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VanEck, Cboe and SolidX Meet With SEC to Discuss a Bitcoin ETF

VanEck, Cboe and SolidX Meet With SEC to Discuss a Bitcoin ETF

Having met the U.S. Securities and Exchange Commission (SEC) in August 2018, officials of VanEck, SolidX and Cboe BZX Exchange have met with the Commission again, in the latest attempt to convince the regulator to approve the nation’s first bitcoin exchange-traded fund (ETF), according to an official presentation submitted to the SEC.

The firms gave the pitch to the SEC’s Division of Corporation Finance, Division of Trading and Markets, and Office of General Counsel.

The presentation given to staffers of the agency was focused on comparing the cryptocurrency market to other markets that already have exchange-traded funds, including silver and gold markets. The promoters of the VanEck/SolidX ETF hammered on its long-held view — that the bitcoin market is ready for an ETF.

Using the vector error-correction (VEC) model to compare pricing data between exchanges over an extended period of time, the proponents argued that bitcoin’s price between the futures market and the spot market are connected. They then compared these price correlations to the markets for commodities like gold and silver, which also function as money substitutes to indicate that bitcoin features a “well-functioning capital market.”

“The empirical evidence indicates that the spot and futures prices are cointegrated. This indicates that the spot and futures prices are tightly linked.”

On the issue of market manipulation, one issue that the SEC has continued to point to in a number of ETF rejections this year, the firms argue that the market is more resilient than the regulators give it credit for.

“Several properties of bitcoin and the underlying ecosystem make it less susceptible to manipulation than other commodities that underlie already approved ETPs.”

For most commodities, insiders might trade on information related to production or the “discovery of new sources of supply” of the product which could impact its price. With bitcoin, this is impossible as the inflation rate is fixed and transparent.

For this to be remotely possible, the “manipulation of the price of bitcoin on any single venue would require manipulation of the global bitcoin price to be effective.”

Arbitrageurs would need to have funds distributed on crypto exchanges to have any chance of profiting from “temporary price dislocations.”

This year, the SEC has rejected most of the ETF proposals that crossed its desk. While some were rejected outright, nine others are being reviewed by the Commission. The VanEck/SolidX proposal is the last horse in the race with many believing it’s a matter of “when” not “if” it would be approved.

“We’ll continue to engage and fight this fight to do our part as an asset manager to help the digital asset space mature. So it may not be a short fight — I don’t know,” Gabor Gurbacs, director of Digital Asset Strategy at VanEck/MVIS, said in an earlier interview with Bitcoin Magazine. “But we have done this with gold in the ’60s, and hopefully now, we’re building the right basis that will stay true to bitcoin as well as integrate it into the U.S. capital markets.”

Reggie Browne, senior managing director of the ETF group at Cantor Fitzgerald, said a bitcoin exchange-traded fund would be approved “no time soon,” adding:

“It’s very difficult for the [Securities and Exchange Commission (SEC)] to wrap their heads around a positive approval because there’s no data yet … the markets just aren’t here.”

This article originally appeared on Bitcoin Magazine.

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Bitcoin Price Analysis: Wait and See Where Recent Signs of Strength Lead

Bitcoin Price Analysis

This week realized a big gain as bitcoin enjoyed a 25% rally from its local bottom before topping out around $4,400. Support currently appears to be established in the mid-$3,000s as the market remains indecisive over its next move:

fig1Figure 1: BTC-USD, Daily Candles, Current Support Level

Figure 1 shows the relevance of the current support level as it represents a previous support level that was never properly retested during last year’s parabolic bull market. At the moment, we are currently seeing some resistance around the macro, 78% Fibonacci retracement of the parabolic run-up. To date, bitcoin has realized a whopping 82% devaluation from its all-time high to the current low in the mid $3,500s.

If our current support holds, we should expect to see a battle over the 78% retracement values where, if the overhanging retracement level breaks, we will likely encounter another level of resistance in the $5,000 region. But, for now, the market needs to tackle the 78% Fibonacci before worrying about the overhanging resistance levels.

On the lower time frames, we can see bitcoin is finding nice support on its 23% retracement which also happens to be the previous high:

fig2Figure 2: BTC-USD, 4-Hour Candles, Current Low Time Frame Support Level

The lower time frames are consolidating on top of the previous high and just below the macro 78% retracement. Off the $3,500 low, we saw a decently strong rally with high volume and wide spread indicating strength on the demand side. The ability to hold this current level is a temporary bullish sign that the bears may be taking profit and eager bulls are jumping in to ride a potential rally upward.

At the time of this article, bitcoin is up over 20% from its local low and the bulls appear to be taking a stab at the market following the previous brutal 60% drop. For now, the market is in a kind of sit-and-wait zone while we sit and observe how the market reacts to its newfound support and resistance levels.

If we manage to break through current support, we can expect to see a retest of the mid $3,500s. If that level doesn’t hold, we can then expect to see a drop down to the low $3,000 values:

fig3Figure 3: BTC-USD, Daily Candles, Lower Support Levels

The low $3,000s represent the previously established support level during last year’s bull market and we have yet to retest the support zone. As I mentioned, the current price level is in a wait-and-see level and we need to see how the current support and resistance level holds over the next few days.

Summary:

  1. After bottoming out around $3,500, bitcoin enjoyed a near 25% rally where it is currently testing the resistance of its macro 78% retracement.
  2. On lower time frames, bitcoin is seeing a decent sign of strength as the demand appears to be relatively high and the candle spread is wide.
  3. The current price level calls for observation while we wait and see how the current support and resistance levels are received over the next few days.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

This article originally appeared on Bitcoin Magazine.

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Coinbase Launches OTC Trading for Institutional Investors

Coinbase Launches OTC Trading for Institutional Investors

Major U.S. digital asset platform Coinbase has launched an over-the-counter (OTC) trading desk dedicated to institutional investors, live-streaming site Cheddar reports.

From Coinbase Prime to its Custody service, the exchange has been laying the groundwork for institutional investors for a while now. Earlier this year, Coinbase announced it was on track to be a broker-dealer regulated by the U.S. Securities and Exchange Commission. The exchange also acquired securities dealer Keystone Capital and others, in a bid to expand its offerings to include crypto securities trading, margin trading and OTC trading.

Coinbase Head of Sales Christine Sandler said that the increasing demand for OTC crypto trading made the move a must-have for the exchange.

“We launched our OTC business as a complement to our exchange business because we found a lot of institutions were using OTC as an on-ramp for crypto trading.”

According to Sandler, the launch will enable clients to leverage Coinbase’s crypto exchange and OTC service. There is also the possibility of the crypto trading platform combining its OTC service with its custody business.

Coinbase joins a list of businesses currently offering OTC trading services, such as Circle, Genesis Trading, itBit, Kenetic Capital and others. When asked what makes Coinbase’s OTC trading desk unique, Sandler stated:

“Circle and a number of others have complementary products, but they also trade on a proprietary basis, so they are the counterparty to each transaction, while we, in fact, are matching client orders.”

The OTC trading desk has been added to the basket of services offered by the U.S.-based crypto exchange at a time when digital asset prices are experiencing a decline in their market values.

“From our crypto first clients, we’re hearing that nothing has changed with respect to technology, and they’re still absolutely committed to crypto … to the technology. I think that there’s one small silver lining to this volatility … [it’s] that crypto’s been front and center of the mainstream financial media for the last few weeks. I think that has driven … forced a lot of institutions to think, really, is this an opportunistic investment point for crypto at this point.”

This article originally appeared on Bitcoin Magazine.

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Huobi Is Rolling Out Futures Trading on a New Platform

Huobi Is Rolling Out Futures Trading on a New Platform

At this year’s CryptoFrontiers Conference in New York City, digital currency exchange Huobi announced that it will begin offering derivatives contract trading. The service will be available via Huobi’s Derivative Market (Huobi DM) to customers of select countries and will allow them to open both short and long positions for a handful of coins.

In an interview with Bitcoin Magazine, Joshua Goodbody, general counsel of Huobi’s global institutional team, said, “Our derivative contracts are agreements to buy or sell an asset on a specific future date and at a specific price. Once the derivative contract has been executed, both counterparties will buy and sell at the agreed-upon price irrespective of the actual market price.”

When buying and selling these futures contracts, traders will have the option of 5X, 10X and 20X leverage.

At press time, Huobi DM is in beta testing mode, and its services are unavailable to users in the U.S., Singapore, Israel, Cuba, Iran, North Korea and Syria. Goodbody says, “We are taking things slowly, but we are working with our lawyers and the relevant regulatory authorities to assess the requirements in each jurisdiction, and we will take the necessary steps required to offer this in a compliant manner.”

Huobi has sought to limit both risk and uncertainty for its customers by utilizing 24-hour exchange monitoring. It also provides an insurance fund of up to 20,000 BTC to any customer victimized by a massive security failure, as well as an insurance fund for every trading pair against unfilled liquidation order losses. Huobi also employs a circular break mechanism that protects customers from unnecessary or forced liquidations.

Furthermore, market makers (those who create new trades on the platform rather than taking others) pay no trading fees while utilizing Huobi’s services and are entitled to financial bonuses granted they always trade as makers.

“Huobi has a track record for innovation in the digital asset space,” said Goodbod. “We look to the future and will always bring our clients with us on this journey. This is another exciting and important development for our global business.”

This article originally appeared on Bitcoin Magazine.

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Ether Price Analysis: Untested Support Leaves Shaky Foundation During Drop

Ether Price Analysis

Much like the rest of the crypto market, ether has found itself devalued by more than 90% since its all-time high of $1,400 back in December of 2017. And now, almost a year later, ether sits just above $100 on what appears to be shaky ground during its latest round of selling over the last few weeks:

fig1Figure 1: ETH-USD, Daily Candles, Rapid Descent

Similar to bitcoin’s movement discussed in yesterday’s article, ETH-USD experienced a parabolic growth profile during its bull run. One consequence of a parabolic bull run, however, is the lack of firmly established support on the way — which, unfortunately for ether, means no firmly established support to cushion its fall on the way down. In approximately 3 weeks’ time, ether has lost almost 60% of its value.

Figure 1 shows the levels of support that have gone untested and the levels of support we have already blown right through. And, depending on whether or not we can hold current support levels, ether may be in for further lows.

fig2Figure 2: ETH-USD, 4-Hour Candles, Lack of Retracement

The entire move downward over the last few weeks has been so violent, the market has seen little to no relief or rally during the whole 55% drop. And now, the market is consolidating in what looks like a bear pennant at the bottom of its already massive fall. If this current support level doesn’t hold, we can expect a test of the $80 region, as this is our next level of untested support:

fig3Figure 3: ETH-USD, Daily Candles, Untested Support Levels

Unfortunately, if we manage to end up testing the $80 zone and that support doesn’t hold, we can expect another staggering drop to the $50 region. Granted, this is all up in the air at the moment because we are currently holding support at $100. However, it’s good to anticipate what’s ahead of us if ether can’t manage to hold itself up here.

If ether ends up testing the $80 region, that would be a staggering 95% devaluation from its all-time high of $1,400.

Summary

  1. Ether has followed the rest of the crypto market as bitcoin tumbles down further and further. To date, ether is down 90% since reaching its all time high back in December of 2017.
  2. Because of the parabolic rise last year, ether never managed to establish firm supports. Unfortunately, this means there is nothing to cushion the market as it moves lower and lower.
  3. We are currently holding support at $100 but if we can’t hold this level, we can expect to see a test of the $80 region, as this represents the next level of untested support.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.


This article originally appeared on Bitcoin Magazine.

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Crossing the Atlantic in Stormy Weather: Coinsquare Expands to Europe

Coinsquare Europe

Coinsquare Exchange, headquartered in Toronto, Canada, took its first trip outside its Canadian base to extend its operations to Europe. On November 15, 2018, the exchange enabled euro deposits and trading, in what the startup sees is a promising market for future expansion.

Coinsquare CEO Cole Diamond told Bitcoin Magazine that this is a major move for the young exchange and it makes good business sense to enter a market that has a GDP 12 times the size of Canada’s.

“Europe is a huge market. Expanding there has expanded our market opportunity 12-times over. It’s also a market that our community has been demanding for awhile, so we’re very excited to be live,” said Diamond.

Coinsquare is the largest exchange (by volume) based in Canada according to CoinMarketCap.

Diamond refers to Coinsquare as a digital asset management company with $60 million in funding. His long-term goal for the company is to expand its services for crypto beyond trading to other investment and financial services.

Coinsquare Chief Digital and Growth Officer Thomas Jankowski talked to Bitcoin Magazine about the company’s plans for expansion into Europe and the company’s vision as a future global banking and financial centre. They’re aiming for 1 billion clients by the end of 2019.

“We are working to build a 21st century financial institution, which means so much more than just a trading platform. As we grow in Europe to meet the demands of our European community, that’s what we’re thinking about. The first step in this process? Offering trading in Euros, which went live when we opened in Europe,” said Jankowski.

The company says they are seeing increasing market demand for a variety of coins. The exchange trades in Bitcoin, Bitcoin Cash (both), Dash, Dogecoin, Ethereum, Litecoin, Ripple and Squarecoin and recently added Ethereum Classic.

Regarding the recent Bitcoin Cash fork, Jankowski said:

“I’m pretty happy to say we already carry all three bitcoins and were one of the first platforms in Canada to announce support of all three through the fork. Coinsquare also caused the transaction that triggered the fork — you can see the note we left in the ​ScriptSig​. We have no preference for which coin will ‘win’ and will support whichever the community decides, since that’s the true spirit of blockchain.

“There’s definitely some confusion about the coins, but we hope the community comes together. We respect the decision they make, and once the community has made its choice then we think the confusion will naturally die down as people learn more.”

Managing Complex Regulatory Environments

Cryptocurrency businesses in Europe are governed by complex anti-money laundering and securities trading rules in different countries, but Coinsquare plans to tackle each country’s laws separately.

In Canada, there is growing recognition that the federal government will likely not be bringing forward previously proposed regulations for cryptocurrency businesses, including exchanges, until after the next election in October 2019.

There is some concern in the community about this uncertainty but Coinsquare’s Jankowski sees this as a positive:

“We believe that the government should continue down the path of removing obstacles in order to allow fintech companies, especially in the digital currency space, a fast-track lane toward regulation.

“Canada is an uncontested leader among the G8 countries for getting fintech innovation started, but we stop short of getting those startups past the finish line. To make getting regulated easier would deliver a bold message that we’re not just ready for change, but also ready to lead by example.”

Coinsquare claims they are leading the industry with their anti-money laundering measures and are using AML D5, the most recent update to global anti-money laundering legislation coming into effect in January 2020, intended specifically to target loopholes that terrorists have used in the past for international money laundering.

Canadian Banks Aren’t Banking on Cryptocurrencies (Yet)

One of the big ongoing issues in the Canadian crypto community is shaky to no access to banking services with new concerns about the current court case with QuadrigaCX exchange and the Canadian Imperial Bank of Commerce.

Coinsquare has lobbied hard to develop working relationships with Canadian banks and has signed an agreement with one of the major banks.

Jankowski sees a thawing in the chilly relations with Canadian banks:

“We think banking in Canada is slowly changing its attitude toward crypto. Our banks are careful and that carefulness is what got them through the crisis of 2008. Our Canadian bank has been an amazing partner and we’re happy they put us through a due diligence ‘hell’ so that they could be sure of our practices. But now we’ve got U.S. and EU banks knocking on our doors and we know that transparency matters in finance. We’re looking forward toward more of this in Canada and the rest of the world moving forward.”  

This article originally appeared on Bitcoin Magazine.

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Look at Data From Past Bitcoin Crashes and You Might (Possibly) Feel Better

Look at Data From Past Bitcoin Crashes and You’ll (Probably) Feel Better

After a bearish year of perennial price swings that culminated in months of tightly wound sideways movement, the (former) bottom has dropped out for bitcoin and the wider crypto market.

By all rights, it’s a complete reversal of fortune from the explosion of value the market enjoyed this time last year, and mainstream media has had a field day exploiting the irony of the peripeteia bitcoin’s price has suffered when we compare it to the investor euphoria of just a year ago.

The price plunge is certainly a far cry from the gift hodlers were looking for this holiday season, and talk of bitcoin this year is likely more hushed or contentious than a year prior. But this price action is also nothing new — just another instalment of bitcoin’s many boom and bust cycles.

So with prices down significantly even from their position before the bull run was thrown into overdrive, it’s prime time to take stock of how this crash stacks up to bitcoin’s other historic tumbles, and to take price in hand with other metrics of network growth.

Where We Are Now, Where We’ve Been

At the time of publication, bitcoin is trading for roughly $3,700. With an all-time high just shy of $20,000, this means bitcoin is 80 percent down from its peak price.

That’s a hard drop to stomach, but it’s not as bad as some of bitcoin’s other, more gut-wrenching price depreciations.

In the first major crash the market saw, bitcoin went from a high of $39 in June 2011 to just above $2 in November of the same year. This 93 percent decrease would be rivaled by the 83 percent crash it experienced over a three-day period between April 10 and 12, 2013, when it dropped from $259 to $45.

The April crash was a precursor for perhaps the industry’s most devastating downturn, however. Following the hack of Mt. Gox, a Japanese bitcoin exchange that handled some 80 percent of the entire industry’s transaction volume at the time, bitcoin tumbled 85 percent from an all-time high of $1,151 to $177 over a 411-day period. The crash began on November 30, 2013, and it didn’t reach its end until January 14, 2015.

fig1Fig. 1: Bitcoin price following the Mt. Gox hack (November 2013-January 2016) Source: Blockchain.com

As one might expect, the eve of the Mt. Gox crash was accompanied by a spike in network transaction volume. Bitcoin experienced a record 102,000 transactions on November 29, 2013, but after reaching this benchmark, the network’s activity steadily dropped to 41,476 transactions by December 31, 2013, the lowest it’s been since. It wouldn’t see six-figure transaction volumes again until January of 2015, after bitcoin had borne the full brunt of the 411-day crypto winter.

The crash of 2011 went through a similar reduction. Amidst the market’s downward spiral, bitcoin’s daily transaction volume exceeded 12,000 on June 13, reaching lows of 4,700 transactions in the tail end of November when bitcoin bottomed out — a 60 percent decrease. The network did not see transaction volume transcend 12,000 again until May of 2012.

Crashes and corrections with smaller windows didn’t experience the extended downtrend in transactions that became hallmarks of bitcoin’s historic bear markets. But in 2018’s market climate, the pattern is repeating itself.

In the heyday preceding its all-time high, Bitcoin’s blockchain netted nearly 450,000 transactions on December 12, 2017. A Christmas Eve sell-off would cut this nearly in half to 228,000 before it revisited the 450,000 figure on January 3, 2018.

After the wider market really bled at the end of January, bitcoin’s transaction volume continued to play out according to precedent, dipping by roughly 68 percent to lows of 130,000–150,000 in the spring of 2018. Since this decrease, transactions have made a steady climb back to 250,000–300,000 daily traffic.

fig2Fig. 2: Bitcoin daily transactions volume (2011-present) Source: Blockchain.com

Other Metrics for Interest

The spikes in transaction volume that preceded and/or coincided with each crash seem to forecast the massive sell-offs that would send bitcoin into freefall. This activity, along with the concurrent reduction in transactions and subsequent stagnation, also seemingly reflect market interest; as things heat up, transaction volume runs up with the price until they reach critical mass. After that point, buyer’s euphoria morphs into seller’s frenzy, interest dies down and the network enters a period of relevant dormancy.

You’ll find other similar yardsticks to measure community enthusiasm outside of the network and the market themselves. One of the more popular examples crypto enthusiasts will often turn to is Google trends for the word “bitcoin,” a measurement of the popularity of queries related to bitcoin on Google’s search engine over time.

As you might expect, a bear market means dying interest. Following the Mt. Gox crash, for example, bitcoin’s interest level on Google decreased by 85 percent, nearly on par with its price depreciation. And just like the price, this interest went into hibernation until things started looking up again in 2017.

The current crash has unsurprisingly followed the same trend, though to a more drastic degree. Google searches for bitcoin decreased 93 percent from peak hype to late October of this year. These levels are even lower than interest at the all-time high prior to the Mt. Gox crash, and with the market crashing even further in November, interest is now just barely above what it was at the end of 2013.

fig3Fig. 3: Google Trends interest in bitcoin over time (December 2013-August 2018) Source: Google

Tribulations in Spite of Trials

With drooping prices, the decline of general interest in bitcoin, whether it be on Google or the network itself, is an expected byproduct. Even so, these metrics might not provide a comprehensive frame for the scope of bitcoin-related activity across the web.

For instance, crypto payment processors have operated against the market’s bearish trend. Unfortunately, data for these platforms is scarce and subject to the company’s reporting whims, but what data we do have paints a positive outlook.

Square, which began accepting bitcoin as part of its platform’s payment options in January 2018, saw $34 million in revenue from bitcoin alone in Q1 of 2018. This accounted for 8 percent of the company’s uptick in revenue for the year, which was its largest ever at 45 percent. What’s more impressive, in Q3 of 2018, Square’s revenue stream from bitcoin increased to $43 million.

Again, this transaction revenue was accrued during bitcoin’s bear market. The numbers paint a picture for bitcoin’s use in commerce that builds on trends that the more-popular BitPay experienced throughout 2017. By October of that year, BitPay announced that it had seen a 328 percent increase in transaction volume, setting it on pace for $1 billion in total payment volume for the year.

Yet again bucking the bear market’s trend, Bitcoin’s second-layer Lightning Network has enjoyed the same positive growth as BitPay and Square. Launched in the throes of the downturn, the network has grown to roughly $1.7 million in bitcoin capacity. At 452.52 bitcoin, that’s a 307 percent increase over a 30-day period, and alongside this growth, the network has expanded to 4,000+ active nodes and over 12,000 active channels as well.

In times of market heartache, enthusiasts and hodlers often parrot the aphorism “1 BTC is still 1 BTC” as a source of solace. This might be of small comfort for those who are down 80 percent against fiat on their original investment. But the sentiment of the phrase does encourage listeners to pay attention to non price-related growth.

And that perspective is: Price does not necessarily equate to growth or adoption. Indeed, just as the ICO boom of 2017 has left the market inundated with high-market-cap projects and DApps that are struggling to find users, the 2018 bear market has seen the cogs of development grind against the noise of the market’s crash.

Indeed, even in spite of declining prices, 2018 has been a benchmark year for Bitcoin’s development. In March, the Lightning Network saw its first beta implementation, a milestone that the developer community quickly capitalized on by releasing a slew of Lightning Network apps. Bitcoin smart contract sidechain Rootstock (RSK) also made significant headway this year, merging with company offshoot RIF to expand the sidechain’s reach. And nother sidechain, Blockstream’s Liquid, also launched in 2018 in a bid to improve exchange-to-exchange liquidity and network scalability.

Note: This article is for information purposes only and should not be considered to be investing advice.

This article originally appeared on Bitcoin Magazine.

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NASDAQ Reportedly Looking Into Bitcoin Futures Despite Bear Market

nasdaq bitcoin futures

An unconfirmed report released today, November 27, 2018, claims that NASDAQ has plans to launch bitcoin-based futures contracts, and that these plans are continuing to go forward despite the recent crypto crash.

Bloomberg published an article today describing NASDAQ’s history with these futures contracts, claiming that they have “been working to satisfy the concerns of the U.S.’s main swaps regulator, the Commodity Futures Trading Commission, before launching the contracts.”

NASDAQ has allegedly been laying the groundwork for these new futures contracts for some time and is now “betting on sustained interest despite the cryptocurrency’s dramatic plunge over the past year.” Bloomberg included quotes from a source within NASDAQ from earlier this January, showing the long-term nature of these planned futures contracts.

“The exchange was weighing how to distinguish its plans from contracts already offered by competitors,” said CEO Adena Friedman, with Bloomberg now claiming that “The Nasdaq futures will be based off the Bitcoin’s price on numerous spot exchanges, as compiled by VanEck Associates Corp.

With a long-term interest both in cryptocurrency and in these specific bitcoin-based futures contracts, it would make sense that NASDAQ is continuing to give the futures contracts the green light.

The space has always been a particularly volatile one, but the 80 percent crash in the value of bitcoin over the course of one year has been enough to agitate the nerves of many investors, even in fields only tangentially related to Bitcoin itself.

If the reports are accurate, it is still unclear when NASDAQ plans to actually release these futures contracts. When and if they become a reality, NASDAQ will be the third traditional financial exchange in the U.S. to launch a bitcoin-based derivative, following in the footsteps of the CME and Cboe, which launched bitcoin futures in December 2017.

To date, these bitcoin futures are the wider market’s only mainstream, regulated crypto investments. With hopes of expanding the crypto market’s institutional-tier offerings in 2018, the industry continues to pursue U.S. Securities and Exchange Commission approval for a bitcoin ETF, an investment vehicle that many believe could invite capital from Wall Street to invest directly into bitcoin.

This article originally appeared on Bitcoin Magazine.

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Singapore Grants RMO License for CapBridge to Operate New Security Exchange

Singapore Grants RMO License for CapBridge to Operate New Security Exchange

Global private capital platform CapBridge Pte. Ltd. has garnered a license from the Monetary Authority of Singapore (MAS) to operate a security exchange known as 1exchange (also called 1X), which became operational on November 21, 2018. The exchange is designed to organize liquidity for private companies prior to exit events like an M&A (merger and acquisition) or an IPO (initial public offering).

In an interview with Bitcoin Magazine, CEO and founder of CapBridge Johnson Chen said that the process of obtaining the license took nearly two years. Steps included identifying the business case and ensuring IT systems were in place that included proper risk management and strict governance.

“We also had constant dialogue with industry experts in regulations and securities laws, as well as engagement with regulations,” he says.

In addition, CapBridge is working with global blockchain technology firm ConsenSys. Both ventures have announced plans to build a fully compliant, private securities exchange on the public Ethereum blockchain.

Chen says that at first, key features of the exchange will include smart contracts-based permissioning and fiat settlements such as bank transfers. Initially, this will prevent investors from participating with cryptocurrencies, which he says can still be very volatile.

“We aim to build a trustworthy infrastructure, and we have the ability to trade regulated instruments globally with reduced or zero counterparty risk,” he comments.

However, he does say that when the exchange is a little more established and further protocols are in place, it will offer various crypto-based services including the listing and trading of security tokens.

“CapBridge is working alongside ConsenSys to provide an additional layer of security and authentication in the future,” he said. “The deployment of smart contracts may also allow for settlement efficiency while allowing users direct custody of assets.”

CapBridge serves mid-to-late growth companies. The company brings initial opportunities to lead investors, who then utilize their specific industry knowledge to negotiate value-adding investment structures, conduct due diligence and manage their portfolio positions to the desired exits. These opportunities are then given to co-investors under the same terms, who use the data gathered by the lead investors in specific industry fields.

The co-investment process is conducted electronically on the company’s intelligence platform, which seeks to match deals with investors and facilitate deal processes.

1exchange is a regulated private securities exchange that allows investors to buy and sell private securities in a transparent and centralized environment. The platform was built for private operating companies seeking capital or preparing for liquidity events, as well as family-owned businesses planning management changes, and venture-backed companies seeking to monetize the shareholdings of both their customers and employees.

In recent months, officials with the U.S. Securities and Exchange Commission (SEC) and other governing bodies have placed significant pressure on unregulated cryptocurrency exchanges and have kept a stern eye on initial coin offerings (ICOs) to ensure all security-based offerings are appropriately registered.

This article originally appeared on Bitcoin Magazine.

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VanEck Subsidiary MVIS Launches Bitcoin OTC Index

VanEck Subsidiary MVIS Launches Bitcoin OTC Index

MV Index Solutions (MVIS), a subsidiary of investment management firm VanEck, has announced the launch of MVIS Bitcoin U.S. OTC Spot Index (MVBTCO), a bitcoin-based index and the first one that monitors the performance of bitcoin across established over-the-counter (OTC) platforms in the U.S., according to a company statement.

The index will cover the spot price of bitcoin from these OTC platforms: Circle Trade, Genesis Trading and Cumberland.

MV Index Solutions helps to develop, license and monitor asset classes such as fixed income markets, equities and more, with the use of investment indices. The MVBTCO, which will track just bitcoin, increases MVIS’s portfolio to 24 digital asset indices.

Thomas Kettner, managing director at MV Index Solutions, commented in the release, stating the company was excited to launch a “bitcoin index based on the pricing feed of OTC trading desks,” which he believes would serve OTC traders as a “reliable benchmark for their trades or potential investment products.”

Gabor Gurbacs, director of Digital Asset Strategies at VanEck/MVIS, calls the launch a great win for “greater transparency and price discovery” for institutional investors, which is necessary for the development of the digital asset space. In correspondence with Bitcoin Magazine,  he said that he believes the index will bring greater legitimacy to a young market that has struggled to win the approval of regulators.

“Liquidity, price transparency and regulatory status were the 3 main reasons to build the MVBTCO OTC Bitcoin index. Over the counter-trading represents a large portion of daily BTC trading volume. Transparency to this segment of the liquid institutional OTC markets is a sign of maturity and proof that it’s possible to provide better regulated pricing sources from established trading operations. Trading operations in the index are broker dealers or affiliates of broker dealers, which is a higher regulatory status than crypto exchanges (trading platforms) have today. OTC trading desks are also far less susceptible to market manipulation.” 

Going further, Gurbacs even indicated that he believes an index like MVIS could set the stage for more institutional-friendly, regulated investment vehicles, like the crypto industry’s much sought-after ETF.

“MVBTCO’s constituents are regulated and the newly gained transparency into the institutional OTC markets should make regulators comfortable. . .I believe this development may pave the way for more regulated funds, such as ETFs,” he told Bitcoin Magazine.

The Bitcoin Index is expected to provide a new tool through which institutional investors can monitor the price of bitcoin. Up until now, data related to this has been derived from cryptocurrency exchanges. With this new index, they will receive transparent and more accurate data on pricing.

Earlier this year, VanEck, the parent company to MVIS and fintech company SolidX, developed a physically backed bitcoin exchange-traded fund (ETF) and applied for it to be listed on CBOE BZX Equities Exchange.

However, the U.S. Securities and Exchange Commission (SEC) has not deemed it fit to be approved. The agency had delayed its decision in August and again in September; it has now asked for comments from members of the public as it begins proceedings to decide whether or not to approve the VanEck/SolidX ETF.

One reason for the delay in approving the ETF is the SEC’s concern regarding market manipulation and illegal practices being carried out on cryptocurrencies and digital trading platforms.

MVIS is VanEck’s response to the concerns of the regulator, as the index uses a pricing source that builds on data from OTC counters that is subjected to “rigorous practices, regulatory-driven disclosures and client protection rules” — all measures that the SEC is looking to see in a bitcoin ETF.

Earlier this week, the Swiss authorities gave the green light to blockchain startup Amun AG’s offer to list a cryptocurrency exchange-traded product (ETP), which sources its pricing from VanEck’s MVIS.

This article was update to include quotes from Gabor Gurbacs, VanEck’s director of Digital Asset Strategies. 

This article originally appeared on Bitcoin Magazine.

Original Link

VanEck Subsidiary MVIS Launches Bitcoin OTC Index

VanEck Subsidiary MVIS Launches Bitcoin OTC Index

MV Index Solutions (MVIS), a subsidiary of investment management firm VanEck, has announced the launch of MVIS Bitcoin U.S. OTC Spot Index (MVBTCO), a bitcoin-based index and the first one that monitors the performance of bitcoin across established over-the-counter (OTC) platforms in the U.S., according to a company statement.

The index will cover the spot price of bitcoin from these OTC platforms: Circle Trade, Genesis Trading and Cumberland.

MV Index Solutions helps to develop, license and monitor asset classes such as fixed income markets, equities and more, with the use of investment indices. The MVBTCO, which will track just bitcoin, increases MVIS’s portfolio to 24 digital asset indices.

Thomas Kettner, managing director at MV Index Solutions, commented in the release, stating the company was excited to launch a “bitcoin index based on the pricing feed of OTC trading desks,” which he believes would serve OTC traders as a “reliable benchmark for their trades or potential investment products.”

Gabor Gurbacs, director of Digital Asset Strategies at VanEck/MVIS, calls the launch a great win for “greater transparency and price discovery” for institutional investors, which is necessary for the development of the digital asset space. In correspondence with Bitcoin Magazine,  he said that he believes the index will bring greater legitimacy to a young market that has struggled to win the approval of regulators.

“Liquidity, price transparency and regulatory status were the 3 main reasons to build the MVBTCO OTC Bitcoin index. Over the counter-trading represents a large portion of daily BTC trading volume. Transparency to this segment of the liquid institutional OTC markets is a sign of maturity and proof that it’s possible to provide better regulated pricing sources from established trading operations. Trading operations in the index are broker dealers or affiliates of broker dealers, which is a higher regulatory status than crypto exchanges (trading platforms) have today. OTC trading desks are also far less susceptible to market manipulation.” 

Going further, Gurbacs even indicated that he believes an index like MVIS could set the stage for more institutional-friendly, regulated investment vehicles, like the crypto industry’s much sought-after ETF.

“MVBTCO’s constituents are regulated and the newly gained transparency into the institutional OTC markets should make regulators comfortable. . .I believe this development may pave the way for more regulated funds, such as ETFs,” he told Bitcoin Magazine.

The Bitcoin Index is expected to provide a new tool through which institutional investors can monitor the price of bitcoin. Up until now, data related to this has been derived from cryptocurrency exchanges. With this new index, they will receive transparent and more accurate data on pricing.

Earlier this year, VanEck, the parent company to MVIS and fintech company SolidX, developed a physically backed bitcoin exchange-traded fund (ETF) and applied for it to be listed on CBOE BZX Equities Exchange.

However, the U.S. Securities and Exchange Commission (SEC) has not deemed it fit to be approved. The agency had delayed its decision in August and again in September; it has now asked for comments from members of the public as it begins proceedings to decide whether or not to approve the VanEck/SolidX ETF.

One reason for the delay in approving the ETF is the SEC’s concern regarding market manipulation and illegal practices being carried out on cryptocurrencies and digital trading platforms.

MVIS is VanEck’s response to the concerns of the regulator, as the index uses a pricing source that builds on data from OTC counters that is subjected to “rigorous practices, regulatory-driven disclosures and client protection rules” — all measures that the SEC is looking to see in a bitcoin ETF.

Earlier this week, the Swiss authorities gave the green light to blockchain startup Amun AG’s offer to list a cryptocurrency exchange-traded product (ETP), which sources its pricing from VanEck’s MVIS.

This article was update to include quotes from Gabor Gurbacs, VanEck’s director of Digital Asset Strategies. 

This article originally appeared on Bitcoin Magazine.

Original Link

New Cryptocurrency-Based ETP Arrives in Switzerland

New Cryptocurrency-Based ETP Arrives in Switzerland

Amun AG, a startup in Zug, Switzerland, has received a license from Swiss authorities to offer a new cryptocurrency exchange-traded product (ETP).

An ETP is a blanket term to denote a security that derives its price from an underlying asset (e.g. a currency, commodity, stock) and is traded on a regulated stock exchange. It could refer to a number of exchange-traded investment options, including exchange-traded funds (ETF), exchange-traded commodities (ETC) and exchange-traded notes (ETN).

Anum has referred to the instrument only as an ETP, and it’s unclear at this time whether or not it is characteristically an ETF, ETC or an ETN.

Amun AG has stated that its ETP will be based on a collection of the top five most liquid crypto assets, which it refers to as “HODL5.” The currencies contained within the ETP will be bitcoin, ether, Ripple’s XRP, litecoin and bitcoin cash. The company will purchase cryptocurrency using cash from its customers. The assets will then be transferred into custodial hands, for which the company will charge management fees of roughly 2.5 percent.

The fund also sources its pricing from the MVIS, an index for institutional-grade price tracking that was developed by VanEck.

Amun’s CEO Hany Rashwan explains, “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. It will also provide access for retail investors that currently have no access to crypto exchanges due to local regulatory impediments.”

The ETP will be traded on SIX Swiss Exchange, the country’s official stock exchange. Based in Zurich, the platform earned well over $100 billion during the first half of 2018 and is estimated to be worth over $1 trillion.

Big league financial players in the U.S. have struggled to get a cryptocurrency-based ETF on track for years without success. Some of the industry’s biggest players, like the Winklevosses’ Gemini Exchange in New York, have submitted applications for bitcoin ETFs only to be slapped down by the Securities and Exchange Commission (SEC). Currently, nine applications that were formerly rejected by the SEC’s staff are pending review by the agency’s Commission, and a bitcoin ETF pitched by VanEck in collaboration with SolidX is awaiting a decision.

