Monthly Archives: June 2017

Amid what appears to be widespread fatigue among traditional investors, excitement is booming in the wild, wild west of cybercurrencies right now.

Over on Reddit, one forum dweller said they were ready to drop $20,000 into bitcoin BTCUSD, -0.02% after doing some research and concluding the only way was up for the crypto cash. It beats $20k sitting in a safe-deposit box, the poster said.

Only invest what you are willing to lose, was one response.

For those who are willing, Rupert Hargreaves, blogging for ValueWalk, offers up a less volatile way to bet on cryptocurrencies over just buying bitcoin or ethereum -- though theres still plenty of risk involved. He says theres big money being made on cybercurrencies... and where theres an opportunity, there are hedge funds.

Hargreaves took a deep dive into the Crypto-Currency Fund Index from Eurekahedge. The data firm uses the index to track the performance of five actively managed hedge funds with holdings in bitcoin, ethereum and other digital cash.

His findings? The Eurekahedge index not only beat traditional hedge funds, it even blew bitcoin itself out of the water.

Between June 2013 and April this year, the index shows eye-popping cumulative returns of 2,152.32%, versus 1,408.11% for the Bitcoin Price Index. Looked at annually, thats a return of 125.35%, compared with 102.96%.

It should be noted that while less volatile than a straight play on bitcoin or another cryptocurrency, the level of volatility for the index itself is off the chart, Hargreaves notes in his blog post.

In its report on performance, Eurekahedge said that over a period of 14 months between December 2013 and January 2015, the Eurekahedge Crypto-Currency Fund Index lost almost 73% of its value from its 2013 high. In contrast, the Bitcoin Price Index lost almost 81% of its value, according to Hargreaves.

Whether were on the edge of a South Sea Bubble or greatness for the cybercurrency faithful, bitcoin and its pals have been bringing the drama.

Popular rival ethereum suffered a flash crash Wednesday, plunging from more than $317 to briefly trade as low as 10 cents in a flash cash on the GDAX exchange before rebounding. In a post, GDAX Vice President Adam White said a multimillion-dollar market sell order was placed on GDAXs ETH-USD [ethereum-U.S. dollar] order book, which resulted in orders being filled from $317.81 to $224.48for a slippage of 29.4%. That, in turn, began a cascade of around 800 stop-loss orders and margin-funding liquidations, which sent the price temporarily as low as a dime, he explained.

Just a day in the life of a brave new world.

Check out: How big is bitcoin, really? This chart puts it all in perspective

Originally posted here:
How to bet on bitcoin, without the crazy volatility? Here's one idea - MarketWatch

Source

Bitcoin (Pending:COIN) is the first cryptocurrency, but it isn't necessarily the "best". In fact, multiple digital assets have staked their entire value proposition on providing slight improvements on the core technology Bitcoin is based on. This suggests a great deal of Bitcoin's value seems to come from name recognition and other first-mover advantages.

The fact that Bitcoin isn't necessarily superior to the alternatives like Ethereum, Ripple, and even Litecoin hasn't escaped the attention of holders of those competing assets. Many feel that as soon as Bitcoin is dethroned - through another cryptocurrency (Ethereum) surpassing it in market cap - it will lose its premium status and investors will flock to the new coin, dramatically increasing the value of the new coin through an event that has been humorously dubbed "The Flippening"

However, the Flippening is starting to look like a "Floppening". And this key bullish argument for Ethereum is not playing out as expected. While many Ethereum bulls may have rejoiced at Bitcoin's scaling issues and political squabbling over a solution to them - most probably didn't expect Ethereum to run into similar issues a few weeks later. Massive fundraising events called initial coin offerings have revealed serious weaknesses in the Ethereum network, causing many to question how much "better" it really is than Bitcoin.

Status, a project that raised hundreds of millions within a day, appears to be the straw that broke Ethereum's back - at least temporarily. The event was a mess, and it seemed to have set off a chain reaction of dysfunction throughout the entire network, culminating in a flash crash that caused many U.S investors to accidentally sell (through limit orders) their positions at ridiculous prices only to see the price of Ethereum soar back up again. The dysfunction in the Ethereum markets has been so severe that investors, especially on Reddit and other message boards, are suggesting market manipulation may be involved.

