Bitcoin Trades Sideways As Investors Look To China
Bitcoin prices have been trading sideways for the last few weeks, moving within a reasonably tight range as many investors wait to see what China’s regulatory environment will look like going forward.
The digital currency’s price has primarily traded below $4,000 since September 14, according to the CoinDesk Bitcoin Price Index (BPI).
The currency has suffered this malaise after surging to more than $5,000 on September 2 and then promptly falling back from that level.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Following this decline, Bitcoin prices, along with the price of many other digital currencies, pushed higher, but encountered some difficulty as the regulatory environment for these digital assets became increasingly uncertain.
Chinese authorities banned initial coin offerings (ICOs) on September 4, according to CoinDesk. This came after the nation’s government officials investigated the exchanges, as well as them permitting no-fee trading, earlier this year.
Later that month, China’s already complex regulatory situation took a new turn when the nation’s three largest exchanges announced that within the next few months, they would stop offering local trading, TechCrunch reported.
Wait And See
Now, many Bitcoin investors are adopting a “wait and see” approach to see what China does next, according to several analysts.
“People are looking for clarity from China,” said Arthur Hayes, co-founder and CEO of leveraged cryptocurrency exchange BitMEX. Traders are “evaluating” the effects that new restrictions will have on the markets, he added.
Lucas Geiger, founder and CEO of Wireline, offered similar input, stating that “the regulation issues are casting a shadow” that likely worries those who are on “on the fence” about getting involved with cryptocurrencies.
Ryan Rabaglia, head trader for Octagon Strategy, shed some light on how this “wait and see” situation was impacting markets, stating that traditional volume has fallen across the board.
These market observers may get the clarity they are looking for very soon, said Pawel Kuskowski, CEO & co-founder of Coinfirm, a blockchain and regulatory technology firm.
“There are obviously some valid concerns from the regulators,” he said, asserting that the industry is quickly learning the impact of these requirements.
“So I think soon we see more and more ‘traditional’ players coming to this market and they will be strictly compliant,” said Kuskowski. “This will push the price up.”
Tailwinds For Bitcoin
Kuskowski is certainly not the only market observer who has asserted that regulation could have a positive effect on digital currency prices.
Geiger, for example, spoke to the upward price movement that Bitcoin enjoyed earlier this year as Japan recognized the cryptocurrency as a legal payment method.
“In my opinion the bull run coincided with positive regulatory information in the spring coming from Japan,” a development that “brought new participants to the market.”
Geiger insisted that in recent months, digital currency prices have risen as investors have entered the market.
A Healthy Pause
While Bitcoin prices have been moving range-bound for the last few weeks, this period of relative calm has taken place after the digital asset enjoyed a meteoric rise, causing its price to surge more than 400% this year.
After such a sharp climb, moving within a modest range could simply represent a healthy pause, said analysts.
“Cryptos were probably a little ahead of themselves when BTC was trading toward $5,000,” said Sean Walsh, partner at Redwood City Ventures.
Tim Enneking, managing director of Crypto Asset Management, offered similar sentiment, stating that “it’s healthy to take a pause” after experiencing such sharp price increases.
What The Future Holds
Going forward, some analysts are very optimistic. Geiger has described the growth of the digital currency market as “structural,” emphasizing that many players have been getting involved, causing the market to grow rapidly.
Marshall Swatt, an entrepreneur who founded cryptocurrency exchange Coinsetter, which was acquired by Kraken, provided a bullish stance on these digital assets.
Even though China was at one point considered the center of Bitcoin, Swatt asserted that cryptocurrencies will continue to grow regardless of what the Asian nation opts to do.
One analyst, Kevin Zhou, had a more neutral stance on the matter.
“I think it’s a bit hard to say right now whether the bull market will resume or whether we are at an inflection point,” said Zhou, co-founder of cryptocurrency trading fund Galois Capital.
“We’ve been in a bull market all year and if we really hit an inflection point here, we could see a more sustained pullback in both severity and time.”
Disclosure: I own some Bitcoin and Ether.