In August 2018, American investors were given their first access to an exchange-traded note (ETN) called the “Bitcoin Tracker One” on the Nasdaq Stockholm Exchange in Sweden, first established in 2015. Unlike an ETF, which issues shares of an underlying asset, an ETN is akin to a bond. It is an unsecured debt note that can be bought and traded until it reaches its maturity date, at which time the debt on the note must be repaid.

Prior to August of 2018, investors had only been able to buy into the ETN using either euros or the kora, Sweden’s national currency, and the tracker’s USD listing paved the way for more western interest.

Less than a month later, however, the SEC suspended American access to the Bitcoin Tracker One and Ether Tracker One, another ETN issued by the Swedish company XBT Provider AB. The SEC cited investor confusion as the primary reason for blocking investors from taking part in either venture.

This article originally appeared on Bitcoin Magazine.

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Bitcoin Price Analysis: Another Red Day Pushes BTC Into Deeper Support Test

Bitcoin Price Analysis

Bitcoin has tumbled again today as the market continues to see further downward movement shortly after breaking two areas of market support. So far, bitcoin is down 15% on the day — 25% in 1 week:

fig1Figure 1: BTC-USD, Daily Candles, Downward Continuation

This drop below support is starting to display hallmarks of market capitulation. After most of the sellers got out of the market earlier this year, bitcoin managed to consolidate sideways for about 9 months in the form of a descending triangle.

Last week, after several tests of support, the bottom finally gave out and sent bitcoin jolting downward through multiple support levels. With little to no relief in sight for the bulls, many early buyers are now finding their investments underwater as the market continues to head down toward its macro 78% Fibonacci retracement values:

fig2Figure 2: BTC-USD, Daily Candles, Macro Fibonacci Retracement Levels

Historically, bitcoin’s previous parabolic run-ups and declines have typically found support around their 78% retracement values. In our case, this coincides at approximately the $4,400 range. However, something that’s a bit concerning regarding the macro trend of this market is the weekly Bollinger bands (bbands):

fig3Figure 3: BTC-USD, Weekly Candles, Bollinger Bands

After such a prolonged consolidation, the weekly bbands found themselves very tightly wound. And now, one week after a 25% drop, bitcoin’s weekly bbands are expanding for the first time in over a year.

If you are unfamiliar with Bollinger bands, just think of them as a visualization of market volatility. The tighter the bands, the more consolidated the market is. When the bands begin to expand, their movement is a predicter of increased volatility in the direction of the breakout. While there are some nuanced set-ups involving Bollinger band fakeouts, it is generally considered to be a sign of trend continuation.

A possible scenario that could play out is called a “head fake.” A head fake is basically a breakout in a given direction that quickly “fakes out’ the market and reverses (a fakeout for bitcoin would yield a strong reversal to the upside).

Since this move is on such a macro scale, I wouldn’t entirely rule it out — although, it’s not looking likely at the moment. The most likely situation in our case right now is a downward continuation. Just how far the trend will continue remains to be seen, as the breakout is still fresh in the market.

Looking at Figure 1 and and Figure 2 above, we can see a few areas of support and resistance outlined in blue. So far, we have broken straight through the support with very little pause. As stated previously, the next line of support for bitcoin lies in the $4,400 zone. Given the capitulative nature of this move, it seems likely that the $4,400 zone will hold up nicely as it welcomes a fresh round of buyers. From there, we will have to re-evaluate the market and see how it reacts to the support level.

Summary

  1. Bitcoin has, yet again, seen another decline by over 15% in value.
  2. It’s managed to plow right through several layers of support and is now heading down toward its macro 78% retracement.
  3. Historically, bitcoin’s parabolic advances have tended to retrace approximately 78% percent just before reaching its bottom.
  4. The move downward is unrelenting, but the 78% retracement at $4400 may bring in a fresh round of buyers.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.


This article originally appeared on Bitcoin Magazine.

Original Link

Bitcoin Price Analysis: Yearly Support Breaks as Bitcoin Tests Underlying Demand

Bitcoin Price Analysis

After months and months of consolidation, the yearly support finally broke and now bitcoin has found itself in the lower $5000s for the first time since 2017:

fig1Figure 1: BTC-USD, Daily Candles, Broken Support

Bitcoin managed to drop a staggering 16% yesterday as the market sliced through the long held support like a knife through butter. The high volume and wide candle spread does not bode well for the bulls as we are currently witnessing an excess of supply in the market. We have blown through two levels of support and haven’t seen a significant retest just yet:

fig2Figure 2: BTC-USD, Daily Candles, Support Levels (shown in blue)

Figure 2 shows the next levels of support below us, but it seems for now we are content to consolidate at the $5400 level. The $5400 is pretty interesting because that is when the market went from being parabolic to *super* parabolic as the market took off on what’s referred to as a “hypodermic trend.” It’s when the market experiences parabolic blow-off toward the end of its parabolic cycle and the market actually breaks north of its parabolic curve. Almost one year to the day, we have found ourselves positioned at the exact same price it was previously. It was this time last year that we saw the major leaps and bounds in price as the market accelerated upward, following a strong round of media coverage over the winter holiday season.

Something quite alarming for the bitcoin bulls is this massive descending triangle that broke downward yesterday:

fig3Figure 3: BTC-USD, Daily Candles, Descending Triangle (shown in red)

Over the entirety of 2018, the market consolidated in a pattern called a “descending triangle.” Typically, if a triangle breaks downward, it will be seen as a trend continuation to most traders and they are likely to short the asset. In our case, the trend continuation would be a downward continuation. It’s unclear where the actual market will lead, but the blue levels outlined in Figure 2 and the 78% Fibonacci retracement shown above are likely to entice some of the more patient bulls that sat out most of 2018. It’s still very early to tell whether the market will see a strong continuation or if the market is just attempting to find its floor. We will know more with the weekly close.

Summary:

  1. The yearly support finally broke down as bitcoin shoved down a staggering 16% in one day.
  2. The move is still fresh, but the market is attempting to test support as the bulls decide whether they want to start a strong round of buying. One thing is clear though: Supply is very present.
  3. The breakdown of the descending triangle shown in Figure 3 is a sell signal for traders, as it typically is a sign of a trend continuation. The breakout is still fresh, so we will need to check back on the market to gather further insight.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.


This article originally appeared on Bitcoin Magazine.

Original Link

OKCoin Adds the Argentine Peso as It Eyes Expansion Into Latin America

OKCoin Adds the Argentine Peso as It Eyes Expansion Into Latin America

Despite a prolonged cryptocurrency bear market and regulatory uncertainties, OKCoin, one of the largest cryptocurrency exchanges in the world, is expanding to Latin America launching a new exchange platform headquartered in Buenos Aires, Argentina.

Already active in 110 countries and 21 U.S. states, OKCoin USA CEO Tim Byun told Bitcoin Magazine that he is not worried about market volatility as they launch on a new continent:

“Overall, we are very bullish on the cryptocurrencies markets throughout the world and in Latin America in particular. The growth might not be perfectly linear, but we fundamentally believe in the potential of cryptocurrencies to fix what ails many of the infrastructure problems that ail the global economy.”

Launching today, November 15, 2018, OKCoin will allow traders in Argentina to deposit Argentine pesos (ARS) in exchange for cryptocurrencies, including bitcoin, bitcoin cash, ether, ethereum classic, litecoin, ripple, ada, stellar, zcash and 0x, with more being added soon.

OKCoin plans to begin its expansion by opening an office in Buenos Aires and then building up a team to support its business throughout Latin America. Other Latin American fiat currencies will be added in the coming months.

Why Argentina?

“There is a huge opportunity within Latin America and Argentina, in part because traders in the region are extremely savvy and in part because the Argentine peso has experienced a lot of volatility,” Byun explained.

“As the value of Argentina’s fiat currency remains uncertain, consumers there are looking for other options to invest in currencies that are not backed by any central bank or hard asset.”

In a recent study of the top cities in the world for bitcoin adoption, the authors found that Buenos Aires had the 8th highest adoption rate in the world, making it the leading bitcoin city in South America.

Buenos Aires has 130 merchants accepting bitcoin and three bitcoin ATMs in a city of 2.9 million people that is struggling with the volatile peso and a 32 percent yearly inflation rate.

Argentina is also known as one of Latin America’s top destinations for software development, with blockchain startups like CoinFabrik that offer blockchain development for other startups.

RSK Labs is also active in Argentina’s blockchain development ecosystem, creating Rootstock, a smart contract platform connected to the Bitcoin blockchain. RSK recently partnered with the Universidad de Buenos Aires (UBA) to offer courses in blockchain technology as part of the university’s Information Engineering program.

OKCoin and Security

OKCoin says it puts a premium on the importance of security and calls it “the core and center to our business.”

They told us they have assembled one of the industry’s largest teams of security and fraud experts to stay ahead of hackers, and, since its launch in 2013, the company has developed a sophisticated system of security measures to handle new challenges like its Latin American expansion.

Byun added: “Preventing hacks is one of the most important roles for an exchange like ours, and we are proud to report that in the five years since our launch, our exchange has never been hacked, not even once.”

Minding Their Regulatory P’s and Q’s

The Argentine Parliament recognizes cryptocurrency as property, not as currency, so currently, the exchange of coins is legal. The Argentine government permitted the installation of 200 bitcoin ATMs in October 2017.

Byun comes to OKCoin with U.S. experience in risk and compliance with the FDIC (Federal Deposit Insurance Corporation) and the Federal Reserve Bank of San Francisco.

In the U.S., at least, OKCoin says all its regulatory ducks are in a row and it is properly registered as an MSB (Money Services Business) with FinCEN (Financial Crimes Enforcement Network).

Byun concluded by encouraging the crypto community to keep on innovating:

“It’s been remarkable to witness the tremendous amount of creativity and ingenuity being poured into the market. We believe the combination of the internet and blockchain technologies will create a whole new paradigm of applications and use cases. As such, we will continue to look for the best and the hottest cryptocurrency projects to list on our exchange.”

This article originally appeared on Bitcoin Magazine.

Original Link

OKCoin Adds the Argentine Peso as It Eyes Expansion Into Latin America

OKCoin Adds the Argentine Peso as It Eyes Expansion Into Latin America

Despite a prolonged cryptocurrency bear market and regulatory uncertainties, OKCoin, one of the largest cryptocurrency exchanges in the world, is expanding to Latin America launching a new exchange platform headquartered in Buenos Aires, Argentina.

Already active in 110 countries and 21 U.S. states, OKCoin USA CEO Tim Byun told Bitcoin Magazine that he is not worried about market volatility as they launch on a new continent:

“Overall, we are very bullish on the cryptocurrencies markets throughout the world and in Latin America in particular. The growth might not be perfectly linear, but we fundamentally believe in the potential of cryptocurrencies to fix what ails many of the infrastructure problems that ail the global economy.”

Launching today, November 15, 2018, OKCoin will allow traders in Argentina to deposit Argentine pesos (ARS) in exchange for cryptocurrencies, including bitcoin, bitcoin cash, ether, ethereum classic, litecoin, ripple, ada, stellar, zcash and 0x, with more being added soon.

OKCoin plans to begin its expansion by opening an office in Buenos Aires and then building up a team to support its business throughout Latin America. Other Latin American fiat currencies will be added in the coming months.

Why Argentina?

“There is a huge opportunity within Latin America and Argentina, in part because traders in the region are extremely savvy and in part because the Argentine peso has experienced a lot of volatility,” Byun explained.

“As the value of Argentina’s fiat currency remains uncertain, consumers there are looking for other options to invest in currencies that are not backed by any central bank or hard asset.”

In a recent study of the top cities in the world for bitcoin adoption, the authors found that Buenos Aires had the 8th highest adoption rate in the world, making it the leading bitcoin city in South America.

Buenos Aires has 130 merchants accepting bitcoin and three bitcoin ATMs in a city of 2.9 million people that is struggling with the volatile peso and a 32 percent yearly inflation rate.

Argentina is also known as one of Latin America’s top destinations for software development, with blockchain startups like CoinFabrik that offer blockchain development for other startups.

RSK Labs is also active in Argentina’s blockchain development ecosystem, creating Rootstock, a smart contract platform connected to the Bitcoin blockchain. RSK recently partnered with the Universidad de Buenos Aires (UBA) to offer courses in blockchain technology as part of the university’s Information Engineering program.

OKCoin and Security

OKCoin says it puts a premium on the importance of security and calls it “the core and center to our business.”

They told us they have assembled one of the industry’s largest teams of security and fraud experts to stay ahead of hackers, and, since its launch in 2013, the company has developed a sophisticated system of security measures to handle new challenges like its Latin American expansion.

Byun added: “Preventing hacks is one of the most important roles for an exchange like ours, and we are proud to report that in the five years since our launch, our exchange has never been hacked, not even once.”

Minding Their Regulatory P’s and Q’s

The Argentine Parliament recognizes cryptocurrency as property, not as currency, so currently, the exchange of coins is legal. The Argentine government permitted the installation of 200 bitcoin ATMs in October 2017.

Byun comes to OKCoin with U.S. experience in risk and compliance with the FDIC (Federal Deposit Insurance Corporation) and the Federal Reserve Bank of San Francisco.

In the U.S., at least, OKCoin says all its regulatory ducks are in a row and it is properly registered as an MSB (Money Services Business) with FinCEN (Financial Crimes Enforcement Network).

Byun concluded by encouraging the crypto community to keep on innovating:

“It’s been remarkable to witness the tremendous amount of creativity and ingenuity being poured into the market. We believe the combination of the internet and blockchain technologies will create a whole new paradigm of applications and use cases. As such, we will continue to look for the best and the hottest cryptocurrency projects to list on our exchange.”

This article originally appeared on Bitcoin Magazine.

Original Link

Bitfury Acquires Minority Stake in Final Frontier, Aims To Expand Services

bitfury frontier

The Bitfury Group has acquired a minority stake in blockchain services firm Final Frontier. Both organizations are looking to utilize each other’s knowledge and experience in the traditional and digital finance spaces to potentially release a new line of financial products and services designed to assist professional investors in getting their hands on digital assets.

“Our mission is to be the bridge for institutions from traditional finance to enter this innovative asset class,” said Final Frontier co-founder Imraan Moola in a public statement. “Bitfury’s technological expertise, combined with our financial markets know-how and track record will allow us to create unique and differentiated financial products and solutions to service our sophisticated investor base.”

Bitfury is a full-service blockchain technology company that started out with a focus on cryptocurrency mining. Among the company’s latest hardware releases are semiconductor chips and mobile data centers.

Bitfury is also the developer behind other blockchain projects including Exonum, a private blockchain framework; Crystal Blockchain, an advanced analytics platform; and LightningPeach, an open-source Lightning Nnetwork project.

Based out of Switzerland’s renowned Crypto Valley, Final Frontier is a cryptocurrency and blockchain investment firm. Among the venture’s main goals are helping professional traders and investors enter the crypto space.

Bitfury CEO Valery Vavilov states, “This is a ground-breaking partnership between a blockchain technology firm and an experienced team from traditional finance. With the blockchain space institutionalizing, we consider it an important step forward for the entire ecosystem and for our own mission to be the world’s leading full-service blockchain company.”

News of the partnership comes only days after Bitfury closed a Series C, $80 million funding round led by Korelya Capital. Funds will be used to further develop the company’s exploration of emerging technology and boost its software and hardware equipment. Its partnership with Final Frontier raises questions about whether Bitfury may be trying to expand its reach into investment services.  

Bitcoin Magazine reached out to Bitfury for comment. The company said that it was unable to “provide more details at this time,” but it was “looking forward to sharing more details in the future.”

Final Frontier also did not respond to our request for comment.

This article originally appeared on Bitcoin Magazine.

Original Link

In the Race for a Bitcoin ETF, Wall Street Has Plenty of Hurdles to Clear

Bitcoin ETFs: Where the Industry Stands Right Now (and Where It Going)

In the latter half of 2018, few developments have occupied crypto investors’ headspaces like the industry’s indefatigable pursuit of a bitcoin exchange traded fund (ETF).

This conversation lay largely dormant since the two brothers’ first attempt was rejected by the U.S. securities regulator in March of 2017. But the Winklevosses reignited the conversation when their second attempt at an ETF was shot down by the U.S. Securities and Exchange Commission (SEC) in July of this year. 

With the buzz back, the prospect (or failing prospects) of a bitcoin ETF have crowded the headlines of mainstream and crypto media alike. Following the Winklevosses’ failure to secure the coveted first-in-the-industry fund, the ensuing months would see a flurry of decision delays for existing applications, more rejections and revisions of said rejections.

The sheer volume of news surrounding ETFs — and the general complexity of the asset when compared to the simplicity of trading on the bitcoin spot market — makes the industry’s pursuit of one a rich and even abstruse topic.

So let’s see if we can set the record straight.

What an ETF Is and What It Means for Bitcoin

To start, a short explanation: an ETF is a fund that holds an underlying asset or assets, be they stocks, commodities, bonds, etc., which are then divided into shares for investors to buy. In structure, an ETF functions like a hedge fund, the primary difference being that an ETF is traded on a public market like shares of a stock, while a hedge fund is not.

With that primer in mind, we can now unpack the processes and jargon that constitute an ETF’s many working parts.

Typically, an ETF features four primary stakeholders:

  • a sponsor (the entity who creates the ETF)
  • a custodian (the entity who stores and manages the underlying asset/s)
  • authorized participants (financial institutions or accredited individuals who create and redeem a block of the ETF’s shares)
  • shareholders/investors (those who purchase the shares on the open market)

More or less, authorized participants and sponsors are in charge of the ETF’s supply. The participants create or redeem blocks of shares (called creation units) directly from the sponsor; typically, these creation units are settled in-kind, meaning they are purchased for or redeemed in the underlying asset. Once participants have purchased creation units, these units are then divided into shares and traded on public exchanges.

For bitcoin, an ETF would function similarly to ETFs for other commodities like gold and silver. Its sponsor, most likely a trust of sorts, would employ the help of a custodian to store the physical bitcoins backing the ETFs (or, in the case of futures, the futures contracts) and related cash flow, and it would also rely on eager financial institutions to jumpstart circulation by purchasing shares to trade on a regulated, legacy exchange like the NYSE, CME or Cboe.

Many investors see the bitcoin ETF as the hitherto undiscovered holy grail of institutional-grade bitcoin investments, something that could push the market to new heights. In the broader market, ETFs are considered to be a low-barrier, low-cost alternative to other investment vehicles like hedge funds, and per this rationale, community members in favor of a bitcoin ETF say it would finally give institutional investors easy, reliable access to the crypto market. Supporting this thesis, proponents often point to the impacts ETFs had on the underlying gold market, noting that bitcoin would likely experience a similar price stimulation.

