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| January 24, 2019

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Current Crypto Bear Market Set to Become the Longest Ever

January 22, 2019 |

The market downturn that has prevailed since early 2018 is now within weeks of becoming the longest winter in the history of the cryptocurrency markets. Despite being on course to become the longest downtrend in BTC’s annals, the current market has produced the weakest drawdown of the three major bear trends experienced by BTC so far.

Also Read: How to Buy Bitcoin Anonymously

Cryptocurrency Markets Within One Month of Comprising Longest Downtrend Ever

On Jan. 16, 2019, CNBC’s Ran Neuner tweeted that the 2018/2019 bear trend had entered its 390th day – just 30 fewer days than the entirety of the 2014/2015 bear trend, which he estimates lasted 420 days.

While the exact length of a bear trend is hard to precisely quantify, the tweet highlights the length and intensity of the prevailing cryptocurrency downtrend.

Current Crypto Bear Market Set to Become the Longest Ever

When counting from BTC’s all-time high of approximately $ 19,700 on Dec. 17, 2017, it has been 401 days since the start of the current downtrend.

As of the recent low of roughly $ 3,100, the current bear market has resulted in a drawdown of up to to 84 percent on the price of BTC.

2014 Bear Market Comprises Longest and Bloodiest to Date

When counting from record highs preceding 2017 until the low of the following trend, the 2014/2015 bear market appears to have lasted 410 days.

Current Crypto Bear Market Set to Become the Longest Ever

On Nov. 30, 2013, prices peaked at a record high of roughly $ 1,180, precipitated by a lengthy downtrend that finally capitulated on Jan. 14, 2015 when prices crashed to post a local low of $ 155 – a drawdown of 87 percent.

The first significant bear trend in BTC’s history lasted from 162 days from Jun. 9, 2011 until Nov. 18, 2011.

Current Crypto Bear Market Set to Become the Longest Ever

After starting the year trading for just $ 0.30, BTC rallied to post a then-record high of $ 29.58 during early June. The markets would then lose nearly 93 percent over the course of little more than five months, with the bear trend easing after hitting $ 2.14 on Nov. 18, 2011.

Do you think the current trend will become the longest in cryptocurrency history? Share your thoughts in the comments section below!


Images courtesy of Shutterstock, Tradingview, 99bitcoins


At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.

The post Current Crypto Bear Market Set to Become the Longest Ever appeared first on Bitcoin News.

Bitcoin News

Cumulative Volume on Huobi Derivative Market Exceeds $20 Billion

January 19, 2019 |

Huobi has announced that its cryptocurrency derivative platform, Huobi DM, has surpassed $ 20 billion in cumulative trading volume. The announcement comes just one month after the platform exited beta mode.

Also Read: Eastern European P2P Markets See Strongest BTC Volume in Over 12 Months 

Huobi DM Cumulative Trade Volume Doubles in 2 Weeks

Cumulative Volume on Huobi Derivative Market Exceeds $  20 BillionHuobi Derivative Market has announced that the cumulative trade volume on the platform has exceeded $ 20 billion as of Jan. 12, 2019. As such, cumulative trade on the platform doubled in just 15 days.

Huobi’s derivative platform launched in beta on Nov. 21, 2018, for BTC contract trading only. On Dec. 10, 2018, Huobi DM exited beta mode and was integrated with Huobi Global and posted a 24-hour volume of $ 195 million.

On Christmas day, Huobi announced that daily trade volume had surpassed $ 1 billion for the first time. On Dec. 28, 2018, Huobi DM claimed that cumulative volume on the platform had exceeded $ 10 billion alongside the launch of EOS contract trading.

Livio Weng, the chief executive officer of Huobi Global, stated that he is “pleased” with the strong response,” describing the platform’s growth as “explosive,” despite the cryptocurrency markets being “in the midst of an ongoing bear market.”

Bittrade Merger Facilitates Japanese Relaunch for Huobi

Cumulative Volume on Huobi Derivative Market Exceeds $  20 BillionOn Thursday, Huobi announced that it had relaunched a fully regulated exchange under Japan’s Financial Services Agency (FSA) following a merger with Bittrade. As such, Huobi Japan has been granted one of the first 17 licenses issued by the FSA.