Written by Charles Bovaird
Gibraltar Financial Service Commission Plans Framework for ICOs
On 22 September the Gibraltar Financial Service Commission (GFSC) released a statement on Initial Coin Offerings (ICOs) that shows promise for the future of the industry in Gibraltar. The statement outlined the important role tokens play in raising finance for early stage startups and proposed to introduce a new regulatory framework as early as January 2018 to ensure that Gibraltar continues to be a ‘sound and safe place to do business’.
“A new regulatory framework for DLT which will become operational as from January 2018 will regulate the activities of firms, operating in or from Gibraltar, that use DLT to store or transmit value belonging to others, such as virtual currency exchanges”
This is good news for current and future enterprises looking to launch token sales out of Gibraltar. The number of projects approaching TokenMarket to undertake token distribution has risen dramatically throughout 2017, but a considered regulatory framework is still lacking in the global arena. TokenMarket welcomes any such assistance and assurance the GFSC can provide to this emergent ecosystem to ensure we can continue to foster tokenization as a means of launching some of the world’s brightest new startups.
Statement on Initial Coin Offerings
22 Sep 17
The Gibraltar Financial Services Commission (GFSC) has noticed the increasing use of tokens or coins based on Distributed Ledger Technology (DLT) as a means of raising finance, especially by early-stage start-ups. The sale of such tokens is often conducted using terms such as initial coin offering (ICO), token sale, initial token offering and the like.
A new regulatory framework for DLT which will become operational as from January 2018 will regulate the activities of firms, operating in or from Gibraltar, that use DLT to store or transmit value belonging to others, such as virtual currency exchanges.
Gibraltar is committed to being a sound and safe place to do business with and is considering a complementary regulatory framework covering the promotion and sale of tokens, aligned with the DLT framework.
ICOs are an unregulated means of raising finance in a venture or project, usually at an early-stage and often one whose products and services have not yet been significantly designed, built or tested, yet alone made operational or generating revenue. Such forms of crowdfunding are often used by start-ups to bypass the rigorous and regulated capital-raising process required by venture capitalists or financial institutions. In an ICO, tokens are sold to early supporters of a project in exchange for cash or cryptocurrency, such as bitcoin or ether.
Tokens vary widely in design and purpose. In some cases, tokens represent securities, such as shares in a company, and their promotion and sale are regulated as such. More often, tokens serve some cryptocurrency or functional use that is unregulated, such as prepayment for access to a product or service that is to be developed using funds raised in the ICO.
New ventures are highly-speculative and risky, and early-stage financing is often best undertaken by experienced investors who are familiar with assessing the nature of a project and its business plan, the technical characteristics of proposed products, the market for those products, and the capabilities of founders and their team. Experienced investors know how to evaluate the likelihood of success and that more high-risk ventures fail than succeed, and they understand only to invest such sums as they can afford to lose.
Anyone considering investing in tokens through an ICO is advised to consider the following:
- Regulation: Do you understand that tokens and ICOs are unregulated and that you have no recourse to any regulatory authority, financial compensation scheme or ombudsman?
- Volatility: Are you aware that the value of a token may be highly volatile and there may be no way for you trade or sell tokens?
- Disclosures: ICO whitepapers are unregulated and may contain inadequate, inaccurate or misleading statements and disclosures. Are you satisfied you have all the information necessary to make an informed decision?
- Risk appetite: Recognising that investing in early-stage startups is high risk and speculative, can you afford to lose your entire investment?
In common with regulators around the world, the GFSC continues to monitor the use of unregulated tokens as a means of raising finance. ”
Story by TokenMarket, Statement
Payment or Asset? Bitcoin’s Limbo Is Leaving Merchants in the Middle
Word that South Africa’s second-largest supermarket might accept bitcoin sent twitters of excitement through the cryptocurrency community last week – that is, until it emerged that, actually, they weren’t going to.
At least not yet, and probably not for a while, if ever.
