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Top 10 Cryptocurrencies See Green After a Tumultuous Week

Bitcoin (BTC)–After one of the hardest hitting weeks to the crypto markets in an otherwise bearish year, the top ten currencies by market capitalization appear to be in recovery.

On Monday, the total market capilization of cryptocurrency dipped below $200 billion for the first time since last year, signaling a relative low from January 2018’s near-trillion dollar valuation. Altcoins in particular experienced a severe decline, with currencies across the board posting double-digit losses throughout the week.

Ethereum, an otherwise stalwart coin that has both developers and investors excited over, dropped to a valuation not seen since last year, making for a full retraction in value following the bull run to start the year. Various analysts disagreed over the exact reason for the plunging price of Ether, but two predominant theories emerged. The first was proposed by Biswas Das, director of crypto hedge fund BloomWater Capital, who blamed the ICO market for causing a decline in Ethereum. According to Das, the falling crypto markets in addition to jumpy venture capitalists were leading to a mass sell-off in the Ether collected for ICOs–in part to cover costs, but also to lock in profits ahead of a total market collapse,

“These startups are raising a lot of funds but they don’t have treasury management or enough cash management experience, so they’re selling too early and causing a lot of pressure in the market. It was fine last year but right now the the market is so fragile that it causes a lot of pressure.”

Arthur Hayes, CEO and co-founder of crypto exchange BitMex, echoed the sentiment that ICOs were hurting the price of Ethereum, making a bold claim that he believed price depression would lead to Ether dropping below $100.

While Ethereum benefited through most of 2017 and early 2018 from the massive boom in ICO development, of which almost every project is built upon the ERC-20 platform, the plunging price of crypto has led the initial coin offering venture capitalists to force sell Ether. However, in a statement to CCN, eToro’s Mati Greenspan blamed the sinking price of cryptocurrency and Ethereum on a strengthening dollar. According to Greenspan, efforts to stave off inflation in the United States is leading to a stronger dollar, which means investors have less incentive to shelter their funds from inflation in cryptocurrency, particularly with the massive price volatility currently wreaking havoc on the market,

“As the United States moves to tighten its economy and avoid strong inflation, they’re taking action that is strengthening the Dollar. Because the US Dollar is the global reserve currency, many smaller economies rely heavily on a stable exchange rate with the greenback. So too, as the Dollar is being seen as a stable store of value at the moment, there really isn’t much incentive for people to store their money in digital assets.”

Most of the market is still hinging upon a decision by the United States Securities and Exchange Commision (SEC) over whether to approve a Bitcoin Exchange-Traded Fund. The belief is still that institutional investors and most Wall Street players are waiting for greater government regulation in the cryptomarkets before entering, which has produced a large amount of interest over ETFs.

As of writing, total market capitalization was holding at $210 billion.

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Analyst: Strong U.S. Dollar Hurting Cryptocurrency

Bitcoin (BTC)–While most of the cryptomarkets and its investor base scramble to find the cause over the recent bottoming-out in the market, which has made only a modest recovery in the past few days, one analyst has an interesting take on the falling price of Bitcoin and altcoins: a strengthening U.S. Dollar.

Since the start of August, the cryptocurrency market has been experiencing a roller coaster ride in terms of volatility. While the end of July seemingly signaled a recovery in the market, and possibly a bullish return for investors, subsequent price action has shed a different light. Following widespread faith in the passage of a Bitcoin Exchange Traded-Fund by the U.S. Securities and Exchange Commission (SEC), the market made a decent recovery, with Bitcoin rising above $8000 and holding its position. However, a series of events led to a decrease in investor confidence, beginning with the SEC’s denial of the Winklevoss Twins’ proposed ETF.

