TOTAL with some clear key areasVarious scenarios, or rather areas I'm looking out for. If price moves into either, will act accordingly. Want to stay open to any idea, so it's important to consider the bullish/bearish alert zones.
TOTAL trade ideas
Blockchain Architecture Blockchain Architecture
Around how to realize decentralized trust, a blockchain can be divided into five layers from a technical point of view, which are the data layer, network layer, consensus layer, contract layer, and application layer, as shown in Figure 1. The data layer defines the blockchain’s underlying data structure, storage structure, and ledger pattern as the theoretical basis and outlines a theoretical model of decentralized trust. The theoretical model of blockchain decentralized trust in the network layer is realized by utilizing the distributed P2P network. In the consensus layer, the consensus algorithm organizes and coordinates the behaviors of nodes in the decentralized system to drive the continuous operation of the blockchain. In the contract layer, smart contracts are introduced as the extension of the blockchain so that the blockchain can handle more complex transactions. At the application layer, providing blockchain APIs makes it easy for developers to build Dapps and offer decentralized solutions to problems from various industries.
Mathematics 11 00101 g001 550Figure 1. Blockchain architecture.
3.1. Data Layer
Due to the lack of authoritative central node coordination and management, the decentralized system has problems such as easy data tampering, untraceable node behavior, and difficulty in rapidly authenticating transactions, leading to the data not being trusted. As the theoretical basis of blockchain, the data layer needs to solve the appealing problem to ensure that the data are credible to achieve decentralized trust. From the perspective of the logical structure of data, the blockchain is a chain composed of a connected block, and each block stores the transaction information. The blocks are connected by hash pointers and are chained in chronological order of their generation. According to the characteristics of the hash function, any slight modification to the block data will create a huge change in the hash value of the block, leading to the block not being chained. Based on that, security ensures that the data on the block is not tampered with, and thus the credibility of the data on the chain. The data layer constructs the decentralized trust model of blockchain from three aspects: data structure, storage structure, and ledger pattern.
3.2. Network Layer
The network layer is the key to implementing a decentralized system at the physical level. Decentralization means that the blockchain nodes are peer-to-peer at the physical level and that each node can communicate with each other without passing through the central node. Therefore, the network structure of the blockchain adopts the decentralized P2P structure. As shown in Figure 2, compared to a centralized network structure, a P2P network can ensure peer-to-peer communication between nodes, and nodes can join or exit the system quickly.
Mathematics 11 00101 g002 550Figure 2. P2P network vs. centralized network.
The P2P network is a distributed application architecture. The P2P networks were initially designed to facilitate the distribution of large files over unreliable networks. In a P2P network, multiple computers are connected in a peer-to-peer position, and the entire network does not require centralized coordination by a central processing node. In P2P networks, each peer can act as both requestor and responder of network services. Research on p2p network technology has recently focused on improving system performance and security. In system performance: Abudaqa et al. summarized, evaluated, compared, and classified the techniques used to improve the performance of P2P file-sharing systems based on network coding; Milojicic et al. provided a general analysis of the design and implementation issues of P2P systems in the context of practical cases. In security: Alharbi et al. explored the security weaknesses and threats in P2P networks and proposed that the fundamental problem of P2P networks is the trusting of peers and the problem of secure traffic routing. Risson et al. discussed the metrics affecting the robustness of P2P systems.
3.3. Consensus Layer
The consensus layer implements the consensus algorithm, which organizes and coordinates the decentralized system, allowing the blockchain to operate securely and stably. A blockchain is a distributed system where nodes communicate and coordinate with each other only through messaging because no central node is involved. In a distributed system, nodes agreeing on an event is also called a consensus, and a consensus algorithm is used to ensure data consistency among nodes in the system. Due to unavoidable problems such as network latency, node failure downtime, and bandwidth limitation, distributed systems are subject to the FLP impossibility principle and CAP theory. The FLP impossibility principle means that in a system containing multiple deterministic processes, as long as one process may fail, no protocol can guarantee a finite time for all processes to agree. CAP theory points out that it is impossible for any distributed system to satisfy consistency, availability, and partitioning of fault tolerance at the same time , as shown in Figure 3. Therefore, according to CAP theory and the FLP impossibility principle, certain aspects must be traded off when designing consensus algorithms for blockchains.
Mathematics 11 00101 g003 550Figure 3. CAP theory.
Blockchain can be regarded as a distributed public ledger. The essence of consensus is to decide the bookkeeping right, i.e., to solve the problem of who can produce the blocks and package the transactions into the blocks. According to the different mechanisms to reach consensus, blockchain consensus algorithms can be divided into proof-based and voting-based.
3.4. Contract Layer
The contract layer implements smart contracts, a set of digitally set commitments that are unmodifiable once deployed and executed immediately once triggered. Smart contracts, as an extension of the blockchain, enable the blockchain to have the ability to handle logically complex transactions.
3.5. Application Layer
The application layer provides API interfaces for users to easily build Dapps using blockchain services and applies blockchains to various practical scenarios. With the development of blockchain technology, various Dapps have emerged to bring decentralized trust solutions to the problems of traditional industries.
4. Blockchain Basic Principle
4.1. Data Structure
A blockchain has a chain structure in terms of blocks to achieve data immutability. The data structure of different blockchain platforms differs in specific details but is the same overall. Take Bitcoin as an example. The block in Bitcoin is divided into the block header and the block body. The block header contains the version number, random number, hash of the previous block, Merkle tree root hash, timestamp, current workload proof difficulty, etc. The block body contains all the transactions packed into the block, and the Merkle tree comprises these transactions. To support smart contracts, Ethernet adds a system state to the block header for storing account balances, contract storage, contract code, and account random numbers.
A block contains a block header, timestamp, proof-of-workload random number, hash of the previous block, packed transactions, Merkle tree, etc. . The block’s verification signature and proof-of-work use cryptographic algorithms such as elliptic curve encryption and SHA-256. The data-layer structure differs slightly from blockchain platform to blockchain platform because of the different functions they focus on. Take the Bitcoin system as an example, and the data-layer structure is shown in Figure 4:
Mathematics 11 00101 g004 550Figure 4. Blockchain data-layer structure.
To reduce the bandwidth consumption caused by block synchronization, each block in the Bitcoin system can be divided into two parts: the block header and the block body, which stores all the transaction records in the current block. Bitcoin nodes are divided into full nodes and light nodes. Bitcoin light nodes only need to synchronize the block header for block synchronization. The transaction records in the Bitcoin system are similar to the transaction records in the physical system. Each transaction record includes information such as the input and output addresses of the transaction information and the number of transfers. Based on this transaction information, a corresponding form of Merkle-tree structure can be generated from the bottom up. The hash value of the root node of the Merkle tree is stored in the header of the block, and at the time of each block generation, the bookkeeper of the block adds a timestamp to the block, which is used to mark the generation time of the block. As the timestamp is enhanced, the block is extended to form a chain of blocks with a time dimension, allowing data information to be traced back in time. In addition, the block header contains the hash value of the previous block header, the version number, the random number of the proof of work, and the target hash value, among other information. Finally, the all information in the header of this block is hashed, and the resulting hash value exists in the header of the next block, which, in terms of logical structure, makes each block linked together in the form of a chain.
4.1.1. Hash Function
Hashing converts data of any length into a number within a fixed range. The conversion method is called a hash function, which calculates the value obtained after the original value is called a hash value. Take MD5, a widely used hash function, as an example. The MD5 algorithm is also called the MD5 message digest algorithm, which can generate a 128-bit hash value to ensure the integrity and consistency of information transmission. The MD5 algorithm is universal, stable, and fast; and it is widely used in the encryption and protection of ordinary data.
Hash functions are the basis of crucial blockchain technologies such as hash lists, digital signatures, and Merkle trees. The calculation of the hash function is unidirectional. It is easy to calculate the hash value of the given data, but it is difficult to deduce the original data given the hash value. The generated hash value may be the same for different data, and this phenomenon is called a hash collision. Due to the one-way nature of the hash function, people who want to generate hash collisions can only continuously try random numbers through brute force. Therefore, the process of finding suitable random numbers to create hash collisions is often used as “proof of work” by the blockchain.
4.1.2. Hash List
In order to ensure that the block data cannot be tampered with, the hash value of the previous block is retained in other blocks except the Genesis block, and the blocks are connected with the hash value to form a hash list. A hash list is a one-way chain table in which hash pointers connect nodes. Any small change in the block data will cause a huge change in the hash value, so it is impossible to tamper with the data in the hash list.
In addition to a chained structure, some scholars have proposed a blockchain with a non-chain structure for dealing with different scenarios. Qi et al. proposed a cascade structure of blockchain to solve the performance problem of blockchains, which can accelerate the generation of blocks, expand the capacity of blocks, reduce the risk of bifurcation, and increase the security. Ribero et al. proposed a cryptocurrency called DagCoin based on DAG structure, the first blockchain-based on DAG. DagCoin has no fixed blocks; each transaction has its own proof of work. The system can achieve a speed comparable to Bitcoin. Despite the emergence of blockchains with non-traditional chain structures, such as DAG and cascade structures, mainstream blockchains are still dominated by chain structures.
4.1.3. Timestamps
To make transactions traceable, Bitcoin adds timestamps to blocks and calculates the block’s hash value by using the timestamp as the information in the block together. The timestamp is the total number of seconds from 00:00:00 GMT on 1 January 1970 to the present, and the timestamp proves that the transaction in the block must have existed at that time.
The current development of timestamps mainly revolves around improving timestamp accuracy and reducing errors. Zhang et al. proposed an accurate blockchain-based timestamping scheme which solves the problem of the inaccuracy of file timestamps caused by blocks due to the existence of time errors in timestamps. Ma et al. proposed an optimized blockchain timestamping mechanism that reduces the range of timestamps in blocks to an average of 10 min by serving external trust timestamps to the blockchain consensus.