In a prime example of rapid reporting, headlines proclaiming mainstream adoption (in supermarket aisles at least) jumbled up the news. Pick n Pay was testing bitcoin acceptance, not rolling it out across its network.
In an interview with BusinessDay, the chain’s deputy CEO Richard van Rensburg highlighted two interesting points that paint a much bigger picture.
One is that the authorities have yet to establish a regulatory framework to manage cryptocurrency risks. This is true for most jurisdictions. Earlier this year, Japan passed a law that recognized bitcoin as a legal method of payment. Since then, several large retailers in the country have announced that they will accept (or are considering accepting) bitcoin as payment.
That doesn’t mean that a significant number of people are using it as such, however.
This brings us to van Rensburg’s second point: there’s not a clear business case for accepting bitcoin.
This may seem like a small detail, but it could end up guiding the development of the bitcoin market.
Why would stores accept bitcoin? Drawbacks include rising transaction fees, erratic confirmation times and the cost of retooling.
Advantages include the “cool factor” and the publicity that announced tests and implementation generates. Some retailers see it as an opportunity to broaden the market. And for bitcoin believers, there’s the assumption that it’s a currency and therefore should be accepted.
But its usefulness as a currency is debated.
Bitcoin was originally designed for “electronic transactions without relying on trust.” Since its inception, however, it has evolved into a different type of financial instrument. It can be used for payments and transactions, but its limitations mean that it is not practical for most purchases, and expectations of it replacing fiat have dwindled.
On the other hand, the entrance of institutional funds and small savers into the market highlights its value as an investment vehicle. Its recent performance has attracted even more investors, which further consolidates its character as an “asset” rather than a “currency.”
Meanwhile, after a flurry of bitcoin activity from merchants a couple of years ago, interest has dwindled. Several large retailers accepting bitcoin report that customer engagement is minimal. And regulatory uncertainty in most jurisdictions makes stores wary of investing in the process.
Could the tide be turning?
Interest continues to trickle in from retailers and services, including some local governments. And the “wealth effect” theorizes that holders, emboldened by their new riches, will be more willing spend some of their bitcoin.
However, the concerns expressed by Pick n Pay’s CEO – no doubt shared by many others – are likely to act as barriers to commercial adoption around the world.
While the number of purchases with bitcoin will probably increase as the sheer volume of transactions continues to climb, the bulk of the growth will most likely come from other use cases. Part of that will come from practical applications such as cross-border transfers. Nevertheless, the recent cultural emphasis on the investment potential does point to a change in perception.
A shift in focus from bitcoin-as-a-means-of-payment to bitcoin-as-an-investment could have longer-term implications for development. Lowering transaction costs and working on sidechains would become less of a priority, enhancing security and trading venues more so.
Regulatory clarity could gather pace. The multifaceted nature of bitcoin is difficult for regulators to get their head around – a more focused approach would make it easier to draw up specific protections, which in turn could further encourage a certain type of use.
And confusion amongst the mainstream media and general public could gradually give way to an understanding that this new technology is not a threat to the established system – it can complement it, become part of it and help it to evolve.
Out of sync concept via Shutterstock Story written by CoinDesk
Government Debt Getting Downgraded, Thankfully Bitcoin Backed Only By Math
The biggest argument against cryptocurrencies is that unlike fiat currencies, they do not have the backing of any government. As multiple rating downgrades show, government support isn’t what it used to be.
Thumbs down to Britain
Moody’s downgraded the credit rating of the United Kingdom from Aa1 to Aa2 on September 22, citing weakening public finances and calling into question the Government’s fiscal consolidation plans. The pound sterling, which had been slowly recovering following the Brexit debacle, promptly lost ground after the rating downgrade. Other rating agencies like S&P and Fitch had downgraded the UK to AA in 2016.
The UK suffered its first ratings downgrade, from Moody’s and Fitch, in 2013. This ended a 35 year period of being rated AAA, and it’s been a downward slide ever since.
