BTC Sessions - Bitcoin golden cross, DeFi exploited again for $600k, FCoin Exchange Owes $125M EP021

Starting point is 00:00:01 Wasabi wallet. I'm fairly private. What's up everyone? I'm Ben with the BTC sessions and this is your daily session. Before we dive in, of course, I've got to give a big shout out to sponsors of the show, leaden.io. This is where you can use your Bitcoin for a variety of different services. They've got Bitcoin savings accounts where you can earn interest on your Bitcoin paid in Bitcoin. They've got Bitcoin back loans so you can use your Bitcoin as, collateral to obtain a Canadian or US dollar loan. So if you're in a pension, you need your hands on dollars, but you don't want to sell. Maybe it's a bad time. This could be an option for you.

Starting point is 00:00:45 And then finally, for you Bitcoin bowls out there that want a little bit of extra exposure, their B2X offering gives you double the exposure to the price fluctuations of Bitcoin. I just started playing with this myself. I'm enjoying it quite a bit. But if you want to check out any of these down below, there is a link in the show notes. And if you opt to get a Bitcoin, back loan, they'll actually, using that link, give you a credit of an additional 50 bucks worth of Bitcoin. And secondly, we've got Rise Wallet. This is a physical Bitcoin gift card that you can give to anybody. It's super easy, super idiot proof. I love these things. I've given them to a number of friends and family members. Basically, you pick it up at a store near you and give it to anybody

Starting point is 00:01:28 you like. At this point, they are instructed on the back of the card to download the paired app. They scratch and scan a code, and at that point, it creates them a brand new Bitcoin wallet on their phone, and then sends them an on-chain transaction for the face value of the card. As I said, I love these things, super easy to use, and I think it's a real utility for onboarding new users. If you want to check them out, head over to risewallet.com and click on locations to see where you can pick one up. Now, they are currently only in Canada, but keep an eye out because they're expanding in, in the near term, all right? And with that, let's dive into the news. So, Bitcoin on the charts have, has finally performed a golden cross. So this is a very bullish indicator in technical analysis.

Starting point is 00:02:21 The long and the short of it is when the 50-day moving average, so the average over the price over the last 50 days, goes above that of a longer-term moving average. In this case, the 200-day moving average. So that means that the average price of the last 50 days is higher than the average price of the last 200 days. So just to visualize that, if you're watching this on YouTube, essentially you have one indicator that's following the chart, the 50-day moving average. It moves quite much more in time with the actual candlestick charts. It's much quicker to follow it, whereas the 200-day moving average is a little bit, it lags a little bit. And so long after the all-time highs, you see these drops in the 200-day moving average.

Starting point is 00:03:16 So we can see that there is a cross indeed of the 50-day moving average, just starting to peak above the 200-day moving average, but both are kind of sloping upwards. So again, that could be an indication of further bullish momentum. At the time of recording this, we are in the 9900s after a dip over the weekend. We did see as low as the 9,400s. So, you know, getting close to over $500 above that dip. So was that the bottom? Who knows? Regardless, by the time this is up, I'm sure, it will have fluctuated.

Starting point is 00:03:58 wildly, hopefully to the upside, but we shall see. Overall, yeah, exciting, bullish. We'll see where that goes. Let's move on here. So there is a couple of different articles here talking about tax and regulatory policy in regards to Bitcoin and in regards to the 2020 presidential election. Now, yesterday we were talking about the U.S. Treasury Secretary and how there was a lot of fud around potential crypto crackdowns on the horizon, but really it was just a big nothing burger and everything that he actually said was pretty benign. This article from Decrypt talks about a senior official for President Donald Trump proposing new economic stimulus packages basically allowing for tax-free investment. And so here they're talking about they, normally

Starting point is 00:04:56 there are exemptions for 401ks. When you're investing, you can invest in them and then not pay tax on them. They're looking at expanding that potentially to regular U.S. stocks and in turn potentially, at least in this article, they talk about it extending to things like cryptocurrency, like Bitcoin. Now, it should be noted at the end of this article, they say that the spin, specifics have yet to be worked out, but it is aimed at kind of creating universal savings accounts that can be funded tax-free. And that means that accumulation of profits during the investment time frame known as capital gains would not be taxed. However, tax legislation does have to be approved by House of U.S. representatives. And it's

Starting point is 00:05:56 unlikely that sweeping changes would be made, especially given that it's a Republican suggesting these changes and there's basically, it's the House of Representatives as controlled by the Democrats right now, probably not going to happen. It's worth noting right now that the stock market is currently owned by a record of 55% of Americans who have invested, which is the highest since the Great Depression. So there's that. This is largely in response to the fact that, again, it's a hedge against inflation. Any new printed money, like all of this QE that has happened or the QE that is in the repo

Starting point is 00:06:47 markets right now, the overnight repo markets, is just being pumped into the stock market to further extend this longest bubble in U.S. history. So any newly created money is just inflating the stock market further. And, you know, that's kind of driving the fomo for people to invest in the stock market. Now, how long can they keep it up? God, who knows. But eventually, shit will hit the fan. They're just very, very good at kicking the can down the road.

