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The crypto correction of 2018 has been brutal. Bitcoin went from mainstream hype of December 2017, to being banned along with ICOs in Crypto Ads by Facebook, Google, Twitter and Snapchat with plummeting value and consumer search.
Bitcoin reached as low as $6,600 on April 6th, but is now nearly back up to 10k. But something strange is going on, even as the SEC buckles down.
Finance Firms Will Launch Crypto Trading
According to Thomson Reuters survey: 20% of 400 finance firms surveyed are considering launching crypto trading with the next 12 months.
Even Goldman Sachs has brought on a former crypto trader, Justin Schmidt, to explore creating a bitcoin trading desk.
Everyone wants a piece of this supposedly popping crypto market cap. If Goldman does go ahead with a crypto desk, it would be the first major US bank to do so. What does that tell you about the normalization of crypto in society?
Crypto Could be More Valuable When the Next Recession Hits likely in 2019
Crypto trading remains a niche activity in mainstream finance but interest is growing and could support price growth, according to Business Insider. What if this interest fuels transactions related to crypto and turns bear to bull at the break of a a global economy where a recession is likely as soon as 2019.
If a fifth of finance firms are considering getting into cryptocurrency trading within the next year, according to an industry poll by Thomson Reuters, it speaks volumes to the future of the blockchain, inspite of shitcoins and regulatory pressure.
The U.S. is Falling Behind Asian Countries in Crypto Adoption
Mainstream adoption is so high in Japan and South Korea, that those nations are growing dominant in the future of crypto. That stimulates innovation, startups, trading, blockchain adoption and actually, the economy. By banning Crypto Ads, the U.S. may have cooled our interested in Bitcoin artificially, but investors want in.
There are over 200 cryptocurrency-focused hedge funds globally, according tofintech research firm Autonomous Next, but their combined assets under management are only $5 billion at a maximum. The truth is, these are still early days for Crypto and blockchain fiat currencies.
The Size of Bitcoin Transactions is Increasing
Goldman Sachs-backed Circle has doubled minimum bitcoin trade size to $500,000. The move comes during a trading lull in the market for digital currencies across crypto exchange venues. This is a lull, if the bubble would have popped, Bitcoin would be at zero, that’s clearly not the case.
The size of crypto trades is increasing, even if the total amount traded has declined compared to December. Per data from CoinMarketCap, 24-hour trading volumes are down to about $20 billion a day from all-time highs near $70 billion at the beginning of the year. Some trades are now larger than $100 million according to Circle.
“If I have $5 million, I can’t do that trade on GDAX.”
Shitcoins and Unregulated ICOs Lower Trust and Increase Uncertainty
OTC desks can also provide a more secure alternative to crypto exchanges, which are known for hacks and outages. There are in the area of 1,658 cryptocurrencies or alt-coins. However most of those are shitcoins, this is because the top the top 20 cryptocurrencies account for 89% of the total market — the other 1,638 cryptocurrencies are worth a combined $39.6 billion. The entire cryptocurrency market is still weirdly tethered to Bitcoin’s value. A day will come when this no longer makes sense.
Ethereum will reach $1,000 again, Bitcoin may never reach $20,000 again. But Ethereum, Stellar, Cardano and NEO aren’t just going away. These are fueling new ways of thinking about blockchain businesses, and one day soon the right technology for scalability will break things open again.
Cryptocurrency is still a relatively small part of the trading market, but this survey makes clear this niche segment is starting to enter the mainstream of the financial services industry.
This is a relatively new and specific to developments in 2018. Stunting the cryptocurrency market could have been a deliberate thing by the 1% to more easily begin to manipulate the prices. The median cryptocurrency’s market cap is just $925,000, meaning that half are worth more and half are worth less. We really do have a shitcoin problem here. Fraudulent ICOs have given crypto investing a bad name. But decentralization will eventually win out, because it’s a more equitable system that will ultimately increase efficiency, and be foundational in the internet of everything.
We can maybe only take those Cryptocurrencies above $3Bn market cap seriously. Those are precious few among the altcoins.
- There are only 4 cryptocurrencies worth more than 10 billion
- There are only 12 (13) cryptocurrencies worth more than 3 billion
Cryptocurrency Name (Code)
Current Price in U.S. Dollars
Market Capitalization
Bitcoin (BTC) | $8,313.40 | $139.57 billion
Ethereum (ETH) | $607.14 | $59.34 billion
Ripple (XRP) | $0.67 | $26.58 billion
Bitcoin Cash (BCH) | $926.25 | $15.69 billion
Litecoin (LTC) | $163.03 | $9.00 billion
Cardano (ADA) | $0.18 | $4.70 billion
NEO (NEO) | $69.74 | $4.47 billion
Stellar (XLM) | $0.23 | $4.30 billion
EOS (EOS) | $5.15 | $3.76 billion
Monero (XMR) | $213.66 | $3.37 billion
Dash (DASH) | $416.22 | $3.30 billion
NEM (NEM) | $0.36 | $3.18 billion
IOTA (MIOTA) | $1.08 | $2.98 billion
A Crypto Correction or Lull is Not a Popping Bubble
As for the cryptocurrency market’s lull or crypto correction of 2018, hedge funds and high net worth individuals, and even commodity speculators see the volatility in the crypto markets as a huge opportunity. As they put chips in the game, basically all hell could break loose.
By Michael K. Spencer
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