Crypto Markets Await Next Major Catalyst as Facebook Acquires Smart Contract Firm

Crypto markets were little changed on Tuesday, as a lack of trading catalysts kept participants on the sidelines. A sharp decline in volatility for bitcoin provides further confirmation that narrow ranges will continue to be the norm for the foreseeable future.

A Lack of Direction

The total value of all cryptocurrencies swung back below $114 billion on Tuesday, according to CoinMarketCap. At the time of writing, the market capitalization was $113.5 billion, down from a Monday high near $114.3 billion. Markets have been mostly rangebound since Jan. 28, the last major breakdown in price for bitcoin and the leading altcoins. On that day, bitcoin and some of its peers tumbled to fresh six-week lows.

Related: Bitcoin Risks Bigger Pullback as Prices Fall to Six-Week Low.

By Tuesday, most of the top 20 cryptocurrencies had seen modest movement. Bitcoin continued to trade below $3,500, little changed from last week’s levels. XRP was down 1.1% at $0.2982. Ethereum was virtually unchanged below $108.00. Litecoin edged up 0.7% to $34.16.

The biggest percentage losses were reported by NEM and Waves, which fell 5.8% and 4.6%, respectively. The NEM Foundation is struggling to stay afloat after the year-long bear market caused the price of its XEM token to crater. More on this story: Crypto Winter’s First Victim; NEM Foundation Crumbles as XEM Coin Price Sinks.

Overall trading volumes remained well north of $16 billion, with spot exchanges seeing a greater share of the daily turnover. BitMEX, a popular crypto derivatives platform, processed just 8% of bitcoin transactions on Tuesday. The exchange accounted for nearly a third of bitcoin trades during the depths of the bear market in November and December.

Bitcoin, the leading digital currency, has witnessed a sharp drop in volatility over the past four weeks. As of Monday, the 30-day bitcoin volatility index had fallen to 2.34%, the lowest since mid-November.

Facebook Embracing Cryptocurrency?

Facebook’s blockchain division has reportedly acquired a smart contract company by the name of Chainspace, a move that could catapult the social media giant to the forefront of crypto innovation and product development.

The news was initially reported by Cheddar, which described the purchase of Chainspace as an “acqui-hire.” That’s because a Facebook spokesperson has already confirmed that former Chainspace employees were already working within the company’s blockchain division. However, no further details were provided.

Chainspace describes itself as a “planetary scale smart contracts platform” that uses a “distributed web of blockchains for scalability, speed and privacy.” The company was founded by researchers at the University College London.

Adding to the intrigue was the following banner that appears on the official Chainspace website:

“We’re excited to announce that the team is moving on to something new. Chainspace code and documentation will still be open source, and all previously published academic work remains available.”

Rumors linking Facebook to cryptocurrency have been circulating for quite some time. As Hacked reported back in June, the social media giant has been linked to speculation of a possible takeover of Coinbase, one of America’s premier crypto exchanges. While the rumors couldn’t be verified, Facebook has been quietly expanding its blockchain capabilities and may have already started working on a new cryptocurrency for its WhatsApp messaging application. The cryptocurrency has been described as a stablecoin that would allow users to transfer money directly through WhatsApp.

The WhatsApp speculation made our weekly roundup on Dec. 21.

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.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi