Category Archives: Christopher Giancarlo

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Ex-CFTC Chair: Trump Admin Coordinated to Pop 2017 Bitcoin Bubble

Former Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarclo says that the Trump administration coordinated to pop the Bitcoin bubble of late 2017.

They did this by introducing Bitcoin futures on the Chicago Mercantile Exchange (CME). Specifically, Giancarlo says:

“One of the untold stories of the past few years is that the CFTC, the Treasury, the SEC and the [National Economic Council] director at the time, Gary Cohn, believed that the launch of bitcoin futures would have the impact of popping the bitcoin bubble. And it worked.”

The theory was that institutional money would tame the rapidly rising price of Bitcoin on the spot markets, as Giancarlo says: “We believed that, should bitcoin futures go forward, it would allow institutional money to bring discipline to the value of the cash market. And that’s exactly what happened.”

Indeed, the Bitcoin bubble of 2017 peaked at USD 20,000 a day before the launch of Bitcoin futures on CME, after which point the price of Bitcoin began to crash, precipitating the bear market of 2018.

Apparently this decision was driven by the events of the 2008 Great Recession, when a massive economic bubble collapsed and caused widespread loss. Regulators believed that it was safer to pop the Bitcoin bubble than to let it inflate to its maximum size, since then when it pops the losses would be less. Of course, cryptocurrency users, traders, and investors who collectively lost hundreds of billions of USD when the 2017 Bitcoin bubble popped probably disagree with this ideology, since perhaps the bear market would have not been as severe if CME Bitcoin futures were never introduced.

 

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Bitcoin Gives in to Selling Pressure

Bitcoin Gives in to Selling Pressure

Bitcoin could not withstand the selling pressure after losing its grip on USD 10,000 yet again during Europe trading time yesterday when the cryptocurrency slid down from its daily high of USD 10,259 to remain under 5-digit figures all the way until Eastern Coast in the US opened to trade.

Even then, the recovery failed to last four hours. After making the arduous climb to USD 10,129, price suddenly took a plunge to USD 9,660 at around 10:30 pm UTC and now trades around that same price as Shanghai approaches afternoon (CoinDesk).

Altcoins are now back at where they were before last week’s recovery, and the bearish bias looks to be confirmed if Bitcoin cannot reclaim lost territory within the next 24 hours.

$BTC looks to be creating lower-highs and lower-lows on the daily chart

Marked are the open and support areas based on the weekly chart with previous support possibly flipping to resistance

If confirmed, watching the next weekly support at $8975 as a potential target pic.twitter.com/yG2WO2yrzX

— Josh Rager 📈 (@Josh_Rager) July 23, 2019

Josh Rager, crypto analyst, is one of those who has now turned to go with the current, with previous support levels likely to turn into resistance. The lower highs that have been managed, coupled with lower lows, leads Rager to believe that we may have to dig in and prepare for a USD 8,975 valuation should bears continue to have their way.

With the headlines in the news still equal in terms of positive and negative coverage this week, Bitcoin’s dominance as pointed out yesterday, continues to be the constant winner, and advocates will be pleased to see how sentiment finds good support in fundamentals like that.

One potentially important piece of news that could affect sentiment this week is that of Bakkt, the platform for Bitcoin futures that was predicted to be the catalyst for institutional investment in Bitcoin. After over a year of intense hype leading up to its original launch at the end of 2018, Bakkt eventually ran into operational hurdles and has been delaying its launch over and over again.

Its latest announcement yesterday seemed to be more of the same news as in the past few announcements, in so many words explaining that they were not ready to formally launch the platform. Whether this delay is to do with technical aspects as seems to be from the wording of their blog posts is a matter of some speculation online, with some believing that it is actually their regulatory compliance that is holding the launch back.

Today kicks off user acceptance testing @ICE_Markets for the Bakkt Bitcoin Daily & Monthly Futures contracts

Testing is proceeding as planned with participants from around the world

— Bakkt (@Bakkt) July 22, 2019

As per the info from the platform, they are now accepting people to test their daily and monthly futures, with international users invited to apply to become the first testers. The timing was deliberate, since 22 July 2019 is only two days after the 50th anniversary of Apollo 11. Once fully in play, Bakkt’s futures will be listed and traded at ICE Futures US and cleared at ICE Clear US.

