Markets Continue Sell-Off 

Bitcoin Drops $1,000 In Two Days

Today the market fell further, finding equilibrium around 200 Billion.

Interestingly, the news that acted as the catalyst for the initial drop, Goldman dropping their plans to launch a cryptocurrency trading desk, was outed as false today.

“I never thought I would hear myself use this term but I really have to describe that news as fake news,” Goldman Sachs Chief Financial Officer Martin Chavez said.

Instead, the CFO said Goldman is working on a type of derivative for bitcoin because “clients want it.”

“The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they’re settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges,” Chavez said.

It’s been clear that Goldman has had interest in offering a crypto option for their clients for some time, but it hasn’t been clear just to what extent they were planning to go.

This week’s dip, once again predicated on literally nothing other than misconceptions, once again reminds us that this market is manipulated, irrational, and massively speculative. This is the price you must pay in order to ride the potential upswings and long term gains.

Still, it was not all bad today.

On the ETF front, we received two pieces of news that could really turn the tide ever more in favor of expanded institutional investment.

If reports are to be believed, Coinbase has sought help from $6 trillion Wall Street giant BlackRock for its ETF application. As reported, Coinbase has held conversations with BlackRock’s blockchain working group to tap into the firm’s expertise at launching exchange-traded products. BlackRock, an early pioneer of the ETF market, is well known for its iShares division.  It remains unclear whether the talks were a one-off or part of ongoing conversations between Coinbase and BlackRock.

While the development could be positive, one has to remember the independently BlackRock had confirmed it had no interest in being a crypto fund issuer. Furthermore, CEO Larry Fink has said the firm’s clients have expressed zero interest in the $300 billion markets for digital currencies, referring to bitcoin as an “index of money laundering”. We will have to wait and see what comes out of these meetings between Coinbase and Blackrock.

The second piece of news is that the Trump administration has made its 4th appointment to the Securities Exchange Commission in form of Elad Roisman a Republican from Maine. In July, Roisman touched on what will be a series of landmark decisions on cryptocurrency made by the Commission, saying:

“…the SEC must examine and re-examine its rules, regulations, and guidelines to ensure that they are still working as intended to accomplish the SEC’s mission. This is most recently manifested in areas such as data protection and cybersecurity, as well as the emergence of new investments and technologies such as initial coin offerings and blockchain. It is essential that the SEC approach these new challenges in a fair and transparent manner, provide clarity and certainty to the markets and investors, and enforce the laws and regulations that hold market participants accountable.”

With Elad Roisman’s appointment the equation at SEC becomes very interesting. The commission now looks like Chairman — Jay Clayton (I), Commissioner — Robert Jackson, Jr. (D), Commissioner — Hester Peirce (R), Commissioner — Elad Roisman (R).

The fifth Commissioner and last holdover from the Obama administration, Kara Stein, can’t serve past December. What’s important to note is that the majority of commissioners are in favor of cryptos and therefore the Bitcoin ETF is conceivably a 3-1 decision with Chairman — Jay Clayton, Commissioner — Hester Peirce and Commissioner — Elad Roisman all favoring cryptocurrencies (based on their present and past statements).

I think, based on this perceived shift and the continuously improving market maturity, that there will likely be a Bitcoin ETF sometime in the next year.

The effect it will have on the perceived legitimacy of the market, on bringing in institutional money, and ultimately on the price of Bitcoin will be staggering. Time will tell, but it just may begin today with the confirmation of Elad Roisman as SEC Commissioner.

So, what is the takeaway from today’s events? A bleeding market from invisible wounds? More ETF nonsense? Is this really what cryptocurrency is about?

No, of course not.

We who are among the first to build and propagate this space feel very deeply the need to have a market without such irrational swings, manipulation, and liars.

After all, blockchain is inherently a technology that is focused on promoting irrefutable truth. Why then is the market around it filled with nothing but false claims and narratives?

It is a paradoxical state in which we find ourselves. Not wanting a manipulated market, but also not wanting the big players to step in and manipulate it into submission.

Ultimately, they’ll win. The institutional players have an enormous market appetite and very little technical knowledge, so investment vehicles like the ETF embody their ideals. After all, an ETF is a multibillion-dollar ‘not-your-keys-not-your-Bitcoin’ vehicle, so you’re giving up what makes Bitcoin compelling in the first place to simply trade a number.

But, that’s always the case with any commodity.

Gold is shiny and people have coveted it for centuries, and yet today more people own shares of gold than the physical asset itself. Most people investing their capital in gold have no intention of ever exchanging it for actual bullion; they simply want to park their money in something with perceived value.

So, yes, the ETF does represent everything that crypto is not: centralization, forfeiture of freedom, and bending the knee to the big banks who Satoshi clearly had issues with.

But, the beautiful thing about crypto is that it is many things at once. Simply because more money enters the space does not mean that decentralization will die and big money will corrupt the ideals of blockchain. Already we see multiple interpretations of what a blockchain “should” be and multiple iterations of Bitcoin itself.

Just like the Internet before it, blockchain needs the right incubators, both big and small, to allow it to grow and prosper and find unique ways to challenge norms and build upon existing solutions.

What a privilege it is that we get to watch it grow into something truly exceptional, and to be a part of history in the making.

If you missed Mav’s webinar “Top Ten Ways to Create Passive Income With Crypto” then you can watch the webinar at this link. 

We’ve started to produce episodes for The ReadySetCrypto Podcast; all of our episodes are posted on our blog (and on iTunes) and Episode Eleven is now available. Episode Eleven is an interview with Adam Todd of Digitex Futures which we’ll be looking to employ as soon as it’s live. Look for more episodes shortly as we comb the crypto space for valuable interviews, and create valuable content to keep you in the loop!

See you over the weekend!

Our next Premium-Only Livestream is scheduled for 5 September 2018 at 8 PM EDT (UTC/GMT -4 hours). Watch below for new link.

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Defensive Actions for the next trading day: 

• None.