September 30, 2016 BitMEX Morning Report

Currency 24 Hour Return
Monero (XMR)  – 4.948%
Bitfinex Token (BFX) + 4.210%
Ethereum Classic (ETC) + 3.564%

Monero (XMR) News:

How a Hacker Can Steal Monero, a Cryptocurrency More Anonymous Than Bitcoin [Motherboard]

To trade Monero on BitMEX, please trade XMR7D


Bitfinex Token (BFX) News:

New platform is on broad [Bitfinex]

To trade Bitfinex Token on BitMEX, please trade BFXU16

 

Ethereum Classic (ETC) News:

A Victorious Rebellion? Microsoft Investigates Ethereum Classic’s Potential [btckan]

To trade Ethereum Classic on BitMEX, please trade ETC7D

 

September 29, 2016 BitMEX Morning Report

Currency 24 Hour Return
Ethereum Classic (ETC)  – 4.848%
Bitfinex Token (BFX) + 2.003%
Factom (FCT) – 1.863%

Ethereum Classic (ETC) News: 

Synereo 2.0 Tech Stack to Compete with Ethereal Protocol [Newsbtc]

To trade Ethereum Classic on BitMEX, please trade ETC7D

Bitfinex Token (BFX) News:

Bitfinex Issues Bitcoin Hack Repayment Plan Update [CoinDesk]

To trade Bitfinex Token on BitMEX, please trade BFXU16

Factom (FCT) News:

Public blockchain investments heat up: $5 million in 5 minutes [VentureBeat]

To trade Factom on BitMEX, please trade FCTXBT

 

 

DEVCON TWO – A Strike to the Core of ETC

The Ethereum Foundation (EF) is stepping its game up with the number of significant news announcements coming out of Devcon Two and ETH is responding, up 21% over the past 2 days. Devcon Two is the official Ethereum conference, currently held in Shanghai where “the Foundation’s own team of developers and researchers emerge from their dev caves to present and discuss their most current work and innovations”.

Some of the more interesting highlights (apart from Vitalik’s cat bag and immense usage of Doge) that I see positive for ETH:

  • A Focus on Smart Contract Security: Seems the EF is learning through (epic) failure. A number of sessions have been dedicated to security on Ethereum and DAPPs, could this be a revival of faith in decentralised autonomous organisations?
  • Zcash Integration: The ability to use Ethereum contracts to send and receive Zcash and also meaning that transactions can be conducted in private.
  • Santander Integration: Huge news from one of the world’s largest banks, Santander will allow customers to turn bank account funds into Ethereum based tokens.

It is clear from the chart above the divergence between ETH and ETC since the start of the conference. The core concept behind Ethereum Classic is to remain immutable, no forks, no bailouts, no going back. Large corporations, and clearly large banks such as Santander, are not going to invest in this train of thought. The idea of a bailout is attractive in case things go wrong and heads are about to roll. If money is pouring in from corporations to attract talent, resolute devs are going to go hungry.

There will be more to come over the next few days from the conference, and I see more divergence ahead. One in particular, as I used to use the service every day, is the Ethereum Blockchain Initiatives at Thompson Reuters.

The clear trade is to go long ETH and short ETC. On BitMEX we offer 33x leverage on ETHXBT and 10x onETC7D. Play the FOMO to the end of the conference and look for a close before the end of the week.

Battle for Online Privacy

Betamax vs VHS, Coke vs Pepsi, Ring Signatures vs zk-SNARKs; the choice for a winner in the battle for online cryptocurrency privacy is not so clear cut. We see two main contenders: Zcash and Monero.

Zcash hasn’t launched yet but is making waves, featuring a new privacy method that has not been used in any other coin. Zcash implements the Zerocash protocol, which is an evolution of Zerocoin, a protocol prominent in 2013 but never mainstream. Zerocash’s main draw is transaction size; Zerocash can make transactions up to 98% smaller than Zerocoin through a novel method. This method is known as a zk-SNARK (zero-knowledge Succinct Non-interactive ARgument of Knowledge). zk-SNARKs allow Zcash to feature completely opaque addresses and transactions, while keeping proof size small. From their protocol spec:

“The basis of the privacy properties of Zcash is that when a note is spent, the spender only proves that some commitment for it had been revealed, without revealing which one. This implies that a spent note cannot be linked to the transaction in which it was created. That is, from an adversary’s point of view the set of possibilities for a given note input to a transaction—its note traceability set— includes all previous notes that the adversary does not control or know to have been spent.”