Detractors don’t think this is a good thing. They believe that, by encouraging a flood of institutional money, a bitcoin ETF would drown the market in inflated valuations, an argument critics in other markets have made by insisting that ETFs distort prices and liquidity. So the argument goes: Why would we create an investment vessel that could leave bitcoin susceptible to the same inflationary threats that it was created to avoid?

The Playing Field

The merits of either argument are for another article entirely, but the perspectives are helpful for understanding why so many players are pursuing an ETF and why there’s so much noise surrounding it.

The following list looks at all past and current applications, some of which were refiled or restructured after the initial applications were rejected by the SEC or pulled by their sponsors.

In chronological order:

Winklevoss Bitcoin Trust

File date: July 2013

Status: Rejected March 2017

Sponsor: Winklevoss Bitcoin Trust

Custodian: Gemini Exchange

Listed Exchange: Bats BZX Exchange

Price Data Source: Gemini Exchange

Creation Unit Size: Basket of 100,000 shares

SolidX Bitcoin Trust

File Date: July 2016

Status: Rejected March 2017

Sponsor: SolidX Management LLC

Custodian: SolidX Management

Other Custodians: The Bank of New York Mellon (cash funds)

Listed Exchange: NYSE Arca

Price Data Source: TradeBlock XBX Index

Creation Unit Size: Basket of 100,000 shares

The Bitcoin Investment Trust

File Date: January 2017

Status: Withdrawn September 2017

Sponsor: Grayscale Investments LLC

Custodian: Xapo Inc.

Listed Exchange: NYSE Arca

Price Data Source: N/A

Creation Unit Size: Basket of 100 shares

VanEck Vectors Bitcoin Strategy

File Date: August 2017 (refiled in December 2017)

Status: Withdrawn September 2017 (and again in January 2017)

Sponsor: VanEck

Custodian: The Bank of New York Mellon

Listed Exchange: NASDAQ

Price Data Source: N/A

Creation Unit Size: N/A

ProShares Bitcoin ETF and ProShares Short Bitcoin ETF

File Date: December 2017

Status: Rejected at staff level but appealed for review by the Commission in August 2018

Sponsor: ProShares Capital Management LLC

Custodian: Brown Brothers Harriman and Co.

Listed Exchange: NYSE Arca

Price Data Source: Cboe and/or CME bitcoin futures

Creation Unit Size: N/A

GraniteShares Bitcoin ETF and GraniteShares Short Bitcoin ETF

File Date: January 2018

Status: Rejected at staff level but appealed for review by the Commission in August 2018

Sponsor: GraniteShares Advisors LLC

Custodian: Bank of New York Mellon

Listed Exchange: Cboe BZX Exchange

Price Data Source: Cboe bitcoin futures

Creation Unit Size: N/A

Direxion Daily Bitcoin Bear 1X Shares, Direxion Daily Bitcoin 1.25X Bull Shares, Direxion Daily Bitcoin 1.5X Bull Shares, Direxion Daily Bitcoin 2X Bull Shares, and Direxion Daily Bitcoin 2X Bear Shares

File Date: February 2018

Status: Rejected at staff level but appealed for review by the Commission in August 2018

Sponsor: Direxion Asset Management LLC

Custodian: Bank of New York Mellon

Listed Exchange: NYSE Arca

Price Data Source: Cboe and CME bitcoin futures exchange

Creation Unite Size: Basket of 50,000 shares

Other Info: Direxion’s ETFs would give investors the option to short bitcoin as well as giving them a 200% short leveraging option and a 125%, 150% and 200% long leverage option — they are the only ETF filing that accommodates leveraged shares.

VanEck SolidX Bitcoin Strategy (refiling)

File Date: June 2018

Status: Pending

Sponsor: SolidX Management LLC

Custodian: The Bank of New York Mellon

Listed Exchange: Cboe BZX Exchange

Price Data: MVIS CryptoCompare Bitcoin Index (MVBTC)

Creation Unit Size: Basket of 25 shares

Other Info: ETF is backed by physical bitcoin, but they will be redeemed in cash

Winklevoss Bitcoin Trust (refiling)

File Date: June 2018

Status: Rejected July 2018

Sponsor: Winklevoss Bitcoin Trust

Custodian: Gemini Exchange

Listed Exchange: Cboe BZX Exchange

Price Data Source: Gemini Exchange

Creation Unit Size: Basket of 100,000 shares

Bitwise HOLD 10 Cryptocurrency Index Fund

File Date: July 2018

Status: Pending

https://www.sec.gov/Archives/edgar/data/1746379/000149315218010390/forms-1.htm

Sponsor: Bitwise Investment Advisers, LLC

Custodian: N/A

Listed Exchange: TBD

Price Data Source: Bitwise’s HOLD 10 Cryptocurrency Index

Creation Unit Size: Basket of 25,000 shares

Other Info: Unlike other ETFs, Bitwise’s would be based on the 10 cryptocurrencies in its index fund, not just bitcoin.

The Winklevoss Standard and the Rationale for Rejection

The Winklevosses were the first to try and first to fail at filing a bitcoin ETF. Naturally, they set a precedent for other contenders to follow, as subsequent filings were submitted with the frontrunner’s shortcomings in mind. For the SEC, the Winklevosses’ first attempt has become something of a touchstone to evaluate the worth of those that came after it, as the first rejection order is cited in every rejection order the SEC has issued since.

And that’s because the SEC keeps running into the same problems.

In sum, these problems are few and simple. You could boil them down to three interconnected areas of concern: risk of fraud/manipulation, market size and lack of regulation.

To create an ETF for a new asset, applicants must propose a rule change to accommodate that asset in the SEC’s legal framework, and this places the onus on the applicant to prove that the asset and its underlying market are consistent with regulations laid out in the Security and Exchange Act of 1933.

As the rejection would indicate, the Winklevosses’ preliminary attempt wasn’t convincing enough to the SEC.

“[The] Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.

“The Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (“ETPs”) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter. First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated,” the order reads.

SolidX’s first crack at an ETF would be scrapped with the same verbiage, word for word, nearly three weeks following the Winklevosses’ rejection.

In 2013, when the Winklevosses’ ETF was filed — and in 2017 when it was summarily rejected — there were no federally regulated markets for bitcoin. Of course, the Winklevosses’ own Gemini Exchange is regulated via the New York State Department of Financial Services through one of the much-coveted BitLicenses. But the scale of this regulation is inconsequential to the SEC, so the twins’ first application was fighting a losing battle from the start.

Though by June 2017, they found an opening. The Cboe and CME exchanges launched the world’s first institutional bitcoin futures in December of 2017. By proxy, these were also the first fully federally regulated bitcoin products to trade in the United States.

So the Winklevosses took another stab at it, submitting a revised proposal and petition for review. This time around, the twins’ Gemini Exchange entered into a surveillance-sharing agreement with Cboe’s bitcoin futures market to appease the SEC’s request in the former rejection. As the name suggests, a surveillance-sharing agreement is a self-regulatory accord struck between two or more marketplaces in the same market to police fraud and manipulation. Sharing data and monitoring practices between Gemini and Cboe, then, would seemingly satisfy the SEC’s major concern with the prior application.

Still, the SEC was not impressed. In their filing, the Winklevosses et al. argue that the bitcoin market’s global nature makes bitcoin resistant to conventional mark manipulation tactics. Ironically, this argument backfired, as the SEC found that because of this global market, the Winklevoss Bitcoin Trust couldn’t possibly shield their potential investors from fraud, especially when you consider that the Gemini Exchange (which would source the ETF’s price data) accounts for a sliver of bitcoin’s daily transaction volume.

“BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices,” the rejection reads.

Looking Toward the “Futures”

The rejection rationale detailed above would be copy-pasted practically verbatim into the nine rejection orders that would come in the following month, August 2018.

These filings by Direxion, ProShares and GraniteShares, however, didn’t source their price data from the underlying spot market. In fact, the contracts weren’t for physical bitcoin at all — they would be ETFs for bitcoin futures themselves.

The logic here is pragmatic if not a little obvious. Seeing as the Winklevosses were rejected a second time even if they entered into a surveillance-sharing agreement with a regulated exchange, they must have not gone far enough. If the SEC is worried about the regulation status and integrity of the market, then the ETF (and its pricing data) must be based on a regulated market, not just surveillance-share with it.

So Direxion, ProShares and GraniteShares followed in VanEck’s footsteps, which was the first to file for an ETF based on bitcoin futures, bizarrely, before a mainstream futures market even existed (this is why its proposal was initially withdrawn at the SEC’s request).

Unlike its counterpart in physical bitcoin ETFs, these products would divide shares of the Cboe’s and/or CME’s futures contracts, while naturally sourcing pricing data from these markets as well.

These ETFs all claim to have established a surveillance-sharing agreement with the CME’s and Cboe’s regulated futures markets. Even so, these agreements must be with a “market of significant size related to bitcoin,” and in the eyes of the SEC, the CME and Cboe aren’t there yet.

“While CME and [Cboe’s CFE] are regulated markets for bitcoin derivatives, there is no basis in the record for the Commission to conclude that these markets are of significant size,” the rejection notices read.

“Publicly available data show that the median daily notional trading volume, from inception through August 10, 2018, has been 14,185 bitcoins on CME and 5,184 bitcoins on CFE, and that the median daily notional value of open interest on CME and CFE during the same period has been 10,145 bitcoins and 5,601 bitcoins, respectively,” it continues.

With this data in mind, the SEC then says that extrapolating any “meaningful analysis” from this market volume is difficult “because reliable data about the spot market, including its overall size, are unavailable.”

Of course, these rejections were made at the staffing level and are pending review by the Commission itself, so while the staff’s decision doesn’t exactly inspire confidence, it could still be overturned by the SEC’s senior decision makers.

Precedents and Disappointments

Almost all arguments against these ETFs make their way back to the spot market.

If the ETF prices its data from spot exchanges like Gemini, these markets are too small in the scope of bitcoin’s global trading to definitively defend against fraud. If the ETF prices its data from a regulated derivatives market, there’s no reliable way to measure the significance of this future’s volume against the overall market.

The SEC’s gravest concern when deliberating bitcoin ETF approvals has been related to fraud and manipulation; market size, asset liquidity and reliability of pricing data are also wrapped up in this primary concern. And these concerns don’t even touch on the custody and settlement difficulties offerings would have to hurdle if they redeemed shares “in-kind” with bitcoin itself (there’s a reason most (if not all) of the filings since the Winklevosses’ own have opted to settle contracts in cash, instead).

Ironically, the biggest obstacle to regulating an ETF into existence, then, is the current dearth of regulated entities and structures in the bitcoin market at large. In an interview with Bitcoin Magazine, SEC Commissioner Hester Peirce hit on the catch-22 that the SEC’s rejection creates, as well as explaining that she feels their rejections set a disconcerting precedent for the SEC’s power to vet or denounce the quality of an investment.

“If you really want this market to be more orderly,” she said, “then you’ve got to let some of these forces in that are going to bring order to it,” like an institution-grade product such as an ETF.

Peirce suggested that the rejection of the Winklevoss ETF in particular set a poor precedent. “It plays into a bit of a thread in securities regulations — at the federal and at the state level — which is that there’s an inclination among regulators to almost step into the shoes of the investor and say whether or not the investor should be making that particular decision, based on our assessment of the actual product — in this case, the actual asset. So yes, that is a disturbing precedent, because I can’t make assessments about those things,” she said in the interview.

So far, ETF news has been punctuated by overarching disappointment, but a number of decision-pending files are still crowding the SEC’s desk. As we mentioned earlier, currently, the ETFs pitched by Direxion, ProShares and GraniteShares are up for review by the Commission; VanEck and SolidX’s joint effort, as well as Bitwise’s sweeping ETF of popular coins, are still being reviewed.

This September, Abra’s CEO Bill Barhydt told CNBC that he would bet on an ETF being approved “in the next year,” and Peirce said she was “a bit optimistic” that one is coming. Barhydt believes the right suitor hasn’t called on the SEC yet, but that once it does, the ETF is inevitable, while Peirce thinks that there’s enough interest in the product for an eventual approval.

Until this eventually becomes reality, though, the industry is stuck waiting on what the SEC will do next — something that’s become a constant for 2018 and isn’t likely to change anytime soon.

This article originally appeared on Bitcoin Magazine.

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Bitfury Secures $80M in Private Funding Round

Bitfury funding round

Cryptocurrency mining firm Bitfury Group has closed a Series C, $80 million funding round led by EU-based Korelya Capital. The round also included crypto merchant bank Galaxy Digital, Lian and Jabre Group, Dentsu Inc., Armat Group and others.

Bitfury is a diversified blockchain company known for its expertise in developing high-performance computing technologies, processing capabilities and advanced blockchain-based solutions for companies and governments, including the development of a blockchain-based land registry in Ukraine.

The funding round will be used by the company to enrich its software and hardware development, as well as explore other technologies that are emerging alongside the blockchain.

“This private placement enables Bitfury to expand our existing areas of focus, including securing the Bitcoin Blockchain, as well as hardware and software development – and broaden our financial strategic options. It also enables us to concentrate on adjacents such as high-performance computing, including emerging technologies like artificial intelligence (AI),” CCO John Mercurio told Bitcoin Magazine.

Valery Vavilov, CEO and co-founder of Bitfury, said the success of the round was a reflection of the company’s achievements and its ability to meet the needs of “adjacent market segments in high-performance computing.”

In correspondence with Bitcoin Magazine, Vavilov stated:

“We are very pleased with our successful private placement, which enables us to expand our work designing ground-breaking blockchain solutions to governments, businesses, and institutions around the world. Strong support from the investor community also allows us to concentrate on adjacent businesses such as high-performance computing, including emerging technologies like artificial intelligence.

Bitfury made headlines last week when word broke out that the company may be considering going public. When Bitcoin Magazine asked if this private funding changes the prospect of an IPO, Mercurio responded with the following:

“Bitfury is continuously evaluating financing options to support its development strategy, and the IPO is one alternative. But no decision has been made and ultimately it will depend on a number of factors, including the capital markets environment.”

At a time when cryptocurrency miners are being criticized for the energy consumption required to secure public blockchains with high security requirements, Bitfury has made a commitment to using renewable energy. It has also created standard processes for reducing the consumption of energy in its data centers by using immersion cooling technology.

In September 2018, Bitfury announced a bitcoin mining chip called the “Clarke” ASIC chip, which it claims offers the “strongest performance among bitcoin mining chips and is unparalleled in efficiency,” via a Medium post. The company also has plans to integrate Clarke into its range of existing mining products and on its mining farms across the world.

In addition to the Clarke chips, the company also launched its latest computing servers dubbed the Bitfury Tardis. Both the chip and the server will be included in the company’s product offering, the Bitfury BlockBox, per reports on its release.

Founded in 2011 and recognized as the largest, non-Chinese company that provides hardware for bitcoin mining, Bitfury is also known for pioneering the hybrid algorithm Flare on the Lightning Network, which ensures that payment routes can be found as quickly as possible.

This article originally appeared on Bitcoin Magazine.

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Coinbase Is Officially Adding Support for Basic Attention Token (BAT)

BAT Coinbase

On November 2, 2018, Coinbase announced that it would be integrating support for Basic Attention Token (BAT), an ERC-20 token that is designed to work out-of-the-box with the privacy-centric Brave Browser, on CoinbasePro.

BAT will initially trade against USD Coin (USDC), a stablecoin that Coinbase developed with Circle Ltd. and recently added to its platforms. The new offering is not available on Coinbase’s primary platform, and the company said it would make a separate announcement when this occurs.

The offering is being integrated on Coinbase Pro in the following order of stages: “Transfer-only,” “Post-only,” “Limit-only” and finally a “Full trading” stage.

“If at any point the BAT/USDC order book does not meet our assessment for a healthy and orderly market, we may keep the book in one state for a longer period of time, or suspend trading as per our Trading Rules. Any other BAT order books we launch will also go through the same stages,” according to a Coinbase blog post.

“We will accept deposits for at least 12 hours prior to enabling trading. Once sufficient liquidity is established, trading on the BAT/USDC order book will start … BAT trading will be accessible for users in most jurisdictions, but will not initially be available for residents of the state of New York,” the Coinbase blog post continued.

The newly added token is the latest in a list of cryptocurrencies that Coinbase said it was “exploring” back in July of 2018, and it comes on the heels of Coinbase’s listing ZRX last month.

This article originally appeared on Bitcoin Magazine.

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Unchained Capital Revamps Loans With Multi-Party, Multi-Sig Storage

Unchained Capital

Blockchain financial service company Unchained Capital will now offer multi-signature and multi-institution cold storage solutions for borrowers who leverage its crypto-collateralized loans service. According to a company statement, the cold storage solution will be multi-institution and collaborative with code-level controls for the safe storage of cryptocurrencies.

Earlier this year, Unchained closed a $2.9 million round of venture funding to fuel the innovation in its wealth management and financial services offerings for long-term crypto investors.

Unchained Capital offers loans to individuals and businesses, accepting only bitcoin (BTC) and ether (ETH) as collateral. The crypto lending service can fund loans between $10,000 and $1 million within 24 hours, offering 5.99 percent annual interest rate on loans over a period of six months or less. The platform currently provides loans in 43 states in the U.S.

Multi-Signature solutions require a series of keys to authorize a blockchain transaction, say three keys in total, where two would be required to sign a transaction. For most people who hold cryptocurrencies, they often use a single private key to authorize their transactions via their online or hardware wallets. A major problem with this custody option is that they are solely dependent on protecting a single private key. Losing this private key could result in loss of funds.

Unchained Capital’s multi-signature and multi-institution cold storage solution is expected to safeguard the borrower’s funds by distributing trust across three separate and independent parties: the borrower, the lender (Unchained) and an external third party. Two of the keys will be required for a transaction to be authorized.

To keep the counterparty risk low, Unchained Capital executed a Key Agent Services Agreement with Citadel SPV, to act as a third-party key agent which gives it the power to sign collateral-related transactions under certain circumstances.

According to the Citadel SPV website, “If you have a loan from Unchained Capital, the Security Agreement you executed in connection with your loan application will disclose whether a Key Agent is being used to secure your loan’s related collateral.”

Based on the press release, Unchained Capital will be hoping to distinguish itself in the crowded crypto lending market, that already includes BlockFi and Genesis Global trading, by focusing on cold storage and providing a dedicated on-chain address for investors’ assets.

