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Crypto Startups Going Bankrupt Amidst Market Crash

Blockchain, Cryptocurrency–While investors are left holding the tab from the plummeting crypto market, with this week seeing a relative low for Bitcoin since peaking at $20,000 in December 2017, crypto-based startups have also had to contend with the fallout.

On December 6, Bloomberg reported on a round-up of cryptocurrency startups that are closing doors amidst the most recent price rout for Bitcoin and the broader altcoin market, starting with ETCDEV–the group behind the launch of Ethereum Classic.

ETC, seventeenth in market capitalization with a value of over $400 million, announced last week that it would be closing shop following a shortage of funds and inability to raise more capital to keep the project afloat. Igor Artamonov, founder of ETCDEV and the forked coin of Ethereum (ETH), spoke in an interview on the state of his company in the context of the broader falling market,

“There are a few things that happened at the same time. I am sure if that happened a year ago, that wouldn’t be a problem at all, a year ago there was a lot of free money in the market. But in a bear market there’s a change.”

ETCDEV is not the only crypto based company to take a hit in the present market, with the Bloomberg report including actions by ConsenSys, a software company based out of New York, to cut its workforce by 13 percent as a direct result of falling coin prices. In November, content publishing platform Steemit Inc., which also created the currency Steem (STEEM) to facilitate in-house transactions, had to layoff 70 percent of its employees.

Bloomberg lays the majority of the blame in projects over-extending themselves on digital assets, setting up significant losses as a result of 2018’s ongoing bear cycle,

“Many of the companies are suffering because they kept a portion of their funds in digital assets, whether in tokens they sold through initial coin offerings or in Bitcoin and Ether, which served as the preferred means of exchange in the crypto world. As prices collapsed this year by more than 90 percent in some cases, and their so-called digital wallets thinned out, many developers found they couldn’t raise additional funding.”

With the decline in crypto prices and the demand for ICOs, many projects that made their fortune collecting coins in exchange for issued tokens have had to contend with the ill effects of a collapsing market. In addition, the landscape for fundraising has vastly shifted, with projects no longer being able to raise millions on a whitepaper alone or by including “blockchain” in a company title.

In some ways, the declining market may have the effect of pushing better projects to the top of the heap, with efficiency being valued over greed. Given the sudden boom cryptocurrency experienced in 2017, with coin prices rising several thousand percent for many currencies by year’s end, the gold rush for blockchain and ICOs created a scramble that is still having negative effects on the industry. The focus became on launching projects rather than promoting durability, quality and real world use–a hallmark of an inflated and destined to crash industry.

With prices and the market resetting to a valuation to that of over a year ago, cryptocurrency will find itself of having to do more with less, which includes focusing on development routes that will lead to the greatest adoption by Main Street customers while drawing the interest of Wall Street investors.

The post Crypto Startups Going Bankrupt Amidst Market Crash appeared first on Ethereum World News.

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Bitcoin Price Spikes to Nearly $9K on Little-Known Crypto Exchange

For a cryptocurrency exchange that has seen its bitcoin price trade at a market premium since launch, the spike to nearly $9,000 on the WEX exchange on Wednesday was an outlier.

Some background: in July of last year, U.S. and international law enforcement took aim at BTC-e, the long-running – and long-mysterious – cryptocurrency exchange. In a dramatic turn, a Russian national and one of BTC-e’s suspected employees was arrested and charged with laundering billions of dollars while American regulators moved to slap the exchange with a massive $110 million fine.

In the months since, BTC-e has returned under the WEX banner while Alexander Vinnik has been the subject of a legal tug-of-war between Russia, the U.S. and, now, France, each of which is seeking to extradite him. Vinnik has that he is innocent of the charges levied against him.

Yet Wednesday’s move is a curious one, with the price of bitcoin (against the U.S. dollar) on WEX climbing to $8,999, as shown in the graph below:

By contrast, CoinDesk’s Bitcoin Price Index (BPI) hasn’t climbed above $6,396 since the start of trading on July 11.