Users are hopeful but skeptical. There may be too much anonymity; transactions can’t be traced to the genesis block. In the wild, there could be more coins mined than claimed by the devs – only a thorough review of the source code & proof that all parties are running the same code could verify. Zcash also requires a “trusted setup”, essentially a seeding of key data, that has attracted criticism. The technology is new and untested; like Bitcoin in 2009, it has yet to be proven, and few understand the implementation.

Zcash is attempting to integrate with other chains. Zooko Wilcox O’Hearn, one of Zcash’s technology leads, describes “Project Alchemy”, an attempt to connect the Zcash blockchain and the Ethereum blockchain. “You [can] create a decentralised exchange right there,” Zooko writes. “It means you can create unshutdownable things. It also means when you add this new power – to send and receive Zcash – all the other Ethereum contracts gain this new power.”

What about Monero? Monero has had a head start in this race. Monero’s ensures privacy via Ring Signatures. In short, it is based on mixing transactions with other transactions. This method of privacy is tried and tested in Bitcoin mixers, but mixers are explicit and coins coming from them are often blacklisted. Monero’s mixing is implicit and constant, significantly improving privacy.

Monero is not without issues. The set of mixed transactions is smaller than that of Zcash (where your transaction is hidden amongst all outstanding transactions), and mixing more coins requires a larger transaction size and thus slower transactions.

Both coins seek to solve other Bitcoin issues.

Monero has no block size limit nor any built-in reward halving. Zcash seeks to prevent a mining cascade at launch by slowing scaling up rewards in the first weeks. Both have faster block timings, and both use hashes designed to disadvantage GPU and ASIC mining.

Both coins desire to keep mining decentralized by reducing the GPU and ASIC advantage. Monero hasCryptoNight, which is designed to be fast on a CPU but slow on a GPU. This is effective in reducing GPU hashrate – the latest & greatest GPUs only have a very small scale advantage over fast CPUs. Zcash tackles the same problem with Equihash, a tunable hash algorithm that is designed to require massive amounts of memory, thus being almost entirely unusable on all but the very fastest GPUs. No GPU miner has yet been released forEquihash.

Which will capture hearts & minds? Usability may be the decider. Monero users have been waiting years for a simple GUI wallet. Monero is a completely new currency and thus has few tools. Zcash, on the other hand, isforked directly from Bitcoin and already has GUI wallets and even a block explorer forked from Bitpay’s popular Bitcore project. If the Zcash team is able to deliver fast and quality development, they may see users switch quickly.

Zcash is not yet launched, but you can already trade it, exclusively on BitMEX. We have launched a future,ZECZ16, that will settle on the largest underlying spot market’s price with expiry Dec 30, 2016. Bullish on Zcoin vs Monero? You can long the Zcoin ZECZ16 contract & short the Monero XMR7D contract (or vice versa), using BitMEX today.

Bitcoin, The Reserve Currency

7 years on, Bitcoin still remains the largest cryptocurrency by market capitalisation (market cap). While Bitcoin may have been the most volatile currency, it has since ceded that mantal to up and coming altcoins.

The transformation of Bitcoin from a volatile experiment, to a “stable” form of electronic money is illustrated in Figure 1. Figure 1 plots the 90 day moving average market cap of Bitcoin against its 90 day realised volatility.

Volatility peaked alongside the market cap during the 2013 bubble. Over the past 3 years, the market cap fell substantially then surpassed the 2013 high earlier this year. During the same period, volatility fell and continued falling.

The holy grail for many users is a cryptocurrency that has a growing market cap, and falling price volatility. A large market cap helps improve liquidity and reduce transactions costs. Falling volatility means that Bitcoin can retain its value for longer periods of time. That helps facilitate its adoption in online commerce and as an asset used as a savings vehicle.

Bitcoin’s march towards reserve status is not welcomed by all. Many speculators, who account for a significant portion of trading volumes, prefer very volatile cryptocurrencies. Short-term trades with high leverage can yield stupendous returns. As Bitcoin’s volatility falls, it becomes boring and speculators search for the next hot altcoin.

