CryptoAM: EU worries, Goldman leans in, and Polkadot closes

Happy Friday folks!

Three things you need to know:

One: EU banks feel the heat from Facebook

Image result for eu banks

Moving money between banks can be a frustrating experience. Especially internationally, the process is often fraught with fees and can take days to go from one bank to another.

This looks likely to change however among EU banks, who have been jolted by Facebook’s Libra announcement and the threat it could pose to them.

The response: A new push by the European Payments Council (EPC) for real-time payments between all banks in the Euro Zone. The end goal is to ensure that bank clients can transfer payments to any other bank in the EU instantaneously and at any hour of the day. Those last words are like music to the ears - no more having to wait on banks’ regular Monday to Friday, 9-5 schedule to make and receive payments.

Coordination between banks is key. It’s also the toughest part of the process. Real- time payments have technically been available in the continent since 2017, and the European Central Bank (ECB) has been pushing its own settlement system called TIPS since 2018. However the key is getting banks to adopt a common standard, or at least to reach a stage where these existing systems work together. The key quote, as per Piet Mallekoote, the CEO of the Dutch Payment Association:

“The challenge now is to make these mechanisms interoperable.”

Reality check: Facebook is not the only player putting pressure on these banks to adopt real time payments, nor is it necessarily the most important. There are other large players such as PayPal and Tencent, as well as Fintechs like Revolut and N26. Libra’s announcement however, with the accompanying media attention, has put bank transfer delays in the spotlight and renewed pressure to change.

The bottom line: Moving money to any place in the world instantaneously at very little cost is not a matter of if, but when. That much is obvious and is something that Fintechs, Libra and crypto companies like SendFriend are all aiming at achieving. The next great hurdle will be convincing consumers to keep the majority of their savings in companies like these as opposed to traditional banks. If anyone has recently tried to convince a friend to keep their life savings in a non-custodial wallet it’s clear - that transition is still in its nascent stages.

Two: Goldman CEO leans in on crypto

Source: Les Echos

Goldman Sachs isn’t a firm you’d likely associate with a financial revolution.
The firm has built up a colorful reputation over the years and is a bastion of the traditional financial system. And yet they’ve been actively exploring crypto for some time now, and have made investments in notable blockchain and crypto companies such as Axoni and Circle.

CEO David Solomon opined about crypto, Facebook’s Libra, and how he believes they will shape the payment system during an interview with French newspaper Les Eschos. Here are the key takeaways:

1. Speaking about Libra and stablecoins, Solomon commented:

“This is the direction in which the payment system will go. But as to whether it is this platform or one of the other fifty that people are watching that will make the most progress, I can not tell you.”

2. On whether Goldman would look at launching a currency similar to JP Morgan’s Coin:

“Assume that all major financial institutions around the world are looking at the potential of "tokenization", "stable wedge" and frictionless payments.”

3. If he thought technology companies like Facebook and Apple would threaten traditional financial companies:

“…these companies have a lot of customers and will certainly try to monetize them… however…they will try to seal partnerships with banks rather than become banks themselves. We are Apple's partners in credit cards.

The key takeaway: Here you have the leader of one of the world’s most famous financial institutions saying, on record, that the world payment system will shift towards stable digital assets. That is no small feat.

The crypto community is diverse. In recent weeks there have been countless arguments about what it stands for, the ideals it upholds, and what it actually wants the world to look like in the future. As institutions like Goldman Sachs take a greater interest in the industry, watch to see how this impacts divisions in the community and how high profile companies and figures in the industry react.

Three: Polkadot Successfully Closes 1.2B Round

Image result for polkadot blockchain

The large protocol valuations keep on coming. So far this year we’ve had Cosmos valued at over a billion at launch, Algorand valued at 24B, and now Polkadot valued at 1.2B. These valuations are high, but now that we are officially in a bull market they may make more sense.

Cosmos has performed relatively well since listing, although Algorand has seen its token shed over 50% despite the lack of supply on the market currently.

According to reporting by The Block:

Although the foundation did not specify how much it had raised, the sale is said to be on track with the protocol’s $1.2 billion valuation reported by the WSJ earlier this year. The latest round saw the foundation liquidate and sell 5% of the total token supply, meaning Polkadot’s managing team would have expected to raise $60 million, although it did not confirm the figure.

This is a continuation of a larger trend of promising projects finally going live. 2019 and 2020 are shaping up to be critical years for the growth of blockchain infrastructure. Keep an eye out on serious Ethereum competitors and also the burgeoning interoperability projects like Cosmos and Polkadot. It’s likely the protocol wars are just heating up, and over the next year or so we’ll see a lot of different competition and fragmentation.

Also in the news:

Things Happen:

Yikes — looks like traditional players are trying to make things hard…

Market Outlook:

Quick Take

Direction: Immense volatility over the last few days. ATM 1 Month volatility on Bitcoin options has increased from 86% on June 21st to 127% at the time of writing. At the beginning of the week, Bitcoin was trading at $10,800. In the next 48 hours, Bitcoin posted a monstrous 26% gain, reaching a high of $13,868 on Coinbase. Immediately after printing that high, Bitcoin crashed ~18% in 2 hours to $11,365 and then rebounded to $13,365…and then fell back down to the $11,600 level before close of day.

Phew, lot of action.

Some trading tips moving forward. $13,800 - $13,900 is a huge resistance level. As you can see in the chart above, that level is a strong monthly resistance. It will take a significant push to break that level. It’s no coincidence that Bitcoin rejected at $13,868 so violently. When you see a rejection like that after a parabolic advance, it’s a clear sign that buyers are exhausted. Shorting the bounce is a generally profitable strategy. That chart pattern is actually quite common when trading up against large resistances.

The next key level to watch is the $12,100 level. The longer we trade below $12,100 the more likely it is we take another leg down to $11,500 and then to $10,200. Moves are likely to be violent over the next week.

Once there, we’ll probably see a battle for $10,000 — but I’ll be mostly in fiat at that point! Once we break down past $10,200, I’ll be taking most of my spot profits. Right now, a good course of action is to wait. Buying a breakout of $12,100 or shorting $10,200 are both EV positive trades in my opinion.

Key Support:  $10,200

Key Resistance: $11,600

Overall Market: The overall market is looking very shaky right now. Alt coins are suffering greatly, and Bitcoin dominance is ratcheting upwards hitting 60%+. The volatility of Bitcoin is making it very difficult for alts to recover, and for the time being it seems best to stay away until Bitcoin begins to consolidate.

Further complicating the issue is the closure of Binance and other altcoin exchanges to U.S customers, who historically make up a significant portion of altcoin punters. It’s far from certain that we will see an alt-season like 2017, and if I were making bets I would stick to top 50 alt coins, and preferably those with already liquid trading pairs and engaged communities.

What I’m reading today:

CryptoWords Financial Journal ‘19

I won’t be going too in depth to this “article”, mainly because it’s a 117 page document detailing a massive amount of different valuation indicators for the Bitcoin and cryptocurrency market.

Over the last two years, this area of study has transformed significantly. When I first started looking at metrics, there were very few. Willy Woo had come out with NVT (network value to transactions) and Dmitry Kalichkin has improved NVT slightly using moving averages. Those were the two main on-chain indicators at the time.

Now, we have hundreds — with new indicators popping up every week. I’d highly suggest diving into the report above, which does a fantastic job aggregating the important and useful indicators. It’s definitely a good weekend read!

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Nothing written in CryptoAM is legal or investment advice and should not be taken as such. CryptoAM does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence.