Outlook For Bitcoin in 2019

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Summary

BTC had a nice recovery in late December, but technicals say we may see a correction in the coming weeks.

Major support sits around $3,212 and resistance around $4,560 so those are important numbers to look for as either starts to be approached.

If weekly price candle/bar closes below the $3,700 minor support price level, then price action might head toward $3,212.

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Last month saw the price of BTC/USD (BTC-USD) drop below its long-standing support price of $5,800, on the back of the Bitcoin Cash (BCH-USD) hard fork which produced just the impetus needed for sellers to push prices below this support level. This price move is not unexpected, as it’s part of the downside resolution of the price move below the descending triangle on the weekly chart.

The question that now confronts traders of Bitcoin is this: Have we hit the bottom, or is worse yet to come? This analysis piece attempts to look at the price action of BTC/USD as it attempts to answer these questions.

Fundamental Outlook

Fundamentally speaking, the market has provided a bearish ending for a volatile year in Bitcoin. It looks as though it will end the year below $4,000 — after hitting an all time high near $19,000 in early 2018.

2019 is shaping up to be a year for institutional investment. Bakkt, the crypto company spun out of the Intercontinental Exchange, just announced a $182.5 round of investment capital fundraising. This coming from 12 firms, some major names in venture capital.

2019 also will see BTC continue to challenge national regulatory bodies. If and as countries can provide proper regulatory framework, BTC prices may see stability and potentially rise on growing demand and limited supply. For now, here are the technicals going into 2019 for BTC on its USD trading pair.

Technical Outlook

The BTC/USD weekly chart is shown below, and we can see that after posting some slight gains in the week leading to Christmas, the weekly candle is trending downward. Most cryptos lost ground in the current week, and Bitcoin is leading the way. The long-term outlook indicates that a further test of the $3,200 support level, which was last seen in October 2017 and the third week of December 2018, is very likely indeed.

We also can see that the 9-EMA line (orange-colored) is located above the price action candles, thus serving as a dynamic resistance to price action. This gives further confirmation that price moves for the rest of the year will most likely be to the downside.

BTC/USD Weekly Chart: December 30, 2018

We then switch focus to the daily chart, where we see a number of things:

There are a number of things that should be noted from this chart.

  1. The brief period of price recovery in the week leading up to Christmas stalled at an area where price had previously found resistance. This was at the $4,560 mark. This area also marks a previous resistance (boxed areas).
  2. A minor horizontal support exists at the $3,870 mark. This level needs to be broken to the downside for the price to continue moving southward.

BTC/USD Daily chart: December 30, 2018

  1. The major horizontal support line rests at the $3,212 mark, where price had found support two weeks ago.
  2. The 9-EMA indicator line has been broken by downtrending price action, and it now sits atop the daily candles, providing dynamic resistance to price action.

So how does all this play out?

Trade Scenario

The major support continues to remain at $3,212, while the major resistance continues to be the $4,560 level. In the long term, this looks to be the boundaries of the range of price movements of the BTC/USD, with price oscillating between the $3,212 floor and the $4,560 ceiling. Within this price range, there are several minor support/resistance key levels which will serve up areas where traders can set up short-term entries.

The scenarios for BTC/USD will depend on the behavior of price action at the minor and major levels of support and resistance. One scenario favors downside movement of BTC/USD, which will occur if price action breaks the current minor support levels, best visualized on the four-hour chart below.

BTC 4 hour Dec 31

BTC/USD Four-Hour Chart

If the weekly price candle/bar closes below the $3,700 minor support price level, then price action will make a dash for the next major support levels of $3,212. This move is going to have contentions along the way, as several minor support levels (such as the $3,400) mark will have to be breached.

Market Sentiment:

The outlook for the long term, mid term and short term is as follows:

  • Long-Term – bearish
  • Mid-term – neutral to bearish
  • Short term – neutral to bearish

It’s expected that BTC/USD will head south in the coming weeks in order to test the long-term floor of $3,212.

Please note: It takes a whole week for a candle to form on the weekly charts, so these moves may take several weeks to play out. Entries should be made on shorter time frame charts such as the daily chart.

Well, the crypto craze may have deflated. But that’s not a bad thing! In fact, if you still believe in the transformative power of blockchain, it means that many of these technologies are back to early adopter prices. At the Coin Agora, our focus is on altcoins – the smaller cap cryptos that have massive potential to disrupt business ecosystems. Don’t miss out—let us help you cut through the noise and find winners – join the Coin Agora community today!

Disclosure: I am/we are long BTC-USD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

A Salutary Year of Depression for Bitcoin, Cryptocurrencies and Blockchain in 2018

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[2018 Review] A Salutary Year of Depression for Bitcoin, Cryptocurrencies and Blockchain Assets

“My take on the whole dot-com bubble was that a lot of people who wanted to make a lot of money got too excited and hyped up the commercial aspects of the Internet prematurely. I think the vision of the Internet as a democratizing medium – as everyone’s printing press – is real. We got distracted from that by the mass hallucinations of the bubble.” – Craig Newmark, founder of Craigslist

For Internet, read blockchain, and you realize how that quote still remarkably rings true almost two decades later. That’s because it’s not so much a quote stating his own opinion on a specific bubble but a pithy, eternally valid observation of the ineluctable socioeconomic effects of revolutionary ideas.

“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run” – Roy Amara

But why do we keep doing this? It’s a self-feeding cycle. Once a promising new technology, hitherto unimaginable, captures our collective imagination, our immediate response is to theorize, and to some extent hypothesize, various applications for it, even as our understanding and appreciation for practical use of the technology are in infancy.

Thus ensues a heuristic process to unravel realizable applications through trial-and-error. Inevitably, our early endeavors founder, resulting in misplaced cynicism. Maybe this overhyped technology isn’t all that after all?

