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BitMEX CEO’s Call For Double-Digit Ethereum Comes True: ETH At $90

Arthur Hayes: Ethereum (ETH), A “Double Digit S*hitcoin”

In late-August of this year, Arthur Hayes, the chief executive at BitMEX, the world’s foremost crypto mercantile exchange, took to his firm’s in-house blog to tout some controversial sentiment. In an extensive post, the former institutional trader began his Ethereum (ETH) bash by telling a personal story, hyperbolized to convey a point.

The BitMEX CEO discussed a s*hitcoin named Pepe Cash, an evident combination of a popular internet meme and Bitcoin Cash, and somehow, someway, related it back to Ethereum, which Hayes evidently holds a grudge against. Hayes, imbuing the op-ed with his normal swagger — unfiltered statements, crazy calls, and all — even noted that ETH could “go from a 3-digit to a 2-digit s*hitcoin.”

Backing his statement, which was inflammatory to put it lightly, Hayes drew attention to ICO-funded projects, many of which based their operations around Ethereum, venture capitalists “turned-hedge-fund-punters,” and crypto-centric funds.

Hayes’ chastising of Ether was quite extensive, but the long and the short of it is Hayes believed that there was enough prospective selling pressure to push the asset below $100, which was situated at $200 at BitMEX’s time of press.

While many proponents of Ethereum and “altcoin maximalists” laughed at the industry savant for his sentiment, lambasting the prediction (of sorts) as foolhardy, on Thursday, the asset finally showed signs of falling to double-digits.

At first, during the wee hours of Thursday morning, ETH suddenly flash crashed to $13 on Coinbase Pro — straight out of left field.

Although this move wasn’t backed by a clear catalyst, nor did Coinbase recently a statement on the matter, a number of Ether’s skeptics took to Twitter to claim that the asset’s time was up. Decentralist Kevin Pham, a zealous Bitcoin maximalist and anti-ETH fanatic, took to his Twitter following to claim that both the asset and Coinbase were a “s*hitshow.”

Others also chimed in, with Justin Sun of Tron even telling developers to “plz leave Ethereum and join Tron.” NVK, a pseudonymous crypto commentator, also expressed his/her thoughts, noting that at its core, the aforementioned project is “centralized,” before asking his followers to use Bitcoin and its recently-established Liquid Network to issue tokens.

While ETH subsequently recovered to $100, with those who bought in at the bottom making 770% near-instantly, the asset continued lower on Thursday, following BTC as it slid below $3,500. Eventually, the asset fell under $100, after putting up a fight at that key psychological, technical, and fundamental level for hours on end. As BTC continues to stumble, recently moving under $3,350 in a seemingly endless downtrend, ETH has followed suit, moving to $98 before finding itself rapidly falling to $88, where it has found itself.

So for the second time in weeks, it seems that Arthur Hayes has made a successful prediction against crypto, as the member of BitMEX’s top brass called for BTC to move under $5,000 previously.

Keeping all this tumult in mind, a number of analysts and market commentators took to Twitter to tout their thoughts. Alex Kruger, a prominent crypto-friendly macro markets analyst/investor, posted the photo above, evidently summing up Ether holders’ sentiment in a simple image.

Ethereum Believers Maintain Faith

Although the sentiment touted by traders is undoubtedly bearish, a number of diehard believers in this “world computer” project have maintained their bullish sentiment. Tom Lee, head of research at Fundstrat, recently took to Blockshow Asia to claim that Bitcoin, XRP, and Ethereum all have staying power, due to their status as established networks with purportedly bonafide use cases.

Mihailo Bjelic, a blockchain researcher, took to Twitter to claim that while ConsenSys, an Ethereum development consortium recently downsized, it remains a booming project.

ShapeShift CEO Erik Voorhees, responding to criticism regarding ETH from Peter Schiff, a Bitcoin hater, joked that “[Ether] HODLers are crying all the way to the bank… although they don’t need banks anymore, either.”

Title Image Courtesy of Pedro Gabriel Miziara on Unsplash

The post BitMEX CEO’s Call For Double-Digit Ethereum Comes True: ETH At $90 appeared first on Ethereum World News.

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BitMEX CEO’s Call For Double-Digit Ethereum Comes True: ETH At $90

Arthur Hayes: Ethereum (ETH), A “Double Digit S*hitcoin”

In late-August of this year, Arthur Hayes, the chief executive at BitMEX, the world’s foremost crypto mercantile exchange, took to his firm’s in-house blog to tout some controversial sentiment. In an extensive post, the former institutional trader began his Ethereum (ETH) bash by telling a personal story, hyperbolized to convey a point.

