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With the technical charts flashing signs of buyer exhaustion, bitcoin (BTC) risks falling to levels below $10,000 this week.

The top cryptocurrency by market value rose to a 17-month high of $13,880 last Wednesday only to end the week on Sunday (UTC time) with a 0.66 percent loss at $10,760, according to Bitstamp data.

Essentially, BTC created a candle called “gravestone doji” on the weekly chart, which comprises of tall upper shadow (marking a big gap between the open and high) and little or no lower shadow (meaning low and close are almost identical).

The narrative behind the candle is that buyers had pushed prices up to unsustainable levels during a specific period, then sellers ended up pushing prices back to the starting point.

This sort of price action, if witnessed following a stellar rally, is widely considered a sign of bullish exhaustion and an early warning of an impending price drop. That may well be the case here, as the gravestone doji formed after bitcoin reached 17-month price highs.

As a result, BTC could be quoted in four digits across cryptocurrency exchanges later this week. As of writing, the cryptocurrency is changing hands at $11,000 on Bitstamp, representing a 6.5 percent drop on a 24-hour basis.

It’s worth noting investors may view any pullback to levels below $10,000, as just another chance to get involved in the bull market. After all, a number of bullish price drivers are lined up over the next few months, according to Alex Kruger, a prominent technical and fundamental analyst.

Weekly chart

BTC created a gravestone doji last week with the biggest red volume (selling volume) bar since November.

Further, the candlestick has appeared following a near 90-degree rise from levels near $4,000 seen at the beginning of April and the relative strength index (RSI) continues to report overbought conditions with an above-70 print. Therefore, the case for a price drop to $10,000 looks strong.

It is worth noting that the 5- and 10-week moving averages are still trending north, indicating a bullish setup. As a result, the averages, currently located at $9,840 and $8,757, could fuel a price bounce.

Daily and 4-hour charts

As seen on the daily chart (above left), the Chaikin money flow index has retreated sharply from 0.39 to 0.19 in the last five days – a sign of weakening buying pressure. The oscillator takes into account both the price and trading volume to gauge buying and selling pressures.

The 5- and 10-day MAs are also teasing a bearish crossover. Over on the 4-hour chart, meanwhile, the cryptocurrency has carved out a bearish lower high at $12,448.

Overall, both charts are aligned in favor of a short-term drop to levels below $10,000. The bearish case, however, would weaken if the price breaks above $12,448 with high volumes. In that case, BTC could revisit the recent high of $13,880.

Disclosure: The author holds no cryptocurrency at the time of writing

Chart image via Shutterstock; charts by TradingView

After issuing comments and reports heavily critical of cryptocurrencies over the last few years, Agustin Carstens, chief of the Bank for International Settlements (BIS), has acknowledged that central banks will likely soon need to issue their own digital currencies.

Speaking to the Financial Times on Sunday, Carstens said that BIS – which acts like a central bank for central banks – is supporting global central banks’ efforts to research and develop digital currencies based on national fiat currencies.

A number of central banks are engaged in such work and “we are working on it, supporting them,” Carstens said. Further, the arrival of such products might just around the corner if there is clear evidence of demand from the public.

According to Carstens:

“[I]t might be that it is sooner than we think that there is a market and we need to be able to provide central bank digital currencies.”

The comments come soon after Facebook’s unveiling of its planned Libra cryptocurrency made headlines and shook regulators worldwide, as the prospect of a tech firm with users in the billions launching is own money potentially poses a threat to state currencies.

France’s finance minister has said that Libra must not be allowed to become a sovereign currency.

Over in the U.S., Congresswoman Maxine Waters has asked Facebook to halt development of the Libra Network until hearings can be held.

BIS itself name-checked Facebook in its latest annual report, expressing fears that initiatives like Libra pose a long-term threat to central banks control of money:

“Regulators need to ensure a level playing field between big techs and banks, taking into account big techs’ wide customer base, access to information and broad-ranging business models.”

Talking to the FT, Carstens again addressed the Facebook issue.

“The issue is how will the currency be used? Will there be discovery of information, or data that can be used in credit provision and how will data privacy be protected?” he said, adding that a “simple way” to regulate such cryptocurrency networks is to start addressing “immediate and very obvious” money laundering concerns.

Agustin Carstens image via Sari Huella/Wikimedia Commons

Shin’ichirio Matsuo is a research professor and the director of B-TED research center at Georgetown University. He is also a co-founder of the BSafe.network, a global blockchain research test network used by 31 universities.

