Kraken exchange CEO: investors should “look out for themselves” and not rely on exchanges to protect them #NEWS
Looking at mainstream media headlines over the past few weeks shows a lot of columnists and pundits have declared that ‘bitcoin’s bubble has burst.’ They always claim that it’s much safer to invest in traditional investments like equities or the stock market while at the same time highlighting cryptocurrency’s volatile price swings. However, on Monday, February 5th the Dow Jones Industrial Average dropped more than 1,175 points, losing more value in one day than the entire cryptocurrency ecosystem over the past six weeks.
The Black Monday of 2018
It was a ‘Black Monday’ on February 6 when both global stocks and the entire cryptocurrency ecosystem shed billions yesterday. The Dow Jones Industrial Average (Dow) and a good portion of stocks worldwide plummeted at 2:40 pm EDT; more so than the drops during the 2008 economic crisis. Yesterday’s stock market dip broke records not only bringing up memories of 2008 but the day was also very similar to the other ‘Black Mondays’ of 1929, 1987, and 2000. However, mainstream media is not so quick to call the stock market slump a ‘crash,’ a ‘bubble pop,’ or even a death spiral. Yet the Dow lost more value ($300 billion USD) than the entire crypto-bear run of 2018 in one intraday.
Some Reports Say the Stock Market Sell-Off Pushed Money Towards Crypto-Investments
In addition to the grueling stock market madness, the financial publication Business Insider published a report that stated, “money was pouring into crypto during the stock market’s selloff.” The Dow started to nosedive at 2:40 pm EDT, and twenty minutes later the entire cryptocurrency capitalization according to Coinmarketcap spiked 7 percent one hour later.
“Cryptocurrencies got whacked alongside equities last week,” explains the report on Monday evening.
But Monday’s continuation of the stock market selloff appeared to send some investors to digital currencies in search of a safe haven.
Yesterday BTC/USD markets tumbled 20 percent in 24-hours reaching a low $5,900 which shaved $18 billion USD from its market cap. The following day BTC markets have rebounded considerably back above the $7,200 price territory. The Dow average took another hit during the opening bell on Tuesday, losing 500 points but has since recovered much of the morning loss. However the Dow, S&P 500, Nasdaq, and a vast swathe of traditional investments still look unsettling. The Dow is showing some slight recovery, but many other mainstream investment vehicles are still nurturing losses. Moreover, European stock markets are declining rapidly after U.S. and Asian markets were routed.
Mainstream News Outlets Have No Problem Saying Bitcoin Is Dead But They Think Twice When It Comes to the Global Stock Market
Over the past week, mainstream news outlets have had no problem calling bitcoin markets ‘dead’ and publishing reports stating that it will never recover. There are at least seven new editorials per day stating that bitcoin is “done” since the beginning of January. There’s no hesitation towards telling the public that the dream of cryptocurrencies has come to an end, and many columnists are telling people to sell.
On Tuesday, February 6, mainstream media’s outlook on the stock market is gloomy, but there’s not that many (if any at all) editorials about the stock market ‘crashing,’ or the ‘stocks bubble has popped.’ The only ones calling the stock market ‘dead’ are the lesser known ‘conspiracy-like’ publications. Mainstream media pundits wouldn’t dare shake the market with headlines saying that traditional markets are in a ‘death spiral.’ But with cryptocurrencies, these ‘news outlets’ could not care less about spreading FUD among the crypto-investment crowd.
The Stock Market Can Be Far More Dangerous Than Crypto
The truth is stocks, bonds, equities, and nation-state issued currencies can suffer from extreme volatility. Some nation-state currencies are so worthless people weigh bags of cash on scales rather than counting. Moreover, stock markets can cause significant disruption to retail investors, and way more than the digital currency ecosystem governments warn everyone about. Stock market crashes can collapse an entire housing market, banks close in record numbers, and in some cases, there can be a run on the banks.
This week U.S. regulators mentioned the ‘dangers’ cryptocurrencies could bring to retail investors during a congressional hearing, but of course, they failed to mention that regulated and centralized markets can be even more dangerous.
What do you think about the stock market tumble in comparison to bitcoin markets? What do you think is more dangerous? Let us know in the comments below.
Images via Pixabay, CNN, WSJ Feb.5, and Business Insider.
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All good things must come to an end—and bad things, too. Bitcoin has had a hell of a ride over the last year, but that all seems to be over as almost 60 percent of its value has vanished in the last month. Enthusiasm in the cryptocurrency market is low as Bitcoin dropped below $8,000 for the first time since November.
According to the popular cryptocurrency app Coinbase, the price of Bitcoin slumped to $7,540 on Friday morning before picking up to around $9,000 a little before noon. The run of thousand-percent increases was never sustainable, and even the most dedicated believers in the cryptocurrency revolution didn’t think the high of almost $20,000 would hold in the short term. But the common belief among the community has been that $10,000 was as low as it would go. Irrational exuberance inevitably invites corrections, but it’s beginning to look like we’re witnessing a massacre.
In a matter of 24 hours, about $30 billion was wiped off of Bitcoin’s market cap. A look at the charts on CoinMarketCap shows that all but five of the top 100 cryptocurrencies are down, most by double digits. All told, Bitcoin has lost $177 billion from its high in December.
It’s not difficult to pin down why this is all happening. Even if you truly believe that blockchain technology is the future and decentralized currency will eventually find its footing, it’s impossible to ignore the fact that we’ve seen nothing but bad news for the whole crypto-sphere.
