Ethereum Price Drops Below $300 for First Time in Nine Months

Things continue to look gloomy for Ethereum. The second most popular cryptocurrency by market cap tumbled more than 21% from a Friday high of $365.57 to its current price of $285.69 at press time. This marks the first time that Ethereum has fallen below $300 in more than nine months.

Going into the weekend from a Friday high of $365.57, Ethereum fell sharply later in the day, losing nearly 10% in just over an hour. The slide continued into Saturday afternoon – to a low of $309.01 – before a brief respite saw a jump back up over the $325 mark. Trading continued in the $320 – $325 range until this morning, when yet another drop – this time nearly 6.5% – brought the price of Ethereum below $300 for the first time since November 2017. The downward momentum has continued throughout the day, resulting in a further 4.6% loss. ETH is currently trading at $285.69.

Ethereum price chart - CoinMarketCap

What is Causing Ethereum’s Price to Fall?

The exact cause of the crash is anyone’s guess. The SEC’s decision last week to postpone its ruling about the VanEck Bitcoin ETF sent the entire cryptocurrency market into a tailspin – including Ethereum, whose price dropped more than 7% in less than two hours following the news. We can’t discount general market malaise, either. Since prices first began their decline in January, experts and crypto influencers have been seeking to reassure traders that it’s all part of the cycle and that this, too, shall pass. While undoubtedly true, it would not surprise me if some investors – especially newer investors who bought ETH during its peak panicked sold for fear of losing even more of their initial investment.

Of course, those are just general market factors. There are several possible Ethereum-specific factors as well. Speculation is running rampant that one or more ICOs are in the process of cashing out and there is also a possible ongoing spam attack on the Ethereum network. Others have suggested that, rather than an attack, the activity could be related to a blockchain-based mobile game called Last Winner that is essentially a clone of the FOMO3D game that gummed up the network last month. The delay in the release of the Casper upgrade isn’t doing the market any favors either.

Chin Up, It Gets Better

With the current cryptocurrency market being so depressed, it is easy to look at Ethereum’s latest losses and despair. But it is important to remember that there are good things on the horizon for Ethereum. Google searches – both web and news – for Ethereum are on a general upswing, indicating that interest in the cryptocurrency has not waned. If anything, it is increasing. The roll-out of the combined Casper / sharding upgrade – while delayed – is in the offing, and Volkswagen’s interest in IOTA, Ethereum, and Bitcoin with regards to the implementation of blockchain functionality in its vehicles cannot be ignored.

All in all, there is a lot to look forward to in Ethereum’s future.

What do you think are the contributing factors to Ethereum’s latest drop? When will we see a reversal? Let us know what you think in the comments below.

Images courtesy of CoinMarketCap, Shutterstock

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Turkish Citizens Flock to Bitcoin as Local Currency Plummets

Turkish residents are flocking to Bitcoin and cryptocurrency trading in the wake of the fresh currency crisis in the country. Meanwhile, the price of virtual currencies continues to slide as the market recorded a $43 billion loss over the course of just five days.

Bitcoin Trading Volume in Turkey Surges

Writing for Forbes, Billy Bambrough reports that there is a significant increase in the cryptocurrency trading volume in troubled Turkey. Cryptocurrency exchange platforms in the country are experiencing an upsurge in demand for their services over the last couple of days.

Koinin, the largest virtual currency exchange bourse in the country, has seen its Bitcoin trading volume go up by 63 percent. Paribu, another Turkey-based platform, has witnessed a 100 percent spike in its 24-hour trading volume.

Unlike countries like Iran, the apex bank in Turkey hasn’t issued a cryptocurrency ban. Thus, local commercial banks are free to do business with crypto bourses in the country. Turkish citizens looking to hedge their wealth against a falling local currency can comfortably use online cryptocurrency exchange platforms based in Turkey. According to a study published in June, Turkey has the highest percentage of cryptocurrency ownership in Europe.

