Bitcoin withdrawals are a consequence of the halving held last May. These actions correct the price of the cryptocurrency, although they have not negatively impacted it yet.

CryptoQuant, the firm dedicated to the analysis of data on cryptocurrencies, recently presented information that indicates an important withdrawal of bitcoins. Last June 23^rd went down in history as the day with the most Bitcoin outflow from the most important miners’ wallets in the ecosystem.

When this piece of news came out, analysts considered the bitcoin withdrawal flow registered that day to be the highest in history until now. Experts also indicated that this may lead to a Bitcoin (BTC) price correction, something that has already happened.

Last June 25^th, 9,098 BTC exceeded the withdrawals registered by the main mining groups on May 20^th. That May 20^th was the start of a deep 10% drop in Bitcoin’s price, when it fell to levels below USD 9,000 per BTC, with less than USD 700 per BTC.

That drop was a consequence of the departure of less productive miners, after the halving reduced BTC’s reward per block. That event, which occurs every four years, seeks to make the distribution of bitcoins more equitable, but it makes mining less profitable for miners living in areas where electricity and the cost of mining are greater than the reward.

Now, another scenario related to the halving is taking place. Miners are withdrawing their BTCs and this may lead to further falls in the price of the cryptocurrency until the price stabilizes again and even rises. Miners withdraw a larger amount of bitcoins in an attempt to sell them and cover the expenses that mining generates, in addition to obtaining their profits.

Before the halving, another event sparked a massive bitcoin withdrawal. It was the economic crisis that arose in traditional markets as a consequence of the Covid-19 outbreak and the uncertainty surrounding the global economy.

This other massive withdrawal occurred on March 12^th, a day the press called “Black Thursday.” That day, the leading cryptocurrency fell -50% in price. In this way, Bitcoin’s price was less than USD 4,000.

What will happen with the Price of Bitcoin?

Although it is too early to determine whether the price of Bitcoin will follow the negative behavior of the last two major withdrawals of BTC registered until today, currently the daily chart of BTC, according to CryptoQuant, indicates a small rebound above the monthly support area at USD 9,200 after registering a -4.75 % drop.

On the other hand, Glassnode also showed an important fact that would be contributing to the drop in the price of Bitcoin. According to this cryptocurrency analytics firm, the largest flow of Bitcoin from miners to crypto exchanges is happening.

“Yesterday, we observed the largest flow of Bitcoin from miners to exchanges in over a year. This was primarily due to large miner transfers to Bitfinex, totaling USD 2,650 BTC,” Glassnode said on Twitter. Likewise, Glassnode indicates that a group of miners with anonymous proxies removed 2,680 from an unknown pool titled ‘Others’.

Bitcoin withdrawals occur at a key time of the month. A significant sum of Bitcoin futures options expired. Some 114,000 Bitcoin options expired this June 26^th for a value of USD 1 billion, according to Skew data.

Despite the drop in the price of Bitcoin recorded a few days ago, this does not completely affect the profitability of this quarter. The main cryptocurrency in the market continues in green numbers. Only a fall like that of Black Thursday could reverse the positive trend that Bitcoin has had in this second quarter of the year.

By María Rodríguez

Bitcoin’s price is likely to reach USD 7,000. However, this may be the last drop below USD 10,000 for BTC, according to an analyst.

The price of the main cryptocurrency is currently consolidating below USD 9,200, which has been a key support level since the end of May. According to on-chain data analyst Cole Garner, if BTC falls to the USD 7,000 level, this may be the last drop below USD 10,000 in the long term.

Garner says that Bitcoin is technically still experiencing a technical bullish trend.  He considers that a drop below the volume-weighted average price (VWAP) is an excellent opportunity to buy. He noted that it could be the last drop in the price of the cryptocurrency below USD 10,000.

Traders’ Pessimism towards Bitcoin’s Short-Term Trend

Four main factors make analysts cautious about Bitcoin: the increase in the selling pressure from the miners, the uncertainty in the stock market, the consolidation at a pivotal price point, and the decrease in volatility.