The BitMEX CEO discussed a s*hitcoin named Pepe Cash, an evident combination of a popular internet meme and Bitcoin Cash, and somehow, someway, related it back to Ethereum, which Hayes evidently holds a grudge against. Hayes, imbuing the op-ed with his normal swagger — unfiltered statements, crazy calls, and all — even noted that ETH could “go from a 3-digit to a 2-digit s*hitcoin.”

Backing his statement, which was inflammatory to put it lightly, Hayes drew attention to ICO-funded projects, many of which based their operations around Ethereum, venture capitalists “turned-hedge-fund-punters,” and crypto-centric funds.

Hayes’ chastising of Ether was quite extensive, but the long and the short of it is Hayes believed that there was enough prospective selling pressure to push the asset below $100, which was situated at $200 at BitMEX’s time of press.

While many proponents of Ethereum and “altcoin maximalists” laughed at the industry savant for his sentiment, lambasting the prediction (of sorts) as foolhardy, on Thursday, the asset finally showed signs of falling to double-digits.

At first, during the wee hours of Thursday morning, ETH suddenly flash crashed to $13 on Coinbase Pro — straight out of left field.

Although this move wasn’t backed by a clear catalyst, nor did Coinbase recently a statement on the matter, a number of Ether’s skeptics took to Twitter to claim that the asset’s time was up. Decentralist Kevin Pham, a zealous Bitcoin maximalist and anti-ETH fanatic, took to his Twitter following to claim that both the asset and Coinbase were a “s*hitshow.”

Others also chimed in, with Justin Sun of Tron even telling developers to “plz leave Ethereum and join Tron.” NVK, a pseudonymous crypto commentator, also expressed his/her thoughts, noting that at its core, the aforementioned project is “centralized,” before asking his followers to use Bitcoin and its recently-established Liquid Network to issue tokens.

While ETH subsequently recovered to $100, with those who bought in at the bottom making 770% near-instantly, the asset continued lower on Thursday, following BTC as it slid below $3,500. Eventually, the asset fell under $100, after putting up a fight at that key psychological, technical, and fundamental level for hours on end. As BTC continues to stumble, recently moving under $3,350 in a seemingly endless downtrend, ETH has followed suit, moving to $98 before finding itself rapidly falling to $88, where it has found itself.

So for the second time in weeks, it seems that Arthur Hayes has made a successful prediction against crypto, as the member of BitMEX’s top brass called for BTC to move under $5,000 previously.

Keeping all this tumult in mind, a number of analysts and market commentators took to Twitter to tout their thoughts. Alex Kruger, a prominent crypto-friendly macro markets analyst/investor, posted the photo above, evidently summing up Ether holders’ sentiment in a simple image.

Ethereum Believers Maintain Faith

Although the sentiment touted by traders is undoubtedly bearish, a number of diehard believers in this “world computer” project have maintained their bullish sentiment. Tom Lee, head of research at Fundstrat, recently took to Blockshow Asia to claim that Bitcoin, XRP, and Ethereum all have staying power, due to their status as established networks with purportedly bonafide use cases.

Mihailo Bjelic, a blockchain researcher, took to Twitter to claim that while ConsenSys, an Ethereum development consortium recently downsized, it remains a booming project.

ShapeShift CEO Erik Voorhees, responding to criticism regarding ETH from Peter Schiff, a Bitcoin hater, joked that “[Ether] HODLers are crying all the way to the bank… although they don’t need banks anymore, either.”

Title Image Courtesy of Pedro Gabriel Miziara on Unsplash
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BitMEX Leases The World’s Most Exorbitant Offices In Hong Kong

BitMEX has hit the crypto printing press again, with the Hong Kong Economic Times, a local newspaper, reporting that the exchange had signed an agreement to rent out the world’s most expensive office spaces.

BitMEX, founded by former Citigroup trader Arthur Hayes has reportedly leased out the whole 45th floor of the Cheung Kong Center. This information comes anonymously via individuals allegedly knowledgeable about the firm’s plans.

While any piece of Hong Kong real estate is already expensive in and of itself, Cheung Kong Center, which is also home to Goldman Sachs, Barclays, the Bank of America and Bloomberg, has one of the highest $/Sq.ft ratios in the world.

In January, when Bloomberg interviewed Hayes, they discovered that the firm’s Hong Kong offices at the time were located in a lesser-known warehouse district, where rent is HK$25 ($3.18) for each square foot. But with the firm’s move to Cheung Kong, which is smack dab in one of Hong Kong’s flashiest districts, BitMEX will need to pay a staggering HK$225 per square foot, a near ten-fold increase from the rent requirements of their previous office.