Currency Crisis in Turkey

The spike in crypto trading volume on Turkish exchanges is occasioned by the current currency crisis in the country. A breakdown in the U.S. – Turkish relations have seen the emergence of an economic tussle between the two nations. Disputes over tariffs levied on Turkish steel and aluminum have contributed to a massive 20 percent drop in the value of the Lira – the Turkish fiat currency. The Lira is down by about 45 percent since the start of the year.

Even the best efforts of the government which included a proposed market-calming plan to be implemented today (August 13, 2018), the Lira is still on its downward spiral. Presently, the Turkish fiat currency is more volatile the Bitcoin. Recep Tayyip Erdogan, the Turkish President, has described the situation as a “foreign operation.”

Prices Continue to See Red

The increased trading volume in Turkey is yet to have any significant effect on the health of the cryptocurrency market. Presently, the prices of many virtual currencies are in the red, including Bitcoin. Ethereum is currently trading below the $300 for the first time in nine months.

Over the last five days, the cryptocurrency market has lost more than $43 billion from its total market capitalization. During the weekend alone, the market shed $8 billion from its value.

Do you think the increased trading volume in Turkey will impact the price of cryptocurrency? Let us know your views in the comment section below.

Images courtesy of Coinmarketcap, ShutterStock

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Wall Street Banks Eye Custody as Perfect Entry Point into the Cryptocurrency Market

While Wall Street Bank chiefs like Jamie Dimon might appear to be critics of the emerging asset class, their firms are reportedly examining ways of entering the market. Behind the scenes, notable names like Goldman Sachs and JPMorgan are considering providing robust custodial tools for the cryptocurrency market.

Wall Street Banks and Cryptocurrency Custodial Tools

Recently, Goldman Sachs announced that there were considering offering custodial services for cryptocurrency funds. If the plan does go through, it would mean a significant advancement for the still nascent virtual currency market. For one thing, it would provide a greater incentive for institutional investors to come into the market.

Many big-money players tend to stay away from cryptocurrency trading due not only to the volatility of digital currencies, but also the lack of trusted custodial infrastructure. Many of these institutional funds are required by law to keep their assets with a qualified custodian. Hence, they couldn’t even enter the market if they wished to do so.

Commenting on the emerging trend of big banks mulling the idea of offering custody services to crypto funds, the head of Coinbase Custody, Sam McIngvale, said that platforms are responding to the clamor by big money players for reputable names to enter the market. According to McIngvale:

People were saying: ‘Hey, we’re already holding bitcoin with you, we trust you, but we need more; we need a regulatory component, we need monthly statements, we need a different type of insurance.’

Many experts have identified the emergence of robust custodial tools as the next significant step in the evolution of the cryptocurrency industry. In fact, one of the biggest concerns of the SEC concerning the approval of a Bitcoin ETF is the lack of crypto custodial infrastructure on the ground.

Tentative Forays in Cryptocurrency Investment

Apart from considering custody solutions, major Wall Street banks are also looking at the actual virtual currency trading itself. The likes of JPMorgan and Goldman Sachs trade Bitcoin futures on behalf of their clients. Others are reportedly in the midst of developing crypto-focused products and services as well.

Wall Street, thus far, has refrained from completely dismissing cryptocurrency. While some CEOs regularly take to Bitcoin bashing, Lloyd Blankfein of Goldman Sachs recently declared that it would be arrogant to dismiss Bitcoin as a legitimate contender for the future of money as a medium of exchange, a store of value, and a unit of account.

Will Wall Street ever fully embrace cryptocurrency? Let us know your views in the comment section below.

Image courtesy of USA Today. PxHere

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#FindSatoshi Crowdfunding Campaign Raises More Than $!00k in Quest to Find “Real” Satoshi Nakamoto

A new crowdfunding campaign has been set up with the aim of finding the elusive Satoshi Nakamoto. The campaign – #FindSatoshi – has so far raised over $100,000.

Where in the World is Satoshi Nakamoto?

