CryptoAM: Australian Regulation, Fake News, and Energy on IOTA

Friday, September 7th

🌟Congrats everyone, we got to Friday in one piece. Bitcoin is still holding above 6400, and I’m still here writing this newsletter. Here’s a tweet by Dr. Doom (Nouriel Roubini) for some Friday morning motivation.

Also, if you have feedback for the newsletter, feel free to fill out our form! If you have any hate mail for us, submit it here.

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3 things you need to know:

One: Australian regulators to increase scrutiny. ASIC (Australian Securities and Investments Commission) has announced that it will be taking a new approach when it comes to crypto regulation and increase scrutiny on ICOs. Also, ASIC is the perfect name for an organization dealing with Bitcoin…

  • New game, old rules: The ASIC will apply the current principles it uses to regulate existing market infrastructure to crypto exchanges in an attempt to protect retail investors and consumers. For adoption, it is good that clear regulatory measures are being passed in regards to cryptocurrencies around the world. Clear and understandable regulation will help to further the industry and comfort investors, both institutional and retail, regarding the safety of their existing or potential crypto investments and the digital asset markets as a whole.

  • First time for everything: Australia has not posted any regulation specific to crypto exchanges. Last year, they just gave guidelines for companies wishing to ICO. This will add additional clarity around the digital asset markets in Australia, and will hopefully pave a clear path in which exchanges, ICOs, and others can access and participate in the market in a safe and regulatory compliant way.  

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Two: Fake news in Crypto? Unbelievable! Goldman’s CFO has announced that the reports of it shutting down plans to establish a crypto desk are “fake news”. Yes, he actually used the words “fake news” in an interview.

  • So, what’s going on with desk? No one knows when Goldman plans to launch their crypto trading desk, but plans may be delayed, as the firm decides to focus on other crypto related products and services, such as custodial services and the creation of derivatives with cryptos as the underlying. Chavez, the CFO, has stated that the bank specifically plans to engineer bitcoin derivatives product similar to the cash settled BTC futures.

    “The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they’re settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges.”

  • Slow and steady: The firm’s exploration of digital assets will not happen overnight - it will be slow and steady. As more regulation comes into place and market infrastructure evolves, we are sure that Goldman will continue to explore ways to profit from the crypto asset markets. Until the time is right, the firm will be proceeding with caution and keeping its cards close to its chest.

  • Read more…

Three: Smart energy on the blockchain. The IOTA Foundation and ENGIE Labs have partnered up to produce new smart energy ecosystems using the blockchain.

  • Experimentation, experimentation: Under the terms of the agreement, the two parties will use IOTA Tangle to test proofs-of-concept for smart energy using the blockchain.

    “The IOTA Foundation is excited to team up with ENGIE Lab to further accelerate the technology development and prototyping cycle through concrete pilots and international collaboration within the power and utilities industry. The IOTA team very much looks forward to scaling this cooperation. ENGIE Lab’s broad expertise and proactiveness in investigating new digital technologies and smart energy business models are real assets to our ecosystem.”

  • Efficiency: Using smart contracts and DLT, energy usage and management can theoretically become more seamless and efficient. While IOTA technology is wholly unproven, it still presents an promising push into the future of real time payments for utility consumption.

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Also in the news:

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Market Outlook:

Quick Take

Direction: It’s more likely than not that the market will continue on this new bearish trend, and believe that a re-test of the key annual 5.8-5.9k support is in short order.

Short term: I see 6.3k as the key short term support, any breakdown below that level would likely lead to a test of our key annual support of 5.8-5.9k.

Longer term: The longer term, key support is at the 5.8-5.9k area, which is our yearly lows. Any high-volume breakdown below this key support would likely lead to a bloodbath and a draw down to the low 5K area where support has been found in the past.

Key Support: 6300, 5900

Key Resistance: 6500, 6600, 6800

Actions: Buckle up for a bumpy ride. We are currently in what we call a ‘no-trade’ zone; it would be best to wait and see for some convincing price action in one direction or another before entering into new positions. If I see a breakdown to 6.2k, I would likely short it down to the 5.8-5.9k retest.

Daily Chart

Fear & Greed

We’ve actually upped the F&G index since yesterday, which indicates bearish action is likely to continue.

Here’s a reminder of what these criteria mean

Around the corner:

What I’m reading today:

What Caused the Bitcoin Dump on September 5th?

In which I explore the three major theories that were floating around the price action that took place on Wednesday.

It’s often an exercise in futility to ascribe price movements to specific events, but people often do so. I wrote this partially as a way to explore the reasons but also to illustrate that often the convenient narrative is wrong. Many people were blaming the Goldman Sachs article or the movement of Silk Road bitcoins — but neither of these theories actually pan out.

I present the abbreviated version of the theories here. If you want to go more in depth, check out the article!

Theory 1: Goldman’s announcement about rolling back a trading desk affected the markets, as reported by multiple headlines.

Chart says it all.

Theory 2: Silk Road Bitcoins were dumped on the market and drove down the price considerably.

Silk Road bitcoins were moved mostly to Bitfinex, so if they dumped then we would see Bitfinex going down first. However, the price charts show BitMEX was the exchange that led the dump.

Theory 3: It was a technical breakdown, and large sellers saw an opportunity to crash the price.

Massive uptick in shorts on Sept 3nd failed to drive down price.

Following the shorts failure to drive down the price, retail traders began to pile in longs as they felt safe in a seemingly “bullish” market structure.

This piling on of longs set up the market structure to be weaker, as a long squeeze became a real possibility if the price took a turn for the worse.

Of course, that’s exactly what happened, and once the price dropped, these longs were forced underwater. Retail traders will often close positions quickly when in the red, and we saw that effect take place as the dump kept cascading.

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