Kraken exchange CEO: investors should “look out for themselves” and not rely on exchanges to protect them #NEWS
U.S. banks really aren’t big on bitcoin. That’s the inference to be drawn from a widespread crypto crackdown led by major financial institutions. Bank of America, the country’s second largest bank, is the latest player to give bitcoin the thumbs down, joining JP Morgan Chase and Citigroup in seeking to distance itself from cryptocurrency purchases made with credit card.
Banks and Bitcoin Don’t Mix
For all the progress bitcoin has made in gaining mainstream recognition over the past 12 months, there’s a growing sense that the world of traditional finance is pushing back against cryptocurrency. That’s not to say that major banks feel directly threatened per se. Nevertheless, the climate is very much one of mistrust, caution and self-preservation, in keeping with the conservative nature of these age-old institutions. If bitcoin is to prosper, it will need to do so without the support of many of the financial organizations that are capable of providing an onramp to the world of decentralized currencies.
As of Friday February 2, Bank of America has stopped accepting credit card transactions from cryptocurrency exchanges. While debit cards are believed to be unaffected, customers of exchanges such as Coinbase will no longer be able to purchase crypto with credit card. As news.Bitcoin.com has previously reported, the growing number of people purchasing bitcoin on credit, a trend which peaked amidst December’s price rally, is a high-risk move that’s been widely criticized.
Thus, the decision made by Bank of America and Citigroup, which also announced it would be following suit on Friday, is defensible from a business perspective. These companies are trying to protect themselves against customers recklessly borrowing to buy bitcoin and then finding themselves unable to pay off their debts should the cryptocurrency plummet in price, as has proven to be the case. The news follows in the wake of a Europe-wide crackdown on crypto debit cards, orchestrated by a Visa subsidiary, and comes amidst a climate of increased regulatory pressure on cryptocurrencies as a whole.
Bittrex Gains a Bank as Cryptopia Loses One
In a podcast on Friday, Bittrex CEO Bill Shihara confirmed that the U.S. exchange will soon be enabling fiat currency deposits in U.S dollars. The move has been interpreted as a desire on behalf of Bittrex to free itself from the increasingly tainted brand of Tether. At present Bittrex, together with fellow U.S. exchange Kraken, is reliant on tethers as a form of pseudo-fiat currency. In light of the news that U.S. officials subpoenaed Tether last month, it’s logical that Bittrex should want to free itself from being solely reliant on tethers.
Other exchanges haven’t been faring so well in the banking stakes however. Last week, New Zealand’s Cryptopia exchange announced that its domestic banking services had been withdrawn at short notice, writing: “Unfortunately, our current bank has notified us that they intend to close our NZDT account on 9 February. Due to this, we are announcing an immediate halt to NZDT deposits from COB today.”
Cryptopia also spoke of receiving “extremely short notice from the bank” and “little opportunity to present our case and provide compliance documentation to demonstrate our commitment to the applicable regulations”. In what may be a dig at Bitfinex, whose ever-changing and ever-opaque banking provisions are well-documented, Cryptopia added: “Whilst some exchanges choose to operate by opening bank accounts without being transparent (and running these until they get shut down), we believe this exposes us and our customers to greater risk and uncertainty.”
Despite growing interest in cryptocurrencies, getting money in and out of exchanges remains as hard as it’s ever been. It was that way in 2013, when banks scarcely knew what bitcoin was, and it’s still that way in 2018. Banks know all about bitcoin now but the vast majority want nothing to do with it.
Do you think Bank of America and Citigroup are opposed to bitcoin or are they simply trying to protect their customers from getting into debt? Let us know in the comments section below.
Images courtesy of Shutterstock, Citigroup and Bank of America.
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The post Bank of America Becomes the Latest Credit Card-Issuer to Ban Bitcoin appeared first on Bitcoin News.
