Week In Review

Market Continues To Improve

The market had nearly a neutral week overall as we returned to 225 Billion.

The big takeaways this week were that the fears that caused us to drop were mostly unfounded, and the positive news that helped us recover were much more significant.

The most obvious catalyst of this is the recent news of the upcoming physical Bitcoin futures set to be launched by Intercontinental Exchange’s Bakkt cryptocurrency platform. They will take the form of physical BTC futures, aiming to create a “regulated ecosystem” for institutional investors, with the first contracts to be available in at least three fiat currencies, such as the U.S. Dollar, British Pound Sterling, and Euro.

These will be the first of their kind, as both the CME and CBOE futures are cash settled. This indicates that Bakkt has found a custodian that is both regulated and able to handle the high volumes they expect on their platform. It’s possible they are that custodian, but we won’t know until they release more details.

I covered some of my thoughts on Bakkt here:

This week continued to be dominated by big names rolling out plans.

In particular, two of the biggest names in the crypto space have made some big news. Coinbase introduced an application process to onboard new altcoins, they announced a new series of educational resources, and finally revealed a product that allows customers to buy a bundle of Coinbase’s listed assets.

Potential investors got a peek at Bitmain’s IPO prospectus this week, but the information contained within may make them pause.

The leaked pre-IPO presentations showed that Bitmain made a $1,137 million net profit in Q1. This means Bitmain actually lost $400 million in Q2. Still, they’ve raised more than half a billion dollars in 2018.

Additionally, they are by far the biggest manufacturer of mining equipment in the crypto space.

BitMEX research published a in depth read, and I highly suggest checking it out if the financials of a cryptocurrency mining company intrigue you.

As we also covered, Google is ending its sweeping ban on cryptocurrency-related advertising and plans to allow regulated crypto exchanges to buy ads in the United States and Japan. The new policy starts in October.

This very much signals a warming up to the space by large tech companies which had originally banned all crypto-related advertisements.

With Google onboard, it really does signal a shifting tide.

Besides industry adoption, regulatory acceptance is another big piece of what crypto needs to move forward.

We certainly saw that happen this week in the US. Congressman Warren Davidson held a round-table of 80 industry leaders to talk regulation including venture capital firms actively investing in digital tokens (Andreessen Horowitz, Union Square Ventures), token and traditional exchanges (Intercontinental Exchange, Kraken, Nasdaq, CME Group, Circle), non-profits (Coin Center), and other digital token and securities companies (Ripple, Harbor, CoinList).

The main complaints about the government’s approach to cryptocurrencies centered about the lack of transparency and clear regulation. The big question right now is in regard to what constitutes a security, especially with the 5 SEC commissioners all taking different stances.

The round-table seemed to have an impact, though, as Rep. Davidson and 14 other co-signers penned a letter to SEC Chairman Jay Clayton requesting that the SEC clarify how it is approaching token sales, saying that “current uncertainty surrounding the treatment of offers and sales of digital tokens is hindering innovation in the United States and will ultimately drive business elsewhere.”

The letter continues, saying:

“We believe the SEC could do more to clarify its position. Additionally, we are concerned about the use of enforcement actions alone to clarify policy and believe that formal guidance may be an appropriate approach to clearing up legal uncertainties which are causing the environment for the development of innovative technologies in the United States to be unnecessarily fraught.”

This mirrors the viewpoints shared during the round-table by industry leaders, with the group cautioning watchdogs of the possible “brain-drain” if digital assets continue to be abided by 72-year-old regulations, as the CEO of crypto exchange Kraken said:

“Foreign companies are able to outraise their U.S. competitors and often whoever raises the most money is who wins. Not only are U.S. companies not able to raise enough to compete globally, but U.S. investors also are not able to invest in these global companies.”

This is certainly something that needs to improve in an expedited fashion if the US wants to continue to stay in the race for blockchain innovation and adoption. Needless to say, the next few years are going to be paramount for blockchain innovation, blockchain regulation, and the sovereign countries looking to participate.

CZ, CEO of Binance, was quoted as saying, “I think that any minute the bull market will return, and historically, October to December are the good months. Before Christmas are usually the months when the markets go up very often.”

I’m inclined to agree with him. Nothing is inevitable, but certainly we are seeing the market start to make moves that lead to bright days. Let’s wait and see.

Watch Doc’s recent online classes here and here on “Four Rules to Chart Like a Pro.” If you have any interest in signing up for this class, do it before the price goes up on Monday!

We’ve started to produce episodes for The ReadySetCrypto Podcast; all of our episodes are posted on our blog (and on iTunes) and Episode Thirteen is now available. Episode Thirteen is our interview with the CEO of Internxt about his upcoming beta of distributed storage services using Xcloud. (like a Dropbox). 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 tomorrow!

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Defensive Actions for the next trading day: 

• None.