As we all know, Bitcoin Cash terrified the markets by splitting in two this month. Miners went to war, threatening to launch attacks on each other and hold the network hostage.
It showed a possible weakness in “mining” cryptocurrencies in that miners can exert a huge influence over the network.
It’s no coincidence that Proof-of-Work mining cryptocurrencies like ethereum, bitcoin, and bitcoin cash fell harder than others.
XRP, which uses a consensus protocol instead, held its value better during the crash, as did others with a consensus network like Stellar (XLM).
As market prices fall, traders look to put their money in projects with real-world use. Ripple has been on a headline-grabbing spree this year, shouting about their high-profile partnerships with banks like Santander and American Express.
While Ripple is shouting from the rooftops about XRP, developers at Ethereum have got their head down. Ethereum enjoyed all the attention in 2017, but the team is now quietly working on the next upgrade, dubbed Ethereum 1x, due next year.
It doesn’t necessarily mean activity or innovation has died down on Ethereum, it just means there are fewer headline-grabbing announcements.
4. The Demise of ICOs
If you wanted to invest in an ICO (initial coin offering) last year, you typically needed to fund it with ether. Now that some ICOs have lost as much as 98% of their value, that excitement has vanished.
Not only is there a lack of ICO hunger, some ICOs are reportedly liquidating their ETH to meet costs. As the premier platform for ICOs, Ethereum is taking a bigger hit than many other major cryptocurrencies.
What do you think?
Is the XRP flippening permanent? Will Ethereum’s big upgrade trigger a resurgence? Leave your comments below!
A version of this article first appeared in our exclusive newsletter. If you’d like Block Explorer’s cutting-edge analysis before it hits our website, sign up now.
The world’s first fully-regulated crypto ETP (exchange-traded product) will launch in Switzerland this week, allowing people to trade a basket of cryptocurrencies including bitcoin, ethereum, XRP, bitcoin cash, and litecoin.
It’s important to point out that, contrary to some misleading news reports, this is not the much-hyped bitcoin ETF (exchange-traded fund).
The cryptoverse is eagerly awaiting the approval of a bitcoin ETF, with many calling it the future catalyst for a bitcoin price surge. But how is this Swiss crypto ETP different? And what exactly do you need to know?
What is a Crypto ETP?
An ETP is an acronym for “exchange-traded product.”
In simple terms, an ETP tracks the price of an underlying asset (or a basket of assets), like gold, stocks, and now cryptocurrencies.
The beauty of ETPs is that they are simple and cheap. With this new ETP, investors don’t need to buy cryptocurrencies directly or figure out how to store them. They simply buy the ETP from their broker and instantly get exposure to a basket of five cryptocurrencies.
The ETP is traded on the Swiss stock exchange and can be bought through a traditional stockbroker.
In essence, they’re more accessible to institutional investors which may lead to more money flowing into the crypto market.
Sounds a Lot like an ETF…
It is. The difference is that “ETP” is an umbrella term for different types of exchange-traded products. Those products include ETFs.
ETFs are the most popular type of ETP, but there are others, including exchange-traded notes (ETN) and exchange-traded vehicles (ETFV).
The Amun Crypto ETP will begin trading this week on the Six exchange. It will track a basket of five cryptocurrencies, weighted heavily to bitcoin and XRP. The exact makeup of the ETP is listed below:
Bitcoin Cash: 5.2%
It’s interesting to note that XRP receives a significantly higher weighting compared to ethereum. Although XRP overtook ethereum as the second-largest cryptocurrency last week, the heavier weighting may be an indication of Amun’s expectations for the future.
Note: the weighting will be rebalanced automatically on a monthly basis.
Amun notes that it aims to provide a diverse holding of crypto assets. However, it removes any assets that are tied to a fiat currency, like tether, and any currencies with anonymity features (such as zcash and monero).
The Amun Crypto ETP also avoid any coins without sufficient liquidity and those that don’t trade on reputable exchanges.
