CryptoAM: ETF reviews, Real Estate Tokens, and Crypto/USD Pairs Proliferate

Friday, August 24th

Resolution for next week: stop talking about ETFs so damn much.

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3 things you need to know:

One: The SEC will review the rejection of the Nine Bitcoin ETF applications. In a tweet, one of the SEC commissioners, Hester Peirce, explained that some tasks are delegated to SEC staff, and it some cases, the decisions that are reached by the staff may be reviewed by the commissioners, as is happening in this case. You may recall that Hester Peirce is the SEC commissioner who wrote a dissent on the rejection of the Winklevoss ETF.

  • Change of fortune: Does this mean that the ETFs could in fact be approved? Yes, but it’s unlikely. The reasoning the SEC staffers gave for rejecting the ETF applications were similar to the reasoning the commissioners gave when they rejected the Winklevoss ETF application. In addition — there was no specified deadline for the decision. For all we know the review may not be completed until 2019, so impact on the market is likely to be low for the next few months.

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Two: Bittrex partners with Rialto in bid to offer regulated crypto securities trading. Rialto Trading is an alternative trading system provider. With Rialto’s broker dealer license and ATS license, in partnership with Bittrex’s experience with DLT, these two companies hope to offer a comprehensive digital securities trading platform.

  • Rise up: Bittrex is currently ranked 37th largest exchange in the world with around $30 million daily volume. If/when the SEC decides to deem many of the tokens out there today as securities, Bittrex will be in an advantageous position alongside Coinbase, Robinhood, and Circle, in that it will be able to offer security token trading to US clients. .

  • USD Trading: Bittrex has opened up USD trading markets for all accounts created prior to August 1st. With a simple request form, users may also request USD deposits and withdrawals. On on hand, there aren’t nearly as many markets for USD as there are for Tether or True USD, and USD cannot easily be transferred from exchange to exchange. On the other, USD trading is certainly a safer alternative to trusting any stablecoin.

  • Infrastructure: Cryptocurrencies went truly went mainstream in late 2017. Over the past 8 months, there has been a lot of development focused on improving user experiences. Historically, the learning curve for cryptocurrency has been incredibly high. It takes some dedication to figure out all the nuances of how to buy, transfer, trade and store cryptocurrencies. Moving forward, players that make it easy to interact with crypto will capture the lions share of the market. Bittrex creating more USD pairs is a huge step in the right direction!

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Three: Indiegogo promoting real estate backed security token. The token, Aspen Coin, is a security token representing shares in trust that owns the St. Regis Aspen Resort. The token is fully SEC compliant and will be able to be purchased with USD, BTC, and ETH. The ISTO (Initial Security Token Offering) launches today with a goal of $18 million. Unfortunately as it is a security token, only accredited investors can participate in the offering :(

  • Templum: The ICO is being conducted on Templum Markets. Templum is a marketplace for issuance and trading of security token offerings. The platform is only open to accredited investors, so it’s not expected that there is much liquidity, if any.

  • Be smart: Don’t forget that it’s not illegal for non-accredited investors to buy and hold security tokens, they just can’t participate in the ICO. Once mainstream platforms such as Coinbase and Bittrex start to offer security token trading, we expect to see much more liquidity for security tokens.

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Also in the news:

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Market Outlook:

Quick Take

We’ve been hanging out in the 6.4-6.5k area on low trading volume for a considerable amount of time. After the ETF rejection and the subsequent announcement of further review for some ETFs, the market doesn’t know how to react. Be careful trading in this region, as we expect a large move, either up or down, relatively soon. We are currently in what people like to call a ‘no trade zone’.

Bullish take: The optimistic scenario is a high volume break above 6.6k, which would then likely lead to a re-test of the 6.8-6.9k resistance region. If we break above 7k, a bullish trend would be confirmed.

Bearish take: The pessimistic scenario is a high volume break down below the key 6.25-6.3k support region, leading us to a re-test of the 5.9-6k strong annual support level which bears have been unable to break thus far.

Daily Chart

The longer hold above support and bottom trendline the more likely we revisit 7k.

Fear & Greed

The market is relatively neutral, as evidenced by this prolonged period of sideways trading. Speculation in alts is picking up, and open short positions are disproportionately high relative to longs.

Here’s a reminder of what these criteria mean

Around the corner:

What I’m reading today:

The Fundamental Assumption of Crypto Systems

There are generally two types of people in cryptocurrency. Those that only care about price, and those that care about the technology. Often the people that care about technology will also care about price -- but the reverse is not true. In fact, I’d wager it’s almost never the case.

Today, we have a situation where the majority of token buyers are pure speculators hoping to make money on ICOs and tokens. This creates weird incentives for the actual developers of certain projects. If most of your investors only care about token price, then should most of your work go towards inflating token price? What happens if the work you do is important for the success of the project, but doesn’t necessarily lead to an increase in token price?

Here we’ve found the fundamental assumption (and contradiction) of Crypto systems: as the value of the network increases, the price of its token will increase.

However, as Nathan points out in this article, that is not always true. He claims that an increase in the value of a network does not always increase the price of the token. He points towards all the ICOs on the market today that have made substantial progress but have seen their token value plummet.

Can you hear that? It’s the screams of thousands of ICOs...dying in the distance….

Personally, the fact we have not seen corresponding increases in token value when network value rises has less to do with a broken token system than a horrible overvaluation of cryptocurrency projects over the past year.

It’s not necessarily a flaw with tokenized systems — but rather a flaw with the way the market has reacted to ICOs.

I’d say that in any well built system (take Augur) the “true value” of the token increases the more the system is built out. The fact that Augur crashed in price is less due to the building not increasing the “true value” of the token (which I believe it did) and more to do with the overvaluation of Augur from the start.

I think the main issue here is over-speculation (paying $100M for something that is worth $5M) and ICOs pricing themselves too high and raising too much money.

Anyways, great article -- it made me think!

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