4.1.4. Merkle Tree
Blockchain stores all the transaction records of history, and the data volume of historical transaction data will become larger and larger as time goes by. It is unrealistic to verify the existence of a certain transaction by traversing all the historical transactions. To enable fast transaction verification, all transactions in the block are stored as a Merkle tree.
A Merkle tree is a tree that connects parent and child nodes with a hash pointer. Bitcoin uses the simplest binomial Merkle tree to quickly verify whether a transaction exists in a block. The structure of a binary Merkle tree is shown in Figure 5. Each leaf node in the tree corresponds to a SHA256 hash of one transaction data within the block. The value of the parent node is obtained by concatenating the values of the two child nodes and then performing a hash operation. Hashing between nodes is performed repeatedly until the root hash value is reached, when the transaction Merkle root is generated. The Merkle root is used to detect any tampering with the transaction data in the block, so as to ensure the integrity of the transaction data in the block.
Mathematics 11 00101 g005 550Figure 5. Merkle tree.
4.1.5. Digital Signature
Bitcoin is a chain of digital signatures designed to prevent transactions from being forged or denied. A digital signature is an unforgeable string of numbers that can be generated only by the sender of the message. It proves the validity of the sender of the message. Digital signatures are often used to verify the integrity of documents or messages and are an effective way to make transactions non-repudiation and unforgeable. In the process of Bitcoin transactions, the owner of a Bitcoin transfers the coin to the next owner by digitally signing it with the hash of the previous transaction and the next owner’s public key and adding it to the end of the coin. The recipient can verify these signatures to validate the ownership of the coin.
Digital signatures are based on asymmetric encryption, first proposed by Rivest et al. . Asymmetric encryption has two keys, which are used in the encryption and decryption processes. The commonly used asymmetric encryption algorithms in blockchain are RSA, SHA256, ECC, etc. As a decentralized distributed system, blockchain needs to adopt a compatible encryption algorithm because the system configuration of each node is different. RSA algorithm is an international standard algorithm that is widely used and compatible and can be applied to different systems. RSA is the first algorithm that can be used for encryption and digital signature, and it is also considered one of the best public key schemes. Although RSA has the characteristics of strong compatibility and high security, RSA has the problems of long key and time-consuming cryptographic computation. Compared to RSA, ECC has the advantages of small key length, high-security performance, and small time consumption for the whole digital signature. Compared with RSA, ECC can use a shorter key to achieve comparable or higher security than RSA.
4.2. Storage Structure
During blockchain transaction execution, transaction data need to be packaged into blocks, and data writing is in high demand. In the process of blockchain transaction validation, it is necessary to quickly locate the block where the transaction is in and perform transaction validation. Based on the above functional requirements, blockchain often uses a combination of file systems and databases to store block data. The file system can facilitate the system to append data in the form of logs, and the database stores the index information of the file where the block is located, which can quickly find the location of the relevant transaction block and assist the system in query. Block data and block “undo” data are stored in the file system, and block “undo” data are the data for rolling back the blockchain when the system generates a chain fork. The database stores the state and index data of the blockchain, which are usually stored in key–value pairs for quick querying.
4.3. Ledger Pattern
A blockchain is a decentralized transaction ledger, and the ledger records the history of all transactions. There are two main types of mainstream ledger patterns: transaction-based and account-based.
4.3.1. Transaction-Based Ledger
The transaction-based ledger is used for digital currency transactions and is the ledger model used by Bitcoin. In Bitcoin, an “Unspent Transaction Output” (UTXO) is used instead of a centralized institution to clear transactions. In this transaction-based model, the user’s assets are not explicitly recorded directly in the system but instead extrapolated from the information in UTXO. In order to know how many bitcoins a user has in total assets, we need to calculate how many coins that user has in total in all accounts in UTXO. The transaction-based ledger can record each transaction, trace the origin of each fund, and protect user privacy.
4.3.2. Account-Based Ledger
The account-based ledger is suitable for blockchain platforms that support smart contracts, such as Ethereum and Hyperledger Fabric. The account-based ledger model is similar to a bank account, where the account balance information is recorded explicitly by the system, and the transaction balance and business status data can be easily checked. Take Ethereum as an example. Ethereum accounts are divided into external accounts and contract accounts. External accounts are controlled by public–private key pairs; the user locally generates a public-private key pair. The private key controls the account also called a normal account. The user creates a contract that returns an address, and the contract can be invoked as long as the address of the contract is known. The account-based ledger gives participants a more stable identity and better support of smart contracts.
5. Consensus Mechanisms
In the decentralized scenario, without the participation of the central node, a fair operation mechanism, i.e., a consensus mechanism, must be established among the nodes of the blockchain to enable each node’s unified and coordinated operation. Blockchain establishes a “trustworthy” network among nodes through the consensus mechanism so that each node can reach an agreement and achieve data consistency in the ledger of each node in the blockchain, which drives the continuous operation of the blockchain. The consensus mechanism of blockchain mainly solves the problem of who will construct the block and who will package the transactions into the block . The consensus mechanism is the core of blockchain technology, which determines the security, scalability, and distributed nature of blockchain system. The problem of consensus originates from the “biliteracy problem”, and later the “Byzantine general problem” was proposed. The biliteracy problem refers to how to achieve reliable communication over unreliable channels. The Byzantine problem refers to the problem of how to make a distributed system agree in the presence of malicious behavior (e.g., message tampering or forgery), and the nodes that can both fail and behave badly are called “Byzantine nodes”. Consensus algorithms can be divided into classical distributed system consensus algorithms and blockchain consensus algorithms, depending on the time. Classical distributed consensus algorithms include Paxos, Raft, and Kafka. According to the different mechanisms used to reach consensus, blockchain consensus algorithms can be divided into proof-based and voting-based. The proof-based consensus algorithms require “some competition” among nodes to decide the bookkeeping rights, such as proof-of-work (PoW) and proof-of-stake (PoS). Proof-based consensus algorithms do not require the strict identity of participants, and nodes are free to join and exit, so proof-based consensus algorithms are commonly used in public chains. The voting-based consensus algorithm is initiated by a node to reach consensus by having the whole network nodes vote on whether to agree to the proposal, such as practical Byzantine fault tolerance (PBFT) . The voting-based consensus algorithms require a high identity of participating voting nodes and control the joining and exiting of nodes by the access mechanism, so voting-type consensus algorithms are commonly used in consortium chains.
The consensus algorithm is the core of blockchain technology and a research hotspot of blockchains. The current research on consensus algorithms mainly focuses on two aspects: performance optimization and application. In performance optimization: Wu et al. proposed a hybrid consensus algorithm for blockchains that combines the advantages of PoS and PBFT algorithms. It reduces the number of consensus nodes to a fixed value through verifiable pseudo-random ordering and witnesses transactions between nodes. The improved hybrid consensus algorithm has excellent scalability, high throughput, and low latency, which is superior to the previous single algorithm. In applications: Biswas et al. proposed a proof-of-block-transaction (PoBT) consensus algorithm. The algorithm allows the verification of transactions and the reduction of computation time for blocks, improving the performance of the system in terms of security, computation, memory, and bandwidth. Fu et al. proposed a framework for evaluating consensus algorithms to provide guidance for the selection of consensus algorithms in sundry blockchain application scenarios.
5.1. Pow
5.1.1. Overview
The proof of work (PoW) algorithm is one of the most widely used consensus algorithms in blockchain systems, and the Bitcoin system uses the PoW consensus algorithm. The PoW algorithm was first used for spam detection , and the core idea is to include in the email proof that a certain job has been completed (hence the name “proof of work”). Usually, the calculation of such proofs takes a few seconds, so this does not cause any difficulties for casual users. However, for spammers, this can take weeks to send millions of spam emails. Email recipients can easily verify if an email is a spam by proof of workload.
In the blockchain using the PoW consensus algorithm, nodes need to constantly search for a specific random number, which is usually required to be calculated by a hash function (e.g., SHA-256) to obtain a hash value starting with several zero bits. It can be verified that the average work required to compute the random number is an exponent of the number of required zero bits. Due to the one-way computation and irreversible nature of the hash function, the random number found by the node is easily verified. In the Bitcoin system, the first node to find a specific random number is given bookkeeping rights and 50 coins as a reward. Hence, the process of finding random numbers is also called: “mining”.
5.1.2. Advantages and Disadvantages
The Bitcoin system has been running smoothly since its launch in 2009 without any major failures, which is a testament to the effectiveness and security of PoW. In the PoW consensus, a node needs to control 51% of the computing power of the whole network to launch an attack. In the absence of a centralized node, the probability of a successful node attack is very low. Therefore, PoW consensus can effectively guarantee the security of the blockchain system. However, in PoW consensus, nodes constantly performing hashing operations will consume a large number of power resources, and blockchain chain systems using PoW consensus generally have serious energy consumption problems. In addition, the throughput of transactions in PoW consensus is very low. E.g., Bitcoin processes about seven transactions per second due to the limitation of block-out time and block size. This low transaction throughput makes it difficult to meet other application scenarios.
5.1.3. Improved Algorithms
PoEWAL (proof of elapsed work and luck) : The PoEWAL consensus reduced the energy cost of the consensus by adding a time limit to the PoW. The mechanism emphasizes consensus by solving problems partially rather than completely within a fixed time frame. By adjusting the size of a given time period, the resource consumption of block mining can be effectively reduced, and devices with low computing power can also participate in mining. However, the essence of the consensus is still to obtain more consecutive zero hash values through continuous hashing operations. There is a problem similar to PoW where nodes with high arithmetic power have a higher probability of successful mining.
