Week in Review: EOS Goes Against the Grain, VanEck Blasts Allianz Over Crypto
The crypto crash of the last six weeks has widened the chasm between early adopters of digital assets and those who believe they are a scam and should be outlawed. This debate is now raging within institutional circles, with the CEO of VanEck taking Allianz to task over calls to ban cryptocurrencies outright.
In terms of market dynamics, not much has changed in the last week. Bitcoin succumbed to new yearly lows Friday, capping off a relatively uneventful week of lower highs and lower lows. EOS emerged as a net gainer while bitcoin SV registered the biggest percentage drop among the majors. Since breaking off from bitcoin cash, SV has shown a propensity to move inversely with its peers.
Bitcoin Extends Slide
The bitcoin price on Thursday set new lows for the year, capping off a disappointing week that failed to generate higher bids for the leading digital currency. At its lowest point Thursday evening, BTC/USD traded around $3,204 on Coinbase Pro. Over the past seven days, bitcoin’s average price fell 2.8%, according to CoinMarketCap. Aggregate data currently show an average price of $3,300.
Accounting for 55.1% of the entire cryptocurrency market, bitcoin’s slide had a gravitational pull on altcoins and tokens. The combined market cap of all coins fell by $4 billion this week to $104.5 billion.
Long-term holders of bitcoin have been advised by Weiss Ratings that now is the best time to increase their positions. The Florida-based rating agency told its audience via Twitter that crypto is “here to stay,” and that bitcoin’s current price represents its “least speculative investment.”
EOS’ Incentive Spiral
Losses among the major cryptocurrencies this week ranged from 0.5% (Ethereum) to 28% (bitcoin SV), but EOS managed to string together a gain of 10.6% following a devastating stretch that dragged prices to $1.50. The rebound this week appears to be technical in nature after prices reached extreme oversold territory. The cryptocurrency last traded around $1.86.
As Hacked reported earlier this week, EOS’ block producers are struggling to stay alive amid the downtrend. A new survey by altShiftdev, the creator of My EOS Wallet, showed that the EOS break-even point for block producers is $4.14. While EOS can easily adjust the fee it pays producers, the reward is essentially meaningless when the coin is valued at less than $2.
Mediocre incentives and cyclical bear markets present difficulties for the EOS network. What’s more, some people are convinced that the U.S. Securities and Exchange Commission (SEC) will bring the hammer down on the project over its year-long crowdfunding campaign. This warning came from none other than Charles Hoskinson, the founder of Cardano. More on that story can be found here: EOS Price Analysis: Cardano Founder Charles Hoskinson Warns of Regulatory Action Against EOS.
VanEck Tells Allianz to “Shut the Fuck Up”
It didn’t take long for VanEck’s chief executive to take Allianz to task over claims that the cryptocurrency industry should be outlawed. The war of words, which was reported by CCN, basically goes like this: Allianz CEO Andreas Utermann told a panel in London that regulators should “outlaw” cryptocurrencies. A few days later, VanEck’s Gabor Gurbacs told Allianz to “shut the fuck up on anything crypto or insurance” (the latter is a reference to Allianz’s poor handling of an insurance claim submitted by Gurbacs’ mother).
Gurbacs’ reaction came via Twitter, though the thread has since been deleted.
The exchange is significant when we consider the players involved. Allianz is one of Europe’s biggest asset managers. VanEck is no slouch, either, with nearly $50 billion in assets under management. Gurbacs’ company is pushing hard for a bitcoin exchange-traded fund (ETF), and is working with CBOE and SolidX to make that happen.
Gurbacs lashed out against the insurance industry as a whole. From CCN:
“Insurance companies regularly mislead investors, their disclosure systems are questionable and leave clients behind when they most needed. Insurance companies need more regulation, not crypto…The state by state regulation of insurance companies, and inconsistencies across the board, make it practically impossibly for policy buyers to understand what the heck they are buying. Buying insurance is like intending to buy bread but getting horse-shit instead.”
Interestingly enough, the blockchain revolution is proposing to upend the way insurance companies do business. It’ll be interesting to see how firms like Allianz react.
The Week Ahead
December is shaping up to be another disappointing month for cryptocurrencies. Investors in search of a silver lining may take solace in knowing that the worst of the downtrend appears to be over. This doesn’t mean new lows aren’t over the horizon; it simply means that weekly declines of 30% are less likely now that bitcoin is testing a critical long-term support.
There’s no denying that the recent skid is positively correlated with the hard fork of bitcoin cash on Nov. 15 (after all, prices began to plunge on the eve of the highly anticipated event). However, the longer we have been able to evaluate the trend, the more apparent it has become that the capitulation was triggered by multiple technical selloffs after bitcoin fell below $6,000 – a critical support that represents the long-term breakeven price for miners. With this view in mind, the outlook for the remainder of the year remains overwhelmingly bearish, and investors shouldn’t add to their positions until a definitive bottom has been reached.
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.