No one knows who the creator or creators behind Bitcoin are, yet that hasn’t stopped people from speculating as to who it could be. Is it a man or a woman? A group of people or someone working by themselves? The community isn’t sure and it’s because of this that a new campaign has set itself up with the aim of finding out.

The campaign, which is being crowdfunded on Russia’s Boomstarter, was set up by German Neff, a crypto enthusiast and investor from Estonia. His profile states that he has been collecting information about Nakamoto for the past three years. He’s also the founder of #Findsatoshi. This is a community that wants to understand the motives of Nakamoto, and Neff believes it’s about time we found out.

In Neff’s opinion, the crypto economy is in a fragile state of balance. For further development, he believes that it is imperative that the person or people behind it are found. He adds:

The cryptocurrency world needs to be sure that the cryptocurrency is not a global fraud.

He questions why Bitcoin was created in the first place. Was it a person or group of people doing it for science? Did a large company create it to control all transactions? Was it really an invention for monetary independence? Who owns more than one million coins? Who could overthrow the market overnight? These are questions that Neff believes the crypto community has a right to know.


At the time of publishing the fund has raised over 7.1 million Russian rubles, or more than $100,000. The total amount being sought is 15 million rubles. So far it has the backing of 1,543 people.

The campaign states that searching for Nakamoto can only be achieved through public efforts.

We intend to order the search for Satoshi Nakamoto from independent detective agencies in the U.S., Japan, and also in Europe.

Agencies around the world have already been selected to undertake the investigation. According to Neff, the funds raised will be distributed among them evenly. A bonus will be delivered to the agency that achieves the final result of the investigation.

And Then What?

One of the reasons why Bitcoin is so popular is because there is no person or entity controlling it. It is a truly decentralized cryptocurrency.

Yet, even if the community did find out who Satoshi Nakamoto was, what would happen next? Bitcoin has survived this long without knowing who the creator or creators are, which just goes to show that people put value into something they believe in, not necessarily who is behind it.

Do you think the community should know who was behind the creation of Bitcoin? Let us know in the comments below.

Images courtesy of Shutterstock, #FindSatoshi

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Sending Crypto Is Now as Easy as SMS: Former Visa CEO’s Startup Solves Transaction Issues by Introducing a New Way of Transferring Funds

One of the biggest criticisms of cryptocurrencies is that they’re trying to be something they’re not. With a complicated and sometimes slow transaction process, none of them is as readily usable for day-to-day purchases as a currency. Sending crypto by mobile phone has become an easy alternative method thanks to former Visa CEO’s startup Crypterium. It now allows people to transfer crypto by just putting in a phone number.

Does it mean the first truly user-friendly crypto solution has arrived, and we’re witnessing the Netscape moment for the whole industry? Marc O’Brien, who has held the position of CEO of Visa UK for six years, to then become a key advisor to Revolut, Britain’s first digital bank unicorn, bets the house that it did.

Going Mainstream

Almost all blockchain applications are not user-friendly. Tech-savvy people have created them for other tech-savvy people, and those solutions are still very confusing for both businesses and consumers who are not as computer literate.

Former Visa UK CEO Marc O’Brien has set a goal of bringing the crypto industry mainstream and making it more user-friendly.

“We’re on our way to the 21st century’s “Netscape moment”, the day when a California startup’s eye-popping market debut illuminated the World Wide Web for millions of people, otherwise only vaguely familiar with its potential and promise,” he explains, mentioning that his own startup, Crypterium, “makes buying, selling and spending of cryptocurrency in everyday life as easy as possible, and that’s what will bring the next billions of people to using crypto.”

Problems Unsolved

There are two key problems all crypto holders are facing today, while trying to transfer coins and tokens to each other. First of all, you can get confused with the wallet address. This is how they look like – 0xc5b133a52145990313915612bd732f059330287f – so getting confused is really easy. And once you do, you never get your money back.

