Bitcoin has bounced back to $16,437, a 10% gain according to Coinmarketcap.com, from lows a week ago around $13,000 in the see-saw pattern we predicted in our previous report. The market now waits to see if the cryptocurrency can break through resistance at $16,500, a level it failed to sustain over the holiday period.
If recent rangebound trading holds, then selling may take hold above $16,500. This time however, the news of buying by Peter Thiel’s Founders Fund venture capital firm has helped to bolster the confidence of bulls to take bitcoin higher. The Founders Fund invested $15-20 million in bitcoin in 2017, a sum that has appreciated in value by “hundreds of millions”, according to a report on the Wall Street Journal.
Total cryptocurrency market cap now stands at $769 billion.
A number of high-flying altcoins have fallen back as investors shift money back into bitcoin. Ripple is off nearly 14% and Cardano is down 13% and Ripple rival Stellar Lumens 17% lower, over the past 24 hours. Chinese blockchain coin Tron has given up some of its huge gains for the week, now trading at $0.2 after reaching a high of $0.25 on Thursday.
Tron, a blockchain platform offering out of China, jumped 160% in the past few days following founder Justin Son’s tweet that he would be announcing a partnership with a Nasdaq listed company next week put a rocket under its price. Tron also signed a deal with bicycle-sharing company oBike in Singapore earlier this week. Using Tron’s technology, oBike plans to launch a digital currency called oCoin.
Pro-Am battle rages on
The battle between bullish retail investors and bearish professional traders seems to rage on, although with profit-taking perhaps lightening to combine with the Thiel news to shift sentiment in a short-term bullish direction.
A statement issued by the Coinbase exchange that it would not be adding any new coins to its listings has also helped to push some leading altcoins lower. Ripple is down 20% from its highs as art of its gains were attributed to rumours about its imminent listing on Coinbase, although there was never any evidence to support that.
CoinDesk is persisting with the launch of trading in the Bitcoin Cash coin. Wallets have been set up but no date for trading has been communicated.
Investors who keep their bitcoin holding in a wallet off-exchange and under their direct control will have received Bitcoin Cash (BCH) on 1 August when the currency forked. However, as the recent news from Seychelles Islands-based exchange Bitmex shows, where clients’ BCH funds were unilaterally liquidated, entrusting your funds to exchanges that don’t give you access to your private key is problematic.
Lawsuits, Ripples and crypto futures
In other Ripple matters, the R3 consortium that took Ripple to court in a contractual dispute over non-payment of XRP and which led to Ripple counter-suing, has now mushroomed in value so that $20 billion is now at stake in the outcome of the litigation. R3 is a consortium made up of financial services companies and other companies that is seeking to develop interoperable solutions in areas such as interbank payments and post-trade settlement, to name a few.
Other news this week that would normally weigh on sentiment, hasn’t stopped bitcoin’s recovery, for now.
The US Securities and Exchange Commission warned investors of the dangers they face in the space and in particular pointed to the initial coin offering market and the difficulty it was having in keeping on top of the activities of ICO promoters.
That was followed by the Commodity Futures Trading Commission seeming to signal the addition of some breaking power regarding the speed at which any further cryptocurrency futures products might come to derivatives exchanges, by considering tightening self-certification rules to prevent trading venues using that route to bring more products to market as the CMC and CBOE did with bitcoin futures.
After three weeks of trading on CBOE and two weeks on the CME, open contract volume is considered low, with 2,828 and 498 contracts sold on the respective exchanges. An individual CME contract is five times the size of a CBOE contract, representing five bitcoins as opposed to the CBOE’s one.
Although the cryptocurrency sector is tiny compared to the size of wider mainstream markets, the authorities continue to worry that the volatility in the market could one day endanger the position of liquidity providers in the derivatives markets and have a knock-on effect on other players, thereby infecting the financial system as a whole.
A Bank of England cryptocurrency?
A report in the UK’s Daily Telegraph newspaper on 30 December confirmed that the Bank of England is working on a digital currency and that plans are fairly well advanced, although no decision about release has yet been made but the paper said the central bank “may green light its own bitcoin-style digital currency as early as 2018”.
Market participants are already aware of the Venezuelan government’s plans to release an oil-backed cryptocurrency this month, but Russia has now indicated it may do something similar as a way of circumventing US sanctions. Russian president Vladimir Putin has ordered the government to look into developing a framework for establishing a national cryptocurrency, dubbed the “cryptorouble”.
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