The founder of Huobi Group, Leon Li, stated that the relaunch was an “important milestone,” emphasizing the importance of the Japanese market to the company. Li also described working with regulators as “a longstanding priority for Huobi Group.”

Huobi Japan currently supports BCH, BTC, ETH, LTC, XRP, and MONA pairings.

Do you think that cryptocurrency derivative markets will come to dwarf the spot markets in trade volume in coming years? Share your thoughts in the comments section below!


Images courtesy of Shutterstock


At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.

The post Cumulative Volume on Huobi Derivative Market Exceeds $ 20 Billion appeared first on Bitcoin News.

Bitcoin News

Mining Closures Reveal Recurring Bitcoin Bear Market Trend

January 18, 2019 |

Mining Closures Reveal Recurring Bitcoin Bear Market Trend

Another bitcoin miner this week shut down its operations, though the news didn’t come as much of a shock. The latest closure, of U.S.-based Giga Watt which went bankrupt last year, follows a trend among large mining operations that stretches back years.

Also read: No Reason to ‘Bury’ Cryptocurrencies, Russian PM Medvedev Says

Bankruptcy to Closure

After declaring bankruptcy last year, Giga Watt, which launched in 2017, announced in a Telegram message that it would be ceasing all operations. “As was reported in November of 2018, Giga Watt voluntarily filed with the Bankruptcy Court seeking debt relief and reorganization,” the message read. It added:

“Subsequent to the filing, day to day operations continued until now. At present, both access and power to the facilities in which Giga Watt operates have been closed to the company.”

The mining firm Giga Watt filed for bankruptcy at a court in the Eastern District of Washington in November, stating that it still owes its biggest 20 unsecured creditors nearly $ 7 million. Despite continuing to operate until Tuesday, the firm said it would not be able to refund those who had invested in its WTT token.Giga Watt Becomes the Latest Bitcoin Mining Company to Go Bust

But Giga Watt said it would be returning mining equipment to some of its customers, adding: “Customers will receive an email notification within the next two weeks with the tracking information for their shipments.”

A Recurring Trend

Giga Watt’s case is by no means unique – a number of mining firms have had to close up shop after prolonged bear markets in recent years, due to falling revenues. In 2016, Knc Miner, one of the fastest growing mining operations, declared bankruptcy and had to close, despite having a positive outlook and raising over $ 32m in venture funding from investors.

Another seemingly promising company was 21E6, which later became 21.co. Backed by prominent Silicon Valley investors, the mining company raised $ 70 million in 2013. But things took a turn for the worse and it ended up with long-term datacenter leases and falling revenue. The company was later saved after it was turned into Earn.com and sold to Coinbase.

Giga Watt Becomes the Latest Bitcoin Mining Company to Go Bust
Hashfast, Alydian and Cointerra are more examples that suffered similar fates, with long term datacenter leases but falling revenue. Bearish market conditions evidently also exacerbated Giga Watt’s problems. BTC extraction has become less profitable due to a slump in prices, leaving many miners on the brink of collapse. As news.Bitcoin.com reported last week, some mining operations are packing up and moving to countries such as Mongolia, seeking benefits such as cheaper electricity and cooler climate. 

Do you think other mining companies will go the same way as Giga Watt or is the bear market coming to an end soon? Tell us in the comments section below.


Images courtesy of Shutterstock and Giga Watt. 


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The post Mining Closures Reveal Recurring Bitcoin Bear Market Trend appeared first on Bitcoin News.

Bitcoin News

Dropgangs and Dead Drops: Report Highlights Evolving Darknet Market Opsec

January 15, 2019 |

Dropgangs and Dead Drops: Report Highlights Evolving Darknet Market Opsec

Since the creation and subsequent takedown of the darknet marketplace the Silk Road, the hidden market ecosystem has exploded with inventive solutions that promote private voluntary exchanges. According to recently published darknet market (DNM) research, the cat and mouse game continues with vendors inventing new ways to bolster online black market activities. In the last two years, the DNM ecosystem has popularized methods like ‘dropgangs’ and ‘dead drops’ to evade the clutches of the world’s law enforcement agencies.

Also read: Venezuelan BCH Proponents Bolster Cryptocurrency Use Cases and Adoption

The Rise of Dropgangs

When the Dread Pirate Roberts (DPR), leader of the now defunct Silk Road marketplace, created his darknet web portal, a new economy of online trade was born. Even after the Silk Road’s head was cut off by U.S. three-letter agencies, the DNM idea continued to spread like a hydra. A number of reinvented Silk Road clones dispersed throughout the deep web and global law enforcement has been trying to take each one down ever since.

