CoinEx Institute: A Brief Analysis of the Bitcoin Ordinal Protocol

Audy Castañeda
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<strong>CoinEx Institute: A Brief Analysis of the Bitcoin Ordinal Protocol</strong>

As Ordinals attract new users and transactions to the Bitcoin network, miners have also benefited from increased usage.

For a long time after its birth, Bitcoin progressed slowly. However, Ordinals, a new development within the Bitcoin ecosystem, emerged in early 2023, allowing users to enroll unique and verifiable crypto assets in specific Satoshis on the Bitcoin network, which has sparked a bit of a craze around native Bitcoin tokens and NFTs.

Furthermore, Ordinals also helped Bitcoin to improve the inflow of funds, creating a vibrant ecosystem. As of May 31, more than 10 million signups have been created, costing more than 1,600 BTC and transaction fees exceeding $40 million.

Despite that, this development has also generated some controversy in the Bitcoin community. Critics say it deviates from Bitcoin’s original purpose as a peer-to-peer electronic currency, and it creates clutter in precious block space.

Foundation of Ordinals

In August 2017, Bitcoin SegWit (Segregated Witness) was officially activated. The Bitcoin Core developers were directly opposed to increasing the block size limit without technical improvements, and without taking balanced resource expenditure into account.

However, SegWit allows each block to accommodate more transactions without directly increasing the original 1MB limit. This update introduced the concept of witness data by moving certain information (such as transaction signatures) to the witness data, reducing the block space occupied by each transaction and indirectly improving the throughput of the network.

However, for nodes that support SegWit, the actual data received often exceeds 1 MB (block + token data) because the token data is stored separately.

In 2021, Taproot, the most significant technical upgrade to the Bitcoin network after SegWit, officially went live, and it introduced new scripting features such as Schnorr signatures and Pay-to-Taproot (P2TR) outputs.

Schnorr signatures make multi-signature scripts indistinguishable from single-signature scripts, providing greater privacy for all Taproot users. Most importantly, Taproot removes the witness data size limit from a transaction, allowing data storage of up to 4MB in BTC.

Birth of Ordinals

The activation of SegWit and Taproot laid the foundation for the rise of the Bitcoin Ordinals protocol. Proposed in January 2023, Ordinals is a protocol that assigns off-chain numbers to Satoshis, the smallest unit of Bitcoin, and gradually gained market consensus.

Leveraging the technical features of SegWit and Taproot on the Bitcoin network, the protocol enables direct minting, transfer, and destruction of NFTs on the Bitcoin Blockchain.

The Ordinals protocol has brought a new dimension to Bitcoin, expanding its applications beyond traditional payment and store of value to NFTs and FTs. Prominent NFT projects such as BAYC started issuing Bitcoin NFTs through the Ordinals protocol, while anonymous Ordinals NFT projects also gained popularity in the market.

Bitcoin enrollments store all content within Taproot scripts, while Ethereum NFTs often rely on URIs (Uniform Resource Identifiers) to locate associated metadata, allowing the network to identify media resources (for example, images) linked to the specific NFTs.

In early May, the Bitcoin network became congested due to massive transactions and transaction fees even exceeded block rewards, which is extremely rare. Despite the immense popularity, due to network performance, the user experience was far from satisfactory, and the market hype did not last long.

Bitcoin is expected to experience another halving in 2024, which will once again cut block rewards in half. The rise of Ordinals opens up possibilities for changes to the mining fee model following future Bitcoin halvings.

By Audy Castaneda

BlackRock’s Bitcoin ETF Seems to Be a Changing Reality Case of Perception

Marina Meza
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BlackRock’s Bitcoin ETF Seems to Be a Changing Reality Case of Perception

BlackRock Rolls the Dice on a Bitcoin ETF

BlackRock’s BLK application registering a Bitcoin ETF on the commercial market looks like both a self-fulfilling strategy and an attempt to gain approval for an investment format that has been repeatedly rejected by U.S. regulators.

The world’s largest money manager, with $9.1 billion in first-quarter assets under administration, filed a preliminary prospectus for iShares BitcoinBTC Belief late Thursday afternoon New York time. The exchange-traded fund (ETF) is intended to hold bitcoins that will be held by Coinbase, the largest U.S. cryptocurrency exchange.

The Securities and Exchange Commission has insisted that commercial bitcoin is not safe enough to offer to retail investors, although funds based on bitcoin futures are allowed. In denying an application by VanEck to offer a Bitcoin ETF in March, the agency said the Cboe division that applied to offer the fund had failed to meet requirements that it be “designed to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest” because the underlying commercial bitcoin market is too opaque.