The sharp increase started around 16:00 (UTC) from a comparatively high price point of about $7,800. To put things in perspective, Coinbase, a competing US-based crypto exchange, featured bitcoin prices throughout the entirety of the day between the range of $6,200 and $6,400.

So what gives?

As might be expected, the unexpected surge stoked speculation that WEX is either insolvent, suffering banking problems or gearing up for a calculated exit. BTC-e’s long-mysterious reputation and links to the now-defunct dark market Silk Road may arguably have provided fuel for such allegations.

The move also comes a day before WEX will undergo a planned maintenance period scheduled to last for 2 hours, according to a post on Twitter from July 9.

For its part, the exchange hasn’t commented on its public-facing channels about the price spike, and a message sent to WEX’s official account on Twitter wasn’t returned by press time.

Bitcoin image via Shutterstock

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Futures Launch Weighed on Bitcoin's Price, Say Fed Researchers

Researchers from the U.S. Federal Reserve Bank’s San Francisco division believe that the launch of bitcoin futures on several marketplaces in the U.S. last December played a role in a subsequent slump in the cryptocurrency’s price.

According to a research paper published on Monday, the authors  – including three researchers from the Federal Reserve Bank of San Francisco as well as a finance professor from Stanford University – believe bitcoin’s recent price trend is somewhat similar to how the housing bubble developed in the U.S. during the 2000s.

And the introduction of bitcoin-related derivatives played a part in that trend, the authors wrote.

As previously reported by CoinDesk, the Cboe and CME Group moved their bitcoin futures products to the market near the end of the year after obtaining approval from the Commodity Futures Trading Commission (CFTC). It was around this time that the price of bitcoin nearly hit $20,000 after surging throughout that year, only to fall close to $6,000 by the end of the first week of February.

Citing data and calculations conducted through their research, the Fed paper’s authors argue that the “rapid rise of the price of bitcoin and its decline following [the] issuance of futures on the CME is consistent with pricing dynamics suggested elsewhere in financial theory.”

Such pricing dynamics, as the researchers explained, refer to a trend where demand for a financial instrument is initially driven by optimists who push up the price until the point where the market introduces a mechanism that allows pessimists to invest reversely.

The researchers argued:

“And until December 17, those investors [optimists] were right: As with a self-fulfilling prophecy, optimists’ demand pushed the price of bitcoin up, energizing more people to join in and keep pushing up the price. The pessimists, however, had no mechanism available to put money behind their belief that the bitcoin price would collapse. So they were left to wait for their ‘I told you so’ moment.”

That said, such trends may not continue indefinitely, as the authors further suggested.

As the bitcoin mining process goes on and fewer coins become available (as a result of the scheduled halving of the network subsidy, now pegged at 12.5 BTC per block), the authors argue that the transactional function of bitcoin as a payment method could play a leading role in driving its value as “speculative dynamics disappear.”

Read the full Fed paper below:

FedBTCPaper by CoinDesk on Scribd

U.S. dollar image via CoinDesk

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Goldman Sachs to Begin Bitcoin Futures Trading Within Weeks

Investment banking giant Goldman Sachs will use its own money to trade bitcoin futures on behalf of its clients, according to the New York Times.

The Times reported Wednesday that while the exact launch date of the new trading operation is not yet set, the move came after the bank’s board of directors signed off on the initiative. Goldman is also set to “create its own, more flexible version of a future, known as a non-deliverable forward, which it will offer to clients,” according to the report.

Goldman executive Rana Yared said the decision resulted from a growing number of inquiries from clients that indicated interest in holding bitcoin as an alternative asset.

“It resonates with us when a client says, ‘I want to hold bitcoin or bitcoin futures because I think it is an alternate store of value,'” she told the Times.

The investment bank has hired its first “digital asset” trader, Justin Schmidt, to handle the daily operation. Schmidt previously worked as a trader at hedge fund Seven Eight Capital before leaving last year to trade cryptocurrencies.