Amidst widespread disillusionment and derision, some of us persist, wiser for having learned from the early misinterpretations, cognizant of each failure representing a lesson to draw upon, and eventually discover practical applications for the technology.

So failures are not always an indictment of the technology, but perhaps our interpretation of it. This is true of every enduring technology ever conceived and yet, we seem to have a hard time wrapping our heads around it.

A Necessary Year of Depression

Salutary

/ˈsaljʊt(ə)ri/

adjective

(of something unpleasant or unwelcome) beneficial in providing an opportunity for learning from experience

On the face of it, 2018 has been a harrowing year for cryptocurrencies – abortive projects, waning interest, startups struggling to stay afloat.

But it’s in fact been a salutary year – one which, on the back of rampant, unsustainable speculation towards the end of 2017, had to be endured to progress further forward. While the price action has been gloomy throughout the year, functionally, Bitcoin is in a far better place than 12 months ago.

In the 2017 review, we discussed how 2018 could be the year we separate the wheat from the chaff. Given the cooling-off of indiscriminate investment in ill-conceived ICOs and relenting speculation over assorted altcoins, we certainly seem to be on course.

Let’s take a glance at the most notable events of this year before discussing what may lie ahead.

News and Events from 2018

January 2nd Bitcoin’s dominance of the cryptocurrency market is at its lowest level ever thanks to rising interest in alternative digital coins. Despite a market cap of $231.8 billion, Bitcoin’s share of the market fell to a new low of 36.1% of the total valuation of all cryptocurrencies. By contrast, at the start of 2017, its market share stood at over 80 percent.

January 10th Warren Buffett is back at it again. The billionaire investor and his longtime manager Charlie Munger, two of the world’s most successful investors, say they’d never invest in Bitcoin and that cryptocurrencies “will come to a bad end”. Munger went on to add, “investors are excited because things are going up at the moment and it sounds vaguely modern. But I’m not excited.”

January 11th South Korea ponders a ban on Bitcoin trading. Justice Minister Park Sang-ki said virtual currencies were “great concerns” and that the ministry was preparing a bill to ban trading. South Korea’s presidential office said later that a ban had not yet been finalized and was one measure being considered. The local Bitcoin price fell by a fifth after the justice minister’s comments.

January 26th Japanese cryptocurrency exchange Coincheck says that around 523 million of the exchange’s NEM coins were sent to another account around 3 a.m. local time. The stolen coins were worth about 58 billion yen at the time of detection, or roughly $534.8 million, according to the exchange.

January 30th Social media giant Facebook unveils a new policy to ban advertisements involving Bitcoin, other cryptocurrencies and initial coin offerings. Rob Leathern, the company’s product management director, wrote in a Jan. 30 blog post that the new policy targets “ads that promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings, and cryptocurrencies.”

February 6th Bitcoin price falls to $5,947, representing a 70% fall from its all-time high only six weeks ago, amidst banks in the US banning purchase with credit cards and governments moving to tighten legislation on cryptocurrencies. Financial regulators across the world warned investors that they could lose all their money if they buy digital currencies issued by companies, known as initial coin offerings.

February 7th At the Senate Banking Committee testimony, the chairman of the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, made it clear that Bitcoin was here to stay, “We owe it to this new generation to respect their enthusiasm for virtual currencies, with a thoughtful and balanced response, and not a dismissive one.”

February 12th Energy use for Bitcoin mining in Iceland poised to overtake that of all Iceland’s homes, says a spokesman for Icelandic energy firm HS Orka. “If all these projects are realized, we won’t have enough energy for it. What we’re seeing now is… you can almost call it exponential growth, I think, in the [energy] consumption of data centers,” said Mr. Sigurbergsson.

February 20th South Korean government official for cryptocurrency regulation is found dead at his home in Seoul. Police presumed Jung suffered a heart attack while sleeping and were awaiting details from the coroner’s office, reported local news agency Yonhap.

February 21st With its economy ravaged by hyperinflation, Venezuela launches national cryptocurrency named “Petro” backed by its oil reserves, in an attempt to bypass tough economic sanctions imposed by the US government.

March 2nd Bank of England (BOE) Governor Mark Carney calls for greater regulation of cryptocurrencies, calling the huge price moves and volatility “speculative mania.” Carney said, “The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system. The average volatility of the top 10 cryptocurrencies by market capitalization was more than 25 times that of the U.S. equities market in 2017.”

March 8th Japan’s Financial Services Agency (FSA) shuts down two cryptocurrency exchanges, ordering them to suspend operations for a month, as part of a crackdown following the $534 million hack of Coincheck in January. The FSA also issued business improvement orders to five other exchanges, including Coincheck (again), which had already been slapped with a business improvement order in January.

March 14th Bitcoin briefly falls below $8,000 after Google, the world’s largest online ad provider, says it will ban cryptocurrency ads. Tech giant Google announced an update Wednesday to its financial services policy that will restrict advertising for “cryptocurrencies and related content” starting in June.

March 19th US executive branch issues an executive order prohibiting the use or purchase of Venezuela’s Petro cryptocurrency, claiming the currency was issued unlawfully in an effort to circumvent U.S. sanctions against Venezuela, and in particular the President Nicolás Maduro’s regime.

March 20th Bitcoin rallies back above $9,000 following positive G20 cryptocurrency meeting. “It was a very good meeting. The spirit of the discussion was very productive, and I agree that everybody left very pleased,” governor of the Central Bank of Argentina, Federico Sturzenegger, said during a press conference.