The SEC’s continued opposition to detecting Bitcoin ETFs raises the question of why BlackRock would go to the trouble of filing a prospectus for a fund that was destined to be denied. The answer may be that its name, size, and traditional financial background would go along the way towards overcoming the agency’s opposition to an inescapable development.

Some Perspectives

Jeff Feng, co-founder of SEI Labs and former Goldman Sachs analyst said that “as the world’s largest asset manager, BlackRock sees an opportunity to maintain its position in the global capital markets through its ETF application, if they are successful, it indicates a strong sense of confidence in their leadership by the SEC to navigate the challenges of a revolutionary product alongside regulators while legitimizing Bitcoin.”

Feng, whose firm backs the SEI blockchain, designed for trading digital assets, says legitimacy could extend to other cryptocurrencies. “Given BlackRock’s shift in its position on bitcoin in recent years, it’s clear they don’t see bitcoin and tokenization as something that can be ignored as a globally traded asset.”

Larry Fink, BlackRock’s CEO, called bitcoin a “money laundering index” in 2017 but has since moderated that view. In August, BlackRock announced it would offer bitcoin trading to some institutional clients in a deal that also involves Coinbase.

A BlackRock spokeswoman confirmed the filing of the registration statement, but declined to comment further due to “regulatory filing restrictions.”

The ETF filing comes as the SEC has been cracking down on the cryptocurrency industry. Last week, it sued Binance, the world’s largest cryptocurrency exchange, as well as Coinbase, alleging they were operating as unlicensed exchanges that listed unregistered securities; a category which keeps up including most cryptocurrencies.

Grayscale, from Electronic Currencies Group, is suing the SEC over its refusal to allow the fund management firm to convert a bitcoin trust into an ETF in a case that began in June last year. Grayscale argues that the SEC’s position that commercial prices are subject to manipulation, but futures are not, is illogical, as the latter reflects the former.

By Marina Meza

Can Bitcoin reach $100,000?  

Marina Meza
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Can Bitcoin reach $100,000?  

Until now in 2023, Bitcoin (CRYPTO: BTC) has been one of the top-performing cryptocurrencies, up more than 57%. Bitcoin trades for around $26,000 after briefly breaking the $30,000 price level earlier this year.

But Bitcoin is still nowhere near its $68,789 all-time high, which was reached in November 2021. Nevertheless, a growing number of analysts, investors, and cryptocurrency enthusiasts still think that Bitcoin will surpass the $100 000 level sometime in 2024. While that price trajectory may sound outrageous, there are three compelling reasons why it could happen.

Bitcoin as Electronic Gold

One of the main arguments around Bitcoin is that it functions as “electronic gold,” making it a good store of value, especially in volatile economic conditions. Therefore, during the banking disaster that began earlier this year, investors looking for a safe asset outside of the traditional banking and the financial system turned to Bitcoin, and indeed, the correlation between Bitcoin and gold increased in 2023.

Institutional Adoption

It is fine, but what if you got burned by Bitcoin in 2022 and are still skeptical? Gold, after all, doesn’t lose 65% of its value in a year, it is acceptable. There is another route to the magic $100,000 price level, and it involves the long-term growth story around institutional adoption.

Bitcoin, after all, is more than an easy store of value; it is also a form of payment and a potential replacement for several building blocks of the modern financial system, including the U.S. dollar.

Leading investor Kathy Wood of Ark Invest, for example, has analyzed eight different use cases for Bitcoin in the global economic system. By taking a closer look at each of these eight different use cases for Bitcoin in the global economic system. Looking more closely at each of these eight areas and then extrapolating growth rates going forward, Wood arrived at a USD 1.48 million price target for Bitcoin.

Bitcoin’s Halving

There is a technical event that could influence the price of Bitcoin, known as a halving. This event occurs only once every four years and is highly anticipated by the Bitcoin community. In a halving event, the reward paid to Bitcoin miners for mining a new block on the blockchain is halved.

The next Bitcoin halving is scheduled for April 2024, and investors are already submitting aggressive price targets above $100,000 for Bitcoin. For example, Normal Chartered Financial Institution believes Bitcoin will reach that figure by the end of 2024.

The Path to $100,000

As can be seen, there are several paths Bitcoin can take to reach $100,000. While the target price may sound absurdly high, especially given the particular macroeconomic environment, the potential certainly exists. Certainly, there are wildcard factors, such as the Securities and Exchange Commission (SEC), which could move to common Bitcoin at any time, and the Federal Reserve, which has demonstrated the ability to increase the price of Bitcoin simply by raising interest rates.

Taking into account what has been explained, there is hope in the fact Bitcoin remains bullish in both the short and long term. While it is undoubtedly a volatile electronic asset, it has a long history of outperforming the market going back nearly a decade.