There are also special hacker apps, such as CryptoShuffler, that change the address of the wallet while it is being copied. So in the “Send to the wallet” field, you enter the thief’s wallet number.

The second problem is that any transaction takes a while. If we are talking about Ethereum, it could be minutes, if it is Bitcoin – a transaction may take hours. When the blockchain networks are overloaded, transactions may take days.

The Solution Is on Its Way

Crypterium is aiming to solve both problems. There is no need to copy the recipient’s wallet address. You just need to know his or her phone number. Send crypto to your mom, your friend, your ex-girlfriend in France. They will get money even if they don’t have any crypto wallets. Once the transaction is processed, they’ll get an SMS with a link to get their crypto with some very clear instructions on what they can do with it. For example, they can use their newly acquired Bitcoin to top up their mobile phones.

What is even more great, the transaction of any cryptocurrency takes seconds. This has become possible because all transfers are done off-chain. When the user wants to spend the coins externally, the money is withdrawing from the sender’s wallet inside Crypterium. While not spent, all the transactions are written in the system, make the transfer the fastest of all.

O’Brien says:

We have analyzed the most popular crypto wallets in the market, and none of them offer anything like it, though it sounds so exciting.

Time will tell if crypto transactions will become more popular than the payments with Visa and Mastercard, but this solution is for sure one big step towards global crypto popularization.

What are your thoughts on being able to send crypto payments without using long, convoluted wallet addresses? How will this impact the use of crypto as a day to day payment method? Let us know in the comments below.

Images courtesy of Crypterium

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Do Import Tariffs Help Reduce Trade Deficits?


Import tariffs are on the rise in the United States, with a long list of new tariffs imposed in the last few months—25 percent on steel imports, 10 percent on aluminum, and 25 percent on $50 billion of goods from China—and possibly more to come. One of the objectives of these new tariffs is to reduce the U.S. trade deficit, which stood at $568.4 billion in 2017 (2.9 percent of GDP). The fact that the United  States imports far more than it exports is viewed by some as unfair, so the idea is to try to reduce the amount that the nation imports from the rest of the world. While more costly imports are likely to reduce the quantity and value of imports into the United States, the story does not stop there, because we cannot presume that the value of exports will remain unchanged. In this post, we argue that U.S. exports will also fall, not only because of other countries’ retaliatory tariffs on U.S. exports, but also because the costs for U.S. firms producing goods for export will rise and make U.S. exports less competitive on the world market. The end result is likely to be lower imports and lower exports, with little or no improvement in the trade deficit.

One way to see that higher import tariffs will reduce exports is to look at the experience of countries that have changed their import tariff rates. China reduced its import tariffs when it joined the World Trade Organization (WTO) in December 2001. Although China had lowered its tariffs prior to that time, in 2000 they were still fairly high, averaging 15 percent. By 2006, this average tariff rate had fallen by 40 percent, to 9 percent. We can see from the chart below that the growth rates of both China’s exports and its imports increased enormously (more than 25 percent on average per year) following its WTO accession, with both growth rates more than doubling in the five years after China joined the WTO, compared with the five years prior to joining.

Do Import Tariffs Help Reduce Trade Deficits?

Of course, we cannot tell from this chart what caused the increase in exports. Many reforms were taking place in China at that time in addition to trade liberalization. In order to identify the effect of lower import tariffs on China’s exports, recent research has turned to using highly disaggregated Chinese firm-level data with information on all the products a firm imports and exports. The research shows that between 2000 and 2006 (the period for which detailed firm-level data are available), China’s imports increased and so did its exports.

Focusing on China’s exports to the United States, our research paper (“How Did China’s WTO Entry Affect U.S. Prices?”) shows that by lowering its own tariffs on imported inputs, China reduced its production costs and increased productivity, enabling Chinese firms to enter the U.S. export market and compete with other firms. With a fall in production costs, Chinese firms charged lower prices on goods exported to the United States and increased their U.S. market shares. A large part of the market-share gains stemmed from new varieties of goods exported by Chinese firms entering the U.S. export market.