March 25th A survey of thousand Americans finds that Bitcoin is the most popular investment option among millennials. Given an investment kitty of $10,000, 9.19% of Millennials (18-34) said they would invest the $10,000 in cryptocurrencies, compared to 4.04% of Generation Xers (35-54) and 3.08% of Baby Boomers (55+). Specifically, 76% of the Millennials in the survey said that they would invest the $10,000 in Bitcoin, 12% in Ethereum and 12% in Litecoin.

April 5th India’s central bank, the Reserve Bank of India (RBI), bans regulated financial institutions in India from dealing with cryptocurrencies. “In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling [virtual currencies],” the bank said in a statement. The RBI was more open to blockchain, the technology that underpins virtual currencies, and says in the statement that it has the potential to improve the financial system.

April 12th The Vietnamese government weighs in on a $658 million alleged cryptocurrency scam in the country resulting from a fraudulent initial coin offerings (ICO) by a company in Ho Chi Minh City. Deputy Prime Minister Vuong Dinh Hue urged six ministries to “quickly consider and tackle” the issue.

April 15th Cryptocurrency evangelist and investor, Ian Balina, is hacked after a compromised college email account. Balina took to Twitter to announce that his cryptocurrency wallet was being hacked while he was hosting an ICO Review Live Stream, acknowledging that he failed to set up robust security measures to prevent the incident.

April 17th Cryptocurrency Exchanges operating in New York receive ‘fact-finding’ letter from New York Attorney General, Eric Schneiderman. The letter asked 13 cryptocurrency exchanges for detailed information about their operations as part of a “fact-finding inquiry to increase transparency and accountability.”

April 18th Suspected mastermind behind the theft of 600 computers used to mine bitcoin in Iceland, Sindri Thor Stefansson, escapes from prison and flees to Sweden on an airplane reportedly carrying the Icelandic prime minister.

April 23rd Iran’s central bank bans the country’s banks from dealing in cryptocurrencies, including Bitcoin, over money-laundering concerns, the state news agency IRNA reported as the country tries to halt a currency crisis.

May 2nd American Investment bank Goldman Sachs reportedly moving ahead with plans to set up the first Bitcoin trading operation at a Wall Street bank. Rana Yared, one of the Goldman executives overseeing the creation of the trading operation, said the bank was clear-eyed about what it was getting itself into.

May 8th Bill Gates, the founder of Microsoft, dismisses Bitcoin as nothing more than just a pure ‘greater fool theory’ type of investment. In an interview with CNBC, Gates said, “As an asset class, you’re not producing anything and so you shouldn’t expect it to go up. It’s kind of a pure ‘greater fool theory’ type of investment. I would short it if there was an easy way to do it.”

May 10th Intercontinental Exchange Inc., the owner of New York Stock Exchange, is reported to be working on a trading platform that would let investors bet on Bitcoin. ICE Chief Executive Officer Jeffrey Sprecher declined to rule out offering contracts based on digital currencies, “There is a trend here we can’t ignore in my mind, so I don’t discount it.”

May 12th South Korean prosecutors raided the offices of Upbit, one of the world’s largest cryptocurrency exchanges. “Upbit is currently under investigation by prosecutors and is cooperating,” the exchange said in a notice to clients, adding that services such as transactions and withdrawals were unaffected and that client assets were safe.

May 24th The US Justice Department opens a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies. The investigation is focused on illegal practices that can influence prices – such as spoofing or flooding the market with fake orders to trick other traders into buying or selling.

May 30th Brad Garlinghouse, Ripple CEO, likens Bitcoin to Napster, “We may come to find that bitcoin is kind of the Napster of digital assets, an important flop. This is a transformative technology, but Spotify and iTunes and Pandora rule the day because they engaged with regulators to solve a real problem.”

June 10th South Korean cryptocurrency exchange Coinrail is hacked, losing over $30 million according to local news agency Yonhap. Coinrail said in a statement on its website that its system was hit by “cyber intrusion” on Sunday, causing a loss for about 30% of the coins traded on the exchange.

June 12th Apple prohibits cryptocurrency mining on iPhone and iPad. Amending its App Store review guidelines related to cryptocurrency, Apple now states that “apps, including any third party advertisements displayed within them, may not run unrelated background processes, such as cryptocurrency mining.”

June 14th US Securities and Exchange Commission official, William Hinman issues a statement saying Ethereum’s native currency, Ether, is not a security. “We don’t see a lot of value in seeing ether as a security. Ether is a coin that is evolving,” said Hinman at the Yahoo All Markets Summit.

June 17th The Bank for International Settlements says in its annual report that cryptocurrencies are not ready for prime time — and as far as mainstream financial services go, may never be. Citing a range of shortcomings, the BIS dismissed decentralization as “a flaw, not a strength.”

June 20th In a second South Korean exchange hack in as many weeks, Bithumb claims that hackers stole about 35 billion won ($32 million) worth of digital currencies. The exchange halted cryptocurrency deposits and withdrawals, said it will compensate victims and moved investor assets to a cold wallet.

June 26th Facebook relaxes its ban on cryptocurrency ads but retains a ban on ICOs. Interested advertisers are asked to fill out an application that includes information on licensing and whether their currency is publicly traded to help Facebook determine their eligibility.

June 27th A multimillion-dollar transaction totaling 48,500 BTC ($300 million) is reported on Bitcoin’s Blockchain at the cost of just 675 Satoshis (0.04 USD).

July 3rd Ripple Labs Inc. is hit by a third class action securities fraud lawsuit in California seeking to classify the company’s XRP cryptocurrency as a security subject to California’s Corporations Code. Filed on behalf of a local XRP investor on June 27 in San Mateo County Superior Court, it is the third class action in two months against Ripple.

July 16th New York-based asset management giant BlackRock sets up a working group to look into ways it can “take advantage” of cryptocurrencies and blockchain technology, the company’s CEO Larry Fink confirmed to Reuters.