One theory suggests the June 21st flash crash was caused by a large holder termed a "whale" purposely dumping an astronomical amount of Ethereum on a single exchange to fill all the buy orders, liquidate leveraged longs, and drive the price extremely low in order to buy up as much Ethereum as possible at extremely low prices before it soared back up. Some Redditors even suggest that this "whale" could have been the recipient of recent ICO funds. To investors used to the highly regulated U.S markets, such a story sounds widely implausible. But in the wild-west of cryptocurrency, an unregulated asset class at the frontiers of finance, it actually makes sense to many people. GDAX, the exchange where the problem took place, is investigating the situation and has provided a response to the community's suspicions by stating, quote:

On 21 June 2017 at 12:30 pm PT, a multimillion dollar market sell was placed on the GDAX ETH-USD order book. This resulted in orders being filled from $317.81 to $224.48, translating into a book slippage of 29.4%. This slippage started a cascade of approximately 800 stop-loss orders and margin funding liquidations, causing ETH to temporarily trade as low as $0.10.

Our initial investigations show no indication of wrongdoing or account takeovers. We understand this event can be frustrating for our customers. Our matching engine operated as intended throughout this event and trading with advanced features like margin always carries inherent risk.

We are continuing to conduct a thorough investigation and will keep customers updated with any resulting actions. With that in mind, it is important to note that these trades are final in accordance with our GDAX Trading Rules (Section 3.1). Honoring properly executed orders is critical to maintaining the integrity of an exchange.

In response to the large price movement, we decided to temporarily halt trading of ETH-USD. Once we confirmed all systems were operating correctly, we restored trading when in accordance with our Downtime Process (Section 5).

So far, the exchange has found no evidence of wrongdoing. But this event caused many investors, who had made incredible profits through leveraged Ethereum trading, to instantly liquidate their margined positions and those with sell orders to sell at prices as low as $10 for an asset that is currently worth above $300. On the flip side, investors who were lucky enough to have open buy orders were able to earn unbelievable profits by accidentally buying a $300 asset for $10. This sort of extreme activity is sure to attract unwanted regulatory attention. But the dysfunction seems to be concentrated in Coinbase and GDAX - two affiliated companies - and should not be seen as an indictment against Ethereum or cryptocurrency as an asset class.

Conclusion

Ethereum is suffering from currency-specific challenges that put hopes for the flippening at bay. The Bitcoin/Ethereum currency pair has moved in favor of Bitcoin and the Ethereum/USD pair is still reeling from the shock of a massive flash crash on a major exchange. Nevertheless, the bullish case for Ethereum remains strong, and the cryptocurrency is still healthy in regions outside the U.S. One of the key benefits of cryptocurrency is decentralization. Thankfully, for longs, these negative events were quarantined to a few exchanges and couldn't spill into the entire market.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Read this article:
Bitcoin: Why The 'Flippening' Failed - Seeking Alpha

Blockchain, the London-based bitcoin currency service provider, has raised $40 million of fresh funding, representing one of the largest investment rounds in the financial technology sector since Britains vote to leave the European Union.

New investors in the company, which provides technology such as virtual bitcoin wallets and analytical tools for the digital currencys underlying system, include Googles GV, which led the funding with Lakestar. Existing investors, including Lightspeed Venture Partners and Sir Richard Branson, provided new financing.

The pace of innovation in the digital currency space is unmatched, said Tom Hulme, a partner at GV. We were impressed by Blockchains consistent market traction and dedication to building secure financial products for an increasing number of users.

Bitcoin, and the blockchain system that powers it, is one of several virtual currencies and the value of one bitcoin skyrocketed more than 300 percent in the last year.A competing currency, Ether, based on the ethereum blockchain, reached a record $402 earlier this month.

Blockchain Chief Executive Officer and co-Founder Peter Smith said his companys new funding was raised before bitcoin and ethers recent run up. "We did it a few months ago," he told Caroline Hyde in an interview on Bloomberg Television Thursday.

