One of the common critiques that cynics use to bash the Bitcoin and cryptocurrency space is that this whole market is retail-driven. In 2017, this may have been the case. Then, Wall Street was still in the midst of learning about Bitcoin and its ilk and thus made no announcements on the matter.
For some reason, skeptics of this industry have taken this narrative and applied it to 2019. But, Nasdaq, CBOE, CME, New York Stock Exchange, TD Ameritrade, JP Morgan, Ernst & Young, and countless other big names in finance have launched or are working on cryptocurrency products.
And most importantly, a report from industry investment firm Grayscale suggests that institutions continue to siphon fair amounts of capital into this space.
Grayscale’s Crypto Fund Inflows “Dominated” by Hedge Funds
Just like other investors, Grayscale’s clients have also been subject to the fear of missing out. As revealed in the firm’s latest Digital Asset Investment Report for Q2, it secured over $84.8 million in investment during the last quarter, marking the strongest inflows since the true start of the bear market in Q2 of 2018.
Per the report, much of the capital that Grayscale received in Q2 was allocated to its Bitcoin Trust, the firm’s flagship vehicle that trades on American over-the-counter markets. This may be one of the reasons why Bitcoin dominance has rallied in this uptrend, not declined as it did in early-2018. What’s also interesting is that a purported 84% of the $84.8 million inflow was sourced from institutional players, mainly “hedge funds”.
Bitcoin Dominance Rally a Clear Sign of Institutions
This seemingly confirms a report from FN London, which stated that Bitcoin’s rally from $3,150 to over $10,000 was supported by funds, not retail investors.
Fund managers and cryptocurrency executives speaking to the outlet explained that the rapid growth in Bitcoin dominance, which is up to 66% from 33% at the
“My view of the recent rise in Bitcoin dominance is that much of this move was driven by institutional buyers. Macro managers and high net worth individuals are generally, in my experience, focused almost entirely on BTC.”
In other words, Bitcoin is effectively the favorite cryptocurrency for institutions.
Fidelity Investments’ involvement in this industry corroborates this. For years now, the Boston-based financial services giant has been laser-focused on Bitcoin, with reports revealing the company has been mining BTC for years. Aside from a mining operation, the company also has custodial services and a trade execution desk for Bitcoin, and Bitcoin only.
You can see a similar trend with the cryptocurrency-focused financial vehicles already on the market, or those that are looking to come to market. Look no further than the incessant stream of crypto-backed exchange-traded fund applications. Notice how nearly all of them are 100% Bitcoin, save for a few outliers such as Crypto Crescent’s Bitcoin and Ethereum fund announced earlier this month.
So again, the fact that Bitcoin dominance is shooting higher, even as some altcoin projects have begun to deliver impressive products, only gives credence to the “institutions are here” narrative
Binance CEO Begs to Differ
What’s weird is that Changpeng “CZ” Zhao, the chief executive of Binance, noted that the so-called “institutional herd” is not as present as some may say.
Speaking to Bloomberg, the Chinese-Canadian businessman suggested that Bitcoin’s move to $10,000 and beyond wasn’t mainly catalyzed by your average institutional player.
Instead, Zhao notes that it’s been a combination of retail and institutional investment. Backing this quip, the CZ cited data from Binance, claiming that 60% of all trading volume on Binance is a result of retail players — about the same percentage as it was last year.
What is Saga? SGA Stablecoin Backed by Basket of Fiat Currencies
Saga has a bold vision for the future of global commerce, and it has created a tool that may allow people everywhere to trade directly with each other.
Unlike stablecoins, which rely on a single currency to maintain their value or tokens like Bitcoin which float freely, Saga has a novel solution. The token that Saga has created maintains its value via a tie to the International Monetary Fund’s (IMF) Special Drawing Rights (SDRs), which will be explained in greater detail below.
The team at Saga is also top-notch. The Israeli-based company has former central bankers on its team, as well as a Nobel laureate in economics.