The news reflects the growing involvement of Goldman in the crypto-market, as CEO Lloyd Blankfein has previously said that the investment bank was clearing bitcoin futures for its clients. Per the Times, any deeper action – including the direct handling of bitcoin – will only come following approval from U.S. regulators.

And according to Yared, Goldman officials have taken a cautious approach throughout the process.

“For almost every person involved, there has been personal skepticism brought to the table,” Yared was quoted as saying, adding:

“It is not a new risk that we don’t understand. It is just a heightened risk that we need to be extra aware of here.”

Goldman Sachs logo image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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MarketWatch Is Tracking Eight More Cryptocurrencies

MarketWatch, the news publishing unit of Dow Jones Media Group, announced Wednesday that it will begin tracking the market moves of eight additional cryptocurrencies.

On Wednesday, the company said that on top of its bitcoin tracking tool, MarketWatch will display information for ether, XRP, bitcoin cash, litecoin, ether classic, monero, dash and zcash. The website has been tracking the price of bitcoin since 2014.

The new service will post real-time quotes for both the U.S. dollar and the euro – as well as historical price trends for the nine crypto-assets – using data from the cryptocurrency exchange Kraken.

“It’s no doubt that our readers, as the world’s savviest investors, have an eye on digital currency and we’re happy to be expanding our real-time tracking of a total of 9 cryptocurrencies in both Euro’s and USD, with Kraken’s help,” Dan Shar, general manager at MarketWatch, said in a statement.

The Dow Jones Media Group itself has moved to test blockchain in recent days, perhaps signaling a broader interest i the tech within the company past its offerings on MarketWatch.

Dow Jones said last week that it is working with the privacy-oriented Web browser startup Brave in order to trial its blockchain platform. The two firms will test delivering content using Brave’s blockchain-based platform for digital advertising, and Dow Jones Media Group subsidiaries Barron’s and MarketWatch will become “verified publishers,” as previously reported.

MarketWatch image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Ex-IMF Economist: Bitcoin Could Drop to $100 in the Next Decade

A well-known economist has predicted a steep drop in the price of bitcoin over the long-term.

Kenneth Rogoff, a Harvard professor and former chief economist at the International Monetary Fund, said on CNBC’s Squawk Box program on Tuesday that he expects a fall to as low as $100 over the net decade.

Rogoff remarked on the show:

“I think bitcoin will be worth a tiny fraction of what it is now if we’re headed out 10 years from now…I would see $100 as being a lot more likely than $100,000 ten years from now.”

Rogoff struck a critical tone about bitcoin’s use as a means of payment, arguing that there aren’t many uses for bitcoin payments beyond tax evasion and money laundering. Indeed, the former IMF economist has put forward what could be called an ultra-bearish stance on bitcoin prices in the past. Last October, he wrote an op-ed for The Guardian arguing the price of bitcoin will collapse even if the underlying technology thrives.

In part, he based this theory on the idea that governments would not allow decentralized or anonymous cryptocurrencies to completely replace state-issued tender.

Other researchers, looking at bitcoin’s value proposition through the payments angle, have reached other conclusions in the past. Digital Asset Research estimated that bitcoin transaction use cases in 2017 would have established roughly a $2,074 value – even without speculative trading or any store of value market.

And on the illicit activity front, a study by the British blockchain analytics firm Elliptic found only 0.61 percent of the money involved in European bitcoin exchanges and conversion services were verifiably connected to such uses.

Although Rogoff may not be the biggest fan of bitcoin, he still advocated during Tuesday’s interview for a global regulatory response rather than outright bans.

“It really needs to be global regulation. Even if the U.S. cracks down on it and China cracks down, but Japan doesn’t, people will be able to still launder money through Japan,” he said.

Japan is a unique example to cite, considering the nation boasts perhaps one of the world’s most mature regulatory frameworks to date. Japanese regulators said in February that they plan to ramp up on-site exchange inspections – a notable position to take considering that the National Police Agency reportedly identified 669 cases of suspected money laundering from exchange platforms between April and December 2017.