Starting point is 00:07:18 The problem with that is the more you kick the... can down the road when shit does hit the fan, if it's been an extended period of time, then that's going to make a recession and or depression that much more intense. So we'll see. Now, as far as this extending to things like Bitcoin, I'm very doubtful if it were to ever be implemented, which who knows, like shit is crazy enough, they may just go. go ahead and eventually implement something like this just to push the bubble, kick the can down the road. But to extend it to Bitcoin outside of the stock market, I think is incredibly unlikely because it's not really what they're looking to do. In fact, it's the antithesis of what

Starting point is 00:08:06 they're looking to do. They're trying to pump money into the stock market to inflate it further. Why would they allow people to purchase things that are external to that? Now, perhaps if they encourage people to invest in instruments that are listed on the stock market. Maybe. So if you have ETFs down the road that consist of Bitcoin and other cryptocurrencies, maybe they'll do something like that. But again, it is a bit of a pipe dream. It's probably not anywhere close to being around the corner. If it was, and you could demand delivery of the underlying assets, then I would jump on that, but odds are probably not. And then also in the kind of ring of presidential regulatory frameworks, U.S. presidential contender Michael Bloomberg is proposing a clear regulatory

Starting point is 00:09:08 framework for crypto. So he did drop some new financial reform plans recently, and he I'll just read a bit from the article here on CoinDesk. Specifically, the proposal suggested requiring financial institutions to monitor risk exposure, recording all financial transactions in a centralized database, strengthening the Consumer Financial Protection Bureau, and a number of other recommendations. The proposal also recommends creating a regulatory sandbox for startups and providing a clear regulatory framework for cryptocurrencies. So the proposal went on to say cryptocurrencies have become an asset class worth hundreds of billions of dollars,

Starting point is 00:09:57 yet regulatory oversight remains fragmented and undeveloped. For all the promise of the blockchain, Bitcoin and initial coin offerings, there's also plenty of hype, fraud, and criminal activity. So the plan recommends clarifying which agency are responsible for overseeing the space, creating a framework to clarify when tokens are securities, and protecting consumers from cryptocurrency-related fraud. And then also clarifying the tax regime

Starting point is 00:10:29 and defining the requirements for financial institutions in the space. To me, that's, like, it's really nothing. It's kind of vague. He just said, hey, we need regulations without really saying what those proposed regulations, regulations would be or what direction they would go in. So, yeah, not really anything here. Like, at least the Trump thing, the Trump advisor said like, hey, you know, we want to, you know, we want to make it more attractive for people to invest in the stock market to kind of take that capital. I mean,

Starting point is 00:11:07 granted, it's pumping it into a further bubble, but, you know, they said what they want to do. This just says we want to do something eventually. So, yeah, anyways, let's move on here. Yesterday, we talked about defy. We talked about a quote-unquote hack, which wasn't really a hack. It was just like somebody exploiting arbitrage opportunities and making money off of poorly designed decentralized finance systems built atop Ethereum. and they made off with $300 plus $1,000, I think it was $350,000. Well, it happened again.

Starting point is 00:11:47 Obviously, it's going to happen again. People, they look at these systems, they pick them apart and they say, okay, what can I do? How can I make money? Where are their inefficiencies here? And it's not a hack. Again, we need to stop calling this a hack. People are looking at the rules of the system and saying, oh, if I go by these rules, then I can make money in this area.

Starting point is 00:12:10 And that's exactly what this person has done. This time to the tune of, what was it, $600,000, I believe, this time. Yeah, $6,000. Now, apparently, they're saying that they can neutralize the hack and prevent the loss of user funds like they did for the last hack. And the way they did that was with a master key. Again, it's the name DeFi, Decentralized Finance, is hilarious when you have a centralized master key that can lock up funds and take them and distribute them to other people. Unbelievable.

Starting point is 00:12:52 But let's take a look. There's a pretty good summary here from Kerman Koli, I believe is his name. Anyways, he kind of broke down how this person made money this time around. Essentially, what they did is they used a flash loan, so they borrowed 7.5,000 Ethereum using collateral. They acquired 3,500, so about half of the Ethereum, they used to acquire a stable coin called S-U-S-D, which was about $900,000. using the S-USD as collateral for an ETH position. So what they did is they essentially went long. And then what they did, they used 900 ETH to bid an order on Khyber, which is a platform,

Starting point is 00:13:50 to drive up the price of S-U-S-D. So essentially, they tried to buy a bond. of this stable coin, which is limited in supply, on Kiber, in order to drive up the price. So they, and they successfully did. So the price of the stable coin went up, which is hilarious, because stable coins are only stable until they're not. They drove up the price of stable USD. And then that meant that they, because they were holding a whole bunch of collateral,