Derived from the word “backed”, Bakkt’s major difference from previous iterations of Bitcoin futures is that its offerings will be the first one backed by actual Bitcoin, rather than cash settled like the offerings by other platforms. Some crypto commentators believe that it is this need to buy or sell actual Bitcoin to settle futures contracts that will really drive trading volumes for Bitcoin, as well as fuel an increasing demand for it, eventually driving prices upwards for the long term. The US Commodity Futures Trading Commission (CFTC) Commissioner Christopher Giancarlo himself believed that fintech’s sheer pace of progress had been the major cause for the regulators to stall their approvals for such instruments like Bakkt.

Many continue to believe that Bakkt is still significant and will have a major role to play in determining long-term trends for the crypto market. Fundstrat Global Advisors managing director Sam Doctor is confident that Bakkt will be ready in its full form by September. He says that institutional money is still very much in the wings, just waiting to pounce:

“There appears to be a critical mass of adopters ready to come on board on Day 1 of the Bakkt launch, with the sales team gaining traction among brokers, market makers, prop trading desks and liquidity providers.”

$BTC 1W CME Futures. Recap of unfilled gaps: ($11,730.00, $8,440.00, and $7,180.00) also note EMA 26 has crossed over EMA 55 as a potential bullish sign for the mid term. Short term let’s see which gaps get filled first. #Bitcoin #Crypto pic.twitter.com/Dixbv3T2xH

— Bart Simpson (@CryptoBartSimps) July 22, 2019

Whatever the developments with Bakkt, the more immediate concern now for Bitcoin holders is how speculators will react, particularly because CME futures contracts which are about to expire has an existing gap around USD 8,500.

Some believe that this is now the rational level for Bitcoin to arrive at before it identifies a new support level. Optimists aren’t too worried, though. As this one trader puts it:

we had the cme futures bear.
soon we will have the bakkt bear.

— Diary of a REKT man (@diaryrektman) July 23, 2019

And so, if we are now in the throes of the CME bear, as we seem to be every end of month, we should be prepared for a Bakkt bear. Judging from the past attempts at price breakdown, though, USD 8,500 levels will be seen by many as a rare, if not last, opportunity to make serious entry points.

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Global Conference Fireworks Over Crypto

A recent panel discussion at the Milken Institute Global Conference in Beverly Hills became heated when panelists aired their conflicting views on the future of cryptocurrency.

Every seat in the conference auditorium was filled for the discussion which included United States Commodity Futures Trading Commission (CFTC) chairman Christopher Giancarlo, economist Nouriel Roubini, and Commissioner at the United States Securities and Exchange Commission (SEC) Michael Piwowar.

SEC’s commissioner Piwowar, issued an early warning, making reference to the current argument surrounding ICOs, which has occupied much debate recently, suggesting that if an ICO token is a security it falls into one of three categories:

“The first is the registered public offerings; this is the normal IPO, public offer. We’ve not had anybody register a public offering for an ICO. The next bucket is exempt offerings, so if you have an ICO, you have to fit into one of those types of exempted. And the third bucket is illegal […] if you are not falling into the first two buckets, we’ve said we’re coming after you.”

Piwowar added, “Bitcoin itself is not a security, but these customized tokens for these initial coin offering – most of them are.”

Christopher Giancarlo was upbeat,  suggesting that there should be more respect for the generation’s “new instrument”, referring to cryptocurrencies, and said that rather than derision, markets needed policy initiatives that were “thoughtful and forward-looking”. He continued:

“There is something going on here that is generational… Just as the baby boomer generation lost faith in the leaders that came before them and tried to seek a cultural change in those days through sex, drugs and rock and roll, I think there is a generation that also has lost faith in us that led them through the financial crisis and they see technology as a way of disintermediating institutions for which they don’t have a great deal of respect.”

He went on to explain the CFTC’s problems of applying outmoded regulations to completely new technology.

Nouriel Roubini, tagged as ‘Dr Doom’, an economist known for predicting the 2008 financial crisis, caused friction when describing blockchain as “a glorified Excel spreadsheet” and described investors entering the Bitcoin market “bubble” in 2017 as “suckers.”

His description of decentralization as bullsh*t provoked blockchain entrepreneur Alex Macshinsky to respond, “Everything you just said is irrelevant.”

Ex-CIA cryptographer Bill Barhydt, clearly bemused by Roubini’s comments, retorted with “I don’t even know where to begin”.

 

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