After the busts in 2017, which saw the takedown of extremely large DNM the Alpha Bay and Hansa marketplace, vendors and patrons had to think of new ideas in order to continue to keep the economy thriving. Even though people still use DNMs such as Dream Market, online black market participants are reinventing the wheel when it comes to these types of illicit exchanges. Jonathan “smuggler” Logan’s nine-page report, written on Dec. 28, gives a comprehensive look at how some DNM community members are participating in ‘dropgangs’ and utilizing ‘dead drops.’

Dropgangs and Dead Drops: Report Highlights Evolving Darknet Market Opsec
“Given the additional plausible development that long distance, high payload drones become available more widely, and for much less cost, the procurement layer of Dropgangs will also become more secure and efficient,” explains the 9-page research report Dropgangs, or the future of darknet markets.

Although some of the ideas are still primitive, DNM merchants have started to create new types of private communications and operational back-ends, explains Logan’s research. Dropgangs use communication systems like Telegram to conduct business and Logan details that chat channels can then be broken down into unique counterparties. The channels are so sophisticated that lots of them use automated bots, which removes human interactions from the equation. “Automated bots allow customers to inquire about offers and initiate the purchase, often even allowing a fully bot-driven experience without human intervention on the merchant’s side,” Logan’s report noted.

The researcher’s report also emphasizes that these messaging platforms make things more comfortable for customers as they can discuss things in real-time and protect themselves with a virtual private network (VPN). Dropgangs still use cryptocurrencies to transact, but Logan says these days vendors are using privacy-centric digital assets to conduct trades. This is due to the rise of blockchain surveillance and cryptocurrency transaction tracing and the report details that this vector of attack is currently exploited by law enforcement.

Dropgangs and Dead Drops: Report Highlights Evolving Darknet Market Opsec
“Dead drops have to satisfy four functions: • They must be plentiful. The more potential locations for dead drops, the more secure their operation in face of law enforcement surveillance. • They must be easy to locate for the customer who has received the necessary information from the merchant. • They must be unlikely to be found by accident,” Jonathan ‘smuggler’ Logan’s report explains. 

  Dead Drops

Another method of trade DNM users have been experimenting with is dead drops. Basically, a dead drop is a random geographical location that a dealer uses to drop off packages instead of using the global mail systems. Dead drops have to be an easy location to find, the report explains, but they have to be obscure enough so that they cannot be identified and surveilled by law enforcement. Logan’s study notes the use of dead drops makes things asynchronous for the merchant and makes it so the customer doesn’t have to reveal their address or an address tethered to their identity.

“The use of dead drops also significantly reduces the risk of the merchant to be discovered by tracking within the postal system — He does not have to visit any easily to surveil post office or letterbox, instead the whole public space becomes his hiding territory,” the report details.

Dropgangs and Dead Drops: Report Highlights Evolving Darknet Market Opsec

Hierarchies and Anonymous Layers

The new DNM systems are not perfected yet and are nascent compared to centralized DNMs like Dream, but are gaining traction. Logan says cryptocurrencies are still the main choice of settlement, but escrow systems are nonexistent in this model. Sometimes multi-party transactions between customer and merchant are established, but Logan explains that it is rare. This has led to the regeneration of hierarchical structures, though the system can still be layered. Often times one layer of the structure doesn’t know the identity of the higher layers like product suppliers, messengers, and dead drop delivery employees. “All interaction is digital – messaging systems and cryptocurrencies again, product moves only through dead drops,” Logan’s research highlights.

What do you think about the use of dead drops and the advent of dropgangs? Let us know what you think about this subject in the comments section below.


Image credits: Shutterstock, and Pixabay.


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The post Dropgangs and Dead Drops: Report Highlights Evolving Darknet Market Opsec appeared first on Bitcoin News.

Bitcoin News

As the housing market slows, builders are offering buyer discounts

January 11, 2019 |

As the housing market has downshifted, more builders are offering sweeteners to close the deal.