“The Amun ETP will give institutional investors that are restricted to investing only in securities or do not want to set up custody for digital assets exposure to cryptocurrencies. It will also provide access for retail investors that currently have no access to crypto exchanges due to local regulatory impediments.”
The ETP carries a management fee of 2.5% annually.
Jane Street and Flow Traders will back the fund and have agreed to pour money into the ETP to give it liquidity. They are known as “market makers.”
In true cryptocurrency style, the ETP will trade under the ticker $hodl. It’s a nod to the popular crypto meme “hodl,” a misspelling of “hold” which was adopted by crypto enthusiasts as a term for holding bitcoin even through the biggest price drops.
It launches on the Swiss SIX exchange, the fourth-largest stock exchange in the world. Based in Zurich, it has a market capitalization of $1.6 trillion.
At the time, SIX CEO said: “For us, it is abundantly clear that much of what is going on in the digital space is here to stay and will define the future of our industry.”
Set to launch in 2019, the exchange will facilitate trading, settlement and storage custody services.
How Is This Different to the Anticipated Bitcoin Etf?
First, there’s the makeup of the ETF itself. The Amun Crypto ETP tracks a basket of cryptocurrencies, rather than purely bitcoin.
Secondly, there’s the scale and impact of the ETP. While the Swiss ETP is an important first step, launching an ETF in the US is a much bigger beast.
The size of the exchange is the first point of difference. The Swiss exchange has a market capitalization of $1.6 trillion, compared to the New York Stock Exchange’s $21.3 trillion and the Nasdaq’s $7.8 trillion.
Simply put, launching a bitcoin ETF on one of the major US exchanges would have a much larger impact.
Then there’s the regulatory process. Switzerland, as explained, is much more open to the crypto industry in general. Approval in Switzerland is less of a groundbreaking move. Whereas the approval of a bitcoin ETF in the US would break down the door for countless other cryptocurrency products and investment vehicles.
The Securities and Exchange Commission (SEC) faces a deadline of December 29th to rule on the next bitcoin ETF proposal put forth by VanEck. However, there’s a good chance the SEC will push the decision back into 2019.
Commentators expect a bitcoin ETF approval to kickstart a new bitcoin price surge. It would, theoretically, allow institutional investors to flood into the market.
Currently, many Wall Street traders are forbidden to buy or hold cryptocurrencies as part of their client portfolios. Others are worried about the risk involved with buying and storing so much crypto directly.
A bitcoin ETF would give them an easier way to gain exposure to the crypto market, without the risk and complexity of buying it directly.
The Swiss crypto ETP is an impressive and important milestone in crypto adoption. It provides a simple route for institutional investors to wade into the crypto market. However, this is not the catalyst many are waiting for, and it does not make a bitcoin ETF approval in the US any more likely.
As always, Block Explorer will bring you more information as and when the true bitcoin ETF is approved in the US.
Good morning, folks. It’s one of those mornings where you’re almost nervous to look at the markets. After a crypto bloodbath where bitcoin suffered an 11% freefall and bitcoin cash ripped itself in two, it’s like peering outside after a hurricane.
As the dust settles, two cryptocurrencies have bounced back stronger than others: Stellar Lumens (XLM) and Ripple (XRP).
Stellar (XLM) +5%
Stellar (XLM) is up more than 5% over the last 24 hours. After “flippening” EOS earlier this week, XLM has strengthened its position ahead of EOS as the fifth-largest cryptocurrency.
The price movement is supported by the recent decision to airdrop $125 million worth of XLM tokens to blockchain.com wallets. Stellar has also announced its integration with Kik, a mobile messaging service which is moving from Ethereum to Stellar to launch its own cryptocurrency.
Coingate, a payment gateway, has also announced support for Stellar, allowing people to use XLM as a payment method on e-commerce stores.
Ripple (XRP) + 3%
Among a sea of red, Ripple’s XRP token is pushing 3% higher this morning, having overtaken ethereum as the second-largest cryptocurrency.
