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Bitcoin Could See Credit Card Companies Sweating, Says Bank Report

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A recently published bank report by Spanish banking giant Banco Santander is foreseeing a future wherein – if bitcoin is adopted in the mainstream – the fundamental business model of credit and debit card companies could be uprooted.

A research report [PDF] was published earlier this week by Santander Investment Securities (SIS), a subsidiary owned by the Spanish banking group. The report and its findings came after an August meeting which saw SIS researchers, local investors and most notably, Mercado Bitcoin – the largest bitcoin brokerage in Latin America.

The bank-sanctioned report, titled “To Bitcoin or Not to Bitcoin?” assess what bitcoin could have in store for banks and financial services in Brazil.

In it, the impact of a future with wider adoption of the cryptocurrency and its underlying technology, the blockchain, upon various sectors of the financial services ecosystem is predicted. Card issuers and acquirers, card brands, exchanges and Brazilian banks are all taken under the scanner to see the threats or opportunities that bitcoin and blockchain brings.

Card Issuers Closest to Bitcoin’s Rising Tide

The report does not pull any punches, as researchers suggested:

Simply put, we believe a future with bitcoin transactions with their low (or no) costs and fees puts at risk the entire business model of credit and debit card companies. Acquirers such as Cielo (through net MDRs and POS revenue) and issuer banks (through interchange fees) potentially could suffer the most, in our view.

The researchers followed up their claim with a list of the disadvantages of a card payment in comparison to a bitcoin payment. They are:

  • Long payout time for merchants; 30 days as opposed to 10 minutes, with a bitcoin transaction.
  • The lack of card contracts, with bitcoin.
  • Card fees and other middlemen costs.
  • Local taxes as opposed to no taxes with bitcoin
  • Operational costs from IT, back-office to process the transactions with cards.

As more merchants and suppliers accept bitcoins, “the risk increases” for card issuers, the researchers note.

Blockchain Benefits for Banks and Cards

While card issuers fall under the endangered category in a big bitcoin future, the researchers see card brands – the likes of Visa and Mastercard – to benefit from blockchain technology.

“[T]hey could benefit from the blockchain concept in order to lower transaction, IT, and back-office costs,” the report adds.

blockchain

Furthermore, the report cites a Visa initiative where it is testing a payments system based on the blockchain, to process interbank transactions. The upside, compared to a traditional transfer method such as SWIFT, would be significantly faster settlement times, reducing credit risk over domestic and cross-border transfers and cost cutting.

“In our view, it is definitely a challenge to Swift,” the authors wrote.

Meanwhile, the authors of the report also believe banks have already started taking action in preparation for the cryptocurrency , even though they perceive banks to consider digital currencies’ technology to be in their “early stages.”

With this in mind, banks are already looking toward their own digital currencies such as Goldman Sachs’ SETLcoin, the report stated.

It added:

We believe the blockchain concept has the potential to redefine money transactions in the banking world, taking advantage of the power of decentralized computer networks to eliminate difficult, time-consuming and costly trading among banks. IT, transaction costs, the banks’ huge back-offices, capital requirements – all of those could change in a material way, in our view.

Altogether, the authors believe that in the future, that the answer to the report’s title, would see a response heavily leaning toward the cryptocurrency.

[W]e believe that the question in this report’s title will eventually be answered with a resounding “Yes, to bitcoin.”

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4 stars on average, based on 1 rated postsSamburaj is the contributing editor at Hacked and keeps tabs on science, technology and cyber security.




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  1. Gimmel Yod

    October 3, 2016 at 7:53 pm

    reading all of the talk about BitCoin by the “banks” is like listening to old fogies talk about the “new innovation of the DVD”. They’re already behind the curve. BitCoin is AWESOME but it’s most awesome as a digital store of wealth — eventually destined to become a digital global reserve currency (worth about 50000x of it’s current (2016) value). It will be ETHereum that composes the digital freight-train that fukks over the current established banking system. And the fact that the “banks” are still focused on BitCoin tells me that they’re too slow to “get-it” until it’s too-late.

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Analysis

Crypto Update: Another Rally Attempt in Crypto-Land

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The major cryptocurrencies are all trading slightly higher today, following two bearish days that brought them back to last week lows, and for now, another breakdown has been avoided, despite the overwhelmingly bearish broader picture. The modest bounce left our trend model on sell signals across the board, and odds continue to favor new lows in the coming period, so traders and investors should remain defensive here.

