Crypto Market Strongly Reacts While US Stock Market Sells Off

Lesson: Be Careful What You Wish For

Late yesterday we saw an absolutely massive sell-off that shaved 15 Billion off the total market cap within the span of hours.

The two competing explanations making the rounds today focused on the descending triangle we’ve been in since February, and that the US Stock Market melted down yesterday.

Whatever the culprit, remember that we’re still in a bear market and at times you don’t need anything other than that to explain why the market dropped.

I will say our warnings about the $6,500 level turned out to be very true: once it broke through that, there wasn’t a floor for BTC to stand on until $6,300.

What’s interesting is that even in the midst of all this chaos, we’re still seeing some optimistic trading occurring.

After months of speculation, 0x (ZRX) was added to Coinbase today, making it the 6th cryptoasset to join the selective list.

Don’t fret if you missed the pump, however. Even if you had bought right before the news, and sold right at the top, you would have only made 23%. Yes, crypto traders are a bit entitled, but understand that it wasn’t earth-shattering.

Now, this draws us to the announcement that Coinbase made in June regarding the 5 assets they were considering for listing: Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC) and 0x (ZRX).

Obviously, 0x made the cut, but it begs the question: which one(s) will be next?

Quite frankly, they’re all very solid bets and arguments could be made for any of them. For example, Stellar is looking at legal ICOs and a fee-less peer-to-peer marketplace that lists every asset class, such as crypto, fiat, bonds, and commodities.

Or ZCash which is targeting October 28th for their Sapling network upgrade, a major feature enhancement to the Zcash network. Sapling represents years of engineering and cryptographic breakthroughs designed to improve shielded, private transactions. This represents an important upgrade and technological advancement to Privacy and zk-SNARKS, and Ethereum founder Vitalik Buterin believes that Ethereum can use Zcash’s ZK-SNARKS technology to scale the ETH protocol by more than 3000%. Not to mention, Zcash is already trading on Gemini, Coinbase’s US competitor.

Of course, there’s also coins that weren’t among the 5 listed, such as Ripple. With a conveyor belt of new companies using xRapid, there will likely be a demand to trade Ripple on more platforms in the US. Likely that decision has been delayed due to concerns that XRP constitutes a security, but it could be argued that seeing XRP being used in production as a utility helps its case. We’ll see.

The takeaway from this is that a Coinbase listing does not represent the power it once held. With institutional competition on the horizon in the form of Bakkt, ErisX, and even Goldman-backed Circle acquiring SeedInvest to pursue Security Tokens, Coinbase could soon find itself one among many instead of the dominant power it represented the past couple years.

Add on to that a new report today from Crypto Fund Research that indicates that 90 crypto hedge funds have launched so far in the first nine months of 2018, with an extrapolated projection of 120 new crypto hedge funds in 2018, indicating crypto oriented hedge funds represent 20% of all new hedge funds. This is a solid indication of how the crypto space is becoming relevant to mainstream investors.

But, Coinbase is smart, and they know this game is about more than just money (though it certainly helps).  

If we are indeed creating a whole new ecosystem, rather than just a new asset class, then we’ll need companies like Coinbase and Gemini pushing forward the interests of those concerned about the underlying technology.

We’ll need coordinated efforts on all fronts of this space: technology, regulation, market infrastructure, and adoption. It’s going to take a lot more than just new money entering the space to change things. But, thankfully, that’s precisely what the soul of crypto represents: change in the face of unwavering odds.

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Defensive Actions for the next trading day: 

• None.