The solution to a boring coin is more leverage. Given the increasing liquidity, leverage offered by platforms like BitMEX and our competitors will increase to retain the attention of speculators. If the volatility keeps falling, 500x and 1,000x leveraged trading will become increasingly popular.

Regardless of the form, increased leveraged trading via derivatives bleeds into the spot market. Market makers must buy or sell the underlying asset to remain hedged and earn the Bid / Ask spread. Increased spot trading volumes help commercial users of Bitcoin reduce their transactions costs. More commercial users, means greater adoption, and hopefully a higher price.

The Next Frontier

Ether, the token that rides on the Ethereum blockchain, was a boring altcoin until early 2016. The price spiked over 1,000% in a few months. Figure 2 is the ratio between Ether and Bitcoin’s realised 90 day volatility. The ridiculous volatility drove on-exchange trading volumes over that of Bitcoin for a short time.

Ether’s market cap surged to a high of US$1 billion in the Spring of this year. The smaller market cap means that it is easier to push the price around. Large whales can cause significant price volatility using relatively little capital. Many think this is counterproductive to a successful currency. But without greedy and impatient speculators, where will the liquidity come from?

Monero’s impressive rise from obscurity has captivated traders over the past month. Figure 3 is the 7 day realised volatility of Monero. At times, Monero has become the most traded product on BitMEX. Traders are flocking to the Monero futures contract, XMR7D, because the price can move by percentage points within a few minutes. With 10x leverage, you can double your stack quite quickly.

Bitcoin illustrates that for any coin to be successful, speculators must be attracted first by high volatility. The coin may be illiquid, but that is exactly what produces the wild price swings that keeps traders captivated. Volatility is the best form of advertising. A coin that is not volatile has either died, or is on the path towards reserve status like Bitcoin.

It is telling that the most liquid pair for any altcoin, is its exchange rate vs. Bitcoin. At the end of the day speculators want their profit denominated in the world’s most “stable” cryptocurrency.

Data Sources:

Figure 1, Quandl

Figure 2, ETH BitMEX and Bitcoin Quandl

Figure 3, BitMEX

Breaking Down Bitcoin / CNY

Figure 1.

Short CNY and long Bitcoin has been a good trade over the past 18 months. As seen in Figure 2 below, the Chinese currency has depreciated to a 6-year low of 6.68087 against the US Dollar, with CNH (the offshore freely traded version) trading at levels of 6.6833. The premium between XBT/CNY and XBT/USD is trading relatively weak however, currently pricing at a small discount as seen in Figure 1 above. With analysts predicting further devaluation in the Yuan, we are on course to see a continuation of this bullish trend in Bitcoin and a pick-up in the premium.

Figure 2.

CLSA, a brokerage and investment group known for their Asian research, predicted back in April that the CNY will head towards 8.00 by the end of next year. More recently, a Reuters Poll conducted in late August of over 60 FX strategists showed a more conservative, yet still bearish case, that the CNY is expected to depreciate to 6.80 by the end of February and by the end of August 2017 further weakness to 6.89.

As the chances of the Fed raising rates increase, and once they eventually do raise rates (whether before or after the election), the USD will strengthen (as it has been recently). This makes it harder for China to keep the currency pegged to the greenback as they need to sell their reserves to support the Yuan. Further depletion will prompt China to adopt a free-float regime which could cause immediate selling in the Yuan, as traders are free to price their views on the impending issues in China such as the much-anticipated debt bubble.

As Chinese become more and more concerned about the value of their local assets they will continue to look for ways to convert into another currency or asset. One method the Chinese have used is known as the EB-5 Immigrant Investor Program, allowing foreign investors to obtain a US green card and investing in the US at their will, by first investing in specific US based projects (predominantly real estate projects such as apartment complexes and shopping malls). This method has taken a hit over the years given the restriction on capital flows out of China. In fact I have had several US firms approach me enquiring about Bitcoin as a “legal” method for moving funds out and into their programs. However, at high premium above 3% this approach becomes unattractive for these firms.

The current cheap premium entwined with the impending rate rise may be the trigger to spur another round of purchasing by the Chinese, pushing the premium and bitcoin up with it.

Bitcoin Traders Should Pray For A Federal Reserve Rate Hike

After the biggest money-printing episode ever recorded in human history, it appears that central bankers are realising the limits of quantitative easing. The Federal Reserve (Fed) has indicated that they are planning to raise interest rates. The Fed next meets on the 20-21st of this month.