July 10th Wall Street cryptocurrency trader, Bart Smith of Susquehanna International Group says Bitcoin is still the best bet among cryptocurrencies. “If you want to own the asset that you can actually use today and that people are functionally using, it’s Bitcoin. The use case for bitcoin is valid today, which is the currency of the internet,” Smith told CNBC.

July 24th San Francisco based asset manager, Bitwise joins the race to launch a cryptocurrency ETF. The company filed with the U.S. Securities and Exchange Commission for an exchange-traded fund that would track a basket of 10 cryptocurrencies, including Bitcoin. “The index’s goal is to capture the most valuable assets that emerge,” Hunter Horsley, co-founder, and CEO of Bitwise Asset Management told CNBC.

July 26th US Securities and Exchange Commission rejected a second attempt by Cameron and Tyler Winklevoss, founders of crypto exchange Gemini, to list the first-ever cryptocurrency ETF on a regulated exchange. The proposal from BATS BZX Exchange to list and trade the Winklevoss Bitcoin Trust’s commodity-based shares was voted down 3-1 by the commission.

July 27th Taking Apple’s lead, Google bans cryptocurrency mining apps from the Play Store. “We don’t allow apps that mine cryptocurrency on devices. We permit apps that remotely manage the mining of cryptocurrency,” read Google’s new policy.

August 3rd Backed by Microsoft and Starbucks, Intercontinental Exchange (ICE) announces Bakkt, a Bitcoin futures market aiming to offer a federally regulated market for Bitcoin. “Bakkt is designed to serve as a scalable on-ramp for institutional, merchant, and consumer participation in digital assets by promoting greater efficiency, security, and utility,” said Kelly Loeffler, ICE’s head of digital assets, who will serve as CEO of Bakkt.

August 6th Amid inevitable rumors of Starbucks accepting Bitcoin, the American coffee company quickly debunks them in a statement, “It is important to clarify that we are not accepting digital assets at Starbucks. Rather the exchange will convert digital assets like Bitcoin into US dollars, which can be used at Starbucks. Customers will not be able to pay for Frappuccinos with Bitcoin.”

August 9th A survey by cryptocurrency app Gem and analytics firm Harris Insights finds that 41% of Americans will never invest in cryptocurrencies. “We find that younger people with less income are more willing to put money in crypto,” said Gem founder and CEO Micah Winkelspecht. “My guess is that crypto is of the digital age. And the younger generation is of the digital age and used to doing everything on the internet.”

August 14th Cryptocurrency markets tumble as altcoins suffer heavy losses. Bitcoin falls below $6,000 and dozens of smaller digital tokens including Ether retreat to yearly lows in widespread sell-off.

August 23rd US Securities and Exchange Commission (SEC) rejects 9 Bitcoin ETF applications from ProShares, Direxion and GraniteShares. The SEC reinforced its qualms over inadequate “resistance to price manipulation” in an insufficiently sized BTC derivatives market.

September 5th Business Insider reports ‘fake news‘ that Goldman Sachs is dropping its plan to open a trading desk for cryptocurrencies. Goldman Sachs Chief Financial Officer Martin Chavez moved quickly to refute the news, “I never thought I would hear myself use this term but I really have to describe that news as fake news.” The CFO said Goldman is working on a type of derivative for bitcoin because “clients want it.”

September 9th US Securities and Exchange Commission (SEC) issues an order seeking to suspend the trading of the Bitcoin Tracker One and Ether Tracker One exchange-traded notes, issued by XBT Provider AB, a Swedish-based subsidiary of the U.K. firm CoinShares Holdings. The SEC cited a “confusion amongst market participants” based in the U.S. as to the nature of the financial instruments as the reason for the move.

September 18th A UK Treasury committee report urges the need for “Wild West industry” of cryptocurrencies to be regulated to protect investors. The committee said there were no well-functioning cryptocurrencies and preferred to call them “crypto assets.” “Crypto-asset investors are currently afforded very little protection from the litany of risks. Namely, there are no formal mechanisms for consumer redress, nor compensation,” said the committee.

September 20th Japan-based licensed cryptocurrency exchange, Zaif is hacked in $60 million Bitcoin theft. The exchange said it first noticed an unusual outflow of funds on the platform around 17:00 Japan time on September 14, after which the company suspended asset deposit and withdrawal services. The exchange further filed the incident as a criminal case to local authorities for further investigation.

September 21st Ripple(XRP) surges nearly 50% within 24 hours to topple Ether as the second largest cryptocurrency by total market capitalization after reports of the impending launch of its new product, xRapid, that could help banks speed up transactions using XRP.

September 25th Google partially reverses its ban on cryptocurrency-related advertising and plans to allow regulated crypto exchanges to buy ads in the United States and Japan with the new policy set to take effect in October.

September 26th Beijing-based cryptocurrency mining giant, Bitmain files an application to go public on the Hong Kong Stock Exchange (HKEX). Bitmain’s long-awaited initial public offering (IPO) prospectus follows various news reports that the mining giant has been mulling a Hong Kong listing for a multi-billion dollar public fundraising.

October 14th Tether LLC, the issuer of controversial USD pegged cryptocurrency Tether (USDT), pulls $300 million worth of the “stablecoin” out of circulation. A day later, USDT loses its dollar peg, trading as low as $0.85 in some exchanges.

October 15th Financial services giant Fidelity which administer more than $7.2 trillion in client assets, announces a new and separate company called Fidelity Digital Asset Services. The firm will handle custody for cryptocurrencies such as bitcoin and will execute trades on multiple exchanges for investors such as hedge funds and family offices.