The link between lower input tariffs and stronger export growth can be seen in the chart below. Chinese firm-level exports to the U.S. are aggregated into two groups: the group of Chinese industries that experienced large tariff cuts on imported inputs (specifically, average tariff cuts above the median, equal to 4.6 percentage points or 43 percent), and the group of industries that experienced input tariff cuts below the median, with both indexed to 100 in 2001. We can clearly see that Chinese exports to the United States grew much more rapidly in industries that experienced the largest drops in input tariffs.

Do Import Tariffs Help Reduce Trade Deficits?

The evidence from China’s experience strongly suggests that a country that increases its tariffs is likely to not only reduce its imports but also reduce its exports. Many large exporters are also large importers that depend on imported inputs for production of their exports. Even if U.S. exporters switch to domestically produced inputs their costs will still rise, because competing domestic suppliers will be able to increase their markups in the industries that are protected by higher tariffs. For example, with a 25 percent steel tariff, domestic steel producers can increase their markups and still stay competitive. It is the U.S. exporters that rely on these inputs that will be adversely affected. And this is even before we take into account the cost to exporters from the retaliation by other countries.

While we cannot predict the size of the trade deficit, what seems clear from our analysis is that import tariffs will reduce both imports and exports.


The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

Mary Amiti

Mary Amiti is an assistant vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

Mi Dai is an associate professor at Beijing Normal University.

Robert C. Feenstra is a professor at the University of California, Davis.

John Romalis is a professor at the University of Sydney.

How to cite this blog post:

Mary Amiti, Mi Dai, Robert C. Feenstra, and John Romalis, “Do Import Tariffs Help Reduce Trade Deficits?,” Federal Reserve Bank of New York Liberty Street Economics (blog), August 13, 2018,

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FinCEN Included a “Wide Array of Virtual Currency Businesses” Under Its Watch, Director Says

Kenneth A. Blanco, Director of the US Financial Crimes Enforcement Network (FinCEN), recently spoke at the Chicago-Kent Block Tech Conference, revealing that the bureau has widened its purview, including an array of virtual currency businesses.

FinCEN, recognizing the impact that cryptocurrencies could have on economies, created a Bitcoin training program for tax examiners back in 2015. A few years later, the bureau has substantially increased its purview, keeping the cryptocurrency field under a careful watch.

Why FinCEN?

Speaking at last week’s Chicago-Kent Block Tech Conference, FinCEN’s directory Kenneth A. Blanco shared important insights on the work of the bureau and its involvement in the cryptocurrency field.

Blanco detailed that FinCEN’s regulations apply to both fiat transactions and those made with virtual currencies:

First, as our March 2013 guidance indicates, FinCEN’s rules apply to all transactions involving money transmission—including the acceptance and transmission of value that substitutes for currency, which includes virtual currency.  Thus, our regulations cover both transactions where the parties are exchanging fiat and convertible virtual currency, but also to transactions from one virtual currency to another virtual currency.

The director also said that the bureau is working closely with other federal regulators, revealing a coordinated and consolidated approach towards the field:

In addition, we are working closely with our federal regulatory colleagues, including the SEC and CFTC, for coordinated policy development and regulatory approaches, including addressing risks.

According to Blanco, these risks include illicit finance as well as fraud which surround Initial Coin Offerings (ICOs). The director urged businesses involving ICOs and cryptocurrencies, in general, to pay close attention to the existing obligations regarding anti-money laundering and terrorist financing.

Increased SAR Filings – A Good Thing

The director revealed that the bureau is receiving an increased amount of Suspicious Activity Reports involving cryptocurrencies:

We now receive over 1,500 SARs per month describing suspicious activity involving virtual currency, with reports coming from both MSBs in the virtual currency industry itself and other financial institutions.

He also mentioned that the industry itself is developing new technologies designated to identify suspicious activity in the field, helping the bureau to identify and investigate the same. According to the director, this allows the industry to further focus on innovation and legitimate applications.

