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Nouriel ‘Dr. Doom’ Roubini Argues Against Crypto at Senate Hearing

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Economist Nouriel Roubini is kicking cryptocurrencies while they are down. In his testimony today before the Senate Banking Committee today at a crypto and blockchain hearing, Roubini argued that cryptocurrencies are “the mother of all scams and (now busted) bubbles.”

The timing of today’s hearing before skeptical U.S. Senators couldn’t have been worse, with the broader cyrpto market having shaved billions of dollars from its value overnight.  Roubini took advantage of the current sell-off, using it to his advantage and pointing to double-digit declines in leading coins like “ETH, XRP and other key cryptocurrencies.” The ETH price is currently barely holding above $200, while XRP is down by 13%, with the total value of the market hovering at $201 billion.

Chief among Roubini’s argument is that cryptocurrencies aren’t scalable and that there is “massive centralization” in an “oligopoly” that’s extremely risky. In fact, in recent days, he accused Ethereum Co-Founders Vitalik Buterin and Joseph Lubin of being “criminals” for their ETH holdings and wealth. Buterin fired back, hitting Roubini — who earned the nickname Dr. Doom for predicting the housing crisis of 2008 — where it hurts.

Skeptical Senators

Senators peppered Roubini and Peter Van Valkenburgh, who is the director of research at Coin Center, a nonprofit dedicated to protecting the open blockchain networks, with questions about bitcoin. They were seemingly looking for a way to distinguish between opportunities for technological innovation, e.g. crypto derivatives, and challenges surrounding regulation and scams.

U.S. Senators are open-minded about hearing about use cases for crypto and blockchain technology that can help the unbanked but appear skeptical about profit potential in light of this year’s 70% downturn in the BTC price and the ability to stamp out scams.

Meanwhile, Roubini may be an expert on the economy, but he knows enough about cryptocurrencies and the community that he refers to as “crypto land” to be dangerous. The blockchain, he stated is “nothing more than a glorified database.” He complained about the blockchain only being able to handle five transactions per second, adding that 80% of mining is controlled by an oligopoly.

But in defense of the crypto market, Van Valkenburgh frequently gave Mr. Roubini a wake up call on topics like TPS in which he rebutted:

“We can do a lot more. There are multiple layers being built on top of Bitcoin today that do [robot-powered] batch settlement” in which thousands of transactions can be completed.

As for Roubini’s argument about centralization, Van Valkenburgh quipped that miners with power “can’t do much.” For instance, the number of bitcoins in circulation is fixed, so they can’t change that. Also, they “can’t reallocate or move other people’s funds on the blockchain.” The worst they can do, he stated, is to “slow down the network” via a denial-of-service attack, which is the internet is similarly vulnerable to.

Market Volatility

The instability in cryptocurrency market prices this year was the elephant in the room. But as investors in any emerging asset class could attest to, there can be a “struggle to price something new,” said Van Valkenburgh, pointing to “irrational exuberance” that had, in fact, gripped the market. But institutional capital beginning to come off the sidelines, into bitcoin first and eventually other digital currencies, which is a sign of a maturing market. “We could use ETFs regulated by the SEC. We could use better [custodial solution] in general,” he added.

U.S. Senators questioned Roubini and Van Valkenburgh about the risks for Main Street investors. One Senator described that while the Winklevoss twins may be able to shoulder the risk, families risking their savings may not.

The profile of the average cryptocurrency investor, however, is someone who is “technologically sophisticated” as they must know how to manage public and private keys, Van Valkenburgh explained. The market is attractive to millennials, which reflects the ideal time to take investment risk in someone’s life.

Meanwhile, crypto exchanges have adopted “know-your-customer” standards for consumer protection. One shortfall is these companies must gain a money transmission license on a state-by-state basis, which is a cumbersome process. As a result, a federal license that encompasses a solution for market manipulation “would be a wise choice to make America a leader and protect our consumers,” Van Valkenburgh said.

While the Senate hearing on crypto may have taken place on a tough market day, the price declines are rivaled by the fact that bitcoin, while imperfect, is working.

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 67 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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Public Sale of Venezuela’s Oil-Backed Petro Cryptocurrency Slated for November

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After much controversy and speculation, the government of Venezuela has announced plans to take its state-backed petro cryptocurrency public.

Public Sale Announced

According to RT News, the public sale will commence Nov. 5, 2018, giving investors the opportunity to own a piece of Venezuela’s natural gas reserves. Government authorities describe the petro as an “instrument to consolidate Venezuela’s economic stability and financial independence, coupled with an ambitious and global vision for the creation of a freer, more balanced and fairer international financial system.”

President Nicolas Maduro claims the new cryptocurrency will not only strengthen the domestic economy, but revolutionize the global blockchain industry.

In addition to a public sale, Venezuela is incentivizing the usage of petro domestically by requiring all passport fees be paid in the virtual currency. This was confirmed on Friday by Venezuela’s Vice President Delcy Rodriguez.

Through a combination of public and private funding, the petro is intended to shore up Venezuela’s finances and give the government an additional source of revenue. The token sale could also help the South American country circumvent U.S. sanctions following its most recent election. The country hasn’t produced regular GDP data since 2015, but according to TradingEconomics, Venezuela’s economy shrank 13.2% in 2017. That followed a whopping 16.5% contraction the previous year. The economy has been in deep recession since mid-2014 as oil prices began to tank.

No Shortage of Controversy

To suggest that investors and market participants are skeptical of the petro would be an understatement. As Hacked reported last month, Venezuela has produced little evidence that the petro exists or that it raised $5 billion via pre-sale – something Maduro claimed back in March.

Reuters also visited the tiny hamlet of Atapirire – the supposed site of a booming oil industry that will be used to back-stop the petro – to investigate the government’s claims. At the time, no evidence of the petro was found.

