2020 has been a strange year for many reasons, and as far as stocks, bonds, and other investments go, it’s been a rollercoaster. Bitcoin is a great example of the unprecedented falls and rises that investments have experienced this year.
In February, it was riding high with a valuation of over $10,000. In March, it saw its value slashed in half, dropping to $5,000 and causing panic across the cryptocurrency sector. Once the dust settled and investors realized that Bitcoin could be a safe haven, it began to rise, eventually climbing above $11,500 in August.
In the last few days, we’ve seen close to 10% wiped off the value since that summertime high, but Bitcoin is still the investment of choice for many in 2020 and that’s having a knock-on effect for the online Bitcoin casino industry.
How Bitcoin Casinos are Profiting
The more Bitcoin investors there are, the more Bitcoin users there will be. It’s a simple formula and it’s one that has seen a surge in demand for Bitcoin casinos.
Bitcoins have a way of drawing you in and making you obsessed. If you start investing in gold, you don’t simply buy a few coins, hoard them in a drawer somewhere, and then forget about them.
You research into coins and bars. You look into numismatics, and before long, you find yourself drawn to stacking videos and obsessing over the price of gold.
It’s the same with Bitcoins, but there are no physical coins to stack or drool over on YouTube videos, and so that obsession turns you into a regular Bitcoin user. You look for places to spend them and use them, and because many Bitcoin gambling sites are available to scratch that itch and give you a chance to earn more, it becomes your industry of choice.
Not only has this led to a surge in player numbers, but those players tend to be richer and more willing to take risks. After all, the average fiat currency gambler bets no more than $50 a month and is reluctant to take risks. They’re “normal” everyday people who aren’t necessarily used to taking risks and just want to play a few games.
By definition, the average Bitcoin user is an investor who is used to taking risks, and in most cases, they are investors that have at least 1 Bitcoin in their possession, which means they tend to have more disposable income and are more willing to bet big.
This simple truth helped to keep Bitcoin casinos alive in the early years, even though they were getting 1/100th of the traffic going through traditional gambling sites.
Bitcoin is popular amongst gamblers for many reasons. Firstly, as mentioned above, it gives them an excuse to spend and use those coins, with the potential for increasing their investment. Of course, it’s gambling, so there is never a guarantee, and in most cases, players will lose their initial investment.
But they’re used to taking risks on currency exchanges so they know that better than anyone.
Secondly, Bitcoins offer a level of anonymity and speed that you can’t get with other currencies. Casinos are not so devoted to the Know Your Customer rules and usually don’t follow them until large withdrawals are initiated, thus saving the player a lot of time and hassle.
It also allows gamblers to bet without linking to their credit cards, debit cards, or bank accounts, which is great for anyone who values their privacy.
There have been many instances of players from restricted countries using Bitcoin gambling sites. They do this by activating VPNs, and it’s possible because the casino can’t trace their location.
However, this is not recommended, because eventually that casino may initiate the KYC protocol and when that happens, the player will need to expose their location and their account may be suspended as a result.
What Does the Future Hold?
Some experts believe that Bitcoins will be worth more than $500,000 in a decade. Others are predicting big growth but are reluctant to suggest that it will grow higher than $100,000 per coin.
The truth is, no one really knows. However, many pre-pandemic predictions were based on the world growing less confident in fiat currencies and on currencies like the dollar devaluing. In 2020, we’ve seen all of that happen.
Not only is the dollar struggling (although it has stabilized in the last few days) but we’re seeing similar issues in Europe, with the pandemic and Brexit potentially leading to a devaluing of GBP and EUR.
Many investors are turning to gold and silver in these troublesome times, but it’s a matter of time before more start turning to Bitcoin and when that happens, we could see the growth that experts have predicted.
Whatever happens, it’s fair to say that Bitcoin, and cryptocurrencies in general, will play a major role for years to come.
Buyer of Jack Dorsey’s ‘genesis tweet NFT’ reportedly detained in Iran
Iranian Cyber Police have reportedly arrested Bridge Oracle CEO Sina Estavi, according to a tweet pinned to Estavi’s Twitter account.
A rough translation of the tweet reads:
“The owner of this account was arrested on charges of disrupting the economic system by order of Special Court for Economic Crimes. Official judicial authorities will provide additional information.”