October 16th Worried about China’s Bitcoin dominance, Donald Trump’s White House is interested in ripple (XRP) adoption, according to Ripple Labs’ chief strategist, Cory Johnson. “The White House, in particular, seems to be thinking about what it means to have 80% of bitcoin mining taking place in China and a majority of ether mining taking place in China. With XRP, there is no mining, so from a foreign-control aspect and environmental aspect, XRP is a very different beast,” said Johnson.

October 23rd HTC launches a blockchain-focused phone, Exodus 1, featuring a secure micro OS, kept separate from the phone’s Android operating system (OS), to hold the user’s private keys. HTC’s decentralized chief officer, Phil Chen, said the significance of integrating blockchain technology in the phone is that it bolsters the security and privacy of a user’s assets, and will in the future help with protecting a customer’s data and identity.

October 31st Ten years ago on this day, Satoshi Nakamoto sent his Bitcoin whitepaper to the Cryptography Mailing List with the message, “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.” Thus began the journey of Bitcoin.

November 1st American Investment bank, Morgan Stanley publishes report classifying Bitcoin and cryptocurrencies as a “new institutional investment class.” The report stands in stark contrast to an earlier report in January which referred to Bitcoin as a “controversial asset and a speculative fad.”

November 3rd Winklevoss twins accuse Charlie Shrem of stealing Bitcoin worth $32m. According to a lawsuit filed in a US federal court, the twin brothers are accusing Shrem of spending Bitcoin worth $32m (£24.7m) owed to them since 2012 to fund his lavish lifestyle.

November 5th Fake Elon Musk accounts on Twitter promote Bitcoin scams. Multiple verified Twitter accounts are hacked to impersonate Elon Musk with one reportedly collecting almost $170,000. Highlighting Twitter’s incompetence in dealing with the issue, the tweets also bear a ‘promoted’ tag, indicating the scammers paid Twitter to promote the scams.

November 15th Bitcoin Cash blockchain splits following contentious hard fork, resulting in two different cryptocurrencies – Bitcoin Cash ABC and Bitcoin Cash SV. Majority of market participants show support for Bitcoin Cash ABC.

November 18th Switzerland approves first Bitcoin ETP with ticker $HODL. The ETP, offered by Amun Crypto, a U.K. based fintech company, will trade on Switzerland’s Six Swiss Exchange. According to Amun’s executive Hany Rashwan, “The Amun ETP will give institutional investors that are restricted to investing only in securities or do not want to set up custody for digital assets exposure to cryptocurrencies, while also providing access for retail investors that have no access to crypto exchanges due to local regulatory impediments.”

November 21st ICE postpones Bakkt launch. The Atlanta-based company said that its Bakkt trading platform will be postponed, with a target date of 24th January 2019. “Given the volume of interest in Bakkt and work required to get all of the pieces in place, we will now be targeting January 24, 2019, for our launch to ensure that our participants are ready to trade on Day 1,” said Kelly Loeffler, CEO of Bakkt.

November 26th Ohio sets up an official website to allow businesses to pay taxes with Bitcoin. The key to the move is State Treasurer Josh Mandel, who can direct his office to accept Bitcoin without approval from the legislature or governor. The taxes must be filed through OhioCrypto.com. Mandel claimed that the plan for this initiative is for Ohio to be “planting a flag” in Bitcoin’s wider adoption.

December 1st G20, the international forum of the world’s top 20 economies, agrees to introduce regulations on cryptocurrencies in compliance with Financial Action Task Force (FATF) recommendations to counter money laundering and financial terrorism.

December 4th Cryptocurrency exchange ErisX raises $27.5 million from investors including Fidelity Investments and Nasdaq Ventures. ErisX says it will offer investors the ability to trade the cryptocurrencies Bitcoin, litecoin and ether on spot and futures markets starting next year, subject to regulatory approval.

December 6th Bitcoin plummets to its lowest price in 15 months, trading lower than $3,400 in some exchanges. The move marks a continuation of sell-off tracing back to Bitcoin’s breach of yearly support around $6,000 about three weeks ago.

December 13th Basis, a cryptocurrency project by Intangible Labs that in April announced it had raised $133 million from a slew of high profile investors, says that it will be shutting down and returning the funds to its backers because of regulatory concerns. “Unfortunately, having to apply U.S. securities regulation to the system had a serious negative impact on our ability to launch Basis,” Nader Al-Naji, chief executive of Intangible Labs, said in a blog post.

December 14th The U.S. government confirms bomb threat emails that demand Bitcoin from organizations and suggests steps to take. According to the National Cybersecurity and Communications Integration Center (NCCIC), the emails claim that a device will detonate unless a ransom in bitcoin is paid. The NCCIC advised citizens that, if they receive one of the bomb threat emails, they should not try to contact the sender or pay the ransom.

December 21st Bloomberg reports that Facebook is developing a way to use cryptocurrency to transfer money on WhatsApp messenger. Instead of using Bitcoin, Facebook plans to use a self-issued stablecoin pegged to the U.S. dollar.

December 31st Bakkt announces the completion of first round of funding, raising $182.5 million from 12 partners and investors including Microsoft, Galaxy Digital and PayU. Bakkt CEO Kelly Loeffler wrote in a blog post that the startup was closely working with the US Commodity Futures Trading Commission(CFTC) to have its physically settled Bitcoin futures approved in early 2019, “Clearing firms and customers have continued to join us as we work toward CFTC approval. We made great progress in December, and we’ll continue to onboard customers as we await the green light.”

What Lies Ahead in 2019?

Now I can’t speak for anyone else, especially not the ‘experts’ who’re apt to pontificate their price action prophesies, but I’m not going to pretend that I have a crystal ball.