Trading is arrogant, be it on Wall Street or across crypto exchanges. In order to trade rather than hodl, you must fundamentally believe you’re smarter, more disciplined or better informed than the other half of the market. Time will tell. But as long as you’re trading, we’ve established that you’re at least more arrogant than the other half of the market. Bitcoin is arrogant. In order to be a bitcoiner, you must fundamentally believe that a bunch of software engineers can create a better form of money than economists, governments and central banks.
Also read: Why Do We Fall, Bruce?
Wall Street Manipulation and Willy Bot
If you are a bitcoin trader (rather than just a hodler) you must be really smart. Or at least you must think you are really smart. A common trait I see in bitcoin traders is that they have theories for everything. They see through it all; the Mt.Gox “Willy bot” bubble, the Chinese wash trading, the Chinese government insider trading, the stop-hunting, Spoofy, Tether & Jamie Dimon trying to buy up cheap bitcoin. The latest conspiracy: Wall Street shorting futures and manipulating spot prices near settlement.
The price of $BTC over the last ten days, with the CBoE and CME futures settlement date/times highlighted. Make of this what you will. #cryptocurrency #bitcoin #futures #therearenoanswers pic.twitter.com/w0DWPmhQDb
— cryptoscopia (@cryptoscopia) January 26, 2018
I’m not saying that these theories aren’t sometimes correct. The Willy bot really did exist, and Chinese volumes dropped 90% after zero fee trading was banned. What’s important is that regardless if they’re correct or not, these theories become significant drivers in the bitcoin price. Many times, they create the price movement they are afraid of, like a Harry Potter boggart. This week, either Wall Street drove spot exchanges prices downwards in an act of manipulation, or it was the traders who thought Wall Street would do that did.
The CME and Cboe are traditional financial marketplaces where institutional traders (“Wall Street”) have been able trade bitcoin futures contracts since December. A futures contract is a contract to trade a certain thing for a certain price at a certain time. The Cboe and the CME futures contracts are cash-settled, so what is traded in practice is the price difference between what one entered the contract at vs. the “real” price at the time of settlement.
The first batch of Cboe bitcoin futures settled on Jan 17. The first batch of CME bitcoin futures settled on Jan 26. Futures contract entry prices are negotiated on the Cboe & CME exchanges themselves, but the “real” price at settlement is determined by the spot exchanges. For Cboe, it’s determined by a Gemini auction, and for CME, it’s a composite of Bitstamp, GDAX, Itbit and Kraken.
What the Market Believes
From the Gemini auction data page we can see that the volume for the particular auction (Jan 17) setting the price for the Cboe futures was ~6.72 million USD.
As a comparison, let’s look at the auction from the previous large dump (22 Dec):
On that day, the volume was only ~1.53 million USD. Even on the most active day of December, the volume was ~3.73 million at most. So why was there such a huge spike in interest on Jan 17?
Could the reason perhaps have been the 1,058 Cboe bitcoin futures contracts (>11 million USD) that were still open on Jan 17?
Personally, I don’t think so. We would have to look at the Cboe cumulative delta for that period to properly gauge how many of those were unhedged short positions, but even if we assume 100% were short positions, 11 million USD still doesn’t sound like enough at stake lot to pull of such a stunt.
The Gemini auction doesn’t exist in a vacuum. If you wanted to artificially push the price down, you would cause an arbitrage opportunity between Gemini and the rest of the world. But for the sake of argument, let’s assume you were able to push the price down on Gemini ~10%, we’re still only talking about 11 million USD worth of contracts open. The heist would have been around 1.1 million USD — or in Wall Street terms, “a penny”, and not a rational amount to engage in market manipulation.
But that aside, the market believes what the market believes. If the market believes bitcoin dumped because of the Cboe futures on Jan 17, the market will believe bitcoin will dump again because of the CME futures on Jan 26.
So, What is Your Trading Tip Exactly?
I believe we are about to break out from an extended period of consolidation. I’ve been hoping to get in some long positions from ~$8k, but it appears to me that we would have gotten there thanks to the CME futures FUD if $8k was really going to happen. As the market runs out of paranoia, I expect us to start a Lightning Network-positivity-fueled recovery to ~$13000-14000 in the coming weeks.