Starting point is 00:14:24 they were able to borrow even more Ethereum because their collateral was now worth more because they bid it up themselves. Then they used the extra collateral or sorry the extra loan to pay off the other loan. And then they were left with an additional $2,378 Ethereum, $600,000 for basically just looking at the systems and saying like, hey, I can borrow money here. I can then go long. I can bid up the price because I've got so much damn money that I just borrowed. And then I can pay out my loan with the profits from the long that I placed and then still

Starting point is 00:15:07 have a bunch of money. So yes, people are smart. They will dissect your systems if they're not really thought through well. And damn, second time in a couple of days. this person is up, well, if it's the same person, and I don't know if it is, but anyways, it was 350K before and now it's 600 something. That's damn near a million dollars in a few days. So kudos. Again, this is not a hack. This is not a hack. This is somebody playing exactly by the rules and using the system as it's built and profiting from it.

Starting point is 00:15:51 And I would argue that somebody locking down these funds and diverting those funds to other people is actually the thief. So that's my hot take. Let's move on. One more thing. Now, these guys are probably actually thieves. So Chinese exchange F-coin is closing down. And they owe their users $125 million worth of Bitcoin or up to $125,000. is actually somewhere between 7,000 and 13,000 Bitcoin that cannot be paid out,

Starting point is 00:16:24 which is somewhere between $67 and $125 million. The owner of the exchange is very vague about what's... Well, vague is an understanding. He basically gives no indication of what's going on. He says, this is a problem that is a little too complicated to be explained in a single sentence. The time span is also large, and the two-story development... lines are advancing and affecting each other at the same time leading to the final outcome. So that was essentially him saying nothing. He's saying it's complicated. That's about it.

Starting point is 00:17:02 And then he said that with the deepening of the investigation, we found a large number of existing data problems of dividends and mining returns. And these problems have existed for many days. As a result, a large number of users have already been through operations such as buying and selling various currencies and withdrawing cash, causing the pollution of assets. So essentially, their excuse here is that they just had poor systems in place for data of who is owed what and everything, and now they've just like leaked money over time. But they say it's not a hack. It's just data problem. Again, it doesn't, they really said nothing. They've explained nothing. You think he says, well, it's, it takes more than a sentence to explain it. So take more than a sentence to explain it.

Starting point is 00:17:58 Like, it drops some knowledge on people, leave a blog post, like fully flesh it out. A lot of people are just saying that this is probably an exit scam. Yeah, probably, probably. So essentially, this is going to be hard to prosecute. They are, we're based in China, but the guy has, uh, essentially just left China. Um, yeah. And, and there's not really like, you, the guy has so much money. He's probably just going to be able to disappear if he really wants to. Um, and it's unfortunate.

Starting point is 00:18:38 It's, it's, it's, he said that he's going to compensate users, uh, losses, uh, losses. with the profits he would make from other projects, but then he also neglected to say what projects those even were, if there are even any. So odds are people are out $125 million. So once again, not your keys, not your coins, leaving money with custodians for extended periods of time when you don't need to or it's not acquiring you a service

Starting point is 00:19:10 is a terrible idea. and even if you are actively trading or if you're using a service with your cryptocurrency, with your Bitcoin, hopefully just your Bitcoin. But anyways, if you're, if you have your Bitcoin with somebody for a purpose, try to minimize that risk. Don't put all your eggs in one basket. And as soon as you're able to, as soon as you don't need to have it there, get it back into your own custody.

Starting point is 00:19:38 And the vast majority of your funds should be in your own control, unless there is an absolute necessity for you to have them elsewhere. So be smart. Get a hardware wallet. Get a way of securing your coins. And don't put too much trust in other people because that's the antithesis of what Bitcoin was created for. I guess I can stop renting there. That's about it. Okay. So I'll finish up there. Thank you guys very much for watching. Of course, as always, If you're watching this on YouTube, hit like, subscribe, and share. If you are listening to this via the podcast, be sure to share that out on your social media. Great to have more people over there listening to the audio only.

Starting point is 00:20:21 If you want to help out the show in another way, hit up the sponsors down below, Leiden and Rise wallet, as well as Wasabi Wallet, which is a great desktop wallet for Bitcoin privacy. And finally, you can hit up NordVPN. This is something I use on my phone and my computer all the time. It hides your IP address, encrypts your browsing data, and it allows you to unlock a geoblog content on top of that. So if you want to access something that's not available in your country or location, just change your country or location within the app,

Starting point is 00:20:49 and it should be unlocked for you, no problem. There's a deal if you use the link down below. It gets you 70% off as well as one month free, and ends up being $3.49 a month. So be sure to check that out. And in doing so, you will help the channel as well. With that, I am out. Have a wonderful evening, and I will see you guys next time for

Starting point is 00:21:08 your daily session

BTC Sessions - Bitcoin golden cross, DeFi exploited again for $600k, FCoin Exchange Owes $125M EP021

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