New York-based firm VanEck has been the leading candidate for approval in the creation of the world’s first Bitcoin ETF, but also saw a setback in the form of the SEC delaying decision from early August to the end of September. Following news of a delay and another potential denial of a regulated ETF, the bears pushed the price of Bitcoin down to $6000, with altcoins getting obliterated in the fallout and posting double-digit losses on an already hurting industry. At this point, the norm among the altcoin market is 95 percent or more losses since the all-time high experienced at the beginning of January, creating a market that has been very bearish throughout 2018–and possibly little end in sight.

In addition to weakened investor confidence via the SEC delaying its decision on a Bitcoin ETF, analysts also speculated that a mass ICO cashing out was hurting the market of cryptocurrency. Ethereum in particular took hard losses early in the week, falling to below price levels experienced at this point last year. The thought process was that ICOs, which are almost universally built on top of Ethereum’s ERC-20 token, were cashing out in volume to cover costs associated with the falling crypto market. Arthur Hayes, CEO and co-founder of BitMEx, made the claim that ICO investors would continue the sell-off, thereby driving the price of ETH to below $100. However,  eToro’s senior market analyst Mati Greenspan disagrees. Instead of ICO sell-off depressing the price of cryptocurrency, Greenspan blames a strengthening U.S. dollar as being indicative of the market turn,

“As the United States moves to tighten its economy and avoid strong inflation, they’re taking action that is strengthening the Dollar. Because the US Dollar is the global reserve currency, many smaller economies rely heavily on a stable exchange rate with the greenback. So too, as the Dollar is being seen as a stable store of value at the moment, there really isn’t much incentive for people to store their money in digital assets.”

In a statement to CCN, Greenspan continues,

“Over the course of this week, it seems that cryptocurrencies have been reacting negatively to the surging US Dollar. In this sense, they’ve been acting a lot like traditional commodities,”

As much as some in the cryptocurrency industry consider digital currencies waging a war against traditional fiat, the U.S. dollar may actually be to blame for the falling price of crypto. While being a safeguard against deflation has long been a selling point for cryptocurrency, Greenspan contends that a strengthening U.S. dollar alleviates that fear, in addition to providing security against price volatility.

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Ethereum Co-Founder: Sinking Price of Crypto Will Not Hurt Growth

Ethereum (ETH)–Joseph Lubin, one of the co-founders to the second largest cryptocurrency by market capitalization Ethereum and current CEO of ConsenSys Inc., told Bloomberg in an interview published yesterday that he is not concerned with the sinking price of cryptocurrency or the overall impact it will have upon the growth of the industry.

While investors across the world reel from double-digit losses to extend an already taxing market in 2018, Lubin is confident that the industry will continue it’s march of adoption and growth that has characterized 2018 despite the otherwise bearish atmosphere. In particular, Lubin cites last December’s massive bull run, which bled over into the early weeks of 2018, as being bubble-like developments that are similar to price increases in the past. As Lubin points out, the past occurrence of BTC and cryptocurrency in general spiking in price, followed by a crash (hence creating multiple bubbles over time) is just par for the course, and each time getting slightly worse. While the bubble makes for a terrible experience to investors having to survive the bear market, it doesn’t indicate that the industry is failing in terms of development or adoptive achievement. Lubin claims there have been,

“six big bubbles, each more epic than the previous one, and each bubble is astonishing when they’re happening.”

Despite being all consuming during the bubble, looking back on the ebb and flow of the market reveals a more steady movement in price, which Lubin refers to as ‘pimples’ on the chart. He also finds, in some small part, the severity of the crash to be indicative of the industry’s growth. The most recent crash has been that much more severe due to the fact that cryptocurrency is spreading, ICOs are on the rise, more projects are being developed with intriguing concepts compelling investors to pour money into,

“…we build more fundamental infrastructure, we see a correction, and the potential gets even more impressive… I absolutely expect that there is a strong correlation between the rise in price and the growth of fundamental infrastructure in the ecosystem and the growth of development in the ecosystem. We are probably two orders of magnitude bigger as a developer community than we were eight or 10 months ago.”  

