Alexei Gusnov, head of the Russian central bank’s legal department, the central bank is going to prohibit the issuance and circulation of cryptocurrencies in the country. Guznov spoke of the plans to local news agency Interfax.

The new restrictions are part of a wider regulation yet to be formed. An earlier draft of the regulation would have allowed cryptocurrency use and exchange, but the new law is significantly stricter in the matter.

“In terms of the functioning of the financial system and consumer protection system, legalization of the issuance and facilitating the circulation of cryptocurrencies is an unjustified risk. As such, the bill explicitly prohibits emission and organization of cryptocurrency circulation, introducing legal liability for violating these rules,” Guznov told.

It is so far unclear when the law is set to come into effect. A bigger question is whether it’s even possible to effectively oversee the restrictions. Guznov did not reveal how the ban would be practically implemented.

Russian central bank building
Russia’s central bank wants to curb crypto – or at least try.

Famous bitcoin analyst accused of forgery

Jacob Canfield, a crypto analyst followed by over 63 000 people, is accused of manipulating pictures to make his investments look more successful than they actually were. Canfield’s forgery seems to have been revealed from screenshots taken by Twitter username King.

Canfield admitted to having photoshopped at least “some” screenshots. He also defended himself by claiming the forgeries would have taken place early in his career. Additionally he claimed to have been delirious after staying awake three days without sleep.

It has been verified that Canfield manipulated at least one picture, in which he exaggerated his profit as 15.59 bitcoins while the actual amount was 7 bitcoins. King in turn claims to have evidence of at least 10 other forgeries.

The case is a good reminder that screenshots in practice do not work as evidence in modern times. It also serves to show that investors are willing to lie about their success in order to improve their own reputation.

Canfield screenshot
An alleged screenshot from the discussion.

Scammers abuse the coronavirus

Cybersecurity company Sophos reports that a group of online scammers have impersonated the World Health Organization with the intention to lure bitcoin donations. The perpetrators claim the money is used in the battle against the corona epidemic.

The scammers send emails from the fictive address [email protected]. In contrast to normal scam messages filled with errors, the language is relatively high in quality. So far it seems the scammers have failed to find victims, since the bitcoin addresses in question remain empty at press time.

The case is not the only scam related to the coronavirus, since the pandemic has also made other miscreants crawl out. According to authorities in the United Kingdom some scammers are selling corona insurances and demanding payment in bitcoins. A malware called CovidLock is also currently spreading and locking down computers while demanding $100 dollars worth in bitcoins as ransom.

Scam message impersonating WHO
Scammers are trying to abuse people’s panic and goodwill.

Crypto mining power used to combat corona

CoreWeave, the largest Ethereum miner in the United States, has redirected its computing power to modelling coronavirus proteins. CoreWeave took 6 000 units specialized for computing from its network and dedicated them to Stanford University’s Folding@home project.

Folding@home is a project enabling decentralized modelling. When the corona epidemic grew worse the Stanford University decided that all of its computing power would be used to simulate coronavirus proteins, unless specifically earmarked for something else.

Folding@home has earlier partaken in the development of different medicinal breakthroughs. According to Coreweave’s CTO Brian Venturo the project has at least a chance at finding a cure for the virus.

“Their research had profound impacts on the development of front-line HIV defense drugs, and we are hoping our computing power will aid in the fight against coronavirus,” Venturo said.

Protein simulation
Anyone can use Folding@Home.

Reddit’s Bitcoin time traveller mystifies

A strange mystery is unfolding at Reddit’s Bitcoin forum, related to a user claiming to be a time traveller. In 2013 the user wrote a message claiming to come from an apocalyptic future in which bitcoin has risen to a million dollars. The user was blocked from the forum already years ago, but now his original message has been edited.

Under normal conditions Reddit messages can no longer be edited if the original sender has been blocked from the forum. Despite this the message has been edited as if done by the original user.

“In my world, soon to be your world, most governments no longer exist, as Bitcoin transactions are done anonymously and thus most governments can enforce no taxation on their citizens,” wrote username Luka_Magnotta.

The user also told that there are so called “Bitcoin citadels” in the future where bitcoin users seek shelter from hostile regimes and their drone armies. The username ”Luka_Magnotta” is assumed to be connected to Luka Rocco Magnotto, a prison convict known for murdering a Chinese man and sending his body parts to the Canadian parliament.

While the case and afterwards edited message may seem strange, it is probably not as bizarre as it sounds. The editing has most likely been done playfully by an admin or employee of Reddit.

Magnotta message
The username Luka_Magnotta claims he can prove his time travel.

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