What’s perhaps the most troubling for long-time bitcoiners and newcomers alike is the almost daily developments in government regulations to address cryptocurrency. As financial analyst Nouriel Roubini, of Roubini Macro Associates, told Bloomberg, “Pretty much every G20 policymaker is talking about a crackdown.” This week saw officials in India indicate that they will be introducing regulations to completely eliminate payments with cryptocurrency in their country, and they made it official that India does not recognize Bitcoin as a legal tender.
US Treasury Secretary Steven Mnuchin also said this week that he would like the members of the G20 group to discuss cryptocurrency regulations when its annual summit is held in March. The US has been mostly hands-off when it comes to cryptocurrency, electing to wait and see what happens. But the IRS still wants its cut, and investors are getting their first taste of what it’s like to pay Uncle Sam some of that free money. A visit to his accountant prompted one redditor to exclaim, “Fuck taxes man. This is so fucked it’s like I didn’t earn anything.” And it’s not just the federal government that wants its taxes; states are getting in on it, too. A bill in Arizona that would require residents to pay the state a portion of their earnings advanced toward becoming law this week.
While hugely successful companies like Facebook are trying to purge their services of cryptocurrency scams, floundering companies like Kodak have jumped at the opportunity to attract investors by slapping blockchain buzzwords onto their business plans. Kodak was supposed to launch its own initial coin offering (ICO) on Wednesday, but as more information was revealed about the company’s plans by the New York Times, Kodak said it needed more time to vet potential investors. Most of the gains that Kodak’s stock made after its blockchain announcement are now gone.
The most infamous company capitalizing on the frenzy, formerly named Long Island Iced Tea Corp, appears to have had a change of heart and on Friday it announced that it won’t be buying 1,000 cryptocurrency mining rigs after all. At the moment, the company’s name is still Long Island Blockchain.
Nobel Prize-winning economist Robert Shiller has insisted that Bitcoin will eventually “totally collapse,” even if it takes 100 years. At the moment, it’s on track to reach that goal much more quickly. Whether the “Bitcoin is bogus, but blockchain is real,” crowd will be proven right remains to be seen. Blockchain is, without a doubt, a unique technology, and lots of people are working interesting applications for it. The problem remains that the thousands of ICOs that have cropped up have their values inescapably entwined with Bitcoin. Maybe they’ll be able to disentangle that co-dependent relationship, but the expensive growing pains are certain to take a long time.
According to multiple reports back in October and December of last year, it was said that the financial institution Goldman Sachs had plans to create a bitcoin trading desk. Now a month later, Lloyd Blankfein, the CEO of the firm, says the reports are “not true” speaking at the World Economic Forum in Davos this past Wednesday.
Goldman Sachs CEO Denies Opening a Bitcoin Trading Desk
A while back in October, publications started rumors that the banking institution Goldman Sachs was planning to launch a cryptocurrency trading desk. Further, the story was bolstered even more so in December when the financial news outlet Bloomberg said Goldman would start the trading platform this coming June. According to those reports which cited sources “familiar with the matter” Goldman was “still trying to work out security issues as well as how it would hold, or custody, the assets.”
Moving forward to the 2018 World Economic Forum event held in Davos, Lloyd Blankfein explained to the press that the brokerage firm was not planning to open a digital asset trading desk and earlier reports were false.
“What we said was we were opening — We’re clearing futures in bitcoins for some of our futures clients — We’d clear them,” explains Blankfein.
We’re a prime broker and so if our clients are going to do it, we’re going to do it — A principle bitcoin business where we’re going long and short, market making, so far we’re not.
‘Mad Money’ Host Says Investors Should Read Between the Lines of Lloyd Blankfein’s Bitcoin Statements
The host of the television broadcast, “Mad Money,” Jim Cramer believes that Blankfein’s statements did not completely dismiss bitcoin. Cramer explains on his recent show that “investors should read between the lines on Lloyd Blankfein’s bitcoin comments.”
“I think it was important to parse what Lloyd said,” Cramer reflects on the show. “[Blankfein] said customers who want to be involved with bitcoin we will do business with on some level.”
And he did say, ‘If clients want to do something in the futures with crypto, they are there for them.’
Bitcoin’s Rise Is Becoming ‘Uncomfortable’ for Financial Incumbents as the Boss of JP Morgan Says the Media ‘Should Go Back to Something Relevant’
Lloyd Blankfein has been asked about bitcoin many times in the past but even more so recently during the cryptocurrency’s meteoric rise in value. Blankfein has stated before that he’s uncomfortable with bitcoin and believes the market might be overheated. In an interview with Kayla Tausche, Blankfein said: “Maybe bitcoin is a kind of a bubble — I don’t like it — I’m not comfortable with it.” Blankfein’s comments in Davos suggested that Goldman Sachs is willing to deal with digital currency investors.
The mainstream media has been very interested in what CEOs of large financial firms like Goldman Sachs and JP Morgan have to say about this emerging technology. Following the interview with Lloyd Blankfein, the CEO of JP Morgan Jamie Dimon was also inundated by the press in Davos and asked to answer questions about bitcoin. Dimon who called bitcoin a “fraud” last year has been very vocal against the cryptocurrency.
“I’m not going to say any more about the digital currency,” Dimon explains this past Wednesday in Davos. Dimon clearly unimpressed with the media concludes:
The media should go back to something relevant.
What do you think about Goldman Sach saying they are not launching a trading desk one month after publications reported on the story? Do you think the company really is interested in bitcoin and cryptocurrencies? Let us know what you think in the comments below.
Images via Goldman Sachs Tower, Logo, and Lloyd Blankfein at WEF.
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