“We’re excited to be the first lender that can deliver on the promise of a decentralized platform for Bitcoin and Ethereum-backed loans,” Joe Kelly, CEO of Unchained Capital, said to Bitcoin Magazine. “Now Ledger and Trezor users can extend their experience of self-sovereign wealth into the context of secured loans.”

According to Kelly, as a loan comes to term or is prepaid, Unchained Capital will sign along with the borrower to return the assets used as collateral. In worst-case scenarios where the loan goes into default, “Citadel SPV will work with the appropriate party to sign a transaction that moves the collateral.”

Unchained Capital hopes its latest solution and the reduction of crypto lending risk will make the company’s multi-institution custody solution the gold standard for “large, complex transactions.”

“Our custody solution is the foundation not only for safer loans, but many other classes of financial products as well,” Kelly added in the press release.

Crypto lending services have been getting a lot of traction. Earlier this week, Bitcoin Magazine reported BlockFi’s expansion of its crypto-backed loan services to the international market. Unlike Unchained Capital that only accepts bitcoin or ether as collateral, BlockFi borrowers can also use litecoin or Gemini USD in addition to BTC or ETH.

This article originally appeared on Bitcoin Magazine.

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Bithumb and seriesOne Partner to Launch U.S. Securities Token Exchange

Bithumb securities tokens

Aiming to create an SEC and FINRA-compliant U.S. exchange, blockchain-based crowdfunding firm seriesOne and crypto exchange Bithumb have formed a joint venture. According to an announcement made on November 1, 2018, officials behind the venture look to trade security tokens within a “compliant marketplace” and within the context of “other applicable regulatory approvals.”

For South Korea-based Bithumb, the venture provides the exchange with new expertise around U.S. regulation. seriesOne, a company created by finance industry veterans in the tech, investment banking, venture capital and compliance sectors, operates a U.S. platform for initial security token offerings compliant with SEC exemptions like Reg CF and Regulation D.

For seriesOne, the new alliance allows it to build its presence in the Asian region through a Bithumb investment designed to “scale technical development and marketing.”  

Kaine Kim, former deputy director of Korea’s Financial Services Commission, joined seriesOne earlier this year. Kim, responsible for incorporating seriesOne South Korea, functions as the company’s managing director in the country and as head of Asian operation.

“Together the companies believe they are well positioned to execute on a global token exchange that operates in compliance under U.S. securities laws,” according to the joint statement.

 

This article originally appeared on Bitcoin Magazine.

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Bitcoin Price Analysis: Weekly Consolidation Hints Toward Sustained Breakout

Bitcoin Price Analysis

Another week has passed as bitcoin continues to coil in a tighter and tighter consolidation. Both price and volume continue to consolidate as bitcoin decides where the next major move will be. A trend of higher lows and lower highs shows a balance of both supply and demand, but ultimately one will win out:

fig1Figure 1: BTC-USD, Daily Candles, Macro Consolidation

To gain a perspective of *just* how tightly wound the market is, a great tool analysts often use are Bollinger Bands (bbands). Bbands are a visual representation of forecasted volatility. If the bands are squeezing, there is a forecast for increased volatility in the future. Conversely, if the bands have already expanded and are beginning to round/bulge, there is a forecast for decreased volatility. In our case, on the weekly candles, the bands are squeezing tighter than they have in several years:

fig2Figure 2: BTC-USD, Weekly Candles, Bollinger Band Squeeze

During the bull run, we could see a very clear trend of support being found on the bband midline for several years. However, at the beginning of our bear market, the midline has continuously proven itself to become resistant to every single rally over the last few months. However, as the price begins to consolidate further and further, the midline has drawn itself within striking distance, while the price trend has established a series of higher lows.

Even though a breakout has yet to happen, there are some early signs we can keep an eye out for, using the weekly Bollinger bands. I believe this next move will be a strong, sustained move that will paint the course of the market for months to come.

It’s very easy to get lost in the weeds while trading bitcoin because it is so volatile on low timeframes, but if you look at the bigger picture on daily and weekly candles, we can see the strength of the trend.

One early sign of a directional breakout is when the bbands begin to expand again. As I stated earlier, bbands are a visual representation of consolidation and can forecast volatility. If the bbands begin to expand, that is an indication that the volatility has chosen a direction and will likely continue in that direction until the bbands round/bulge — thus indicating a forecast for decreased volatility until it consolidates once again.

An early sign of a bullish trend reversal will be on the close of the weekly candle. If bitcoin can manage to close above the weekly midline, that will be a sign that we have broken resistance.

However, it’s important to note that just because we close above the midline doesn’t mean we *must* continue. The next candle (the one following the candle close above the midline) will give us more information. If we can establish two consecutive candles closing above the weekly midline, this will be a definite change of character for our trend as we have yet to see two consecutive closes above the midline:

fig3Figure 3: BTC-USD, Weekly Candles, BBands Midline Rejections

Summary:

  1. Bitcoin continues to wind tighter and tighter as both price and volume consolidate in a sideways fashion with both higher lows and lower highs.
  2. On a macro scale, the consolidation can be visualized using weekly candle Bollinger Band trend. We are currently the most consolidated the market has been in several years and the breakout of this consolidation with undoubtedly be a strong, sustained move..
  3. Early signs of a breakout direction will be found with the BBand trend on the weekly candles. If the weekly candles can manage to close above midline of the BBands and, most importantly, find support, this will be a strong sign of a change of market character on a macro scale.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

This article originally appeared on Bitcoin Magazine.

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The Same Equity Firm That Owns Korbit Exchange Just Acquired Bitstamp

Bitstamp acquisition

In a statement to customers, Luxembourg-based cryptocurrency exchange Bitstamp announced its acquisition by Belgium private equity firm NXMH Holdings, whose parent company NXC also owns South Korean crypto exchange Korbit. The all-cash deal, which was signed by Bitstamp founder Nejc Kodrič on October 25, 2018, was announced today, October 29, 2018. NXMH has around 2 billion euros in assets under management and invests in digital technologies.

In an interview given to Reuters, Kodrič declined to disclose the purchase price, but he did assert the EU’s largest crypto exchange wasn’t actively looking for deals. Bitstamp, according to CoinMarketCap, has had a 30-day reported volume of just over $1.6 billion. According to Reuters reporting, the exchange has a daily turnover volume of over $100 million USD, making it the largest digital currency exchange in the European Union.

Founded in Slovenia in July 2011, Bitstamp has continued to maintain volume in spite of the overall decline in volume and valuations digital currencies have faced in 2018. It should be noted that Bitstamp is one of the few exchanges where the Blockchain Transparency Institute did not uncover evidence of wash trading.

Kodrič will still maintain 10 percent ownership of Bitstamp, with the sale handing over 80 percent of shares in the exchange to NXMH. Pantera Capital, which invested $10 million into Bitstamp in 2014, has reportedly also sold part of its stake to NXMH. Kodrič is slated to stay on as Bitstamp CEO. Reuters has reported that for now, Korbit and Bitstamp will continue to operate independently.

This article originally appeared on Bitcoin Magazine.

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Thomson Reuters Partners With Startup for Next Level Derivatives Exchange

Reutrs Level01

Thomson Reuters (TR) provides trusted data and information to professionals across the legal, tax and accounting, and news and media industries. Operating in more than 100 countries, TR lists its shares on both the New York Stock Exchange (NYSE) and Toronto Stock Exchange (TSE). The company has now expanded its scope and entered into the realm of blockchain technology and artificial intelligence (A.I.).

Last month, the peer-to-peer (P2P) blockchain startup Level01 announced its partnership with TR in order to create a “derivatives” exchange that would change how parties interact with one another, without the fear of losing funds to unknown third parties.

Level01’s proprietary platform, a peer-to-peer (P2P) derivatives exchange, allows investors to trade options contracts directly with one another, without requiring an intermediary or broker.

A “derivative” is a financial security that holds a value reliant upon or derived from an underlying asset or group of assets. An “exchange traded derivative” is a financial instrument that trades on a regulated exchange and whose value is based on the value of another asset.

In the world of blockchain, making it a decentralized peer-to-peer platform changes the game.

“At its beginning stages, we were looking at both Bloomberg and TR,” Jonathan Loi, the CEO of Level01, told Bitcoin Magazine.

“From our perspective, TR proved to be a more competent and receptive company because the individuals we were in collaboration with went the extra mile to ensure things were done moving forward.”

How Does It Work?

Combining distributed ledger technology (DLT) for transparent and automated trade settlement on the blockchain with A.I. analytics provides fair value pricing to counterparties that is based on current and retrospective market data.

Consumers and investors, however, are constantly at war with fund deposits/withdrawals, multiple tier-identity verifications and wallet security.

By implementing this new platform in partnership with TR, Level01 hopes to remove this friction and allow investors to focus fully on their trading activities.

“Level01 utilizes TR’s data feeds as a trusted source for its A.I. deep-learning algorithms, providing real-time pricing analytics on derivative contracts,” Charles Wong, the chief marketing officer of Level01, explained to Bitcoin Magazine. “Additionally, the data is also used to ensure transparent, timely and accurate settlement of derivative contracts upon contract maturity.”

“We have painstakingly designed a UI that caters for both simple and advanced users. More importantly, new investors using Level01 are assured of the fairest market pricing: e.g. prices coming directly from main industry players like Thomson Reuters and open for all to view at ‘interbank’ rates. New investors are then able to make informed business decisions based on this real-time data, cognizant of sudden spikes or changes in the market.”

According to Thomson Reuters, this is more than just a partnership with Level01.

“Fundamentally, what we do is supply the non-core technology that helps connect Level01 to the market, plus fundamentally supplying the data that feeds into the machine,” said Michael Go, Thomson Reuters’ Asia Pacific head of trading markets.

“We are the leader in this field and beyond this partnership, we are taking in crypto-related information, platforms, and exchanges, while diving into blockchain technology.”

“When we are talking about ‘investors,’ it’s important to identify them as ‘institutional investors,’” Loi emphasized.

“These institutional investors that invest in larger amounts can assume roles of ‘liquidity providers’ within the platform. A function of the Level01 platform allows staking of the native token, Level01 Exchange (LVX), to host ‘Trading Rooms’ where the host earns commissions from providing the group trading functionality. Since these tokens are staked and cannot be used/exchanged for long periods of time, this reinforces the pricing of the LVX token by reducing sell pressure from the markets.”

According to the company, Level01 has already begun its plans of launching the public beta version of the platform.

This article originally appeared on Bitcoin Magazine.

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Bitfury May Be Mulling Over an IPO

Bitfury IPO

Bitfury, a leading mining firm and blockchain software company, is reportedly in talks with global investment banks in Europe and Hong Kong as it mulls an Initial Public Offering (IPO), according to Bloomberg sources close to the matter.

The source also indicated that Bitfury is mulling other strategic options alongside the IPO, including debt financing or selling a partial stake in the company. If the mining giant does hold an offering, it’ll reach for an estimated $3 to $5 billion valuation. The offering, which could begin trading as early as next year, could mark Europe’s first public offering by a cryptocurrency company.

A representative from Bitfury told Bitcoin Magazine, “At this time, we don’t have any information or comment on that report.”

Headquartered in Amsterdam and London, Bitfury also has offices in the U.S., the U.K., South Korea, Hong Kong and Japan and recently opened its seventh office in Russia.

Since its beginnings as a bitcoin mining firm in 2011, Bitfury has developed a range of blockchain software for governments, institutions and interested companies. Recently, the company worked with the Republic of Georgia to put land titles on the blockchain.

Bitfury is mostly known for its blockchain product Exonum, an open source enterprise-grade blockchain framework created to allow businesses and individuals to build blockchain networks that solve administrative issues.

The company reportedly made revenues of about $450 million over a 12-month period through March 2018. CEO Valery Vavilov and co-founder Valery Nebesny share a majority stake in the company.

The Beijing-based mining giant Bitmain filed for an IPO in Hong Kong last month but is experiencing some questions from investors particularly about lost income into 2018.

Are ICOs Passé?

One of the first pioneering crypto mining companies, it may be surprising that the company chose not to go the ICO route, but it’s in line with a wider industry trend that has sought fundraising from traditional investment avenues rather than the token sale crowdsourcing that was so popular in 2017.

A recent study by blockchain research group Diar reported that, while traditional investment in crypto products has doubled and continues to grow, ICOs have lost 70 percent in value in the last year.

The Diar report shows that almost $3.9 billion in investments was raised in the first three quarters of 2018, 280 percent of what was raised in 2017. The report also indicates an increase in the number of investment deals — almost twice the number recorded in the previous year.

Recently, Fidelity Investments and Goldman Sachs are among the financial companies investing in crypto businesses, adding to traditional financial institutions investing in the space.

This article originally appeared on Bitcoin Magazine.

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Poloniex Revised Terms of Use, Shutters Services in Several Countries

Poloniex

With a revision to the popular exchange’s terms of use, users from a handful of jurisdictions will have their access to Poloniex shuttered.

According to an October 18, 2018, update, “the websites and the services offered by Poloniex (as defined below) are NOT addressed to persons who have their registered office or place of residence in China, Germany, Pakistan, the U.S. states of New Hampshire, New York or Washington, Vietnam or any other Restricted Territories as defined in Section 37.”

Section 37 goes on to detail that, in addition to the jurisdictions blacklisted, users may not use the Services if they reside in “Cuba, Iran, North Korea, Sudan, Syria or any other country to which the United States, the United Kingdom or the European Union embargoes goods or imposes similar sanctions.” It also cautions that users are forbidden to use the services if they intend to transact with a person or entity from one of these territories.

Poloniex has cut off user access from residents of New Hampshire, Washington and New York since 2017, but the other restricted territories are a product of the most recent revision.

The impositions took effect immediately for users “signing up for Poloniex on or after October 18, 2018,” the same day as the revision to the terms was posted. For existing users, the new user agreement will take affect a month later on November 18, 2018.

Among these user restrictions, the exchange also notes in the terms of use update that it reserves the right to “refuse to let you open an Account, suspend your Account, consolidate Accounts if you have more than one or terminate your Account or your use of one or more of the Services,” as well as “[reserving] the right to change, suspend, or discontinue any aspect of the Services at any time and in any jurisdiction, including hours of operation or availability of any feature, without notice and without liability.”

This is not the first time that Poloniex has made substantial revisions to its terms of use. The exchange came under fire from the community for an announced update in August of 2017. Including expanding its restricted states from New York to Washington and New Hampshire, the update warned users it was under no obligation to award users forked coins, a non-guarantee that served as a source of anxiety given a looming Bitcoin Cash hard fork.

More recently, controversy plagued the exchange when news broke that it began freezing unverified accounts, giving its users an ultimatum to verify or have their accounts suspended. Coincidentally, this change came roughly a month out from Circle Internet Ltd., a Goldman Sachs-backed company, acquiring Poloniex in the first major exchange acquisition in the industry’s young history.

This article originally appeared on Bitcoin Magazine.

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The Past Month, Bitcoin Has Been Less Volatile Than NASDAQ, DOW and S&P 500

Bitcoin markets

In what is a rare, time-sensitive window, bitcoin’s volatility since September 14, 2018 has been less than that of the most popular indexes from traditional finance sectors.

Bitcoin seems to have found a temporary bottom relative to its incredible bull run that saw bitcoin’s price increase more than 1,200% in 2017 alone. 2018, however, has seen a reversal in fortune, as bitcoin started the year in the red and is down over 60% to date.

Bitcoin has been married to volatility ever since the digital currency’s inception in 2009, as bubble-like runs have occurred several times in its nearly 10-year life span.

The narrative today, though, tells a different story. In just over a month, bitcoin’s price has moved only 0.45%.

Meanwhile, the DOW (DJI), NASDAQ-100 (NDX) and S&P 500 (SPX) indexes have each fallen 3.62%, 5.60% and 7.36% respectively.

Bitcoin Dow

Whereas bitcoin is typically marred by volatility, traditional financial markets are usually much more stable. The change in volatility that both markets have been experiencing may be attributed to bitcoin’s retreat from the all-time highs from its most recent bull/bear cycle coupled with the financial market’s uncertainty surrounding interest rate hikes and upcoming midterm elections.

Is Bitcoin Tied to Traditional Financial Markets?

Since bitcoin has gained more attention from traditional markets in recent years, many have pointed out that the digital currency’s price movements may be correlated to movements in the traditional financial sector. It’s important to note that while certain signs point toward their correlation, it is not certain that the two markets are correlated because bitcoin has existed only in a period of consistent gains in the financial sector. In its young existence, bitcoin has not been tested by a wider market recession.

This article originally appeared on Bitcoin Magazine.

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Bakkt’s Futures Platform Slated to Begin Trading in December

Bakkt’s Futures Platform Slated to Begin Trading in December

Almost a year to the day after the CBOE and CME launched their own bitcoin futures products, the Intercontinental Exchange’s Bakkt platform is heralding the launch of its own futures on December 12, though the platform is still pending approval from the Commodity Futures Trade Commission.

Originally slated for November, Bakkt was announced in August 2018 as “a scalable on-ramp for institutional, merchant and consumer participation in digital assets.” The platform is advertised as an all-encompassing, “open platform” for “digital assets across global markets and commerce,” and was, in part, pitched as a solution for day-to-day crypto payments for merchants.

It also comes with a promise of daily futures contracts. The Bakkt Daily Bitcoin Futures Contract will allow investors to trade “a physically settled daily futures contract for bitcoin,” according to the announcement. This means that, unlike their CBOE and CME counterparts, which settle in cash, these contracts will settle in actual bitcoin.

The announcement continues to state that “[one] daily contract will be listed for trading each Exchange Business Day.” Each bitcoin will be held by Bakkt LLC in what the exchange calls its “Digital Asset Warehouse,” and each contract will be settled by ICE Clear US, a subsidiary of the Intercontinental Exchange.

Full details and specifications for the contracts can be found here.

This article originally appeared on Bitcoin Magazine.

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CME Group: Bitcoin Futures Trading Is Up 41 Percent in Quarter Three

CME volume

Bitcoin futures trading is up. American financial market company CME Group Inc. announced on Twitter early on the morning of Wednesday, October 17, 2018, that its futures products are experiencing rising volume, explaining, “In Q3, Bitcoin futures average daily volume rose 41% and open interest was up 19% over Q2.”

This is a massive improvement over just two months ago when CME stated that volumes on the futures markets had been in the hole for three consecutive trading sessions. During that time, CME’s data reported less than 2,500 BTC transactions — down from over 8,000 at the month’s midpoint. This represented a fall of nearly 70 percent over eight days.

Now, however, trading is heating up. Per the company’s data, the average daily volume soared above 5,000 contracts in the third quarter, a significant increase from the 3,577 contracts traded in Q2 and a 170 percent hike from the first quarter’s 1,854 contracts.

