bitcoin volumes swell, but it's not the only winner

Award-winning cryptocurrency writer Gary McFarlane brings you the latest industry news and digital assets going places.

Bitcoin has seen a week of steady price progress, gaining as much as 5.7% to $4,080 since 12 March.

Most significantly, bitcoin has scaled the $4,000 barrier and had surmounted resistance at $4,040, but has since fallen back to $4,020 at time of writing, putting the sterner test at $4,200 further out of reach for now.

The last time bitcoin hit $4,200 was on 24 February where it was strongly rejected, crashing to $3,793 on the same day. 

Also notable in the bitcoin market this week is the firming daily trading volumes, touching an almost year-high on 15 March at just over $11 billion, and maintain volumes above $8 billion since then.

However, it is not just bitcoin that has been faring well. 

Although it still determines the general line of march for the crypto market overall, its dominance has fallen to 50.8%, according to coinmarketcap, reflecting progress made by a number of other digital assets.

Altcoins making headway

Among the altcoin gainers are Binance Coin (BNB), the token of the industry's largest exchange, Litecoin, which has nearly doubled in value this year (from $30 to $60), and a recent return to form by Stellar (XLM) and Cardano (ADA). 

In addition, Ontology (ONT) and Tezos  (XTZ) are up 12% and 15%, respectively, in the past 24 hours, according to research site CryptoCompare.

Ontology recently entered into a partnership with video platform MovieBloc. It is also running a competition in which it is distributing 200,000 Ontology Gas (ONG) tokens to the 50 traders with the highest trading volume on Binance, in a celebration of its listing anniversary on the exchange.

Tezos, which raised $232 billion in its initial coin offering and was plagued by controversy in its early days, seems to have left all that behind it after successfully concluding a voting round to decide its future development path. Market participants are rewarding it.

Cardano (ADA) hit a major development milestone this week as it transitions its consensus protocol (used to verify transactions) to proof-of-stake. It aims to implement the transition in such a way that it maintains the same high security associated with the proof-of-work protocol used by the likes of bitcoin. 

Led by Brit Charles Hoskinson, Cardano is the only major project that submits to academic peer review and, as such, is considered to have a solid and performant code base, as it creeps its way forward towards launching a working decentralised application (dapp) platform.

IBM World Wire launch 

Stellar Lumens (XLM), the cross-border payments system, is a beneficiary this week of the launch by IBM of its World Wire service, powered by the Stellar protocol. 

IBM World Wire is a real-time payments system for global transactions that does away with the current cumbersome system that can sees such transactions take hours or even days to settle.

Six banks have already signed a letter of intent to launch stablecoins (crypto backed by a fiat currency)  on the platform. Marie Wieck, general manager, IBM Blockchain, said: “We've created a new type of payment network designed to accelerate remittances and transform cross-border payments to facilitate the movement of money in countries that need it most.”

Jesse Lund, head of IBM Blockchain, said the network is operational in 72 countries and supports 48 currencies although is at a “limited production” stage as only one stablecoin is currently in use, Stronghold USD.

Three of the six banks readying to launch stablecoins on World Wire are RCBC of the Phillippines, Bank Busan of South Korea and Brazil's Banco Bradesco.

XLM initially spiked 8.5% to $0.117824 on the IBM news Monday, but has since fallen back  to $0.111119 for a more modest 2.4% improvement.

In other IBM news, the tech company has helped New York fintech Shuttle to launch a crypto custody platform built on IBM's cloud and encryption server technology, IBM LinuxONE.

IBM is a long-time partner of the Stellar Foundation and has also developed its own enterprise-focused private blockchain platform called Hyperledger Fabric.

Surviving the crypto winter

As the crypto winter drags on, more companies are cutting back on costs in their bid to survive. 

The latest exchange to retrench is South Korea's Bithumb. It is reducing its head count from 310 to 150 according to crypto outlet CoinDesk Korea. The company hopes to make the redundancies through "voluntary retirement". 

Crypto miners are also thought to be suffering, with persistent rumours that the largest mining company, Bitmain, is insolvent.

Blockstream chief strategy officer Samson Mow tweeted a copy of a document purporting to show a list of companies suing Bitmain for unpaid bills. 

"Bitmain already facing multiple lawsuits and more being filed. Their assembly, component, production, and repair companies are unpaid and losing patience. Seems Bitmain is deep in debt and trying to raise new capital from unwitting investors to keep going," Mow said in a tweet.

However, its competitor, Canaan, has managed to complete a successful funding round in which it raised "hundreds of millions", according to Asian financial outlet Securities Times. The company is now valued at $1 billion. 

It's not all bad news for Bitmain though. A leader in the manufacture of ASIC processors, the company's brand new Z11 machine for mining the Zcash and Komodo cryptoasset and others using the EquiHash algorithm, sold out in 20 minutes according to reports.

Elsewhere, Goldman Sachs-backed crypto-focused fintech Circle's chief executive Jeremy Allaire admitted activity was "down" in its exchange and over-the-counter businesses, blaming the bearish climate. 

"When there's not volatility, or prices are down, then volumes are down," said Allaire in comments to Fortune.

Bitmain is an investor in Circle, which at its last funding round was valued at $3 billion.

