Bitcoin Moves Past $5,000 Mark as Mystery Whale(s) Cause Sudden Rally: BTCManager’s Week in Review April 8, 2019
The price of bitcoin rallied by over 25 percent week-on-week thanks to a hefty price jump on April 2, 2019, which some believe was caused by algorithmic trading hedge funds while others think it was the work of a single buyer.
In light of bitcoin’s price gain since the start of the year combined with last week’s sudden price pump, everything points towards the “crypto winter” finally ending. Wall Street analyst Tom Lee agrees and stated on CNBC’s Squawkbox that the April 1 pump shows that there is “a lot of dry powder” among crypto investors with cash waiting on the sidelines for bitcoin to break through in a meaningful way.
Aside from the big jump in bitcoin, the biggest news of the week was the SEC publishing a framework for determining the legal status of cryptoassets.
In the publication, which is not an official rule or statement on behalf of the SEC, its authors Bill Hinman and Valerie Szczepanik state that the Howey Test should be used to determine whether a particular digital asset has the characteristics of an investment contract or not. To that end, the published document has not really managed to deliver any new insight into the SEC’s plans of how to regulate crypto. It has, however, confirmed that – at least for now – cryptoassets that pass the Howey test will likely remain unregulated in the U.S.
As a result of the Bitcoin rally, altcoins also had a week in the green. Bitcoin cash (BCH) and Litecoin (LTC) were the big outperformers, gaining 84 and 54 percent respectively versus last week’s close.
The cryptocurrency is up almost 25 percent from its price one week ago. This positive price movement has given a much-required boost to investor’s diminishing optimism regarding cryptocurrencies at large with many of them now expecting an incoming bull run.
However, according to a Bloomberg report, the increasing popularity of algorithmic hedge funds in the crypto industry might have a lot to do with the surge in the price of cryptocurrencies. Citing data from Crypto Fund Research, the report notes that algorithmic traders account for over 40 percent of crypto hedge funds launched since September 2018.
Further, according to Oliver von Landsberg-Sadie, the CEO of London-based crypto firm BCB Group, the volatile bitcoin price swing of more than 20 percent was “likely triggered by automated software set up to execute a $100 million trade across three exchanges.”
These exchanges are Coinbase, Kraken, and Bithumb.
There is a little more clarity regarding the legal status of digital assets as two SEC officials have published a framework that helps in determining whether an asset qualifies as such on April 3, 2019.
The new document is titled the “Framework for ‘Investment Contract’ Analysis of Digital Assets” and was compiled by Bill Hinman, director of the SEC’s Division of Corporation Finance, and Valerie Szczepanik, Senior Advisor for Digital Assets and Innovation.
In the document, the authors were quick to stress that this is not an official rule or statement on behalf of the SEC and it has not been approved by them. It also should not serve act as legal advice but rather an analytical tool to help those in the ICO market determine where the digital assets they want to deal in will likely fall under the law.
The document merely focuses on determining whether a particular digital asset has the characteristics of an investment contract or not.
This is done by making use of the Howey Test, in which an asset is deemed to be an investment contract if there is an investment in a joint enterprise, in which investors are reasonably led to expect profits that others generate.
Creditors of the now-defunct Canadian cryptocurrency exchange, QuadrigaCX may be compensated sooner than later, as Ernst & Young (EY), the court-appointed monitor investigating the case, has advised the firm to commence bankruptcy proceedings as soon as possible, to cut costs and expedite the creditors’ refunds process, reports Bloomberg on April 2, 2019.
Per sources close to the matter, Quadriga Fintech Solutions Corp, the creator of the distressed QuadrigaCX exchange, have been asked by Ernst & Young, the court-appointed monitor, to dump its ongoing restructuring proceedings and file for bankruptcy instead.
EY has reported that going ahead with bankruptcy proceedings will make things easier for everyone as it would enable Quadriga to cut costs, while also facilitating the recovery of assets for creditors.
The embattled crypto exchange which was forced to shut down operations in January 2019 following the sudden demise of founder Gerald Cotton earlier in December 2018, currently owes its clients about $195 million and EY has made it clear that creditors may never get refunds if the platform remains in restructuring mode.
Malta, popularly known as the blockchain island, has approved licenses for the first 14 crypto asset agents in the country. The announcement was made by the Malta Financial Services Authority (MFSA), on April 2, 2019
It is virtually impossible to hold a conversation about countries in the blockchain space without making mention of Malta. While many nations such as the United States have passed very crypto-positive laws and Venezuela has its own national cryptocurrency, Malta has earned the title of “blockchain island” for a reason.
Very few nations have done as much to secure blockchain business and encourage the industry as Malta has, and as a result, many businesses that specialize in blockchain and cryptocurrency have moved their operations to the island nation. The country has taken yet another bold step in that direction by approving the first 14 crypto asset agents in their country, it was reported on April 2, 2019.
Most, if not all crypto users are concerned about the possibility of their funds being stolen, and for good reason.
The recent hack of exchanges such as DragonEx and Cryptopia led to the loss of millions of dollars of customers’ crypto holdings. On top of this, a number of vulnerabilities have been exposed in wallets such as the Trezor wallet which means that user funds still have a chance of going missing.
Between all these and the still-unfolding QuadrigaCx Story, cryptopians around the world often seek some assurance that their funds are safe. On April 2, 2019, Coinbase’s Chief Information Security Officer (CISO) Philip Martin gave users some of this assurance by announcing that Coinbase now offers insurance for some of the funds in their hot wallets.
The post went on to detail that Coinbase has coverage for up to $225 million of the funds that are kept in their hot Wallet. The insurance in question is being provided by a Lloyd’s, a London-based broker.
In an interesting turn of events, Andreessen Horowitz has registered all its employees as qualified financial advisers, essentially giving up their status as a venture capital firm in order to explore other options, as reported on April 2, 2019.
The business world is ever-changing and as such, the firms in it are changing just as fast, either by launching new products and services or exploring new markets and searching for new opportunities.
One such business that is undergoing massive changes is Andreessen Horowitz, who it was reported on April 2, 2019, has undergone some significant restructuring. As part of these restructuring efforts, all members of their staff have been registered as qualified financial advisors.
Before now, the company had been known as a venture capital firm and had raised over $1.7 billion across seven funds, most of which was invested in tech and financial services ventures such as Lyft. By making this move, they are leaving their previous reputation behind and starting anew and it seems crypto might have something to do with this.
Compared to just a year ago, The Wall Street Journal reports on March 31, 2019, that ICOs are raising 58 times less money due to tighter restrictions and unprofitable token launches.
Initial coin offerings (ICOs) have been a bit of a mixed bag in the crypto space. They’re banned in several parts of the world and in the United States, the Securities and Exchange Commission (SEC) has been kept on their toes shutting down fraudulent and unregistered ICOs.
For a time, they were the go-to method for blockchain startups to get the funding they needed. Now, it would seem that they have fallen out of favor as The Wall Street Journal reports on March 31, 2019, that in the first quarter of 2019, ICOs raised 58 times less than what they did in the first quarter of 2018.
According to the figures provided by TokenData, ICOs raised about $118 million in funding for the first quarter of 2019. This, on its own, seems like an impressive figure until some context is provided. To compare, the first quarter of 2018, which was just a year ago, saw ICOs raise a staggering $6.9 billion, a clear dropoff since this year.