There’s no major catalyst for the price movement other than the news that Coinbase will support XRP in its custody service. We should point out this does not mean XRP will be tradable on the Coinbase platform.
Elsewhere on the markets, IOTA is holding up well (+3%), alongside 0x (+7) following its addition to the Coinbase roster. Dogecoin (+6%) is also rising after it was reported that Dogecoin is used twice as much as Bitcoin Cash for transactions.
“The XRP offered and sold by the defendants had all the traditional hallmarks of a security, yet defendants failed to register them as such… XRP purchasers reasonably expected to derive profits from their ownership of XRP, and [Ripple] themselves have frequently highlighted this profit motive.”
In other words, they claim Ripple created XRP, sold the tokens to raise money, and then mislead buyers to believe the price would rise.
Is XRP a Security?
This is the crux of the lawsuit.
A security is an investment vehicle, like stocks or bonds, and they are subject to much more rigorous regulation.
But what does it matter if XRP is a security?
If XRP is considered a security issued by Ripple, then it means that holding XRP would denote ownership in the Ripple company.
If that happened, Ripple could, theoretically, be held responsible for the price drops.
Ripple could also then be in trouble for not registering XRP as a security in the first place.
Ripple CEO, Brad Garlinghouse, has repeatedly explained that XRP is not a security.
In June, he said: “I think it is very clear that XRP is not a security. It exists independently of Ripple the company. If Ripple, the company shut down tomorrow, XRP will continue to exist.”
Doubling down in September, he said: “when you buy XRP, that doesn’t give you any rights to the profits or ownership of Ripple the company.”
Ripple and XRP don’t appear to satisfy the “Howey Test,” the most widely used criteria for classifying a security. However, a court may see it differently.
Ripple in Court: A Brief History
A number of individual lawsuits have been brought against Ripple in 2018, but they have since been rolled into one large class action.
In response, Ripple is now trying to move the case from state courts to federal courts. It’s a high-profile move, but one lawyer familiar with the situation called it “tactical brilliance.”
Ripple's legal team showing some tactical brilliance here.
It's hard to explain the procedural maneuver in one tweet & I'm not going to thread this, but suffice to say it's a *seriously* crafty attempt to go federal. Might not work, but slick regardless.https://t.co/DuR5kWNJwy
The reason being that a class action lawsuit is more suited to the bigger courts with plaintiffs from different locations. However, there’s also a suggestion that federal courts look more favorably on corporate rulings. In other words, it gives Ripple a better chance of winning.
The debate about XRP and Ripple has raged for years, but it may now spill out into the biggest courts in the country. While the court may finally provide some guidance on XRP as a security, the ultimate decision rests with the Securities and Exchange Commision (SEC). And the SEC remains quiet.
Block Explorer will bring you more information as the lawsuit unfolds.
The surge in volume indicates a flurry of buying activity for XRP, the cryptocurrency associated with Ripple, with the price soaring more than 15% to tick over the $0.5 mark.
What is volume in cryptocurrency? Volume indicates how much of a particular cryptocurrency changed hands over a 24 hour period. High volume means that lots of traders are buying and selling XRP. Volume is not necessarily linked to price increase; volume will also rise when lots of selling activity occurs.
Why Did XRP Volume Triple?
There appears to be a handful of reasons behind XRP’s surge in volume, from the ongoing rollout of Ripple’s xRapid service to its expansion into new territories. Let’s look at them one at a time:
A relatively new crypto exchange in Canada, CoinField, now lists XRP as its base currency. In other words, 22 trading pairs on the exchange are now linked to XRP.
Although based in Canada, the exchange is available in 61 countries and is growing rapidly. The choice of XRP as a base currency means almost all trading on the platform will take place via the XRP token, which could increase volume further.
Ripple Expands to Dubai and Middle East
Ripple has been busy partnering with banks in the Middle East throughout 2018. They’ll now finish the year strong by opening up an office in Dubai.
These factors combined over the last few days to trigger a swell of momentum in the XRP market. It’s a welcome surge of activity after October marked the weakest month of trading of the year.