Crypto Markets Correct and Rebound in Volatile FUD-Filled Week: Week in Review Feb 5
For the week beginning January 29, the price of bitcoin collapsed from a high of $11,900 to a 2018-low of $7,830 according to CoinMarketCap. However, as we have witnessed during steep bitcoin price corrections in the past, the price of bitcoin bounced back again to close the week at around $9,000. Naturally, this deep correction caused weak hands, especially newcomers who bought in late 2017, to sell their coins, which amplified the drop.
The price drop was caused by a mix of falsely reported news surrounding a possible bitcoin ban in India, which has since been negated, rumors surrounding harsher-than-expected global cryptocurrency regulations as well as banks and credit card providers making it harder or more expensive for individuals to purchase cryptocurrency using their services.
Fortunately, for seasoned HODLers, the crypto markets bounced back again at the end of the week, to remind us all that these clusters of volatility are entirely normal in the cryptocurrency markets and that year-on-year bitcoin is still up by over 800 percent.
A correction like this is healthy for the markets as it allows those who are in it for the long run to reposition themselves in the coins they like at a deep discount to their recent all-time highs.
Facebook and Twitter, specifically, have encroached into nearly every aspect of life and already include the functionality of transferring funds. These two behemoths have two very different stances on the issue of cryptocurrency.
Facebook, on the anti-crypto side of the equation, has issued a broad ban on any advertisements featuring the subject. The ban includes ICO’s, the promotion of virtual coins, and binary options. Zuckerberg made the decision partly due to Facebook not wanting to be party to any scams or gambling schemes.
Twitter’s CEO Jack Dorsey, on the other hand, tweeted a somewhat hesitant, but positive position on cryptocurrencies: “Instant buying (and selling, if you don’t want to hodl) of Bitcoin is now available to most Cash App customers. We support Bitcoin because we see it as a long-term path towards greater financial access for all. This is a small step.”
In a recent UnikrnRadio podcast, Bittrex CEO Bill Shihara revealed that the US-based exchange would open up USD deposits and possibly dump tether as one of the main pairings. The episode also touched on the history of the exchange and how it got started.
When asked about opening up new signs ups, Shihara has this to say, “Yes, there is going to be a time, I actually think it’s not that far away, when we are going to open up for global signups again, we will end up doing additional requirements, minimum deposit sizes, and things like that to trade, ensuring signs up that are coming in, are people who understand what they are doing… demand has been pretty incredible.”
The main revelation of the podcast was that Bittrex would be opening up to USD deposits. Currently, the exchange only deals in cryptocurrencies, with either bitcoin (BTC) or tether (USDT) serving as the pairing for all of their listed cryptos.
However, the CEO cautioned that “Bittrex will never be retail shop” and “the average person who knows nothing about crypto could or should trade on Bittrex.” Instead, they are targeting institutional and professional traders.
One of the most significant digital currency exchanges Coinbase has informed some of its users that buying bitcoin and other cryptocurrencies with their credit card is no longer ‘business as usual,’ as these card issuers have started charging fees on Blockchain-based virtual currency purchases via credit cards.
The exchange, which is the one most connected with retail investors sent an email to a few of its customers, telling them that credit card networks now treat buying of cryptos as cash advances, which attracts fees and higher interest rates on transactions.
A Reddit user who claimed to be working with a major credit card firm stated on the social media platform in late January that Visa and Mastercard customers were already suffering from this adverse change. Some parts of the post read:
“Coinbase has been coded as a cash advance with Visa and Mastercard Transactions. This is impacting the US and Canada (so far as am aware should be any Visa and Mastercard transaction though).”
Significant global insurers are on course to start offering protection against the loss of cryptos through hacks. The crypto heist insurance policy will cover instances of theft for companies and exchanges that handle digital currencies between anonymous parties.
Chubb, Mitsui Sumitomo, and XL Catlin are among those currently offering this service, while many others are also looking to provide crypto theft coverage as part of their offerings.
Notably, this insurance news comes after Coincheck, one of Japan’s largest digital currency exchange, lost $534 million in XEM coins to a group of hackers. While the theft was one of the largest in crypto history, the exchange does indeed plan on refunding the lost coins.
In a blog post published on the Facebook Business platform, the company detailed important changes to its advertisement program aimed at “Improving Integrity and Security of Financial Product and Services Ads.” In a nutshell, Facebook’s new policy is an attempt to stem the flow of cryptocurrency and initial coin offering related advertisements popping up on the website.
Starting with “Misleading or deceptive ads have no place on Facebook,” the post went on to highlight the type of advertisements that would be affected by the company’s decision. For example, ads titled “Start binary options trading now and receive a 10-risk free trades bonus!” are now classified under the platform’s “prohibited financial products and services” category.
Facebook has been very adamant and clear that initial coin offerings, cryptocurrencies, and binary offerings will all be hit by this blanket ban.
The pent-up demand for bitcoin in 2017 led to massive network congestion which in turn resulted in a bidding war over block space. As observed by CoinMetrics, in early 2017, fees were at an average of $0.30, but by December, they had peaked at over $40. Median transaction fees spiked above $30 in December 2017 but have since fallen to around $4.00 in February.
2018 started on a bearish note, with a significant decline in the number of transactions broadcast to the Bitcoin network as a result of the calmed speculative frenzy around the world’s pioneer cryptocurrency. According to data from Blockchain, the number of operations added to the mempool every second has reduced by roughly 50 percent compared to what it was back in December 2017.
Market analysts believe the bitcoin fees have tumbled just because people are no longer anxiously buying the cryptocurrency in anticipation of the journey to the moon and this has drastically slashed demand for block space.