The trust-based PoW mechanism : It can effectively solve the problem of high energy consumption in PoW consensus while ensuring the security of the blockchain network. By introducing the attribute of the node credit value, the higher the credit value, the lower the difficulty of node mining. Using a malicious behavior detection mechanism, the behavior of nodes is divided into positive and negative aspects, and positive behavior helps to increase the credit value of nodes. In contrast, negative behavior decreases the credit value of nodes. The positive aspect is expressed as the number of valid transactions calculated and verified by the node in the consensus process. In contrast, the negative aspect is determined by the node’s malicious behavior time and penalty coefficient, where the malicious behavior is divided into two types. One is the node’s lazy inaction in the consensus process. The other is the node’s double spending attack in the transaction. The system dynamically adjusts the penalty factor according to the actual malicious behavior of the node, but it will bring on an additional computational overhead for malicious behavior monitoring.
5.2. Pos/Dpos
5.2.1. Overview
The Proof-of-Stake (PoS) algorithm is designed to solve the problem of wasting a lot of resources by using PoW mining. Unlike PoW, which determines the bookkeeping right through the arithmetic power of nodes, PoS differentiates the bookkeeping right through the “equity” of nodes owning coins. The core idea of PoS is that in a decentralized network, the node with the largest equity will have a greater incentive to maintain the network. In terms of implementation, PoS introduces the coin age to dynamically adjust the mining level of nodes with different equity. The older the node, the lower the difficulty of mining it. Based on the appealing advantages of PoS, the PoS algorithm was first adopted in the blockchain platform peercoin, and Ethereum’s consensus mechanism was transitioned from PoW to PoS on 15 September 2022.
Although PoS solves the energy consumption problem of PoW, the performance is still not improved. In response to the performance problems of PoS, Dan proposed the delegated proof-of-stake (DPoS) algorithm . The topology of DPoS is shown in Figure 6. DPoS reduces the pressure on the network by reducing the number of participating consensus nodes and adding an election mechanism to PoS. As a variant of PoS, DPoS is similar to PoS in that the number of representative members is limited and elected by all, and the elected representatives participate in the consensus.
Mathematics 11 00101 g006 550Figure 6. DPoS topology.
5.2.2. Advantages and Disadvantages
PoS consensus can significantly provide the transaction throughput of the system and reduce the energy loss in the consensus process. However, PoS consensus has disadvantages such as poor fairness and ease of generating the Matthew effect. The use of coin age will make it easier for the node with more tokens to gain bookkeeping rights, shifting the power gradually to that node, decentralizing the degree of decentralization, and making fairness worse.
5.2.3. Improved Algorithms
e-PoS : In response to the possibility that PoS can lead to centralization and unfairness in blockchain systems, Saadd et al. improved PoS and proposed modular e-PoS. Compared with PoS, e-PoS can resist the power concentration of the network.
Ouroboros : Kiayias et al. proposed the first proof-of-stake-based consensus protocol with strict security guarantees. Ouroboros also employed a new incentive mechanism to incentivize “proof-of-stake” protocols, where honest behavior is an approximate Nash equilibrium.
5.3. Pbft
5.3.1. Overview
Practical Byzantine fault tolerance (PBFT) can tolerate Byzantine faults. The PBFT algorithm was proposed by Miguel Castro and Barbara Liskov in 1999. It improves the efficiency of the Byzantine algorithm and reduces the complexity from exponential to polynomial, making Byzantine fault tolerance practical. The PBFT algorithm can achieve 2f + 1 fault tolerance; f is the number of Byzantine nodes that can be tolerated; and 2f + 1 can ensure that the correct nodes in it send more information than malicious nodes. Therefore, the minimum number of nodes required by PBFT is 3f + 1 (the maximum number of fault-tolerant nodes is (n − 1)/3).
The PBFT algorithm is divided into five stages: request, preparation, preparation, confirmation, and reply. The process is shown in Figure 7. In the request stage, the client initiates a transaction request to the master node. In the pre-preparation phase, the master node verifies the message signature after receiving the request from the client. After the message signature verification is passed, it broadcasts the pre-preparing message to all the network’s nodes. In the preparation phase, the replica node verifies the message after receiving the pre-preparing information broadcast by the master node. If the verification is passed, the node broadcasts the prepare message to other nodes. In the confirmation phase, after receiving the correct prepare message from 2f other nodes, the node will enter the prepared state and send a commit message to other nodes. In the reply phase, after the node receives the commit message, it verifies the message, passes the verification, and waits for the commit message sent by 2f + 1 different nodes. After receiving the message, it will send a reply message to the client.
Mathematics 11 00101 g007 550Figure 7. PBFT consensus process.
5.3.2. Advantages and Disadvantages
The PBFT algorithm can realize Byzantine fault tolerance with polynomial complexity and reach a consensus in the presence of malicious nodes in the network so that the Byzantine fault tolerance algorithm can be applied in practical systems. However, the PBFT algorithm has problems such as high communication complexity, a fixed number of nodes, poor scalability and dynamics, and only being suitable for private chains or consortium chains. In terms of network resource consumption, the frequent broadcasting of messages by the system will also lead to high bandwidth consumption. When the number of participating nodes increases, network congestion will likely occur, resulting in system performance degradation. Regarding the number of participating nodes, the number of nodes in the PBFT algorithm remains unchanged, the nodes cannot enter and exit at will, and the number of nodes is fixed.
5.3.3. Improved Algorithms
Hot-Stuff : This algorithm was proposed by Abra et al. It improves the efficiency of the distributed consistency algorithm by making improvements to PBFT. The Hot-Stuff algorithm uses a parallel pipeline processing proposal, which is equivalent to combining the preparation and commitment phases in PBFT into one phase. In addition, Hot-Stuff uses linear view change (LVC), which reduces the communication complexity in view change.
RPBFT : In response to the problems of arbitrary master node selection, a high communication overhead, poor dynamics, and low efficiency in the PBFT algorithm, Li proposed the practical Byzantine fault-tolerant consensus algorithm (RPBFT) based on role management. The RPBFT algorithm divides nodes into three roles, manager, candidate, and normal nodes; and realizes the transition between roles through a reward mechanism and election mechanism. Each role has specific responsibilities, so the nodes do not need to restart the system during joining and exiting. Meanwhile, using a synchronous verification mechanism instead of the traditional view replacement protocol increases the node efficiency.
5.4. Discussion
The consensus mechanism is the core part of a blockchain. The traditional distributed consensus mechanism (PBFT) is not well adapted to the unique open environment of the blockchain, and the network connection is replicated between nodes. Therefore, traditional distributed consensus blockchain systems often employ various networking assumptions. However, reality often differs from our assumptions. Consensus mechanisms explicitly designed for blockchains (such as PoW, although its original purpose is not this, are still regarded as representatives of blockchain consensus mechanisms) often do not need to make various assumptions about the network and nodes. Thus, openness and decentralization tend to be stronger. In different application scenarios, the two have their advantages and disadvantages, and blockchain designers must choose.
6. Smart Contracts
Smart contracts are the core of blockchain 2.0 , represented by Ethereum smart contracts. They allow a blockchain to handle complex transactions not just limited to cryptocurrency ones. The concept of smart contracts was proposed before the emergence of blockchain, almost simultaneously with the emergence of the modern Internet. However, limited by the technological development at that time, smart contracts were not widely used until the emergence of blockchains.
Smart contracts are digitally established contractual terms that are self-verifying, self-executing, and do not require a third party. Compared to traditional contracts, smart contracts are more efficient, less costly, more secure, and free from “repudiation”. Smart contracts are designed to perform safely and efficiently without a trusted third party, which aligns with the “decentralized trust” of blockchain. The smart contract in a blockchain is essentially a piece of code that runs continuously, cannot be modified once deployed, and is executed automatically when a predefined condition is triggered. A blockchain enables reliable information exchange, value transfer, and asset management through smart contracts.
6.1. Development
Smart contracts were first proposed by American computer scientist Nick Szabo in 1995 . In 2009, the Bitcoin platform went online, supporting the use of Bitcoin scripts to manage transactions with the prototype of smart contracts. Bitcoin also represented the first generation of blockchain technology. In 2014, Ethereum introduced smart contracts and supported the creation of smart contracts in the Turing-complete programming language. In 2016, Kosba et al. proposed Hawk, a smart contract development framework that protects user privacy. In 2018, Kalra et al. proposed ZEUS, a smart contract security analysis framework. The framework provides an order of magnitude improvement in security analysis time compared to previous techniques. In 2020, Zheng et al. classified smart contract applications by comparing and analyzing typical smart contract platforms.
In summary, smart contracts are evolving towards easier development, higher security, and widespread application. Additionally, with the rise in blockchain technology, smart contracts will also receive more attention from scholars while developing rapidly.
6.2. Contract Languages
Smart contracts are deployed to blockchains, which requires the contracts to be strongly typed, as blockchains have valuable storage space. In addition, smart contracts should be easy to read and not misleading. Therefore, traditional programming languages such as C/C++ and Java do not write smart contracts very well. Programming languages for smart contracts have been born to meet the development needs of smart contracts.
6.2.1. Solidity
Solidity is a new language developed specifically for Ethereum smart contracts. It has a syntax similar to JavaScript and runs on EVM. Solidity is a statically typed programming language that supports inheritance, libraries, and user-defined types. It can be used to create voting, crowdfunding, blind auctions, and multi-signatures. It can be used to create a variety of contracts, such as voting, crowdfunding, blind auction, and multi-signature wallet. On Ethernet, solidity contracts are compiled into bytecode, written to blocks through special transactions, and eventually executed by other transactions driven by the Ethernet VM. Solidity is one of the most widely used contract languages today, but at the same time, solidity has seen many security vulnerabilities and corresponding attacks.
6.2.2. Vyper
To solve solidity’s security vulnerabilities, Vyper provides a smart contract language focusing on simplicity, suitability, and security , a contract-oriented Python programming language targeting EVM . Vyper has a very clean and easy-to-understand syntax, so it is almost impossible for developers to write misleading programs.
6.2.3. Daml
The DAML language is a domain-specific language specifically designed to encode shared business logic for simple, secure, and efficient applications. DAML is used for developing and deploying distributed applications in blockchain environments and is one of the best programming languages for smart contracts. Developers can use DAML to write applications quickly and concisely as an open-source programming language.
6.3. Platform Comparison
6.3.1. Bitcoin
In the Bitcoin network, users can write Bitcoin scripts to manage transactions. Bitcoin scripts are used to implement bitcoin transaction validation by checking a transaction’s lock script and unlock script. Bitcoin scripts are stack-based, non-stateful, non-Turing-complete scripting languages with no complex statements such as select and loop statements, and therefore, they have limited functionality. Bitcoin scripting reduces the complexity of the system while meeting the requirements of transaction needs. However, it also brings disadvantages, such as low flexibility and limited usage.
To allow Bitcoin to adapt to different systems, Bitcoin scripts are designed to be stateless so that a script can be executed similarly on any system. Suppose a script is validated on one system. In that case, it ensures that every other system in the Bitcoin network can also validate the script, meaning that a valid transaction is valid for everyone. A Bitcoin script is a sequence of actions for a transaction that describes what happens to the next person who wants to spend the bitcoins being transferred and will gain access to them, divided into locking scripts and transaction scripts. Bitcoin scripts have the makings of a smart contract.
6.3.2. Ethereum
For the first time in a blockchain system, Ethereum introduced smart contracts that support Turing completeness . Ethereum uses Solidity to write smart contracts. Solidity is a contract-oriented, high-level programming language created to implement smart contracts. In Ethereum, smart contracts deploy bytecode to the Ethereum network through transactions. Ethereum successful deployment generates a new smart contract account, executed by an Ethereum Virtual Machine (EVM). When deploying a smart contract, the contract code is first compiled into EVM bytecode by the SOLC smart contract compiler, and then a single transaction is used to create the smart contract. Ethereum smart contracts are Turing-complete, so in theory, users can write programs that do anything with them. It is easy to create contracts for voting, crowdfunding, closed auctions, multi-signature wallets, etc., using solidity, and they can meet most smart contract development needs.
6.3.3. Hyperledger Fabric
Hyperledger Fabric is a platform for distributed ledger solutions based on a modular architecture that is highly confidential, resilient, flexible, and scalable. Its main purpose is to support the pluggability of different components to the complexity and complexity of the economic ecosystem. Hyperledger Fabric typically deploys smart contracts in the form of chain code. In Hyperledger Fabric, the chain code is the business bearer and is primarily responsible for the specific business logic, i.e., encapsulating transaction definitions and processing logic into interfaces. Each chain code runs in a protected container (Docker), isolated from the running of background nodes. Hyperledger Fabric supports writing smart contracts in multiple languages, such as golang, java, and node.js, which greatly reduces the development threshold for smart contracts.
6.3.4. Eos
The Enterprise Operation System (EOS), a commercially distributed application blockchain operating system, is a new blockchain system developed by Block.one which aims to decentralize everything. As a new blockchain architecture , EOS provides a platform for smart contract development. It distributes storage designed to address scalability issues common in blockchain systems such as Ethereum and Bitcoin. EOS provides a decentralized application development environment with high transaction throughput through dPoS consensus and BFT consensus. Unlike Ether, which uses a virtual machine to execute smart contracts, EOS uses WebAssembly3, a portable, small, fast-loading, and web-compatible format, so users can write smart contracts in various languages as long as they can be compiled into WebAssembly3 (e.g., C++).
6.3.5. Avalanche
Avalanche is a new generation of public chain projects, and the main network was launched in September 2020. Avalanche is not a blockchain but a collection of blockchains composed of multiple subnets. The subnet has a special subnet consisting of three blockchains, the Primary Network. The three chains are the exchange chain (X-chain), platform chain (P-chain), and contract chain (C-chain). Each of the three chains has its functions, and they can be converted across chains, making it more convenient for users to take advantage of assets. The X-chain is responsible for the establishment and transferal of assets, and most users use this chain when transferring assets or trading assets. The P-chain is responsible for storing the data, information, and verification work on the chain. The C-chain is responsible for the functions of smart contracts. This chain is compatible with EVM, so it can be applied to most smart contracts. Thanks to its unique structure compared with traditional blockchain platforms, Avalanche has higher performance—it can achieve more than 4500tps—and is more scalable and secure.
6.4. Example
The following is an example of a money transfer contract to show the complete workflow of smart contract development, deployment, and execution. Suppose A wants to transfer money to B through a smart contract. The contract workflow is shown in Figure 8. First is development, where the business process of transferring money from A to B is written as smart-contract source code, and the source code is compiled into bytecode by a compiler. Next is deployment, where the compiled bytecode is deployed to the blockchain network via a single transaction. After consensus in the P2P network, the contract address is returned for contract invocation. Finally, when the deployed smart contract triggers an execution condition or is invoked to execute the contract transaction (e.g., deducting a specified amount from A’s account and adding a specified amount to B’s wallet), the result of the execution will be written to the block.
Mathematics 11 00101 g008 550Figure 8. Smart contract workflow.
In the process of transferring funds from A to B, the whole process is open and transparent without the intervention of a third party, and the results of the transaction execution are written to the blockchain and cannot be tampered with.
6.5. Discussion
The execution of smart contracts does not require the participation of a third party and can respond to user requests at any time, ensuring the fairness and efficiency of transactions. Before the contract is deployed, all the terms and execution processes have been formulated and executed under the computer’s absolute control, so there is no possibility of errors in the entire process. Once the contract is deployed, all content cannot be modified. If one party breaks the contract, it will be punished accordingly. Using smart contracts can save transaction fees charged by banks and service fees of intermediaries. In addition to the advantages mentioned above, smart contracts still have the following problems: security issues, as it is difficult for anyone to guarantee the complete correctness of the code, and errors cannot be modified; interface problems, as each blockchain has different forms of storage for digital assets; the issue of how to call smart contracts across blockchains to realize asset transfers remains to be researched.
7. Applications
From blockchain 1.0 to blockchain 3.0, blockchain technology has been flourishing. Blockchain technology has also been applied from the earliest cryptocurrency to a wider range of fields, such as cryptocurrency, healthcare, IoT, Security AI, and NFT. . The decentralized, open, and transparent characteristics of blockchain can also bring decentralized solution ideas to existing problems in some fields.
7.1. Cryptocurrency
Cryptocurrencies have been around since the 1990s but were not used and developed for various reasons until the emergence of Bitcoin made them widely known. Electronic cash (Ecash) emerged in 1990, changing the way traditional money works and allowing it to be traded digitally and anonymously over the Internet. In 1997, Back proposed the hashcash algorithm mechanism , which calculates a token through the CPU cost function and can be used as a proof of workload. In 1998, Dai proposed the electronic cryptocurrency system B-money, a distributed system that uses cryptography to control the currency for transactions, and first adopted the idea of decentralization to design cryptocurrency. In 2008, influenced by the global financial crisis, the international community began exploring innovative finance. Satoshi Nakamoto proposed Bitcoin in this context, which also marked the birth of Blockchain 1.0 technology. Satoshi Nakamoto combined a distributed system using cryptography from Ecash and B-money and a proof-of-work mechanism from Back and Finney to solve the trust and Byzantine problems. Bitcoin is a P2P form of digital currency. Unlike traditional currencies, Bitcoin does not have a central currency issuer, and the P2P network nodes work together to keep the system running. Bitcoin is also the most successfully used cryptocurrency to date.
Cryptocurrency is by far the most successful and well-known application of blockchain. Cryptocurrencies, represented by Bitcoin, were once synonymous with blockchain. It is foreseeable that even in the future when blockchains are widely used, cryptocurrencies will remain among of the most important blockchain applications.
7.2. Energy
Current energy trading methods are still dominated by traditional centralized trading, which suffers from inefficient trading, opaque trading information, and long settlement times; and distrustful and opaque energy markets have potential security and privacy issues. In addition, intermittent energy sources and microgrids are an important part of the energy supply, and the increasing amount of renewables in the energy system requires new market approaches to pricing and decentralized generation .
Compared to centralized generation and single -arket pricing strategies, using a decentralized blockchain to control generation and energy trading can better incentivize generation organizations, improve generation efficiency, and facilitate energy trading. Kang et al. proposed a localized P2P power trading system (PETCON) for local power trading among plug-in hybrid electric vehicles (PHEVs) based on consortium chain technology. In PETCON, electricity trading among PHEVs is resolved through an iterative double-auction mechanism that maximizes social welfare while protecting PHEVs’ privacy. Su et al. proposed a smart-contract-based energy blockchain system that enables secure charging services for electric vehicles by executing smart contracts. The experimental results show that the scheme has higher efficiency compared to other conventional schemes.
Blockchain technology will be applied more to decentralized energy management and energy trading in the future, and decentralized energy management systems can supplement the current centralized energy management system.
7.3. Healthcare
The current information systems of most medical institutions are centralized and stored independently, which makes it difficult to efficiently interconnect data among medical institutions and inconvenient for patients to seek medical treatment across institutions. Centralized information systems are also vulnerable to hacking and data leakage, compromising patients’ privacy.
