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Cryptocurrencies smashed forecasts and made headlines throughout 2017, but though the crypto market continues to grow by leaps and bounds, 2018 is likely to be a more complex year for this maturing space.
Article / 03 January 2018 at 14:21 GMT

Crypto Update: Central banks join the fray as market diversifies

Cryptocurrency Analyst / Saxo Bank
Denmark
  • Cryptocurrency market continues to expand
  • Central banks mulling crypto options
  • Futures launch to be followed by new ETFs

Bank of England
Central banks like the Bank of England are presently mulling potential cryptocurrency ventures as the market continues to expand. Photo: Shutterstock

By Jacob Pouncey

Since December 19, Bitcoin (BTC) fell over 35 % to recover 30%. Ethereum (ETH) also fell about 40%, according to coinmarketcap, to recover all the losses and break new all-time highs. Since the last weekly update, ETH lost its position as second most valuable cryptocurrency by market cap to Ripple (XRP).
 
Bitcoin’s market dominance, measured by BTC’s market cap compared to the entire crypto market, fell to an historical low of 37% down from BTC’s previous dominance of 67% less than a month ago. This represents a greater interest in the crypto market as a whole, which is valued at $700 billion

Thirty-six crypto instruments have market caps over $1 billion, and 56 are valued at over $500 million. An increase in market cap as a whole is good for BTC and ETH regardless of their respective market dominance since all of the crypto market trades against Bitcoin or Ethereum.

Peter Thiel bets huge on Bitcoin while others retreat

The price of Bitcoin rose after a Wall Street Journal stated that Thiel’s Founders Fund holds hundreds of millions of USD worth of BTC after an initial $15-20 million investment over the last couple of years. Thiel was quoted as early as October stating that he believes people are “underestimating” BTC, and that there is “great potential left.” 

On the other hand, Mike Novogratz, who was setting up a $500 million crypto hedge fund postponed the fund as he believed the market was not favourable for new investors at the current price levels.

National cryptocurrencies are planned to arrive this year

The Bank of England is playing with the idea of issuing its own crypto. Venezuela has issued detailed plans to release the Petro, a cryptocurrency backed by 5.3 billion barrels of oil. Russia is set to release its own crypto-ruble to avoid Western sanctions. Russia has even suggested creating a transnational cryptocurrency for the members of BRIC countries.

Wealth will continue to be generated or destroyed

Japan could see a 0.3 % increase in GDP thanks to the crypto market, according to Nomura. Last year over $6 billion was raised via ICOs, eclipsing the amount of VC funding, with $1 billion being raised in December 2017 alone. This trend is likely to continue barring heavy regulations. 

The world has at least 35 Bitcoin billionaires and as many as 200, based on news from BitInfoCharts. With futures in place, several ETFs are planned to emerge for crypto instruments this year.
— Edited by Michael McKenna

Jacob Pouncey is a cryptocurrency analyst at Saxo Bank 
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