The controversy continued last week after Joey Zhou, one of Ethereum’s developers, accused the Venezuelan government of plagiarizing parts of the petro whitepaper. In a tweet that appeared Oct. 2, Zhou said petro was a “blatant Dash clone,” referring to the Dash cryptocurrency. The whitepaper not only took an algorithm from Dash but provided a near-identical description of its proof-of-work specifications.

Nevertheless, these concerns haven’t stopped the government from doubling down on the petro and what it has to offer. Back in August, the Central Bank of Venezuela devalued its national currency, the Bolivar, by 95% and created a new petro-backed currency called the sovereign bolivar. The currency devaluation follows years of hyperinflation and economic chaos that has strangled the socialist republic.

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 643 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Cryptocurrencies

Blockchain Capital’s Bogart on Why It’s Been ‘Best Week’ for Crypto

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Now that Yale University has earmarked an allocation to cryptocurrencies, it could be the start of an institutional wave. Although the Yale endowment, whose value is is a whopping $29.4 billion, isn’t investing directly in bitcoin or another digital currency, it’s gaining exposure through a couple of leading crypto venture funds.

The development plus a couple of other positive headlines should have ignited a rally, but instead, the bitcoin price is little changed. Blockchain Capital Partner Spencer Bogart isn’t deterred by the subdued market reaction, suggesting instead that this has been the best week of 2018 for crypto, telling CNBC:

“We have a week of amazing news with TD Ameritrade, Ric Edelman and Yale and it has almost no impact on price.”

Subdued Market Moves

Indeed, the market reaction was subdued.

Source: TradingView

Meanwhile, at year-end 2017, the market ignored any negative developments while crypto prices were in the midst of a bull run. This time around, it’s the opposite dynamic in which the market isn’t reacting to “amazing news,” he said. Nonetheless, the events over the last week will serve as the “building blocks to bring more institutional capital into this space,” Bogart added.

Institutional crypto research firm Omni Research went a step further, pointing out how endowments the size of Yale are generally “risk-averse,” not to mention other headwinds described in the below tweet. He’s right, as it was like turning the titanic when pension funds like Calpers began making allocations to risky hedge funds at the turn of the century. Calpers has since exited hedge funds amid hefty fees, something they wouldn’t encounter in a blockchain industry that centers on decentralization and removing friction from the process. Now Yale could inspire a chain reaction among other pension and endowment investment committees to consider crypto.

“Crypto Bonfire”

Meanwhile, Bogart noted that the next phase of the endowment wave will see these institutional investors “go direct into the markets” once the crypto market has sifted the wheat from the chaff and more of the infrastructure, e.g., custody, has been built. For now, Yale’s Chief Investment Officer David Swensen has bet on Andreessen Horowitz and Paradigm crypto funds.

Despite the fact that the bitcoin price remains 70% below its peak, Bogart believes the No. 1 cryptocurrency, as well as the broader crypto market, is “close to bottoming,” saying:

“It’s going to take a little bit of time. But each of these news items is a piece of kindle that we’re going to throw onto a future crypto bonfire when we have the next bull market.”

The bitcoin price is headed into the weekend trading fractionally higher.

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 67 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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Altcoins

Bitcoin Cash Price Analysis: When is BCH/USD Taking Another Extended Move Higher?

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  • The Bitcoin Cash price behavior suggests another imminent breakout is likely. Upside surprises appear move likely than any potential downside breakouts.
  • BCH/USD continues to move within a bullish pennant pattern formation. Narrowing price action indicates a breach is near.

The Bitcoin Cash price after the huge surge to the upside on 26th September, attributed to the Bitmain IPO news, has remained elevated. Risks appear tilted to the upside, given current price behavior and technical patterns observed. Outside of the technical view, news flow and updates have remained positive around Bitcoin Cash.

News Flow Remains Positive

Bitcoin Cash adoption continues to take place. It was reported that the events ticketing company, Bigtickets.com, has expanded its payment options, with acceptance of cryptocurrency. Customers will be able to pay using Bitcoin Cash. The CTO said “We know our dedication to innovation is deserving of a secure and seamless purchase method for our event attendees. The use of Bitcoin Cash is a major social trend we’ve been following. Therefore, we’re excited to be one of the first event ticketing platforms in the United States to accept the burgeoning cryptocurrency,”

Elsewhere, earlier in the week, TD Ameritrade, announced it is investing in a cryptocurrency exchange platform, ErisX. This will be facilitating a range of products, including crypto futures contracts. Fortunately for Bitcoin Cash, it has earned its way into the top 4 cryptocurrencies by market cap. Given its status, Bitcoin Cash will be one of the crypto futures products offered by ErisX.

This follows news back in August, Crypto Facilities announcing a Bitcoin Cash futures product. Crypto Facilities are regulated by the UK Financial Conduct Authority (FCA). The move came given Bitcoin Cash has a growing presence and acknowledgement across the market. The introduction of Bitcoin Cash futures is joining the company’s other crypto-based products.

Near-term Analysis (60-minute chart)

Eyes are locked on BCH/USD movement within a bullish pennant pattern formation. Price action is well-supported by the lower trend line. It for now remains within consolidation mode, after the strong surge on 26th September. The price is moving towards the end of the pattern, into a narrower range. This behavior suggests a breakout could very much be imminent, subject to bullish momentum.

BCH/USD 60-minute chart

Resistance to the upside is seen at the above trend line of the pennant, $523. Given the pole of the mentioned pattern, the breakout may be chunky. A retest of the supply around $640-$660, will therefore be the likely first target area. The price last traded in this region from the 1st to the 4th September. Support is eyed around $510-509, as mentioned above, the lower trend line of the pennant.

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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4.5 stars on average, based on 29 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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