Grandma Yellen indicated September and December rate hikes are on the table. Some analysts expect the Federal Funds rate to increase by 0.50% by year end.

Apart from banks and insurance companies, increased rates are not welcomed. Non-financial corporates have gorged on free money to complete stock buybacks and M&A deals. Higher borrowing costs will be disastrous for their highly levered balance sheets. That is why equity indices react negatively to any hint that the punch bowl will be removed.

Bitcoin dances to the beat of the PBOC. As I have written about on numerous occasions, the PBOC is staring at a banking system collapse of epic proportions. The amount of credit extended in the past eight years dwarfs the amount extended during the US Subprime Mortgage crisis by multiples.

As long as the Fed keeps rates low, the PBOC is able to quietly and slowly deleverage China’s collective balance sheet. A stronger USD makes Chinese goods more expensive globally. It also encourages more capital flight into a “safer” and stronger currency.

Each day at 9:15am Beijing time, the PBOC sets the USDCNY onshore exchange rate. Since August 2015, any time the Fed has hinted at or raised rates the PBOC has accelerated the devaluation of the Yuan. A devaluing Yuan signals that the global economy is not well, and deflation is being exported by the workshop of the world. That is not positive. As a result, during periods of Yuan depreciation, global equity markets fall.

Through quantitative easing the Fed attempts to push American savers and corporates into equity markets. Due to the lack of positive risk-adjusted and inflation-adjusted yielding assets, savers and corporates have responded correctly. The S&P500 is at all time nominal highs, and the US equity market has been one of the best performing markets globally since the Global Financial Crisis in 2008.

Given that a significant percentage S&P500 earnings are international, a faltering China signals global malaise. As such the index trades violently lower. When the S&P500 is falling, the Fed is in panic mode. It forces the same savers and corporates to dump shares in favor of cash. This cash will sit in a bank account, and the demand for credit will fall.

After a sufficient fall in the S&P500, the Fed relents and proclaims due to “market forces” the time just isn’t right for a rate hike. The PBOC then halts the devaluation, and the game continues into the next quarter.

Yellen’s Jackson Hole remarks were very hawkish. The rhetoric was subsequently backed up by various Fed governors during public speeches. The PBOC noticed and began weakening the Yuan towards 6.70.

If the hawkish rhetoric translates into action, the PBOC will allow onshore USDCNY and offshore USDCNH to trade much higher (the higher the level, the weaker the Yuan). Bitcoin reacts positively to a weaker Yuan.

If the Fed’s threats of a rate hike are perceived as credible, the market will attempt to front run the PBOC and short the Yuan by selling offshore CNH. In response, the PBOC instructed state owned Chinese banks to restrict lending of CNH in order to drive up the cost of funds. [Bloomberg] If you want to short CNH, you usually borrow it from one of the large Chinese banks. If the interbank CNH rates become prohibitively expensive, shorts are forced to cover.

Watch USDCNH, the PBOC has been defending 6.70 in the offshore market. If they allow that level to be breached, it means they are willing to tolerate a much weaker Yuan. Bitcoin will soar.

The best hope for a retaking of $700 and then $800 is for the Fed to raise rates next week. If the S&P500 nose dives before the meeting then the Fed will not hike, and all attention will shift to the December meeting.

Trade Zcash Futures on BitMEX

zcash-logo

Zcash (ZEC) is the hot new altcoin this fall. Zcash aims to bring complete privacy to digital currency transactions.

Zcash offers total payment confidentiality, while still maintaining a decentralized network using a public blockchain. Unlike Bitcoin, Zcash transactions automatically hide the sender, recipient, and value of all transactions on the blockchain. Only those with the correct view key can see the contents. Users have complete control and can opt-in to provide others with their view key at their discretion.” [z.cash]

The Zcash genesis block is scheduled to launch on October 28th. After the astonishing rise of Monero over the past few weeks, many traders are equally bullish on Zcash.

ZEC coins will be distributed by mining and earning the block reward; there will be no Initial Coin Offering. As a result, the initial supply of ZEC coins will be limited.

Most traders want economic exposure to ZEC rather than buying, holding, and storing ZEC itself. Futures contracts allow traders to gain long or short exposure without ever touching ZEC.