I’m opening a medium-sized long position (saving some of my trading balance in case we do get a chance at ~$8k). As usual, I timestamp my trades on Twitter for transparency so there can be no post-editing until this article is processed by Bitcoin.com.
Long XBTUSD from $11012 on BitMEX.
Timestamp for future reference.
— Eric Wall (@ercwl) January 26, 2018
As a final note, I find it a bit ironic that the category of people who are most determined that the market is rigged is the same category of people who are most actively trading it. I think of it as the sailor superstitions of the crypto seas.
What are your thoughts on market manipulation? Let us know in the comment section below!
Images via Shutterstock, Twitter.
Disclaimer: Bitcoin price articles and markets updates are intended for informational purposes only and should not to be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the “money.”
The post Trading Tip `The Wall´ – Wall Street Price Manipulation? Go Long appeared first on Bitcoin News.
Bitcoin has had a rocky week to say the least. At its lowest point, the cryptocurrency dipped to $9,200 before a rising green candle sent it scurrying back into the safety of five figures. That candle was sparked by the release of $100m worth of tethers – surrogate US dollars – and was followed by another $100m issued for the next three days in a row. Tethers are propping up the bitcoin market right now, but what happens when the music stops? Should regulators wade in or Tether shut up shop, the loss of fresh capital could be cataclysmic.
Tether – Savior or Sinner?
The bitcoin community have decidedly mixed feelings on Tether. On the one hand, this ersatz fiat currency is instrumental in shoring up prices. But if that supply line were to be cut off, the crypto markets would be starved of new money. While Bitfinex, which controls Tether, is in charge of issuing these dollar-pegged tokens, other exchanges are also reliant on them including Kraken and Bittrex. What happens to Tether affects everyone.
The amount of new bitcoins created each day is worth approximately $18 million. Miners need to sell most of these coins to cover their utility costs. This means that $18 million of new money needs to enter the markets daily just to maintain current prices. Given that $400 million of tethers has been issued over the past four days, and yet the price of BTC has remained sluggish, this is alarming. If it wasn’t for tether’s torrent of newly created cash, this week’s dip would have cut deeper still.
Don’t Stop Believing
In the short-term, the issuance of tethers serves as a form of quantitative easing that keeps the markets ticking over, even amidst negative news and regulatory uncertainty. As one commenter pointed out, “Tethers aren’t really ‘backed’ by USD fiat, but rather by confidence in Bitfinex itself. Similarly the USD isn’t ‘backed’ by hard assets, but rather confidence in the US economy. What happens to USD if the Fed shuts off the insane volume of their printing press?”
So long as we collectively believe that tethers are real, they are real, or at least as real as any other global currency that’s magiced out of thin air, which has generally been the case ever since the gold standard was dropped. But what are markets if not manifestations of human psychology; global sentiment etched into every line, chart, and candle? No one, at this stage, realistically believes that Tether is receiving $100 million a day in customer deposits via its diminutive Polish bank and then converting these into USDT. That just ain’t happening.
Beware the Changeling
In folklore, a changeling was a child that fairies were reputed to leave in cradles after snatching the human baby. It looked like the cradle’s original inhabitant on first glance, only to prove to be anything but. If the fairies performed the old switcheroo, unexplained diseases, disorders, and failed crops were sure to follow. Tether is valued like a real dollar and works like a real dollar – at least until the time comes to cash out. In the past month alone, over $1 billion of tethers have been issued. If Tether doesn’t hold a corresponding amount in its bank, the whole house of cards could come tumbling down, destroyed by a changeling swaddled in the mantle of the US dollar.
Do you think the volume of tethers entering the market is cause for concern? Let us know in the comments section below.
Images courtesy of Shutterstock and Wikipedia.
Need to know the price of bitcoin? Check this chart.
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