The past week was mostly silent as all legacy cryptocurrencies traded in a very narrow range, with only Bitcoin at the end of the week managed to break above the $4,000 level. I think the market will continue to remain volatile and CBOE’s recent decision to hold the listing of new Bitcoin futures is likely to have a negative effect on the already bearish market.
Despite lower volatility and recent positive moves in the market, the traders are skittish regarding the future momentum of the market. Regular Incidences of scams and hacks in exchanges are also raising doubts among the traders and sustainability of the current crypto structure.
After breaking higher towards the $4,150 level, the market witnessing a pullback, trying to break below the $4,000 level. On the hourly chart, the short term momentum of the market is negative as BTC prices are now below the 50 Day EMA slope, which was acting as a strong support line for a long time. Also, the 20 Day EMA has crossed below 10 Day EMA, suggesting more selling pressure in the market.
Its unlikely that the momentum of the market will reverse and BTC price could initially reach down to the supportive $3,900 level and then $3,800 level.
Ethereum rallied higher a bit during the past week but experienced a strong resistance at the $145 level or the 100 Day EMA slope. Going forward, I think the market is likely to trade in a range between 50 and 100 Day EMA, in which former offering strong support to the market. Also, the 50 per cent in the Fibonacci scale is offering strong support with 61.8 per cent acting as a strong base.
If ETH prices break above the $145 level, then the next major target will be $160 level.
The XRP/USD pair is witnessing a lot of noise around the 50 Day EMA slope and is offering a strong resistance. But, the short term uptrend line is offering strong support to the market and helping the pair to reach higher. The market needs to close above the $0.3250 level, in order to reach further higher towards the $0.33705 level, which is its next major resistance.
The LTC/USD pair was extremely bullish in the past week, as it reached above the $62 level. Since then, the market is experiencing a bit of pullback but the $58 level underneath should offer strong support. I think LTC/USD will continue to gain value and reach a higher level. It has also formed a cup and handle pattern, which is a strong bullish pattern indicating a strong reversal pattern and also marks the end of a downtrend.
A break above $68 level, would help the market to reach towards the $100 level and above.
EOS traded rangebound during the past week, mostly traded between the $3.91 and $3.6 level. The market is finding it too difficult to gain a bullish momentum in order to break higher the range. The 38.2 per cent in Fibonacci retracement is offering strong support and if it breaks below, then it can reach down towards $3.35 level.
Genesis Lends $425 Million of Crypto in Q1 – and Not Just to Short Sellers
Genesis Global Trading’s cryptocurrency lending arm continues to grow – and diversify beyond short sellers.
Announced Thursday, Genesis Global Capital wrote $425 million of crypto loans in the first quarter, bringing its total originations since the business launched in March 2018 to $1.53 billion.
Moreover, Genesis’ portfolio of outstanding loans grew 17 percent from the end of last year to $181 million as of March 30. (The average loan is paid off in six weeks, which explains why the amount outstanding at the end of the period is so much smaller than the volume produced during the quarter.)
Of that loan book, bitcoin-denominated loans made up 68 percent, XRP loans 6.7 percent and ethereum and litecoin loans 3.6 percent each.
But perhaps most notably, short sellers now account for only 3 to 5 percent of Genesis’ bitcoin loans, down from about half in early 2018, Michael Moro, the CEO of Genesis’ trading and lending businesses, told CoinDesk.
The ability to sell crypto short, or bet that its price would fall by selling borrowed coins, “was a missing piece for a long time, something that exists in any other existing established world. You can short gold, stocks, why can’t you short cryptocurrency?” Moro said, explaining why Genesis’ loans were initially so popular for this purpose, adding:
“But this speculative bet on the downside of bitcoin started to disappear towards the end of 2018 and now it doesn’t exist.”
The predominant category of borrowers for Genesis now is exchanges and over-the-counter (OTC) trading desks, which prefer to keep clients’ funds in cold, or offline, storage and settle trades with borrowed coins, he said.
If interest in shorting bitcoin has dwindled, that’s not the case for other cryptocurrencies.
“Short sellers pretty much exist in altcoins: ether, litecoin,” Moro said. “Maybe there is some kind of bitcoin maximalism built-in in long term, or the cost of shorting it is too high.”
There was also “a lot of short interest in XRP” during the third quarter of 2018, “but that trend steadily diminished towards the end of the year and hasn’t reignited thus far in 2019,” according to Genesis’ quarterly report released Thursday.
In the report, Genesis shows a clear correlation between the price movements and borrowing activity of the company’s clients. And as ether and litecoin prices go down, the amount of loans rises, Genesis’ charts show.
Interestingly, shorting patterns for different cryptos vary, the analysis shows. For example, for bitcoin, so far in 2019 there is little correlation to be seen between the volume of loans and the price.
For ether and litecoin, the link is clearer: as the price declines, people borrow more coins, and as it goes up they pay back the loans. However, “unlike ETH, LTC borrow returns preceded major rallies rather than trailed – indicating better information or better understanding of momentum in the asset,” the report says.