However, the fact that miners are selling a large amount of Bitcoin is nothing new in the ecosystem. They have been selling most of their mined coins every day since the halving occurring last May 11^th.

The massive sale by miners coincides with other worrying factors, such as the Chicago Mercantile Exchange (CME) Bitcoin market, which is net short. It suggests that professional traders are predicting a temporary pullback in the cryptocurrency.

Garner explained that the CME commitment of traders shows that institutions have been massively net short BTC for many weeks. He said that they have only been this net short once before: the last time that BTC was around the same price.

Data from the Bitcoin options market support this narrative. Last June 26^th, the Bitcoin options market experienced the largest expiration in history with options worth USD 675 million. However, Bitcoin’s price did not record a large increase in volatility, which indicates that most options were presented when BTC was in a narrow range between USD 9,000 and USD 10,000.

Currently, the Bitcoin options market is generally net neutral, while the CME futures market remains net short. When combining that with the fact that miners have sold 1,115 BTC more than they had mined since last June 19^th, the trend may turn bleak.

Analysts’ Optimism about BTC’s Medium-Term Trend

Garner still predicts a major bullish market to materialize in the long term. In addition to optimistic developments in the industry, such as growing support from Fidelity and institutional adoption, a key macro indicator has lit up.

Besides, hash ribbons, which assess potential capitulation phases among miners in the cryptocurrency market, are signaling an upward trend. Mining capitulation generally marks a local floor for Bitcoin as there is an elimination of over-leveraged miners and investors.

Garner noted that the Bitcoin community is very close to a hash ribbons buy signal. This is one of the highest alpha on-chain signals that the analyst is tracking. As they do not occur often, he hopes that this will be the last one for a long time.

Fundamental factors are becoming stronger and the mining industry is finally recovering from the halving and a two-year high difficulty adjustment. For that reason, traders expect Bitcoin’s price to rebound along with it.

By Alexander Salazar

The report raises privacy scenarios, always thinking of complying with KYC and AML protocols. The study contrasts with the Bitcoin and Zcash models.

Analysts from the Bank of Canada, the central financial institution of the North American country, are exploring privacy aspects for the launch of a hypothetical central bank digital currency (CBDC). The researchers consider that the privacy of payments with this type of cryptocurrencies looks good to the public.

Researchers Sriram Darbha and Rakesh Arorade highlighted the importance of considering privacy during the design phase itself. Doing a functional design first and adding privacy and compliance later, poses risks of unnecessary compensation, according to the analysts from the Bank of Canada.

The Bank of Canada recently published the analysis on its website. In the study, they focus on finding possible designs focused on privacy and regulatory compliance for CBDC. The text highlights that the most advanced privacy techniques are “immature”. It also alleges that they do not comply with the know-your-customer (KYC) or anti-money-laundering (AML) rules.

The researchers emphasize the difficulty of creating a system that ensures certain levels of privacy for citizens while complying with the aforementioned policies. The report adds that the need for proactive disclosure to prevent fraud further complicates this.

Risks and Possibilities

According to the analysts, the Central Bank could create a system around a CBDC “with higher levels of privacy than commercial products can offer, but with compensation in terms of regulations”. However, they qualify this aspect by indicating that the privacy of users would depend on many external factors. Among those aspects, they mention the privacy policies of “other entities in the CBDC ecosystem”.

In their report, Darbha and Arorade contrasted models such as that of Bitcoin, with public and verifiable transactions, and that of Zcash, whose model focuses on privacy. Regarding the Zcash design, they argued that it is very complex, since “it does not scale and is a computational overhead for users.”

Among the possibilities evaluated, the report includes group signatures, secret exchange schemes, zero-knowledge proofs, homomorphic encryption, multi-party computing, and differential privacy.

CBDC Boom as Next Step for Central Banks

Central Banks have insistently turned their attention to digital currencies. There has been an exploration of the idea in Canada, at least since 2017, as reflected in a study in which the Bank of Canada analyzed the issue.

In recent months, many central entities in the world have approached CBDCs. In Europe, the project has even received support from entities such as the Italian ones, while in Asia it is also gaining strength. China has already been maturing its digital currency plan for a while, and now both Japan and Cambodia are joining.