According to the Hong Kong Economic Times, the outlet that first broke this news, the 45th floor consists of 20,000 square feet, which will mean that the exchange will pay the equivalent of over $573,000 a month in rent.

Some legacy market cynics see this as sort of ‘power play’, with BitMEX’s appearance in such an office space alluding to the fact that crypto is here, and is here to stay for the long haul. Others see this as a strategic move, with such a move putting the exchange within arms reach of the most influential financial and technology firms in the world. But most importantly, this move shows that BitMEX has still been raking copious amounts of profit in, even as the crypto market has essentially fallen off a sharp, tall cliff.

BitMEX’s Growing Influence Over The Crypto Industry

As reported by Ethereum World News, the market surged after BitMEX announced that it would be temporarily shutting down to do maintence work on its engine. While this announcement may seem mundane on the surface, Bitcoin rose by nearly $500 in the minutes following the commencement of BitMEX’s downtime. Altcoins followed closely behind the market leader, posting similar gains in terms of percentage.

Even as BitMEX’s one-hour of downtime finished, the market held its gains (temporarily at least), with Bitcoin finding a place to stand at $6,700. While some speculated that this bout of positive price action was just an untimely coincidence, many noted that such a move could only be attributed to the scheduled maintence of the world’s largest Bitcoin exchange.

Issuing a tweet regarding this occurrence, Crypto commentator and ”s***poster’ EmptyBeerBottle drew attention to the fact that this move indicates the vast amount of influence the exchange has over the market. As such, the crypto personality noted that BitMEX should not be discredited, as the exchange has evidently become an integral part of this nascent industry and market.

Photo by Jason Wong on Unsplash

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Experts Have Quite Contradictory Opinions Regarding BTC ETF Approval and Its Importance

A few days ago, the Winklevoss brothers’ request to start a Bitcoin ETF was denied after a controversial SEC decision that served as a catalyst to increase bearish sentiment in the crypto-investor community after an excellent week in which Bitcoin and the rest of the cryptos seemed to had bounced back to new heights.

Following the SEC decision, a controversial letter issued by Comm. Hester Pierce, in which she publicly stated her dissent sparked the debate in the community, giving a touch of optimism to bulls and hodlers who quickly saw her as their voice in the SEC.

Bitcoin ETF: A Complicated Topic

Ran Neu-Ner

There are still at least 4 Bitcoin ETF applications left for this year. The contradiction between the SEC’s background as a “denier” of opportunity and Pierce’s vision as promoters of innovation has allowed experts to provide media with interesting insights into Bitcoin’s future at the regulatory and institutional levels, and especially about the possibility of ETFs and the impact these decisions would have on the market.

Ran Neu-Ner, host of the “Crypto Trader” show aired on CNBC in Africa, had a conversation with a panel of experts in the field, and although the opinions were solidly based on arguments, they were somewhat contradictory:

Michael Sonnenshein, Managing Director – Grayscale Investments

Michael Sonnenshein

Mr. Sonnensheim does not believe in the possibility of a Bitcoin ETF being approved during 2018. When asked about it, this was his answer:

“so it’s really hard to say… I think that there are still quite a few concerns that the SEC has. If you look at the recent letter they published when they denied the Winklevoss ETF they’re still looking at a lot of factors within the underlying market including surveillance, regulation and to the best of my knowledge many of those things haven’t changed just yet.”

When asked about the importance of a Bitcoin ETF for the ecosystem, Mr. Sonnenshein does not consider it to be so relevant:

“I think it’s actually not as important as people make it seem … we’re actually seeing the institutional inflows into this space despite the fact that there isn’t an ETF.”

Arthur Hayes, CEO – Bitmex

Arthur Hayes

Mr. Hayes is not sure about a prediction regarding a Bitcoin ETF approval on 2018. When he was first asked about it he said:

“I actually took a look at the SEC website and there are two ETFs that have decision dates in q3 and September and two that have decision dates in q1 February of next year so I’d say there’s probably a 50/50 chance that we see some decision in q3 again and then again we have another to each yes looking for approval in February of next year”

However, at the end of the interview, Mr. Neu-Ner asked him to answer with one word: Will there be an ETF Bitcoin by the end of 2018? To which Mr. Hayes replied: “Yes.”