Blockchain’s tamper-proof and verification features can ensure that patients’ private information is not leaked . Azaria et al. have built a decentralized record management system (MedRec) to handle electronic medical data using blockchain technology. The system provides a comprehensive, immutable patient log and is easily accessible. Using PoW incentives enables patients to participate as “miners” in maintaining the system’s security while allowing patients and providers to choose the release of metadata to facilitate medical research. healthbank, a Swiss global digital health startup, offers users a secure blockchain-based data management platform , where users can store and manage their health information data, and the sovereignty of the data is in the hands of the user. In addition, healthbank can act as a data trading platform where users can save data for medical research, and where users can receive specific financial compensation for the data they provide. hirtan et al. implemented a medical data-sharing system using Hyperledger Fabric, which can share important information about medical analytics among hospitals, medical clinics, and research institutions based on patient-defined access policies. The system uses a combination of public and private chains to protect user privacy. The private chain stores the user’s accurate ID information, and the public chain stores patient health information labeled with temporary IDs.
In summary, the use of blockchain to build a decentralized medical data management platform enables the sharing of medical data to facilitate medical research while ensuring the privacy and security of the data.
7.4. Internet of Things
IoT devices are found in various scenarios, such as cities, buildings, and homes. IoT combines various information sensing devices with networks to form a huge network to achieve interconnection of people, machines, and things at any time and place, allowing traditional devices to become intelligent and autonomous . However, the IoT still has issues such as security and privacy that hinder its widespread use.
A blockchain can establish decentralized trust in a distributed environment , which helps to overcome the security issues and privacy problems of IoT. Alphand et al. combined an object-based IoT security architecture and an ACE authorization framework. Their solution uses a blockchain to replace a single ACE authorization server. It enables smart contracts, handles authorization requests, and uses a self-healing key distribution scheme to achieve efficient management of the IoT. Li et al. proposed a multilayer, secure IoT network model based on blockchain technology, providing a wide-area network solution for the IoT. The model reduces the difficulty of blockchain deployment by dividing the IoT into a multi-layered decentralized network while ensuring the high security and trustworthiness of the blockchain. Pinno et al. proposed a blockchain-based IoT access authorization architecture that ensures the privacy and confidentiality of information collected by IoT devices. The architecture is compatible with many access control models used in the IoT today.
In summary, more and more blockchain technologies are being applied to the Internet of Things (IoT) to solve the privacy and security problems in the IoT. However, a blockchain consumes many resources, and IoT devices generally have little computing power and storage space, so the traditional blockchain is not directly applicable to the IoT.
7.5. Security AI
Thanks to the development of computing power brought about by cloud computing and the generation of many samples in the era of big data, artificial intelligence technology, represented by machine learning, has been developed and used increasingly. However, studies have shown that machine learning models are vulnerable to attacks that lead to privacy leaks, posing privacy and security risks.
Blockchain’s data are highly redundant and decentralized, which is ideal for storing and protecting important privacy data from data loss or privacy leakage caused by attacks or mismanagement of centralized institutions. In recent years, various scholars have researched how blockchain can be applied to AI privacy protection. Zyskind et al. implemented a decentralized personal data management system based on blockchain technology to ensure that users own and control their data. Additionally, they implemented a protocol that turns the blockchain into an automated access control manager that does not require a third party. Chen et al. proposed LearningChain, a decentralized machine learning system for privacy protection and security, and designed a distributed stochastic gradient descent (SGD) algorithm to learn general prediction models. Decentralized SGD uses a differential privacy-based scheme to protect the data privacy of each party. Qi et al. proposed a federated learning framework based on the consortium chains which can achieve secure and reliable federated learning without the need for a central model server. The federated learning framework can effectively protect model data privacy and prevent data poisoning attacks due to the noise-added differential privacy mechanism.
The blockchain can be regarded as a decentralized trusted database, replacing the centralized server to realize the data storage function required for machine learning and avoid privacy and security attacks on the central server.
7.6. Nft
A Non-Fungible Token (NFT) is a token issued according to the Ethereum ERC721 and ERC1155 standards. It has indivisible, irreplaceable, and unique characteristics. Through NFTs, all tokenized properties can be freely traded with customized values based on age, rarity, liquidity, etc. NFT is mainly used for games, artworks, domain names, collectibles, virtual assets, real assets tokenization, and other fields, especially artwork and games that have received great attention in the market. NFT has greatly stimulated the prosperity of the decentralized application market. According to data from the cryptoslam website, as of August 2022, the cumulative transaction volume of NFT has reached $39,245,668,068. Wang et al. conducted systematic research on NFTs for the first time, pointing out that the development of the NFT ecosystem is at an early stage, and related technologies need to be further developed.
7.7. Web 3.0
Web 3.0 is generally considered the next generation of the Internet, a decentralized Internet running on blockchain technology. In this environment, users do not have to create multiple identities on different centralized platforms but can create a decentralized universal digital identity system that can pass through various platforms. The most prominent feature of Web 3.0 is that it can not only realize the exchange of data but also realize the circulation of value . Web 1.0 data are read-only, such as Yahoo and MSN data. Web 2.0 data are read–write interactive, such as Facebook and Twitter data. Web 3.0 data are read–write interactive and owned and controlled by the creator; representative applications include Bitcoin, Ethereum, IPFS, etc. Web 3.0 is a new network infrastructure that integrates the traditional Internet, blockchain, programmable economy, etc. It is currently experiencing a blockchain, and its final architecture is uncertain, but the booming trend is unavoidable.
MARKETS week ahead: September 18 – 24Last week in the news
Financial markets were traded in a relatively mixed manner during the previous week. The highest impact on the market sentiment had increased prices of oil and ECB`s rate hike as well as US inflation figures for August. The US equity markets were traded in a mixed manner, ending the week in red, while EU markets ended the week higher, supported by a potential peak in ECB rates. The crypto market managed to end one week in green, after three losing weeks. Bitcoin was last traded above $26K, Ether is still holding above $1.6K.
The crucial event of the previous week was the ECB meeting, where rates were further increased by 25 basis points. It was a 10th consecutive rate hike amid surging inflation within the Euro Area. In a n after-meeting speech, ECB President Lagarde commented that rate hikes have peaked with the latest increase, but they will stay at elevated levels in order to contribute to the “timely return of inflation to the target”. The ECB also lowered their economic growth projections from 0.9% to 0.7% in 2023 and from 1.5% down to 1% in 2024. Markets reacted in a negative manner, pushing the euro to a three-month low against the US dollar. At the same time, the EU equities rallied after the decision, where higher gainers were companies within the household goods and auto industry.
The second important event during the previous week was related to surged oil prices to the highest yearly level, which were traded above $90/barrel. Analysts are noting a high probability that the price might easily reach $100 in the coming weeks. Some two weeks ago Saudi Arabia noted their intention to continue with decreased oil output by 1 million barrels per day at least till the end of this year. Other OPEC members also followed the path of Saudi Arabia. This increased concerns of markets over possible tight-supply over the next months. The International Energy Agency issued a warning over potential “substantial market deficit” in Q4 this year. Surging oil prices would most certainly put additional pressures on monetary authorities of the western countries, in their efforts to fight inflation, as well as on further economic growth.
The crypto exchange company Bybit said that it is searching the ways to continue with its operations in the United Kingdom. The UK regulator extended the deadline till October for crypto companies operating on the UK market to register their operations with the Financial Conduct Authority. Some companies operating with crypto assets like Luno and PayPal halted their digital assets operations in the UK as a result of this regulation.
The Standard Chartered bank started operations of its crypto firm Zodia Custody in Singapore during the previous week. Zodia Custody represents the first company owned by banks to start its operations in Singapore. As noted by the company, its goal is to expand further within the Asia-Pacific area in order to position for the increasing demand from institutions for custody of digital assets.
Crypto market cap
During the previous week markets were mostly oriented toward the news related to ECB rate hikes and its future monetary moves, as well as, with increasing concerns over surging oil prices which might curb efforts of monetary authorities of western countries to fight inflation. Current market sentiment is showing that rate increases in both EU and US have peaked, increasing the potential of rate cuts in the future. This brought back sentiment for allocation of funds into riskier assets, like Bitcoin. Total crypto market capitalization bounced back during the previous week by 1%, adding total FWB:11B back in the market cap. At the same time it should be noted that Bitcoin only increased its cap by FWB:13B , which means that this coin was a major driver behind the weekly total market cap increase. Daily trading volumes were modestly increased to the level of SGX:43B on daily basis, from $28B from the week before, however, it still holds at relatively low levels for the crypto market. Total crypto market capitalization increase since the beginning of this year currently stands at level of 37%, where it has added total $280B to the market cap.
It was a mixed trading week on the crypto market. Although total crypto market capitalization was increased by FWB:11B , only Bitcoin brought back to it FWB:13B on a weekly basis, increasing its value by 2.5%. Bitcoin Cash also gained 7.7% in value during the week. For the second week in a row Maker was gaining more than 10% in value, adding 10.7% during the previous week. Tron had a good performance, through increased value by 9%, while Zcash gained 5%, same as Filecoin. Monero and Stellar also managed to gain 3.1% and 5.1% respectively. On the opposite side were coins that finished the week in the red zone. Few of them were Polkadot with a loss in value of almost 7%, Miota was down by 4.5% Polygon and OMG Network lost around 3% both.
Majority of other coins were traded flat on a weekly basis. For the second week in a row there has been increased activity when it comes to coins in circulation. Rarely seen, but Bitcoin added 0.1% to its total circulating coins. Among other coins, significant weekly changes were with XRP, with an increase of 0.4%, LINK added 3.5%, Filecoin was up by 0.8% and Solana surged its circulating coins by 0.6% on a weekly basis. At the same time, Polkadot decreased its coins in circulation by 4.8%.