Lubin, like other leading authorities in the industry of cryptocurrency, blames part of the crash and price volatility on the large number of speculative investors swaying the market, creating unhealthy conditions and myopic goals. Lubin, who helped co-found Ethereum alongside the outspoken Vitalik Buterin, has put his primary focus on growing the cryptocurrency industry in terms of utility and building greater adoption rather than through a price-focused discourse. Having the market dominated by speculative-driven investors is not a proper indicator of how the actual industry and underlying technology is performing,

“So we can look at the price and make growth plans and projections, and we’re still on track, basically. So this is not unexpected.”

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Short Ethereum Token: The Token That Rises When ETH Plummets, And Plummets When ETH Rises

The crypto market is steadily maturing, expanding the possibilities for investors. Good news for the growth of crypto-verse because the more options there are, the more people can consider it an attractive investment option.

dYdX logo

Within the group of initiatives that have dared to take a step forward in the creation of new market strategies, one of which is worth mentioning is dYdX. For those with some knowledge of mathematics, the name of this startup comes from the concept of derivatives, an intelligent choice by the team, given that they focus on financial derivatives trading.

One of the points that make dYdX stand out is that they offer a trading option that is so far unusual for the markets. The team behind this platform have created a token which variation is inversely proportional to that of Ethereum.

Short Ethereum Token: Diversify Risks With New Investment Options

As explained by Tech Crunch , the idea of the token is risk diversification, allowing traders to short the token by making profits if they correctly predict a bearish streak in the prices of Ether (ETH):

“The idea is that you buy the short Ethereum token with ETH or a stable coin from an exchange or dYdX. The short Ethereum’s token price is inversely pegged to ETH, so it goes up in value when ETH goes down and vice versa. You can then sell the short Ethereum token for a profit if you correctly predicted an ETH price drop.”

Mr. Antonio Juliano, CEO of dYdX, comments that beyond being a speculative tool, the company expects to be able to offer financial products of proven quality and solidity:

“We think of it as more than just shorting your favorite shitcoin. We think of them as mature financial products.”

dYdX allows traders to execute derivatives operations under the security of a decentralized platform based on the 0x protocol. This is a crucial difference from other options that require traders to deposit funds under the control of third parties, exposing their money to hacking or uncontrolled errors.

Mr. Juliano commented that he is confident not only in the success of the Short Ethereum Token offer but also in the dYdX platform in general:

“We plan to capture value at the protocol level in the future likely through a value-adding token … It would’ve been easy for us to rush into adding a questionable token as we’ve seen many other protocols do; however, we believe it’s worth thinking deeply about the best way to integrate a token in our ecosystem in a way that creates rather than destroys value for end users.”

dYdX: A Serious Business With Lots of Potential

Likewise, the startup has raised high expectations in several firms that have been involved in its financing rounds. Polychain partner Olaf Carlson-Wee said about it;

“Antonio and his team are among the top engineers in the crypto ecosystem building a novel software system for peer-to-peer financial contracts. We believe this will be immensely valuable and used by millions of people … I am not concerned with short-term revenue models but rather the opportunity to permanently improve global financial markets.”

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Reddit’s Cofounder Alexis Ohanian Keeps His Prediction: BTC at 20k and ETH at 1.5k by 2018 Are His Bets

In an interview for CNBC, Alexis Ohanian spoke about the stability of Bitcoin (BTC) as the cryptocurrency par excellence within the crypto sphere.

For Mr. Ohanian, Bitcoin (BTC) has already been battle-tested and has proven victorious. The co-founder of Reddit and Initialized Capital comments that Bitcoin is “certainly the most robust” crypto right now and is also “one of the best proofs” that cryptocurrencies are an excellent means of storing value, especially in times like the ones we have today.

He argued that his prediction of the value of the two main cryptos in the global market cap has strong chances of being met. For the famous investor, Bitcoin will reach at least 20k, and Ethereum will reach 1.5K before the end of the year.

He commented that Bitcoin is a good investment despite the high volatility of prices. Scalability efforts and its growing adoption make it an exciting option for those with a long-term vision.

