Four Major Developments in Crypto This Week Suggest Bull Market is Just Getting Started
The cryptocurrency market is up a whopping 89% this year, but the rally could just be getting started as consumers, retail traders and institutions get involved with digital assets. Developments this week point squarely in the direction of greater cryptocurrency adoption among the players who matter most.
Bakkt to Test Bitcoin Futures
Intercontinental Exchange’s highly-anticipated Bakkt trading platform will finally get a test-net in July, more than seven months after its planned launch date.
In a blog post published on Monday, Bakkt CEO Kelly Loeffler said the market for physically-settled bitcoin futures will be available for testing beginning in July. The futures contacts were developed in collaboration with ICE Futures U.S. and ICE Clear US, and under the direct supervision of the Commodity Futures Trading Commission (CFTC).
“In conjunction with our exchange and clearing partners at ICE, we’ll be working with our customers over the next several weeks to prepare for user acceptance testing (UAT) for futures and custody, which we expect to start in July. We’ll provide more details in upcoming posts, but we expect to use UAT to ensure that customers have time to onboard and can test the trading and custody model we’ve built to their satisfaction.”
Bakkt is a much larger initiative that spans institutional investing, custody services and payments. It has attracted more than $740 million in private funding despite not having a single customer yet.
Whole Foods and Nordstrom to Accept Crypto Payments
Efforts to bring cryptocurrency to mainstream commerce took a major leap this week after Forbes reported that several major retail chains will begin accepting bitcoin payments.
High-profile retailers like Amazon-owned Whole Foods, Nordstrom and Crate and Barrel are said to have joined forces with the Winklevoss-backed Gemini exchange and Flexa, a payment startup, to start accepting phone-based crypto payments.
The payment service works “works by piggy-backing on the digital scanners that many big retailers use to accept phone-based payments from their apps and from digital wallets like Apple Pay,” Forbes said.
According to Forbes, Flexa was able to convince retailers to join the initiative by showing them an easy way to configure their scanners to recognize payments from Spedn, its cryptocurrency app. The store cashier doesn’t even have to know that the customer paid in crypto; the customer simply scans their phone and the merchant receives instant payment.
Microsoft Building on the Bitcoin Blockchain
U.S. software giant Microsoft announced on Monday that it is developing a decentralized identity (DID) network on top of the bitcoin blockchain, offering another tangible use case for the largest distributed ledger.
“Today, we’re announcing an early preview of a Sidetree-based DID network, called ION (Identity Overlay Network) which runs atop the Bitcoin blockchain based on an emerging set of open standards that we’ve developed working with many of our partners in the Decentralized Identity Foundation,” Alex Simons of AZURE wrote on Monday.
By leveraging blockchain technology, Microsoft is able to enhance the throughput of its DID systems to “achieve tens-of-thousands of operations per second.”
The DID is based on Microsoft’s belief that every individual needs a digital identity they can control. The new initiative is currently seeking input from open-source developers ahead of the mainnet launch later this year.
Institutional Demand Surges
A year-long bear market wasn’t enough to scare off institutions. As the Grayscale asset manager recently reported, institutional interest in cryptocurrency is growing by the day.
As of May 13, Grayscale’s Bitcoin Trust (GBTC) controlled $1.7 billion in assets under management (AUM). Funds that hold other cryptocurrencies amounted to roughly $100 million in AUM.
5/13/19 UPDATE: Holdings per share and net assets under management for our investment products
— Grayscale (@GrayscaleInvest) May 13, 2019
Grayscale has attracted a steady stream of capital over the years, with overwhelming interest concentrated in its bitcoin fund. This allowed Hacked to conclude back in April that we may be entering a new period of bitcoin maximalism. Given bitcoin’s growing dominance rate, that may in fact be the case.
In the first quarter of 2019, total investment into Grayscale products totaled $42.7 million, with average weekly investments valued at $3.3 million. Of that total, the Bitcoin Trust brought in $3.2 million. Nearly three quarters (73%) of the investment came from hedge funds.
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.
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