In any case, it’s time for us to stop asking what could happen and start discussing what should happen and how do we get there? Going forward, the focus should be on utility and unqualified decentralization.

A Great Idea Without Utility Is Not So Great

Thomas Edison is perhaps the greatest innovator in history. There’s a lot to learn from him but how about this little anecdote on utility for a start?

Every time the US Congress voted on a proposal, each senator was required to stand and call out his vote. Edison found this inefficient and unnecessarily time-consuming.

He went ahead and invented an automatic tally system. But when he took it to the Congress, to his dismay, his invention was given short shrift. This angered Edison, as he cursed the Senators for failing to understand how much time and effort his system could have spared them.

Edison later realized that he had failed to account for the needs of his target customer. The process of vote calling involved a lot of posturing and filibuster. Senators were never going to entertain time efficiency at the expense of politicking in the Congress.

A lot of the recent interpretations of blockchain are culpable of the same mistake – building something that seems like a great idea on the whitepaper without regard for utility.

Ethereum, often criticized for its bloated blockchain, has more dapps deployed on its blockchain than there are users for all the dapps combined. Ethereum’s hyper-active GitHub repo does not represent value if all the development fails to entail utility.

Work alone never creates value. Value is a consequence of utility. You can work hard on something which ultimately turns out to be inutile.

Blockchain is not the revolution, Bitcoin is

Ripple is awesome, isn’t it? I mean it’s fast, frictionless and all that jazz, palling up with a lot of banks and stuff.

A friend, who has no more than cursory interest in cryptocurrencies, recently got wind of Ripple, called me up and asked what it was all about. When I explained how Ripple worked and what it was trying to accomplish, he simply quipped quizzically, “How did they even manage to sell this to people as some kind of decentralized revolution like Bitcoin?”

Now that’s a great question. How did we get so lost as to go from wanting to eradicate the flawed, anachronistic and crooked banking system and fiat economy to getting hyped up over a blatantly centralized, humdrum ‘protocol’ with the ultimate goal of perpetuating the banking system based on the sole criteria that it utilizes a blockchain?

It’s staggering how many people who’re invested in cryptocurrencies are unaware that private blockchains are old hat, not immutable or tamper-proof and certainly not trustless. The private blockchain is a 20-year-old idea and even back then, it was dead in the vine as it offered no advantages over extant data ledgers. Ripple protocol itself has been around since 2004. The recent interest in Ripple is simply a consequence of an inconsequential commonality with Bitcoin – use of blockchain.

Decentralization of money is not merely about fast transactions, but primarily about rooting out the moral hazards that inhere within fractional reserve banking and the perpetual cycle of overspending, endless credit, inevitable collapse, followed by continual bailouts for the 1% who continue to screw over the 99% because it’s the latter that bears the brunt.

“I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can’t stop. I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments ” – Friedrich Hayek, Austrian Economist

Any compromise on decentralization is not worth wasting our efforts on. This includes delegated protocols like EOS and Tron involving third-party validating nodes, centralized exchanges where assets are traded and wallets where assets are held.

Even trading decentralized currencies and assets against centralized currencies, such as stable coins, is a compromise of decentralization. Absolute decentralization is also the only way to avert market manipulation. If we’re going to delegate trust to third parties, we might as well keep trusting banks and governments.

Cryptocurrency most important areas for improvement over the next few years:
* More secure storage (key management)
* Trust-minimized (decentralized) exchanges
* Make 2nd layers more user-friendly, especially via automated routing, while not overly sacrificing trust minimization

— Nick Szabo (@NickSzabo4) April 24, 2018

As long as we continue to seek unyielding progress on these fronts, 2019 promises to be the year of the great recovery.

Bitcoin, Ripple (XRP), And Ethereum Got Roasted Over Thanksgiving--Here's Why

Bitcoin, Ripple (XRP), And Ethereum Got Roasted Over Thanksgiving–Here’s Why

Bitcoin, Ripple (XRP), And Ethereum Got Roasted Over Thanksgiving--Here's Why

Bitcoin fell sharply over the Thanksgiving weekend, dragging the wider cryptocurrency market down with it, including ripple (XRP) and ethereum’s ether, as last week’s huge sell-0ff surged back destroying hopes the bitcoin market had found a floor.

The bitcoin price dropped to a low of $3,604 according to CoinDesk’s bitcoin price tracker, before rebounding back over the psychological $4,000 mark. The bitcoin price is currently hovering around $4,000 on the Luxembourg-based Bitstamp exchange, as the volatility seen throughout November continues to cause chaos for traders, investors, and exchanges.

The bitcoin price is now off some 80% from highs of almost $20,000 late last year, while other major cryptocurrencies ripple (XRP) and ethereum are down by similar amounts. Bitcoin has lost some 40% of its value in just two weeks of November, the worst bitcoin price drop since April 2013.

Ripple, the common name for the XRP digital token, has held up better than most over November’s sell-off, boosted by deals it continues to ink with the traditional financial services industry to provider cheap and speedy cross-border transactions.

Ripple recorded significant falls over the weekend, however,

Despite many bitcoin faithful arguing bitcoin is merely on discount for Cyber Monday today ahead of a so-called Santa rally (which traditionally sees stocks around the world move high in the run-up to Christmas), others are losing faith in the future of bitcoin and cryptocurrencies as this year’s $700 billion rout tightens its grip.

The bitcoin price falls over the weekend do not appear to be linked to any particular fresh news but a continuation of the sell-off sparked earlier this month by the fork of the bitcoin cash cryptocurrency that ignited a civil war between the bitcoin rival’s two factions.

Low trading volumes over the holiday weekend, however, mean the market is more vulnerable to so-called “whales” moving large amounts of bitcoin, ripple (XRP), or ethereum. When a major coin holder sells it can trigger automatic computer controlled sell orders leading to sudden sell-offs.