For Mr. Hayes an ETF Bitcoin is critical to the community:

“ it’s very important to get more retail money into the system because at the end of the day retail traders don’t want to have to worry about securing a Bitcoin wallet, where do they buy it from, using the different exchanges… so if all they have to do is click on an e-trade … they could buy an ETF which gives an exposure to Bitcoin but not allow them to actually experiences the risks of holding it that’s a very powerful way for them to get involved”

Mr. Hayes still maintains his position that Bitcoin (BTC) is “one ETF away” from reaching a value of 50k USD

Mark Brady, former ETF builder – Blackpool

MArk Brady

Mr. Brady considers that from a pragmatic point of view, an ETF represents a great opportunity, so he considers it to be of particular importance to the crypto sphere:

“Well I think from the standpoint of mass retail acceptance it’s very important when you think of an ETF it’s basically a container that allows you to put in different underlying assets that may be difficult for average retail investor to get exposure to”

When asked about the possibility of a Bitcoin ETF being approved in 2018, his response was stark:

“Very unlikely.”

The main reason is that he does not see a sufficiently regulated market in the near future to create the necessary conditions for an ETF.

Mati Greenspan, Senior Analyst – eToro

Mati Greenspan

Mr. Greenspan was perhaps the most ambiguous or conservative of all. Regarding the possibility of spotting a Bitcoin ETF by 2018, he said:

“Before the end of 2018, it doesn’t seem likely; however, it is a possibility for the first quarter of 2019.”

According to Greenspan, the SEC is likely to postpone some of its decisions until 2019, when the market will have a higher level of maturity.

Regarding the importance of Bitcoin ETF, he considers it important but does not give it much relevance.

“So yes it could be a good thing in that it’ll bring fresh money into the market new liquidity into the market is a very good thing and very healthy for the ecosystem
I don’t think that it’s the most important thing in the world, but if the ETF is approved what happens to the Bitcoin price most likely it’ll go up.”

Full show available here:

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BitMEX CEO: A Bitcoin ETF is Great For Adoption, Triples-Down On $50k Prediction

Despite the SEC declining the Winklevoss Twins’ ETF proposal, the discussion of such a fund is still a hot topic within the cryptocurrency community. CNBC Africa’s “Crypto Trader” show, hosted by Ran NeuNer of OnChain Capital, recently spoke with BitMEX’s CEO regarding what an ETF means for this nascent industry.

Taking into account Bitcoin’s current price action, Ran opened up the interview by asking Arthur Hayes how BitMEX has been performing. For those who are unaware, BitMEX is one of the highest volume cryptocurrency mercantile exchanges in the world, offering up to 100x leverage for traders of the XBT (BTC) contract.

The CEO of BitMEX noted that the exchange has been doing well, as a direct result of the volatility seen in the cryptocurrency markets.

Hayes also added that the exchange had done “four to five times” the amount of volume it had facilitated in the entirety of 2017. This figure took many by surprise, as a majority of other exchanges have been seeing declining volumes. However, taking into account that BitMEX supports leverage trading, it makes sense why this may be the case.

Arthur Hayes Speaks On Crypto-Based ETFs 

The Crypto Trader host went on to question Hayes about his outlook on Crypto-backed ETFs. The exchange executive first noted that there are two proposals that have verdict dates set for September, and another two in February 2019. Extrapolating what this information means, Hayes stated that he sees a “50/50 chance that we see some decision in Q3, and again we have another two ETFs looking for approval in February of next year.”

Speaking more on the highly-anticipated VanEck and SolidX’s ETF proposition, the executive said that “I don’t know.” Although those three words may be vague, he later elaborated on this specific proposal. Hayes stated:

“I think at the end of the day that the SEC wants to keep people interested in the financial markets and if retail continues to ask for these particular products (ETFs), at some point they are going to have to approve one of them.”

The CEO went on to call out the gold ETFs, pointing out the industry surrounding one of the most valuable metals in the world is unregulated, so “how could regulators not allow a Bitcoin ETF?”

Later speaking more on the most recent ruling on the Winklevoss ETF, Hayes commended the brothers for laying the groundwork for this aspect of the crypto industry, adding that other issuers will benefit from the work completed by their unsuccessful predecessors.

Ran, seemingly not fully satisfied with that answer, went on to query the industry leader on the SEC’s fears of the “underlying” Bitcoin price manipulation. Hayes brought attention to the fact that the SEC has not shown “empirical evidence” of what the regulatory body sees as manipulation, justifying that this reasoning is just an “excuse.”

What Does An ETF Mean For The Cryptosphere?

BitMEX’s CEO sees that acceptance of such a fund will produce a capital influx from retail investors, as an ETF streamlines the process of onboarding fiat into this industry, stating:

“Retail traders do not want to have to worry about securing a Bitcoin wallet, where do they buy it from, using the different exchanges. So if all they have to do is to click on their E*Trade, Scottrade, Interactive Brokers, 401k (etc.), to buy an ETF that gives them exposure to Bitcoin, but not allow them to experience the risks of holding it, that is a very powerful way for them (retail investors) to get involved”

Closing off his time on the show, Hayes tripled-down on his $50,000 price prediction, expecting that a positive ETF verdict will push the price of Bitcoin to the stratosphere.

