Daily Archives: September 16, 2018

Coinbase Goes on Wall Street Hiring Spree as Part of Global Expansion

Coinbase has cut the ribbon for its new New York office with plans to expand the staff profile to 150 employees over the next 12 months.

As part of the company’s expansion plans, the current staff of 20 have been acquired from the New York Stock Exchange, Barclays, and Citigroup, which indicates the level of seriousness on its part in infiltrating the banking system. Adam White, general manager of Coinbase Institutional, explained the staffing direction the exchange was embarking on:

“We have to create a bridge between financial services and technology,” he added, “In order to do that, we need to pull from some of the best and brightest minds that have worked their whole careers in other kinds of traditional financial firms.”

With an expansion into the Irish Republic and now NYC, crypto exchange giant Coinbase is clearly on a push to amplify its influence around the globe. In its push to raise its corporate and institutional investor client base, the office is following the NYSE with its new staffing profile. According to Christine Sandler, the company’s head of institutional sales, its focus on institutional investors should sit comfortably with its retail investment trade. She commented:

“We want to partner with appropriate institutions to help the whole ecosystem grow.” She further said, “It’s not ‘institutional or retail,’ because a lot of these institutions will be distributors.”

White argues that they had expected an exodus of institutional investors when the market corrected but claims, “It was exactly the opposite.” White sees Coinbase as having the capability to “light up more countries and more fiat rails” with a new office in Tokyo planned and a move into South America. White further said: “we’re committed to not being a U.S. company.”

Coinbase has also joined a new Washington-based lobby group called the Blockchain Association who intend to convince governmental bodies to give the crypto space some well-needed regulatory leeway in a bid to foster innovation.

Along with Coinbase other leaders in the sector include Circle, Protocol Labs, and other crypto investment firms, like Polychain Capital and Digital Currency Group,

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Bitcoin Annual Returns Show Long-Term Profitability

A simple calculation of Bitcoin annual return, which is the percentage difference in price from the beginning of the year to the end of the year, shows that the cryptocurrency has been extremely profitable practically every single year since it was launched. This blows away the profit percentages for other asset classes like stocks and precious metals. The Director of Research at Pension Partners and Manager of the ATAC Rotation Fund, Charlie Bilello, posted a chart of Bitcoin annual returns on Twitter.

Bitcoin Annual Returns, 2011-2018… pic.twitter.com/eJcXU9MzSm

— Charlie Bilello (@charliebilello) September 10, 2018

Bilello’s calculations show that Bitcoin annual returns have been in excess of 1,000% during 2011, 2013, and 2017. In 2012 and 2016 Bitcoin annual returns were in excess of 100%, with 2015 having an annual return of 35%. The only years with negative annual returns for Bitcoin are 2014 and 2018 so far, at -58% and -54% respectively.

One thing that is noticeable immediately, is that generally when there is a 1,000%+ price increase during a year, Bitcoin tends to have a bear market the next year and decline. This is what the Bitcoin market is experiencing during 2018 so far. However, some experts are of the opinion that Bitcoin will rebound before the end of the year, especially since Bakkt, in partnership with the Intercontinental Exchange (ICE), will be launching physical Bitcoin futures by November 2018. This is expected to accelerate institutional investment in the Bitcoin market.

BitcoinNews went through the calculations to verify Bilello’s numbers using Bitstamp data on Bitcoinwisdom. In 2012, Bitcoin increased from USD 5.50 to USD 13.5, a 145% increase. In 2013 Bitcoin increased from USD 13.5 to USD 900, a 6,566% increase. In 2014 Bitcoin decreased from USD 900 to USD 275, a 70% decrease. In 2015 Bitcoin increased from USD 275 to USD 430, a 56% increase. In 2016 Bitcoin increased from USD 430 to USD 930, a 116% increase. In 2017 Bitcoin increased from USD 930 to USD 16,000, a 1,620% increase. In 2018 so far Bitcoin has declined from USD 16,000 to USD 6,500, a 59% decrease.