Elsewhere, others remain hopeful the latest bitcoin price plunge will be short-lived and can be remedied with increased institutional involvement and regulatory oversight of the cryptocurrency space.

“Bitcoin’s latest plunge is evidence of the need for greater regulatory oversight to give a boost to investor confidence,” said Herbert Sim, the chief commercial officer at Cryptology, a cryptocurrency exchange based in Singapore. “There is already a huge amount of capital tied up in cryptocurrencies, in excess of $100 billion, so why allow it to continue being a rogue market?

“In order for the space to move forward and investor confidence to settle, regulators need to put standards in place to separate the weeds from the roses in the cryptocurrency world. Having oversight of the cryptocurrency Wild West will legitimize, and subsequently stabilize the industry, which will allow it to reach the next step of maturity.”

“There’s still a lot of people in this game,” Stephen Innes, head of trading for Asia Pacific at Oanda, told Bloomberg last week. “If we start to see a run down toward $3,000, this thing is going to be a monster. People will be running for the exits.”

IMF: Central Banks Could Issue Digital Currency

IMF: Central Banks Could Issue Digital Currency

IMF: Central Banks Could Issue Digital Currency

Christine Lagarde, the managing director of the International Monetary Fund (IMF), has said central banks throughout the world should consider issuing digital currency to make transactions more secure. At a recent conference in Singapore, Lagarde argued that state-backed cryptocurrencies could satisfy public policy goals related to financial inclusion, consumer protection, privacy and fraud prevention.

Safe, Cheap and Semi-Anonymous Payments

“I believe we should consider the possibility to issue digital currency,” Lagarde said in a speech this week in the city-state, which is at the forefront of driving fintech innovation. “There may be a role for the state to supply money to the digital economy. The advantage is clear. Your payment would be immediate, safe, cheap and potentially semi-anonymous. And central banks would retain a sure footing in payments.”

Cashless transactions have soared around the world in recent years, unsettling many of the control freaks who work for various governments. Bitcoin, for example, was created to challenge the conventional financial system and return the ownership of money to the people, beyond the reach of the state. But this vision has not endeared it to global financial gurus who are steeped in tradition. Unsurprisingly, many national governments have raised concerns about cryptocurrencies and have called for tighter regulation.

Citing the example of central banks in Canada, China, Sweden and Uruguay, which are all “seriously considering” the introduction of their own digital currencies, Lagarde said a state-issued cryptocurrency would be a liability of the state, just like fiat money. Such currencies could reduce the cost of transactions while maximizing security and spreading adoption. She stated:

The more people you serve, the cheaper and more useful the service. Private firms may under-invest in security to the extent they do not measure the full cost to society of a payment failure.

A More Competitive, Level Playing Field

Regulations may not be able to fully address these downsides, Lagarde said, but a digital currency could offer a number of advantages, particularly as a backup means of payment. “And it could boost competition by offering a low-cost and efficient alternative — as did its grandfather, the old reliable paper note,” Lagarde said. She added that although the case for virtual currencies “is not universal,” it should be investigated “seriously, carefully and creatively.”

In addition, central banks could offer a more level playing field for competition, leaving space for private companies to concentrate on innovation. “Putting it another way, the central bank focuses on its comparative advantage — back-end settlement — and financial institutions and startups are free to focus on what they do best — client interface and innovation. This is public-private partnership at its best,” Lagarde claimed.

However, Lagarde’s calls for digital currencies sponsored by central banks are likely to be met with indignation by many cryptocurrency hardliners, who advocate the foundational principles of bitcoin. They tend to see bitcoin as a currency that was built for freedom by resisting any form of control, especially that exerted by governments. The involvement of a central bank could be viewed as intrusive, as it could mean that governments would impose unnecessary controls that might hinder transaction speeds, while sacrificing freedom and lower costs. Some legacy financial institutions and businesses have, nevertheless, been attracted to the use of blockchain technology, which underpins cryptocurrency settlements, to process transactions.

Bitcoin Group SE Buys Investment Bank Tremmel for Undisclosed Figure

Bitcoin Group SE Buys Investment Bank Tremmel for Undisclosed Figure

Bitcoin Group SE Buys Investment Bank Tremmel for Undisclosed Figure

Bitcoin Group SE has bought 100 percent shares of investment bank Tremmel for an undisclosed amount. This is the German digital currency exchange operator’s second acquisition in 2018. Bitcoin Group, which holds current assets of $40 million, said Tremmel allows it to issue its own cryptocurrency-related products, conduct proprietary trading and operate bitcoin ATMs.

The Frankfurt Stock Exchange-listed company operates Bitcoin.de, Germany’s only regulated digital currency exchange, trading BTC, BCH and ETH. It hopes to use Tremmel’s banking license to expand the range of its service portfolio. For example, Bitcoin Group said it is now possible for the trading platform to maintain an order book and even quote prices, while simultaneously ensuring more liquid trading.

“We are very pleased that in Tremmel Wertpapierhandelsbank Gmbh…we have been able to gain an excellently positioned partner with in-depth knowledge of the market,” Marco Bodewein, managing director of Bitcoin Group, said in an online statement on Nov. 12. “This will enable us to take the corporate development of Bitcoin Group SE to a new level,” he added.

The deal is expected to be completed in the first half of 2019, subject to approval by relevant regulatory authorities. Bitcoin Group did not disclose the actual purchase price, but said “it is in the lower seven-digit euro range.”

Rainer Bergmann, the previous sole shareholder and managing director of Tremmel, is to continue working at the investment bank in the same capacity. The bank, which trades shares, bonds and other stock exchange products on behalf of local and foreign banks, insurance companies and asset managers, will be expanded into a deposit-taking institution, Bitcoin Group said.

