Bitcoin, as predicted, has failed to hold gains above $16,500 with sellers pushing the leading cryptocurrency back down below $15,000. On US exchange Coinbase, bitcoin is currently trading at $14,800.
Adding to bitcoin’s travails was the news from Microsoft (MSFT) on Monday that it would stop accepting bitcoin as a payment method.
In another pointer to the immature nature of the crypto space, much to the annoyance and confusion of many market participants (the author included), prices quoted on Coinmarketcap.com have been skewed by the removal of South Korean exchanges from its global average price quotes.
Coinmarketcap’s move had the effect on Monday of making Ripple, for example, appear to be down 25% when it wasn’t, with other top 30 coins all flashing red with chunky, but erroneous, 20% or more losses. The move by the popular industry website was not communicated to the market before implementation and is thought to have triggered some panic selling.
The bright spot in the market over the past few days has undoubtedly been the continuing northward march of Ethereum, which was recently pushed out of its position as second-largest crypto measured by market capitalisation, following the price surge of Ripple’s XRP token.
With a daily volume currently at around $7 billion, according Coinmarketcap.com, double the average for the past month, Ethereum first conquered $1,000 on 4 January and has steadily climbed since then to trade at $1,231, according to CoinDesk.
The number of transactions on the Ethereum network is a testament to its popularity as the platform of choice for decentralised apps and initial coin offering smart contracts, which underscores its value proposition. It is therefore no coincidence that transaction volumes peaked on 4 January when the coin hit $1,000, with transaction volumes tracking the price climbs.
However, congestion on the network continues to worsen, and transaction fees – known as gas – continue to rise. As a result, popular altcoin exchange Bittrex has temporarily stopped creating new wallet addresses for Ethereum deposits.
“Due to incredibly high gas prices, we’re preventing new ETH and asset deposit addresses from being created. Existing deposit addresses will work as normal,” the US-based exchange said in a statement.
A notable exception to recent bearishness among alts is Dentacoin, which is a payment solution for the Dentistry sector and on Sunday was trading up nearly 300% and is currently the 30th-placed coin by market cap, and is priced at $0.0059.
DentaCoin plans to introduce an insurance scheme for dental care called DentaCoin Assurance later this year. According to Dentistry.co.uk, the first establishment to accept the coin as payment in the UK is Dentaprime F3T Dental Clinic in London. Dentacoin has risen 925% since early December, to trade at $0.0008.
Zuckerberg looking at crypto for Facebook fix
Another coin doing well recently, is KIN, the native coin of the Kik social network.
We previously highlighted the coin moving its development work from the Ethereum blockchain to Stellar as it works on a suitably high-scale solution to implement its plans to use distributed ledger technology to create a monetised environment, where developers can easily rollout and receive payment for apps for the platform and users can be similarly be rewarded for popular content they might create.
KIN has jumped to 48th position, at one point reaching a market cap of $1 billion, a massive jump from just $50 million in mid-December, an increase of 1,900%. Its market cap has since moved down to $778 million, pricing the coin at $0.001030. There are currently 75 trillion tokens in circulation.
Interest in KIN was likely fanned by comments from Facebook chief executive Mark Zuckerberg in his annual New Year address to the followers of his Facebook account, outlining what he will be prioritising in the year ahead. Bemoaning the centralization of power in the hands of large corporations (such as his own presumably) and the possible censorial predations of overbearing governments, he remarked: “There are important counter-trends to this – encryption and cryptocurrency – that take power from centralised systems and put it back into people’s hands.”
Authentication and fake news are perhaps two areas in which the blockchain features of immutability and consensus could be productively deployed.
In addition to Kik’s efforts, Zuckerberg may wish to ask the team at Trive.news – a blockchain project that uses “human swarmed crowd wisdom” in its social science global consensus system to establish what is true and what is not – how they are implementing their solution to the fake news phenomena.
Qtum making waves in China
Much price movement among altcoins is news driven, and with no earnings to report, the focus is on adoption and growth vectors.
In that regard, both Tron and Qtum are expected to announce significant partnership news this week.
Tron’s price has advanced in recent days in the hope of a tie-up with a Nasdaq-listed company.
Meanwhile, continued positive newsflow is expected from Qtum, a Singapore-based blockchain platform whose technology is able to run decentralised apps on mobiles and could be used as a scaling solution for Ethereum because of its ability to accommodate multiple so called virtual machines, like Ethereum, and with a proof-of-stake protocol to boot.
Qtum is thought to have scheduled the release of price-moving partnership news for some time this week, possibly a deal with a Chinese company.
Last week Qtum revealed it has partnered with Chinese video portal company Baofeng in an ambition plan to create a blockchain network running on 50,000 masternodes, which would make it bigger than either bitcoin or Ethereum’s networks. Qtum’s price was lifted 35% over the weekend to $67 but is down to$55 today, although investor selling may prove premature if the expected further partnership announcement materialises.
Elsewhere, despite claims by Ripple that three out of five of the world’s top money transfer companies plan to use its blockchain technology, including Western Union, the XRP token is still off 25% from its highs as profit-taking sets in after its stratospheric gains were blunted by renewed focus on the extent to which recent announcements of bank pilots will translate into hard cash down the road.
Privacy coin Verge has recovered after claims it was leaking users’ IP addresses and is 16% higher at $0.209 while Chinese-based blockchain platform coin Neo is up 18% at $119.
Bears still dominate in futures trading
Data published by US derivatives market regulator the Commodity Futures Trading Commission, underlined the thesis argued in our recent reports that there is a tussle in the marketplace that can be roughly characterised as long retail investors versus short professional traders.
Analysis of CBOE bitcoin futures shows that the majority of small contracts (less than 25), assumed to be retail investors, are long by a factor of 3.6 times the short positions, while the majority of larger contracts, likely to be held by professional traders and trading companies, are 2.6 times more likely to be short positions than they are to go long, according to the Wall Street Journal.
Also, the fairly thin trading in bitcoin futures on both the CBOE and the much larger CME, indicates that institutional investors remain on the sidelines, with many Wall Street brokers and investment banks, such as Merrill Lynch Bank of America, refusing to offer the instrument to their clients.
New platform for institutions and active traders
Alexander Kravets, co-founder of XTRADE.io, a blockchain project that’s building a trading platform for professional traders and institutions that will aggregate liquidity from across the major cryptocurrency exchanges, expects institutions to enter the fray as the crypto marketplace grows.
Kravets told Interactive Investor that his company aims to play its part in those developments by delivering the tools for a mature trading environment: “There are billions of dollars flowing in and out of these markets every day with incredible inefficiency. Literally, hundreds of millions of dollars are being wasted on inefficiencies that could be solved by applying existing, mature technology that has been tried and tested on Wall Street.”
The project expects to make a major partnership announcement this month in a reflection of the “huge interest across Wall Street” the projects is said to be attracting, with an initial coin offering slated for the end of the first quarter.
“I expect total cryptocurrency market cap to grow to $2 trillion with a lot more hedge funds entering the market, maybe 500 more in addition to the 170 or so out there. This is the year of ICOs releasing real products,” said Kravets.
Retail investors will welcome the emergence of platforms that can make it easier to exploit the plentiful arbitrage opportunities in the cryptocurrency space, where prices for the same coins vary widely from venue to venue, and especially so between geographical regions.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.