Crypto futures market
The crypto futures market continues to be divided in opinions when it comes to future prices of BTC and ETH, as it is following the sentiment from the spot market. During the previous week BTC gained in value, which was fully reflected in BTC futures prices. The short term futures were traded higher by more than 2% on a weekly basis, while the longer term ones were traded higher by more than 1.5%. Futures maturing in December this year ended the week at price $26.915, which is almost 1% higher from the end of the week before, while those maturing in December next year managed to move 1.67% higher on a weekly basis, ending the week at price of $29.775. The $30K level seems back in the spotlight of the market for one more time.
At the same time ETH futures were traded on a negative side. Short term futures were last traded around 0.7% lower from the week before, while long term ones closed the week around 1.5% lower. Futures maturing in December this year were closed with a price $1.664 or 0.12% lower from the end of the previous week, while those maturing in December next year were last traded at $1.773 or 1.5% lower from previous week. The price also managed to drop below $1.8K level for one more time. Such developments are showing that the market continues to be unsure regarding the prospectus for ETH in the future period.
That is what we are playing for in the cycleTotal market cap to reach around 7 Trillion at the end of 2025. That is roughly an 8x from here. That doesnt mean that everything will go 8x evenly. As always you are going to have coins that die/ do nothing/ go down. And coins that go crazy.
Total Update on TOTAL. #TOTAL CRYPTOCAP:TOTAL Looking at the Weekly bearish rotation with 12/26 emas cross, hanging on for dear life on Day Yellow support. Next, Stop a double bottom at My weekly Orange target at 879.B #crypto #CRYPTONEWS #cryptocrash #cryptomarket CRYPTOCAP:BTC #BTC
📈 The Cryptocurrency Market | Growth OpportunityThe Cryptocurrency market has been seeing some choppy action, we can see some weakness, many shakeouts, corrections and retraces... We focus mainly on the Altcoins.
As a new bullish wave is approaching the market, this is a great time for a friendly reminder; Retraces and corrections are nothing more than a great opportunity to buy-in, rebuy and reload.
✔️ Right now things might look bad because Bitcoin has been dropping for almost two months.
✔️ Right now things might feel down because many Altcoins hit new lows...
The thinking will be completely different in the coming months. When looking back, you won't be feeling and thinking that things were bad in these days, you will be thinking that we had such great prices and somehow you missed the train.
It is hard to be a contrarian at the right time.
It is hard to buy red.
But to sell green you need to buy red.
To have a great entry prices must be low, if you wait for hype to buy, you might end up buying at the top.
While there can be some waiting now it can never be longer than buying at the top of a bullish wave. If you buy at the bottom or near support, you can simply wait. If there is a delay, think long-term.
If you buy at the top, even if you wait long-term you will give up at the bottom and when you sell everything goes up.
✔️ What I am trying to say is that the best time to buy is when prices are low and near support.
The best time to sell is when prices are going up.
Bitcoin is not going up now, so we have a buy opportunity right in front of us.
This is not financial advice.
Make sure to do your own research because when trading, buying/selling any asset, there is always risk involved. We are not responsible for your action.
If this information does not resonate, you can just ignore it and move on.
If you find this information useful, feel free to boost, comment and follow!
Thanks a lot for your amazing support throughout the years.
We are here for the long-term. The market moves in waves; up and down, up and down... It's been down, soon it will be up.
Namaste.
MARKETS week ahead: September 11 – 17Last week in the news
Another losing week on the equity markets and another flat one on the crypto market. This week was marked by surging commodities prices, which left its mark on the market sentiment. The further inflation fears are again active, as Saudi Arabia announced oil production cuts, while gas prices surged by 10% in the EU due to union strike in the largest gas production facility in Australia. SPX is ending the week below 4.500 level, BTC continues to hold above 25K support line, while ETH manages to stay above $1.6K.
The previous week put commodities back to the spotlight of the markets. Namely, it started with an announcement of Saudi Arabia that the country will extend its 1 million barrel daily voluntary oil production cut. Decrease in production will last at least till the end of this year, and will be reviewed on a monthly basis. Few other OPEC nations will also join Saudi Arabia with their cuts in production till the end of this year, which is a silent agreement outside the OPEC+ agreement. Highest Brent crude oil price reached was $90/barrel after the news was announced. Such a news was also perceived negatively across markets, considering that it puts into jeopardize efforts of western countries officials to fight inflation. Further increase in oil prices might imply higher inflation and probably more rate increases in the future.
At the same time with the surge of the oil prices on the markets, came the news that gas prices in the EU jumped by 10% due to the strike in the major LNG facilities in Australia. The unions are currently in negotiations with the US energy company Chevron over jobs and salary conditions. It is expected for decreased gas production to be prolonged during the week until the agreement is made between the company and the work union. The EU economy is struggling with both inflation and decreased economic output, in which sense, increased gas prices during the winter period might further hurt the EU economy.
In light of the dozens of filings with SEC for the first spot BTC ETF, during the previous week ARK Invest and the crypto investment firm 21Shares filed for the SEC`s approval for the first spot ETH exchange traded fund. This filing counts among the first ones with the aim to invest in ETH instead of BTC. Although SEC recently postponed its decision on BTC ETF`s for October this year, the decision of Ark Investment to file for ETH ETF was supported by the Grayscale`s win of a lawsuit against SEC after SEC refused to provide green light to Grayscale for a conversion of its Bitcoin Trust into an ETF.
Reuters is reporting that HongKong digital asset financial services firm HashKey Capital will invest $100 million of its funds into altcoins. BTC will take less than half of these funds, while ETH and two other altcoins will take the rest of the funds. A decision was also supported by Hong Kong`s clear regulation on digital assets, putting it as a world`s leading crypto hub.
Crypto market cap
Previous week was the one with commodities in focus, while other market events were more or less put aside. The increasing oil prices caused by Saudi Arabia's announcement of continuation in decreased oil output at least till the end of this year, impacted the oil prices to go as high as $90/barrel. This news was not well perceived by financial markets as expectations on further increase in inflation emerged. If the oil market does not calm down in the coming period, it might imply further rate increases by central banks in order to fight inflation. Regardless of developments on the oil market, and investors’ concerns, the crypto market slowed down further during the previous week, losing modest 1% on a weekly basis or $7B in nominal value. Currently this market is set to react to any news related to SEC`s moves on BTC and ETH ETF`s applications which might impact further flat moves in the coming period. Daily trading volumes reached their lowest levels since December last year, moving around $28B on a daily basis. This is also a significant drop from $60B traded during the week before. Total crypto market capitalization increase since the beginning of this year currently stands at level of 35%, where it has added total $267B to the market cap.
During the previous week the crypto market was performing in a mixed manner. Major coins were on a losing track, while several altcoins performed relatively good on a weekly basis. BTC lost $3.2B in market value or 0.65%, while ETH was down by 1% with a loss of $2B in its market cap. XRP was another coin with a drop in value of 3.5% or almost $1B. In a relative terms, other altcoins which finished the week in red were ADA with a drop in value of almost 2%, Litecoin was down by almost 3%, Polkadot decreased its value by 5%, while Uniswap was down by 5.3%. On the opposite side were several altcoins with relatively good performance, like Maker, which was up by around 10%, Miota was winner of the week with an increase in value by 19.5%, OMG surged by 6.6% , while LINK and Dash were up by more than 3%. It seems that some funds flows occurred from major coins toward the several altcoins during the previous week. There has been some increased activity when it comes to the coins in circulation. For the first time in many months, BTC has increased its circulating coins by 0.1% w/w. Solana and Filecoin had an increase in coins in circulation by 0.7% both, while Monero managed to add even 3.3% to its total circulating coins. Such activity in new coins on the market has not been recently seen, especially taking into account significantly decreased daily trading volumes on the crypto market.
Crypto futures market
The crypto futures continued their downtrend for the third week in a row. Both BTC and ETH futures finished third week in red on the CME. BTC short term futures were trading around 1.5% lower from the week before, while the long term ones were down by 0.7% on average. Futures maturing in December this year were last traded down by 2.13% w/w ending the week at price of $26.420, while those maturing in December next year were traded down by 0.7% and closed the week at price $28.940. This was a drop from the $ 29K level, traded during the week before.
ETH futures performed in a similar manner. Short term futures were down by 1.6% on average, while long term ones were down by almost 1% on a weekly basis. December 2023 was down by 1.7% and ended the week at price $1.665, while December 2024 was down by 0.95% with a closing price of $1.776. This was a further decrease from the $1.8K level for ETH. At this moment expectations of the market for both BTC and ETH are not positive.
Continuation of the bear market in cryptoJudging by the latest news and the technical picture in general, the bear market will continue for at least another year or two. Right now we are in the middle of a flat bear market and with a high degree of probability we will reach the level of 700-800B by the end of this year. Ethereum should retest the level of $900-1000, but Bitcoin may not go much below $20,000, because it looks much stronger than all other altcoins.
CRYPTO TOTAL MARKET CAPThis would be a prolongued catastrophic draining and patientce/willpower to live outcomes be.
Slow grind of a 3 wave move just to have a nother sharp drop in 3 waves to kill the current lows and run all the stops, create blood on the streets and to make people say that the crypto is dead AGAIN....
One of the potential counts...
Crypto Total Market Cap BreakdownWith Bitcoin & Ethereum breaking down, it's no surprise to see total market cap doing the same. A rejection at key overhead resistance is never good. Being below the 3-year ma and Ichimoku Cloud is never good either. The path of least resistance is currently to the downside. There simply isn't enough weight of evidence to turn bullish at this point. I know there are a ton of fundamental reasons to be bullish. An unbiased analysis of the chart evidence tells us a different story though. Be careful out there.
total cryptoTotal has faced a heavy fall and will fall in the near future. Everything is clear in the picture. It has formed two negative patterns, both of which are very strong patterns
#TOTAL MARKET CAP ANALYSISThe Total market cap is moving in a symmetrical triangle. Volume is very low in the market. MACD is in the neutral zone.
