Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 22 December 2017 at 13:35 GMT

Crypto Update: House of Cards

Cryptocurrency Analyst / Saxo Bank
  • CME futures were launched this week
  • Stocks associated with blockchain see meteoric rise
  • South Korean crypto exchange declares bankruptcy

 Pretty bubbles in the air? Maybe not so pretty after all. Pic: Shutterstock

By Jacob Pouncey

The past few weeks have seen extraordinary rises and falls in cryptocurrencies: Bitcoin climbed 25% this week to reach an all-time high of about $20,000 last Sunday and now trades 30% down from that peak. Ethereum has more than doubled over the last month. This week ether rose 42% to a new all-time high close of $900 and now trades 20% down from that peak. This past week the entire crypto market cap rose to $640 billion and Bitcoin’s market dominance waned to 45%.

CME futures launch

The CME launched its long-awaited bitcoin futures contract. The contract specifications can be found here. The contract opened at $20,000 per Bitcoin or $100,000 per contract. There will be more futures in 2018 as Nasdaq announced it will offer BTC futures contracts by mid-2018. Yet, investors are still paying 100% premium to get exposure to Bitcoin through the Grayscale Investments Bitcoin Trust (GBTC).

Blockchain is reminiscent of a bubble

In a classic bubble fashion stocks that are linked to blockchain or have blockchain in their name have seen a meteoric rise in market cap. A fintech CEO cooled off his own company stock in an interview due to the market fervour around a crypto acquisition. Meanwhile, Ronnie Moas of  Standpoint Research sees another 500% increase in BTC price, and fund manager Dan Morehead says a 50% correction would be normal before the next leg up.

South Korean crypto exchange shuts down

South Korean crypto exchange Youbit is closing down after its second hack this year. This comes on the heels of a government meeting around crypto exchanges while South Korean exchanges braced for regulation. The SK financial regulator claimed it has no plans to regulate digital currencies, while the prime minister believes Bitcoin is corrupting the youth. South Korea represents one of the largest crypto exchange markets.

Bonus Holiday Reading: Two studies that offer a great assessment of the cryptocurrency and blockchain sectors.

— Edited by Clare MacCarthy

Jacob Pouncey is a cryptocurrency analyst at Saxo Bank

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1000pipclimbersystem 1000pipclimbersystem
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Daniel CN Daniel CN
I just had one more look at my favorite company (equaling my least favorite stock): Amazon. This rode the last wave of "disruption" and made the richest man in the world. But never a reasonable profit. Over 20 years, you have a skyrocketing "value" and no profit. I wonder how that business model would react to a severe slow down on the balance sheet. House of Cards ... let me know where you see solid investments. Apart from the language training for my daughter I cant see any lately.
Alan M Alan M
Daniel I totally agree with you. I have worked for multiple technology start-ups over the years and I can say with confidence that they offer absolutly no value what so ever from an investment point of view. Also, at least in NL, the minimum wage has risen slightly, while the pay from these companies is minimum at best when calculated on an hour to hour basis. House of cards describes it perfectly, and I think the situation is significantly worse than most people currently belive. In my opinion, value exists in companies that give their employees an incentive to stay and actually be productive, rather than work less hours on minimum wage for the same pay at the end of the month. Where are these companies...? Well, that is a separate question entirely.


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