A Proactive Approach

Blanco mentioned that FinCEN is actively working on developing information sharing programs which help other financial services in the sector battle illicit activity. In his words:

We are focused on swiftly and continuously building our capabilities and understanding in the emerging technologies space to (a) rapidly identify risks, (b) close gaps, and (c) support responsible innovation through clarity.

Do you think FinCEN’s proactive regulatory approach is beneficial for the cryptocurrency field? Don’t hesitate to let us know in the comments below!

Images courtesy of Flickr

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Cryptocurrency Exchange Platform, KuCoin, Launches Institutional Investment Program

KuCoin has joined the league of cryptocurrency exchange platforms to offer specialized trading services for institutional investors. The platform has also debunked claims of shady activities on accounts of its empty “office” in Hong Kong.

The KuCoin Institutional Investor Program

The Singapore-based exchange platform announced the launch of a program for institutional investors in a blog post published on Wednesday (August 8, 2018). According to the announcement, KuCoin wishes to encourage more big-money players to engage in high-frequency cryptocurrency trades. The statement also went on to state that qualified investors would receive discounts on trading fees.

According to KuCoin, interested institutional investors will have to complete a know-your-customer (KYC) verification process. Upon completion of the verification step, the big-money traders will be all set up within five working days. KuCoin plans to offer fee discounts of between 20 percent and 80 percent for at least the first month of trading.

The decision to offer an institutional trading deck comes as many other players in the cryptocurrency exchange market like Coinbase etc, are doing the same. Earlier in the year, the platform announced Q1 2018 profit of $7.6 million.

Cryptocurrency Exchange Platform Refutes Hong Kong Office Scam Claims

In another development, a controversial issue has arisen concerning the KuCoin’s operations. In a Medium post on Friday by Jackson Wong, it was alleged that a registered address purportedly belonging to KuCoin in Hong Kong doesn’t exist. Wong had long been suspicious of KuCoin’s claims that it operated out of Hong Kong.

To confirm his suspicions, Wong visited the listed KuCoin address in Hong Kong and found that the platform did not indeed operate out of that location. In his blog post, Wong warned traders to be wary of an exit scam from KuCoin saying:

Since KuCoin is completely in stealth, and you couldn’t find them in their registered “office”, nor is there even a single person in their “office”, if KuCoin decides to exit scam on us — either by withholding our withdrawals or simply by shutting down their entire exchange and run with our money —we will have absolutely no recourse. And GOOD LUCK to you then in trying to get back your money.

In response, the platform released a statement on Sunday (August 12, 2018) refuting the claims. According to the statement, the “Hong Kong address is merely a mailing address” of one of its subsidiary companies. KuCoin went on to assure its customers of its legitimacy saying its headquarters was in Singapore. The statement also mentioned the fact that the platform operates out of four major countries with more than 300 employees.

Do you think KuCoin’s institutional trading service will attract big-money cryptocurrency investors? Let us know your views in the comment section below.

Image courtesy of KuCoin and ShutterStock

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Crypto Mining 101: College Students Capitalize on Free Electricity, Internet to Mine Cryptocurrencies in Dorm Rooms

Cryptocurrency mining is an appealing business model. With the right hardware and access to cheap electricity, profits can be generated over time. It now appears college students are trying their hand at mining altcoins at their dorm, which raises a lot of concerns.

The Penn State Dorm Miner

When college students turn to cryptocurrency mining, interesting things tend to happen. For Patrick Cines, his goal was rather straightforward. With his dedicated hardware, he began mining cryptocurrencies using campus electricity. By combining several graphics cards, his unit is capable of mining Ethereum and other altcoins. It is uncommon to see such units show up in dorm rooms.

Cines left the machine running while he attended classes. As these miners do not require 24/7 oversight, it can turn into a small passive revenue stream. Cines envisioned making a bit of extra money while spending several years at Penn State. Unfortunately for him, realizing that vision has not been possible.

