The last few weeks have been good for Bitcoin, and by extension, the cryptocurrency space. Sure, the world’s largest cryptocurrency finally surged on the charts to give much-needed relief to its investors, but that wasn’t all. With every passing day, cryptocurrencies are being legitimized as an “asset class,” and mainstream institutions are finally playing a part in it.
Look no further than what made news recently. Visa and Mastercard endorsed Bitcoin. Goldman Sachs appointed a new head of digital assets and revealed that it is working towards developing its own digital token. JPMorgan started offering banking services to crypto-institutions like Coinbase and Gemini, 2 years after CEO Jamie Dimon called Bitcoin a “fraud.”
An occasion for opportunism
Times are changing, aren’t they? Well, that’s what Avanti Bank & Trust CEO Caitlin Long thinks, with the former appointee to the Wyoming Blockchain Taskforce stating,
The land grab by traditional banks entering #crypto has officially begun. July 22 = the OCC news + Visa’s blog post endorsing #bitcoin & stablecoins as valuable payment tech, & now Goldman breaks news that it has a team headed by a former #repo trader.🍿https://t.co/NwEu90nsps
— Caitlin Long 🔑 (@CaitlinLong_) August 6, 2020
Long’s turn of phrase is pretty interesting. “Land Grab,” she said, in reference to all these banking institutions suddenly taking an interest in crypto. Now, Cambridge Dictionary defines the phrase as “the act of taking control of part of a market very quickly or forcefully.” When used in the present context, we can see that while these players may not be moving forcefully, they sure are doing it very quickly indeed.
But, wait? Have they moved in and taken control? Well, no. Ringing endorsements, new clients, and appointees are hardly the way to signal your full participation in the space. Hence, the question arises – What shall we expect once these institutions do enter the deep end of the crypto-market?
Trust and Identity
Well, it can be argued that whenever this happens, these mainstream financial institutions might have a slight upper hand over more traditional, crypto-centric institutions. Think about it – Bitcoin’s recovery over the last few months and its recent performances have converted many doubters, including many on Wall Street aka where the institutional money is.
When these investors take the leap, will they choose to trust the crypto-institutions that are already in business, or will they choose to join hands with the brand they recognize? Name recognition, brand value, and visibility matter a lot when it comes to investment because those three aspects factor in when the question is who to trust your money with.
Trust. That’s a critical factor, and it is one that unfortunately cryptocurrencies don’t totally enjoy yet, despite the many now taking an interest in it.
The nature of the new investor class will factor in too. The new wave of institutional investors will not invest in crypto because they believe in its utility or its ideals; they’ll invest in it if they are confident of getting good returns against what they put in.
All these factors will come to play if these institutions well and truly enter the game. Caitlin Long’s use of the term “Land grab,” ergo, isn’t misplaced.
Land Grab – Long time coming?
She isn’t the first one to use this term, however. Back in May, Tuur Demeester, Founding Partner at Adamant Capital, had said something similar,
“…right now its institutions that are interested. It’s kind of like a land-grab phase where you know this is going to get big and this is not correlated with the traditional financial system that is in all kinds of trouble.”
None of this is supposed to mean that there aren’t points arguing the contrary case. And to be clear, no one is arguing that the entry of these big players will be anything but bullish for the rest of the cryptocurrency market. Instead, what is possible is that the entry of these big players can push out the ones already in business.
Now, the example of Fidelity Digital Assets can be used to assert otherwise because while it has been in operation for a few years now, Fidelity hasn’t exactly set the world alight with its numbers and figures. Wouldn’t this case study invalidate the aforementioned assertions?
Well, perhaps not, because the fact of the matter is that the crypto-market hasn’t seen a proper bull run in Fidelity’s lifetime, and nor has it seen a proper rush of institutional investors. Since Bitcoin’s fundamentals suggest both may soon be incoming, only time can prove any of these points.