Zcash funded development partially by pre-selling ZEC coins to investors. A portion of each block reward will be given to initial investors for a period of time. The spot market will be quite illiquid until enough blocks have been mined, and block rewards earned. Initial investors can forward sell their allotment of ZEC by selling futures contracts.

BitMEX is committed to providing price discovery for new and promising digital currencies. We are proud to be the first exchange to allow trading of any kind for ZEC/XBT. The BitMEX Zcash / Bitcoin futures contracts allow traders to go long or short with leverage on the ZEC/XBT exchange rate.

Product Details:

Symbol: ZECZ16
Underlying: ZEC/XBT
Contract Value: 1 ZEC
Quote Currency: XBT
Expiry Date: 30 December 2016 12:00 UTC
Settlement Currency: Margin and PNL are denominated in Bitcoin
Leverage: 2x

Given that ZEC/XBT has not begun trading on any spot market, we do not know which exchange will have the most liquid market. We will make an announcement in early November about which spot exchange will be used for the settlement price.

Flavour of the Month: Monero

Bitcoin (XBT) and its darker sibling, Monero (XMR), have had an interesting past few days, with XMR’s epic pump over the past 2 weeks after the announcement of inclusion in the DNM. XBT recently decided to wake up from its $565 – $580 range that it has been trading in and has pushed through the $600 barrier with good support behind it, rising above the 12H Moving Average.

The push up coincides with the drop on XMR of 33% from a high of $15 down to a local low of $10 over the weekend. That is, a lot of profit taking from XMR and back into XBT has happened. This however has been short lived, with XMR’s price recovering back to almost $14. The 6HR return correlation between XBT and XMR is -21% over the past 10 days.

Ethereum (ETH) and Ethereum Classic (ETC) have both taken a step out of the limelight with traders putting their cash towards XMR instead. Both altcoins are the worst performers in the above chart, giving a return/volatility figure half of what XBT has given.

Given the short-term negative correlation on XBT, traders should be wary for further moves ahead for XBT. The next resistance level tests are at $630, $650 and $680. If we see traders moving back into the King, XBT, then we may see more conversion from XMR resulting in a price decline.

BitMEX offers 10x leverage on XMR. Look for a short-term sell with tight stops in case we see a reversal of correlation.

Risk Disclaimer

What If Deutsche Bank Was A Bitcoin Exchange?

Gold is the most trusted form of money globally. Up until the 1970’s most paper currencies were backed in some shape or form by the barbaric relic. Due to the monetary folly of negative interest rates, western global savers are rediscovering the money-good properties of the shiny metal.

In Germany, retail banks recently began charging their depositors to hold their money. This prompted a flight to cash under the mattress. German savers began buying safes in record numbers. Various gold exchange traded products became even more popular.

Xetra-Gold is one of the most popular Exchange Traded Commodities (ETC). The key selling point is that clients can request delivery of the physical gold that their paper derivative represents at any time. Due to the financial chicanery over the past 7 years, investors rightfully do not fully believe they own gold unless they can physically touch it.

Recently GodModeTrader published a troubling report about a Xetra-Gold investor whose request for delivery was denied. Xetra-Gold is not some fly-by-night operation. The fund has over 1.5 billion Euros of assets, and is sponsored by Deutsche Bank.

After this report gained traction, Deutsche Borse and Deutsche Bank released a statement. The statement contained no substance, and did not answer the crucial question of why the client could not receive delivery of his physical gold.

Due to social and governmental conditioning, most people place immense trust in the banking system. Events such as these are rarely reported by mainstream news outlets such as The Financial Times, The Wall Street Journal, or Bloomberg, underlying this level of misplaced trust.

What if Xetra-Gold were a Bitcoin exchange? Every time a Bitcoin exchange is hacked, it makes the front page of the major publications and starts a bank run on the remaining Bitcoin.

But if exchange traded products with billions of Euros under management cannot make good on their fiduciary responsibilities, why is there not a bank run on these organisations? Why doesn’t every holder of Xetra-Gold paper request delivery immediately and determine if the gold actually exists where it should?

Although gold has been the best store of wealth over many millennia, certain properties of the metal lead to third parties holding it on our behalf. Gold is heavy and voluminous; transporting, storing and insuring a large amount of gold is expensive. Gold can be counterfeited; there are many instances where gold bars and coins have been found to include various amounts of tungsten or other cheaper metals. And, like Bitcoin, gold can be stolen.