In easier to read format, BitcoinNews calculated from Bitstamp data, that Bitcoin’s annual return is 145% for 2012, 6,566% for 2013, -70% in 2014, 56% in 2015, 116% in 2016, 1,620% in 2017, and -59% in 2018 so far. There is a significant divergence from Bilello’s calculations, but the general findings are similar. Bilello likely used different data for his calculations, which is not surprising since there are many different exchange rates for Bitcoin around the world.

Above all, it is clear that Bitcoin is the most profitable asset class for long-term over the past decade. Therefore, the bear market during 2018 is to be expected since the same thing happened in 2014 after the major 2013 rally that brought Bitcoin over USD 1,000 for the first time.

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Williams Percentage Range Indicates Bitcoin Is Oversold

According to Bloomberg, the Williams Percentage Range for Bitcoin is sitting at -83%, indicating that the popular cryptocurrency market is oversold. This suggests that a corrective rally may soon occur to bring Bitcoin back up to its equilibrium.

The Williams Percentage Range was developed by Larry Williams and is a technical analysis oscillator that indicates market momentum. It compares Bitcoin’s price to the highest high and lowest low over a 14 day period, using the formula Williams Percentage Range = (Highest high – Bitcoin price)/(highest high – lowest low) multiplied by -100. A Williams Percentage Range between -80 and -100 indicates oversold conditions, and overbought conditions when it’s between -20 and 0. The Williams Percentage Range has gained notoriety among technical analysts since it has a good track record of predicting market reversals.

Generally, it is good practice to combine the Williams Percentage Range with other indicators to make a more accurate forecast. One indicator is that the Bitcoin price has been holding steady above a support level of USD 5,800 consistently, and it has already risen to USD 6,500 at the same time the Williams Percentage Range indicates oversold conditions. This suggests that the current rally will gain steam. A true market reversal would be if Bitcoin’s price breaks above USD 7,500, the high of the rally peaking on 4 September 2018, and an even more solid sign of a true market reversal would be if Bitcoin goes above USD 8,500, which it hit during the rally that peaked on 24 July 2018.

The 2018 Bitcoin market has been defined by rallies with progressively lower peaks, while lows have been at or slightly above the USD 5,800 support level. So, if it breaks the trend of progressively lower rally peaks, that might indicate the bull market is truly here.

The Relative Strength Index (RSI) is another popular indicator used to determine oversold conditions. Right now the RSI is at 45 according to Bitfinex data on Bitcoinwisdom, after being as low as 35 on 7 September. An RSI below 30 indicates oversold conditions, and an RSI over 70 indicates overbought conditions. The RSI isn’t officially in oversold territory, but it got close when Bitcoin bottomed out near USD 6,100 on 7 September. The RSI got as low as 26 in mid-June 2018 before the rally to USD 8,500 that peaked in late July, so RSI seems to be a solid indicator for Bitcoin.

Overall, market indicators such as the Williams Percentage Range and RSI indicate that Bitcoin is currently oversold, increasing the likelihood of a rally, at least for the short term. Bitcoin could rise significantly above its current level of USD 6,500.

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Bitcoin Whale Watch: USD 380 Million Leaves #1 Bitcoin Wallet In Only 4 Days

Bitcoin whale watch is in full effect since 58,550 bitcoins worth approximately USD 380 million left the biggest Bitcoin wallet in only 4 days. The wallet in question is the Bitfinex cold storage wallet, and based on the blockchain records, this sort of outflow in such a brief amount of time is highly unusual. Remarkably, despite the huge amount of Bitcoin sent out of the wallet, it is still the #1 Bitcoin wallet with 170,500 Bitcoins worth approximately USD 1.11 billion.

There are speculations among the Bitcoin whale watchers that such large movements of Bitcoin could precede a dump. That is possible if this Bitcoin is going from Bitfinex’s cold storage to a hot wallet in preparation for a dump. However, according to data on Bitcoinwisdom, there is no indication of such a large amount of bitcoins being dumped on Bitfinex. This large outflow of Bitcoin from the cold wallet was completed on the 13th of September 2018; it’s been 3 days since then (as at the time of this writing).