The Ichimoku cloud is acting as resistance. We've to keep an eye on a solid breakout or breakdown of the triangle for short-term direction confirmation.
Crypto Total Market Cap: $874BThe crypto total market cap is on the edge of fall.
Let's see where it goes.
Total could drop hard if it breaks 1T
After retesting the recent high in the 1.2T zone during mid-summer, the Total Crypto Market cap has begun to decline and has dropped to the 1T zone support level. The rise on August 23rd was, in fact, only a spike, and the bulls were unable to sustain their gains. Now, we find ourselves once again near the support level.
Considering the inability to achieve a new high in the summer and the subsequent drop to this horizontal support, I'm feeling very pessimistic about the future. If we break below this support, it will expose the next level at 870, but to be honest, I'm more focused on the possibility of a test of the 750 low.
MARKETS week ahead: September 4 – 10Last week in the news
Equity markets started September in a positive territory, erasing some of the losses incurred during the previous month. Treasury yields slowed down on reported US unemployment figures, while the crypto market was supported by the Grayscale`s lawsuit win against SEC`s after the regulator denied its application for BTC ETF. Bitcoin is ending the week close to $26K, while ETH manages to hold above $1.6K.
The crypto market has been supported during the previous week with the news that the US Court of Appeals ruled in favor of Grayscale in its lawsuit against the US Securities and Exchange Commission, after the SEC has denied Grayscale`s application for conversion of company`s Bitcoin Trust into an Exchange Traded Fund. Such a decision is important in a manner that it might support other companies which have filed with SEC for the first BTC ETF, to gain approval. This is at least per market expectations. However, the last word is with the SEC, so it might be too early for higher optimism. As the news was published, BTC surged by more than 7%, while other major coins also gained in value.
The US Securities and Exchange Commission delayed to issue a response to all applicants for spot BTC ETF`s, including BlackRock, WisdomTree, VanEck, Valkyrie Digital Assets and others. As per information provided, such a decision could be expected to be brought up in October this year. One of the rationales for such a decision is expectations to have adequate public feedback on applications. Bitcoin dropped more than 4% on this news.
The US banks continue to struggle with regulation, opting for their survival of current unfavorable economic conditions. In their latest call to regional banks, the US regulators unveiled plans by which regional banks, with at least $100 billion in assets, will be forced to increase their capital through debt issuance in order to strengthen their position. The aim of such a decision is to protect depositors in case of some further difficulties faced by banks in the US. Analysts perceive such a government move as a negative, considering that it is going to increase costs of conducting business for banks, which are already struggling to sustain their profitability and capital levels.
Paolo Gentiloni, the European Commissioner for economic affairs, requested CNBC journalists not to call the current state of the EU economy a “recession”. He rather preferred the wording of “double crisis”. The double crisis refers to geopolitical impact and “subsequent economic hit” to the EU. As per IMF estimate, the Euro Zone ended 2022 with GDP growth of 3.5%, while expected GDP for this year would account to 0.8% and 1.4% in 2024. At the same time Gentiloni is certain that the Euro Area can avoid a recession.
Crypto market cap
Previous week was a bit volatile for the crypto market considering two important news which hit the market. Both were related to the probability for the first spot BTC Exchange Traded Fund to see the light of the day. First the market was thrilled with the court decision which ruled out in favor of Grayscale, a leading crypto asset management fund, in its lawsuit against SEC for denying the company to convert its Bitcoin Trust into an Exchange Traded Fund. The market perceived positively such a court decision, increasing the probability that the SEC might finally approve the first spot BTC ETF. However, the optimism was soon reverted by the SEC`s decision to postpone the response to all applicants for spot BTC ETF for October this year. Currently the waiting list includes names like BlackRock, WisdomTree, VanEck, Valkyrie Digital Assets and others. On this news, almost all previous gains on the crypto market were erased. Total crypto market capitalization remained flat for another week in a row. Compared to the week before, total market cap was down by $5B, ending the week at a level of $1.025 trillion. Daily trading volumes increased a bit during the week, moving around $60B on a daily basis. This was an increase in volumes from previous week`s $43B. Total crypto market capitalization increase since the beginning of this year remained flat at level of 36%, where it has added total $269B to the market cap.
Crypto coins were traded in a mixed manner during the week. Major coins were mostly on a losing side, while several altcoins had quite a good performance. BTC lost $2B in value or 0.43%, while ETH was down by 0.6% losing more than $1B in value. XRP also finished the week in red, down by $1B or 4.2% w/w. Among other altcoins some of the highest drops in value were with Stellar, which was down by more than 7%, Uniswap dropped by 4.5%, Solana was down by 3.2%. There have been several altcoins with relatively good performance, like Bitcoin Cash, who managed to increase its market cap by 5.15% w/w. IOTA was up by an incredible 9.7%, OMG Network also had a good week with an increase in value of 8.3%. The winner of the week was Maker, which managed to surge by 12% in a single week. As for coins in circulation there has not been significant changes, except for Polkadot, which increased its circulating coins by 5.7% on a weekly basis. Filecoin`s circulating coins were up by 0.5%, while Stellar and Solana also had an increase of coins in circulation by 0.2% both.
Crypto futures market
The crypto futures market has stabilized a bit during the previous week, after a strong downtrend in futures prices since three weeks ago. Short term BTC futures were traded around 2% lower from the end of the week before, while long term futures remained relatively flat on a weekly basis. Futures maturing in December this year, ended the week at price $26.655 without significant change from the previous week. At the same time, December 2024 was last traded at price $29.285, also without significant change on a weekly basis.
ETH short term futures were traded down by 1.5% on average, while there has not been significant changes in prices for longer term futures on a weekly basis. December 2023 ended the week at $1.666, down by 1% from the previous week, while December 2024 was last traded at $1.800, almost flat from the week before.
Total analysis📌📊Total
✅Well, as we said on August 17th and with the emphasis we had on the index falling, this happened and even the possible area for the market reaction was completely engulfed and reacted to the initial area of the uptrend of the index.
❗️Currently, if the index has strength and continues the uptrend, it will continue until the level of 1.116.
✅The possibility of 3 drives of the market movement in the 4-hour time frame is not far from the mind, which causes the supply area to gain more strength, which is indicated in the photo.
#total
Navigating the #TOTAL Market Cap: A Glimpse into Crypto's Future💎The overall health of the cryptocurrency market can be gauged by examining the #TOTAL Market Cap, making it an essential chart for traders and investors. Delving into the #TOTAL weekly chart, the long-term perspective remains optimistic. Notably, the downtrend trendline representing the average price has been breached, accompanied by the formation of a new Higher High. Such developments hint at a potential transition from a bearish to a bullish trend.
💎Post-breakout, the market entered a consolidation phase lasting four months. During this period, the price oscillated between the 1.235T resistance and the 1.000T support. Currently, #TOTAL is undergoing a retest of the significant 1 Trillion mark, which aligns with the Volume Profile support, reinforcing its importance. If this Demand Zone remains unbreached, we might be on the cusp of a substantial 60% surge, targeting the 1.6T resistance. The strength of this resistance is underscored by its alignment with the 327.2% and 38.2% Fibonacci retracement levels.
💎It's worth noting that making long trades now could be akin to catching a falling knife. Nonetheless, our objective at the MCP team is to highlight these pivotal market shifts. By doing so, we hope to empower you to discern bullish indicators promptly, ensuring you maintain a competitive edge in your trading decisions.
Double Trouble Ahead with Head and Shoulder PatternsThe crypto market is revealing a worrisome development - not one, but two head and shoulder patterns. The larger pattern has already experienced a breakdown, which paints a bleak picture for the crypto landscape.
This double whammy of patterns hints at a very bearish outlook for the crypto market. Stay cautious and keep a close watch on market developments.
Wyckoff Accumulation & DistributionThe Wyckoff Method, pioneered by Richard Wyckoff, a prominent figure in the early 1900s stock market, remains a powerful technical analysis-based trading approach. This article delves into the intricacies of the Wyckoff Accumulation and Distribution phases, fundamental to this method.
Who was Richard Wyckoff?
Richard Wyckoff, a highly successful American stock market investor of his time, stands as a pioneer in technical analysis. He transitioned from accumulating personal wealth to addressing what he perceived as market injustices, devising the Wyckoff Method to empower traders against market manipulation. Through various platforms like his own Magazine of Wall Street and Stock Market Technique, Wyckoff disseminated his insights.
The Wyckoff Method:
Wyckoff proposed that markets undergo distinct phases: Accumulation and Distribution. These phases guide traders on when to accumulate or distribute their positions, forming the core of the method.
The Wyckoff Accumulation Phase:
This phase materializes as a sideways, range-bound period subsequent to a prolonged downtrend. During this stage, significant players seek to establish positions without causing dramatic price drops. The accumulation phase comprises six integral components, each serving a vital role:
Preliminary Support (PS): As signs of the downtrend ending emerge, high volume and wider spreads surface. Buyers initiate interest, suggesting the end of selling dominance.
Selling Climax (SC): Characterized by intense selling pressure and panic selling, this phase represents a sharp price decline. Often, price closes well above the lowest point.
Automatic Rally (AR): Late sellers experience a reversal, driven by short sellers covering positions. This phase sets the upper range limit for subsequent consolidation.
Secondary Test (ST): Controlled retesting of lows with minimal volume increase indicates potential reversal.