While it has been accepted for legitimate transactions by companies such as Microsoft Corp., Expedia Inc. and social media platform Reddit, it is also a favorite tool for criminals seeking ways of anonymously sending and receiving money, such as during the May WannaCry ransomware attack that affected countless businesses and hospitals worldwide.

In a press release, Blockchain said its new investment will support a wider global expansion and related localization efforts, as well as further research and development for its product.

The 14 trillion dollar financial services industry hasnt meaningfully changed in over a century, said Smith in the release. Blockchain is on a mission to create a financial system that is faster, more inclusive, and radically different than the status quo.

Blockchain had previously raised $30.5 million in 2014.

More:
Bitcoin Startup Blockchain Taps $40 Million in New Funding - Bloomberg

"Do you accept Bitcoin?"

That's the question Marco Ciocca, co-founder and chairman of the Montessori Schools, says he's been getting over and over lately. The schools in the Flatiron and Soho districts of the city comprise what Ciocca says is the largest preschool program in Manhattan, and because of their location they have a lot of parents who work at "Silicon Alley" tech companies.

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"There were a couple of parents that said, "How could you do this?"

This month the school announced it would accept Bitcoin as a way for parents to pay the tuition, which runs $30,950 for the full-day program.

"We looked at the pros and cons of accepting it and decided that now is probably a good time because it's starting to enter the mainstream," Ciocca says. "It happens to be that were the first pre-kindergarten school to accept it as a form of payment."

The Montessori Schools

Some parents were skeptical.

"There were a couple that were like, 'How could you do this? Between the exchange risk and its use for underworld nefarious purposes [it's a mistake].'" Ciocca responded by pointing out that "many Fortune 500 companies accept it and it's a misconception that it's used for nefarious purposes."

With a merchant account on Coinbase, the for-profit schools "instantly turn Bitcoin into fiat currency" when parents use it for payment, negating the risk that it would depreciate based on the cryptocurrency's volatility.

Ciocca says that "the perception that Bitcoin may have been gained through illicit activities or that it represents some kind of underworld, dark web" was a consideration" since "we're a school, which is wholesome and obviously deals with children."

He and his administrative team decided that the potential benefits outweighed the cons, and so far "a handful" of parents have used it.

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With a value today of nearly $2,700 U.S. dollars per Bitcoin, up from $880 in January, Ciocca says some parents who invested months ago are "in essence paying a reduced tuition." Also, he says, "there's really not much else that you can pay $30,000 for in Bitcoin." (Buying a Tesla is, apparently, another way to spend a lot of the cryptocurrency.)

"Its just really another payment option, Ciocca says. "If you dont want to use it then by all means pay with a checkno harm, no foul."

Read more here:
Why These New York City Private Schools Are Accepting Bitcoin - TownandCountrymag.com (blog)

Uncertainty about governments could make cryptocurrency like bitcoin an even more in-demand commodity, said Lightspeed Venture Partners partner Jeremy Liew.

"Bitcoin and the other digital currencies, they all really see a lot of benefit in times of political and economic instability," Liew said to CNBC. "Fundamentally when a citizen doesn't have faith in their currency of their country, then they are looking for alternatives, and a digital alternative like bitcoin becomes much more compelling in those circumstances."

Lightspeed co-led the first venture round in Blockchain, a bitcoin wallet, in October 2014. Liew also led the first venture investment in Snap, whose IPO in March turned a $485,000 investment into a stake worth more than $1 billion.

Liew said in parts of the Middle East, Africa, South America and Eastern Europe, concerns over the government being overthrown or persistent long-term currency inflation have been driving bitcoin's increasing valuation. A bitcoin is valued at a little over $2,800 as of Tuesday afternoon, according to Coindesk.

While there are other cryptocurrencies like ethereum, Liew points out it's currently valued at just a fraction of bitcoin's market cap.

"If you're going to be an investor in anything, you want to be where the most trading volume is happening, and right now that's happening in bitcoin," he said.

See the original post:
Jeremy Liew, Lightspeed: Bitcoin rally will continue - CNBC.com - CNBC