China in a soup
A day before the UK was downgraded by Moody’s, S&P cut the sovereign rating of China, downgrading it from AA- to A+. According to S&P, China’s prolonged credit growth had increased its economic and financial risk. The rating cut brought S&P’s rating in line with other rating agencies. It is ironic that China had taken action against ICOs and cryptocurrency exchanges shortly before its own rating was downgraded.
US and Japan drift downwards
Though the sovereign ratings of the United States and Japan have not been cut recently, the trend has been negative. The US was downgraded by S&P from AAA to AA+ in 2011, after being AAA rated for 70 years. Since the dollar is the primary reserve currency of the world, the rating of the United States government has great significance in the global financial markets. With the US national debt crossing $20 tln recently, the country’s creditworthiness likely isn’t improving any time soon. Japan, which was last Aaa rated by Moody’s in 2009, has seen multiple rating cuts in the last eight years. It is currently rated A1/A+ by Moody’s / S&P.
Is government backing Important?
A fiat currency derives its value from the support of the government. While currencies were initially backed by gold, governments across the world felt that this was restricting their ability to print currency and expand their economies, and withdrew from the gold standard long ago. Today, the US dollar, like all fiat currencies, is solely backed by the “full faith and credit” of the nation’s government. Clearly, this “faith and credit” isn’t what it used to be.
Misguided government policies can result in the value of fiat currency depreciating rapidly. Thankfully, Bitcoin is backed by math and nothing else.
Written By Jacob J at Cointelegraph
Cryptocurrency Job Openings Double in Last 6 Months
It is no secret that the crypto world is booming. A recent report from AngelList, the online job postings in cryptocurrency related fields have increased exponentially as companies seek new talents to help fill needs of the growing marketplace.
The report indicates that in the first half of 2017, more money was invested in cryptocurrency startups than all of 2016 combined. The increasing number of startups has also coincided with an increasing number of job postings within the AngelList platform. The report said:
“As cryptocurrency companies are growing, raising larger amounts of money at higher valuations, so are their hiring needs for finding top talent. The number of job listings on AngelList by cryptocurrency companies have nearly doubled in the last six months.”
The report also suggests that there are reasons to join the cryptocurrency hiring boom. First, within AngelList, nontechnical and technical cryptocurrency jobs pay, on average, 10 to 20 percent more than the industry norm. Further, they offer better benefits.
Second, cryptocurrency companies have far more flexible remote working perks. In fact, within cryptocurrency companies, employees are 22 percent more likely to have remote working freedom.
Third, cryptocurrency companies, and especially ICOs, offer far superior liquidity options. Typical equity positions require a liquidity event in order to be sold and have complex restrictions. ICOs generally offer employees coins as part equity positions. While those coins may still have some restrictions, they are far more liquid that options.
Technical and not
The site reportedly has 2,500+ technical role positions and 1,000+ non-technical positions available. Additionally, rather than looking for those with substantial technical awareness, the companies are looking for employees who are willing to learn. The report indicates:
“Usually, deep knowledge of the Blockchain is not a requirement. Companies are looking for a willingness to learn, ability to contribute right off the bat, and genuine interest in the market.”
The report, as a whole, indicates that the cryptocurrency market is growing rapidly, and will continue to grow as the market continues to embrace the revolutionary new technology.
Written by Cointelegraph
Cryptocurrency – Still a Long Journey Ahead
There still needs to be a lot of development and scaling work done in order for Ethereum and other cryptocurrencies such as Bitcoin to overtake existing financial systems, explained Ethereum co-founder Vitalik Buterin in an interview with prominent venture capital investor Naval Ravikant at the Disrupt SF 2017 conference hosted by TechCrunch.
Before delving into the scalability issues of Bitcoin and Ethereum, it is important to acknowledge that scaling decentralized Blockchain networks is far more difficult than expanding centralized systems. With permissioned or closed networks like Visa and PayPal, it is relatively easy and less expensive to become more flexible and serve billions of users.
But, Bitcoin and Ethereum focus on security and prioritize decentralization by operating on top of the Blockchain, a transparent ledger which processes and facilitates the transfer of data.