The USA has also focused its attention on CBDCs. The President of the Federal Reserve (Fed), Jerome Powell, has confirmed this. However, he has clarified that there should be no private participation in the development of these currencies. The Philadelphia Fed also recently assessed CBDCs as a risk to commercial banks.

This proliferation of plans from central banks seems to be an opportunity to increase the adoption of cryptocurrencies like Bitcoin. A study by the Grayscale firm indicates that central banks’ imposition of CBDCs would highlight the benefits of decentralized systems such as that of Bitcoin.

By Alexander Salazar

The Italian Banking Association published guidelines that it deems necessary to adopt CBDCs. The agency is willing to participate in tests of digital currencies in Europe.

The Italian Banking Association (ABI), which groups more than 700 financial entities, has released the guidelines that it considers necessary for the adoption of a central bank digital currency (CBDC) in Europe, showing its support for the possible launch of the digital euro.

In a post on the Association’s website on June 18^th, Italian banks expressed their willingness to participate in projects and experiments for the development of a CBDC of the European Central Bank.

They claim that thanks to the skills acquired while building infrastructures linked to blockchain technology, they can accelerate the implementation of an initiative at the European level.

The group thus recalls the progress of Italian banks in the use of blockchain through the Spunta Banca Project. In 2019, this initiative allowed processing the reconciliation of data for an entire year of local banking activity through the Corda platform.

The ABI explains that a group that has been working on digital currencies since last year was in charge of developing the guidelines. This material bases on some of the characteristics of CBDCs.

Among the ideas presented, the ABI notes that central bank digital currencies represent a financial innovation capable of revolutionizing money and the forms of exchange whilst representing advances for traditional banking. In this sense, the ABI considers that this type of currency allows preserving the properties of cash, incorporating the benefits of the digital world.

Furthermore, it is necessary to preserve the monetary stability and full respect of the European regulatory framework. The document states that banks play a crucial role in this regard to “maintain the effectiveness of the mechanisms for transmitting monetary policy and regulatory compliance.”

The ABI also mentions the issue of security and privacy, since it considers it important that citizens can trust digital money.

Support for the Digital Euro

The group supports the creation of the digital euro, a project that the European Union proposed in November 2019. This served as the basis for the European Central Bank (ECB) to launch a proof of concept (PoC), at the end of last year.

Despite these advances and the recognition of the advantages of CBDCs, the ECB has no plans to issue a digital currency in the short term, without first thoroughly evaluating the implications of these assets for the stability of the financial system. To do this, it is still analyzing its possible effects on the monetary policies of the countries of the region, as the financial institution expressed last May.

An increasing number of banking institutions in Europe seems ready to develop digital central bank currencies in support of the digital euro project.

Before the ABI’s pronouncement in Italy, the Central Bank of France announced the results of the first test of its blockchain-based digital currency, which it recently completed. The agency added that it will conduct further tests with other participants, as part of its experiments with the digital euro.

The project for the creation of the digital euro has also received support from the Central Bank of the Netherlands and the German Association of Private Banks (Bankenverband), representing more than 200 banking institutions.

By Alexander Salazar

The Bank for International Settlements (BIS) recently analyzed different factors within the digital transformation of payments worldwide. The study indicates that central bank digital currencies (CBDC) are aimed at providing an innovative response in this regard.

In the framework of its Annual Economic Report, the Bank for International Settlements devoted a chapter to central banks and digital payments. In that report, they explored the reality of central banking institutions in the face of current challenges, regarding the current COVID-19 pandemic, and the evolution of digital payments.

The BIS believes that central banks should accelerate their participation in the digital transformation of payments. The intention is to promote interoperability, and support competition and innovation, to operate in public infrastructures that provide easy, low-cost, and high-quality access to payments.

The institution highlights that central banks must lead what they call “the next step in the evolution of money” since they consider that the issuance of a CBDC “is not a reaction to cryptocurrencies and stablecoin proposals from the private sector.” On the contrary, they believe that it is rather “a technological effort to pursue various public policy objectives”, which are related to financial inclusion, security, speed, economy, and integrity of payments.