Companies large and small are paying closing costs, buying down mortgage rates and trimming square footage to offer a cheaper abode. Some are countering the high cost of a mortgage with a more direct…


L.A. Times – Business

Fund Providers Insist There’s Enough Market Liquidity for a Bitcoin ETF

January 10, 2019 |

For years, bitcoin exchange traded funds (ETFs) have been struggling to get off the ground and receive approval from the U.S. Securities and Exchange Commission (SEC). Passive fund providers are now arguing there is sufficient market liquidity for a bitcoin ETF to be launched in 2019. 

Also read: SEC Wants Second Look at Nine Bitcoin ETFs

ETFs to Top $ 9 Trillion by 2022

Fund Providers Insist There's Enough Market Liquidity for a Bitcoin ETFETFs are becoming a large part of the investment landscape. Research firm ETFGI predicts that in 2020, ETFs and ETPs listed in Europe will reach $ 1.1 trillion. Morgan Stanley forecasts global ETF assets to top $ 9 trillion by 2022. As interest in these products grows, regulators have been addressing structural vulnerabilities. Research conducted by broker and asset manager Charles Schwab shows the millennial generation is increasingly choosing to invest in ETFs accessed by apps. It could be a game-changer when – or if – the SEC approves a bitcoin ETF. 

There have been a number of applications submitted over the years. The most recent ones include Proshares, which had two proposals for a bitcoin ETF, both based on bitcoin futures contracts. There was also the Vaneck-Solidx proposal which is based on a physical-backed bitcoin ETF. Before an ETF is approved to trade on one of the U.S.’s major exchanges, there is a number of factors which need to be considered.

Bitcoin Market Cap Stands at $ 72 Billion

Last year, Blockforce Capital launched blockchain ETFs in the form of BLCN and the world’s first Chinese blockchain ETF, BCNA.  Eric Ervin, CEO of Blockforce Capital, told news.Bitcoin.com the current market environment has the ability to support an ETF for two primary reasons.

Fund Providers Insist There's Enough Market Liquidity for a Bitcoin ETF“First, [BTC] has a market cap of $ 72 billion,” he explained. “While this is small in comparison to many blue-chip stocks, there are a number of ETFs currently on the market that are focused on esoteric assets. For example, iShares’ IWC ETF focuses on micro-cap stocks, and has almost $ 900 million in assets. Collectively, the underlying stocks have a market cap of about $ 450 billion. That number dwarfs bitcoin’s market cap, but when looking at the underlying assets’ liquidity, there are significant volume constraints.”

Ervin explained that 40 percent of the IWC fund comprises holdings that are greater than 50 percent of the average 30-day volume. This is because most are micro-caps, and are also only listed on U.S. exchanges. Ervin highlights that in comparison, BTC’s 24-hour trading volume is about $ 5.3 billion, and trades on multiple exchanges around the world, allowing global investors to add liquidity to the marketplace.

Exchange Arbitrage Is a Growing Business

As the market develops, participants are becoming more sophisticated and exchange arbitrage is a growing business.

Fund Providers Insist There's Enough Market Liquidity for a Bitcoin ETFErvin said: “Exchange arbitrage – buying bitcoin on exchange A and selling on exchange B to take advantage of small price inefficiencies – is a growing business as many traditional market players enter the space because returns from arbitrage are considered ‘risk free’ as the strategy has no directional exposure.”

When the Blockforce Capital team started arbitraging prices at the beginning of summer 2018, they were averaging around 75 bps profit per trade. “That number has dwindled and the number of opportunities have gone down considerably, due to increased competition. These market participants add liquidity to the marketplace because if an exchange’s price of [BTC] deviates from the global mean, market participants will arbitrage the price back in line with the global average,” explained Ervin.

He concludes that this factor, coupled with an expanding derivative, futures, and swap market, adds liquidity and makes it much more difficult for the price of a globally traded asset to be manipulated, adding:

We could make the case that an ETF holding a substantial amount of a micro-cap stock’s daily volume would have a higher impact on the price than a globally traded asset. 

Scandinavia Leads Market With Bitcoin ETNs

As the SEC continues to agonize over whether to approve a bitcoin ETF, it is worth taking a look at other crypto financial products such as Sweden’s bitcoin exchange-traded note (ETN). In May 2015, XBT Provider AB announced the authorization of Bitcoin Tracker One, the first bitcoin-based security available on a regulated exchange.