CME also offered data regarding open interest, which accounts for the total number of unsettled contracts held by current market traders. This figure is also significantly larger, jumping from about 1,500 individual contracts in quarter one to nearly 2,900 contracts in the third quarter. This number has also grown significantly from the second quarter, which boasted just over 2,400 separate contracts.

Tim McCourt, CME’s managing director and global head of equity products and alternative investments, suggested in September that volumes had been spiking and that the firm was witnessing growing interest from Asian markets.

“Out of the 40 percent of bitcoin futures trading on CME that’s outside the United States, approximately 21 percent are coming from Asia,” he mentioned at CoinDesk’s Consensus in Singapore.

CME’s data is somewhat comparable to bitcoin futures products listed on the Chicago Board Options Exchange (CBOE), which has posted similar numbers for each quarter with differences of only a few hundred contracts. In mid-February during Q1, for example, CBOE daily volume was at roughly 2,100 contracts, while open interest accounted for just over 1,100 contracts. By mid-June, both figures had jumped to 2,258 and 1,412 contracts, respectively. Now, in mid-October, CBOE is reporting significantly larger numbers, with nearly 5,800 contracts in the total volume category and about 1,750 contracts in open interest.

The first institutional-grade bitcoin derivatives of their kind in the U.S., both the CME and CBOE futures were launched back in December of 2017. The derivatives were considered a significant step toward attracting institutional money into the largely retail-investor-driven crypto market, and other legacy financial institutions have been following — or, in the case of a bitcoin ETF, trying to follow — CME’s and CBOE’s lead in 2018 to provide like products.

This article originally appeared on Bitcoin Magazine.

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Bitcoin Price Analysis: Bitcoin Consolidation Forecasts $3,500 Move

Bitcoin Price Analysis

A strong round of buys hit the market this weekend as unsubstantiated rumors began to circle surrounding Tether and Bitfinex’s potential insolvency. I won’t be going into the details surrounding the allegations because, like I said, they are nothing more than unsubstantiated rumors. However, the effects of the rumors did not go unnoticed.

Tether, a stablecoin and dollar-backed token, began to stack up a sizable premium from its normal 1:1, dollar-to-tether market rate. This deviation in price began to run massive premiums between Bitfinex and other large crypto exchanges. At one point, the price of bitcoin on Bitfinex hit a high of $7,800 while barely breaking $6,700 on most other exchanges. At the time of this article, the premium, although still modest, has closed significantly. The trend difference between Bitfinex and other exchanges tells a very different story than those of Coinbase, Gemini and Bitstamp:

fig1Figure 1: BTC-USD, 12-Hour Candles, Bitfinex Premium and Break of Downtrend

One huge difference between Bitfinex and other exchanges is this clear and decisive break of the multi-month downtrend that has governed the market dynamic for the last 10 months. Currently, Bitfinex is consolidating outside this downtrend and saw the largest daily volume that its BTC-USD market has traded in over 6 months. However, if we take a look at Bitstamp, for example, we see a very different story:

fig2Figure 2: BTC-USD, Daily Candles, Bitstamp Price Trend

Although Bitstamp also saw a sizeable round of buying pressure, it wasn’t enough to crack the downtrend (shown in black). I’m not going to attempt to speculate on the potential outcome of this whole Tether/Bitfinex debacle, but judging strictly from price action, bitcoin is looking very consolidated and ready for a very large move.

The current consolidation pattern is called a descending triangle and has a measured move of approximately $3,500. Whether that $3,500 move is upward or downward remains to be seen, but one thing is certain: The market is very tightly wound and ready for a move:
fig3Figure 3: BTC-USD, Weekly Candles, Bollinger Bands

The weekly Bollinger Bands (bbands) have been consolidating since bitcoin topped at $20,000. If you are unfamiliar with bbands, you can think of them as an envelope of volatility: If the bands are expanding, they forecast a continuation of volatility, if they are contracting they forecast reduced volatility, and if they are squeezing (which is what we see right now) they forecast upcoming volatility.

Since the bear market began, bitcoin has been unable to break the midline of weekly bbands and volume has contracted. Currently, we are making a pivot for a fourth higher low as the volume and price volatility has continued its trend of consolidation. The first milestone, on a macro perspective, would be a break and close above the weekly bbands midline — which just so happens to also line up with the macro downtrend shown in Figure 2.

We have already wicked above the weekly midline, but the price is currently sitting just below the midline values. If we can manage to close the current candle above the midline, that would be a very bullish signal and will likely see the projected move of the descending triangle (shown in Figure 2) push the price to the low $10,000 range.

However, if we fail to break out upward we have an immediate support test in store in the low $6,000 range. This would mark our sixth test of this support — typically not a good sign as support tests tend to weaken with each test. If we break below support, I would fully expect to see, at minimum, a test of the macro 78% retracement shown in Figure 3 — the low $4,000 range. There is very strong support on these values which will likely stifle any significant round of selling. For now, we are basically in wait-and-see-mode until the bitcoin consolidation is broken.

Summary:

  1. Tether/Bitfinex insolvency rumors caused a massive tether premium to occur and, ultimately, resulted in a large price discrepancy across multiple exchanges.
  2. Currently, Bitfinex is sitting outside its macro downtrend while virtually every other exchange is sitting inside its downtrend.
  3. We are in the process of testing the weekly bbands midline and are currently rejecting the midline values. If we can manage to close the weekly candle above the midline, that would be a very bullish signal.
  4. Our currently consolidation pattern has a measured move of $3,500 and can break out in either the upward or downward direction. For now we are consolidating, so it’s very difficult to tell in which direction it will actually break out.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

This article originally appeared on Bitcoin Magazine.

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Fidelity Unveils New Institutional-Grade Cryptocurrency Investment Service

Fidelity Crypto

Fidelity Investments has launched a new business to allow its institutional clients to trade in digital currencies such as bitcoin, a press release reveals. Known as Fidelity Digital Asset Services, LLC, the company will purchase and sell cryptocurrencies for family offices, hedge funds and other monetary ventures.

All coins will be sourced from large, over-the-counter digital exchanges and housed using cold storage to ensure customer funds always remain safe. To start, Fidelity’s services will be limited to bitcoin and ether, though representatives say they’re looking to expand their offerings in 2019.

“Our goal is to make digitally native assets, such as bitcoin, much more accessible to investors,” chairman and chief executive of Fidelity, Abigail Johnson, said in a statement.

Volatility in crypto prices, along with the lack of custody and other banking services witnessed in the digital currency space, is a point of concern for institutional investors, one that has prevented many of them from feeling comfortable enough to take part in the cryptocurrency space. Fidelity is hoping to change all that by allowing trades and sales in a more traditional, regulated environment and boosting the market maturity of both bitcoin and ether.

Fidelity Digital Assets already has 100 employees on its roster, and it will be headed by Tom Jessop, managing director at Goldman Sachs Group Inc. and former president of the tech startup Chain.

“We started exploring blockchain and digital assets several years ago, and these efforts have been successful in helping us understand and advance our thinking around cryptocurrencies. The creation of Fidelity Digital Assets is the first step in a long-term vision to create a full-service enterprise-grade platform for digital assets,” Jessop stated in the press release.

The company is one of the largest asset management firms in the world, managing just under $7 trillion in combined customer assets. It also serves over 13,000 separate institutions.

Last year, Fidelity began allowing its retail clients to view their holdings of bitcoin and other digital currencies hosted on Coinbase’s website. It was also alleged to be testing blockchain technology internally.

This is not the first time a large, traditional investment platform has entered the crypto arena. In August 2018, the Intercontinental Exchange (ICE), software king Microsoft and coffee giant Starbucks partnered to form what is known as Bakkt, a platform designed for allowing customers to sell, buy and trade cryptocurrencies in a formal and regulated environment. The venture is expected to make its official introduction in November 2018.

Bakkt is hoping to make cryptocurrencies more usable and plans to issue physical, one-day bitcoin futures contracts that, once expired, will reward their users with bitcoin rather than cash. The organization is currently awaiting approval from the Commodity Futures Trading Commission (CFTC).

This article originally appeared on Bitcoin Magazine.

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Coinbase Ditches Its Index Fund in Favor of a New Retail Feature

Coinbase index fund

Coinbase – one of the largest digital currency exchanges in the U.S. – is nixing its index fund designed for accredited investors and shifting its focus to a new retail product, The Block reports

Coinbase is shutting down its fund aimed at big investors as it pivots to a new retail product

.

Coinbase first announced its fund back in March of 2018. The project was designed to give institutional investors easy access to the digital currency market by offering them an index that represents a basket of Coinbase’s listed assets. During this time, Coinbase representatives stated that they were “seeing strong demand from institutional and high net worth individuals.”

However, now the index fund has failed to attract an appropriate number of clients. Coinbase was reportedly unable to garner necessary revenue from the project and has since decided to move on to other endeavors.

The latest retail product entitled the Coinbase Bundle, launched at the end of September. Using the feature, investors can purchase an assortment of the coins offered on Coinbase with one click. Minimum purchases begin at $25. Differing from an index fund, Coinbase Bundle does not offer fixed methodologies, nor does it provide rebalancing options.

This is not the first feature of its kind. Circle introduced its clients to a similar product entitled Circle Invest, which allows users to buy up to 11 different tokens in a single investment. Circle also sports a lower purchasing minimum of merely $10. While the product has garnered solid reviews on Apple’s App Store, it remains unpopular amongst everyday users, and currently holds the #734 spot amongst finance apps according to App Annie.

Founded in 2012, Coinbase is a broad company that covers trading, institutional brokerage and venture capital. It has amassed more than 20 million users, though active user activity has fallen by roughly 80 percent this year.

https://www.msn.com/en-us/news/other/coinbases-active-customers-drop-80-25-in-crypto-slump-study-says/ar-BBOeGP7

The company has worked hard to expand its team and has brought several renowned figures from the financial and tech industries on board, including former Instinet CEO Jonathan Kellner. Kellner will lead institutional sales and support for Coinbase beginning in 2019. He will work with the exchange to build an over-the-counter trading business, allowing Coinbase to better compete with exchanges such as itBit, Gemini and Kraken.

Furthermore, the company is looking to hire 100 additional employees for its New York office, where they’ll join a campaign to bring more Wall Street vendors to the crypto industry. Recently, representatives have stated their desire to employ roughly 1,000 individuals by the end of the year.

This article originally appeared on Bitcoin Magazine.

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Singapore-based Blockchain Consortium Buys Majority Share in Bithumb

Bithumb acquisition

Singapore-based BK Global Consortium has paid 400 billion won (approximately $350 million) for a majority stake in South Korean Bithumb, the world’s third-largest cryptocurrency exchange, according to a local news outlet.

BK Global Consortium is a blockchain investment firm under BK Global, a Singapore plastic surgery medical group owned by Kim Byung-Gun. The Consortium had held a minority position in Bithumb for a while and was the exchange’s fifth largest shareholder until today’s announcement.

The new deal will see the consortium acquire a “50 percent plus one share” of the holdings of Bithumb’s largest investors, BTC Holdings Company. The move, once finalized, would give the Consortium a controlling stake and make Kim the largest shareholder of Bithumb.

Bithumb is presently the largest digital asset platform in South Korea by trading volume. South Korea emerged as one of the hottest spots of the crypto market last year. Investors were so crypto-hungry that they had to pay a premium on every digital currency they purchased compared to investors in other parts of the world.

The Consortium, under the leadership of Kim, has plans to create a stablecoin for the exchange in the near future, according to the news outlet. There are also plans to launch a global decentralized crypto exchange (DEX) in partnership with blockchain firm One Root Network and a blockchain e-commerce payment system with the aim of reducing “virtual currency price volatility and settlement fees.”

Kim is increasing his stake in a cryptocurrency market that he is massively optimistic about. He founded an initial coin offering (ICO) consulting firm called ICO Platform in Singapore earlier this year, and he is also known as an early cryptocurrency investor.

This news comes on the heels of an announcement by the exchange’s shareholders who revealed the platform’s earnings, showing net profits of 39.34 billion won (about $35 million) in the first half of the year, despite a rocky June where the exchange lost $40 million to hackers.

This article originally appeared on Bitcoin Magazine.

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Chinese and US Investors Team Up to Create a Global Crypto Investment Fund

Chinese and US Investors Team Up to Create a Global Crypto Investment Fund

The latest crypto investment fund on the block is Dragonfly Ventures, a $100 million traditional venture fund investing only in crypto assets, managed by partners Alexander Pack from Bain Capital Ventures and Bo Feng, founding partner of Ceyuan Ventures.

“We come at crypto as generalist venture capitalists who have been investing in internet technology for decades. With Dragonfly, we have decided to go all-in on crypto, because we believe that crypto is the most interesting tech trend today by far,” said Dragonfly managing partner and Bain Capital advisor Alexander Pack in an interview with Bitcoin Magazine.

“The ability to use technology to redefine fundamental social constructs like money, value, and how value is exchanged across borders, is a once in a century opportunity that could be bigger than the internet,” he added.

Pack has been investing in cryptocurrencies and blockchain businesses for more than four years at various venture capital firms in the U.S. and Asia but wanted to create a fund that was solely for cryptocurrency businesses.

He describes Dragonfly as “a fully unconstrained venture fund for the crypto asset class, investing globally and across all asset types. We even invest significantly in other cryptofunds, as well as make direct investments in tokens and startups.”

Dragonfly has already attracted technology founders and investors from across the U.S. and Asia, including Salil Deshpande (Bain Capital Ventures), Marc Andreessen and Chris Dixon (A16Z), Cyan Banister (Founders Fund) and Olaf Carlson-Wee (Polychain Capital).

A China-U.S. Fund

Headquartered in San Francisco and Beijing, Dragonfly Capital Partners have identified what they see as a new market opportunity in bridging the gap between East and West, investing in crypto businesses across both continents.

Managing partner Bo Feng is a founder of Ceyuan Ventures. In the ‘90s he launched the China business of Robertson Stephens, a high-tech investment bank, and is the largest investor in the exchange OKEx.

“I see a parallel between the Internet boom in the ‘90s and the current cryptocurrency market opportunity. The crypto revolution may be even bigger than the internet and more global,” says Feng.

According to Feng, Dragonfly takes an “ecosystem approach,” investing in fund managers around the world and connecting the top technologists from the West to investing in fund managers around the world, as well as connecting top technologists from the West with the largest crypto companies and user bases in Asia.

Asian investors include Bitmain, OKEx, Neil Shen (head of Sequoia China), Eric Xu (founder of Baidu), Bob Xiaoping Xu (founding partner of Zhenfund), Zhang Tao (chairman and founder of Meituan-Dianping), Bao Fan (founder and CEO of

China Renaissance Bank), Cai Wensheng (founder and chairman of Meitu), Justin Tang (founder and CEO of X Financial, eLong), JP Gan (Qiming Venture Partners), and Annie Xu (head and general manager of Alibaba U.S.).

“We have a unique opportunity to back and bring together the leading participants in the decentralized economy — from fund managers to token project leaders, from Beijing to San Francisco to Berlin,” said Feng.

Part of a Growing Investment Trend

Dragonfly is launching with a portfolio of 20 investments, including tech-driven crypto funds and asset managers, decentralized financial infrastructure such as the cryptocurrency Basis, and foundational protocols such as Spacemesh and Oasis Labs.

A recent report by blockchain research group Diar identified a new trend among investors. While traditional investment in crypto products has doubled and continues to grow, ICOs themselves have lost 70 percent in value.

The Diar report shows that almost $3.9 billion in investments was raised in the first three quarters of 2018, 280 percent of what was raised in 2017. The report also indicates an increase in the number of investment deals — almost twice the number recorded in the previous year.

“We invest in any market condition and actually are investing at a faster pace during this downturn than we anticipated, since in our opinion the quality of projects and founders has never been higher,” said Pack.

Traditional venture capital investments are leveraging the decline in ICOs as the cryptocurrency industry tries to find its bearings amid regulatory shifts and losses across crypto markets, notes the Diar report.

Pack told us that the investment strategy for Dragonfly is based on three principles.

“We have three theses that guide our investment philosophy: that the decentralized economy will take trillion dollar bites out of the centralized economy, that pick-and-shovel tech startups will emerge as bridges between the decentralized and centralized economies, and that crypto assets will one day be the most liquid and traded financial assets in the world,” said Pack.

“Today, large barriers prevent mainstream and institutional users from joining the decentralized economy. We are investing heavily in teams that are breaking down those barriers, such as institutional-grade trading infrastructure and general scaling solutions. We look forward to those launching and gaining traction in the next year,” added Pack.

This article originally appeared on Bitcoin Magazine.

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UK’s Oldest Crypto Exchange Prepares for Employee Layoffs

Coinfloor Layoffs

In what may be a sign that business in the cryptocurrency space is in a winding down phase, U.K.-based bitcoin exchange Coinfloor is bidding adieu to half of its staff.

The company, which claims to be the oldest crypto exchange in London, has roughly 40 employees. More than half of them will be let go, Financial News reported, citing two sources close to the matter. The news broke early today, October 8, 2018.

Coinfloor CEO Obi Nwosu confirmed the layoffs but declined to spell out exactly how many employees would be let go. He told Financial News the staff cuts were a normal response to a changing market environment.

Following the market’s downturn at the beginning of 2018, a lot is changing in the cryptocurrency business. Since the beginning of the year, bitcoin has lost more than half of its value, and regulations across the globe are heating up. China has been taking increased action to clamp down on all things cryptocurrency, and, in the U.S., regulators are starting to get tough with crypto exchanges, unregistered securities dealers and questionable initial coin offerings.

Amidst this shifting landscape, Coinfloor is not the only one to feel the market’s pinch. In September, Jesse Powell, the CEO of San Francisco-based exchange Kraken, said the company was cutting 10 percent of its client services team in a “cost-saving measure,” but denied rumors that the layoffs would amount to any more than that. At the time of publication, Kraken is the 23rd largest exchange by trading volume.

Despite the market downturn, some exchanges continue to paint a rosy picture. Binance boasted that it expected a net profit of $500 million to $1 billion in 2018, according to its chief executive officer. But without seeing the company’s financials, it is hard to get a clear view on the full picture.

Typically, exchanges make a lucrative profit, which is why so many have entered the game as of late. To date, there are 219 crypto exchanges all competing for each other’s business. But if the current market downturn continues, more will likely have to make adjustments or else bow out.

