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Crypto’s Watershed Moment Could Be Q1 2019

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If there’s one thing that the 2018 cryptocurrency market has taught investors it’s that you have to be able to see the forest from the trees. Even as the bitcoin price remains approximately 70% from its peak, Fidelity Investments and Bakkt have proven that the industry infrastructure that has been missing has begun to take shape. Today the bitcoin price is hovering at $6,542 on modest volume of $3.2 billion. In order for any gains to take hold, however, trading volume will have to strengthen to more robust levels.

Meanwhile, market strategists like Fundstrat’s Thomas Lee are sticking to their bullish price forecasts of more than $20,000 by year-end while Galaxy Digital’s Mike Novogratz has revised his outlook to the downside. One thing the market seems to agree on is that institutional capital will be a catalyst for gains, and if you ask traders like BKCM’s Brian Kelly, the tide has already begun to turn.

“I would expect over the next three months, six months you start to see the proverbial herd really start to turn in this direction,” he said, adding that based on anecdotal evidence from his hedge fund clients, the plans of big investors to enter crypto are afoot.

The first quarter of 2019 is largely expected to be a watershed period for crypto, as not only are big investors expected to enter the market but according to Kelly, it’s also when traditional retail brokerage houses could unveil their crypto trading solutions to the market.

Fidelity Investments is a first-mover, but their product leaves out individual investors. In an interview with CNBC, Kelly suggested that Schwab and E*Trade could already be working on crypto solutions for retail investors that could be introduced as soon as Q1 2019. Kelly pointed to crypto trading apps like Robinhood, which was able to attract 1 million users to its crypto trading app in a few short days while traditional competitors missed out.

Satoshi’s Vision

But not all of the crypto community is anxiously awaiting institutional adoption. Jackson Palmer, who created one of this year’s best-performing cryptocurrencies, Dogecoin (DOGE), warned that “the institutionalization of crypto will heavily recentralize both power structures and token distribution. So you can say goodbye to much of the original vision for the technology.”

Indeed, Satoshi’s vision was for a “peer-to-peer electronic cash system”, and as the launch of bitcoin futures has proven, the impact of institutional trading products could have negative consequences. But as Kelly pointed out, the industry needs “fresh capital.” And institutional involvement is also a sign of a maturing Bitcoin network, one whose adoption is likely to increase as recognizable brands continue to enter the space.

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 70 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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ICO Funding Has Slowed to a Crawl; Bithumb Reportedly Eyes Security Token Offerings

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The amount of money flowing into initial coin offerings (ICOs) plunged in October to levels not seen since before the crypto boom took off in early 2017, as regulatory uncertainty and bear-market conditions continued to take their toll.

ICO Funding Plunges

Crypto startups managed to raise a mere $54.5 million in token sales last month, the lowest haul since March 2017, according to ICOData.io. That’s a far cry from the $1.66 billion raised in December 2016 and the $1.52 billion-dollar haul from this past January.

ICO funding has declined in each of the last four months following a decisive shift in market dynamics earlier in the summer. Tokens sales attracted nearly $913 million in investments in June; one month later, that figure had fallen to less than half.

For all of 2018, 1,150 ICO projects have raised in excess of $7.16 billion, easily outpacing last year’s haul. Although that still comes out to a respectable $6.2 million average raise per project, the amount of money flowing into the ecosystem has fallen sharply from peak levels.

Bithumb Pursuing STO Platform: Report

The fallout from the ICO boom has given rise to a new paradigm that seeks to address many of the longstanding issues plaguing token sales. The security token offering (STO) is a financial security that mirrors traditional shares in a publicly-traded company. STOs are governed by federal laws set forth by the U.S. Securities and Exchange Commission (SEC), putting them in the same bracket as traditional securities. This includes specific consumer protection guidelines and rules for soliciting investment from the general public.

According to a new report from South Korea’s Yonhap news agency, cryptocurrency exchange Bithumb is planning to launch its own STO platform. Citing industry sources, Yonhap reports that the exchange has already entered into an agreement with SeriesOne, a U.S. fintech firm, to begin developing the STO exchange, which would allow it to list security offerings in the world’s largest economy.

Yonhap reports that SeriesOne is looking to launch the security token platform during the first half of 2019, with Bithumb providing necessary resources to operate the exchange.

“SeriesOne actively sought to strike a deal with Bithumb after assessing it as the most suitable partner,” a Bithumb official said, as quoted by Yonhap. “Bithumb will ramp up efforts to develop into a global financial firm as the blockchain-based asset tokenization is expected to spread globally down the road.”

A platform backed by one of the world’s largest cryptocurrency exchanges could entice more startups to register as a security and actively seek contributions from U.S. investors. Until now, blockchain companies have been hesitant about entering the U.S. market due to more stringent regulations.