In some ways, the Saga project is working to create a stateless stablecoin that can be used in the same way that a person would use a Bitcoin. The choice to tie the value of the Saga token (SGA) to the SDR is a good way to prevent the problems that Libra presents while sidestepping the issues involved with a token like Bitcoin.
Saga Has a Solid Idea
Bitcoin was a truly revolutionary idea.
While Bitcoin has been wildly successful, it isn’t really the same thing as currency, at least in the way that we are used to thinking about currencies. The biggest issue for Bitcoin as a currency is that its value swings around violently. This is a real problem from a trade settlement perspective, as volatility makes hedging more expensive.
The stablecoin solution is also not ideal, as it puts a single central bank in control of the currency. It isn’t a direct tie, as the stablecoin will likely be managed by a third-party, but any asset that is tied to a fiat currency will rely on the central bank that manages that currency to maintain its value.
Saga chose to use the IMF’s SDR as the base for its token. The system that Saga designed will not allow large moves in the value of its token vis a vis the SDR’s value, and unless there is some major volatility in the world’s largest fiat currencies, Saga’s token will be relatively stable.
What Are SDRs?
Special Drawing Rights aren’t a new idea. The IMF created them many decades ago, but they are rarely talked about outside of economic circles. SDRs are just a basket of the world’s biggest currencies, such as US Dollars, Euros, and Chinese Yuan.
According to Ido Man, who is the founder of the Saga Foundation:
“It (SDRs) achieves the purpose of not being reliant on a single currency or a single state (while) rendering accessible the usage of a hedging currency not only to central banks, but to the public.”
How it Works
When Saga launched its token on December 10th of this year, the value of one SGA token was worth the value of one tokenized SDR. Saga holds reserves in a variety of currencies, including cryptos, which are used to enforce the SDR peg.
There is no motivation for the SGA token to either rise or fall in value relative to the value of the SDR, as it is designed to be a stable store of value.
According to Man:
“If anyone wants to speculate, SGA is probably not the proper vehicle…If the market cap grew by $1 billion overnight, the price of SGA wouldn’t even double.”
Of course, the fact that the company is telling speculators to move on from the beginning will probably also dissuade people from trying to bid up or sell down SGA, which will likely help to reinforce its status as a digital reserve asset.
Why SGA is Relevant Today
There is no shortage of reasons why the SGA token may become a popular way for people to trade, and hedge fiat currency risk. The world is teetering on the edge of a recession, and some smaller economies, like Hong Kong, are already in a technical recession.
The modern take on economic management usually involves a lot of newly created money being spent into a low-interest rate economy, which means that some form of a rise in asset values is inevitable.
The big spend after 2008 manifested in record high equities and record low-interest rates (as much as ¼ of global investment grade debt has negative yields), and the broad economy still hasn’t recovered. More money creation is almost inevitable at this point, which makes
When governments start pushing central banks for more stimulus, the result is generally a lower currency value, which could make stablecoins less attractive as time goes on. A tie to the SDR makes these moves less worrisome, as one currency in the basket will benefit from a fall in the other.
Could SGA Become a Reserve Asset?
One issue that Saga may be anticipating is the political issues that tend to arise when an economy falters. South Africa has used currency control to attempt to maintain the value of its national currency, the Rand, and we may see this happen to larger currencies as central banks and governments look for ways to prop-up the value of their fiat currencies.
Capital controls in a regional economy aren’t going to destabilize the global financial system, but they could cause major problems if they were used by a nation like the United States to protect the US dollar. In addition to big moves in the FOREX market, global trade would be undoubtedly be impacted.
One of the most important things that currency does is enable trade. Saga’s SGA token allows investors large and small to hold a reserve asset that can be used across borders for trade, even if the economic landscape of a nation is in flux. Unlike a stablecoin, SGA is unlikely to be influenced by geopolitics, at least by the same amount that a national currency would be.
