Study: How to predict pump-and-dump schemes

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Two scientists from Imperial College London have taken a close look at the process of pump-and-dump schemes. Based on their findings, Jiahua Xu and Benjamin Livshits developed a prediction model based on machine learning that significantly increases the chances of “successful” participation in a pump-and-dump event.

Who Bitcoin trader doesn’t know this:

At the crypto market, some shitcoin that nobody had on the screen before suddenly goes through the Bitcoin trader ceiling for no apparent reason. As soon as you as a Bitcoin trader start to find out more about the coin (maybe it’s a project with substance?), you can see the course slipping back into red in the corner of your eye. This FOMO-causing course behaviour is mostly based on a fiddling around. This fiddling is called pump and dump.

A pump and dump is about consciously and in a coordinated manner driving a price upwards (“to pump” = inflate, inflate) in order to sell the asset immediately after reaching the highest level with a clear profit (“dump” = throw it away, unload it). Although pump-and-dump schemes are significantly older than Bitcoin & Co., they fall on particularly fertile ground in crypto space. And this despite the fact that the initiators of the pump and the dump benefit first and foremost.

In their paper “The Anatomy of Cryptocurrency Pump-and-Dump Scheme”, Jiahua Xu and Benjamin Livshits have explored this form of market manipulation in more detail. They have found that comparably simple machine learning models can make useful predictions about which coin will be pumped. They observed over 220 pump and dumps between July and November 2018.

Crypto trader Choice: Cryptopia

More than two thirds (67 percent) of the crypto trader manipulations took place on the Cryptopia crypto exchange, followed by Yobit (18 percent), Binance (eleven percent) and Bittrex (four percent). In every fourth crypto trader case there has already been a pump of the respective coin at the corresponding exchange. The authors also note that Binance has significantly more users involved in pump-and-dump activities due to its large reach. However, the corresponding price increases of the pumped coins were significantly lower at these trading locations than at Jobit and Cryptopia. The reason lies in the listing of coins with a low market capitalization, which are sought in vain on the large crypto exchanges.

“Pump-and-dump organisers who prefer Cryptopia are attracted by the wide range of low market capitalisation coins listed on the stock market. It is not surprising that small coins are more likely to be associated with fraud, leading to a possible delisting,

so the two authors.

Hold on for dear life: 5 sentences to get a Hodler on his toes

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Hodl: In the Bitcoin community it is Meme No. 1. The mantra is stoic expression for the deep conviction about Bitcoin’s assertiveness. Because being Hodler is an obligation; selling the crypto positions is out of the question. The only thing allowed is to buy back. At least this is how it is written in the famous Hodler Manifesto. The term once Senior Member on “GameKyuubi” has coined the term, which, after “some whisky”, was apparently no longer able to hit the “hold” right into the keys. In the semi-coherent post, he writes trading off that the market is not timable anyway. The rest is history.

It’s high time to dedicate an article to Bitcoin formula Meme No. 1.

“Shit, Bitcoin formula crasht!” For Hodler, falling prices mean one thing in particular: shopping time! Instead of falling into panic, the Hodler von Welt is happy about the discounts on Bitcoin. Because Hodlers are not here for the quick profits, they hodl because they know: winter follows spring.

HOLD on bitcoin warriors!!
Watch this video on YouTube.
“You should sell real slow.”
Hodlers don’t sell. Never, never ever. They wait stoically for the time when they can do their daily shopping with Bitcoin.

In short: Bitcoin trader think long term

They don’t trade, Bitcoin trader hold. Hodling makes life easy, because even experienced Bitcoin trader often overestimate market timing. Anyone who dares in these dark times is welcome to take a look at our price index.

“Maybe Bitcoin Cash is the real Bitcoin after all.”
Hodlers are loyal to their currency. FOMO buying from rising stars in the crypto cosmos is taboo. Only purchases of the favourite currency are allowed. Hodling is a way of life, not an investment strategy. Once decided, Hodler no longer deviates from “her” coin. Exorbitant price gains of Rising Stars are demonstratively ignored, because the mean Hodler is confident: In the long run “my” coin wins.