Wholesale and Retail CBDCs

in its publication, the Bank for International Settlements states that it is possible to promote CBDCs at both wholesale and retail levels, options that central banks have studied and tested experimentally. As for the wholesale scale, these can “improve security and speed, and potentially simplify the post-trade clearing and settlement cycle.” They can also “help mitigate the risk of fraud and cyberattacks.”

For its part, a retail CBDC “would provide general users with direct access to money of the central bank and would potentially offer a secure, reliable, and universally accessible settlement instrument, the same as cash does today.” The BIS adds that “unlike cash, retail CBDCs could generate interest and influence the transmission of monetary policy, even by lowering the effective lower limit of nominal policy rates.”

First Steps and Development for the Future

Central Bank Digital Currencies can coexist with both cash and electronic payment options, according to the BIS. In this way, it completes a two-layer design that allows both the public and private sectors to take advantage of them equally. They state that the private sector seems to be better able to bring CBDCs to consumers.

In general, CBDCs must meet some essential characteristics, such as ease of use, reliability, and attractiveness of use. They must also be operational resistant in terms of infrastructure and cyberattacks. Other key factors are the security and integrity of payments, along with user privacy and regulatory compliance, such as anti-money laundering (AML) standards.

In its report, the BIS concludes that the right design would enable CBDCs to “lead to a new, interoperable default payment mechanism, foster competition among private sector intermediaries, and set high standards for security and risk management” in the future of payments.

By Alexander Salazar

Hackers pose as web page crews or password reset pages to steal personal and login information.  

During the last two years, a cybercriminal group has stolen around USD 200 million from different cryptocurrency exchange houses. The criminal group has affected between 10 and 20 exchanges in the United States, the Middle East, and Asia.

The name of this group is “CryptoCore”, although it is also known as “Dangerous Password” and “Leery Turtle”. Cybersecurity firm ClearSky conducted an investigation that determined that this criminal group attacks to different cryptocurrency exchanges, at least since 2018.

The investigation revealed that several of the affected crypto-exchanges are from Japan, although it did not disclose the names of the victims to respect the confidentiality agreement. Regarding the location or provenance of the criminal group, the investigative firm considers that the group is from Eastern Europe, Ukraine, Russia, or Romania.

Phishing Attacks

According to the firm that investigated the case, hackers used spear-phishing attacks to gain access to the wallets of cryptocurrency exchanges. To achieve this purpose, hackers were even able to access executive email accounts.

The report details that hackers execute spear-phishing attacks “typically” by posing as employees, primarily those who have a high-ranking role within the company or other organization, such as the advisory board.

Brett Callow, a threat analyst at a malware lab called Emsisoft, provided some feedback on phishing attacks that groups like CryptoCore have conducted. In this sense, the analyst explained the situation.

“Some phishing campaigns consist of mass, non-targeted emails sent to a large number of people. Others, however, are designed to target specific individuals, for example, a company executive. This is known as spear phishing, and since the actor may have spent time gathering information about the target individual, the emails can be extremely compelling,” said Callow.

The analyst added that, in this way, many security incidents, and data breaches start with phishing emails. He explained that hackers generally design phishing campaigns to collect data that is used; for instance, for logins of different accounts, as a kind of form requesting information or “helping” to recover passwords.

In this way, hackers direct the recipient to a fake banking site to deliver malware through malicious attachments. “In either case, the result may be the same: A compromised network,” says Callow.

Other Hackers in the World

A North Korean hacking team, called the Lazarus Group, attacked multiple crypto exchanges last year, according to a Chainalysis report. One of the attacks involved creating a fake but very realistic commercial bot website. Hackers offered a fake website to employees of the DragonEx exchange.

Recently, a study warned of a massive phishing campaign that Lazarus could launch soon. Supposedly, this could affect six nations and more than 5 million businesses and individuals.

Due to these criminal acts, the best recommendation is not to enter suspicious or unknown webpages, since they can obtain passwords for bank accounts, generate other personal damages, or even, as in this case, steal cryptocurrencies.

By María Rodríguez