CryptoAM: Singapore Becomes the ICO Capital, ErisX Challenges Bakkt, and Exchanges are at Risk

Wednesday, October 3rd

🐫Happy hump day everyone. I’m writing to you from the DC CFTC fintech conference, where some major players are talking interesting topics. This morning I had a chance to talk to the CEO of Bakkt, the Chairman of the CFTC, and the head of DRW market structure. Look out for some conference notes in tomorrows CryptoAM.

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3 things you need to know:

One: Major financial institutions are supporting the development of ErisX, a Bakkt Competitor

CBOE, TD Ameritrade, DRW and other large financial firms are backing the launch of ErisX. The project itself was developed by a former Citigroup executive, Thomas Chippas, and aims to be a full service cryptocurrency derivatives exchange.

  • ErisX plans to launch the first ETH, BCH, and LTC futures markets, ushering in a new era for crypto derivatives. It is in direct competition with Bakkt, the ICE backed cryptocurrency exchange.

The takeaway: Major financial institutions are pouring in money to the cryptocurrency space, and picking horses to back. Moving forward, it’s likely we see a proliferation of regulated exchanges pop up backed by traditional players. Unregulated exchanges are now under intense scrutiny, and will likely face major issues moving forward — heightening the need for new, regulated platforms.

Go deeper: Check out the ErisX website

Two: King in the Castle — Singapore ICO issuance is now #1 in the world

Singapore has overtaken the US in monthly issuance for the first time, according to ICO research firm Elementus, accounting for roughly 16% of global monthly ICO volume

Some key points:

  • Singapore has a crypto-friendly regulatory framework in place that is attracting ICO issuers away from countries such as the US, and showing that countries that introduce clear legislation reap the benefits of innovation.

  • Also in the report, Elementus finds ICOs are also becoming more competitive for issuers, as the amount of ICOs raising at least $100k has dwindled significantly YTD

Driving the point home: The US needs to develop a clear regulatory framework around ICO issuance to attract innovators back to the country.

Go further: Read the full Elementus report

Three: Research performed by ICOrating finds exchanges incredibly vulnerable.

Volume and revenues seemed to have little impact safety, with large exchanges such as Binance, OkEX and Huobi coming in 17th, 42nd and 27th place respectively.

  • 32% of top crypto exchanges have code errors that can lead to “certain defects in operation” and only 46% have proper security practices.

  • Coinbase Pro came in first place:

Go deeper: Read the full report

Isn’t that stock photo hilarious?

Also in the news:

Market Outlook:

Quick Take

Direction: We are continuing the slow slide down past support levels, like expected. It seems we are primed for a large breakdown to the 6.2k level, as there seems to be a consistent lack of demand at key levels. There are currently no large catalysts for demand, and so I do not expect there to be an upwards spike anytime soon. If there is a move upwards, I expect it to be short lived and due to a short squeeze as margin shorts climb in number.

As you can see in the chart, our levels from yesterday have held up well, and the support has now turned resistance.

Key Support:  6500, 6440, 6300

Key Resistance: 6530, 6620, 6700

Actions: I’m net short BTC, and moving over some alt positions into USDT for now. Will flip to a long position on a break of 6700 with volume.

Fear & Greed

F&G is climbing slowly down. If we can make it fearful through a slowing of volume and a low slope decline, that bodes well for future price action. As of right now F&G is neutral, and when combined with the Bearish structure of the markets we expect further price declines.

Here’s a reminder of what these criteria mean

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Around the corner:

What I’m reading today:

You Don’t Need a Diversified Crypto Portfolio to Spread Risk: Here’s Why

Tl;dr — Don’t spread yourself too thin. Cryptocurrencies are highly correlated and you should concentrate your assets to achieve maximum potential while insulating yourself against exchange risk, black swan risk, etc. Holding a basket of currencies means you are exposed to additional idiosyncratic risks, without gaining the benefit of a diversified portfolio (which is the uncorrelated nature of a general basket).

Here is a correlation matrix. Everything is correlated. Take note.

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