An Experienced Team
Saga has attracted some of the brightest minds in economics and technology to its project. The core group at Saga has experience across a range of industries and is well suited to make the SGA token a success.
Here is the core team at Saga (information from the company):
Ido Sadeh Man, Founder & Chairman of the Board: Mr. Sadeh Man spent the last decade leading product and technology organisations, including Odysii (sold to Gilbarco Veeder-Root, NYSE: FTV), and at Mobli where he was COO.
Keren Orian Nadel, Managing Director: With over 15 years’ worth of experience in strategy, product, marketing, operations and P&L management, Keren has held global senior management positions in both corporates environments (Microsoft, Haaretz Media) as well as startups. Keren holds a BA in Political Science and an MA in Public Policy from Tel-Aviv University.
Barry Topf, Chief Economist: Mr Topf joined Saga after a 33-year career at the Bank of Israel, where he served as one of the founding members of the Monetary Policy Committee and as Senior Advisor to the Governor, Stanley Fischer. He also held positions of Head of Market Operations, Head of the Foreign Currency Department, and Chief Investment Officer. In his capacity as an IMF Consultant, Mr. Topf has advised over 25 countries on economic policy.
Roy Eshkol, CTO & Blockchain Architect: Roy joined Saga with a wealth of knowledge and experience in technologies and infrastructures. With a passion for methodical information technology specifications, Roy leads Saga’s architecture design and development. Roy holds an M.Sc in Management Sciences in Management of Technology and Information Systems from Tel Aviv University.
Ron Sabo, PhD, Chief Scientist: With a PhD in experimental condensed matter physics from Weizmann Institute of Science, Ron leads Saga’s Research department. A Clore Scholar, he also lectures at the international program in Electrical & Electronics Engineering at Tel Aviv University.
Saga also has a number of advisers who are equally qualified in their respective fields, and will probably be a great help to the project. All their information is available here.
Saga is Creating New Assets
Cryptos were a huge shift away from existing asset classes, but with the SGA token, Saga has taken blockchain technology and made it into a viable trade and reserve asset.
In the future, the price of decentralized tokens may calm down, but for the moment, SGA is a bridge to a world where people can trade freely with blockchain technology, and not worry about price volatility. If you want to learn more about the project and token, just follow this link.
Cryptocurrency News Today – Headlines for December 13
- Crypto assets have once again outperformed other major asset classes.
- A huge percentage of the crypto rally this year is due to Bitcoin’s ability to lead the market trends.
Cryptocurrency News Today – It is that time of the year when analysts compare the performance of different asset classes. During this decade, digital currencies came into existence and stayed on top compared to traditional assets. Every year since the decade began cryptocurrencies have led.
Now as the year draws to a close and as this decade ends, we have taken a look at how each class of assets performed. In the last 12 months, cryptocurrencies have once again outperformed traditional assets. Note that the asset class was able to achieve this feat once again despite trading significantly lower than the record highs attained on December 2017.
At the time, the large-cap cryptos had a phenomenal 12 months. That period remains the greatest investment success story in the closing decade. It was during that era that crypto placed itself as the world’s number one asset class by yearly performance. It is safe to agree that cryptos have risen significantly above the annualized returns issued by the equities, commodities and bond markets of the U.S for the closing year.
Large-cap Digital Assets Offer Higher Returns than Traditional Assets for the Year
The Co-founder and president of Digital Assets Data, Ryan Alfred, remarked that for this year large-cap cryptos possess higher returns compared to traditional markets. A research given by Digital Assets Data highlights this year’s performance of top 10 digital tokens by market cap and how they fared against traditional assets like gold, oil and equities. 2019 didn’t start booming for crypto.
In February 2019, crypto was in a fairly dismal run, and was resting below the bulk of traditional assets. However, sentiment picked up in March and as of mid-year, cryptos were ahead of other asset classes. This began to close as stocks, bonds and commodities increased their lead. Yet crypto remained significantly ahead of others as the year draws to a close. Much of this is courtesy of Bitcoin. BTC is currently up by 100% since the beginning of the year.
