Regulatory news and announcements had the biggest impact on cryptocurrencies in recent years.
According to a report published by BIS (Bank of International Settlements), any news from regulatory authorities can move the crypto market in both directions. Although most of the news came from regulatory authorities has proven to be negative for the crypto market, there were some positive cases as well where good news from authorities moved the market in positive direction.
Cryptocurrencies were developed with the main idea to be operated without any central authority, that’s why the world of crypto known as the decentralized world, but facts are against this statement. Study shows that movement in cryptocurrencies is directly related to regulatory news. Positive news from regulatory authorities, like approvals affected the volume and valuation of many crypto currencies . On the other hand, news related to Ban on crypto currencies and ICO’s made the matter worst for the crypto market. There are many examples in the past related to ban on cryptocurrecncies and rejections from regulatory authorities which resulted in market crash.
SEC’s rejection of Bitcoin ETF’s had the worst impact on Bitcoin prices in the past, not only in 2017, but it’s being repeated in 2018 as well, in recent days SEC announced the rejection of Bitcoin’s ETF one more time and market reacted negatively to that news. In addition to that, regulatory authorities like SEC, FCA, FSA and other central financial institutions can impact the market in a big way, crypto market is fragile as compared to other financial markets, liquidity is also low, so a strong announcement from these authorities can move the market in either direction.
Some of the key findings from the report are
- Strongest move in the crypto market occurs when there is a news related to legal status of the cryptocurrencies. News related to ban on cryptocurrencies or their treatment under tight rules and regulations moved the market in negative manner, on the other hand news related to a possible framework for a crypto currency or approval of an ICO resulted in strong gains.
- News regarding Anti-Money laundering and possible terrorist financing impacted the market in adverse manner in the past
- General warnings by the financial institutions about the crypto market or investing in crypto market without any specification didn’t have any impact on the prices or market volatility, another factor which was ignored by the crypto market was news about the issuance of central bank digital currencies.
- There has been market segmentation, and large price difference sometimes prevail across different jurisdictions.
Security Token Offerings: The Future of Crypto or a Trap by VC’s?
Security Token Offerings (STO’s) is the new phenomenon in crypto market and many people referring it as the new face of ICO’s
People who are following crypto market must have heard about STO’s in 2018, it’s a relatively new idea as compared to ICO’s. According to some people, security token offerings (STO’s) are the future of crypto market, but how true is that?
There is no doubt about the fact that Security Token Offerings are more secure as compared to ICO’s , STO’s have a regulated structure and they are backed by assets or some tangible things like company revenues or profits.
But there is another side of the story as well, due to this secured and safe nature of STO’s , many people believe that this idea is more like a trap by Venture capitalists (also known as VC’s) . This theory is backed by the arguments that ICO’s don’t give control to VC’s because of their decentralized nature and structure. So, VC’s came up with the idea of security token offerings in which they can get back some of their control which they lost in ICO’s.
There is no doubt about the fact that ICO’s are risky, very risky in fact, more than 50% of the ICO’s failed miserably in 2017 and most of them were scam, ICO market is full of scam and vulnerability and that’s why lot of institutional investors don’t invest in ICO market but at the same time reward ratio in ICO’s is very high as well. People made millions in the ICO market and multiplied their initial investments, one of the main reasons for lot of people to join the ICO market was “easy to invest” as ICO market is pretty easy and ICO is a straight forward way for startups to raise funds, so people joined this market without any hassle of registrations, KYC process etc.
One of the key features which makes STO’s different from ICO’s is that STO’s are backed by tangible assets like revenues, or company profits, there is a complete structure behind an STO. Due diligence is required to participate in STO’s , registration, KYC and other requirements must be fulfilled for ownership, It makes STO’s more secure but at that same time reward on STO’s are no way near to ICO’s , same old concept of low risk low reward and high risk high reward applies here.
But the most negative side of STO’s is that it is controlled by same old large VC’s and funds, that concept of decentralization is no more in STO’s because everyone knows there are big players behind the company launching an STO , so they have the control, another negative point is that as of now , STO’s are not tradable in the secondary market, there is not a single exchange dealing in STO’s which makes this idea more difficult to reach a larger audience.