While some may be skeptical of his analysis and speculation, Hayes perpetually keeps his ear to the ground of this industry, so it is likely that his statements hold some credence.

Title Image Courtesy of MaxPixel

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Bitcoin Will Fall to $5,000 Before Surging to $50,000 Before the End of the Year

Bitcoin is currently in the midst of a significant price rally. Thus, many experts have come out to say that the bad days are over for the top-ranked cryptocurrency. However, one trader believes that BTC will still see another dip before soaring to a new all-time high (ATH).

Bitcoin hasn’t Seen Bottom Yet

According to Arthur Hayes, BTC hasn’t seen the bottom yet. Speaking to CNBC on Thursday (July 19, 2018), the Bitmex co-founder and CEO said:

I don’t actually think we’ve seen the worst.

Hayes expects the current price rally to take BTC up to maybe $8,000 or $90,000. The Bitmex chief identified $10,000 as the most optimistic projection for the current BTC price increase. After this point, Hayes expects another massive drop that will see the number-one ranked token based on market capitalization set a new low for 2018.

I would like to see us test 5,000 to really see if we put a bottom in.

In June 2018, Bitcoin twice fell below $6,000 setting a new 2018 low at $5,700. Experts like TenX founder, Julian Hosp, predicted that BTC would dip close to $5,000 before setting a new ATH later in the year. Hosp’s end of year price forecast was $60,000.

Bitcoin is currently trading slightly above the $7,400 mark, an increase of almost 20 percent in the last 20 days. BTC last traded above $7,000 in mid-June before going on a massive dip that saw the asset drop $1,000 in a matter of hours.

Bitcoin Will Hit $50,000 by the End of 2018

Hayes still believes that his $50,000 BTC end of year price forecast can still come true. In an email to CNBC, the Bitmex chief said:

I think the current rally will top out close to but not greater than $10,000. Then we will fall and test $5,000. If that holds then we can rally to $50,000 by year-end.

Arthur Hayes also warned traders to be wary of the summer months because according to him, investors tend to cool off a bit. However, by the end of Q3 and the start of Q4 2018, Hayes expects the bullish sentiment to return once again.

Do you agree with Arthur Hayes’ BTC price analysis? What is your end of year BTC price forecast? Keep the conversation going in the comment section below.

Image courtesy of Coinmarketcap.

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Cryptocurrency Mints Britain’s Youngest Billionaire

Cryptocurrency–Things are looking good for the co-founder of BitMex.

In addition to becoming Britain’s youngest self-made billionaire, Ben Delo holds the distinction of being the United Kingdom’s first “Bitcoin billionaire.” The 34-year-old first launched cryptocurrency exchange BitMex in 2014 along with co-founder and vocal Bitcoin bull Arthur Hayes. In that time BitMex has climbed to the top of the exchange charts, becoming one of the most popular trading platforms for cryptocurrency, with a daily volume around 2 billion USD. Despite the flagging price of cryptocurrency throughout 2018, exchanges such as BitMex have reported significantly higher trade volumes over the previous year, with new user acquisitions reaching double-digit percent increases. Rival Coinbase, the popular cryptocurrency platform for Western customers, has been in the news for its recently revamped Coinbase Pro service, in addition to the launch of Coinbase Custody. However, just two weeks ago it made headlines for allegations of growth outpacing resources, to which the exchange replied that it was being inundated with new users at an unprecedented rate.

In the profile by Daily Mail, Delo cuts an uncharacteristically low-key figure in comparison to the ostentatious perception of the young and wealthy. While Delo has benefited from the exponential growth of cryptocurrency and the boom in adoption that occurred throughout this year and last, he describes the uncertain road he had to joining the ultra-rich, stating the project had consumed most of his life over the preceding four years,

“I have had my nose down in a start-up for the past four years. I was doing 18-hour days at one point.”

Since graduating from Oxford with a degree in mathematics and computer science, Delo has had stints with IBM and JP Morgan before founding the exchange. While hailed as a billionaire out of the U.K., Delo has been living in Hong Kong with his wife. The young entrepreneur cites Warren Buffett (unironically) and Bill Gates as role models in his conception of wealth, being characterized as living a relatively frugal life, as well as pursuing philanthropic efforts with his newly acquired affluence.

BitMex has been valued at 3.6 billion USD, with a reported 35 other “bitcoin billionaires” across the globe—although BitInfo reports that number could be as high as 200.