Ethereum is up by 35% up. XRP is down by 25% from the point it traded as of January 1 2019. During the year before the closing decade began, there was a global financial crisis. Since then to this day, stocks have rebounded. From the March 2009 market meltdown to now, S&P 500 has gained 369%. While, the Dow Jones Industrial Average has gained 326% in the same period. All in all cryptocurrencies have had another remarkable year.
It’s Time to Pray for Bitcoin, Says Veteran Crypto Analyst – BTC, Ethereum, Ripple, XRP, Stellar Newsflash
From Bitcoin’s move below crucial support to a dispute brewing at the Ethereum Foundation, here’s a look at some of the stories breaking in the world of crypto.
Veteran trader Tone Vays says it’s time to say a prayer for Bitcoin.
In a new episode of Trading Bitcoin, Vays says BTC is now at risk of a bigger move to the downside after breaking below support at about $7,200 on TradingView.
“BTC Price is breaking under very critical support. This is not good. Time to pray for the best but prepare for the [worst]…
The fact that we broke support is favoring the bears. The moving averages look very, very bad. The short term is below the intermediate term, is below the long term, and they’re all trending down.
However, because the price action is so far below all these moving averages, it is very possible that the price can snap back. So you really want to be careful about shorting something that is so far below their moving averages, even when the moving averages give you the most bearish picture possible. So you have a bit of a conflict here. I will trust the price action until it shows me otherwise.”
On the bright side, Vays says the fact that BTC is consolidating will become a bullish sign for Bitcoin if the leading cryptocurrency can continue trending sideways for a couple more months.
“Is this consolid
If this consolidation lasts for six months, it’s good. If this consolidation lasts for three months or less, it’s bad. Right now, this consolidation has only lasted for four months. This consolidation needs to last at least six months. And it’s debatable whether this consolidation right now is the same as the consolidation back in September, because we’re clearly consolidating lower.”
The Ethereum Foundation (EF) is responding to reports that it’s shuttering many of its internal projects.
A coder who works at the Foundation remarked via Twitter that an initiative he’s been working on for years had its funding cut on December 1st – a move that he says is part of a wider plan to cut projects and downsize.
EF’s head of communications, Joseph Schweitzer, says the claims are “categorically untrue,” reports Trustnodes.
The Foundation reportedly spends about $500,000 a month to fuel the development of the Ethereum network.
In August, it announced a new grants program allocating $2 million in Foundation-led and co-funded grant funding aimed at boosting the development of Ethereum 2.0.
Ripple and XRP
Ripple says it may take another look at how closely it guards the number of transactions being processed on RippleNet.
In a new interview with Bobsguide, Ripple’s senior vice president of customer success, Marcus Treacher, says it depends on the company’s overall growth.
“We’re a very young network. It’s growing very quickly. When you get to a point when you’ve got a massive network, then you might want to say things about the flow or the volume, etc. Right now, we’re still young, we’re still growing. So we talk about the growth rate, we talk about coverage, and we talk about the time we take to deliver end to end.”
Ripple releases updates on the number of banks and financial institutions that have joined its network – a number that currently stands at 300.
It also highlights transaction data for the digital asset XRP, including delivery times and how much of its XRP holdings the company sells per month.
The institutional asset manager Grayscale has released a new overview on Stellar Lumens (XLM).
It highlights the coin’s “near-instant transactions” and efforts by the Stellar Development Foundation to boost the technical development and adoption of the network.
“Together, XLM and Stellar strive to achieve greater financial inclusivity, by connecting entities ranging from merchants and financial institutions to individual users, especially those without access to traditional banking services…
Stellar is now being piloted for institutional financial use cases by Fortune 500 companies including IBM and Franklin Templeton for cross-border payments and securities tracking and settlement, respectively. While these early stage use cases and experiments center around commercialization of the Stellar network technology rather than XLM specifically, these applications also provide the potential for increased XLM adoption in the future.”