Harsh ‘resets’ are actually healthy for the cryptocurrency industry
The week in review
with Jason Deane
Perhaps one day we’ll have a quiet enough week that I have a hope of summarising everything that’s happening in a paragraph or two.
But this is not one of those weeks.
Usually, news that Meta has laid off 11,000 employees as it scales back on various projects, including its Metaverse investments, would make headlines and be the talk of the town for days, but, frankly, it barely made any column inches. There have been bigger fish to fry.
The big news, of course, is the debacle around Sam Bankman-Fried (SBF), the FTX exchange and its associated token FTT. There is already plenty of analysis and discussion on pretty much every platform and network, so I see little value in simply repeating that here, but there is, perhaps, an argument to look at what this might mean going forward.
Names like Celsius, Voyager, 3AC and Terraform Labs are already synonymous with scams, rug-pulls or poorly managed operations that, for the most part, are operating in a completely unregulated environment. FTX and SBF are merely the latest additions and, as of this morning, focus has shifted to BlockFi who have announced they can no longer operate as normal. Others will follow.
Undoubtedly, a combination of contagion and market sentiment is exacerbating the situation, but make no mistake, the crypto industry as a whole is under immense pressure, affecting prices of all assets across the board.
Interestingly, Nexo has been spared from the focus of attention and appears to be quietly weathering the storm well, at least so far. This company has always had a very conservative approach to lending, asset management and security of client funds and out of all the lending platforms is the only one I have ever personally considered close to “safe” when I carried out some extensive analysis a while ago.
That said, if we’ve learned nothing else in the last few months, it’s that we can never be entirely sure what’s going on behind the scenes, so the same advice still holds true: not your keys, not your coins.
While I realise this is perhaps a controversial position, my view is that in the long run these sorts of “resets” are actually healthy for the industry. It’s all well and good to experiment with new ways of doing things and push the boundaries, but some of these concepts were simply flawed to begin with. Many cryptos have no value at all and the industry has, for now, become a total mess.
The dot.com bubble burst sorted the wheat from the chaff for the internet industry in the early noughties which ultimately led to clarity and solid growth, maybe this is crypto’s moment to do the same?
However, Bitcoin appears to be (finally) decoupling from the hysteria that’s going on in the world of crypto. Not in terms of pricing, as many traders still (incorrectly) lump “crypto” and “Bitcoin” together, but in terms of underlying data. On-chain activity has been immense as record amounts are transferred to private wallets (probably partly due to exchange withdrawals) and Bitcoin’s hashrate is STILL increasing, indicating miner confidence remains high even in terrible market conditions.
Bitcoin will, of course, ultimately emerge unscathed, but the rest of the industry will probably look very different in the future.
Have a great weekend!
Want to learn more about what’s going on in our global financial system and how Bitcoin fits into it? Come to my next free webinar on November 16 at 6pm to find out, ask any questions, and grab some free Bitcoin*. Click here to register.
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Yesterday’s Crypto AM Daily in association with Luno
In the markets
The Bitcoin economy
*Data can be found at https://terminal.bytetree.com/
Total crypto market cap
The total capitalisation of the entire cryptocurrency market at time of writing is currently $874 billion.
What Bitcoin did yesterday
We closed yesterday, November 10 2022, at a price of $17,586.77. The daily high yesterday was $18,054.31, and the daily low was $15,834.02.
Bitcoin market capitalisation
Bitcoin’s market capitalisation at time of writing is $333.17 billion. To put it into context, the market cap of gold is $11.659 and Tesla is $593.32 billion.
Bitcoin volume
The total spot trading volume reported by all exchanges over the last 24 hours was $72.569 billion. High volumes can indicate that a significant price movement has stronger support and is more likely to be sustained.
Volatility
The price volatility of Bitcoin over the last 30 days is 56.33%.
Fear and Greed Index
Market sentiment today is 25, in Extreme Fear.
Bitcoin’s market dominance
Bitcoin’s market dominance today is 40.15. Its lowest ever recorded dominance was 37.09 on January 1 2018.
Relative Strength Index (RSI)
The daily RSI is currently 32.02. Values of 70 or above indicate that an asset is becoming overbought and may be primed for a trend reversal or experience a correction in price – an RSI reading of 30 or below indicates an oversold or undervalued condition.
Convince your Nan: Soundbite of the day
“There will be steps backwards and more steps forward. And then one day it will be boring because it will simply be part of the tapestry of everyone’s life, its wonders barely noticed.”
Steven Boykey Sidley, Professor at JBS, University of Johannesburg and Author
What they said yesterday
Will we learn from it?
Important lesson
Another positive step for Bitcoin
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Crypto AM: Editor’s picks
Three-in-four wealth managers are gearing up for more cryptocurrency exposure
Crypto.com granted FCA licence to operate in UK
Q&A with Duncan Coutts, Principal Technical Architect at IO Global
Jamie Bartlett – on the trail of the missing ‘Cryptoqueen’
MPs are falling silent over potential of cryptocurrency
Erica’s ‘Crypto Wars’ handed honours in Business Book Awards
‘Let people invest’: Matt Hancock makes case for liberal crypto rules
Explained: Why the Treasury is so sold on stablecoins
Fears crypto is used to avoid sanctions ‘misplaced,’ says Matt Hancock
The cryptocurrency fundraisers behind Ukraine’s military effort
Crypto crazy couple name baby after favourite digital asset
Crypto AM: Features
Crypto AM: Founders Series
Crypto AM: Industry Voices
Crypto AM: Contributors
Crypto AM: In Conversation with James Bowater
Crypto AM: Tomorrow’s Money with Gavin S Brown
Crypto AM: Mixing in the Metaverse with Dr Chris Kacher
Crypto AM: Visions of the Future, Past & Present with Alex Lightman
Crypto AM: Tiptoe through the Crypto with Monty Munford
Crypto AM: Taking a Byte out of Digital Assets with Jonny Fry
Crypto on the catwalk
Crypto AM: Events
For those of you who missed the Crypto AM DeFi & Digital Inclusion online summit 2021 – you can now watch the event in two parts via YouTube
Part One
https://www.youtube.com/watch?v=dvqNMNZTIDE
Part Two
https://www.youtube.com/watch?v=WXhX_-Tr5j0
Cautionary Notes
It’s definitely tempting to get swept up in the excitement, but please heed these words of caution: Do your own research, only invest what you can afford, and make good decisions. The indicators contained in this article will hopefully help in this. Remember though, the content of this article is for information purposes only and is not investment advice or any form of recommendation or invitation. City PM, Crypto AM and Luno always advise you to obtain your own independent financial advice before investing or trading in cryptocurrency.
All information is correct as of 08:00 BST