👉 Bitcoin looks bullish after $50M Investment

Monday, October 12th, 2020

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OVERVIEW

UK Bans Crypto Derivative Trading
Payment processor, Square purchases $50M worth of Bitcoin
Bitcoin breaks out of Their September Slumber
Capital Partners talk crypto investments at LA Blockchain Summit
Alt Coin Dominance gets tested
Picks Of The Week feature DIA and 0x

MACRO NEWS

UK Bans Crypto Derivative Trading

Britain's financial watchdog, the Financial Conduct Authority (FCA) banned the sale of crypto derivatives last week. The FCA expects that the ban would save retail investors roughly 53M pounds each year. The ban comes into force on Jan 6th next year, but investors with previous investments will not be forced to sell their positions.

Opinion:

This move would be summed up by the FCA as a protection in order to save retail investors from themselves. However, it seems hypocritical that the British government would allow people to gamble on sports and in casinos, yet they would forbid gambling on these new companies. Over-leveraging is a great way for people to lose money, but people should be responsible for their own financial decisions, and not excluded from markets because it is thought to be 'for their own good.'

What this means for crypto:

This legislation seems to follow a similar trend of national governments looking to enforce regulation on the crypto industry. While this move does not ban the trading of cryptocurrencies themselves, it is important to realize how big derivatives markets can be. The global derivatives market is estimated to be a whapping 1 quadrillion dollars! If/when this value starts to migrate into crypto markets, it could cause the prices of crypto assets to go astronomical. It seems, however, at least in the UK, this won't be happening any time soon.

TOP STORIES

Square Invests $50M In Bitcoin

Last Wednesday, The payment processing company, Square, made another bet big on Bitcoin, purchasing 4,709 BTC at a valuation of $50M. The investment represents 1% of Square's cash reserves and will be held on their balance sheet.

Square CEO, Jack Dorsey, has always been a strong proponent of Bitcoin saying that "Someday, the internet will have its own currency and Bitcoin will be that currency." Wednesday, he backed up those comments and added, "Square believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company's purpose." Square also owns the popular payment application Cash App.

This news set the Crypto markets ablaze Thursday, finally breaking out of their September slumber. We shall see if this trend will continue, but this shot of "stimulus" was definitely exactly what the doctor ordered for crypto markets.

What this means for Crypto:

Although this is clearly a bullish sign for Bitcoin, perhaps the most bullish, yet less covered side to this story is that Square also filed an open-source patent that explains exactly how they allocated 1% of their cash holdings and the exact process they took to make the purchase. In essence, they have created an open-source template for any other business to do the same. This may be one of the early domino's that starts a chain reaction of businesses moving a portion of their cash reserves to Bitcoin.

CRYPTO UPDATES

Bitcoin Breakout

After news of Square's bitcoin purchase, Bitcoin broke out of its general wedge last Wednesday and has shown no slowing down as it continues its trajectory to the upside. CME options trading also spiked by 300% on Wednesday as traders looked to take out bullish positions. All very good signs for the leading cryptocurrency and the crypto space as a whole.

Alt Coin Dominance

The graph above shows the alt-coin dominance, meaning the percentage of the market that is taken up by coins other than bitcoin.In the initial euphoria phase after the Jack Dorsey, Bitcoin announcement, altcoins surged in price as the anticipation begun that this was the beginning of the next bull cycle for altcoins, However, after a huge daily green candle, altcoin dominance hit stark resistance in the same channel that it has been forming since mid-August. Signs are still pointing to this being a Bitcoin focused October.

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INDUSTRY SPOTLIGHT

LA Blockchain Summit: Investment Predictions

The LA Blockchain Summit was held last Tuesday in a virtual format. One of the highlights was a panel between industry leaders speaking about "Uncovering the global crypto & blockchain investment landscape".

Key takeaways from the panel:

Tom Schmidt, Partner at Dragonfly Capital, see's the next wave of "Ethereum Killers" struggling in the market as they lack community & developer support. He also sees Defi as a natural progression for the industry as these financial services become more user-friendly, scalable, and ubiquitous.

Curtis Spencer, co-founder and partner at Electric Capital, is weary about the short term. Why? Because the SEC, which initially focused on outright fraud in 2017, is now targeting credible projects with no end in sight. Long term, Spencer focuses on today's current initiative's scalability and work towards privacy.

Brooke Pollack, founder and manager of Hutt Capital, is most curious about the SEC's future, more specifically, who's in charge. Like most, he believes that in five years there will be an uptake of non-crypto companies using blockchain tech to bootstrap their networks and an influx of token offerings to follow.

Zachary Cefaratti, CEO of Dalma Capital, states that "within six months, we will see the first major corporate and sovereign related entities utilize distributed ledger technology" for issuing Digital securities. Fast forward 5 years, we will see blockchain's as the backbones to a significant portion of the world's global securities market

TRADES OF THE WEEK

DIA (DIA)

An acronym for Decentralized Information Asset, DIA is an oracle solution directly focused on providing accurate, audit-able, and actionable financial data. After it's 80% correction during the September "mini-bear market," DIA's market cap is only $37M at the time of writing. If this project delivers on its mission, the sky is the limit for this asset.

0x (ZRX)

A central piece to the De-fi movement is decentralized exchanges. 0x is a decentralized exchange protocol built on Ethereum. After a 61% correction vs Bitcoin, 0x has tested and found support on a critical line that it hasn't broken since May. A rebound off this line could lead to a profitable short term trade.

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👉 Bitcoin looks bullish after $50M Investment

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