In a more optimistic scenario, perhaps someone has decided to hodl this USD 380 million of Bitcoin in anticipation of a rally in the long-term and has moved the bitcoins from the exchange to their personal wallet. Another possible scenario is that this just represents Bitfinex moving coins around for unknown management reasons, perhaps making their hot wallets more liquid, or in preparation of a business deal.

The reality, however, is that no one knows for sure what is going on, and it isn’t worth speculating since there are so many possibilities. Even if this was the worst case scenario and these bitcoins are meant to be dumped, it wouldn’t affect the market much because every single day there are several billion in USD of Bitcoin trading volume on spot exchanges worldwide.

One remarkable aspect of this USD 380 million worth of Bitcoin outflow from the Bitfinex cold wallet is that they only paid USD 120 as fees, or 0.00000315% and the fees paid were much higher than they had to be, probably for security reasons. No fiat payment method in the world offers low fees comparable to Bitcoin. Fees for sending USD 380 million via banks could easily cost more than USD 1 million.

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TV Drama Features Crypto, Still the Elephant in the Room?

Another TV staple added some extra exposure to cryptocurrency. Britain’s longest running TV drama Coronation Street, added a scenario fitting a recent script.

The soap, Coronation Street, is one of the world’s oldest show running on British TV since 1960 and has a run of 9,500 episodes since its creation. The show is watched nightly by over 8 million viewers in the UK and many more around Europe.

The plots, always set in a working-class neighborhood in Manchester, deal with the daily struggles of loves and lives of those living in one street. The current plot in question focused on a local Ryan Conner, an ex-drug user with a serious gambling problem. He remembers a £50 investment he once made in a cryptocurrency called “Whipcoin” (fictional), only to discover that his investment is now worth £250 million.

Of course, he’s forgotten his password, but eventually, upon locating the coins, he finds that the information he was given about the coin was wrong. Although, his investment in Whipcoin had indeed been worth £250 million when the price of the coin peaked. It had since then plummetted in value to practically zero.

Channels such as Bitcoin News continue to bring the latest in cryptocurrency to the public, but the sector still needs greater mainstream media exposures. Although, this is happening slowly with exposure on popular mainstream television such as The Simpsons, The Big Bang Theory, House of Cards, Supernatural, The Good Wife, Silicon Valley, Family Guy, and Parks and Recreation.

The Big Screen is slow to integrate scripts with Bitcoin or cryptocurrency as a theme, but there are a few in the pipeline such as “Crypto,” starring Kurt Russell in the lead role. The film, already in post-production, is reportedly a crime-based thriller following in the footsteps of films such as Wall Street, Wolf of Wall Street and The Big Short which focussed on the economic crisis of 2008.

Such films about the financial sector are becoming increasingly popular and tend to get good box office ratings as a result. Martin Scorsese’s The Wolf of Wall Street quickly became the prolific filmmaker’s top-grossing film at the worldwide box office shortly after its release.

Publisher Little Brown is to release a biography about crypto twins Cameron and Tyler Winklevoss called “Bitcoin Billionaires”. The book, which is to be published both in the UK and US next year, has been bought by Richard Beswick, Little Brown’s publishing director.

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South Korea Looks to Blockchain With Samsung Tech to Improve Customs Service

Electronics giant Samsung is to develop a blockchain powered platform for use by the Korean Customs Services.

The IT arm of Samsung, Samsung SDS is basing the platform on Nexledger, currently used by businesses as a way of reducing expenses in managing financial transactions and data exchange.

Along with some other 48 organizations, including shipping and insurance companies, the South Korean Customs Service has signed up for the platform in order to streamline and track exported goods passing through customs. The blockchain platform will also aid the customs service in detecting forged documentation.

Samsung is not new to the blockchain industry and appears to be on a drive towards research and development in the new technology. It is currently committed to several new projects in the industry. Samsung is joining a number of other companies in exploring the idea of using blockchain logistics to streamline global supply chains. It is reported that the tech giant has already begun developing a distributed ledger system to monitor international shipments.

