The bear market persists for Ethereum, Bitcoin drops below $6,000 and altcoins continue to struggle. We look at 3 key things which could have or could still be the catalyst for some more bullish behaviour from the crypto market.
1.) 250 million new Tethers entered circulation on monday
The startup known as Tether, the creator of cryptocurrency “stablecoin” USDT (commonly known as Tether) issued over $250million in new tokens on monday morning (25/06/18). Tether converts cash into digital currency, to anchor or tether the value to the price of national currencies and is run by the same team as Bitfinex. For instance, USDT, which is pegged to USD at a 1-to-1 ratio, serves as a proxy for physical dollars on many cryptocurrency exchanges. This is necessitated by the fact that trading platforms have, previously, found it notoriously difficult to obtain banking relationships necessary to hold fiat on behalf of clients.
As, tokens are created when individuals or organizations deposit physical dollars into Tether’s reserve bank accounts, Tether releasing fresh tokens should serve, at least, as an indication that capital is flowing back into the crypto marketplace.
An influx of capital like this, especially one made evident by the new Tethers in circulation, would be a likely instigator for bullish behaviour from the Bitcoin price. Yet, BTC showed little scope to rally this week, dipping below $6,000 for the first time this year on friday!
2.) Reversal of Facebook advertising ban
The $576 billion tech giant have previously exerted influence beyond their own remit and press releases by the social media colossus have previously sent shock waves through particular areas of the stock market. It is fair to say that when Facebook talks, the market listens.
So, when the organisation announced on Tuesday that it has launched a “cryptocurrency products and services onboarding request form” expectant observers waited in anticipation for the crypto market to bounce. Whereas previously, Facebook, Twitter, Google and more had enforced blanket bans on advertising of crypto products, the new form would allow some companies within the sphere to get their ads on the platform. Initial coin offerings will still be banned from posting sponsored content, as will a few other variations of crypto-advertising, but there should be no doubting this is a significant action.
Many market-makers and startups had been suffering because of the advertising ban which had caused speculation that the draconian commercial laws where suppressing the BTC price, however, several days after the ‘lift’ the action has had no effect.
3.) The popular face of ICO’s must change… people are putting money into projects which have little development pedigree.
A White paper and a website do not make a token worthy of backing. Initial coin offerings are vital to the crypto revolution and capital speculating on these innovative startups are what will make this technological revolution a full blown social revolution.
Having said that, putting your wealth of cryptocurrency into some under-developed and highly risky concept at the sale stage could be counterproductive. Yes, we all want to ride the easy wave to get rich quick, pick a winner that soars to the top; Microsoft of the ICO era. The reality is that sinking capital into shabby projects is going to undermine the value and scope of the crypto market.
The message can’t be to avoid taking part in token and equity sales, it’s necessary for the development of the industry and the digital ecosystem that these tech startups benefit from investor faith.
The answer is to do some proper digging before taking equity positions or going big on initial token sales. Check the ICO is developing at a good rate and is, at least nearly the finished product. Make sure the team, board and primary investors have strong credentials in fintech industries and the technology has been developed beyond a promise.
‘More investment, better placed’ - this must be the mantra going forward if faith is going to be restored and the crypto-space is going to avoid being a graveyard of blockchain projects.