There is a lot more to mining cryptocurrency than meets the eye. Its biggest drawback is the massive generation of heat. Getting rid of excess heat in a dorm room is nearly impossible. Especially after a few hours of running, temperatures can run very high. For college students, it is unbearable, rendering the entire operation nearly useless.

Major Mining Hazards and Risks

Generating money with cryptocurrency is only part of the equation. Failing to get rid of excess heat can cause a fire hazard without the right precautions. Especially in a small dorm room, such incidents can happen sooner or later. Various reports can be found online regarding exploding or imploding cryptocurrency mining units.

Additionally, the rise of cryptocurrency malware cannot be ignored. Since the mining unit is connected to campus WiFi, malware can theoretically attack the entire network at Penn State. This has not happened to date, yet it is a potential risk one should not overlook. Add cryptojacking threats to this mix, and one mining enthusiasts can cause a lot of issues for all other campus attendees.

Despite the risks, crypto mining at school is on the rise. Research indicates most college campuses have at least one mining operation active at any given time. This is happening despite falling prices of Bitcoin and altcoins. For colleges, it creates a worrisome situation which needs to be kept in check. Exploiting the “free” electricity available in dorms for mining altcoins is a potential violation of campus rules.

How big of a problem is crypto mining on campus? What measures do you think colleges will put in place to curb it? Let us know in the comments below.

Images courtesy of ShutterStock

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Bitcoin’s Non-Correlation with the Stock Market Makes it a Must Have Asset, Says Tech Stock Analyst

Despite the volatility of Bitcoin and other cryptocurrencies, some investment experts and analysts still believe that it is important to own these digital assets. According to them, the cryptocurrency market appears to operate separately from the rest of the financial market.

Cryptocurrency is Relatively Easy to Acquire

In times past, precious metals like gold was a haven for investors looking to diversify their portfolio and save part of their wealth in a stable commodity. In recent times, Bitcoin seems to have become an even more popular choice. For one, it is much easier to acquire and transfer.

Cryptocurrency is Relatively Easy to Acquire

One of the clearest examples of why the ease of Bitcoin acquisition and transfer is a significant advantage is the situation in China. In mid-July, news emerged that the government was going to accelerate its currency devaluation timetable. In response, affluent Chinese quickly moved their wealth to Bitcoin, contributing to the massive July 19 price spike.

Bitcoin Has No Correlation with Other Asset Markets

Writing for Forbes,  tech stock analyst Chuck Jones identified a critical benefit of investing in cryptocurrencies – their lack of correlation with other assets. The mainstream markets tend to go through periods of uncertainty or even total collapse. Investors end up taking massive losses. Without a significant hedge against such risks, the end result could be even more unpalatable.

Bitcoin Has No Correlation with Other Asset Markets

While Bitcoin certainly has its periods of extreme volatility, if past performance is any indication, it always seems to recover – and climb to even greater valuation – over time.

In a recent study by Fundstrat, it was discovered that Bitcoin has little correlation with other asset classes. The study compared Bitcoin and other cryptocurrencies to asset classes like the S&P 500, gold, oil, commodities, U.S. dollar, etc.

Cryptocurrency Prices Respond to Market Specific Stimuli

Another inquiry by the National Bureau of Economic Analysis also came to a similar conclusion. In a 25-page report published by the Bureau, it stated that the prices of Bitcoin, Ethereum, and Ripple weren’t affected by traditional market factors. Instead, only cryptocurrency market-specific factors seemed to have any effect on the price movements of these virtual currencies.

The study identified two main factors – “the momentum effect” and “the investor attention effect,” that affected the price trajectory of those three cryptos. According to the report, these two factors consistently explain the price behavior of BTC, ETH, and XRP.

Do you agree with Chuck Jones’ assertion that Bitcoin is a smart hedge against uncertainties in the mainstream asset market? Let us know your views in the comments.

Images courtesy of Coinmarketcap, Forbes, Shutterstock

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