Scaling solutions that have been integrated into Bitcoin and Ethereum and alternative technologies which are currently being developed by the open-source development communities of the two Blockchain networks are unprecedented. With the development of on-chain, off-chain and two-layer solutions, developers are attempting to optimize the way the Blockchain networks process transactions and smart contracts.
The development of scaling solutions itself is already difficult but reaching consensus amongst developers, miners, users, businesses and node operators is also a real challenge. For instance, it took the Bitcoin community and industry over a year to implement the Bitcoin Core development team’s Segregated Witness (SegWit), which so far has demonstrated successful scaling of the Bitcoin network.
As Buterin explained:
“Bitcoin is currently processing a bit less than three transactions per second and if it goes close to four, it is already at peak capacity. Ethereum has been doing five per second and if it goes above six, then it is also at peak capacity. On the other hand, Uber on average does 12 rides per second, PayPal several hundred, Visa several thousand, major stock exchanges tens of thousands, and in IoT, you’re talking hundreds of thousands per second.”
For Bitcoin and Ethereum to surpass Visa, PayPal and stock exchanges in terms of processing volume and scalability, developers must come up with innovative, efficient and robust scaling solutions. If Ethereum and Bitcoin evolve into multi-trillion dollar financial and Blockchain networks, the current framework and scaling solutions will not be sufficient.
Both Bitcoin and Ethereum are targeting the development of on-chain and off-chain solutions. Famously, Coinbase co-founder Fred Ehrsam noted in an analytical blog post that the Ethereum network must improve by a factor of 100-fold in regards to scalability just to serve decentralized applications with millions of users.
“There already is really a lot of institutional hype in the space and just public hype. So when you have Vladimir Putin having known what Blockchains and Ethereum are and Paris Hilton going out promoting ICOs on Twitter, that’s peak hype. But the reason why a lot of this hasn’t materialized into action yet is precisely because of some of these technical obstacles that make Blockchains work okay for niche use cases but not really for work well for mainstream use,” explained Buterin.
He further emphasized that the Ethereum Foundation and developers in the open-source community are working very hard to introduce scalability solutions. Plasma, sharding and Metropolis are only a few of scaling solutions that Ethereum developers are actively testing and trying to implement.
Written by Joseph Young at Cointelegraph
Unverified Rumor Circulating That Amazon May Accept Bitcoin By October
Rumors are circulating that Amazon may begin accepting Bitcoin as a payment method this October. The rumors appear to stem from a recent report on squawker.org, Some surveys have indicated that the company would have a financial reason to do so, but no official announcement has been made.
The squawker.org article references a mention in investor James Altucher’s newsletter. According to the source, Altucher is an experienced trader who many believe could have pre-announcement information. The article comments:
“James Altucher has (co)founded more than 20 companies, authored 11 books, and has been a contributor to several major publications.He is a former hedge fund manager and venture capitalist turned activist blogger/podcaster and offers a subscription based mailing list – the source of the Amazon information.”
Such an announcement is a long shot, but isn’t inconceivable. As online retailers begin to embrace Bitcoin, Amazon will likely respond in kind, in order to maintain its dominance. Overstock CEO Patrick Byrne said:
“They have to follow suit. I’d be stunned if they don’t, because they can’t just cede that part of the market to us, if we’re the only main, large retail site accepting Bitcoin.”
The move would also continue a trend that began with Overstock and has included other enterprise-level tech companies. A recent comment within a Google API tutorial has led many to believe that the online behemoth will also begin accepting Bitcoin within the Google Store, as PayPal and others already do.
As recently as this summer, users were petitioning Jeff Bezos, CEO of Amazon, to begin accepting the cryptocurrency. The move may occur as early as October 26th, during the next earnings conference call.
It should be reiterated that this is likely only a rumor at this point, and could be swiftly put to rest. Nonetheless, it is interesting to speculate on the possibilities if Amazon does one day integrate Bitcoin. As the adoption of Bitcoin and cryptocurrencies grow, retailers will need to join the progression toward acceptance in order to remain relevant.
Written by Jon Buck at cointelegraph
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