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⚡Gold's Strength Supports Bitcoin🪙

Croxroad

23 Oct 2023 — 6 min read

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🚦 Bitcoin Eyes $31K

Bitcoin (BTC) is on the rise, driven by positive signals from traditional assets sensitive to interest rates, such as gold. The cryptocurrency reached $30,797 in Asian trading hours on Monday, marking its highest level since July 15, according to CoinDesk data. Over the course of the month, Bitcoin's price has increased by 14%, while gold has seen a more modest gain of 6.7%. Notably, gold's price started rising a week prior to Bitcoin, partially due to increased tensions between Israel and Hamas and ongoing speculation about the Federal Reserve's plan to tighten monetary policy. These factors have signaled the potential for an inflationary economic environment, contributing to both Bitcoin and gold's recent performance.

According to Greg Magdini, the director of derivatives at Amberdata, interest rates are currently the primary driving force in macroeconomics. Interestingly, assets sensitive to interest rates, like Gold, are showing a positive trend, which he believes is a favourable sign for Bitcoin (BTC). Magdini pointed out that traditionally, increased government spending during times of war tends to be inflationary. Simultaneously, the Federal Reserve is hinting at a potential pause in raising interest rates, despite the U.S. economy's continued strength. These factors are contributing to the upward momentum in both gold and BTC, especially with optimism surrounding Bitcoin exchange-traded funds (ETFs) in the market. Magdini also highlighted that BTC remains an attractive asset due to its perfect portability, its role as an inflation hedge, and its status as a government-agnostic store of wealth. The potential approval of a Bitcoin ETF, as well as developments in the Ripple lawsuit, collectively create a very bullish outlook for Bitcoin as a whole, in his opinion. Analysts at Blockware Solutions shared a similar perspective, attributing the rally to the possibility of an ETF tracking the spot price of Bitcoin being approved.

Investors are reacting positively to Bitcoin's price behavior, which is displaying constructive patterns as they seek refuge in the Bitcoin network during times of economic and geopolitical uncertainty. Additionally, they are speculating on Bitcoin's future, particularly in anticipation of the approval of a spot Bitcoin exchange-traded fund (ETF), as highlighted by Blockware. Alex Thorn, Head of Firmwide Research, points out an interesting dynamic in the options market. Market makers in the options market are currently holding a net short gamma exposure, which essentially compels them to buy when prices rise and sell when they fall, in order to maintain a neutral overall exposure. This practice inadvertently adds to price volatility. Thorn notes that as BTC's spot price continues to rise, options market makers being short gamma are likely to buy back spot positions to stay delta neutral, potentially amplifying the explosiveness of any short-term upward moves in the near future.

👮 Silk Road Bitcoin Robbery

Two years after James Zhong's arrest for pilfering 50,000 Bitcoins from the notorious Silk Road back in 2012, some intriguing details surrounding his capture have surfaced. According to a CNBC report, Zhong was a tech whiz who indulged in a lavish lifestyle. He flaunted high-end cars, including a Tesla, partied extravagantly, frequented upscale hotels, splurged on luxury brands, and resided in a rather modest off-campus bungalow equipped with an unusually tight home surveillance system. Not stopping there, he also invested in a second property – a lake house in Gainesville, Georgia, complete with boats, jet skis, a stripper pole, and an abundance of liquor. It's a captivating glimpse into the life of a digital miscreant turned high-roller.

On March 13, 2019, things took a dramatic turn in the James Zhong saga when he called the Athens-Clarke County Police Department in a state of panic. He reported a break-in at his home where a whopping 150 Bitcoins, valued at hundreds of thousands of dollars, had disappeared. It was the police department's maiden encounter with a cryptocurrency case, so they hit a dead end due to their unfamiliarity with this emerging digital frontier, and no suspects were apprehended.

In a twist of events, Zhong sought the assistance of a local private investigator, Robin Martinelli, who began to suspect that a friend of one of her clients might be involved in the theft. However, the former Silk Road scammer struggled to accept this possibility, reluctant to believe that someone close could betray him.

Meanwhile, a group of agents from the Internal Revenue Service Criminal Investigation unit had been patiently tracking the Silk Road 2012 heist as the perpetrator shuffled funds through various accounts, using crypto mixers to obscure their trail. Zhong's fortunes took a downturn when he made an $800 transfer, inadvertently leaving a trail. Chainalysis, a blockchain analytics company, spotted this error and traced the funds to a crypto exchange with strict identity verification rules, revealing the account was registered under Zhong's name. This discovery occurred six months after Zhong had initially reported the Bitcoin theft to the police. It's a tale of twists, turns, and ultimately, an error that led to his undoing.

To delve deeper into their investigation, the IRS sought assistance from the Athens-Clarke County Police Department, creating an unlikely alliance to crack the case. Three investigators were sent to approach Zhong, disguising their true intent by framing their inquiry as related to the crime he reported. Zhong, unsuspecting, welcomed them into his apartment and even showed them around while they discreetly searched for hidden compartments. It was on his laptop that the investigators stumbled upon a jaw-dropping $60-70 million worth of BTC, a revelation they considered solid evidence linking him to the 2012 Silk Road theft.

When questioned, Zhong spun a tale, asserting that he had been an early Bitcoin adopter and had mined thousands of these digital coins. However, the truth was far different: he was part of a group of early coders who had engaged with the Bitcoin technology.

After this revealing encounter, investigators returned to Zhong's residence a few days later, accompanied by a team of officers who conducted a thorough search, even deploying specially trained dogs to sniff out electronic devices. Their search unearthed a popcorn tin concealing a computer holding millions of dollars in BTC, along with cash, precious metals, and physical Bitcoins.

In the end, Zhong was apprehended, tried, and is now serving a one-year sentence at the federal prison camp in Montgomery, Alabama. The stolen assets are being sold by US authorities, as their rightful owners have chosen not to claim them. It's a story of deception, discovery, and the ultimate consequences for a high-stakes digital heist.

🥉 Three Inside Up

The Three Inside Up is a candlestick pattern that suggests a potential shift from a downtrend to an uptrend. It's made up of three candles: first, you have a big red (bearish) candle, followed by a smaller green (bullish) candle that fits within the previous red one. The third and final candle is another big green (bullish) one, signalling the potential bullish reversal. The key here is that the second candle (the small green one) fits snugly inside the first red candle, resembling a pattern called "bullish harami." This pattern is seen as a positive sign that the trend might be about to change in a more optimistic direction.