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Crypto Update: Some struggle, others expand
Jacob Pouncey
Cryptocurrency analyst, Saxo Bank
Summary: Prices and volume continue to fall, but low volatility periods have preceded major moves in the past.
This week the entire crypto market cap fell by 2% to around $110 billion. Bitcoin and Ethereum fell by 1.5% and 5% respectively. The ongoing “crypto winter” is putting pressure on all service providers in the cryptocurrency sector as prices continue to slide.
Low volumes across exchanges
January 2019 was the worst month for exchange volume since 2017. Leading cryptocurrency exchange Binance has seen its volumes reduced by 40% compared to December 2018. This could be due to the low-volatility period that Bitcoin has entered in the month of January. However, periods of low-volatility in Bitcoin have often preceded big moves in the cryptocurrency. A big move downwards to test the previous low is more likely than a move back to the $6,000 level, given the negative market narrative.
Death of CEO cause losses of $150 million
The big story in crypto this week concerns the number-one exchange in Canada, QuadrigaCX. The exchange claims to have lost access to user funds after the death of CEO Gerald Cotten while he was in India opening an orphanage in December. There are several suspicious facts in the case, such as how late the exchange reported the death considering the CEO passed away in December, as well as blockchain forensics that suggest the exchange never had the funds they claim to have lost, to name a few. The lawyers working the case may sell the exchange to pay its creditors. The incident highlights the danger of centralised exchanges that do not implement best practices in storing customer funds.
Kraken to launch futures in Europe
This week, cryptocurrency exchange Kraken announced a nine-figure deal to acquire Crypto Facilities, a firm specialised in derivatives. Kraken plans to use the infrastructure to offer futures on the most popular cryptocurrencies such as Bitcoin and Ethereum with up to 50x leverage. Offering more products with higher leverage is one way to try to increase revenues during a decline in volumes. The service will be available to clients outside of the US. Kraken looks to gain market share in the cryptocurrency futures market presently dominated by BitMex, which has a +90% market share in Bitcoin Futures trading.
Low volumes across exchanges
January 2019 was the worst month for exchange volume since 2017. Leading cryptocurrency exchange Binance has seen its volumes reduced by 40% compared to December 2018. This could be due to the low-volatility period that Bitcoin has entered in the month of January. However, periods of low-volatility in Bitcoin have often preceded big moves in the cryptocurrency. A big move downwards to test the previous low is more likely than a move back to the $6,000 level, given the negative market narrative.
Death of CEO cause losses of $150 million
The big story in crypto this week concerns the number-one exchange in Canada, QuadrigaCX. The exchange claims to have lost access to user funds after the death of CEO Gerald Cotten while he was in India opening an orphanage in December. There are several suspicious facts in the case, such as how late the exchange reported the death considering the CEO passed away in December, as well as blockchain forensics that suggest the exchange never had the funds they claim to have lost, to name a few. The lawyers working the case may sell the exchange to pay its creditors. The incident highlights the danger of centralised exchanges that do not implement best practices in storing customer funds.
Kraken to launch futures in Europe
This week, cryptocurrency exchange Kraken announced a nine-figure deal to acquire Crypto Facilities, a firm specialised in derivatives. Kraken plans to use the infrastructure to offer futures on the most popular cryptocurrencies such as Bitcoin and Ethereum with up to 50x leverage. Offering more products with higher leverage is one way to try to increase revenues during a decline in volumes. The service will be available to clients outside of the US. Kraken looks to gain market share in the cryptocurrency futures market presently dominated by BitMex, which has a +90% market share in Bitcoin Futures trading.