The top coins are trading well below the weekend bounce-highs and without new swing highs, the short-term trend also remains clearly bearish, even considering the deeply oversold long-term momentum readings and the abysmal sentiment. So while a larger scale bounce remains possible in the coming weeks, perhaps following a failed breakdown pattern, bulls should still be patient until we sell clear technical improvements in the segment.

With that in mind, traders and investors shouldn’t enter positions even in the slightly stronger coins, and odds still favor the continuation of the bear market, with new lows likely in the coming days. That said, a successful test or a failed breakdown could trigger a larger scale correction, with the broader picture still being deeply oversold and with investor sentiment still being very negative. For now, there is no sign of an imminent rally, with all eyes on the $3000 in Bitcoin.

BTC/USD, 4-Hour Chart Analysis

Bitcoin rallied as high as $3450 today, but it failed to get close to the $3600 resistance and the weekend high, so the short-term downtrend remains intact despite the bounce. For now, our trend model is still on sell signals on both time-frames, and traders should stay away from entering new positions here, with the long-term picture also being clearly bearish.  Further resistance is ahead in the $4000-$4050 zone, while key long-term support is found near the $3000 price level.

ETH/USD, 4-Hour Chart Analysis

Ethereum is stuck below the key $95-$100 zone even following today’s bounce, keeping the coin on a short-term sell signal in our trend model. Odds still favor a move towards the next major support zone between $73 and $75, and only a quick recovery above the primary resistance zone could change the short-term trend.

The steep long-term downtrend is clearly intact in the coin, and traders and investors should still not enter new positions here, with further strong resistance zones ahead near $120 and $130.

Altcoins Avoid Breakdown but Strong Resistance Zones Lie Ahead

Dash/USDT, 4-Hour Chart Analysis

Despite yesterday’s weakness, last week’s lows held up even in the relatively weaker majors, and although that’s an early sign of stability, it’s not enough to warrant upgrades in our trend model. With still no bullish leadership present in the segment the continued technical weakness in the lagging coins, such as Dash reinforces our bearish long-term view.

XRP/USDT, 4-Hour Chart Analysis

Ripple only experienced a weak bounce, and although it continues to trade near the $0.30 level, the coin is still among the relatively weak coins from a short-term perspective and the renewed long-term sell signal is also in place.

We still expect a move towards the prior bear market low near $0.26, with a weaker support level found above that near $0.28, and traders and investors shouldn’t enter positions here, with resistance levels above $0.30 ahead at $0.32, $0.3550, and $0.3750.

Litecoin/USD, 4-Hour Chart Analysis

While Litecoin managed to hold up above its recent swing low and the $23 support level, it remains in steep short- and long-term downtrends, and we would need to see significant technical strength for even a short-term trend change.

Our trend model is on sell signals on both time-frames, and below $23, the next major support zone is found between $20 and $20.50 with strong resistance ahead near $26 and between $30 and $30.50.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 414 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Bitcoin Price Avoids Bigger Fall amid Market-Wide Consolidation

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Bitcoin traded to the upside on Wednesday, snapping a multi-session losing streak that dragged prices toward new lows for the year. The outlook on BTC and other cryptocurrencies remains overwhelmingly bearish, which means investors can expect a re-test of last week’s lows relatively soon.

BTC/USD Update

The bitcoin price reached a high of $3,570.00 on Bitfinex, a modest recovery from early-week lows. It last traded at $3,513, having gained 2.2% from the previous day. BTC values on Bitfinex had a $100 premium compared with exchanges like Coinbase, Bitstamp, Bittrex and Gemini.

Looking to the aggregate data via CoinMarketCap, bitcoin is trading hands at an average of $3,478 for a gain of 2%. Daily trading volumes reached $4.6 billion, with spot accounts driving an increasing share of the market activity. Over the last 24 hours, the BitMEX derivatives exchange processed 19.2% of bitcoin trades on virtual currency platforms. That figure was around a quarter on Tuesday.

The total market capitalization of all cryptocurrencies recovered around $110.4 billion on Wednesday, having gained roughly $3 billion from Tuesday’s low.