Since 2015, when bitcoin became an issue for regulators like the state of New York, the regulation of cryptocurrency (the G20 now calls it as a crypto asset) has been discussed in many places, mainly at bodies like the Financial Stability Board (FSB) and the Financial Action Task Force (FATF).

However, Facebook’s Libra cryptocurrency has changed the landscape, ensuring a massive number of debates on regulation are likely ahead. To be sure, these debates will be about the size of companies specializing in internet technologies more than they are about technology architecture.

Yet, throughout the history of crypto asset and blockchain, regulators have been considered an enemy, even as most governments have sought new financial innovations based on the blockchain.

The main issue is, we still don’t have proper communication channels among stakeholders in this ecosystem. Regulators don’t have a functional language to talk with open-source engineers. Open-source engineers sometimes do not want to speak with regulators.

Business entities wish to use new and immature technologies by avoiding frictions with regulation. Citizens need transparency to business entities, but there are no standard criteria to ensure transparency of business. Generally (and I hope) regulators don’t want to discourage innovation, and open-source engineers don’t want to facilitate crimes. The goals of both are almost the same.

But, to make the situation more productive, we need to solve this communication problem. That is now beginning to happen.

Historical discussion at the G20

On June 8 and 9 of this year, the G20’s financial ministers and central bank governors met in Fukuoka, Japan, bringing together a group of 20 governments that discuss issues related to economics.

The FSB, FATF and the International Organization of Securities Commissions (IOSCO) are the organizations which form regulations under G20 leadership. Before the G20 financial track, the FSB published an insightful report titled “Decentralized financial technologies: Report on financial stability, regulatory and governance implications.”

This report emphasized the importance of multi-stakeholder discussions, and that regulations and laws are not an 100 percent perfect tool for forming a healthy ecosystem. It concluded contributions from all stakeholders, including open-source engineers, are essential.

On June 8, the G20 held “G20 High-level Seminar on Financial Innovation Our Future in the Digital Age” to discuss the issue of multi-stakeholder governance.

This was indeed the genesis block of discussions by different stakeholders, including Klas Knott, the vice-chair of FSB, Brad Karr, managing director of IIF (a world group of established banks), Adam Back, the famous cryptographer, Shinichiro Matsuo (myself) who represents neutral academia views, and Jun Murai (moderator), the famous “Internet Samurai” who developed the first-ever inter-university internet communications network in Japan.

Knott firstly explained the FSB report and the views of his fellow regulators, including their regulatory goals. Karr went on to discuss many potential applications of decentralized finance, including financial inclusion. Back explained how blockchain technology is an excellent tool to achieve regulatory goals.

I discussed how multi-stakeholder discussion would facilitate healthy permissionless innovations in decentralized finance. We further agreed that the multi-stakeholder discussion is essential for decentralized finance to be made real.

As a result of this seminar and G20 discussion, the following historical sentence was written in the official communique.

“We welcome the FSB report on decentralized financial technologies, and the possible implications for financial stability, regulation and governance, and how regulators can enhance the dialogue with a wider group of stakeholders.”

What multi-stakeholder governance means

In general, governments tend to keep their right to control everything. The internet, which creates a global space of communication, was the first challenge to this order. Here, “global” is different from “international,” because it is independent from the nation.

The internet is also one of the most successful cases of multi-stakeholder governance.

Even in the case of the internet, the government tried to be the only entity of governance, but the effort failed; governments are one of the stakeholders of Internet Governance Forum (IGF) and Internet Corporation for Assigned Names and Numbers (ICANN).

This structure is an excellent foundation that facilitates a huge amount of permissionless innovation, but is also compliant with regulations. A similar situation will happen in finance, and this is the reason why the FSB and G20 are working toward the communique, through the involvement of multi-stakeholders might imply reducing their power of governance.

Here, stakeholders include open-source developers, regulators, business entities, consumers and academia, who are all seeking to solve the current chaos in terms of regulation and innovation in finance. I think it is good to start with have common understandings of regulatory goals; they are financial stability, consumer protection and preventing crimes.

Multi-stakeholder discussion on these goals will create healthier governance than regulation.

Academia facilitates the dialogue

Unfortunately, communications among stakeholders are not sufficient at this moment. However, we need more calm dialogue based on shared understandings and based on academically reviewed pieces of evidence.

One piece of good news is there are several existing initiatives which facilitate discussions among stakeholders. The Scaling Bitcoin workshop was established in 2015 to create a forum for technology discussions led by academics. Likewise, regulators today discuss their work with academics and economists.

This in mind, I believe academia can serve as a good trust anchor and neutral foundation to connect all stakeholder in one place.