Fund Providers Insist There's Enough Market Liquidity for a Bitcoin ETFLaurent Kssis, the CEO of XBT Provider, a Coinshares company, said that to put things in perspective, a so-called ‘physical’ bitcoin ETF simply asks for money upfront to buy the underlying asset physically.

“In this way, a bitcoin ETF provides quick exposure to the underlying asset, but this also means the market needs to be liquid enough to support any new demand for the underlying asset – in this case, bitcoin. There is a key operational question that regulators and investors alike need answered before approval of a bitcoin ETF,” explained Kssis. 

The good news is there are prior proxies in the market to study. Kssis said in his experience of operating the BTC and ETH trackers on Nasdaq Stockholm – notes which are hedged by buying the underlying asset (BTC 1:1) – he has so far been able to keep up with demand while maintaining an accurate price over the last three and a half years without any liquidity issues and being the sole liquidity provider.

“Put differently, even during the height of 2017, the underlying bitcoin market remained liquid enough to absorb new demand as we bought bitcoin to physically hedge the bitcoin trackers,” added Kssis. 

Fund Providers Insist There's Enough Market Liquidity for a Bitcoin ETF
Nasdaq volume of all issuers on Dec. 7 2017.

According to XBT Provider, during 2017, when BTC traded at $ 20,000, the group was able to source ample liquidity. “My takeaway from 2017: even with substantial demand driving AUM well above $ 1 billion, the market demonstrated that delta-one security desks were able to source ample liquidity in the market to operate similar products to a proposed bitcoin 1:1 physical bitcoin ETF. A futures market will simply enhance that liquidity that is already available,” said Kssis. 

If Crypto Trading Picks up Expect More Launches

Fund Providers Insist There's Enough Market Liquidity for a Bitcoin ETFOther products available in the market include Greyscale Bitcoin Investment Trust (OTC:GBTC) which trades over the counter and the Amun Crypto Basket Index (SIX:HODL) which launched in November 2018 on Switzerland’s Zurich-based SIX Exchange. 

According to Lars Seier Christensen, chairman of Concordium and founder of Saxo Bank, if trading picks up we can expect more launchesHe said: “If the primary cryptocurrency exchange market continues to be in trouble, there will be little appetite for launching new trading vehicles. On the other hand, if trading picks back up, it is quite likely that we will see a slew of new initiatives being launched — perhaps even some that have already been planned and gone through due diligence but where the offering party have been waiting for a better time to launch.” 

Do you think the SEC will approve a bitcoin ETF in 2019? Let us know in the comments section below.


Images courtesy of Shutterstock and XBT Provider. 


Need to calculate your bitcoin holdings? Check our tools section.

The post Fund Providers Insist There’s Enough Market Liquidity for a Bitcoin ETF appeared first on Bitcoin News.

Bitcoin News

Amazon Takes Market Cap Crown

January 8, 2019 |

Amazon surpasses Microsoft as the largest U.S. company with a market cap of $ 797 billion, signaling the tech industry’s enduring market dominance even after turbulent months in which investors pummeled their shares.
WSJ.com: US Business

The Daily: Derivative Market Hits $12B in Volume, Reports of Layoffs, Another Fork

January 5, 2019 |

The Daily: Derivative Market Hits $  12B in Volume, New Reports of Layoffs, Another Fork

Cryptocurrency exchange Huobi has announced reaching $ 12 billion in cumulative trading volume on its derivative market in December. The news comes amid reports of job cuts at its Shenzhen office. Also in The Daily this Saturday, major trading platforms have confirmed support for the upcoming Constantinople hard fork in the Ethereum network.   

Also read: Cointext Offers Philippines BCH Wallet, Beam Launches Mimblewimble Coin

Huobi DM Ends Month With $ 12 Billion in Trading Volume

The Daily: Derivative Market Hits $  12B in Volume, Reports of Layoffs, Another ForkHuobi, the fourth largest crypto exchange by trading volume, has revealed that its derivatives platform, Huobi DM, registered over $ 12 billion of trade deals within the first month of its launch. Commenting on the financial results, Huobi Global CEO Livio Weng said the rapid growth “illustrates the strong desire” from institutional investors and professional traders to invest in cryptocurrencies. The executive added:

The time has come for tools to manage the risk and volatility of cryptocurrency – particularly during bear markets, like the one we find ourselves in now.