The same tweet is also pinned to the official account of Bridge Oracle, a Tron Network-based public oracle system. At the time of writing, the price of Bridge Oracle’s native token, BRG, has taken a sharp dive, crashing by more than 65%, according to data from TradingView.
Bridge Oracle is said to be a Malaysia-based blockchain company, but Estavi’s other venture, cryptocurrency exchange Cryptoland, was operating in Iran. Cryptoland’s Twitter account shares the same pinned tweet. No further information was shared publicly by the authorities.
Estavi is known for his heated bidding battle with tech entrepreneur and Tron CEO Justin Sun to buy Jack Dorsey’s first-ever tweet as an NFT. Twitter’s first tweet is dated March 2006 and reads, “Just setting up my twttr.”
In the end, Estavi successfully purchased the NFT for more than $2.9 million, or 1,630 Ether (ETH). Dorsey converted the proceeds to Bitcoin (BTC) and donated them to a charity organization in Africa.
Earlier this year, Estavi was sued by former Bitcoin.com CEO Mate Tokay for allegedly failing to pay him for his services. In his claim, Tokay also alleged that there’s an inconsistency between the purported and actual circulating supply of BRG.
Cointelegraph reached out to Bridge Oracle for comment. This article will be updated should they reply.
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Is Bitcoin nearing another Black Thursday crash? Here’s what BTC derivatives suggest
Bitcoin’s 51.4% crash in March 2020 was the most horrific 24-hour black swan event in the digital asset’s history. The recent price activity of the past week has probably resurrected similar emotions for investors who experienced the Black Thursday crash.
Over the past week, Bitcoin’s (BTC) price dropped 29% to reach a three-month low at $42,150. $5.5 billion in long contracts were liquidated, which is undoubtedly a record-high in absolute terms. Still, the impact of the March 2020 crash on derivatives was orders of magnitude higher.
To understand why the current correction is less severe than the one in March 2020, we will start by analyzing the perpetual futures premium. These contracts, also known as inverse swaps, face an adjustment every eight hours, so any price gap with traditional spot markets can be easily arbitrated.
Sometimes, price discrepancies arise during moments of panic due to concerns about the derivatives exchange’s liquidity or market makers being unable to participate during times of extreme volatility.
On March 12, 2020, the Bitcoin perpetual futures initiated a much larger descent than the price on spot exchanges. This move is partially explained by the cascading liquidations that took place, creating a backlog of large sell orders unable to find liquidity at reasonable prices.
The aftermath of the bloodbath resulted in futures perpetual contracts trading at a 12% discount versus regular spot exchanges. BitMEX, the largest derivatives market at the time, went offline for 25 minutes, causing havoc as investors became suspicious about its liquidity conditions.
By comparing this event with the most recent week, one will find that sustainable price discrepancies are very unusual. Even a temporary 12% gap doesn’t occur, even during the most volatile hours.
Take notice of how the perpetual contracts reached a peak 4% discount versus regular spot exchanges on May 13, although it lasted less than five minutes. Market makers and arbitrage desks could have been caught off guard but quickly managed to recoup liquidity by buying the perpetual contracts at a discount.
To understand the impact of those crashes on professional traders, the 25% delta skew is the best metric, as it compares similar call (buy) and put (sell) options’ pricing. When market makers and whales fear that Bitcoin’s price could crash, they demand a higher premium for the neutral-to-bearish put options. This movement causes the 25% delta skew to shift positively.
The above chart displays the mind-blowing 59% peak one-month Bitcoin options delta skew in March 2020. This data shows absolute fear and an incapacity to price the put (sell) options, causing the distortion. Even if one excludes the intraday peak, the 25% delta skew presented sustained periods above 20, indicating extreme “fear.”
Over the past week, the skew indicator peaked at 14%, which isn’t very far from the “neutral” -10% to +10% range. It is indeed a striking difference from the previous months’ negative skew, indicating optimism, but nothing out of the ordinary.
Therefore, although the recent 29% price drop in seven days could have been devastating for traders using leverage, the overall impact on derivatives has been modest.
This data shows that the market has been incredibly resilient as of late, but this strength might be tested if Bitcoin’s price continues to drop.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
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