Is history about to repeat itself? When CME and CBOE launched their bitcoin futures products it coincided with a collapse in the price of crypto across the board, so will it be a similar story with Bakkt’s physically settled BTC futures product? Nope, because coincidence is not the same as causation.
But the comparison is wide of the mark because today’s market is markedly different to the that of December 2017.
Successive attempts to regain the momentum that drove the bitcoin price to $13,800 earlier this year have come to naught.
However, it looks too early to call on whether the $10,000 support has been decisively broken and that this will not be another case of the “buy the dips” as traders ride the volatility, admitted as much.
Bitcoin is currently trading at $9,595 on Coinbase.
The hoped-for re-emergence of altcoins for a moment looked like it could be having the previously observed effect of sucking money out of bitcoin. But that rally too has stalled if not reversed on today’s reading.
Ethereum (ETH) is probably the better bellwether here, not Bitcoin. The smart contract platform token is priced 7% lower on a 24-hour view, falling back under $200 to $194.
Hopes that the halving of Litecoin block rewards would be supportive of its valuation has proven to be false. That leaves market participants with the nagging worry that bitcoin halving due in May 2020 could herald a similar pullback.
Stablecoins are a backhanded compliment to bitcoin (BTC)
But, again, the crypto world may have moved on to a degree that makes bitcoin a much more robust proposition than it was even a year ago.
Bakkt, despite its underwhelming launch, and Facebook’s Libra, but for different reasons, have brought a new resilience to the space.
ICE-owned Bakkt has laid out the red carpet for institutions, with rock-solid custody and a physically settled instrument based on regulated spot prices on regulated exchanges.
In the case of Libra, as Martin Sandbu writing in the Financial Times puts it today, it is a “’wake-up call’ for central bankers”.
Sandbu reminds us that Uruguay has just finished an “e-peso” pilot, Sweden is “about to” roll out its e-Krona pilot after much deliberation over how to account for those beyond the world of digital native millennials who still use cash.
Then there’s the big one: a Chinese state-backed digital currency issued by the PBOC and distributed by the commercial banks.
Although the well-connected Global Times says the reporting by Forbes and others on this has been inaccurate, notably it did not deny that a central bank digital currency was being built for release, just that it wasn’t imminent.
Some might worry that state-backed stablecoins will undercut the Real McCoy.
In truth, the opposite is likely to be the case because of bitcoin’s brand recognition and its worth as a sort of digital gold if not a practical digital cash.
Having said that, bitcoin payments are coming to 25,000 retail outlets in France this year in a vote of confidence in the future of money taking a cryptographically secured digital form.
State stablecoins will popularise the idea of digital currencies as Libra has done, even before its actual birth.
Altcoin take-off hopes premature
One last word on what’s going on with altcoins. The first and obvious thing to note is that not all altcoins are the same.
Secondly, because we are still at the beginning of the beginning, there is still plenty of room for a project to prove its worth, although there are likely to be some that by design are at a disadvantage.
For example, those coins that are not mined and rely on proof-of-stake (PoS) consensus protocols may have stumbled on a solution of sorts to the scaling problem but it is at the expense of security.
EOS provides a salutary example of this danger as block producers come to be dominated by Chinese outfits. In other words, the promise of distributed networks is threatened with destruction by the centralisation implicit in PoS.
So, there is still all to play for although there will be an increasing number of projects that will need to speed up their plans lest they run out of funds.
Bitfinex relaunches Tokinex as an IEO platform
Although the ICO market is dead the real action has moved to initial exchange offerings (IEO).
The latest move on that front sees Bitfinex getting in on the IEO action. Today it announced the launch (or rather relaunch) of Tokinex as the Bitfinex IEO platform.
With a word advice for already existing projects, Bitfinex chief technical officer Paolo Ardoino, said: “I think some crypto projects are too focused on short-term results and this can harm a project’s long-term prospects. We learned a lot from observing the performance of IEO’s over time and across different platforms as well. Those observations inspired us to take a step back and retool our own approach and technology, which we’re incredibly excited to share with the world.”
It looks like the first token sale will be of Kim Dotcom’s K.im coin “expected to go live in Q3 220 with K.im tokens listed for trading soon after”, according to the press release.
For Bitfinex’s sake let’s hope they get it set up right and don’t find themselves on the wrong end of attention from the Securities and Exchange Commission for selling “unregistered securities” into the US.
And they really don’t want to attract the attention of the SEC when you look at what’s happened to Canadian messaging platform Kik which is rumoured to be closing down to concentrate on crypto and its KIN token which is the subject of an SEC lawsuit with the company accused of running an unregistered securities sale.
While we are on token sales, Telegram (GRAM) is the one to watch. The messaging network is already well-established and growing and its Telegram Open Network upgrade will enable it to power e-commerce across its network and monetize various user activities.
And if crypto investors are still in need of some comfort, then they should draw solace from the money-printers at the central banks and the weakening of equity markets.
The central bank fixation on putting junk on their balance sheets and the likely drawing to a close of the equities bull market with a global recession in tow, will add to the problems of a low-yield world – that’s good news for “censorship resistant” bitcoin as it strengthens its claim to be a reliable store of value despite its volatility.