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 666 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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Is Goldman Sachs Finally Launching a Bitcoin Trading Product?

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After a full year of speculation, Goldman Sachs Group Inc. may finally be following through with plans to launch a bitcoin trading product. According to The Block, Goldman has already begun a limited roll-out of its new trading platform.

About to Make a Splash?

Citing sources familiar with the matter, The Block reported Tuesday that Goldman Sachs is already signing up new customers for a forthcoming bitcoin derivatives product. Although details remain scant, the New York mega firm appears to be pushing for a non-deliverable forward – a cash-settled product that is comparable to futures but isn’t traded on an exchange.

Last year, Bloomberg reported that Goldman Sachs was planning to launch a full-fledged bitcoin trading desk by mid-2018 in its quest to bring crypto trading to mainstream investors. The bank has since scaled back that timeline and has apparently done away with the concept for now. The trading desk was initially conceived to support physical cryptoassets, including bitcoin. Although the bank has been involved in clearing bitcoin futures contracts that trade on CBOE and CME, Goldman announced back in August that it had “not reached a conclusion on the scope of our digital asset offering.”

Rumors linking Goldman Sachs to crypto offerings continue to swirl. Earlier this month, Abacus Journal reported that the bank was actively seeking the creation of an Ethereum derivatives product that would serve many of the same functions described above with respect to bitcoin. According to The Block, those rumors are not accurate.

Institutional Adoption

Putting digital assets in the hands of institutional markets is considered by many to be the greatest hurdle standing in the way of mass adoption. This line of reasoning also believes that institutional access to the market, whether physical or derivatives-based, could spearhead the next wave of growth. While significant efforts have already been made to democratize cryptocurrencies and temper fears over custody and consumer protection, adoption at the institutional level remains limited.

Intercontinental Exchange (ICE) is launching its new cryptocurrency trading platform, Bakkt, in mid-December. The platform will initially offer physically settled bitcoin futures contracts as opposed to the derivatives contracts currently offered by the Chicago-based clearing houses. This means traders who purchase a futures contract will receive physical bitcoin on settlement.

ICE’s foray into cryptocurrencies could be a significant step in the market’s gradual pivot toward institutional investment. In the absence of a bitcoin exchange-traded fund (ETF), physical futures could serve as a promising alternative for investors looking to diversify into crypto without the risk of trading on a virtual exchange.

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 666 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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Crypto M&A: Bitstamp Acquired by Belgian Investment Firm

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UK-based Bitstamp, which is the largest crypto exchange in the European Union, is being acquired by Brussels-based investment firm NXMH. Bitstamp, whose trading volume hovers at approximately $45 million over the last 24 hours and which only supports leading cryptocurrencies, will keep its management team and vision intact. The deal is a sign of shifting sands in the blockchain industry during a year in which market prices and trading volumes have plummeted.

Bitstamp’s reasons for being acquired are three-pronged:

  • “quality of the buyer”
  • “quality of the offer”
  • “the industry is at a point where consolidation makes sense”

According to Reuters, it’s an “all-cash deal”, the size of which is being held close to the vest. Bitstamp reportedly boasted a valuation of $60 million as of 2016. Bitstamp will gain access to the deep pockets of NXMH, which reportedly has AUM of EUR 2 billion and which should only strengthen the exchange’s competitive position. NXMH, whose investment approach focuses on China, Korea and Japan, is no stranger to crypto, with its parent company NXC having acquired South Korea’s Korbit exchange last year.  NXMH is acquiring a majority stake of 80% while Bitstamp CEO Nejc Kodrič will hold into 10%, according to Reuters.

Further industry consolidation could unfold with exchanges buying exchanges or there could be a trend emerging in which investment companies acquire minority and majority stakes. Bitstamp reportedly has been being courted by potential buyers since mid-2017, which suggests that other exchanges are similarly being pursued. Meanwhile, leading U.S. crypto exchange Coinbase is reportedly pursuing an IPO, though no signs of a public listing could be found.

With the BTC price having shaved off more than 50% of its value this year, exchanges are experiencing lower trading volumes versus a year ago, which no doubt has eaten into profits. Reuters reports Bitstamp’s daily turnover at $100 million, but CoinMarketCap suggests it’s less than half that amount. Bitstamp, whose humble beginning sounds a lot like that of Microsoft, having been “founded in a garage with two laptops and EUR 1,000 seven years ago,” maintains that the integrity of the exchange will remain the same.

One Step Forward, Two Steps Back

For all the progress that the industry has made, there are signs of an apparent “exit scam” unfolding on a small Canadian crypto exchange dubbed MapleChange over the weekend. If that proves to be the case, it’s two steps forward one step back for a crypto community that has worked to remove the stigma attached to the nascent industry.

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 70 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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