A group of universities (currently 31 universities from 14 countries) called BSafe.network has started a new initiative to facilitate multi-stakeholder discussions based on its global neutrality. Right after the G20 financial track meeting, BSafe.network held a multi-stakeholder workshop “G20 meets G-20” with the University of British Columbia.  It was the first event of a preliminary series of multi-stakeholder discussions.

A similar workshop, “Decentralized Financial Architecture Workshop,” will be co-located with Scaling Bitcoin 2019 Tel-Aviv, and we hope to see real engagement between regulators and bitcoin engineers.

Observing the current debates on Facebook’s Libra, I conclude we need more moderated and academia-backed discussions to make innovations healthier. The fact is, the Libra Association does not explain how their architecture achieves regulatory goals. Common understandings on regulatory goals and architecture among all stakeholders are essential to start a regulation discussion.

This is a good test case to apply the multi-stakeholder governance.

It may be more difficult than the case of internet governance to establish a formal body for multi-stakeholder discussion on finance. It might take more than a year. However, I believe the historical message triggered by the G20 and a series of workshops will open the door to a new era of a healthy blockchain ecosystem.

Bridge image via Shutterstock

Xetra, a Deutsche Börse-operated trading venue for financial assets such as stocks, bonds and funds, has just listed its first blockchain company.

As reported by DGAP.de on Monday, shares in the firm, Advanced Blockchain AG, will be tradeable on Xetra from today. The news comes after the same company launched on the Frankfurt Stock Exchange in January.

Berlin-based Advanced Blockchain AG develops distributed ledger technology (DLT) software for businesses, according to DGAP. Along with its subsidiary nakamo.to GmbH, the firm has built a project called peaq, which sets out to provide a blockchain base layer for enterprises.

It’s also developing a directed acyclic graph (DAG)-based blockchain called “DAGchain”. When completed, the DAGchain protocol is slated for use in a number of projects in industries such as IoT, automotive, financial and engineering.

In May, Advanced Blockchain made Forbes’ list of “10 Blockchain Companies to Watch in 2019,” ranking at number 2.

According to Deutsche Börse, over 90 percent of share trading across German exchanges, and around 30 percent of trading in ETFs in Europe, is transacted through Xetra.

Deutsche Börse image via Shutterstock

Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.

There is never a dull moment in the world of blockchains and cryptocurrencies.

The two earth-shattering stories of the past two weeks – the launch of the Libra project and the wild swings in the bitcoin market  – might seem like unrelated topics. And, for the most part, the causal impact of the former on the latter is probably not much greater than that of another oft-noted bitcoin price correlation: the avocado chart.

However, the coincidence of these two developments does speak to how globally impactful Satoshi Nakamoto’s invention has now become.

From that wider perspective, these two developments are not at all unrelated. Indeed, they both capture elements of a massive, worldwide financial transformation, all happening at a time of growing economic uncertainty.

Bitcoin’s role as ‘digital gold’

Whether now or in the future, I believe the arrival of Libra, far from being a competitive threat, will be extremely supportive of bitcoin.

Not only will the looming international debate over Libra elevate the conversation around cryptocurrencies and so draw more people into the most established of them, it also represents a major step toward the kind of world in which bitcoin should thrive.

Whether or not Libra succeeds, it confirms the inescapable reality that international money movements in the digital era will be based on blockchain-like solutions that disintermediate the existing gatekeepers and challenge the bank-and-sovereign money-dominated model of the 20th century. It also underscores how we are moving into an age of digital assets.

And, just as people sought out physical assets to protect their wealth from the vulnerabilities of the analog era’s trust-dependent system – by storing value in gold, for example, or in real estate – they will now seek out similar protection in digital assets with similar properties. Bitcoin is not described as “digital gold” for nothing; it offers a level of censorship resistance and isolation from the politicization of money that the corporate-driven Libra project cannot.

I see mainstream global money movements in the next decade or so flowing through a mix of blockchain-era stable-money services that operate along a centralization-to-decentralization spectrum — from JPMorgan’s JPM Coin and the new Swift blockchain project at one end to Libra and more open-standard crypto stablecoin projects such as CENTRE’s USDC  at the other. But as those grow in usage, the demand for bitcoin as the digital asset hedge of choice will also grow.

So, regardless of whether or not there is a causal relationship, the Libra announcement offers important context for the continued, accelerating demand for bitcoin, the surge of buying that saw it rally from around $7,000 on June 10 to a peak just below $14,000 on Thursday last week.

A backdrop of global economic uncertainty

This wider transition in the world’s money paradigm adds a dynamic new variable to what may be a serious global economic downturn. As with previous periods of global economic tensions, the current dicey state of U.S.-China trade relations is directly impacting monetary conditions and policy expectations. But this time it’s happening at a time when cryptocurrencies and blockchains are looking like an alternative vehicle for people to manage the risks they face in this deteriorating environment.

The trade war between the U.S. and China has spooked businesses and investors the world over, resulting in a surge of demand for traditional safe-haven assets. A flood of demand into long-dated bonds has driven down their yields and led to an inversion in the U.S. Treasury yield curve – a market scenario that Wall Street has traditionally viewed as a harbinger of recession.

That, in turn, has stoked expectations of monetary easing by central banks, most likely led by the European Central Bank, whose President, Mario Draghi, last week signaled the strong possibility of stimulus.  Recalling the trillions of dollars, euros and yen that were added to the world’s base money levels during the “quantitative easing” era that accompanied and followed the global financial crisis and European debt crisis within the past decade, investors have once again started buying inflation hedges. And this time, it’s not just the traditional version (gold, up almost 10% in June); it’s also the new one (bitcoin, up almost 40%).

Chinese capital flight

More specifically, there is talk of capital flight out of China and Hong Kong, a pattern of behavior that naturally boosts interest in bitcoin if not outright demand.

China’s balance of payments is showing a very large “errors and omissions” component, traditionally an informal measure of how much renminbi is escaping through unofficial channels to bypass the limits that Beijing imposes on its citizens’ purchases of foreign currency. Almost certainly, this is in part driven by Chinese manufacturers seeking to move their production operations offshore, to places such as Taiwan, to bypass the U.S. tariffs. (Their ability to do so is more evidence of why this is such a harmful, ham-fisted policy by the Trump administration.)

But it’s also likely coming from wealthy Chinese businesses and individuals who are simply looking to protect their funds in an uncertain environment, a group that these days includes bitcoin miners.

Meanwhile, the massive protests in Hong Kong, stoked by concerns about encroaching judicial oversight by the Chinese mainland, have also stirred talk that the territory’s business class will move funds offshore.

The bulk of that flight capital will go into dollars. But if even a small part of it, spooked by the prospects of more quantitative easing from central banks, goes into bitcoin, it can have an outsized impact on the price of the cryptocurrency. Certainly, volumes seen on the more data-reliable crypto exchanges, such as Coinbase’s, have shown surging demand.

The wider point, however, is that the new round of global economic uncertainty is occurring at the same time that cryptocurrency and blockchains are establishing themselves as key elements of the emerging financial architecture of the world.

In the financial crisis of 2008, nobody other than the small number of names on the cypherpunk mailing list to which Satoshi posted his white paper on Oct. 31 of that year had any idea that this alternative model for the global finance existed. Now cryptocurrencies and blockchain are high of mind among banks, global companies and regulators – with Libra, as I mentioned, playing no small role in elevating the technology’s profile.

I hate to say it, but maybe this time is different.

Burning dollars via Shutterstock

Last weekend, two privacy coin conferences heralded the future of cryptocurrency governance: the hybrid startup model versus grassroots experimentation.

Over 200 people gathered in Croatia for Zcon1, organized by the nonprofit Zcash Foundation, while roughly 75 attendees gathered in Denver for the first Monero Konferenco. These two privacy coins are fundamentally different in a variety of ways – which was clearly on display at their respective events.

Zcon1 had a gala dinner with a seaside backdrop and programming that displayed close relations between companies like Facebook and the zcash-centric startup Electronic Coin Company (ECC), as evidenced by Libra being widely discussed with team members in attendance.

The quintessential funding source that distinguishes zcash, called the founder’s reward, became the center of passionate debates during Zcon1.

This funding source is the crux of the distinction between zcash and projects like monero or bitcoin.

Zcash was designed to automatically siphon off a portion of miners’ profits for creators, including ECC CEO Zooko Wilcox. So far, this funding has been donated to create the independent Zcash Foundation, and support ECC contributions to protocol development, marketing campaigns, exchange listings and corporate partnerships.

This automated distribution was scheduled to end in 2020, but Wilcox said last Sunday he would support a “community” decision to extend that funding source. He warned that otherwise ECC might be forced to seek revenue by focusing on other projects and services.

Zcash Foundation Director Josh Cincinnati told CoinDesk the non-profit has enough runway to continue operations for at least another three years. However, in a forum post, Cincinnati also warned the non-profit shouldn’t become a single gateway for funding distribution.