Volatility on the Rise

Bitcoin continues to exhibit extremely high volatility relative to the past six months, where markets carved out a narrower and more predictable trading range. The brief era of ‘stable bitcoin’ came to an abrupt end last month as market participants braced for a highly contentious hard fork of the bitcoin cash network. Markets have yet to recover from that cataclysmic event, which not only ruptured the BCH community, but diverted valuable hash power away from the original bitcoin.

The bitcoin volatility index, which tracks the daily price fluctuations of BTC over the past 30 days, has rose to 5.7% on Tuesday, according to bitvol.info. That’s the highest level since early March, when the market was facing a broad reversal from record highs.

BTC has struggled to put together a convincing recovery in the wake of the recent selloff, with prices overcoming the $4,000 barrier on only one occasion in the last two weeks. The new resistance test appears to be concentrated around $3,700-$3,800, a clear sign that the market was in the process of carving out lower highs and lower lows. On the opposite side of the spectrum, the leading digital currency has fallen to the low $3,300 on multiple occasions and appears poised to test the upper range of the $2,800-$3,200 support zone.

The general view seems to be that bitcoin still has a way to go before fully bottoming out. That largely explains why so many investors have been reluctant to enter the market at today’s prices. For the time being, attention should be paid to the aforementioned support to determine possible entry.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 696 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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If Bitcoin ETF Doesn’t Happen by February, How Will it Affect the Market?

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The Bitcoin exchange-traded fund (ETF) has already become the catalyst of the next big rally of the cryptocurrency to the minds of many investors.

Realistically, however, the U.S. Securities and Exchange Commission (SEC) could easily deem the cryptocurrency market unready of handling a large-scale investment vehicle like an ETF based on the wild volatility in the prices of major cryptocurrencies over the past year and the lack of surveillance in smaller markets.

Jake Chervinsky, a government enforcement defense and securities litigation attorney at Kobre & Kim, has said that while the probability of the approval of a Bitcoin ETF could increase over time, as of now, there only exists a 10 percent chance for the ETF to be approved.

He said:

“Here’s my prediction, with a big disclaimer. This is not in any way meant as advice. Don’t even think about trading on this. I have no idea how the ETF decision will impact the markets anyway. If the deadline were today, I’d give the ETF a 10% chance of approval. My prediction is based largely on the manipulation issue. I think the chance of ETF approval will go up over time as market structure continues to develop & more surveillance-sharing agreements are entered.”

So How Can a Bitcoin ETF Rejection Affect the Market?

Historically, the cryptocurrency market has generally not been affected by a certain event or a catalyst during both bear and bull markets.

In the bull market, regardless of negative events and news coverage, due to an overwhelming demand for crypto, the prices of cryptocurrencies tend to increase. In a bear market, as seen in the case of Nasdaq, Fidelity, and NYSE, positive announcements have minimal impact on the prices of digital assets.

The potential effect on the approval of a Bitcoin ETF on the cryptocurrency market remains unclear, and no one really knows. There have been several reports claiming that if 10 percent of investors in the stock market invest in the Bitcoin ETF, the Bitcoin price would surge to a certain amount.

But, such a vague prediction is no different than a startup thinking “China has 1.3 billion people, 10 percent of that is 130 million, so we can at least secure 130 million customers.” Some startups actually received investment from venture capital firms with this theoretical strategy and lost out in the Chinese market.

Such “if” predictions occur quite frequently in crypto. If 10 percent of the offshore banking sector invests in Bitcoin, the dominant crypotcurrency could be worth $3 trillion. If 10 percent of gold investors invest in Bitcoin, the asset could be worth $700 billion. But these numbers are merely vague estimates and in no way represent real numbers.

The rejection of an ETF approval could affect the market if the price of Bitcoin has been increasing in anticipation of the announcement.

The Case of Winklevoss ETF in July

On July 26, when the highly anticipated Winklevoss Bitcoin ETF was rejected by the U.S. SEC, the price of Bitcoin did not experience a substantial move on a weekly basis. It dropped from $8,200 to $8,000 but recovered to $8,200 the very next day.

The price of BTC could begin to increase as the February deadline of the VanEck ETF comes closer, but the market will likely not lose out more than the value it added in anticipation of the ETF, unless the price of Bitcoin increases solely due to the ETF approval.

Hence, whether the ETF is approved or not, an immediate impact on the price of Bitcoin should not be expected, especially as the bear market of 2018 extends to next year.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.1 stars on average, based on 5 rated postsJoseph Young is a finance and tech journalist based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.




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