Restructuring

Digital currency exchanges are looking for growth in new areas or to consolidate existing positions to help boost revenue and minimize risk from an uncertain regulatory environment in their home economies.

In January, Bitcoin Group, which has 753,000 investors actively using its exchange to buy and sell digital assets, bought a 50 percent stake in financial investment broker Sineus Financial Services Gmbh, to diversify risk. “In the future, this will enable the group to offer additional financial services in the cryptocurrency sector,” the company said at the time.

For the first six months of this year, Bitcoin Group reported net profit increase of 306 percent to $3.85 million from $0.95 million a year earlier. Revenues tripled to $6.57 million from $2.1 million in the comparable period a year ago. Operating profit climbed 368 percent to $5.64 million. The exchange said about $707.6 million worth of BTC was traded on the platform at the end of last year, when the price of the cryptocurrency peaked at $20,000.

After close Tuesday, shares of Bitcoin Group were down 0.36 percent at $31.41 in Frankfurt trading. Over the past 52 weeks, the stock has reached a low of $28.02 and a high of $97.18.

How Institutional Investors Are Changing The Cryptocurrency Market

How Institutional Investors Are Changing The Cryptocurrency Market

How Institutional Investors Are Changing The Cryptocurrency Market

Institutional investors and the cryptocurrency market Pexels.com It’s official: institutional players have entered the crypto race. Bloomberg reported that large buyers such as hedge and endowments funds have been consistently purchasing over $100,000,000 worth of digital coins through private transactions. Miners are now scheduling regular, over-the-counter (OTC) coin sales. […]

Previously, large investors have stayed clear from the crypto-investing space due to high volatility of the key currencies. As bitcoin and ether prices have seemed to reach certain equilibrium this year, more and more traditional financial institutions have started diversifying their portfolios with crypto assets.

Miners are now scheduling regular, over-the-counter (OTC) coin sales. Some have even set up their own liquidity desks and operations to accommodate the estimated $250 million to $30 billion in trades.

Previously, large investors have stayed clear from the crypto-investing space due to high volatility of the key currencies. As bitcoin and ether prices have seemed to reach certain equilibrium this year, more and more traditional financial institutions have started diversifying their portfolios with crypto assets.

For individual investors, this active interest from larger player presents a range of new opportunities as well.

New crypto-investment products are underway

Considering the current demand, large investment firms will not stay away from launching dedicated crypto-investment products for much longer. In fact, Goldman Sachs Group has just become the first investment bank to offer a bitcoin trading product to its customers. At the beginning of November, the company started onboarding a small number of clients to test their new crypto trading desk, which allows trading bitcoin non-deliverable forward contracts.

Intercontinental Exchange (ICE), the owner New York Stock Exchange, has also scheduled a launch of their bitcoin futures product for later in December. The contracts will be backed by bitcoin reserves held in ICE’s Digital Asset Warehouse, meaning that actual bitcoins will change hands once the contract expires. All futures contract will also be validated through ICE Clear U.S.

“Legislative changes regarding financial products are bringing in more transparency and legitimacy to the crypto-trading space,” said Hayato Terai, Co-CEO of G8C token-issuing GanaEight Coin Ltd., a Ganapati Group company. “The ICO space will soon undergo similar changes as well. With better regulations and security mechanisms such as tokenized securities and stablecoins already being introduced, we should expect more interest and participation from institutional investors.”

Earlier this year, Goldman Sachs’ Principal Strategic Investments Group and Galaxy Digital Ventures LLC jointly invested in BitGo’s product – a new generation custodian purpose-built wallet for storing digital assets, designed specifically for institutional investors.

Clearly, institutional investors are growing their tech muscle to accommodate more crypto-trades. Individual investors should definitely stay alert for the new products entering the market.

Institutional investors can prevent market imbalance

Large volume crypto purchases took place over the counter to avoid swinging the crypto markets and crashing the exchanges. A lot in the industry fear that bitcoin liquidity may soon become a problem due to institutional investors’ participation. However, during the past two months, the crypto markets remained stable despite large volume purchases and did not tick upside.

In fact, institutional investors can “anchor” the current market whales, possessing significant crypto holdings and capable to distort crypto prices with little-to-no consequences. Unlike individuals, financial institutions are largely restricted in their abilities to manipulate the markets on a large scale. So their active presence may actually contribute to more stable prices.

Crypto-trading security will likely improve

One of the biggest issues preventing further market penetration for institutional investors is the lack of proper, secure infrastructure. At the moment, only a handful of custodians meet the security standards imposed by regulators.

Additionally, most players have not yet figured out the optimal KYC procedures for their customers. In fact, a staggering 68% of cryptocurrency exchanges operating in the U.S. and Europe are not fully KYC compliant. Most of them allow users to trade fiat and cryptocurrencies without providing any identification documents or undergoing a KYC check. Trust in the crypto trading space remains low, especially among the regulators, who, in turn, try to push stronger regulations and verification procedures.

However, most institutional investors are now working closely with the regulating bodies to develop clear KYC/AML policies and guidelines that favor both parties. Crypto EFT is getting closer to the approval with the SEC in the US. In Switzerland, Crypto Fund AG has recently become the first and only crypto asset manager, authorized by the local Financial Authority. The precedent has been set and more international regulators will move forward with approving new financial tools for both institutional and individual investors.

Institutional investors offer a fresh inflow of capital and liquidity and propel the development and adoption of new regulatory frameworks. Ultimately, this will add more transparency and legitimacy into the crypto trading space and push the markets further. It’s too early to assess the exact impact of institutional money in the space, but clearly, it signifies a new major milestone for the cryptocurrencies.