The amount of trust zcash users place in the asset’s founders and their various organizations is the primary criticism levied against zcash. Paul Shapiro, CEO of the crypto wallet startup MyMonero, told CoinDesk he’s not convinced that zcash upholds the same cypherpunk ideals as monero.

“Basically you have collective decisions instead of individual, autonomous participation,” Shapiro said. “There’s been perhaps not enough discussion about the potential conflicts of interest in the [zcash] governance model.”

While the simultaneous monero conference was much smaller and slightly more focused on code than governance, there was significant overlap. On Sunday, both conferences hosted a joint panel via webcam where speakers and moderators discussed the future of government surveillance and privacy tech.

The future of privacy coins may rely on such cross-pollination, but only if these disparate groups can learn to work together.

Shared zk-SNARKs

One of the speakers from the joint panel, Monero Research Lab contributor Sarang Noether, told CoinDesk he doesn’t see privacy coin development as a “zero-sum game.”

Indeed, the Zcash Foundation donated almost 20 percent of the funding for the Monero Konferenco. This donation, and the joint privacy-tech panel, could be seen as a harbinger of cooperation between these seemingly rival projects.

Cincinnati told CoinDesk he hopes to see much more collaborative programming, research and mutual funding in the future.

“In my view, there is a lot more about what connects these communities than what divides us,” Cincinnati said.

Both projects want to use cryptographic techniques for zero-knowledge proofs, in particular, a variant called zk-SNARKs. However, as with any open-source project, there are always trade-offs.

Monero relies on ring signatures, which mix small groups of transactions to help obfuscate individuals. This isn’t ideal because the best way to get lost in a crowd is for the crowd to be much bigger than ring signatures can offer.

Meanwhile, the zcash setup gave the founders data often called “toxic waste,” because the founding participants could theoretically exploit the software that determines what makes a zcash transaction valid. Peter Todd, an independent blockchain consultant who helped establish this system, has since been an adamant critic of this model.

In short, zcash fans prefer the hybrid startup model for these experiments and monero fans prefer a completely grassroots model as they tinker with ring signatures and research trustless zk-SNARK replacements.

“Monero researchers and the Zcash Foundation have a good working relationship. As for how the foundation began and where they’re going, I can’t really speak to that,” Noether said. “One of the written or unwritten rules of monero is you shouldn’t have to trust someone.”

Shapiro added:

“If certain people are dictating large aspects of the direction of the cryptocurrency project then it raises the question: What is the difference between that and fiat money?”

Different strokes

Stepping back, the long-standing beef between monero and zcash fans is the Biggie vs. Tupac divide of the cryptocurrency world.

For example, former ECC consultant Andrew Miller, and current president of the Zcash Foundation, co-authored a paper in 2017 about a vulnerability in monero’s anonymity system. Subsequent Twitter feuds revealed monero fans, like entrepreneur Riccardo “Fluffypony” Spagni, were upset by how the publication was handled.

Spagni, Noether and Shapiro all told CoinDesk there are ample opportunities for cooperative research. Yet so far most mutually beneficial work is conducted independently, in part because the source of funding remains a point of contention.

Wilcox told CoinDesk the zcash ecosystem will continue to move toward “more decentralization, but not too far and not too fast.” After all, this hybrid structure enabled funding for fast growth compared to other blockchains, including the incumbent monero.

“I believe something not too centralized and not too decentralized is what’s best for now,” Wilcox said. “Things like education, promoting adoption worldwide, talking with regulators, that’s the stuff that I think a certain amount of centralization and decentralization are both right.”

Some fans of both projects see the benefits of that collective approach.

Zaki Manian, head of research at the Cosmos-centric startup Tendermint, told CoinDesk this model has more in common with bitcoin than some critics care to admit.

“I am a big proponent of chain sovereignty, and a big point of chain sovereignty is that the stakeholders in the chain should be able to act collectively in their own interests,” Manian said.

For example, Manian pointed out the wealthy benefactors behind Chaincode Labs fund a significant portion of the work that goes into Bitcoin Core. He added:

“Ultimately, I would prefer if protocol evolution was mostly funded by the consent of token holders rather than by investors.”

Researchers on all sides acknowledged their favorite crypto would require significant updates in order to deserve the title “privacy coin.” Perhaps the joint conference panel, and Zcash Foundation grants for independent research, could inspire such cooperation across party lines.

“They’re all moving in the same direction,” Wilcox said about zk-SNARKs. “We’re both trying to find something that has both the larger privacy set and no toxic waste.”

Zcash image via Shutterstock