Trump Administration Popped 2017 Bitcoin Bubble, Ex-CFTC Chair Says

Christopher Giancarlo who left the U.S. Commodity Futures Trading Commission (CFTC) at the end of his five-year term as chairman in April, told CoinDesk in an interview:

“One of the untold stories of the past few years is that the CFTC, the Treasury, the SEC and the [National Economic Council] director at the time, Gary Cohn, believed that the launch of bitcoin futures would have the impact of popping the bitcoin bubble. And it worked.”

In a speech at the Pantera Summit in San Francisco on Monday, Giancarlo elaborated further, saying that the Trump administration acted in concert to address it in a pro-markets manner.

Bitcoin futures listed by the Chicago Mercantile Exchange (CME) and the CBOE Futures Exchange (CFE) went live on Dec. 18 while bitcoin’s price peaked at nearly $20,000 one day earlier, on Dec. 17, before falling dramatically from that day.

“We saw a bubble building and we thought the best way to address it was to allow the market to interact with it,” Giancarlo told the crowd gathered at the Ritz-Carlton on Nob Hill.

Giancarlo also said that without shorts, a market has no pessimists. “If you do believe it’s a ridiculous price but you don’t own, there’s no way to express that view,” adding:

“If you don’t have that derivative, then all you’ve got are believers [and] it’s a believers’ market.”

The lack of easy ways to short has been cited by other researchers as propping up prices in other crypto assets.

“The CFTC staff handled it strictly on procedural grounds, but at the leadership level I communicated with Treasury Secretary [Steven] Mnuchin and NEC Director Gary Cohn, and we believed that, should bitcoin futures go forward, it would allow institutional money to bring discipline to the value of the cash market,” Giancarlo told CoinDesk. “And that’s exactly what happened.”

Giancarlo further said:

“Coming out of the 2008 financial crisis, the legit criticism of regulators was along the lines of: Where were they during the expansion of the real estate mortgage bubble, and why didn’t they take steps to pop that bubble when they could have?”

That view informed regulators acting quickly on bitcoin’s ascent, he added.

To Giancarlo, the lesson was clear: Regulators mustn’t be complacent when faced with a bubble – but they must act in a way that keeps markets free. In the case of 2017, permitting bitcoin futures presented just such an opportunity. (Negative)

Telegram’s Investors Vote Against a Refund

Investors in the Telegram Open Network (TON) and $1.7 billion Gram token sale have voted against the return of their funds.

Two sources close to the Telegram team told that a majority vote — with the inclusion of investors in both rounds of the offering — had agreed to a postponement of the TON network until April 30 and to uphold their investment in the project.

As previously reported, TON’s anticipated launch on Oct. 31 has been delayed in the wake of an abrupt intervention from the United States Securities and Exchange Commission (SEC) to declare its 2018 token offering illegal.

Telegram’s agreement with investors had been that if it failed to roll out the platform on the pledged date, they would be eligible for a refund.

Yesterday, Oct. 23, was allegedly the deadline for investors to decide as to whether they would choose to demand a 77% refund of their investment.

Telegram had sent them a proposal to wait or to otherwise return a portion of their funds a week after the SEC had secured a temporary injunction against the launch of TON and Gram’s circulation against the firm and its offshore subsidiaries.

With the investors’ endorsement now assured, Telegram will reportedly be able to spend another $80 million of the $1.7 billion investment ahead of April.

Telegram now faces a court hearing scheduled for February 18-19, at which Telegram representatives will seek a court ruling on the main argument that Gram is not a security. 

A leaked copy of the document had revealed that the force majeure clause — which encompasses natural disasters, terrorist threats and the eruption of war — had also included legal or regulatory actions on the part of the authorities. (Neutral)

Bitcoin Hash Rate Record Highs

Bitcoin (BTC) continues to set new records for its network hash rate this month, a sign that miners have shaken off weak price performance.

Hash rate hits all-time highs in October

Data from monitoring resource Blockchain confirmed hash rate hit 114 quintillion hashes per second on Oct. 23. 

This is the largest reading ever and echoed by others such as BitInfoCharts, which recorded an all-time high of just over 110 quintillion at the same time. Coin Dance numbers put the all-time high of 134 quintillion occurring on Oct. 10. 

Due to it being impossible to measure hash rate exactly, all charts are estimates that rely on the previous period’s block times. 

Hash rate refers to the overall computing power involved in validating transactions on the Bitcoin blockchain. More power suggests greater network security, as well as interest in the profitability potential of Bitcoin mining. 

In other words, miners are anticipating higher Bitcoin prices in the future. 

The mounting hash rate in the face of a falling Bitcoin price underscores their dedication to investing in the industry — and its future profitability. Mining giant Bitmain, for example, this week launched what it calls the “world’s largest” mining farm in Rockdale, Texas. 

On the other hand, the profitability metric is, in fact, approaching its lowest in 12 months, with one miner telling Cointelegraph that $6,500 is a floor price to maintain profitability for participants. Pass it, and Bitcoin then could see a reduction in hashing power, as miners may choose to turn off their rigs until difficulty adjusts and/or prices recover. 

Therefore, it remains to be seen if the latest drop in Bitcoin price will have a negative impact on the hash rate. 

From May 2020, miners will compete for half as many new Bitcoins per new block as now — 6.25 BTC instead of 12.5 BTC

With the equivalent of up to $63 million unavailable each week, commentators widely expect the block halving event to dramatically boost the Bitcoin price. (Positive)