ETH course analysis – Despite recovery on a descent

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The Ethereum price dropped to a low of EUR 168.15 (USD 200.85) this week, then rose again to stand at EUR 207.00 (USD 247.26).

The Bitcoin code fell during the week

A downtrend that started on September 12th led to a minimum of EUR 168.15 (USD 200.85) on August 15th, a level Bitcoin code has not had since the end of July. The first interesting short-term resistance after the current triangle pattern is EUR 228.43 (USD 272.85), the first important short-term support is EUR 206.51 (USD 246.67) and Bitcoin code is currently being tested.

The developments in China as well as further global considerations regarding the regulation of ICOs led Ethereum to continue the downward trend. For a short time a support was tested that Ethereum had not had for more than a month, but the price bounced off this support. The rebound allowed the price to rise above the downward trend of the week and has since moved sideways in a downward triangle pattern.

The MACD (second panel) is slightly negative corresponding to the sideways movement and the MACD line (blue) is below the signal (orange). Currently, the signal is testing the zero line, so it can be assumed that it also slips into the negative range.

The long-term price trend for the Bitcoin code

The analysis of the movements on the 60min chart speaks bearish language like this: Is Bitcoin Code a Scam? Read This Review Before You Sign Up!. A first important support is described and tested by the current Triangle Pattern. It is at 206.51 EUR (246.67 USD). Should this be breached, a breach of the support at 168.15 EUR (200.85 USD) described by the weekly minimum would mean a resumption of the downward trend. According to the resistance of the triangle Bitcoin code pattern, which currently stands at 209.25 EUR, exceeding 228.43 EUR (272.85 USD) would mean an end to the current sideways movement. Overcoming the weekly high of EUR 266.79 (USD 318.67) would be an indication of a sustained upward trend.

Let’s start by looking at the 240min chart to assess the medium- and long-term developments:

The events of the last two weeks have led to a trend reversal: In the medium term, we are in a downward trend, which could not be broken even by the slightly positive approaches we saw on the 60min chart. Accordingly, the price has fallen below the exponential moving averages for a week or two for some time now and has only tested them sporadically so far.

The MACD is negative according to these trends, but thanks to the already mentioned rebound at the support at 168.15 EUR (200.85 USD) the MACD line is above the signal – even if both lines are just approaching each other. The RSI is bearish with 43. In the medium term the situation is bearish. The supports are the same as on the 60min chart. The most important resistance is around 245.58 EUR (293.33 USD), a rise above this level would put an end to the current downtrend.

We see that with the weekly minimum mentioned above, not only the 50% Fib retracement level was tested, but also the bullish trend since May. The price increase achieved by bouncing off this support led to a test of the 38.2% Fib Retracement level. Unfortunately, this support could not be overcome, so that currently there is concern after a second test of the uptrend. The MACD is therefore negative – both the MACD line and the signal are below zero. The RSI rose slightly after a short drop to 30, but still at bearish 36.

Overall, the long-term forecast is bearish. The most important support is described by the 38.2% fib retracement level and stands at 228.41 EUR (272.85 USD). The most important resistance at the 50% fib retracement level is EUR 193.07 (USD 230.62).

Comparison: The money creation of Bitcoin and Euro

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In the cryptoscene, knowledge about how the Bitcoin is created is relatively widespread. But what about the Euro? How exactly is our legal tender scooped and what effects does this have? This matter is rarely touched in the world of crypto currencies. Therefore the cryptogel creation – the mining – is to be compared here with the way the euro was created.

Whoever deals with the Bitcoin will also deal relatively early with the topic of the emergence of the digital currency: By mining new blocks, Bitcoin is created, which goes as a block reward to the miner who was the first to calculate the new block. Far less known, however, is how exactly the euro is created.

In our everyday life it makes no big difference whether we store one euro in cash or in our account. For the banks and the state, however, one euro is not one euro: there are three different ways in which a euro is created.

For the Bitcoin news, one euro is not one euro

Coinage money is purely state money: it is minted and put into circulation by state mints. The Bitcoin news between the minting costs and the nominal value of the coins flows into the state coffers.

