CryptoAM: Star Arrests, NASDAQ Algos, and Bitcoin in Mutual Funds

Tuesday, September 11th

Today we remember the victims, families and first responders of the 9/11 attacks. This CryptoAM is dedicated to all those affected by that fateful day.

3 things you need to know:

One: Nasdaq is diving into art of trading. Nasdaq is said to be building an analytical tool, for institutions, to predict crypto price movements.

  • Coming soon: According to insiders, the exchange is looking to add this new tool to its Analytics Hub. The hub has focused on traditional assets in the past, so this addition is a good sign of growing enthusiasm regarding cryptocurrency and the blockchain on Wall Street. NASDAQ is focusing on social media and price action to predict future prices of the top 500 cryptocurrencies.

    “The U.S. stock exchange is preparing to add tools for predicting the price movements of crypto assets to its Analytics Hub. The hub, launched last year, draws on machine learning and natural language processing (NLP) capabilities to parse through social media and other alternative data sources to give investors a better way to assess market movement.”

  • Still unclear: A spokesman for Nasdaq stated that it is still unclear whether they will launch a crypto related product or not; however, the anonymous inside source maintains that it is coming:

    “On the other hand, the source, who's working with Nasdaq on the effort, was resolute, saying that the new crypto functionality is currently being beta tested ahead of a launch targeted for November. The source told CoinDesk that the service would provide sentiment on some 500 crypto assets, and that it takes a three-pronged approach to its analysis, looking at fund flows via wallets, data from exchanges and social media.”

  • The takeaway: Big names are starting to play in the cryptocurrency trading space. It’s only going to get harder to develop trading systems with an edge from here on out.

  • Read more…

Two: Canada’s first and only regulated BTC fund, First Block Capital, has obtained mutual fund trust status. Investors can now put their fund units in self-directed registered accounts.

  • Tax benefits: The fund is only available to accredited investors, but they can now deposit those holdings into accounts that provide significant tax benefits for retirement and savings purposes. Investment advisors can now buy and redeem the trust for their accredited clients. The fund will be available to investors through NEO connect.

  • Why does this matter: We expect to see investors in the FBC fund to move their holdings over to accounts with tax benefits very soon - there is no reason not to. Further, the potential explosive growth in crypto compounded with the (new) additional tax benefits may be enough to convince a larger number of accredited investors to pour capital into the asset class through the FBC BTC fund.

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Three: The founder of OKEx, Star Xu was arrested. He was taken into questioning by the Shanghai police over alleged investment fraud.

  • The WFEE coin: The allegations center around a suspected scheme involving the WFEE coin - Star is an investor in WFee, thus he has been identified as a person of interest in the case. WFee is a decentralized WiFi sharing ecosystem built on blockchain technology. The company issued a native token, WFEE, coincidentally (or not - Star is an investor in the company, after all) OKEx was the world’s first exchange to list the token in March of this year.

  • Law and order in the Wild West: The days of shady activity in the digital asset space going unpunished are in the past. Governments and regulatory agencies across the world are creating guidelines and regulations for this nascent, fast growing asset class. Now that global governments are taking this space seriously and even exploring crypto and blockchain implementations within governmental agencies, the justice system has the basis and impetus to prosecute and bring fraudulent actors to justice.

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Bonus Round: A federal judge has ruled that U.S. securities laws may cover an initial coin offering. This hands the government a legal victory in its effort to regulate billions of dollars in cryptocurrency offerings.

  • The money quote:

    “Per the indictment, no diamonds or real estate, or any coins, tokens, or currency of any imaginable sort, ever existed -- despite promises made to investors to the contrary," Dearie said in his ruling. “Simply labeling an investment opportunity as a ‘virtual currency’ or ‘cryptocurrency’ does not transform an investment contract -- a security -- into a currency.”

  • What this means for you: Right now, nothing. This ruling dealt with a specific case, but it sets precedent for further rulings. Keep an eye out, and make sure to be mindful when investing in ICOs.

  • Read more…

Also in the news:

Market Outlook:

Quick Take

Direction: BTC continues to hold ground in the 6.2-6.4K area; we expect this period of sideways trading to continue in the short term followed by a large move. Sentiment remains bearish, and will continue to remain so. It’s unlikely bulls reclaiming the spotlight anytime soon, absent some big, positive news.

Key Support:  6175, 6100

Key Resistance: 6400, 6480

Actions: We continue to trade in a band between 6.15-6.4K. This is still a no-trade zone, and we don’t plan on entering new positions until a trend is confirmed with a strong candle, whether it be bullish or bearish. Sometimes in these markets, the best trade you can make is not making a trade at all. It may be smart to reduce your exposure to cryptocurrency here, as we may be in for a retest of yearly lows.

Daily Chart

Chart from yesterday is still valid.

Fear & Greed

We are getting less fearful, which diminishes the chances that Bitcoin is in oversold territory. This makes me lean towards expecting further price depreciation.

Here’s a reminder of what these criteria mean

Around the corner:

What I’m reading today:

Olaf Carlson-Wee Rode the Bitcoin Boom to Silicon Valley Riches. Can He Survive the Crash?

For those who don’t know, Olaf CW is the founder of Polychain Capital, the largest cryptocurrency hedge fund. They delivered an insane 2,303% profit for investors last year. Olaf himself turned 14k into a $150M fortune in just a few years.

This great piece by the Wall Street Journal dives into the more recent struggles of Polychain, and Olaf’s brazen attitude towards the recent crash of the markets. Highly suggested read for those that are interested in how people deal with crisis.

Polychain has shed around 40% of the $800 million it made for clients last year through a combination of investment losses and withdrawals by some of its earliest investors. Some backers grumble that Mr. Carlson-Wee refuses to change tactics despite a broad pullback from crypto. Mr. Carlson-Wee cashed out a big chunk of his personal haul in the fund months ago.

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