Business interest in blockchain grows: Cryptos getting crushed
Blockchain technology is the future but will it include cryptos? The answer we keep hearing is yes, but for now, digital currency investing is not for the faint-hearted.
Facebook has reportedly engaged in conversations with blockchain projects including Stellar and is expanding its team focused on the much-hyped technology, according to Business Insider (BI).
Starbucks recently announced a partnership with Bakkt, a new Intercontinental Exchange company whose mission is to create an open and regulated global ecosystem for digital assets.
“We will see more household names exploring and entering cryptocurrency, looking for new models of customer engagement leveraging their brand equity in powerful new ways,” said BI.
“They recognize that brands are exactly what’s missing from the exploding space.”
Bigger brands are almost always slower in adopting new technology, both because they tend to be risk averse and also because they naturally move slower, but the cryptocurrency roller coaster has reached a point at which big brands are starting to recognize a mutually beneficial path forward.
CoinTelegraph reported that Airbnb co-founder Nathan Blecharczyk participated in an almost $23 million funding round for a crypto startup, cryptocurrency dealer SFOX.
A press release notes that the cryptocurrency dealer aims its services at “large-scale investors such as funds, family offices, and high-net-worth individuals,” and has more than $9 billion in transaction volumes to the present.
The company’s Medium post notes that the goal of the funding round is to add cryptocurrency pairs, improve trading liquidity, and expand into “new geographical regions.”
Earlier this week, enterprise-focused blockchain startup Axoni had raised $32 million in a funding round led by Goldman Sachs and Nyca Partners, with other investors including Wells Fargo, JPMorgan, Citigroup, and Andreessen Horowitz.
In July, the venture capital arm of General Electric (GE) joined a $12 million investment round in blockchain startup Xage Security, along with City Light Capital and NexStar Partners.
This week saw double-digit losses that wreaked havoc on many high-profile cryptos, and Bitcoin (BTC) momentarily fell August 13 through the $6,000 support.
Ethereum (ETH) also plummeted to an eleven-month low to trade at around $254, falling by as much as 20% on August 14 alone. That same day, total market cap collapsed by $13.2 billion — back to late November 2017 levels.
VC investor Tim Draper told Cointelegraph in an email that these vertiginous swings are exactly “why [he] made [his] prediction for 2022:”
“The long-term trend is way up, but I expect many short-term swings in the market along the way. Fundamentally, the world needs Bitcoin, and that demand will only increase in the coming years as Bitcoin finds more and more uses and applications.”
Even more unflappable, “Bitcoin Jesus” Roger Ver, told us:
“I’m not sure what crash you are talking about. BTC is up 58% for the last year, and 1048% for the last two years. That feels like the opposite of a crash to me.”
As both of these remarks imply, the week’s cataclysm had in fact disproportionately impacted altcoins, leaving BTC relatively unscathed, as Coin360 data shows:
BTC dominance — or Bitcoin’s percentage of total crypto market cap — continues to break 2018 highs. As of press time, it is at 53.3%, levels not seen since mid-December 2017, just before the coin hit industry records to trade at $20,000.
Bitcoin’s brief spike upwards in late July, since which it has tumbled. Source: Bitcoin Price Index
The ETF issue
CryptoCompare CEO Charles Hayter yesterday proposed that the week’s market decline was a ricochet off the back of U.S. regulators’ recent decision to shelve a high-profile application for Bitcoin exchange-traded-fund (ETF) until September. He said:
“[This has been] momentum-based selling following the ETF kickback and the usual gyrations of a market in a depressed mode.”
Hussein Sayed, Chief Market Strategist at FXTM, meanwhile suggested that:
“If an ETF doesn’t see the light in the coming weeks expect to see a further selloff, as it suggests regulators will continue to fight against bringing cryptocurrencies into the mainstream.”
In mid-July, the $6.3 trillion asset management heavyweight BlackRock – the world’s largest provider of ETFs – was beginning to assess potential involvement in Bitcoin.
But just two weeks later, the markets turned, taking a sharp tumble in response to news that the high-profile Winklevoss twins’ Bitcoin ETF appeal had been denied, with $12 billion wiped from total market capitalization.
At the beginning of August, the SEC delayed its decision over another Bitcoin ETF application.
Bloomberg has suggested that developers of Initial Coin Offerings (ICO) are now cashing their holdings into fiat that they can then spend on developing their products. This could account for the recent shattering price weakness in the Ethereum market.
Bloomberg cites July figures from Autonomous Research that suggest that ICO liquidations worth around $5 billion have been driving down ETH’s price, an impact that has been “magnified due to deteriorating sentiment and low liquidity, with Ethereum’s dominance now dipping as low as 13.5% on August 14.
Meanwhile, Yahoo Finance’s Jared Blikre has claimed that unconfirmed rumors from insider sources allege that the SEC is about to come out with new rules for ICOs in September. This, he said, could be fuelling “a scare that ICOs are disappearing,” but “who knows if it’s true.”