News of Delo’s ascension into the ranks of billionaire status comes on the heels of his co-founder making bold predictions for cryptocurrency this past week. Speaking with CNBC, Arthur Hayes speculated that Bitcoin would reach 50,000 USD by year’s end, despite the falling price that has accompanied the first six months of the year. Citing increased regulation and the possibility of Bitcoin ETFs, Hayes posited that the currency was in prime position for adoption by institutional and professional investors—it just suffers from the murky waters of lack of clear regulation.

“We could definitely find a bottom in the $3,000 to $5,000 range,” he said. “But we’re one positive regulatory decision away, many an ETF approved by the SEC, to climbing through $20,000 and even to $50,000 by the end of the year.”

If Hayes’ prediction proves to be right, sending the market cap of Bitcoin over 850 billion USD, there could be several more crypto-minted billionaires joining the likes of Ben Delo.

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Bitcoin Price Predictions: Take them With a Pinch of Salt, Says Peter Tchir

Not a day goes by without a self-proclaimed expert dropping a Bitcoin price prediction. The “cryptosphere” is filled with a multitude of forecasts ranging from going to zero or reaching a million dollars. Many of these predictions have no analytical backing. Even the ones that do are tenuous at best, trying to explain a market shrouded in the unknown.

Baseless Bitcoin Predictions

For macroeconomist, Peter Tchir, many of these Bitcoin predictions are unfounded. Writing in a recent article for Forbes, he examined the hype surrounding BTC price forecasts from notable figures in the cryptocurrency world as well as in mainstream finance. According to Tchir, many of them do not provide explanations for the price trajectories of cryptocurrencies.

After the astronomic price run of 2017 that saw many cryptos set new all-time highs, pundits seemed eager to contribute to the nascent virtual currency narrative by providing “guesstimates” of future price levels. John McAfee, Tom Lee, and Arthur Hayes are some of the cryptocurrency enthusiasts who have forecasted a new all-time BTC high in the coming months and years.

Particularly perplexing for Tchir is the fact that these predictions aren’t accompanied by any comprehensive analysis that can be examined to ascertain the veracity of the conclusions reached. The macroeconomist identifies the situation as a deal-breaker as far as the credibility of such forecasts is concerned.

Most Cryptocurrency Pundits are Working an Angle

Tchir surmised that many of these assertions about the future price of the asset bore ulterior motives behind them. Using Hayes’ recent remark of Bitcoin reaching $50,000 as an example, Tchir also declared that the BitMEX CEO’s position on the matter was based on “strong incentives to see crypto thrive.”

Arthur Hayes. Courtesy: CNBC

Bitcoin permabulls aren’t the only ones forecasting BTC prices with dogmatic fervor, permabears are also in on it. For every hopeful saying the crypto will end the year on a new high, another naysayer is saying BTC will crash. These BTC death knells have been around since the awakening of the public’s consciousness to the cryptocurrency market. Many of these crypto unbelievers hold significant stakes in mainstream financial markets that are facing threats from the cryptocurrency revolution. It is no surprise to see them espousing negative views.

The Media is After Cheap Clicks

BTC price predictions exist because there are platforms that report on them, many of whom do so without any journalistic due diligence. Tchir observed correctly that such a situation is uncommon in mainstream finance, saying:

There are a lot of rules surrounding announcements and prognostications from CEO’s, and even pundits, in the security markets.  Shouldn’t we be doing a better job on crypto?

Every price prediction by an analyst ought to be followed by a history of that person’s cryptocurrency inclinations. When a permabear sounds the next crypto doom, readers should know that he/she has been doing that since when Bitcoin was $100.

The market needs standards not only in the trading/business realm but in the way news is reported as well. The time for cheap clicks is over; the cryptocurrency news space needs more substance.

Do you attach any credibility to any of the many Bitcoin price predictions floating around? What is your end-of-year BTC price forecast? Let us know in the comment section below

Image courtesy of CNBC and also Ethereum World News archives.

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Bitcoin's Parimutuel Problem (Or Why Shorting Doesn't Pay Today)

When the price of bitcoin plunges — as it did last week — seasoned investors are caught in a market that doesn’t exactly have the mechanisms they’re used to.

Case and point, hedging long positions, is today a difficult prospect. Unlike most traditional stocks, where investors can open a margin account with their broker that allows them to short most shares, the tools in bitcoin are few and far between.

Yet, while some see betting big on bitcoin as a gamble in and of itself, a new casino-like exchange type is filling the gap for those seeking to bet – or otherwise prepare for – the cryptocurrency’s drops.