Bakkt delay, CBOE bitcoin futures "freeze"

The crypto platform from Intercontinental Exchange, Bakkt, was meant to launch in the first quarter of this year, but with April almost here it is now unlikely to do so. 

It appears that the Bakkt launch is being delayed as it awaits regulatory approval.

Explaining the delay, which sees it lagging the likes of Fidelity which opened shop with its Digital Assets platform earlier this month, chief operating officer Adam White, commented:

"It's not the world where you fill out an application, you throw it over the fence and you hope you get it back so you can launch your business. 

White continued:

"It's partnering and working with the regulators to help them understand what is hard fork, what a deep chain reorg is, why one blockchain or public blockchain may be sufficient and capable while another one isn't. It's very much the approach that we've been taking."

Market participants are hoping that companies such as Bakkt will help to onboard institutions into the crypto industry but the lack of knowledge and understanding in regulatory circles is clearly beginning to slow development, at least in the US.

The reticence and caution of the US Commodity Futures and Trading Commission and the Securities and Exchange Commission (SEC) is perhaps understandable, given the crypto industry's young age and possible doubts about the products currently in the marketplace.

The validity of those fears is underscored by derivatives exchange the Chicago Board Options Exchange's (CBOE) decision to "freeze" issuing further bitcoin futures contracts, blaming lack of interest.

Brian Kelly, founder of crypto investment firm BKCM, and something of a crypto perma bull, says the CBOE's move confirms retail exhaustion, which would be indicative of a market bottom. "This tells me that retail traders are out of the picture because these CBOE futures were one contract, so about $3,900, versus CME, were five, so about $20,000. So I think retail is exhausted. You're starting to see sellers being exhausted," Kelly claimed.

Kelly's reported remarks are slightly confusing and should more correctly have stated that each CBOE bitcoin futures contract comprises one bitcoin (not "one contract") while the CME contract consists of five bitcoins. 

CME – Chicago Mercantile Exchange – is the CBOE's much larger cross-town competitor and it is not, as yet, following suit with bitcoin futures. 

Ethereum not a security

Going back to the US regulators, Jay Clayton the chairman of the SEC, seemed to lay to rest a worry for supporters of the Ethereum smart contract platform, the second-largest  cryptoasset by market cap.

He supported the determination of his colleague, SEC director of corporate finance William Hinman, who had previously said that Ethereum is not a security. 

If Ethereum was to be treated as a security it would entail, among other things, considerable over-head costs to comply with the full panoply of US securities regulation, with Ethereum's backers worrying that it would stall development.

In a letter to industry group Coin Center and Congressman Ted Budd dated 7 March, Clayton stated: "I agree with Director Hinman's explanation of how a digital asset transaction may no longer represent an investment contract [a security] if, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts."

Almond app in security token offering

Almond, an environmental impact app that rewards consumers for buying sustainable products, is raising funds through a FCA-regulated security token offering (STO). 

An STO allows investors to buy a token that bestows ownership rights in the company issuing the token. Almond is running its STO on the TokenMarket platform.

Chief executive, Oliver Bolton, said in a press statement: "We're excited to build out the Almond platform using the innovative STO vehicle. Almond's mission is to incentivise consumers to buy sustainable products, help responsible brands grow and ultimately assist in the fight against climate change."

The money will be used to further develop the platform and bring more brands on board. "We are proud to pioneer STO investments in the UK and I believe STOs will transform start-up finance in 2019," said Bolton.  

The Almond platform's app users scan accredited products to unlock rewards. It is still at the prototype stage and as of 4 February had 1,100 users.

The team behind Almond could be onto something, given the rising interest in taking action and changing consumer behaviour to tackle climate change.

TokenMarket is in the FCA's regulatory sandbox, which gives fintechs the flexibility to develop and test innovative and compliant products in a live market environment.

Invesco Elwood Global Blockchain ETF launch

Fund manager Invesco launched a blockchain-centric exchange traded fund (ETF) at the beginning of the week.

The Invesco Elwood Global Blockchain ETF has 48 holdings and comes with a 0.65% fee.

Invesco has teamed up with digital asset investment firm Elwood Asset Management to put together the fund, using the latter's proprietary screening system to pick holdings.

Top 10 holdings by size are GMO Internet, Taiwan Semiconductor (NYSE:TSM), Global Unichip, Signature Bank, Kakao Corp, IG Group, CME Group, Riot Blockchain, Overtstock.com and Digital Garage.

Discussing the launch, Elwood chief executive Bin Ren told the Financial Times:

"We are beginning to see the technology used by financial services companies in particular, but we expect greater application of blockchain technology across a range of industries."

Crypto payments adoption

On the crypto payments front, two companies catch the eye.

Avnet, a US electronics firm and Fortune 500 company with 16,000 employees, has worked with crypto payments solutions firm BitPay to enable crypto payments for its customers.

Avnet says that it has already settled "several multi-million dollar" transactions in crypto.

And in Switzerland, the country's largest online retailer, Digitac-Galaxus, has begun accepting crypto payments in bitcoin, Bitcoin Cash (BCH), Bitcoin SV (BSV), Binance Coin (BNB), Ripple (XRP), TRON and a number of other coins.

Digitec-Galaxus co-founder and chief information officer Oliver Herren said:

"Cryptocurrencies are fascinating and likely to become a relevant means of payment in e-commerce – we want to support this development."