In light of the OCC’s recent decision to allow crypto-custody services, mass crypto-adoption may soon be anything but a pipedream. Binance U.S CEO Catherine Coley thinks so too, with Coley telling AMBCrypto,
“The time is ripe for mass adoption — the past week’s rise in the price of Bitcoin, the expansion of this industry during a lockdown that caused a strain on nearly every other sector of the economy, and the interest from Wall Street as well as mainstream newcomers such as Barstool President David Portnoy prove that.”
By extension, this “land grab” is only going to gather more pace as the days go by. Fortunately, the crypto-space already has experience with the same. After all, the likes of Xapo and BitGo did spend last year sniping at each other.
Andreessen Horowitz Gets FTC OK for Unspecified Coinbase Transaction
Andreessen Horowitz’s (a16z) late-stage venture fund has received a green light from the U.S. Federal Trade Commission (FTC) for a transaction involving Coinbase. It is unclear at press time whether the approval is for the fund’s previously disclosed purchase of shares in the cryptocurrency exchange or for a new purchase.
Stocks, Gold Suffer As Dollar Strengthens While Bitcoin Remains Firmly Above $10,000
The stock market is having a very rough time, which shows us that likely much of the astonishing, almost unbelievable gains of the last few months were assisted in large part by a weaker buck.
Gold is getting hammered. The support that it’s worked so hard to build at $1,900 is toast, as we see a rather well-defined downside breakout.
Several technical analysts have pointed to near-term support just below $1,810, but if the greenback continues this climb, there’s no reason it shouldn’t reach as far as the 200 DMA, currently at $1,721, or even further, depending on the dollar.
The big tech stocks are also very clearly losing their gusto. Tesla is down 8% so far today, on track for its fourth consecutive daily loss and nearly an entire month from clocking fresh, all-time highs. The momentum play is clearly in question, if not completely gone.
Bucking the trend
If there’s one stock that caught our attention today, it’s Twitter. Not only because my team and I spend a ridiculous amount of time on the platform, but because their share price is soaring over the last few days.
One of the main reasons being cited for the surge is an analysis firm called Pivotal Research, who has upgraded their position on the stock from hold to buy.
This stock has largely been left out of the general tech rally, mainly because they haven’t taken quite the same route to direct monetization of their massive user base as some of the other social networks have. To be completely fair though, the active user base is also a mere fraction of some of the other platforms.
On the other hand, this also means that there’s a lot more room to grow. With 2.3 billion active users on Facebook it’s gonna be very difficult to add more. So in order to continue growing, they’ll need to expand into other services, like Apple is trying to do now.
We’re also seeing a bit of speculation on Twitter of a different kind. As top crypto analyst Willy Woo has recently alluded to on Twitter, CEO Jack Dorsey is a huge bitcoin fan.
Twitter and Square, which are both under his authority, may well be of the first corporations to follow in the footsteps of Michael Saylor and buy bitcoin as a reserve with the combined $10 billion worth of unused cash on their balance sheets.
It’s all just speculation of course, but we did see what happened to Microstrategy’s stock once word got out.
There’s a link
Taking the rest of the markets into account, bitcoin is actually holding up quite well against the recent dollar strength. We’re now getting a really good test of $10,000 as a support level, even though this level is rather high in the long-term range for the asset.
The rest of the crypto market, on the other hand, has not been holding up particularly well, with only a few exceptions.
There’s no doubt that a lot of the momentum in the tech stocks is having some level of influence over the more experimental crypto projects, especially within the DeFi space.
That influence, however, doesn’t seem to be all-encompassing though, as the DeFi Pulse graph looks about ready to bust a new all-time high.
Did Corporate Insiders Perfectly Predict the Market Top?
In August, the volume of personally owned stock sold by corporate executives reached its highest level since 2015, followed by a 10% decline in the S&P500 in September.
August saw the largest volume of insider selling since 2015, with more than 1000 corporate officers offloading $6.7B in stock. Subsequently, the market has seen a 10% decline since the S&P500 all time high of Sept. 2. What’s more, according to new statistics, insider selling is happening at the fastest pace since 2012.
The question is: What do these executives know that the rest of the market doesn’t?
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