By Marina Meza

Ethereum Price Reaches Critical Tipping Point: “Now or Never” Situation Arrives for ETH Price

Audy Castañeda
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<strong>Ethereum Price Reaches Critical Tipping Point: “Now or Never” Situation Arrives for ETH Price</strong>

Currently, the Ethereum price is hovering around a crucial level, creating a ‘make or break’ scenario in the market.

The cryptocurrency market is currently navigating complex security law issues, causing price volatility for many digital assets. Ethereum (ETH), the second-largest cryptocurrency, is being hit particularly hard.

The situation has escalated with the recent disclosure of the Hinman documents suggesting that Ether is not considered a security. This, combined with positive Consumer Price Index (CPI) data, has brought Ethereum to a critical point in its price trajectory.

Ethereum Whales Can Create a Sell Situation

The activities of a prominent Ethereum whale, who owns an estimated $738 million worth of ETH, have left even seasoned market analysts stumped. This individual recently moved 450K ETH to an address linked to cryptocurrency exchange, Coinbase.

This action has aroused curiosity and concern, mainly because such a substantial transaction could have a significant influence on the ETH market if these assets were to be sold.

Furthermore, the US Securities and Exchange Commission (SEC) maintains a position that all cryptocurrencies, with the exception of Bitcoin, are securities. The regulator’s recent crackdown on cryptocurrency exchanges has spilled over into staking services, which it aims to stop.

This situation could drive more staked ETH away from exchanges and closer to Lido, the leading provider of liquid staking. While this may seem beneficial, it carries substantial risks for the Ethereum ecosystem.

On June 13, Ethereum advocates on ‘Bankless’ raised concerns about Lido, and they advocated for measures to prevent its monopoly on ETH staking.

Continued SEC enforcement against exchanges is expected to further drive Ethereum staking towards Lido.

A notable spike in Coinbase’s staked ETH redemptions was already seen last week following the regulator’s lawsuit, and may soon put selling pressure on the price chart.

What to Expect from the ETH Price Next?

Ether attempted a rally, but the modest bounce indicates that the bears are capitalizing on every slight rally. The bears are further consolidating their positions by taking the price below the immediate support level of $1,730.

If the bears are successful in pushing the price below $1,700, it could signal the start of a more substantial correction. There is minor support at $1,610, but if this level succumbs, the fall could extend to $1,500.

The ETH price is currently consolidating near $1,720-$1,750, which suggests that buyers are making an effort to prevent ETH price from falling below the EMA20. Currently, the ETH price is trading at $1,740, rising more than 0.1% in the last 24 hours.

On the upside, if the ETH/USD price breaks out of the current consolidation range at $1,779, it would suggest that the bulls are vigorously defending the support level. A rise above the resistance line could pave the way for a possible move higher toward $1,910.

According to CryptoPredictions, the ETH Price is forecasted for today (15.06.2023) to be in the $1,476.301 – $2,171.030 price range. Ethereum is predicted to end today at $1,736.824.

By Audy Castaneda

Fed’s ‘Hawkish’ Pivot Crushes ‘Cryptos’: Bitcoin Loses $25,000

Audy Castañeda
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<strong>Fed’s ‘Hawkish’ Pivot Crushes ‘Cryptos’: </strong><strong>Bitcoin Loses $25,000</strong>

The central bank has tightened its forecasts for interest rates.

Bitcoin (BTC) is down 4% in the last 24 hours and falls below $25,000, while Ethereum (ETH) falls 6% and is trying to hold $1,600.

The fall in the markets occurred after knowing the latest monetary policy decision of the Federal Reserve (Fed). The US central bank followed through on forecasts, pausing its rate hike cycle after 10 consecutive hikes.

Thus, the Federal Reserve (Fed) took “a ‘hawkish’ (aggressive) pause to cool the current enthusiasm” of the market. That was the goal of the Fed after pausing raising interest rates in the United States and anticipating two more rate hikes in 2023.

The Fed has revised its interest rate forecast and has raised this year’s to 5.6%, from the 5.1% it had estimated in March. In this sense, two more increases of 25 basis points are anticipated until the end of the year.

Similarly, it has raised the estimates for 2024, from 4.3% to 4.6%, and for 2025, from 3.1% to 3.4%.

The Fed and Jerome Powell

The president of the Fed has assured that “almost all” the members of the central bank have agreed that “some more increase would be appropriate this year”, although it is “reasonable” to go a little slower.

“It will be appropriate to cut rates at a time when inflation is coming down significantly. And again, we’re talking about a couple of years. As anyone can see, not a single person on the Committee wrote a rate cut this year, nor do I think it’s appropriate,” Powell said.