Enter parimutuel betting pools.

Far from a familiar term, it’s nonetheless an important one should traders want to know what they’re buying into. In simple terms, parimutuel pools are way of speculating on the future price of cryptocurrencies without actually owning the coins themselves.

Or as Lanre Sarumi, CEO of Level Trading Field, which last month launched parimutuel pool Bitcoin Market Predictor, told CoinDesk:

“Parimutuel [betting] is a group of people essentially predicting something, and the person with the most accurate prediction wins.”

Yet, their structures can differ dramatically. One might look more like a cryptocurrency Powerball, while the other is an intense derivatives exchange touting triple-digit leverage.

While their use for short exposure is a bit underdeveloped, more investors are participating in these pools – knowingly or not – to fill the gap.

And if they’re not aware of the limitations and risks involved, they could end up surprised – after all, parimutuel betting isn’t the most sophisticated structure for providing short exposure.

A simple game

Lanre’s Bitcoin Market Predictor, what he calls a “game of skill,” is the latest evidence that parimutuel pools could add some cushion to the cryptocurrency market’s lack of shorting options.

But while theoretically it gives users the ability to bet on bitcoin’s price dipping, the rules of the game are strict, allowing only groups of 10 to bet on the price of bitcoin only 60 minutes in the future. The three players with the most accurate predictions, whether the price is up or down, split the money from the group’s betting pool, so at $50 per player per round, the most an investor can make off their prediction is $225.

Obviously, this presents problems for serious retail investors, since the price of bitcoin (which they might hold) could drop substantially, and all they’ve done is make $225 at most betting that it would.

And if three other players predict closer to the actual price, an investor loses even the money they put in the pot.

In this way, Level Trading Field’s parimutuel pool is less a sophisticated way to short bitcoin, and more an enticing platform for those interested in gambling, and only gambling on bitcoin.

Still, the latter limitation could be especially important in today’s cryptocurrency market, since in early August all bitcoin investors got equal parts of another cryptocurrency, when a group of enthusiasts split from bitcoin’s blockchain creating bitcoin cash.

After all, if free money is being given out to bitcoin holders, it isn’t exactly to the investors benefit to be caught in a limited short position.

Moral hazard

The bitcoin-only limitation carries over to the other end of the parimutuel betting pool spectrum with BitMEX’s full-blown derivatives exchange.

The high-octane exchange is run by former Citigroup trader and ferocious bitcoin bull Arthur Hayes, who told CoinDesk its 100 times leverage was not only its differentiator, but its sex appeal. Traders come to BitMEX wanting to place high-powered bets with very little money down. But, clear that kind of colossal leverage isn’t without risk.

Parimutuel betting means that one trader’s gains are offset by another trader’s losses — so every dollar you win is offset by a dollar someone else in the parimutuel pool has lost – which creates what Hayes calls “moral hazard.”

And that hazard means if your trades are crushing it on BitMEX, there might not be enough equity in the system to pay out your winning bets.

In a way, it’s like breaking the bank at a casino. If the market makes huge moves too fast, traders with losing positions have those bets closed and sold. And without enough equity in the system to payout on the other side, traders with winning positions will also be closed out early, in essence capping the returns they can get.

To Hayes’s credit, he’s incredibly upfront and transparent about it:

“If you want 100x leverage – which obviously you do, because that’s why you’re here – you accept that we at BitMEX can’t put our balance sheet on the line to settle these contracts.”

Yet, still, candid or not, this risk doesn’t allow traders to get a foolproof short opportunity.

In this way, the market – however mature it’s becoming – is still struggling to offer investors refined mechanisms as they prepare for another possible plunge.

Deck of cards image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at [email protected].

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

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Bitcoin's Biggest Bull? Arthur Hayes Isn't Long Crypto – He's Short Government

In the coming war between digital currencies, which side will your money be on?

If that question sounds crazy, meet Arthur Hayes, a former CitiGroup trader who runs BitMEX, a Hong Kong-based crypto exchange that allows eye-bulging leverage – up to 100 times – when buying and selling cryptocurrency derivatives.

Not just another Wall Street veteran, Hayes may also be one of the industry’s biggest bitcoin bulls. It’s a bold claim, but you might agree if you saw his newsletter – a regular synthesis of cryptocurrency news, gangster quotes, GIFs and end-of-the-world premonitions.

In fact, Hayes thinks blockchain is lighting a fuse that will ignite open combat between “true cryptocurrencies” (like bitcoin) and a new “digital fiat” controlled by central banks.

These two parallel currency systems are the inevitable outcome of his core investing thesis:

“A digital society needs digital cash.”

