That’s the magic number.
That’s the number bitcoin has to confidently cross to signal the start of a reversal. And right now, it’s tantalisingly close.
It briefly crossed the $4,000 mark on Tuesday, and again on Wednesday. But it’s yet to make it stick.
Over the last two weeks the crypto market has gone up by around 20%, from $111 billion to $134 billion.
In any other market, this would be a monumental event. But in crypto, it’s just par for the course.
Especially when you remember, the crypto market is still more than 80% down from its all-time high back in January last year.
Still, this latest move has people excited. Many are calling this the start of “the next bull run”.
And the main signal for that will be bitcoin sustaining its move over $4,000.
So, what’s caused this surge?
Well, there are a number of things happening at the moment that are good for crypto prices.
Firstly, Nasdaq is adding bitcoin and Ethereum prices to its data service:
Stock exchange operator Nasdaq is adding indices for bitcoin and ethereum to its global data service later this month.
The company announced Monday that it has partnered with New Zealand-based blockchain data and research firm Brave New Coin to offer information on the two new indices starting Feb. 25.
This has added legitimacy to crypto in the eyes of the financial mainstream.
And it makes it easier for companies and media outlets to report on prices. They can now report the official price from a reputable data service.
JPMorgan creates its own cryptocurrency
On top of this, JPMorgan – the company that famously called bitcoin a scam, and whose CEO, Jamie Dimon, said he’d fire any trader “in a second” for trading it – has created its own cryptocurrency.
Yes, that’s right, JPMorgan has created its own cryptocurrency.
It is, of course, not a real decentralised crypto, and JPMorgan will completely control it. And other banks likely won’t use it because
it would give JPMorgan power over them. But it certainly lends the space more legitimacy.
PMorgan Chase’s splashy new digital coin could change how banks approach blockchain and cryptocurrency.
The initial applications of JPM Coin aren’t revolutionary. JPMorgan (JPM) said last week it would facilitate the instantaneous transfer of payments between institutional accounts. JPM Coin is just a prototype that can only be used by some of the bank’s corporate customers.
But the news last week attracted a lot of buzz, because it could force other banks to follow with big blockchain or crypto-related releases of their own.
“More banks will take it seriously,” said Param Vir Singh, a professor of business technologies at Carnegie Mellon University.
We can look forward to more and more banks creating their own cryptocurrencies in the years that follow.
The best analogy I have seen for this is the internet of the 90s, when companies would all run their own internal “intranets”.
Over time these intranets were phased out and moved on to the real World Wide Web.
As we are at the start of the crypto revolution, we can expect to see a similar storyline develop.
Companies will create their own, closed-off, crippled versions of functioning decentralised cryptos before eventually realising that the main benefit of crypto is that it’s decentralised.
Ultimately, this will propel cryptos like Ethereum into more of the mainstream, and increase its market share… eventually.
Far more exciting in this stablecoin cryptocurrency space is MakerDAO and its smart contract stablecoin DAI.
The things this project is already enabling are mind-blowing. So much so, in fact that I dedicated this month’s Crypto Wire to explaining how MakerDAO works and ranking it.
If you want to get in-depth knowledge into stablecoins and the future of decentralised finance, as well as my full MakerDAO ranking, you can take out a trial to Frontier Tech Investor here.
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Ethereum Constantinople upgrade set for 27 February
Then, we have the upcoming Ethereum upgrade – Constantinople – scheduled for 27 February.
It is the next step towards Ethereum switching from a Proof of Work consensus to a Proof of Stake one.
But it also brings in a number of improvements in its own right.
Here are the five Ethereum improvement proposals (EIPs) it will integrate, from Consensys:
EIP 145: Bitwise Shifting Instructions [Efficiency & Speed]
EIP 145 will add Bitwise shifting instructions to the Ethereum Virtual Machine (EVM). The instructions allow for bits of binary information to move to the left and to the right. This improvement means the execution of shifts in smart contracts will be 10x cheaper.
EIP 1052: Smart Contract Verification [Speed & Energy]
EIP 1052 allows for smart contracts to verify one another by pulling just the hash of the other smart contract. Before Constantinople, smart contracts would have to pull the entire code of another in order to verify, which took time and energy to perform.
EIP 1014: CREATE2 [Scalability]
EIP 1014, known by CREATE2, was developed by Vitalik Buterin. The upgrade improves the enablement of state channels, an Ethereum scaling solution based on off-chain transactions.
EIP 1283: SSTORE [cost]
This proposal — the full name of which is ‘Net Gas Metering for SSTORE Without Dirty Maps’ — reduces the gas cost for the SSTORE operation. This reduction enables multiple updates to occur within a transaction more cheaply.
EIP 1234: Block Rewards & Difficulty Bomb Delay
EIP 1234 is one of the most highly-discussed Constantinople upgrade. It is comprised of two components: Block Reward Reduction and Difficulty Bomb Delay.
When Constantinople happens, Ethereum’s mining block rewards will reduce from three to two.
Many crypto commenters are referring to this event as “the thirdening”. And it could mean (note: could) lead to some big price increases.
This is a similar event to when bitcoin halves its block rewards every 210,000 blocks. Historically these “halvenings” have arguably led to big price increases.
But as you know, in crypto, nothing is certain.
As you can see above, it will also bring improvements to smart contracts and enable state channels, which could lead to real scaling solutions.
We should probably bear in mind, though, that Constantinople has already been delayed twice, at the last minute.
Everything seems to point towards it going ahead this time, but there are a number of people betting against it happening on time in Augur.
Samsung S10 reported to have in-built crypto wallet and 5G
And finally, as I write this, Samsung is announcing its latest flagship phone, the S10.
This phone will have 5G – which if you’re a regular reader you’ll know is going to have a massive effect on the tech world, and on our everyday lives.
And it will reportedly have a hardware-based crypto wallet. This is different from a simple app. It will be much more secure and make buying, trading and holding crypto with your phone a whole lot easier, and a whole lot more secure.
Not to mention that having the wold’s biggest smartphone maker putting a hardware crypto wallet in its flagship phone is another huge endorsement for crypto in general.
We can expect all the other major manufacturers to follow suit in the next few months, bringing even more exposure to crypto.
So, what’s caused this latest surge?
As usual, it could be any number of things. But what I’ve written about above are the most likely candidates.
Or it could be something completely unrelated. As I said, you never really know with crypto.
Don’t miss Eoin Treacy’s gold summit
There is still time to get your all access pass to Eoin Treacy’s gold summit, if you’re quick.
Eoin created this summit after noticing something very strange in the gold price.
In his own words:
“My research tells me that something very interesting and shocking could be about to happen to the gold price. I’ve seen similar conditions in the gold market before, and I made my clients a small fortune from it.
“But what’s happening now is on a much bigger scale…”
Taking part in this summit – and seeing all the in-depth research Eoin has done into this situation – is free, so long as you get your pass here.
I’ve had early access to Eoin’s research, and I can tell you, this is not something you’ll want to miss.
Until next time,
Editor, Exponential Investor