Paper money, i.e. banknotes, is printed by the central bank. The central bank then lends the money to the Bitcoin news commercial banks, which put it into circulation via the ATMs known to us.

The third form of money creation is a special case: the girl’s money. These are the digital Euros on our accounts. Giral money accounts for about 86 percent of the money in circulation in the euro zone, the largest share of payment transactions.

Bitcoin news is produced in three different ways

The creation of Bitcoin news: commercial banks can create 100 euros from 2.50 euros
This money is not produced by a state or public institution, but is put into circulation by commercial banks in the form of loans. So every time a loan is taken out, the bank creates new money. Although it cannot draw on an endless amount of financial resources, in order to generate 100 euros of bank money, it only needs about 2.50 euros of “central bank money”.

(The central bank can lend money to banks either in the form of banknotes or as digital “central bank money” – which is a special form of money).

The potential effects of a worldwide use of Bitcoin as a means of payment can of course only be speculated on. Nevertheless, the thought experiment will be dared here and possible advantages and disadvantages of Bitcoin and Euro, which are already anchored in their money creation, will be compared.

Security Token Offerings (STO): A Company Overview

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Are Security Token Offerings (STO) able to save the tarnished image of ICOs? In a regulated environment, “ICO 2.0” could bring about a revival of token sales, argues Sven Wagenknecht in a commentary on October 19. It’s time to take a closer look at a few of the projects.

The burst ICO hype of 2017 is still making waves. As was recently announced, the US Securities and Exchange Commission (SEC) formally summoned a large number of ICOs this year alone. Investigations are underway against the companies for violations of the Stock Exchange Act.

Time for an overview

STOs are a young phenomenon. Start-ups that make use of this funding are correspondingly rare. Using selected examples, we would like to draw attention to existing projects.

This raises the question of the future of the sale of tokens as a form of capital procurement for start-ups. As Sven Wagenknecht argued last Friday, 19 October, the ICO chapter is far from over even after the bubble bursts. In the form of regulated financial products, token sales could still be a viable way of raising capital. In a legally secure environment, STOs could finally bring institutional investors on board. This would be a milestone for the establishment of this form of corporate financing.

Glasses 24
First a company from Germany. Brille24 is one of the leading online opticians in Europe. The company advertises with modern AI applications, which are intended to handle the purchase of glasses entirely online. This includes a virtual fitting and an online examination of the eyes.

Token Sales not yet at the end

To further finance research and development, the company is planning an STO via Neufund. Each token is secured 1:1 by company shares. Since these are de facto securities, investors are entitled to dividends.

In the growth ranking 2017/18 of the online platform Gr├╝nderszene, mySWOOOP ranked 25th among the fastest growing tech companies in Germany. The re-commerce company specializes in the price-optimized purchase and sale of a large number of used goods. With specially developed software mySWOOOP guarantees the purchase and sale at best prices.

mySWOOOP also plans to issue company shares on security tokens via Neufund in order to enable investors to participate in the profits.

The Swiss company BlockState is dedicated to the digitization of financial products. Smart Contracts are used for the management of token-based assets. BlockState focuses on a “more integrative financial market”, as Michael Weber, founder of BlockState, puts it.

BlockState also uses the CTF15 to manage a kind of crypto ETF that investors can use to cover the 15 largest crypto assets, according to the company.

BlockState is also one of the first companies to launch its STO via Neufund. The tokens are intended to grant investors the usual shareholder rights here as well. We already reported on the BlockState STO in June.

In contrast to the STOs presented so far, BlockEstate does not enter into a partnership with Neufund, but with the STO intermediary Polymath. BlockState is a financial company focusing on the US real estate market. Accordingly, BlockEstate would like to use the hardcap of 50 million US dollars to invest in a broad real estate portfolio. The security tokens also represent company shares here, so they should be regarded as securities. The distribution from the profits should take place quarterly.

The token sale as a means of corporate financing is obviously not yet obsolete. On the contrary, if the regulatory authorities, above all the SEC, learn the right lessons from last year’s ICO bubble, token sales could experience a real revival in the form of STOs. After all, reasonably regulated security tokens should finally also attract institutional investors.