Founded in 2013, Coinfloor was one of the first exchanges onto the scene. Its big pitch early on was that it followed strict know-your-customer (KYC) and anti-money-laundering (AML) procedures to ensure the integrity of its users and traders.

According to its website, the exchange is backed by TransferWise founder Taavet Hinrikus, venture capital firm Passion Capital and Adam Knight, a former managing director at Goldman Sachs and Credit Suisse.

This article originally appeared on Bitcoin Magazine.

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PwC and Cred Partner to Develop Cryptocurrency Trading Technology

PwC Cred

Global professional services firm PwC has partnered with decentralized lending platform Cred to boost trust in the cryptocurrency space and bring in more traders by advancing stablecoin technology.

PwC consists of several different financial firms and spans across 158 countries. The company currently boasts over 200,000 employees serving in quality assurance, advisory and tax service positions.

Founded by former PayPal technologists Dan Schatt and Lu Hua, Cred seeks to offer open access to cryptocurrency-based credit options, regardless of where the seeker may reside. With offices in Munich, San Francisco, Shanghai, Sydney and Singapore, the company has utilized the blockchain to secure over $250 million in lending capital for its clients.

Speaking with Bitcoin Magazine, Schatt describes the partnership as a milestone in the crypto industry. “This is one of the first times PwC has formed a joint business relationship with a company focused on the blockchain and crypto,” he explains.

“We’re looking to help people borrow crypto the way they would fiat and treat it like any other asset class. If you go to any bank, it won’t offer crypto loans because it doesn’t acknowledge crypto as a real asset class. This is bad because we need new ways of looking at custody and lending, and this is the first time a big accounting firm has said it would work with a company in this space.”

One of the biggest problems facing cryptocurrency is volatility. Schatt says that volatility exists because the crypto market lacks liquidity, and trading can frequently result in price swings. Many institutional investors refuse to get involved out of concern that their funds will disappear due to crypto’s consistent price drops.

Several have expressed that they would be less worried if virtual assets were tied to fiat currencies like the U.S. dollar, making them stablecoins. The trouble is that such currencies require a reserve ledger built for fully decentralized assets that can provide value substantiation and transparency.

PwC is seeking to provide education to both investors and startups alike that discusses how this technology can advance. In addition, PwC will offer insight on factors ranging from security and risk management to governance and control to potentially improve upon present industry practices.

Schatt is confident further development of stablecoins will increase the level of transparency in the crypto market and boost the economy by getting more mainstream investors involved.

“If you can get a stablecoin that’s very transparent and tied to USD, for example, that’s a very powerful confidence booster,” he states. “Imagine, also, that you can get out of a rapidly depreciating currency and get into something that’s giving you a return on your money between two and five percent. That’s truly powerful.”

Cred is also a founding member of the Universal Protocol (UP) Alliance. Supporters of the organization include Blockchain at Berkley and Brave, whose CEO Brendan Eich recently penned a letter to a U.S. Senate committee asking that GDPR-like standards be implemented in the United States.

The Alliance presently serves as a major platform for the creation, management and distribution of stablecoins, and works to push mass adoption by introducing new kinds of safeguards that make virtual currencies more convenient and practical. These tactics include inheritability, private key recovery and even loss assurance.

Schatt says that lending in crypto is precisely what allows Cred to garner so many funds for its clients. Several traditional lenders enforce long and complicated processes when acquiring money for customers. In addition, factors like interest rates are always going to differ depending on the fiat currency being issued and the individual terms of the lender.

He explains, however, that while credit and background checks are inevitable, Cred’s procedure for securing capital is simpler in that cryptocurrencies possess the same properties no matter where you are. Thus, the interest rates for Cred’s loans do not change, and people have more opportunity to secure their money and pay it back with ease.

“If you own a home, you have to value it in all kinds of different ways, but bitcoin has the same properties no matter what, so we can potentially offer the same level of interest to all customers,” he assures.

Bitcoin Magazine also reached out to PwC for comment, but did not receive a response.

This article originally appeared on Bitcoin Magazine.

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Famed Endowment Manager Invests Yale’s Money in Crypto Funds.

Famed Endowment Manager Invests Yale’s Money in Crypto Funds.

On October 5, 2018, an article published by Bloomberg stated that Yale University’s Investment Office, under the stewardship of famed manager David Swensen, has put an allocation toward Paradigm, a new cryptocurrency fund that has raised $400 million dollars. CNBC added onto the report by stating Yale had also invested in Andreessen Horowitz’s $300 million crypto fund prior to the fund’s capital raising close in June.

This marks a significant potential boon for the asset class, as Swensen invented the Endowment Model for investing, revolutionizing the industry and using it to grow Yale’s endowments from just over $1 billion in 1985 to a reported $29.4 billion (a feat that in 2008 landed Swensen in Institutional Investor Alpha’s “HFM Hall of Fame”). Considered the gold standard for other universities to follow, Yale’s foray into the beleaguered asset class could signal a positive shift in the way institutions view virtual currencies.

While Yale and Swensen’s foray into crypto could be considered surprising, the reported investments have hallmarks that signal the move as a natural course of action. The investment in Paradigm shows faith in a crypto fund being led by Fred Ehrsam (co-founder of Coinbase), Matt Huang (former principal of venture capital giant Sequoia Capital), and Charles Noyes (formerly of Pantera Capital). Sequoia Capital is also reportedly an investor in Paradigm.

Likewise, the investment in Andreessen Horowitz’s fund shows Yale’s apparent willingness to trust top VC firms with their cryptocurrency investments. Both investments would likely account for a small portion of the Endowment’s nearly 60 percent alternative asset class allocation (i.e. venture capital, hedge funds and private equity funds), which tracks with Yale’s 2017 and 2018 allocations.

Neither Yale or the purported recipients of these investments have yet responded to request for comment from Bitcoin Magazine at the time of writing. No responses to inquiries were given in either the Bloomberg or CNBC reporting at the time of those publications.

This article originally appeared on Bitcoin Magazine.

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Ether Price Analysis: Higher Lows Could Yield Retest of Local High

Ether Price Analysis

After two back-to-back weeks of record-setting volume, ether finds itself situated below historic resistance and currently unable to reach its downtrend line:

fig1Figure 1: ETH-USD, Weekly Candles, Downtrend and Record-Setting Volume

For months, ether has been unable to break its downward trend. And now, after having an enormous amount of buying step in, the market finds itself consolidating sideways while it decides what to do next. Given the high amount of buying pressure that temporarily stopped the price drop, it is likely that a temporary bottom is in for ETH-USD. If we look on the daily candles, we can see just how high the daily trading volume has been for the last three weeks:

fig2Figure 2: ETH-USD, Daily Candles, Daily Trading Volume

Looking even closer at a lower timeframe, we can see that the current consolidation is taking the form of a potential reaccumulation over the last few weeks:

fig3Figure 3: ETH-USD, 2-Hour Candles, Potential Reaccumulation TR

After finding its local bottom around the $170s, we can see the volume has begun to consolidate in a big way over the last few weeks. To complement the consolidated volume, we can see a very well-defined supply-and-demand channel (outlined in gray). As the volume has begun to consolidate, the price has consolidated in an upward fashion, where the lows are getting higher and higher as selling pressure weakens and supply becomes more scarce.

If the market manages to break the bottom of the demand line, we can expect the next test to arrive at the $200 level. The $200 level is the horizontal support outlined above by the trading range. From there, we will have to reassess the market and take into account the volume and the strength of the move.

However, if we manage to hold support we can expect to, at minimum, see a trip to the middle of the supply-and-demand channel and possibly see a test of the previous high in the $250s. The test of the $250s is a logical spot to test because it coincides with the daily 50 EMA and has provided solid resistance for months:

fig4Figure 4: ETH-USD, Daily Candles, 50 EMA

Summary:

  1. Ether saw back-to-back weeks of record-setting trading volume.
  2. Currently, the market is moving sideways. However, it’s doing so while making higher lows in the form of a potential reaccumulation trading range.
  3. Current low-end projections, if it breaks out of its ascending channel trend, would have ether testing the $200 area.
  4. If the current channel provides support, we can expect to see ether testing the previous high in the $250 range. This test would also coincide with a test of the daily 50 EMA — a notoriously strong resistance trend.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

This article originally appeared on Bitcoin Magazine.

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New Study Reveals an Increase in Venture Capital Investment in Blockchain Projects

New Study Reveals an Increase in Venture Capital Investment in Blockchain Projects

Traditional venture capitalist (VC) investments are leveraging the decline in initial coin offerings (ICO) as the cryptocurrency industry tries to find bearing amid regulatory shifts and losses across the crypto markets. The negative toll on ICOs has seen them drop overall to 70 percent less than their initial values, according to a new report.

Rise of VC Investment

A report released by blockchain research group Diar shows that almost $3.9 billion in investments was raised in the first three quarters of 2018 by blockchain and cryptocurrency-focused startups. This, according to the report, is 280 percent of what was raised in 2017.

Adding to the significant leap recorded, the report also indicates an increase in the number of deals — almost twice the number recorded the previous year.

Similarly, the average size of blockchain and crypto investments for 2018 is over a $1 million higher than what was recorded the previous year. Recipient companies of the 10 largest crypto and blockchain investments had a pool of funds worth over $1.3 billion in total venture capital.

This was, however, conducted through the “traditional equity investment” model that ICOs had sought to displace. According to the report, DFINITY was the sole exception, as it raised a combined $163 million from popular VC investors Andreessen Horowitz and others through the sale of its utility tokens.

VC’s sharp increase in popularity among startups seeking funding has been ascribed to the relatively low value of ICO tokens compared to their value during their respective sales. Delving further into the reason, the report states:

“The majority of tokens have dropped in price by more than 90% from their all time highs.”

ICO projects have been trailed by regulatory issues, and Diar acknowledged this as another reason for the waning popularity of token-based funding.

According to the report, “Non-equity ICOs are not only scrutinized by the regulators but the founders also have very misaligned incentives as there is no contractual obligation to deliver a product — a reality that to date seems to be the case with few launches, and even less adoption.”

The amount raised through ICOs as well as the rate of projects that successfully completed an ICO are “now approaching a one year low,” according to the research company.

The top 10 investment deals with respect to equity raised include Bitmain, R3, Circle, Ledger and Paxos.

Crypto Banks

Diar’s publication also touched on the rise of crypto banks, including the launch of Swiss-based Seba Crypto AG, which announced it was launching a regulated bank that lets customers trade fiat for digital currency. Binance also purchased a 5 percent stake in Malta-based Founders Bank, while the Litecoin Foundation partnered with TokenPay to acquire a 20 percent stake in German-based WEG Bank. Outside of these banking acquisitions, very few financial institutions have been willing to facilitate crypto operations, as Diar reports that there are only four banks in the United States and three in Europe that provide banking services.

This article originally appeared on Bitcoin Magazine.

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Bitmain IPO Prospectus Reveals Offering May Be a Gamble for Investors

Bitmain IPO Prospectus Reveals Offering May Be a Gamble for Investors

Bitmain, the biggest company in bitcoin mining, has filed for its IPO in Hong Kong. As part of the approval process, the company submitted a prospectus to the Hong Kong stock exchange at the end of August 2018. The prospectus was published on September 26, 2018.

Most of the document’s financial data is old information, except for that of Q2 of 2018. When Bitmain raised $400 million in a pre-IPO round last month, leaked financial documents provided most of the information we see in the prospectus now. The new prospectus includes three months beyond what was previously known. And that new information tells a bigger story.  

According to the new prospectus, Bitmain posted $701 million in net profit in 2017. Yet, for the first half of 2018, Bitmain claims a gross profit of $743 million, despite a massive slump in crypto markets. This is odd because one would expect any company in the cryptocurrency business to have felt the pinch from this decline.

In fact, Bitmain has. The leaked pre-IPO presentations showed that Bitmain made a $1,137 million net profit in Q1. This means Bitmain actually lost $400 million in Q2.

About Bitmain

Most of the Beijing-based firm’s business comes from making ASIC mining rigs used to mine bitcoin and other cryptocurrencies.

According to its IPO prospectus, 90 percent of the company’s profits came from miners in 2017. And in the first six months of 2018, miners accounted for 94 percent of the profits. The rest of the profits came from mining farms, shared mining pools, AI chips and blockchain services.

In addition to having a corner on 74.5 percent of the entire crypto mining market, Bitmain also runs two of the biggest bitcoin mining pools, AntPool and BTC.com, and is an investor in ViaBTC, a smaller mining pool and exchange.

Where Bitmain Lost Money

In its prospectus, Bitmain explains that losses in 2018 were mainly due to having an excess of inventory and having to sell its miners at a lower price. (As the new prospectus reveals, in 2018 Bitmain suffered an inventory write-down of $391 million.)

Reflecting that, the company’s gross margins are in decline. In the first half of 2018, Bitmain’s gross margin was 36 percent, down from 48 percent in 2017 and 54 percent in 2016. Contributing to that, cost of sale percentage was 52 percent in 2015, 52 percent in 2016 and 64 percent in H1 of 2018.

Antminer sales is not the only area where the company lost money. Since the beginning of 2017 to mid-2018, Bitmain failed three times in trying to come up with a more efficient mining chip. Each of those efforts cost Bitmain hundreds of millions of dollars. Those costs amounted to losses of $500 million. This pinpoints the risks and costs involved in making silicon chips. It is also important to note that any successful company needs to take risks, so this is not necessarily a bad thing.  

Bitmain also lost money in its bitcoin cash investment. It is no secret that Bitmain is a huge fan of the alternate cryptocurrency that resulted from a controversial fork in the bitcoin code in mid-2017. In support of the coin, Bitmain sold much of its bitcoin holdings (which it got from mining bitcoin and also accepting bitcoin as a form of payment for its Antminers) in exchange for bitcoin cash.

In December 2018, Bitmain owned 5 percent of all of the bitcoin cash in circulation, according to the leaked prospectus. Most of those holdings were bought at $900 on average. Price declines in bitcoin cash caused the company to lose about $500 million in 2017. (Bitcoin cash is currently at $550.)

A Risky Bet?

Despite these figures, Bitmain has already raised $785 million in venture capital funding this year (its net cash balance went from $105 million in Q1 to $343 million in Q2, and Bitmain has raised even more in Q3), and it is planning to go public in 2018 or early 2019. The company has not said how much it hopes to make in its IPO, but some estimates put it in the ballpark of $14 billion.

This could make the Bitmain IPO one of the largest IPOs of all time. Facebook’s IPO (2012) was worth just over $16 billion and that of Visa (2008) was $17.9 billion. (In its prospectus, Bitmain said it will funnel the money into research and development and expanding its production output.)

Yet, for investors, the question is: What are Bitmain’s prospects for the future, given that most of its current profits come from manufacturing mining rigs? Crypto markets exert a strong influence on Bitmain’s revenues, but they are declining. Since December 2017, the price of bitcoin has fallen 65 percent from its all-time high. At press time, bitcoin sits at about $6,500.

A lot else is changing in the crypto space — regulation, for one. China has been taking increased action to clamp down on all things cryptocurrency. And in the U.S., regulators are starting to get tough with crypto exchanges and bring down the hammer on questionable initial coin offerings. All of this will have an impact on the price of bitcoin.

Also notable in a report issued in August 2018, analysts at investment firm AllianceBernstein questioned Bitmain’s sketchy cash flow and suggested the company may be slowly losing its edge.

Ultimately, it will be up to investors to weigh Bitmain’s potential down the line. As for the company’s competitors, the influx of cash from an IPO is likely to give Bitmain a much needed boost.

This article originally appeared on Bitcoin Magazine.

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Bitcoin Price Analysis: Potential Reaccumulation Could Test Bear Trend

Bitcoin Price Analysis

Last week, after a devastating move that shook the market violently up and down for a 7% move in just a few short minutes, bitcoin saw a major sign of strength as it proceeded to have a slow, but steady markup where it managed to establish a local high in the $6,800s:

fig1Figure 1: BTC-USD, Hourly Candles, Shakeout Prior to Markup

This shakeout forced the market to temporarily establish a new monthly low in what could be argued to be a stop-hunt prior to the move to the $6,800s. Sitting atop its most recent rally is what appears to be a reaccumulation trading range shown below:
fig2Figure 2: BTC-USD, 15-Minute Candles, Reaccumulation Trading Range

While it’s still early to tell, the current consolidation has some of the hallmarks of a classic reaccumulation trading range that, if realized, will likely lead to a continuation to the upside.

Currently, the market is rebounding from what appears to be a “spring” or a “shakeout” — an effort to create liquidity for large players. Part of the alleged shakeout includes testing prior resistance to see if it can properly hold as support. And, as you can see below, the spring tested the previous high and is currently holding support — a good sign for the bulls:

fig3Figure 3: BTC-USD, Hourly Candles, Spring Testing Resistance Turned Support

So where does that leave us? While it is pure speculation at this point, if we see a strong round of buying, the first immediate test would take us to the top of the current trading range to test the $6,800s again. If the reaccumulation trading range proves to properly consolidate, a break to the upside is expected that will surely have us testing our macro descending trendline:

fig4Figure 4: BTC-USD, 12-Hour Candles, Macro Descending Trendline

If we manage to make it to the descending trendline, this will mark our fifth test of supply along that boundary. This is a potentially trend-changing signal that could pave the way through the woods and lead us out of the bear market.

While several major coins are seeing massive gains, bitcoin is still playing possum; it will continue to do so until this descending trendline is broken. The macro trend is slightly leaning bullish as the total volume is consolidating and, as we have seen in the past, several large coins (see previous ETH-USD Market Analysis) have begun to set records in volume in what could potentially be a macro bottom.

As always, this is pure speculation, but it is a scenario that I feel is entirely possible. We will have to play it day by day and see how the trend interacts with the descending trendline. If we see a definitive break of that trendline, I fully expect to see a large swell of buying interest hit the market as the larger investors regain confidence in a potential bull market.

Summary:

  1. After a violent shakeout, bitcoin managed to climb for several days until it ultimately made a local high in the $6,800s.
  2. There is a strong argument that the current bitcoin consolidation is a reaccumulation trading range and could lead to a potential continuation of the uptrend.
  3. If we break to the top side of the trading range, we can expect to test the macro descending trendline. From there, we will have to reevaluate the market.
  4. If we manage to break the descending trendline, this will likely bring a strong round of buyers as it signals a potential change of trend from bear market to bull market.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.


This article originally appeared on Bitcoin Magazine.

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New Study Argues Tether Wasn’t Used to Prop Up Bitcoin Price

New Study on Tether Argues It Wasn't Used to Prop Up Bitcoin Price

Following an earlier report by researchers from the University of Texas alleging that stablecoin Tether (USDT) issues new tokens to manipulate the bitcoin price, a new report has emerged debunking this theory.

