Thursday, September 6th
|Sep 6 2018||Public post|
📉Yesterday was absolutely insane. 24hr Bitcoin volatility is up more than 250% over the past two days after reaching yearly lows on Monday. Unfortunately for HODLers, it wasn’t an uptrend that caused this volatility.
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3 things you need to know:
One: Coinbase is considering introducing a crypto ETF. This is breaking news as of this morning, and there isn’t a ton of detail other than the fact it’s going to be a multi-crypto ETF and that Coinbase is in talks with BlackRock to help them out.
The scoop straight from the source:
Coinbase in recent weeks has held conversations with individuals from BlackRock's blockchain working group to tap into the firm's expertise at launching exchange-traded products, the people said. BlackRock, an early pioneer of the ETF market, is well-known for its iShares division.
The ETF would also likely track a number of cryptos, not just bitcoin, according to a person familiar with Coinbase's plans. A bitcoin ETF has been viewed as a natural next step in its maturation as an asset and could precipitate the entrance of more retail investors into the crypto market.
Why this doesn’t matter: If we can’t get a Bitcoin ETF approved, we definitely are not going to get a multi-crypto ETF approved. It’s likely that this is either a PR stunt by Coinbase in an attempt to draw attention to their “crypto index fund” that is purchasable directly on their website. I’ve also written extensively about the chance of an ETF approval. The conclusion? Incredibly low, due to manipulation and volatility in the markets. Those two concerns get worse (read: much worse) when you try to create a product with multiple cryptocurrencies instead of just one.
Two: IBM just launched a blockchain payments solution powered by Stellar. Another day, another blockchain move by IBM (International Blockchain Machines?). This time, IBM is venturing into a realm usually tackled by banks — international payments. Up until now, IBM has focused more on the data issues that blockchain tech can solve, and usually sell their product (Hyperledger) as a solution to companies exploring blockchain.
Stellar vs. Ripple: Stellar is a tweaked fork of Ripple, and they’re both competing for the same end goal. Cheap international transactions. There is a storied and dramatic history between the two companies. Jed McCaleb was a co-founder of Ripple, but left to found Stellar when the disagreements between him and his board of directors became too much to handle. There’s actually a great story behind the rift, penned by the New York Observer.
Protocol, not token: IBM is using an unnamed stable coin and the Stellar protocol to process these transactions. It is unclear if they will be using the native XLM token.
Real, or just FOMO? There is currently a large push by major tech consulting firms into the blockchain space. We’re seeing Deloitte, Accenture, IBM, Booz Allen and other big names jumping onto the blockchain bandwagon as corporate FOMO takes hold.
Something to keep in mind: Blockchain is a an experimental technology, especially the permissioned and private chains which most of these explorations are implementing. There is no guarantee that any of these solutions will pan out, so it’s interesting to see companies like IBM stake large amounts of capital and reputation on blockchain.
Three: A large Korean investment firm just asked Goldman Sachs for crypto advice. Korea Post, which oversees $112 billion and is run by the same South Korean government that warned virtual currencies might corrupt the nation’s youth, is trying to learn more about the crypto markets.
An excerpt from the Bloomberg interview:
Kang Seong-ju, Korea Post’s president, said in an interview that he discussed cryptocurrencies with David Solomon, the incoming chief executive of Goldman Sachs Group Inc., at a recent meeting in New York. Korea Post staff will meet with Goldman’s crypto research team in Hong Kong at the end of this month to study digital assets, blockchain and related areas such as artificial intelligence.
“I asked Goldman to pass on their know-how in the cryptocurrency area,” Kang said in an interview in Seoul. “Since cryptocurrencies are considered to have potential, and are something many people are watching, we’ll need to learn the strengths and weaknesses.”
Don’t worry, be happy: It’s pretty evident the large banks are very interested in cryptocurrencies and blockchain technology. There has been a lot noise made about traditional finance organizations turning away from the space, but nothing could be further from the truth. Keep in mind that it takes some time to set up operations, especially when dealing with an industry as new and unregulated as cryptocurrency. The fact that Goldman has a dedicated crypto research team, and are exploring custody solutions should be bullish signs for the future growth of cryptocurrency.
Also in the news:
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Direction: We’ve fallen straight back into the 6300 - 6600 zone that started in all last month. We will likely trade within this range for some time, and the direction of break will indicate further price action. If we break above 6600 on volume, 7400 is back in play. If we fall below 6300, 5800 becomes likely. I’m leaning bearish due to overall market trend and high sell volumes.
Key Support: 6300
Key Resistance: 6600
Actions: I’ll be taking out a long here with a tight stop at 6300, and will be taking profit at 6500 and 6600. I’ll be shorting the 6200 level if we break below 6300.
Fear & Greed
Fearful and ready to bounce. Incredible amount of volume has flowed out of BTC to tether over the past day according to our “Safe Haven” statistic.
Around the corner:
September 7th - EthGlobal Hackathon
September 8th - Ethereum Industry Summit
September 19th - Cboe XBT Expiration Date
What I’m reading today:
We’ve all had to explain to skeptics why we believe Bitcoin has value. Most people point out that Bitcoin “lacks intrinsic value” so why would they invest?
This is an in depth article by the venerable Jonathan Cheesman (great name), so let me boil it down to a few salient points.
Gold also has no intrinsic value (other than humans agreeing it has value)
There will be a fixed amount of Bitcoin created (21M), making it scarce
Bitcoin is governed by the millions of people in the Bitcoin network and not subject to government censorship, allowing people to store wealth outside of systems
Bitcoin removes third-party risk when it comes to financial transactions
Bitcoin has seen tremendous user growth over the past decade
Bitcoins value is self-perpetuating (see diagram)
Faith in governments has been waning, presenting an opportunity for Bitcoin to gain marketshare as a “trustworthy” currency.
In conclusion, Bitcoin represents a fantastic asymmetric investment opportunity and a natural solution to waning trust in government organizations.
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