Huobi Derivative Market was launched in beta in November. Last month the parent company, Singapore-based Huobi, announced its integration with Huobi Global, the group’s main digital assets trading platform. Also in December, Huobi DM’s daily volume exceeded $ 1 billion. On Dec. 25, the combined trading volume of both platforms reached $ 2 billion.

Huobi DM’s contract trading service allows users to take long and short positions on bitcoin core (BTC), ethereum (ETH), and eos (EOS). It also provides clients with options for arbitrage, speculation and hedging in cryptocurrency trading.

Reports of Layoffs at the Shenzhen Office

The Daily: Derivative Market Hits $  12B in Volume, Reports of Layoffs, Another ForkThe positive news about Huobi’s trading volumes coincided with Chinese media reports that the company is closing its Shenzhen branch, laying off all of its 14 employees. According to Odaily, the local subsidiary of the global exchange, which was focused on exploring innovations, was registered in October 2016 and at some point had over 20 full-time employees.

The online edition quotes multiple sources from the company who shared information about the upcoming closure of the Shenzhen office. Huobi’s director of public relations Shi Wei confirmed the plans for job cuts, stating they will affect only the worst-performing employees. She did not specify, however, the exact number of layoffs.

According to another source quoted by the business outlet Caijing, Huobi is closing its branch in Shenzhen because its activities are overlapping with those of other offices. The source also revealed some of the employees will join other Huobi branches, 8btc reported.

Major Exchanges to Support Constantinople Fork

The Daily: Derivative Market Hits $  12B in Volume, Reports of Layoffs, Another ForkLeading cryptocurrency trading platforms have announced their plans to support the upcoming Constantinople hard fork of the Ethereum network. The fork, which is expected to occur in mid-January, will reduce the block reward from 3 to 2 ETH, which in turn should decrease the circulating supply of ethereum in the future.

Ethereum core developers have also recently discussed and agreed to implement a new ASIC-resistant proof-of-work algorithm aimed at increasing the efficiency of mining with GPUs. The price of the coin with the second-largest market capitalization has increased in the past seven days, from around $ 135 to almost $ 157 at the time of writing.

In an announcement published on its website, Binance confirmed support for the Constantinople fork, asking traders to leave sufficient time for deposits to be processed in full prior to block height 7,080,000. Okex informed its customers that it will take a snapshot of all its accounts at the same block height, which is expected to occur between Jan. 14-18. Huobi Global stated it will help users to resolve any technical issues and all three exchanges promised to handle any airdrops during the hard fork.

What are your thoughts on today’s news tidbits? Tell us in the comments section.


Images courtesy of Shutterstock, Smartmockups.


At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.

The post The Daily: Derivative Market Hits $ 12B in Volume, Reports of Layoffs, Another Fork appeared first on Bitcoin News.

Bitcoin News

How Institutional Investors Are Changing the Cryptocurrency Market

January 1, 2019 |

Institutional investors trading cryptocurrency gained ground in 2018, with a number of high profile players edging in and taking a seat at the table. Increased interest from larger investors may have played a part in supporting digital assets as well as distorting the market. 

Also Read: KPMG: Institutional Investment Key to Cryptoassets Growth

Will Crypto Markets Turn Bullish Again in 2019?

How Institutional Investors Are Changing the Cryptocurrency MarketLast year, reports emerged that George Soros and the Rockefeller family were beginning to take positions in the emergent crypto asset class, according to Bloomberg. The family’s $ 26 billion Soros Fund Management was supposedly considering trading digital assets. The Rockefeller family’s VC arm, Venrock, decided to take a different approach by partnering with Coinfund to assist entrepreneurs in launching blockchain businesses. 

Mike Novogratz, the chief executive officer of Galaxy Investment Partners, said he sees Q1 and Q2 2019 as a period when more institutions will start to come into crypto. He also expects the crypto markets to turn bullish again in 2019. 

Crypto Is Not a Playground Anymore

Previously, investors were hesitant to enter the crypto markets due to high volatility and lack of regulation, but this is changing, with large players starting to take positions. How Institutional Investors Are Changing the Cryptocurrency Market

Stefan Neagu, co-founder of digital identify management system Persona, said: “BTC attracted large players, as the institutional investors saw BTC as an investment instrument. This helped the crypto market because it was not a playground anymore, but rather the sandbox of a limited group of people with money from a real economy being shifted to the crypto market.”      