The Community Reacts

Experts point out that the comments by the central bank and its president leave a more aggressive scenario than initially proposed, and many are already forgetting that there is even a slight chance of seeing an interest rate cut this year.

Still, others point out that the Fed will not achieve its goal of bringing inflation to 2% without triggering a recession.

According to TickMill Group, although some risk analysts were optimistic before the Fed meeting, crypto assets were still too stagnant. “The current cryptocurrency problem is the latest wave of negative news affecting the sector,” they highlight while noting that uncertainty has grown again in the digital asset space.

“BTC’s downward correction has led the price to trade within a corrective bearish channel. The last few attempts to break above the $27,415 level have failed so far. However, while $24,930 is supportive, the structure can still be seen as a bullish flag, keeping the focus on an eventual breakout towards the $32,185 level,” TickMill Group explains.

Markus Levin, co-founder of XYO Network, has been more optimistic and has pointed out that “the global macro configuration is changing significantly” in the ‘crypto’ market, which would have already bottomed out.

“I expect there to be sideways action for BTC and other coins for a few months ahead, punctuated by bouts of volatility. However, when the BTC halving occurs next year, I think we will be on the crest of the wave,” Levin added.

In the rest of the market, notable falls in the ‘altcoin’ space. Ripple (XRP), Cardano (ADA), or Polygon (MATIC) yield between 5% and 6%.

Binance coin (BNB) is cutting back sharply after numerous analysts have accused Zhao and Binance of trying to manipulate its price.

By Audy Castaneda

Bitcoin Falls to 3-Month Low Below $25,000, Where Next?

Audy Castañeda
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<strong>Bitcoin Falls to 3-Month Low Below $25,000, Where Next?</strong>

BTC had recovered to trade around the $25,000 price level but was still looking bearish.

Bitcoin prices fell to $24,820 in early Asian trading on Thursday morning. It is the lowest value at which the asset has been traded since March 16, three months ago. $1,000 off the BTC price in less than an hour, resulting in a daily loss of 3.6%.

Bitcoin’s slide follows an announcement by the Federal Reserve that it had halted interest rate hikes in June. It is the first time that it has stopped after ten consecutive rate hikes since March 2022.

BTC has now broken out of its range-bound channel and has been in a gradual downward trend since mid-April. There is some support at current levels, but a further dip seems likely.

Bitcoin Takes the Back Seat

Longer-term charts are looking increasingly bearish, with some analysts predicting a “summer break” is in the offing.

On the derivatives side, there are billions in liquidations at lower levels, according to ‘Bleeding Crypto,’ so a breakdown of current BTC price levels could see markets stagnant quickly. On June 15, the Twitter user posted the following:

“There is $63.9 billion worth of liquidations at $24,200 and $52.3 billion at $21,800 but your Bull maxies want to convince you that “everything is ok” “we are about to go higher.”

Furthermore, the Bitcoin Fear and Greed Index has fallen to its lowest level since the market crash in mid-March. The sentiment indicator was reading ‘fear’ at 41 at the present time.

Analysis firm Santiment noted that trader sentiment is “officially at its most negative level since Covid crashed the markets in March 2020.”

On June 14, Santiment tweeted the following:

“With a combination of falling #crypto prices and rising concerns about Binance & Coinbase, trader sentiment is officially at its most negative level since #Covid crashed markets in March 2020. These situations are often ‘buy the dip’ opportunities.”

According to Santiment’s chart, Bitcoin’s social volume plummeted sharply last week. One possible reason behind this could be last week’s altcoin crash, which made altcoins a hot topic of discussion in the crypto community.

BTC sentiment weighted indicated that investors were not very confident in BTC, as the chart remained in the negative zone.

Elsewhere on Crypto Markets

Total market capitalization has fallen 3.6% on the day to $1.06 trillion as nearly $40 billion left the markets.

As usual, Ethereum and the rest of the altcoins are getting hit much harder than their big brother, Bitcoin. ETH had plunged 5.5% on the day to $1,648 most recently. The asset is now trading back to February resistance levels, which have now turned into support.

Altcoins were taking an even bigger hit, with daily losses of between 4% and 7% for most large-cap crypto assets.

Ripple, Cardano, Litecoin, Polkadot, Polygon, and Avalanche have returned similar percentages. Binance Coin, Dogecoin, Tron, Solana, and Shiba Inu are also in the red, albeit in a less painful way.

Small- and mid-cap alternatives have also suffered. Some of the most notable daily drops have come from Lido DAO, Arbitrum HBAR, XLM, and TONCOIN.

Overall, the total crypto market capitalization has declined by $40 billion and is close to breaking below the coveted $1 trillion mark.

By Audy Castaneda

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