CryptoAM: $416M Liq'd, ICE Ice Baby, and the Brits Get a Small Win

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Happy Friday everyone!


3 things you need to know:

One: Intercontinental Exchange is launching a ecosystem and trading platform for crypto. ICE, the owner of the NYSE, announced today that it plans to form a new company, Bakkt, which intends to leverage Microsoft cloud solutions to create an open and regulated, global ecosystem for digital assets.

  • Big news: ICE is the world’s leading exchange operator, and the owner of the NYSE. If anyone has the clout to build a digital asset exchange, it’s them. There’s been a lot of talk about an ETF, but this could be even bigger. ICE is roping in big names to expand the platform. They announced a partnership with Starbucks, who will leverage the platform to allow their customers to convert their digital assets into US dollars at their coffee shops.

  • Coming soon: The new venture, which is expected to launch in November, will offer a federally regulated market for Bitcoin. With the creation of Bakkt, ICE aims to transform Bitcoin into a trusted global currency with broad usage.

  • Money quote: “In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets," - ICE CEO Jeffrey Sprecher

  • Takeaway: Retailers have been hesitant to accept cryptocurrencies because of the risk and expertise needed to account for crypto payments. While it’s relatively easy to accept crypto, it’s very difficult for large retailers to account, track and store large amounts of crypto. A system that allows for easy reconciliation, tracking and fast transactions would speed up adoption immensely. This is the biggest news of the year and cannot be understated!

  • Read more…

Two: $416 million long gets liq’d, and takes down OKex. On July 31 on OKEx exchange, a $416M long was forcefully liquidated by an automated risk management system. The trader, nor OKEx was able to fully cover the liquidation, and as a result a clawback occurred. All traders who had unrealized gains on the three contracts expiring that week took an 18% cut to their profits. People are pissed…

  • Rekt: After the trader entered the position, OKEx called him/her to ask them to close some of their positions in order to reduce the risk. The trader refused, and then the price of BTC tumbled (lol).

  • New policies: This mega liquidation also caused OKEx to review and update their risk management policies. Notably, you will be forcefully liquidated earlier in order to prevent claw backs from occurring. Previously, OKex implemented a “socialized loss” policy which would use profits from the traders in the green to cover any additional losses that were due traders in the red not having enough initial margin to pay for their losses.

  • Some perspective: Any true exchange like the NASDAQ or CME must be regulated, and acts as the counter-party of every trade. They are required to insure that every party involved with a trade has placed enough initial margin to avoid situations like the OKex one. In addition, there is daily settlement process to ensure that every participant has enough "maintenance margin". OKex had none of these safeguards in place, mostly because they didn’t anticipate such large liquidations happening on their platform. The failure here lies solely on the shoulders of OKex.

  • Last point: Exchanges in the crypto world are incredibly difficult to build. Traditional exchanges are just matching engines for traders and do not deal with any other aspects of trading such as settlement or custody. Crypto exchanges on the other hand act as a matching engine, clearing firm, custodian, prime brokerage and more. If you’re trading on margin, it’s best to do it on the tried & true exchanges. It’s no wonder exchanges fail fast & often. Building them is hard!

  • Read more…

Three: UK Customers can now buy Bitcoin with their Pounds. Previously UK customers had to convert from Pound to Euro and then to Crypto. This will mean less fees and fasters buys/sells for customers from Great Britain. It also puts Coinbase in a much more advantageous position to serve institutional customers which need high speed and high limit transfers to enter and exit positions as needed.

  • Coinbase@coinbase

    Coinbase GBP support is now live for many customers and we will continue rolling out availability to all UK customers in the coming weeks. 🎉

    August 1, 2018

  • Market Share: In the UK, Coinbase accounts for around 20% of the GBP/BTC volume. This is second to Luno who represents around 58% of GBP/BTC volume.

  • Read more…


Also in the news:


What I’m reading today:

The Eureka Moment That Made Bitcoin Possible

Here’s an article for some Friday fun :)

In 1990 physicist, Scott Stornetta, and cryptographer, Stuart Haber, were thinking about how to verify the authenticity and integrity of digital files, given the relative ease of altering digital files. While sitting at a Friendly’s restaurant, Stornetta realized that the solution was to have many dispersed copies of a file so that if one was altered, it would be easy to invalidate it.

Their solution compromised of hashing information together with a timestamp, and then including hashed data from past entries into future entries, creating a cryptographically linked chain of entries. Copies of the chain would be kept by multiple people which would ensure that no centralized party could determine the validity of the chain. This was not called a blockchain at the time, but is undoubtedly the foundation of Bitcoin’s core innovation which we know as blockchain. Three of the eight citations in Satoshi Nakamoto’s Bitcoin whitepaper are attributed to papers co-authored by Haber and Stornetta.

Haber and Stornetta do not dwell on the fact that patent for their “blockchain” tech expired before Bitcoin. They are happy that their innovation was used on arguably one of the most revolutionary technologies of the modern day.

If Satoshi is the father or mother of Bitcoin, Haber and Stornetta are its grandparents!


Around the corner:


Market Outlook:

Quick Take

After rejected the 7.6k, we broke down and bounced off weak support at 7.2k. We still have a bearish market structure and I’m looking for a retest of 7.2k based on technicals.

As the ICE news today, we may see an influx of buyers, so the key level to watch for is 7480. If we are closing consistently above that level, it’s likely we will start to see a trend upwards. in the coming days. Sell volume has been dissipating as we find buyers below the 7.3k mark, which is an indicator of bullishness.

Daily Chart

Fear & Greed

We’re slowly trending down here, and fearfulness is growing. If we continue to see volume dissipate, and we stay above 7480, we are likely to see a bump.

Here’s a reminder of what these criteria mean

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CryptoAM is a Ledger Group project. We offer consultancy, advisory and investing services for both established companies and start-ups interested in the blockchain & digital asset space.