For example, in early February, there was an uptick in ether shorting when the coin was trading at $100; “loans outstanding ballooned to the highest level over the quarter,” the report says. They dropped 30 percent on February 7, after the price went up to $120. A week later, the price rallied again to $140, lowering the appetite to short.
“Our borrowers likely covered shorts after [the] price had already moved against their positions,” the report suggests.
As for litecoin shorting: in mid-March, clients borrowed a lot as the price was around $60, “another level speculators believed to be a top. But that belief was not correct and yet again, the shorts covered before the price rallied swiftly to $90. Like clockwork, they re-engaged after the price established itself in the $80-90 range,” the report says.
Lending fiat, too
Genesis borrows crypto from “whale” investors, including some individual early bitcoiners, Moro said. The firm borrows at a 4 to 5 percent interest rate and lends at 6.5 to 7.5 percent; the interest is paid in crypto.
The company doesn’t hold these coins in cold storage, Moro said: As soon as a borrower pays back crypto, it gets lent out to another client as soon as possible from the hot wallet.
“Every coin we have is for lending,” he said.
Another, newer part of Genesis’ business is fiat loans, although it’s still in a pilot phase. Launched at the end of 2018, cash loans now account for 10 percent of Genesis’ portfolio.
The clients on this side are hedge funds that want to get some extra operational cash without using their clients’ funds, Moro says. They post 120 percent collateral in crypto and are subject to margin calls if the fiat value of it falls below 105 percent.
The crypto lending market is starting to get more competitive, with firms like BlockFi and Celsius entering the fray. Moro believes the popularity of crypto loans and crypto-collateralized cash loans is due to the fact that investors want to hold their bitcoin, and to the general maturing of the market.
“No one wants to sell bitcoin and people want more of it. As for the institutional investor crowd, many entered the market in 2017, and they are used to [being able to] go long and go short, so you have a match of people who want to lend and borrow. Back in 2014-2015, we didn’t have borrowing demand, these people just were not in business yet.”
Nike joins the crypto-race; files trademark application for CRYPTOKICKS
As the “crypto winter” enters its dusk, the ecosystem has seen a steep increase in the number of exchanges and newly listed tokens. The main reason for this influx is attributed to the heightened interest of non-financial institutions such as Facebook and Telegram, in the realm of cryptocurrency. Nike is the latest company joining the party after speculations that it’s about to circulate its own cryptocurrency named CRYPTOKICKS.
The news came into to light after a crypto-enthusiast, @JoshGerben, tweeted information related to an interesting filing that Nike made on April 19, 2019. The tweet said,
“The filing indicates that Nike is intending to launch a cryptocurrency called CRYPTOKICKS.”
Out of the various services listed within the trademark application, Nike, Inc. focused on “providing a digital currency or digital token for use by members of an on-line community via a global computer network.”
The tweet quickly gained traction, with @TR401 replying,
“It’s only a matter of time. Every large corporation will be involved with crypto one way or the other.”
The application was filed on a “1B” basis, confirming the sports equipment company’s “bonafide intent in using the trademark” in the future. Industry experts speculate that this digital currency may play a vital part in catalyzing loyalty programs for customers across the globe.
Late last month, the retail giant filed an intent-to-use trademark application with the U.S. Patent and Trademark Office (“USPTO”) for the word “footware,” which will further help in kick-starting Nike’s smart shoes initiatives.
Adding to the crypto-buzz, prominent players from across industry verticals—including JP Morgan and Samsung, are positioning themselves to go mainstream in the near future.
Banks Can’t Snub Crypto Startups Thanks to France’s New Blockchain Law
- France’s new crypto law grants blockchain-related projects the right to a bank account, provided they opt in to being regulated
- There’s an optional certification or “visa” for ICO projects as well as crypto services providers such as exchanges and custodians
- The new law paves the way for French life insurance and private equity funds to get more exposure to crypto assets
- All of this is a far cry from the U.S.
Among developed countries, France’s new approach to regulated cryptocurrency and blockchain companies can fairly be described as avant garde.
In perhaps the most striking example, the regulatory framework drafted by Autorité des Marchés Financiers (AMF), the country’s financial markets overseer, aims to remove a longstanding point of contention faced by such startups: banking relationships.
Under the framework, firms that opt in to be regulated are guaranteed a bank account. This is a long way from the U.S., where regulators’ warnings about “reputation risk” have tacitly discouraged banks from providing deposit accounts to digital currency businesses.
According to Domitille Dessertine, head of the fintech, innovation and competitiveness division at AMF, “strong feedback” from crypto players on the need for adequate banking was matched by firm consensus from the French authorities.
The French government and legislators “were very supportive of this right and entitlement to open a bank account as long as you are regulated,” said Dessertine, who has been shepherding the new rules over the past two years.
Under the new law, the burden is now on banks to explain why they won’t serve startups, she explained:
“The relationship between the project and the bank remains contractual, but if the banks refuse then they will need to justify with us why they have refused to open a bank account.”
Dessertine said a parallel can be drawn with crowdfunding a few years ago, where banks were reluctant to open accounts for such platforms because money was coming from the internet. However, today this works fine, she noted, stating that “all types of banks, large and small,” will be subject to the new provision.
But this new requirement is just part of wide-ranging blockchain bill adopted at its final reading in the French National Assembly on April 11. Part of PACTE Law, the government’s plan to create a new legal environment more favorable for growth of small and medium-size enterprises (SMEs), the bill also offers purveyors of initial coin offerings (ICOs), as well as “digital asset service providers” (such as exchanges and custodians), the option to attain a “visa” to operate in France.
Emilien Bernard-Alzias, a partner at law firm Simmons & Simmons in Paris pointed out that the French parliament and particularly its so-called “crypto-deputies” have wanted to make life easier for crypto-entrepreneurs for some time.
He told CoinDesk:
“Before PACTE law this was a struggle for crypto-related businesses to open a bank account with a French bank. But now French banks which refuse to open an account will have to explain their refusal before the French regulators and we can bet they would avoid having this discussion with the French regulators.”
Enthusiasm at the highest levels for France’s new crypto rules has been very clear.
Last week at Paris Blockchain Summit, French Finance Minister Bruno Le Maire proposed that the European Union use the bill as a model “to set up a single regulatory framework on crypto-assets inspired by the French experience.”
While the formal application process for firms to gain optional certification in France will not open until after the summer, there has already been plenty of interest, noted AMF’s Dessertine who said 20 to 30 digital asset service providers, including “large and small exchanges” have been in touch already.
“There has been significant interest in the new license proposed for digital asset service providers, which includes crypto exchanges, be they fiat to crypto or crypto to crypto. So if Huobi, for instance, wants this license it will be possible for them to ask for it.”
Dessertine explained the framework will be operational after the publication of the implementing decrees which will happen over the next couple of months. “We hope this will be enacted by May, or at the latest June,” she said. “We foresee the application process to be operational for ICOs by September and the intermediaries license we expect will be operational by year end, maybe a little earlier.”
The French regulator has also been careful about making the crypto visa optional, so as not to cramp innovation in this fast-moving space, said Dessertine, adding:
“There are some business models that may not fit within a regulatory framework. I’m thinking of fully decentralized projects where you don’t even have an identified corporate issuer, where it’s really a community of people working together.”
It’s a sentiment echoed by Bernard-Alzias, who pointed out the new regulations are not designed to limit or control, but rather to attract.
“Neither PACTE law nor the AMF wants to force people to seek one of the optional licenses but if crypto-related firms want to take advantage of these optional licenses to appear more reliable and gain new clients or partners, they could,” he said. “And quite surprisingly, this works! Dozens and dozens of non-French crypto related firms already want to obtain these optional licenses even though the AMF should not start to grant them before September.”
Another notable change allows France’s roughly $2.5 trillion worth of insurance funds to take on more exposure to crypto assets.
PACTE Law allows the French equivalent of hedge funds – specialized professional funds (FPSs) – greater freedom with regard to investing on behalf of life offices.
However, French legal experts believe such seismic shifts may still be some way off. Hubert de Vauplane, a partner at law firm Kramer Levin Naftalis & Frankel, said life insurance offices may have the possibility to invest in crypto thanks to the new PACTE law, “but honestly, at this time it is theoretical.”
De Vauplane highlighted practical impediments such as a lack of institutional grade custody solution for crypto assets. He also pointed out that certain types of funds under EU regulation (Alternative Investment Funds or AIFs) and French law are allowed to hold assets registered within a blockchain, including crypto assets.
“If a life insurance company wants to sell life product exposed in crypto (which is allowed), it is only possible via an AIF/ FPS fund. No custodian fund in France is yet prepared to accept to ‘keep’ crypto assets. But for sure, the offer will come soon,” he said.
Perhaps preparing to test the waters, a subsidiary of French financial colossus Societe Generale recently issued a covered bond (a traditional European instrument similar to mortgage-backed securities) in the form of a token on the public ethereum blockchain.
Although SocGen itself was the sole investor in the issuance, it is pari passu (“on an equal footing” in terms of repayment priority) with other covered bonds, according to a report from Moody’s Investors Service – suggesting that the lender could sell the bonds in the secondary market later on. SocGen’s issuance took advantage of a 2017 French decree that recognized blockchain as a valid recording system for securities, Moody’s noted.
The new rules also encourage French private equity or VC funds to get more involved in ICO tokens, allowing them to invest in crypto assets up to 20% of their assets under management (AUM).
In its approach to ICOs, France differs dramatically from the U.S., where the definition of a security is broad enough to capture many things. Jay Clayton, chairman of the Securities and Exchange Commission, has famously said every ICO he’s seen is a security.
By contrast, the French definition of a security is narrow and means either a clearly defined financial derivative contract, or an instrument like a stock, bond, or unit share of a fund.
“To us, most of the tokens that were issued by ICOs and cryptos themselves do not fall within our definition of security.”