Spring: A deceptive move resembling a downtrend resumption, designed to deceive and shakeout participants.
Last Point of Support, Back Up, and Sign of Strength (LPS, BU, SOS): Clear shifts in price action mark the transition into the range's start. A rapid, one-sided move signifies buyer control, often following the spring.
Wyckoff Distribution Cycle:
Following Accumulation, the Wyckoff Distribution phase unfolds. This cycle consists of five phases:
Preliminary Supply (PSY): Dominant traders initiate selling after a notable price rise, leading to increased trading volume.
Buying Climax (BC): Retail traders enter positions, driving further price increase. Dominant traders capitalize on premium prices to sell.
Automatic Reaction (AR): The end of the BC phase brings a price drop due to decreased buying. High supply causes a decline to the AR level.
Secondary Test (ST): Price retests the BC range, assessing supply and demand balance.
Sign of Weakness, Last Point of Supply, Upthrust After Distribution (SOW, LPSY, UTAD): SOW signals price weakness, LPSY tests support, and UTAD might occur near cycle's end, pushing the upper boundary.
Wyckoff Reaccumulation and Redistribution Cycles:
Reaccumulation occurs during uptrends, as dominant traders accumulate shares during price pauses. Redistribution, during downtrends, begins with sharp price rallies as short sellers capitalize.
Dominant traders strategically enter positions during these rallies.
Wyckoff's Foundational Concepts:
Law of Supply and Demand:
Prices rise when demand is high and supply is low. Prices fall when supply is high and demand is low. Balanced supply and demand lead to stable prices.
Law of Cause and Effect:
Price changes are driven by specific underlying factors. Price rises result from accumulation phases, while drops arise from distribution phases.
Law of Effort vs. Result:
Trading volume should match price movement. Deviations signal potential shifts in market sentiment or upcoming opportunities.
The Wyckoff Method is relevant to all markets, including cryptocurrencies like Bitcoin, where supply and demand play a crucial role in influencing price movements.
TOTAL UpdateTOTAL is dump lower than i expected.
But still, i ain't believe that we're gonna trading below 1T, but if it's happen, i'll call it a fire sale.
Trade safely.
Crypto Market Cap (TOTAL1) – A Bigger PictureConfluence resides within the Dec 15–Dec 24 date range and sits at 542B.
Markets week ahead: August 28 - September 3Last week in the news
Major weekly event, a Fed Chair speech at the Jackson Hole on Friday left the markets relatively volatile, as well as the US Treasury yields. At the same time the crypto market was traded in a flat mode. Bitcoin is ending the week around $26K, while Ether manages to hold above $1.6K.
Major event during the previous week was the Jackson Hall symposium, and speech of Fed Chair Powell as of the end of the conference. The markets were waiting for his speech with high interest, considering many opposite standing points of both analysts and economists in the US whether the country will be able to avoid a recession in the coming period and if the Fed will start to cut interest rates somewhere at the beginning of the year ahead. Fed Chair Powell stressed that the ultimate goal of Fed's policy is bringing inflation down to 2% target and that the Fed might increase interest rates to the higher levels if inflation remains persistent. The policy will remain restrictive “until inflation sustainably slowing”. Since some progress has been made, the Fed will proceed carefully but flexibly from this moment.
Negative news for Binance continues as Mastercard decided to end its partnership with this company, and will no longer offer cards in Latin America and the Middle East for Binance-brand. Binance's card issuer in Europe was Visa, however, this company also ended the business relationship with Binance during July. As per publicly available information, the rationale for such decisions is currently ongoing regulatory scrutiny of Binance in both the EU and the US. The company noted that only a small portion of its users will be affected by this decision, as customers are usually using Binance Pay, a “ borderless and secure cryptocurrency payment technology designed by Binance''.
The U.S. Treasury department finally proposed amendments to the tax law, by which, crypto brokers will be differentiated from the traditional brokerage companies. The new amendments also address the question regarding user’s personal data, which these companies should gather. Namely, based on the proposal, crypto companies will declare their tax obligation on a new form – called 1099-DA. Miners are excluded from this new form. Amendments are currently open for a public view and discussion, while its final adoption could be expected by the end of this year.
The Monetary Authority of Hong Kong will further explore possibilities of the bond market tokenization. This decision comes after the Government issued $100 million of tokenized green bonds in February this year. Their aim is to dig further into potential for increasing efficiency, liquidity and transparency of the bond market.
Crypto market cap
After the final break to the downside two weeks ago, the crypto market remained relatively quiet, in anticipation of the Fed Chair Powell speech at the Jackson Hall conference. Generally, markets did not hear anything new from his speech; however, it brought some modest optimism to the equity markets. The bottom line is that there is still a way to go when it comes to inflation, and the Fed might increase interest rates even higher if inflation remains persistent. The crypto market remained relatively flat during the week. Total crypto market capitalization was increased by modest $1B, actually, without much change from the week before. Daily trading volumes modestly increased to the level of SGX:43B on a daily basis, from $35B the week before. Total crypto market capitalization increase since the beginning of this year remained flat at level of 36%, where it has added total $274B to the market cap.
Crypto coins were traded relatively flat during the week, with modest movements in prices of coins. There were almost equal numbers of coins that finished the week on a positive and negative side. BTC managed to gain $2.5B in its market cap, which is an increase of 0.5% on a weekly basis. ETH was shiny down by $1.1B or 0.5%. XRP was one of the major winning coins during the week, with an increase in market cap of $1B or 4%. Few other coins with relatively solid performance on a weekly basis were Tron, with a gain of 4.85%, Miota was up by 2.5% and Litecoin with a modest surge of 2.1%. Several coins finished the week in red, like Filecoin, which was down by 7.7%, Uniswap lost 6.7% in its market cap and Solana decreased its value by 6.5%. As for coins in circulation, there also has not been too much change. Tron was the one coin whose coins in circulation were down by 0.1%, while Polkadot increased the number of its coins in circulation by 0.2%.
Crypto futures market
Although the crypto spot market remained relatively flat during the week, the crypto futures market went through some changes in investors long term perception for both BTC and ETH futures. Analysts from JPMorgan were commenting on current open interest on the crypto derivative markets and noted that current unwind of long positions can be perceived as they are in the end phase. “As a result we see limited downside for crypto markets over the near term”, as noted by a JPMorgan analyst. If that is the case, then traders might hope that September will be a better month for cryptos, than it was August.
BTC short term futures ended the week down around 1% on average, but the longer term ones suffered a huge drop of around 7% on a weekly basis. During the first part of August and major downturn, BTC long term futures were holding pretty steady, however, this is the first week when December 2024 dropped below $30K levels, ending the week at price of $29.145. At the same time, futures maturing in December this year were last traded at $26.730, or 0.63% lower from the week before.
With ETH futures the situation is a bit different, considering that almost all maturities dropped by more than 5% on a weekly basis. Futures maturing in December 2024 were last traded at price $1.793 or 5.13% lower from the week before, while those maturing in December this year were also down by 5.30% ending the week at price $1.684.
Total Crypto Market Cap about to blow
-Here is a snapshot of above published Monthly chart (in case the thumbnail is yet again wildly distorted).
The decade long Wave 2 correction in Bitcoin is over. Unsuprisingly, the Elliot Wave count on the Total Crypto Market Cap is actually very similar (A Running Triple-Three). Just like on Bitcoin, Time plays a huge part in informing the above count.
Th weekly chart below provides much more detail, showing the completion of Wave Z (on a subwave level):
Similar to Bitcoin, there is easily discernable, Terminally 'messy' price action that is subsequently (post-constructively) confirmed by a strong reaction fully retracing the entire terminal impulse within ~ 50-60% of the time it took to form (60% is a better metric (says me (the greatest ever)). This is an easy count, as determined directly (there is no other count that even comes close).
Also similar to Bitcoin, the Terminal Impulse soldifies the Structure of larger Wave C as an Impulse (a :5). For those who have been following, this is an essential point to understand: It eliminates the possibility that Wave A of Z 'began late' (and no, it can not be Wave A of A as that would necessarily imply a Zig Zag correction is in progress that would have to be followed by yet another relatively long (in price and time) impulsive wave C of A of Z to new lows. In no way shape or form would this work Time-wise.)
More generally (EW aside), we just put in a right shoulder of an Inverse Head and Shoulders bottom pattern.
This is the beginning of the beginning, 9 months of quiet accumulation (while the general public completely forgot about Bitcoin) is over. Now comes the very early stages of the biggest rally Bitcoin has ever had. When we break the local high ~31k, short-term momentum traders will step in, looking to foolishly take profits in the 50-65k range. The sentiment of battered bears on social media will be feelings of relief that 'the next move is up' as opposed to a realization of what is brewing on the horizon. In fear of reprisal over wildly optimistic price
predictions of yesteryear, all anticipation and excitement will be cautiously tamed. Conditioned by 'fin twit' oriented analysis for the last few years, the vast majority of market participants will (in the short term) continue to see Bitcoin/'Crypto' alongside the wider markets, appropriately dazed into the hypnosis of strong correlation...until 'it' happens.
The 'it' (shattering of this correlation) will come above ATH's. The first pull back (really consolidation) after we test/break the ATH will mark the first stage of 'ramping' up, with every new higher low becoming steeper and steeper.
Here we go.
P.S. I did not specify another market (in terms of correlation) intentionally. Bitcoin, and the wider cryptocurrency market, should not be strongly (positively) correlated to *any other market. It is entirely an artefact of 'Market Makers' in traditional markets and those aligned with their interests. There is no future where this level of correlation is maintained and Bitcoin succeeds. Put differently: It is enabled via the siphoning off of capital that would have otherwise come into Bitcoin (into Bitcoin derivatives), which was basically the entire bull run to $65k.