In conclusion, I would like say that there are pros and cons associated with STO market, it makes you more secure as an investor but at the same time it is more centralized. Market participants should wait until STO’s are available in secondary market.
Worst Performing Cryptocurrency of 2018
Bitcoin Gold, the hard fork of Bitcoin, launched in 2017 is the worst performing cryptocurrency in 2018 with almost 94% loss
Bitcoin and many other cryptocurrencies in 2018 saw the worst year they ever had, market crashed after the meteoric rise of 2017 when the market gained dramatic popularity. Current market cap of cryptocurrencies stands at around $220 billion, down from $800 billion at the start of 2018, shows that the total market cap dropped about 70% , Bitcoin itself lost around 2/3rd of its value along with other crypto currencies like Ethereum, Ripple and Bitcoin Cash.
This is year-to-date chart of overall crypto market, look at the levels at the start of the year as compared to now. Market struggled to break resistance levels and kept dropping, even now when the market is in a range, many technical analysts are predicting the market to drop even further.
(Bitcoin’s Year-to-date chart)
Bitcoin’s performance is not different from overall crypto market, being the number one cryptocurrency in the world, it’s pretty obvious that market follows what bitcoin is doing, and that’s what happened. Bitcoin lost around 70% of its overall value from its all-time highs.
Worst performing currency of 2018
But the worst performing cryptocurrency in 2018 is Bitcoin Gold, this hard fork of Bitcoin, launched in October 2017 has performed the worst in 2018 where it lost around 94% of the value year-to-date.
Bitcoin Gold was trading at around $370 on 14th January 2018, and as of now, current market price of Bitcoin gold is around $23 , making it the worst performing currency of 2018
Here’s the chart
Factors behind this performance
One of the key factors behind Bitcoin Gold’s performance is 2018’s overall market crash, which left not a single cryptocurrency unharmed. Bitcoin Gold being the hard fork of Bitcoin was naturally going to be affected by the crash. Apart from that, the core structure of Bitcoin Gold itself is not differentiating this fork idea from other existing options, for example the stated purpose of the hard fork was to restore the mining functionality with common Graphics Processing Units in place of mining with specialized ASIC (customized chipsets), used to mine Bitcoin, but later on as the time passed by this idea didn’t seem to be as effective as expected. Investors started losing their interest in Bitcoin Gold.
May 2018 attack
In May 2018 Bitcoin Gold (and two other cryptocurrencies) were hit by a successful 51% hashing attack by unknown actors. The attackers successfully committed a double spend attack on Bitcoin Gold. An amount of approximately $18.6 million USD worth of Bitcoin Gold was transferred to a cryptocurrency exchange (typically as part of a pair transaction in exchange of a fiat currency or another cryptocurrency) and then reverted in the public ledger maintained by consensus of Proof-of-Work by exercising a >51% mine power. Market reacted to that news and Bitcoin Gold crashed even further.
Infographic: Crypto energy consumption
One of the most appealing sides of cryptocurrencies is the option to acquire them for free. Unlike any other currency, you can get Bitcoins and other altcoins through the process of “mining”. In the beginning, crypto-mining was the primary way of acquiring any cryptocurrency. But now, the majority of people get them through crypto exchanges.
Don’t get us wrong; mining has never been more popular. However, because the return on investment (ROI) has gotten a lot smaller, small-scale mining has become obsolete. This is mainly because electricity consumption has increased, and the amount that one rig can mine has decreased. Today, massive crypto-mining networks do most of the mining.
These facilities take up huge spaces, mostly in abandoned factories. Additionally, they suck up so much power that some estimates say that crypto-mining has surpassed 159 countries when it comes to the energy consumption. Some of the countries on the list include – Belgium, Finland, Switzerland, New Zealand, and many other ones. Even though the use is relatively low when compared to biggest nations like the USA and China, it’s still alarming, especially when you consider that crypto has been around for less than a decade.
This post was originally created by Btxchange.io Team, posted in collaboration with Btxchange
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