The blockchain is set to help shippers, ports, customs offices and many other parties in the global supply chain by replacing paperwork with irrefutable digital records. Blockchain could provide proof of provenance for goods by tracking them globally from the point of origin, manufacture, until the retail store shelf. Import details, fees, and taxes could all be programmed into smart contracts that release payments automatically once the conditions were met.

Recently, Samsung developed Cell 3.0, a platform which combines AI tech with company knowhow, and Banksign, a blockchain-based certification system. The adoption of this new platform is an indication that Samsung may envisage blockchain having a major role to play in the future of the company.

U.S. Customs and Border Protection (CBP), has announced that it will be testing a new blockchain shipment tracking system by combining a newly developed application, Legacy, and other system developed by the Department of Homeland Security (DHS)

Also, in the past month, IBM linked with Danish logistics company Maersk to launch its own blockchain shipping project, “TradeLens” involving 95 other organizations.

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Robinhood Maintains Zero Fees by Selling Customer’s Orders to High-Frequency Trading Firms

Robinhood is a popular stock trading app that has expanded into crypto, and one of their biggest selling points is that they offer customers zero-fee trading. This business model has been somewhat of a mystery, especially in the areas of sustainability. However, a filing with the Securities and Exchange Commission (SEC) of the United States for Q2 of 2018 reveals that Robinhood is selling their customers’ orders to high-frequency trading firms. This is a practice known as payment for order flow or equity order flow, and could easily be generating Robinhood tens or hundreds of millions of USD.

Essentially, Robinhood doesn’t execute all of their customer’s trades on the Robinhood platform, if any at all, instead they sell orders to 5 high-frequency trading firms and choose on behalf of their customers. The firms are Apex Clearing Corporation, Citadel Securities, Two Sigma Securities, Wolverine Securities, and Virtu Financial. Robinhood is paid between USD 0.00008 and USD 0.00026 for each USD of an order they sell to another trading firm. This at first might seem very small, but it is actually 10 times more than firms like TD Ameritrade and E*TRADE profit on payments for order flow.

Additionally, other major trading firms report payments for order flow in terms of per share, instead of per USD like Robinhood does. By reporting the payments for order flow in terms of per USD it makes them appear minuscule, which is deceptive. Robinhood is likely making tens to hundreds of millions of USD on payments for order flow. E*TRADE makes USD 47 million per quarter on payments for order flow, and TD Ameritrade makes USD 119 million.

The reality is that Robinhood is not really in the business of selling stocks or cryptos, they are selling their customers as a product, and their real clients are high-frequency trading firms. The high-frequency trading firms make tremendous profits off Robinhood’s customers since Robinhood customers are generally uninformed and don’t notice that they aren’t getting optimal deals. This is why high-frequency trading firms pay 10 times more for Robinhood’s payments for order flow versus other trading platforms that have more skilled traders.

The reason behind Robinhood’s popularity is due to the branding of zero-fee trading. In reality, there is a heavy fee being charged for all Robinhood trades by high-frequency trading firms in the form of less than optimal order execution.

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BitcoinNews.com Daily Podcast, 15th September 2018

Listen to the 15 September 2018 BitcoinNews Radio Show below.

In this edition of the BitcoinNews.com Daily Radio, hear about Tim Draper’s forecast for a USD 80 trillion crypto market cap, the most bullish forecast in history. We discuss how the Reserve Bank of India says Bitcoin is not a currency, and they couldn’t be more wrong. Learn about how Robinhood sells their customer’s orders to high frequency trading firms, and how BitGo has become an officially licensed crypto custodian in the United States.

Follow the BitcoinNews Radio Show on AnchoriTunesSpotifyGoogle PodcastsStitcherRadio PublicPocket CastsOvercastCastbox, and Breaker. We broadcast a new episode every day, covering the most important topics in the crypto, Bitcoin, and blockchain world!

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