That's why Bitcoin celebrates a new annual high: the crypto-inventory and the new optimism | BTC-ECHO
Many have written and spoken about the potential of institutional investors entering the crypto market. Quite a few can no longer hear the inflationary mantra that big money comes with the institutional investors. This does not change the fact that this statement is true. The big money lies with the pension funds, family offices and investment houses.
In keeping with this narrative, the Bitcoin Trading Desk joins Fidelity, a billion-dollar wealth management firm in Boston. In addition to the existing crypto-custody service, the crypto-trading service for major customers will be launched in the next few weeks. Such news contributes to the new crypto-optimism, even if in the end they are just a small piece of the puzzle in the big picture.
Like to forget: Bitcoin as an escape currency
It remains to be seen that Bitcoin tends to react positively to major economic turbulence. In addition to gold and traditional escrow currencies such as the Swiss franc, Bitcoin is also enjoying an influx of vulnerable and inflation-hungry investors. Finally, cryptocurrencies, as a stand-alone asset class that is relatively uncorrelated to the traditional financial sector, can take advantage of it. Neither the expansionary central bank policy of an ECB nor sanctions against economies or imminent trade wars threaten the value stability of Bitcoin. Accordingly, the crypto admixture in the own asset portfolio is obvious.
Thus, the current trade dispute between the US and China is an example of the subliminal uncertainty in the markets. Especially cyclical stocks such as automotive stocks suffer here. On the other hand, anti-cyclical values such as gold or, more and more often, Bitcoin can benefit from economic conflicts. The same applies to the economic sanctions in the dispute over the Iranian nuclear agreement. For example, this week the European countries rejected Teheran's 60-day ultimatum – one less reason to invest in the DAX, one more reason for Bitcoin & Co.
The Internet giants are slowly showing where the journey is going
Which companies have the biggest impact on the crypto market? One may be inclined to say Binance, Coinbase, or ConsenSys, but that is only partially true. After all, the biggest companies in the world, or companies with the largest clientele in the world, now want to switch to blockchain and cryptocurrency. Although their concepts are far removed from decentralized Bitcoin, they can nevertheless promote Bitcoin adaptation more broadly than the aforementioned crypto companies. The fact that Facebook is soon launching its own cryptocurrency and announcing this week accordingly, in order to ease the crypto-advertising ban, are extremely positive signals for the crypto market.
Finally, Bitcoin and Co. also benefits when hundreds of millions of people get in contact with the crypto-economy through Facebook. Also in recent weeks rumors have arisen that Samsung – after it has already brought with the smartphone Samsung Galaxy S10 a crypto-compatible smartphone on the market – also working on its own coin. Already today owners of the new smartphone can look forward to dApps and an Ether Wallet. The announcement of such crypto-affine corporate messages show where the journey is headed.
Just a few dents: Binance Hack and Tether debacle only do small damage
Of course, there are enough negative headlines in the crypto sector. This week, hackers hacked the world's largest crypto exchange, Binance, and eased it by about $ 40 million. Even greater than the damage of 7,000 stolen Bitcoin is the loss of confidence in the entire ecosystem. Although market hacks are the order of the day, many still hope that the goblet will pass Binance. Correspondingly, the crypto courses reacted with a red sign when the news hit earlier this week. Nevertheless, a bad crash looks different. Bitcoin & Co. recovered above average from the news.
Equally resistant, the courses had also held in the negative headlines at the end of April to Tether and Bitfinex. Tether and Bitfinex have been repeatedly accused of hiding liquidity shortages of up to $ 850 million. Even this negative news could not really impress the market. It seems that the crypto market is currently in a relatively strong phase, where negative headlines can be absorbed very well. Nevertheless, traders should not forget that a not inconsiderable part of the trading volume is generated by wash trading. Specifically, some crypto exchanges are faking fake volumes to fool liquidity. A problem that continues to weigh on the crypto market.
Security tokens and initial exchange offerings as a promise of salvation
To issue tokens as officially recognized securities, ergo to issue a share or bond in token form, brings new impetus and above all new money in the crypto market. Financing crypto as well as non-crypto projects in many respects also provides a positive impetus. The new financing in the crypto-ecosystem promises nothing less than the transformation from physical securities to digital tokens. Even the German Federal Financial Supervisory Authority (BaFin) has acknowledged that it is likely that securities will be securitized as digital tokens by default.
In addition to security tokens or security token offerings (STOs), it is also the initial exchange offerings (IEOs), which also flush new capital into the market. For example, token sales to IEOs through crypto exchanges such as Binance or Bittrex are taking place, promising better investor protection and better usability than ICOs in the past.
The challenges remain
Hardly anyone would want to know about the bear market and the burnt ICOs from 2018. The progressive professionalization and regulation determines the current trend in the crypto-ecosystem. The new optimism is also reflected in the increased transaction volume of Bitcoin and Ethereum, which is as high as it has been for several months. At dApps even a new all-time high was cracked. Therefore, the topic of scaling becomes all the more important. Especially Ethereum must, as Ethereum co-founder Joseph Lubin has recently admitted, press down on the tube. At present, the scaling solutions are still too far away, despite good progress.
The same applies to Bitcoin and the Lightning Network. Although there is good progress here – now can be used on the Apple Watch Lightning – a breakthrough, but you still can not speak. Lack of progress in scaling can therefore be identified as a drag on the crypto courses. Also, the many new projects that are financed via STO or IEO have yet to prove themselves. Despite higher standards, some rotten eggs can be expected – so it will continue to burn a lot of money in the crypto market. As long as there are visible project successes, this is not bad, but completely normal. Conversely, lighthouse projects and success stories have the potential to give the entire crypto market a new dynamic and appeal.
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