Not a day goes by without exorbitant fluctuations in cryptocurrency prices. Bitcoin is no longer the clear leader in terms of market share, with the cryptocurrency market volume share recently dropping to 33%. Bitcoin price has also lost nearly 40% since futures trading opened. Welcome to the world of virtual values!
The latest funny, if almost unbelievable, twist from Crypto Dawn goes something like this: The Long Island Iced Tea Corp. changes its name to Long Blockchain Corp. and enters the field of cryptocurrency. In 2015, the company had $1.9 million in sales, and in 2016 it was $4.9 million—with iced tea, mind you. After announcing the name and change of business, the stock rose 200% on the Nasdaq in a matter of weeks. The current market capitalization is 49 million US dollars.
Mining plants in Iceland
Specifically, the company is purchasing 1,000 units of AntMiner S9, which is manufactured by the Chinese company Bitman. In China, there have been so-called bitcoin mining plants for a long time. The main cost of this virtual extraction process is the cost of electricity. Therefore, Long Blockchain wants to ship AntMiners to Iceland. This is where the world’s most intensive aluminum smelters are located because Iceland has an abundance of easily usable geothermal energy. So this is what the brave new world of crypto looks like?
Business model: Produce bitcoins with cheap electricity
To fund the purchase price of $4.2 million, the Company is issuing new shares at a premium price with the goal of raising $7.7 million. The new business model consists of the production and accumulation of bitcoins. In other words, anyone can get the equivalent of financial journalism and produce cryptocurrency cheaply in, say, Iceland. Should you inadvertently lose currency sovereignty to central banks in this way? Given the inactivity of central bankers so far, the question is perfectly reasonable. Then savers and investors are compared to idiots Crypto newbies like the Winklevoss twinsthe first supposed Bitcoin billionaires (in USD)?
Central banks are waking up
However, things are no longer completely calm as far as central banks are concerned. Not only Member of the European Central Bank Nowotny It was also unusually clear President of the Swiss National Bank in Jordan It was very critical. The SEC and CFTC, the derivatives exchange regulator, issued a joint warning for the first time Urgently before dangers of cryptocurrencies and initial coin offerings based on them. If a policy of appeasement was initially proclaimed, whereby the absolute market size of the crypto universe could not be seen as relevant at a systemic level, this is no longer necessarily the case with the current $750 billion. It is said that there are more than 20 million cryptocurrency holders worldwide. This can be understood using the so-called “wallets” (e-wallets). Since December, the pace has accelerated with over half a million new wallets being added per week! Switzerland stands out: 9% of the population is said to own cryptocurrency to date, and according to another survey, 11% plan to participate in 2018!
How crazy the crypto world is can be seen in every nook and cranny. It starts with the terminology used. Even the governors of the European Central Bank talk about “investing in cryptocurrencies”, not to mention the media, although this is complete nonsense. Without cash flow, at least in the future, it wouldn’t be an investment. When it comes to market size, the term “market cap” is generally used, and it can also be compared to Coca-Cola or Walt Disney, although apples are not compared to oranges here, but rather to radio. “Cryptocurrency prices are going up” or the like is nonsense, because it is known that there are prices only for securities traded on the stock exchange, and all other assets have prices.
Market sizes of cryptocurrencies
While Bitcoin was, until recently, much more than that Half the size of the cryptocurrency market Presented many competitors now. As of January 9, Bitcoin is worth $252 billion, Ethereum is $118 billion and Ripple is worth $90 billion. Dogecoin also appears 25th with a market size of over $1.7 billion. Dogecoin shows a dog and was originally intended as a joke. For years, Dogecoin has received little attention. The creator left the team and there was no software update for two years. However, in the general crypto-euphoria, the Dogecoin relic caught up in the wave of speculation. Dogecoin creator Jackson Palmer said, “…I think it tells us a lot about the state of the cryptocurrency world that a coin with a dog as its token without a software update has a market cap of over $1 billion over the last two years.”
Litecoin creator selling his coins
Meanwhile, the creator of Litecoin has also sold all of its coins to conflict of interest resolution. However, there is a lot of speculation as to whether this is not yet another sign that the cryptocurrency market bubble has already burst. It is noticeable that since the opening of futures trading on the two derivatives exchanges in mid-December, the Bitcoin price trend has been pointing downward.
Bitcoin price correction of 37%
Meanwhile, bitcoin is down as much as 37% from its high of $19,500. The argument that this is the first time that there has been an opportunity to bet on falling prices is incorrect given the falling prices. Bitcoin futures trading is so deep and liquid that, similar to the gold or bond market, the tail can wag the dog. On the other hand, it seems more credible that after the price doubled in 2017, those who got involved early and extensively in cryptocurrencies, like Bitcoin in particular, have now benefited.
Counterparty risk – how the domino effect can hit financial markets
However, the really crucial point is “counterparty risk”, which really first spread out of the cryptocurrency world through a domino effect on the much larger stocks, bonds, currencies and commodity markets. The causal chain could look like this: buyers of bitcoin futures contracts cannot meet margin calls if adverse price movements occur, the affected broker or brokers can no longer fulfill their obligations, and due to the high degree of trade integration, they bankrupt active traders in All financial markets. First class system risk! However, those responsible for approving Bitcoin futures contracts seem to have realized this then. Hence the increase ‘Verbal intervention’ by central bankers In recent weeks!
Korea in crypto headlines
Despite North Korea’s participation in the Winter Olympics in South Korea, the cryptocurrency headlines could not be different. While South Korea has banned the anonymous accounts Higher penalties for money launderers and reserves the right to close virtual currency exchanges North Korea malware For the headlines that the bitcoin equivalent is being “mined” on external computers without the owners’ knowledge – the proceeds are then transferred to Kim Il-sung University.
Texas fires are sharply regulated
A consideration of absurdities wouldn’t be complete without another example, this time from Texas. There, blockchain startup BitConnect announced 100% annual returns for its planned token sale and was looking for sales agents. The token sale should start on January 10th. It broke a few days ago The Texas State Securities Board overturned the action. The TSSB classified the tokens as unregistered securities. The promoters are qualified as unregistered agents for the sale of securities in Texas. According to a statement from the TSSB, BitConnect did not provide any information on the financial situation and did not explain how the company intends to turn a profit — the company wouldn’t even identify the company’s corporate headquarters. BitConnect has already released a token in 2016, which today has a market size of $2.2 billion.
PS announced on January 9th Kodak launches blockchain initiative and KodakCoin version. The stock has been on a steady downtrend since its restart after bankruptcy in 2013, later up 120% at the close. The market capitalization increased by $179 million to $312 million. But that’s nothing compared to today’s winner in tokens: Xenon is up 506% on its turnover of $94,510!