“As volatile as it’s been, we see [Bitcoin] continuing to go up over the long term.”

According to Mr. Ohanian, Bitcoin (BTC) and cryptos, in general, can not only contribute to building a better economic system but also a better way to interconnect data

Better Times Ahead

Ohanian believes that thanks to cryptos it is possible to promote the construction of a “new internet” based on “the idea of being able to browse with a store of value.”

Internet of Value / Courtesy: Z-punkt.de

Internet of value is an idea that has been circulating over the last few years, even though it has not yet become a reality. Despite these difficulties, Ohanian sees cryptos as a “changing sign of the times” and as a “viable alternative that is showing more and more credibility over time.”

However, unlike some anarchists and maximalist enthusiasts who overestimate the influence of cryptocurrencies, Ohanian was explicit in mentioning that he is “not calling for the end of fiat or anything like that.”

Ohanian Invests in a Better World

He commented that with the creation of Initialized Capital, he seeks to invest in startups that have a development potential within the crypto money ecosystem. In his statements he mentioned that his VC firm was one of the first to invest in Coinbase during its birth:

“We’re looking for those companies who are building the robust but very unsexy infrastructure that’s probably not going to make a headline anytime soon.”

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Crypto Markets Add 40 Billion USD, Claw Back From Recent Lows

Cryptocurrency Markets–Despite 2018 being a near-continuous bear cycle for cryptocurrency, the past three days have brought a significant amount of wealth back into the industry–giving investors a short glimpse of hope that the relative bottom might have been reached.

Since peaking at an all time high of 830 billion USD in the first week of January, the cryptomarkets have been in steady declining, shedding 67% of their value over the first six months. June looked even dire for investors, as all coins plummeted to their relative low this past week, with the market reaching 234 billion USD for the first time since last October.

While most investors cautiously await the performance of the market, the major currencies in the industry have all posted significant gains in the last several days, clawing back into the green for the first time since nearly the end of last year.

Bitcoin has had to contend with recent news over the failure of Lightning Network to perform consistently in transactions of larger value, but the currency is showing strength among community perception and in the willingness for investors to hold their coins through the falling price. Despite CNBC’s Crypto Trader predicting Bitcoin to test 5300 USD levels, other bullish proponents for the currency have been adding their two-cents to the dialogue. Bitmex co-founder Arthur Hayes recently made the prediction that Bitcoin would achieve 50,000 USD this year–fulfilling similar predictions made for the currency in the midst of last year’s bull run–citing the history of cryptocurrency volatility and price swings as being nothing new to veteran investors,

“something that goes up to [around] $20,000 in one year can have a correction.”

Hayes does contend that a bottom could form much lower than current prices, but highlights the fact that cryptocurrency is teetering on a precipitous edge of adoption. One small regulatory change or positive announcement could be the push needed to send the currency exponential once again,

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

This time a month ago, few high-profile investors or industry figures were venturing any positive predictions for cryptocurrency in the near future. That is slowly beginning to change, with the announcement of several hedge funds venturing into crypto despite the recent price-lows.

Ryan Rabaglia, head trader with Octagon Strategy, echoed the comments of Arthur Hayes in an interview with CNBC, saying more clear market regulations would pave the way for cryptocurrency growth. The current state of the industry, without regulation or even a green-light for future regulation, has created a buffering uncertainty for professional and institutional investors. Until that barrier is removed, big-money players from Wall Street and around the world are more content to stand on the sideline, even as average investors continue to enjoy double to triple-digit gains.

While regulation has long been antithetical to the decentralized ethos of cryptocurrency, a more clearly defined legal understanding of dealing in crypto, from everything surrounding exchange operation to tax collection, could go a long way in inspiring confidence in financial institutions looking to guard against the downside of crypto investing. With both Hayes and Rabagalia remaining bullish on cryptocurrency in the event of greater regulation, it’s worth considering the impact upon market prices and industry growth.

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