Bitcoin fell to lows last seen on January 11. Some analysts point to the ominous “concern” of Treasury Security nominee Janet Yellen over crypto as the reason for the sale.
The recent withdrawal has had some former bullish analysts, like Guggenheim, speculating on whether the cryptocurrency could track its 2021 earnings in the short term.
Elsewhere, the Bitcoin copyright debate is driving people to maintain their own versions of Satoshi’s white paper while BlackRock, the world’s largest asset manager, has given two of its BTC futures trading funds the green light.
The top shelf
A crypto state
President Joe Biden has frozen all agency rulemaking, including former Treasury Secretary Steven Mnuchin’s controversial proposal on “unoccupied wallets,” according to a prominent cryptocurrency lawyer. Although not out of the woods yet, the pause on the proposal – which would require exchanges to add strict surveillance to private wallets – is being celebrated as a small victory. Elsewhere in Biden’s administration, Brian Brooks will be replaced by former Treasury officer and Ripple board member Michael Barr, as Currency Manager. Besides, Nebraska is positioning itself as the next Wyoming.
Woe to white paper
Bitcoin.org has refused to comply with Craig Wright’s demand to pull down a copy of the Bitcoin white paper. Wright, who claims to be the creator of Bitcoin nickname Satoshi Nakamoto, also claims he owns the copyright to the source document. Bitcoin.org said the white paper was issued under the free and granted MIT license, making Wright’s claims well-deserved, although Wright has taken steps to patent Bitcoin technology among another 100-200 allegedly connected to blockchain. In what is considered a betrayal by some, Bitcoin Core removed the paper, referenced it and merged the changes on GitHub, according to Bitcoin.org.
BlackRock, the world’s largest asset manager with $ 7.81 trillion under management, seems to have given at least two of its funds the ability to invest in bitcoin futures. “Some Funds may participate in bitcoin-based futures contracts,” the prospectus reads, including BlackRock Inc. Global Allocation Fund Inc. and BlackRock Funds V. It is not known if an allocation is coming and when the door is open. Meanwhile, eToro, a popular brokerage, surveyed 25 institutional players and found that pension funds and endowments were warming up to crypto.
BASIC OPTIONS: Deribit explainer on options trading. (Deribit)
BITCOIN IN AFRICA: Crypto trading is a way to boost income, for some. (CoinDesk)
THREE WEEKS: USDT Tron volume continues to beat lead totals on Ethereum. (CoinDesk)
NOT BITCOIN: Yearn, which was once considered Bitcoin’s fair launch affair, may see $ 200 million in issuing tokens. (CoinDesk)
ASSET MANAGEMENT: Crypto finance company Amber Group is crossing $ 530 million in managed assets. (Modern Consensus)
ASIAN BEARS: Market insiders are struggling to explain typical Asian bearish crypto trading sessions. (The Block – paid)
S bearish bearwing
Bitcoin option traders are casting bearish bets as the spread between short-term and call prices has risen to a five-week high of 14%. “Over 380 call contracts expiring January 29 have bought $ 30,000 today,” Levitas, a data analytics platform in Switzerland, told CoinDesk. These contracts account for 50% of the total trading volume on major exchanges, according to Skew.
While some crypto traders look at essentials like bitcoin’s deflationary attributes when placing bets, many may invest on the basis of a ticket price alone.
This was the conclusion of Wall Street Journal columnist James Mackintosh in a report on Tuesday on how traditional stock markets moved in 2020. “This year’s stock market performance has been driven by the raw share price, with lower priced stocks doing better and higher price worse, ”he wrote.
With people shadowing in place, there was a well-documented surge in the number of retail investors signing up for free trading apps. Bloomberg, for one, a Robinhood competitor who was quick on the raffle to add crypto services, reported over half a million new registrations in the first 17 days of 2021.
The influx of inexperienced investors looking to ride the green wave of asset prices, as Mackintosh argues, is a market failure. Instead of considering the basics of what makes a sound business sound, such as its “cash flow, valuation, brand power, management skill or even political sensitivity in the future,” many look at the ticker price alone – with those under $ 5 appearing as bargains.
And it has paid off! As Bloomberg said in June, “Dirty money looks a lot smarter in an endless stock rally.” The idea of ”holding in” an asset based entirely on its current price is a disgrace to some analysts. Mackintosh called it a blatant misallocation of capital.
Stock prices are basically meaningless. Companies can, and do, do things like stock splits (create more shares to cut their price) and reverse stock splits (consolidate shares due to demand) without affecting the company’s underlying value proposition. It’s just arithmetic!
Of course, cryptographic tokens do not equate to the few certificates of ownership over a publicly traded company called stock. Tokens and cryptocurrencies are typically programmable assets that are issued based on how blockchain is programmed.
Many tokens serve a function, such as goodwill, which is a algorithmic stable of US dollars. Bitcoin was the first fully decentralized currency-to-peer system. Social tokens, like $ ALEX, are bets on the future market value of a particular community or individual. None of these are claims on a basic company, because there is no company. (This puts aside some of the securities concerns that hang over some crypto companies.)
As CoinDesk previously reported, in times of market turbulence, many crypto newcomers view ticket price as the main reason for investing. “Some entry-level investors looking at bitcoin’s high volume trading price – unaware it can be bought in fractions of a minute – go to altcoins because their relatively low price makes them seem affordable,” wrote CoinDesk correspondent, Muyao Shen.
It is for this reason that the UK’s financial watchdog issued a warning stating that “if consumers invest in these types of products, they should be prepared to lose all their money.” The Financial Conduct Authority said a lack of consumer protections and high volatility were particular concerns.
That said, many analysts claim that crypto markets are moving away from the FOMO-driven speculation that made markets in 2017. In a new report, CoinShares, a digital asset management company, said the rise in corporate interest and institutionalization in bitcoin is sustainable.
“What was typically a desire for speculative investing has become one of fear of extreme free monetary policy and negative interest rates, with clients looking for an anchor for their investments,” wrote James Butterfill, investment strategist CoinShare.
This does not rule out the idea that crypto retail traders are following the penny stock investment playbook. However, it complicates the complaint that crypto is pure speculation.
With the rise of fractional stock programs, which allow small buyers to buy a percentage of stock, the question arises: What is the dividing line between the old and new markets? The “dumb” and the “smart” money? As my colleague Noelle Acheson often says, does anyone know what is happening anymore?