By David Goodboy
The carnage continues in the cryptocurrency markets. The three leading horses remain the same despite plunging prices. Bitcoin dipped below $6,000 per coin prior to finding a bottom and bouncing back above the psychologically critical $6,000 level. At the same time, blockchain backbone name ethereum collapsed into the low $300 range with price appearing to be building a base near the lows. Perhaps the most damage has been done to XRP, formerly Ripple, as the price has approached $0.30 as the token continues to spiral downward.
All of this downside volatility is part and parcel of a nascent market that is still finding itself. Remember, bitcoin has a history of monster plunges then all-time highs. One example was in November 2013 when bitcoin prices death spiraled nearly 90% from $1,163 to near $150.00 in two months. Keeping the past price action in mind is a good way to ease the pain for those of you crypto HODLs!
5 Crypto Happenings For August
1. Ripple Becomes XRP
There has been much confusion between the company Ripple Labs and the crypto token Ripple, now XRP. In an effort to separate the company from the token, the Ripple token has been rebranded XRP. In the past, any news from Ripple Labs directly affected XRP. It was almost as if XRP acted as a proxy for Ripple Labs stock. Now, the company is in the midst of a campaign to show that Ripple Labs is different than the token XRP.
The separation and its subsequent confusion has resulted in XRP plunging from $3.85 to the $0.30 range.
My bet is that this is the buying opportunity of the century in XRP! Remember, XRP remains the third largest market cap and it is just a matter of time until it becomes mainstream.
2. Saudi Arabia Bans Cryptocurrency
Saudi Arabia has banned cryptocurrency trading. On Aug. 12, the standing committee issued a statement saying that it “warns against trading in the digital currencies or what is known as virtual currency for their negative consequences and high risks on traders as they are out of government supervision. The committee assured that virtual currency including, for example but not limited to, the bitcoins are illegal in the kingdom and no parties or individuals are licensed for such practices. The committee warns all citizens and residents about drifting after such illusion and get-rich scheme due to the high regulatory, security and market risks involved, not to mention signing of fictitious contracts and the transfer of funds to unknown recipients/entities/parties.”
This move by the authorities follows Saudi billionaire Prince Al-Waleed saying in December that he does not “believe” in bitcoin.
It will be interesting to see if Saudi Arabia reverses its stance as cryptocurrencies move into being widely accepted.
3. Prediction Market Maker Auger Launches
Built on the ethereum blockchain, Auger allows users to bet on any possible outcome of anything. Interestingly, it is being used to create “assassination markets” and other dark bets worldwide. The creators see Auger as a decentralized financial system where there is no middleman between individuals wanting to wager on any verifiable outcome.
I see this launch as being the first step in changing the way all financial markets will eventually become. It will not happen right away, but overtime, the same concept will likely be applied to futures, stocks, and options.
4. Bitcoin Replacing U.S. Dollar
UBS released a study indicating that bitcoin could replace the U.S. dollar should it hit $213,000 per coin or if its processing speed dramatically increases. While it is unlikely this would ever occur, it is interesting that a major bank has looked into and quantified the possibility!
5. Crypto Hedge Funds Explode
Showing the institutional acceptance of cryptocurrency, the numbers of crypto hedge funds has exploded.
According to Crypto Fund Research, there are 466 crypto funds with 255 being hedge funds, 195 venture capital funds, and the remainder falling under the private equity umbrella.
The research stated “2017 was a record year for the launch of new cryptocurrency funds with, over 100 new funds including hedge funds and venture capital. This was more than triple the number of funds launched in 2016. It’s quite possible there will be over 100 crypto fund launches again in 2018 based on the current pace. In addition to the . launch of new VC and crypto hedge funds, we expect existing hedge funds to incorporate cryptocurrencies in their portfolios. Likewise, existing VC firms will continue to add blockchain investments as well as launch separate blockchain funds.”
This activity is a very bullish signal for the long term viability of crypto assets!
Risks To Consider: The cryptocurrency world remains the Wild West. Anything can and does happen so be ready and only invest money you can afford to lose!
Action To Take: Continue to monitor the leading cryptocurrencies for buying opportunities during the pullback.