Bitcoin Rally Back on as the New Year Kicks Off: Week in Review Jan. 8
In the first week of 2018, the price of bitcoin rallied from just under $13,000 to hit $17,000 showing that ‘January effect’ also exists in the cryptocurrency market. In fact, the top 20 leading altcoins all made substantial gains in the past week, creating a great start to the new year for crypto asset investors.
The price of bitcoin was largely pushed up by the announcement of PayPal founder and Silicon Valley investor Peter Thiel, who said that he had invested $15 to $20 million in bitcoin through his Founders Fund, which is now worth several hundreds of millions. Whenever well-known investors declare their faith in bitcoin, the price of the leading digital currency tends to rally afterward.
Despite the price rallies in the past seven days, not everything is rosy for bitcoiners. On January 5, it came to light that the primary issuer of bitcoin debit cards, Wavecrest, has been forced by Visa to close its accounts. This resulted in the majority of bitcoin debit cards, especially in Europe, now being completely unusable.
While it has reported that this was not an attack by Visa on bitcoin, it does pose a challenge for Bitcoin community members who now can no longer easily spend their bitcoin for day-to-day in-store purchases. Bitcoin debit card providers have announced that they will now find new issuers so that they can continue their service, it will likely take a while for the bitcoin debit card providers to get their services up and running again with new issuers.
This week’s review is compiled from contributions by Jamie Holmes, Nigel Dollentas, Ogwu Osaemezu Emmanuel, and Priyeshu Garg.
On January 5, users of various bitcoin debit cards were notified that their cards have been temporarily frozen and unable to use them. Wavecrest, the company that issues pretty much every bitcoin debit card in existence, stated to its customers that they were instructed to close down all prepaid cards they had issued immediately. Is this the beginning of the end for bitcoin debit cards?
The surprise is that no announcement or forewarning was given to their users. Many bitcoiners now have funds on their card they cannot use. Some have gone on Twitter and Reddit to confirm the story, saying their transactions have been declined. With a lot of people using these cards as a fiat gateway to manage daily expenses with bitcoin, the Wavecrest announcement is sure to cause some short-term difficulties.
While bitcoin started 2018 on a slope, the cryptocurrency has bounced back by over 10 percent from the $13,000 range and is currently trading at above $15,000, partly due to the positive reports coming from Peter Thiel’s Founders Fund.
Founders Fund is a venture capital firm that was founded in 2005 and has invested $15 to $20 million into bitcoin, which is now worth hundreds of millions of dollars, according to a report to investors. The cryptoasset is estimated to be the most valuable element of the fund.
Coinbase has silenced all rumors of adding Ripple or any other cryptocurrency to the platform with a recent post on their blog titled “Our process for adding new assets.” In the post, Coinbase discusses the criteria for supporting new assets, which they talk about in their Digital Asset Framework.
Coinbase ends the blog post with a very key statement, indirectly ending all speculation of Ripple being added on to the platform soon, which was a main factor in the price increase of the cryptocurrency: “As of the date of this statement, we have made no decision to add additional assets to either GDAX or Coinbase. Any statement to the contrary is untrue and not authorized by the company.”
In his public Facebook post of January 4, 2018, he has suggested that a critical aspect for addressing these issues through the use of technology is linked to the recent debate regarding centralized versus decentralized systems. According to Zuckerberg, a significant amount of people who choose to work in the broad field of technology do so with the aim of empowering people through what he calls a “decentralizing force that puts more power in people’s hands.”
Zuckerberg writes: “Many people have lost faith in that promise. With the rise of a small number of big tech companies — and governments using technology to watch their citizens — many people now believe technology only centralizes power rather than decentralizes it.”
He continues: “There are important counter-trends to this – like encryption and cryptocurrency — that take power from centralized systems and put it back into people’s hands. But they come with the risk of being harder to control. I’m interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services.”
E-trade Financial, a major player in the financial services industry, offered bitcoin futures to its client on January 2. The firm, headquartered in New York City, allows investors to buy and sell securities like stocks, bonds, options, mutual funds, as well as banking services such as savings products.
E-Trade financial kick-started trading in bitcoin futures via the CME gateway on January 2, 2018.
E-trade is the latest broker to start offering bitcoin futures trading following the launch of the CBOE and CME bitcoin derivatives in mid-December 2017. The continuous surge in the price of bitcoin and interests from investors prompted the two financial services giants to list the futures contracts on their platforms.