When Will (Crypto) Winter End?
For almost eight long months, cryptocurrency enthusiasts have been living on ‘Hopeium’ – an ethmology blend of ‘hope’ and ‘opium’.
The cryptocurrency, or digital asset market, that hit an all time high market capitalization of over USD800 Billion at the height of December 2017, has over a period of what seemed like years in crypto age, dwindled to a quarter of its worth to just over USD200 Billion now. In this most recent ‘purgatory period’ of cryptocurrency history, the majority of altcoins have experienced an 80-90% value correction from their all time highs in Nov2018-Jan2019.
Many have turned into (coin) bag-holders, hoping for the light at the end of the tunnel so that losses may be recovered. However, the crypto winter might be at its end. To be exact, it is expected that spring will happen some time at the beginning of September 2018.
Whilst many Bitcoin and crypto newcomers may already resign to swallowing their losses, for the more experience long term traders and technologists who have been on this for years now think that the tide is finally turning.
Not because there is one, single indicator that signals the cusp for a bull market; but due to several fundamentals that have been building up since the beginning of 2018, that collectively contribute to a positive outlook for an end to this prolonged bear market.
One such news was Coinbase – one f the largest crypto exchanges in the world, is offering custodial accounts for some 36 new coins including XRP (Ripple), XMR (Monero) and EOS amongst others.
This is hugely positive news because institutional clients can much easily buy and investing in Bitcoin and protocol-based coins like Ethereum, to a diversity of altcoins. So far, crypto wallets kept on hardware drives, PCs or mobile phones are still considered a security hazard, and pain to manage the trading of coins;
so having a trusted exchange keep the digital assets on your behalf on the exchange – makes it a very attractive entry way for investors to consider buying the other altcoins.
Another recent positive development is Bakkt, a new startup that is backed by Microsoft, NYSE owner Intercontinental Exchange (ICE) and Starbucks, to develop an open, regulated, and global ecosystem for digital assets.
Amongst the strategic objectives of Bakkt are to plans to roll out physical Bitcoin futures contracts (that still need to be approved by the Commodity Futures Trading Commission (CFTC), of course), where customers will receive Bitcoin instead of cash – that is currently being used. This is in effort to make Bitcoin and other digital assets towards becoming mainstream financial asset.
Starbucks’ role in Bakkt is more towards disrupting the retail world where crypto transactions become acceptable, enabling consumers to convert their cryptocurrencies into US dollars to use for Starbucks purchases, and more.
Bakkt will leverage Microsoft’s cloud to create an open and regulated, digital asset ecosystem; while most importantly, ICE’s participation greatly boosts the possibilities of Bitcoin exchange-traded funds (ETFs) stock exchanges, and safe crypto currency investment options for 401(K) retirement funds.
Disruption in Retail Transactions
2018 has been the year of regulatory talk and effort in trying to bring Bitcoin to the mainstream and to see if this digital asset can mature into a larger, less volatile market, and which can also be used on a daily basis.
Which brings to the other news whereby US’ 3rd largest grocery chain Kroger, made headlines late July, when they ban the usage of the Visa credit card amid a fee dispute.
The credit and debit card world has been monopolized by the likes of Visa, Master, Amex for a long time; wiping out about USD90 billion in expense from the profit margins of global retailers. Every single time a retail transaction is made, 2-2.5% ‘swipe fees’ is lost.
Developments from companies like Bakkt come in most timely and apt now for large retail organisations like Kroger who are tired of dealing with the 2-2.5% credit card fees, to realistically implement cryptocurrency alternatives whereby there is almost zero swipe fee, and having to do away with all the red tape associated with the monstrous credit and debit card monopoly.
It is about using Bitcoin to disrupt the world of retail payment from getting customers to scan their Bitcoin applications instead of taking expensive credit card swipes.
In fact, many global banks already have some sort of blockchain research and partnerships going on, knowing well that they have a lot of money to make from trading and commerce fees to cryptocurrency payment gateways and investment instruments. They do want to open up the crypto market to their clients; it is just a matter of how being able to do it within regulations and the best methods.
Yet another positive development is the likelihood of an approved bitcoin exchange-traded fund (ETF) by the end of 2018.
The crypto universe has unanimously spoken and they do want a Bitcoin ETF asap; I think just because when the two current hottest areas of the investment world (cryptocurrencies sand ETFs) collide, a price rally rebound fire will start.
However the U.S. Securities and Exchange Commission (SEC) is has been apprehensive for an ETF to focus on bitcoin, currently the largest cryptocurrency in the world by market capitalization.
Therefore broadly speaking, a bitcoin ETF listing will be a great signal of maturity for cryptocurrencies as it means that the door is opened for traditional investors into this class of digital assets, creating a massive demand for Bitcoin.
So far, the strongest advocates and candidates to list a Bitcoin ETF so far is the one proposed by VanEck-SolidX that has the bitcoin world eagerly awaiting the 30 September approval/ decision y the SEC.
Not Going Below USD6,000
In the deep winter of the past months, Bitcoin has held very well at USD6,000 and there is only a small chance of it dropping below this ‘resistance price level’.
Meanwhile, trading volume is finally picking up.
From an all time bottom of 40,000 bitcoins traded in a week (compared to about 330,000 bitcoins in the same period about a year ago), Coinbase charts are showing a healthy ramping up in sustainable trade volumes.
All of these bits of news and technical developments contribute to what will build up into market confidence, that will replay into both institutional and retail demand for bitcoin and altcoins soon.
Remember this, despite the cryptocurrency market capitalization value of about USD200 Billion now, it has not gone down to levels before November 2017.
This alone, is a comforting indication.
So hold on to your coins, and buy more if you dare – coz it ain’t getting cheaper than USD6,000.
~ By TT Lee, Publisher.