Written by Dr. Wang Chun Wei of the University of Queensland Business School, the report states that, contrary to the conclusion of the earlier study by John Griffin and Amin Shams, the effect of Tether is statistically insignificant as far as bitcoin pricing is concerned. 

Lack of Supporting Evidence

According to Wei’s report, which uses VAR analysis — a model used to discover meaningful relationships between variables over a period — no evidence was found to suggest the influence of tether in bitcoin’s record-breaking price spike in December 2017. Wei concludes that Tether does not have the market heft required to shift bitcoin one way or the other.

Explaining this in detail the report says:

“We find no empirical evidence supporting the notion that Tether grants cause subsequent Bitcoin returns to rise on a daily basis. In fact, when we examine the Bitcoin return equation of our VAR model, none of the lagged variables, impacts Bitcoin returns. This suggests Bitcoin returns are showing greater signs of market efficiency than previously studied on older datasets.”

Fresh Grants and Heightened Trading Volumes

The report established a positive correlation between USDT issuances and heightened bitcoin trading volumes over the next few days. Tether grants also had similar effects on other crypto markets. Despite this, the report says, it does not indicate any causative relationship between Tether issuance and bitcoin price movements because prices are set by market vagaries substantially more numerous and dynamic than traded asset volumes.

In addition, the positive effect on trading volumes only lasts for about five days before going back to normal trading levels, which indicates that Tether is not powerful enough to make any meaningful impression on an asset like bitcoin.

Another important point noted in the study is that there is indeed evidence to suggest that Tether grants are timed in unison with bearish movements in the bitcoin market. According to Wei, while this may indeed be a sign that Tether is issuing new tokens to purchase bitcoin in attempts to shore up its support level, it may also be a simple function of investor demand.

In other words, when bitcoin is moving bearishly, investors may display a greater appetite for tether as a store of value that keeps their funds safe from bitcoin’s volatility. In line with this increased demand, Tether may simply be issuing new grants to satisfy all investors.

Moreover, it was determined that the amount of bitcoin that could be purchased with the new Tether grants was simply too small to make any impression on the bitcoin price, regardless of whether that was the motive or not.

Finally, the study shows that Tether grants have a high level of autocorrection, which means that they are split into several smaller blocks and released over several days to ease the pressure on exchanges. This would again appear to support the theory that there is not enough Tether in the grants in question to buy enough bitcoin to manipulate its price.

This article originally appeared on Bitcoin Magazine.

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VanEck/SolidX ETFs Delayed Again as SEC Seeks Comment on Fund Proposal

VanEck/SolidX ETFs Delayed Again as SEC Seeks Comment on Fund Proposal

The U.S. Securities and Exchange Commission (SEC) has once again postponed a decision on the application for a Bitcoin Electronically Traded Fund (ETF) by VanEck and SolidX, in what is the latest update in a protracted regulatory process that has dragged on for several months. The agency has stated that it needs more time to consider more input to help it arrive at a decision on the matter, which was originally postponed to September 29, 2018.

The Long Wait for an ETF

Despite the huge market appetite for a bitcoin ETF, which would enable investors to effectively invest in bitcoin without actually holding the asset and risking exposure to its unique security challenges, the SEC has so far rejected or deferred a decision on every application for a bitcoin ETF. Earlier, the commission rejected a series of applications by a number of organizations including Gemini, the exchange owned by Cameron and Tyler Winklevoss.

The commission also recently halted U.S. trading of Tracker One’s Swedish ETF, as it seeks further consultations and comments on VanEck’s listing request.

Thus far, the SEC has received over 1,400 comment letters about the proposal by VanEck and SolidX to front an ETF, but the agency is open to receiving even more feedback, according to a filing published on Thursday. The filing states that those who wish to comment on the application have 21 days after the SEC’s order is published in the Federal Register, while those who wish to make rebuttals have 35 days from that date.

The SEC’s major hangup about a bitcoin ETF remains the capacity, or lack thereof, of the crypto market to surveil itself and prevent manipulation effectively. To this end, the body is seeking views from the public about the possible impact of a bitcoin ETF on market manipulation, including whether an ETF is more or less vulnerable to price manipulation than other assets and commodities that form the basis for exchange-traded products.

It will be recalled that, recently, a number of crypto industry heavyweights including a consortium of exchanges led by Winklevoss-owned Gemini started up an initiative aimed at demonstrating that crypto markets have come of age and are capable of effectively policing and surveilling themselves.

This article originally appeared on Bitcoin Magazine.

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Hong Kong–Based Blockchain Fund Makes Its Case for Yen-Backed Stablecoin

Hong Kong–Based Blockchain Fund Makes Its Case for Yen-Backed Stablecoin

Grandshores Technology Group, a Hong Kong–listed investment holding company, is seeking to raise around $12.7 million through a digital token fund, according to reports from the South China Morning Post (SCMP). Grandshores Technology plans to use the funding to launch a yen-backed stablecoin.

Chinese investor Yongjie Yao, who currently chairs Grandshores Technology, is also a founding partner at Hangzhou Grandshores Fund, which is backed by the local government of the city of Hangzhou and Chinese crypto billionaire Xiaolai Li.

Yao stated that the company plans to attract investment from qualified investors from outside China to raise funds via Tether, according to the SCMP report. The company will also invest in disruptive startups and other cryptocurrency projects across the globe that are challenging the status quo.

“We are entering the next stage of blockchain evolution, a stage which is akin to when computer operating systems were transiting from MS-DOS [disk operating system] to MS-Windows.”

The founding partners of Hangzhou Grandshores Fund are currently working with an unnamed, mid-tier Japanese bank to develop the yen-based stablecoin. Grandshores has plans to launch stablecoins pegged to the Hong Kong dollar and the Australian dollar in the future.

Yao remains confident regarding the demand for the coin when it launches. He believes the token could be ready by the end of 2018 or the first quarter of 2019.

“We believe cryptocurrency traders and exchanges will be potential takers of this stablecoin,” he added.

Stablecoins help tackle one of crypto’s chief dilemmas — volatility — without compromising its core values. On a smaller scale, they also help investors trade seamlessly while transferring money between crypto exchanges.

Earlier this year, Binance Labs, OKEx and other notable investors funded a stablecoin project out of South Korea called Terra. Liechtenstein’s Union Bank AG also issued its stablecoin, as it aims to become the world’s first blockchain investment bank.  

Paxos and Gemini joined the party last week, launching their stablecoins on the Ethereum blockchain.

This article originally appeared on Bitcoin Magazine.

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Morgan Stanley Eyes Bitcoin Swap Contracts Tied to Futures Prices

Morgan Stanley Veteran Jacob Dienelt Joins Bitcoin 2.0 Startup

Morgan Stanley is joining Wall Street’s race toward an institutional-friendly bitcoin derivative.

According to anonymous sources reporting to Bloomberg, the financial institution is devising price return swaps tied to bitcoin. These derivatives would allow investors to indirectly invest in the market’s flagship currency, allotting them the option to buy into long or short positions through the contracts.

Taking their prices from bitcoin futures, the swaps will not handle bitcoin directly. Seeing as Morgan Stanley is a regulated and established financial institution, tying the product to futures contracts is a safer bet than basing them on bitcoin’s spot price, as the Chicago Mercantile Exchange and Chicago Board of Exchange offer fully-regulated bitcoin futures from which Morgan Stanley can pool pricing data.

Bloomberg’s source claimed that the derivatives are ready for launch, but it’s waiting on an in-house approval process and sufficient investor demand before taking them to market. In the original reporting, a Morgan Stanley spokesperson declined to comment on the developments.

If the tip is valid, it would make Morgan Stanley the latest in legacy financial groups looking to open a doorway for institutional investors to enter the cryptocurrency market. Despite false reports claiming that Goldman Sachs had put hopes for a bitcoin strategy behind it, the bank has a strategy desk in the works, a service that, if opened, would add to the bitcoin futures options it facilitates for its clients.

Citigroup also reportedly has so-called digital asset receipts in the works. Like its traditional counterpart in American depository receipts, these receipts offer investors an option to purchase an asset that doesn’t trade on local markets from a foreign exchange.

Institutional-tier offerings such as those detailed above are seen as much-needed catalysts to stimulate the flow of institutional money into the market, offering heavyweight financial players a less-risky way to buy into assets like bitcoin. For the same reason, custody services like those offered by Coinbase, BitGo and others are necessary for safely storing and managing these investments as well.

This article originally appeared on Bitcoin Magazine.

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BitGo Gets Approval From State Regulators to Launch Custody Service

Regulators Greenlight Bitcoin Futures

BitGo has received the green light from the South Dakota Division of Banking to act as a qualified custodian for digital assets, according to a Business Wire press release.

The approval means the BitGo Trust Company can now offer secure storage for digital assets “designed for institutional customers,” Chief Compliance Officer Shahla Ali told Bitcoin Magazine. “Built on BitGo’s multisignature security, BitGo Custody delivers modern security for modern assets,” Ali continued.

Ali went on to explain that “BitGo has been working on its application for its charter to be a qualified custodian for the past year.” Per South Dakota regulations, the company won’t begin storing assets under the Trust until a 30-day period has elapsed.

Along with the volatility of cryptocurrencies — which stablecoins are seeking to remedy —  the obstacle of having a safe storage option for cryptocurrencies has obstructed institutional investors from entering the market. Seeing as these investors are used to having their funds safely stored or being FDIC insured, BitGo CEO Mike Belshe believes the lack of readily available custodial services have kept “institutional investors out of the market.”

BitGo is not the first cryptocurrency company to offer custody services. Digital assets platforms Coinbase and Gemini have both launched their own custody solutions in a bid to attract institutional investors to the market, as well, and financial institutions such as Goldman Sachs and Northern Trust are reportedly planning to launch similar services.

In the press release, Belshe points out that, unlike custody services offered by exchanges, BitGo is solely focused on cryptocurrency custody. Built on the technology behind BitGo’s wallet services, the custody will offer cold wallet support with storage in “bank-grade Class III vaults,” support for over 75 cryptocurrencies, multi-user accounts and around-the-clock support.

The custody service is the latest attempt by the company to build out its services. Recently, BitGo implemented a predictive Unspent Transaction Output (UTXO) management system. The UTXO system manages micro-units of cryptocurrencies “by minimizing transaction sizes at high fee rates, while automatically sweeping up and processing many small fragments of coins when fees are low.”

This article originally appeared on Bitcoin Magazine.

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OKCoin Expands Token-to-Token Platform to 20 States

OKCoin Expands Token-to-Token Platform to 20 States

Today, September 12, 2018, OKCoin announced that the company will be offering token-to-token only trading in twenty states across the U.S. This announcement of its expansion in U.S. markets comes shortly after OKCoin/OKEx founder Star Xu was questioned and released by Chinese police in connection with an alleged digital currency fraud. OKEx is the second largest global exchange by volume, according to CoinMarketCap, (though that volume has been called into question) and now OKCoin is hoping that its own volume will increase with low fees in a market-maker favored pricing model.

OKEx was launched in 2014 to target peer-to-peer trading of hundreds of cryptocurrency pairs. The digital asset exchange was to supplant the 2013 version of OKCoin, which enabled Chinese Yuan to BTC payments. However, the past 18 months of regulatory changes amongst major economies have left OKEx unable to cater to investors and speculators in many countries, including the United States. OKCoin international was relaunched only in April of this year and had previously only operated in California as a fiat-to-token trading platform earlier this summer, so this token-to-token platform should enable a U.S. service to OKCoin previously denied to OKEx.

Given its currently limited pool of tradeable cryptocurrencies (BTC, LTC, ETC, ETH, and BCH), it may be hard to differentiate OKCoin from U.S. mainstays. However, this limited pool may be why OKCoin has been able to secure Money Transmittal Licenses (MTLs) from twenty states in the first place.

In its press release on the expansion, OKCoin states, “We have worked closely with regulators and researched regulations in every state to ensure that we are complying with Federal and State convertible virtual currency rules.” According to the same release OKCoin is in the process of applying for MTLs in the remaining states for both token-to-token and fiat-to-token trading.

This could prove to be a challenge in certain states, such as Vermont, New York and Washington. However, notable wins include Massachusetts where state licensing and enforcement on those selling cryptocurrency is notoriously stringent, and Secretary of the Commonwealth William Galvin has been vocally anti-bitcoin. OKCoin CEO Tim Buyn stressed the importance of working within the U.S. regulatory frameworks to “break down the barriers preventing a truly global digital asset market.”

The new states include Alaska, Arizona, Colorado, Idaho, Illinois, Indiana, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, Tennessee, Texas, Utah and Wisconsin.

This article originally appeared on Bitcoin Magazine.

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Gemini and Paxos Both Launch Stablecoins on Ethereum Blockchain

Gemini and Paxos Both Launch Their Own Cryptocurrency Stablecoins

Two crypto companies, Gemini Trust and Paxos, got a green light from a New York state regulator to launch their own stablecoins pegged 1:1 to the U.S. dollar.  

New York Department of Financial Services (NYDFS) gave an okay to Gemini Trust, the crypto exchange founded by the Winklevoss twins, to launch Gemini Dollar (GUSD). It also gave a nod to Paxos Trust, the company behind the over-the-counter (OTC) exchange itBit, to issue Paxos Standard (PAX). Both coins launched on September 10, 2018.  

Since Tether (USDT), the most recognized of the stablecoins, launched in 2014, many other stablecoins have followed, all pegged to the value of some underlying asset, like another currency. In general, stablecoins provide a digital alternative to cash and serve as a hedge against volatility.

Some critics claim, however, that stablecoins are being used for money laundering and, in the case of Tether, to manipulate the price of bitcoin. This is why the NYDFS says it has gotten stringent assurances from Gemini and Paxos.

According to the NYDFS’s press release, Gemini and Paxos tokens are subject to the Bank Secrecy Act, anti-money laundering and Office of Foreign Assets Control controls “to prevent the Gemini Dollar or Paxos Standard tokens from being used in connection with money laundering or terrorist financing.”

“These approvals demonstrate that companies can create change and strong standards of compliance within a strong state regulatory framework that safeguards regulated entities and protects consumers,” NYDFS superintendent Maria Vullo said in a statement.

Unlike Tether, which runs on the Omni Layer on top of the Bitcoin blockchain, both Gemini Dollar and Paxos Standard are ERC-20 coins that run on the Ethereum blockchain.

According to Gemini’s blog post, traders who have a Gemini account can convert U.S. dollars 1:1 into Gemini Dollars and withdraw them to a specified Ethereum address. Conversely, if they move Gemini Dollars back into their Gemini account, they can convert them back into fiat.

Gemini says U.S. dollars backing its stablecoin will be kept in a U.S.-based State Street Bank and insured through the Federal Deposit Insurance Corporation’s “pass-through” deposit insurance program, subject to applicable limitations. Independent auditor BPM Accounting and Consulting will review the company’s bank holdings on a monthly basis. Also, the smart contract controlling the Gemini Dollar has been audited by Trail of Bits.

When Bitcoin Magazine asked if Gemini has plans to integrate the new stablecoin into other services or platforms, such as wallets, point-of-sale platforms or other exchanges, its response was non-committal:

“As the Gemini dollar is an ERC20 token on the open source Ethereum network, it can be sent to any Ethereum address. We look forward to its adoption by third parties, including other exchanges and wallet providers.”

In Paxos’ case, customers can purchase and redeem tokens directly through Paxos.com. According to the company’s press release, investors using the itBit exchange or OTC desk will be able to redeem their crypto holdings for Paxos Standard “instantaneously.” itBit will also trade Paxos Standard tokens OTC.

Paxos says it works with a third-party, independent public accounting firm to monthly review and attest that Paxos Standard tokens are fully backed by actual dollars. Additionally, the Paxos Standard smart contract has been audited by blockchain auditor (Nomic Labs) to ensure that the code is solid and operates the way it is supposed to.

According to the NYDFT, both Paxos and Gemini will be subject to charter revocation if they fail to comply with any of the provisions of the agency’s approval.

This article originally appeared on Bitcoin Magazine.

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Ether Price Analysis: Market Indecision Could Cause Short Covering Rally

Ether Price Analysis

When we last discussed the ETH-USD pair, the price was testing support in the mid $200 range.

Since then, the market has dropped another 30% as ether tests the waters in the upper $190 range:

fig1Figure 1: ETH-USD, 1-Day Candles, Macro Trend

The volume on the current drop has been exceptionally high compared to the beginning of its descent from the $800s. However, one thing to note is how little the last few candles have progressed compared to the large amounts of sell volume accompanying the movement — and this actually makes sense on a basic level. Oftentimes, markets love nice round numbers (in our case, $200) and you can clearly see a line of historic support in the $200 range (shown by the red dashed line).

However, something to keep in mind is this humongous bear pennant that ether recently broke out of:
fig2Figure 2: ETH-USD, 1-Day Candles, Bear Pennant

This bear pennant has a staggering price target approximately in the $80–$100 range, meaning we are only halfway through its measured move. It should be noted that targets are just targets. Just because a pennant has a price target, that doesn’t mean the full move must be realized.

Currently, the market is testing support on very high volume, which means there is a significant level of supply absorption. At this level, there are some eager bulls buying up the panic sellers. Whether or not their buying pressure will be enough to initiate a rally remains to be seen. Although the current daily candle hasn’t closed, there is a bit of indecision present over the last couple days:

fig3Figure 3: ETH-USD, Daily Candles, Double Doji Set-up

This candle set-up is called a “double doji”. You can basically think of it as a visual representation of market indecision. This shows us that, even though the intraday volatility was high, the actual deviation between the opening and closing price of the candle was quite low. Although there is indecision, its very possible that the bearish pressure could ultimately win over the bulls, and we could see further capitulation from the long holders. However, this does give the bulls a shot a possible rally.

And, given the extremely high number of open short positions (highest in history, in fact) on Bitfinex, I would say the bulls have a decent shot at a sizeable short squeeze/short covering rally:
fig4Figure 4: ETH-USD, Daily Candles, BFX Short Count

Summary:

  1. ETH-USD has been dropping like a rock over the last few weeks as it managed to realize a 30% devaluation in a very short period of time.
  2. ETH-USD is testing support at the moment as it sees a bit of market indecision on very high volume.
  3. With the shorts stacked at all-time high values, it is very possible that we could see a sizeable short squeeze if the buying pressure manages to overwhelm the sellers at this price level.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

This article originally appeared on Bitcoin Magazine.

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