In its June 2018 crypto research report by Incrementum, the company referred to its first report in 2018, predicting a spell of crypto and that a hard plummet down to $2,500 is very possible. Especially bleak outlooks have been published since analysts saw a “Death Cross” in the charts in mid-March. Others, such as the crypto hedge fund “Pantera Capital Management” assume that we have already reached the rock bottom price of Bitcoin at $6,500.
What is true is that markets are unpredictable and the crypto market is especially volatile.
But is it real?
Markets speak volume
“The total market cap of cryptocurrencies was around $400bn, around a quarter of that of gold as a store of wealth (gold bars, coins, and physical gold ETFs all together amount to $1.5tn). And monthly trading volumes of the three largest cryptocurrencies by market capitalization (Bitcoin, Ethereum, and Ripple) have increased sharply in recent months, from around $5bn in early 2017 to $550bn in December. This represents around half of the monthly trading volume of gold futures of $1.1tn, as of January 18 aggregate volumes were higher, reaching around $680bn.” That was according to J.P. Morgan Perspectives 2018.
Bitcoin and Co. are still so relatively new that there is a real lack of accepted official data for an unbiased assessment. It is however noticeable that over the past few months more and more central bankers have had a closer look at Bitcoin – and in the process, have confirmed Bitcoin’s role as a currency,” says Incrementum.
From skeptics to believers
Goldman Sacks, the investment bank, which has always thought of itself better than the competition, wants to be the first to get in on the new opportunity, according to incrementum.
At the beginning of May, it was made public news that “Goldman Sachs will be entering the trading floor of Bitcoin”.
The new trading desk will initially be part of the department for foreign currency. It will be led by the 38-year-old Justin Schmidt. In 2017, he had only left the hedge fund Seven Eight Capital to trade Bitcoin and other crypto assets by himself.
“It resonates with us when a client says, ‘I want to hold Bitcoin or Bitcoin futures because I think it is an alternate store of value”, says Rana Yared, a senior of Schmidt’s at Goldman. “Bitcoin is not a scam”, she goes on “But it is also not a currency. Clients want to hold cryptocurrency as a sort of precious natural resource, similar to gold.”
Goldman bankers aren’t the only ones buying up Bitcoin-Futures.
The daily trading volume of the CME Futures in Chicago have risen by 250% since the initiation in December 2017, reported Incrementum.
According to Reuters one-fifth of the big banks want to enter the Bitcoin trade by the end of 2018.
J.P. Morgan’s CEO Jamie Dimon was known as a Bitcoin skeptic, calling it a scam and went as far as to say he would fire any employee who touches the stuff.
A few months later last May, it was announced that J.P. Morgan is working on its own crypto strategy.
Currency speculator George Soros had claimed at the economics forum in Davos that Bitcoin was only interesting for a dictator wanting to keep some money safe on the side.
Last April, he gave the green light to a fund which has $26 billion in assets under management to invest in Bitcoin.
The Intercontinental Exchange (ICE), the mother company of the New York stock exchange, publicly announced to be working on a Bitcoin trading tool.
Venrock, the Venture Capital arm of the Rockefeller family (Ven stands for Venture, Rock for Rockefeller, who were successful early investors in Intel and Apple, are now heading into the crypto sector. Venrock has a partnership agreement with CoinFund, a company based in Brooklyn. CoinFund supports Start-ups which base their business model on the Blockchain technology
David Packman from Venrock commented: “There are many cryptocurrency traders. There are many cryptocurrency hedge funds. This is different. For us, it looks more like Venture Capital.”
The ICO phenom
In just the first three months of this year, Blockchain companies have been able to pull in a combined investment of $400million through venture capital. But It seems to be the norm that investors buy in the pre-sale-phase of an ICO since the value of their equity already rises through the ICOitself.
According to Incrementum, Blockchain companies have had an influx of over $3 Billion via ICOs just this year.
“Roughly half of all ICO funded projects have already failed. Many of these companies only exist on paper–the so-called White Paper,” reported Incrementum
This investment boom is compared time and time again with the Dot Com Bubble. Many big players within the scene, like Ethereum founder Vitalik Buterin, have called out for caution in regard to an ICO Bubble.
Currency exchanges profitable?
Without a doubt, the economic success of the partially dubious crypto exchanges must have drawn the attention of the big players to the sector itself. The top 10 exchanges generate roughly $3 million in fees per day.
Just the top two, Binance and OKEx, have a daily trading volume of approximately $1.7 billion. “The exchanges and transaction processors are the biggest winners in the space because they’re allowing people to transact and participate in this burgeoning sector,” said Gil Luria, an equity analyst at D.A. Davidson & Co.