In other words, bitcoin has brought the world cryptocurrency and institutions of all kinds will use the technology to their advantage.

Here’s what Hayes sees shaking out as a result: Governments will respond to the proliferation of cryptocurrency by withdrawing banknotes from circulation, and governments will issue digital fiat that functions similarly to cryptocurrency.

But don’t be fooled, according to Hayes, the similarities here are all on the surface.

Government-controlled digital fiat will be the antithesis of absolutely everything true cryptocurrency stands for. Central bank’s issuance of digital money will lead to a brave new world where governments are able to monitor and control every single transaction in an economy.

And countering that overreach is the reason Hayes believes bitcoin and other cryptocurrencies have a value proposition not just today, but for years to come.

The digital combatants

When Hayes talks about digital money, he sees the scope of battle on a truly global scale, not just within the U.S., but all across Europe, in China and in India.

What all these country’s governments have in common, according to Hayes, is the desire to use digital fiat as a tool of economic control.

He sees digital fiat as an instrument that will allow governments and global central banks to monitor every financial transaction, tax every sale and even lock out people from the payment system if they don’t have the right government-issued licenses.

Shifting digital fiat into cryptocurrency, he reasons, will be the only way to preserve privacy. Plus, cryptocurrency will allow individuals and businesses to trade in jurisdictions where parties don’t trust electronic fiat – or each other, for that matter – because they know cryptocurrencies cannot be tampered with.

Hayes said:

“If you want to have a financial presence – and not have somebody else know what you’re doing at all times – then you’ll use a form of cryptocurrency.”

A form of cryptocurrency that’s true, like bitcoin, zcash, monero or dash, he says, is one that offers users both privacy and security. These currencies, according to Hayes, have no utility other than being used as anonymous e-money.

In his mind, when a coin has additional utility it detracts from its desirability to be used as money since its value can fluctuate outside of what Hayes call its “moneyness.”

One example of a currency that is not money, according to Hayes, is ether, which he says doesn’t qualify as money because of its use case for distributed applications.

Not for the everyday

But there may be limits to the value propositions of even true cryptocurrencies today.

For example, Hayes sees small value transactions are out of line with a once resounding narrative in the space, that bitcoin is – and should be – a payment system for consumers.

Hayes told CoinDesk:

“I don’t think bitcoin is going to replace consumer facing activities, like buying a cup of coffee or buying a magazine at a 7-Eleven.”

Hayes called bitcoin’s user experience “terrible” for these purchases, because public blockchains are slower than private payment systems. So, for a trip to Starbucks, buying coffee with Apple Pay is a better experience than paying with bitcoin, he contends.

It’s an interesting observation in that many of bitcoin’s strongest proponents tend to envision a world where the cryptocurrency is used for everything. Even still, Hayes is just as bullish on bitcoin, as he continues to reiterate what a fantastic mechanism it is for online international payments and anonymity.

And “those trade flows are massive,” he said.

But despite his bullishness, Hayes doesn’t own any coins personally. According to Hayes, he believes his stake in BitMEX gives him sufficient exposure to the crypto market, since BitMEX’s performance is tied to higher prices and market caps of cryptocurrencies and digital tokens.

Freedom in derivatives

And BitMEX is exactly the kind of exchange you’d imagine a guy like Arthur Hayes would dream up — a wild, intense, leveraged-fueled ride on a derivatives rocketship that lets traders place high-powered bets with very little money down.

There’s a kind of freedom in derivatives, since they’re not tied to the physical delivery of any asset. Instead, derivatives bets play in a virtual world, where the only limits are the money flowing through the system.

That kind of world clearly appeals to Hayes:

“When you’re in the derivatives space you can essentially create any type of exposure you want.”

And he’s gone for triple-digit exposure, which not only makes his company “sexy” to traders, but also comes with substantial risk.

Such colossal leverage means BitMEX cannot guarantee the settlement of its trades, meaning Hayes can’t tell you for certain that you’re going to get paid out at 100 cents on the dollar on a winning trade. While Hayes and his BitMEX users enjoy this risk, someone new to the crypto space might be more than a little intimidated.

Yet, Hayes believes that’s not reason for swearing off the crypto scene altogether, instead he gives more level-headed advice to newcomers.

“I would tell that person to buy a small amount of bitcoin,” he said, noting that bitcoin is a safer bet than most cryptocurrencies because of its $80 billion market cap.

He concluded:

“Once they are comfortable with that, start doing research and deciding for themselves which coins fit their investment risk profile.”

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Zerocoin Electric Coin Company, developer of zcash.

Portrait image via Arthur Hayes 

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at [email protected].