In 2018, over-the-counter (OTC) market makers have thrived, with many institutional traders shifting to OTC. Etoro announced that it had opened an OTC platform for institutional buyers and Coinbase and Hodl Hodl launched OTC desks in November. 

According to cryptocurrency research group Diar, institutional cryptocurrency trading on traditional exchanges has been diminishing in volume due to BTC being welcomed into major outfit portfolios this year. There has instead been a shift to OTC trading. 

During OTC market hours, there has seen an increase in BTC trading volume by 20 percent, while Grayscale’s Bitcoin Investment Trust (GBTC) volumes were down 35 percent in 2017 vs. 2018 for the same period. It seems institutional traders might be shifting towards higher liquidity OTC physical BTC markets. 

Coinbase records more BTC trading volume than Grayscale’s Bitcoin Investment Trust (GBTC) on its OTC markets where the institutional cryptocurrency product is listed.

Liquidity Issues and Susceptibility to Manipulation

Another issue with the cryptocurrency market is low liquidity and its susceptibility to manipulation. The increased entry of institutional investors may have helped anchor the current market and distort prices.

Neagu said: “I doubt that this [increased institutional investor] interest will cause liquidity issues. I don’t see any reason why the crypto market should be different than the stock market. As for distorting the prices, I don’t think that they would see any big ripples.” He added: “Let’s remember that the Mt. Gox trustee sold $ 230 million worth of BTC in four months, and they did it using exchanges, not OTC desks. For the moment, the “weight” of these institutional players is not that big to send the BTC price down.”

Hong Kong Crypto Regulations Favor Institutional Investors

In Asia, Hong Kong’s Securities and Futures Commission (SFC) has introduced new rules which limit crypto trading to institutionHow Institutional Investors Are Changing the Cryptocurrency Marketal investors. Licensed portfolio managers and funds that invest more than 10 percent of their portfolios in virtual assets are required to obtain a license which means only qualified institutional investors will be allowed to invest in virtual asset portfolios.   

Roger Lim of Singapore-based NEO Global Capital (NGC) explains that crypto regulation in East Asia are still fragmented. However, further regulation will drive both governance and the mainstream adoption of cryptocurrencies. 

Lim said: “As institutional investors, high net worth individuals, and family offices continue to monitor and take cryptocurrency seriously, and with regulators working to improve standards and guidelines for adoption, I expect that the market will mature in parallel. If the industry can continue to shift gears and direct its attention towards this narrative of growth, I think it’s very likely that we will see a comeback in 2019.”

Crypto Custody Issues Must Be Addressed

Cryptocurrency custody lies in safeguarding crypto assets. Scarcely a month goes by without an exchange hacking, funds being lost, stolen or compromised, with little hope or possibility of recovery. It is in the interest of any financial institution holding assets for another party to lower the risk of theft.

According to the Bank of New York Mellon, there is increasing demand in the market for a traditional, established custodian to provide custody of cryptocurrencies. There have been a number of firms launching services to secure assets and there have been reports of major banks testing and in some cases rolling out crypto custody solutions. Nomura and Intercontinental Exchange have announced plans, and sources state that other major banks such as J.P. Morgan, Goldman Sachs, and Bank of New York Mellon are exploring offerings. Introduction of custody would also unlock large amounts of capital, blogs Tom Shaughnessy, founder of 51percent Crypto Research.

Coinbase has received approval from New York regulators to form a custodial firm for cryptocurrencies. Previously, CEO Brian Armstrong has acknowledged this issue stating that there is $ 10 billion of institutional money waiting on the sidelines and that the number one issue preventing these individuals from getting involved is the lack of secure custodial services. 

Will we see more institutional investors entering crypto in 2019? Let us know in the comments section below.


Images courtesy of Shutterstock.


Need to calculate your bitcoin holdings? Check our tools section.

The post How Institutional Investors Are Changing the Cryptocurrency Market appeared first on Bitcoin News.

Bitcoin News

Fear of a market meltdown has frozen this retiree’s money decisions

December 30, 2018 |

Dear Liz: I sold my home two years ago and still have not done anything with my gain of $ 200,000. It’s in a one-year certificate of deposit so at least it’s earning something while I try to figure out what to do with it. I’m 66, retired and have an IRA of $ 500,000 that’s invested in the market….


L.A. Times – Business