Retail savers want a scarce, non-governmentally controlled asset that can be bought or sold easily, and they can fully control at all times. The Xetra-Gold example illustrates the pitfalls of entrusting saving wealth to paper derivatives.

Bitcoin is scarce and not backed or controlled by any government. The authenticity of any user’s Bitcoin holding can be independently verified by anyone. Bitcoin can be bought or sold in tiny quantities 24/7, with spreads tighter than the physical gold market. Most importantly, Bitcoin can be stored for zero cost on free-to-download apps on any smartphone.

Bitcoin is volatile, but so is gold. In the spring of 2013, gold dropped 30% in a few hours. It is not uncommon to see 5% pumps or dumps in the gold markets in 5 minute candles. The volatility of Bitcoin is not an excuse to disregard it as a means of wealth preservation.

Retail savers escaping the insanity of negative interest rates should consider investing in Bitcoin over gold. At least with Bitcoin, you are in full control of your wealth at all times.

Gnome vs. Dragon

Last Friday, Grandma Yellen, aka The American Garden Gnome, spoke at the Jackson Hole symposium. While Obama was golfing, Yellen, the real master of the universe, spoke about the future of US monetary policy.

Yellen green-lit a rate hike sometime in 2016. Whether it happens before or after the US election is debatable, but it is definitely on the table.

The PBOC Governor Zhou, aka The Chinese Grand Dragon, is grappling with the largest credit bubble in human history. While the PBOC is very patient, rising USD rates are not desirable. China is attempting the largest-ever economic rebalancing in human history, from an investment-led to a consumption-led economy. Those who got rich over the last 50 years will see their economic benefits eroded in favour of household consumers.

This process is politically dangerous. Many elites are not happy, but Xi Jinping’s anti-corruption drive is quickly bringing them to heel. Last week the former head of the National Bureau of Statistics was indicted on corruption charges [Reuters]. This is the dude who cooked the books, but in reality he was only doing what he was told. Now he faces a bullet. The message is clear.

Even though the stated policy from Beijing is to economically empower households, credit is still being extended on generous terms to State Owned Enterprises (SOE). Beijing isn’t all stick, a carrot must still be extended to ensure support amongst those with local power bases. The PBOC is fighting a herculean battle to ease on one hand, and tighten on the other.

The PBOC’s task becomes increasing difficult with a strong USD since China decided to hitch its star to the USD. China from the 1980’s until now has exported goods and capital to America. The DXY Index (US Dollar Currency Index) weakened to a low of 72.00 in Spring 2008. Since then, it has rallied over 33%. The CNY has strengthened 5% in USD terms and manufacturing wages are up 128% over the same time period [Sources:TradingView CNY, TradingView DXY and Trading Economics]. In FX terms, Chinese goods are 38% more expensive, and profit margins of manufacturers are collapsing. Further USD strength will be crippling to the economic base of China. A strong USD also intensifies capital outflows as rich citizens rush to convert their wealth into a strong and rising USD.

Each time the Fed has thought about or actually completed a rate hike, China has responded forcefully by devaluing the Yuan. A weaker Yuan causes ripples of volatility in the global markets. The most profitable trade since the Global Financial Crisis has been to short volatility. The whole investing world is short interest rates, especially on the long end of the yield curve. This negative convexity will wipe out whole swaths of the investing public if volatility rears its ugly head again. The Fed will do whatever it takes to forestall the day of reckoning.

Yellen, in the past, has cited concerns over global capital market volatility as a reason why rates were not raised. The PBOC will exploit the Fed’s fear of volatility by resuming the CNY devaluation.

The Fed communicated that a summer rate hike was on the table. China scuttled those plans by weakening the CNY to 6.70 in mid-July. After the Fed backed down, The PBOC then allowed USDCNY to fall to a low of 6.62 in mid-August. CNY has been weakening ever since, and today they weakened the CNY further to 6.6856.

The Fall 2015 Bitcoin rally began with the game changing 1% devaluation of the CNY in August. The Fall 2016 Bitcoin rally will be sparked by a tit for tat devaluation of the CNY aimed at deterring the Fed from raising rates. The Fed’s credibility is on the line even more so than before. This time the Garden Gnome might snuff out the Dragon. The ensuing fireworks will be very positive for Bitcoin.