Image Credit: Richter Frank-Jurgen/Flickr

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. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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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Massachusetts Securities Regulator: Bitcoin Fails 'The Smell Test'

The top securities regulator in Massachusetts told CNBC yesterday that the bitcoin market is “entirely speculation.”

“It doesn’t pass the smell test,” said Secretary of the Commonwealth William Galvin, whose responsibilities include overseeing the state’s securities division. He warned:

“It’s also subject to manipulation, because no one can explain it, no one can control it.”

Galvin’s comments came as the latest voice from the U.S. regulators in warning investors about risks associated with cryptocurrencies, following the Securities Exchange Commission and the Financial Industry Regulatory Authority earlier this month.

Yet, it wasn’t Galvin’s first comments on the bitcoin market. Earlier this month, Galvin issued a press release cautioning against “bitcoin mania.” It may have been the first such warning by a state regulator, according to CNBC. He told the network that he is not coordinating with other state regulators on the issue at the moment.

The release listed seven points for investors to consider before buying bitcoin, including checking fees on exchanges, the inability to recover stolen funds and the wild fluctuations in price.

The federal government has also been cautioning investors about the cryptocurrency’s historic rise. Galvin said, “we all seem to agree that this is a problem,” and also extended his concerns to issues around other activities such as initial coin offerings.

“We believe they (ICO) certainly qualify as securities,” Gavin said, adding “This is clearly an area with potentials for fraud. And we are very concerned about that.”

Massachusetts State House 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. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Bitcoin Price Drops Below $15k, Down 25% from All-Time High

The price of bitcoin is down more than percent from the all-time high of nearly $20,000 reached this past weekend, market data shows.

Prices fell to as low as $14,502 during today’s trading session, according to CoinDesk’s Bitcoin Price Index (BPI), about 25 percent from the all-time high of $19,783 reported on Dec. 17.

Overall, bitcoin has seen several notable price drops following Sunday’s gains, including a dip below $17,000 on Tuesday that accounted for a roughly $1,800 drop on the day. Indeed, analysts have suggested that the price could experience continued volatility as 2017 comes to a close and new money, brought in by bitcoin’s meteoric gains, exits for fiat.

But, others may be testing the waters in alternative cryptocurrencies, as bitcoin is far from alone in having seen its price decline after recently hitting an all-time high.

According to data from OnChainFX, which charts price developments for cryptocurrencies, all of the top-20 coins by market capitalization saw an all-time high within the past four days. Of those, cryptocurrencies like bitcoin cash, dash and litecoin have posted declines in the last 24 hours.

Dropping water image via CoinDesk archive

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. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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 Price Rally Has Been 'Amazing' Says Nuveen's Bob Doll

Bitcoin’s price “feels speculative,” according to the chief equity strategist for Nuveen Asset Management.

Speaking with CNBC today, Nuveen’s Bob Doll made the remark, becoming the latest traditional finance analyst to point to the speculation in the market. Doll’s comments were driven by bitcoin’s surge to a new all-time high, following its jump above $9,000 this weekend.

Speculative aspects aside, Doll added that “it’s been an amazing run” for bitcoin.

He told the network:

“I confess it’s an area of that to me feels speculative, but you might call me old or old-fashioned. It’s been an amazing run, has it not?”

Doll also indicated that the cryptocurrency price ramp has gotten some quarters of the finance world talking, though what that interest will lead to remains to be seen.

“‘With bitcoin, why do you need the stock market?’ has been the saying of late,” Doll quipped.

Doll isn’t the first from Nuveen – which was founded in 1898 and boasts roughly $948 billion in assets under management – to comment on cryptocurrency markets.

In October, Nuveen announced plans to put some of its less liquid assets onto exchange-traded funds. According to Bloomberg, the firm remarked at the time that bitcoin’s rise indicated an interest in new ways to transact currencies.

The firm also suggested that it sees blockchain providing “some real usefulness and potential in the market,” though it cautioned that any potential applications of the tech in the finance space remain in development.

Image via YouTube/Bloomberg

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. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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.