It’s time again for a monthly crypto review – Part 5. This time, we will explore the possibility of the market getting ready to rev up.

Some of you may have just followed us, so do feel free to read other parts after this [Part 1, Part 2, Part 3, Part 4].

Bitcoin did an impressive rebound from a low of almost US$6,000 (Source: Coinmarketcap)

Since the past month, bitcoin has surged to nearly US$10,000 per coin, along with other altcoins, bringing the market capitalization of cryptocurrencies to above US$400 billion, once again. Of course, many pundits have been predicting the demise of crypto, so this happened to their dismay (we’re sure).

We are all heading towards increased regulation (and possibly fedcoin)

Japan (and Korea) has been at the forefront in welcoming digital currencies. It was therefore very surprising when the Japanese government announced that it would pressure exchanges to possibly drop privacy-based cryptos (such as Monero and Dash). We predicted it in Part 4 of our crypto review that government regulations was coming and it was going to be soon.

The Venezuelan government has even started to offer special deals to countries who use Petro (the official cryptocurrency issued by Venezuela) when conducting trade with Venezuela. One such offer to India was that if it used Petro, it would get to buy oil at 30% discount. Should it come true, we believe it may open floodgates to a more efficient global trade, and no doubt shifting the power from fiat currencies towards cryptocurrencies.

India is known to hate crypto, but will it say NO to a 30% discount on OIL? (Source: Cointelegraph)

However, it is also fair to say that some governments have decided to be very accommodative (to businesses) for reasons that are as clear as day – jobs and income from taxation.

Just recently, Binance announced its move from Asia to Malta and along with that, thousands of jobs. Its base, Asia (mainly Taiwan, and Hong Kong) wasn’t being friendly towards the business. Clearly, if you have the ability to create jobs and huge profits there would be many governments who are prepared to welcome you with open arms.

Binance (who claims to be the largest cryptocurrency exchange in the world) also announced recently it made US$200 million profits in the 2nd quarter since its founding. If this is true, it beats Deutsche Bank’s US$146 million profits in Q1 2018. For those who have no idea, Deutsche Bank is one of Europe’s biggest bank which started 148 years ago. To imagine that a bank with 100,000 employees is beaten by a company that only existed less than a year with 200 employees is just unthinkable.

Binance’s CZ (Changpeng Zhao) – worth north of US$2 billion

Big boys have embraced crypto – without a doubt

Not surprisingly, UNICEF had recently launched a website that (with the user’s permission) would use any contributor’s computing power to mine for crypto. The proceeds would be used for financing UNICEF’s causes. Charitable organisations (and projects) such as the World Food Programme have begun to realize the potential of crypto in reducing friction (and costs), and experts predict that adoption will only increase in this space.

Perhaps the irony is, the infamous George Soros (YES – the one who “broke the Bank of England” by massively shorting the British pound, and earned US$1 billion in a day), green-lighted his funds to begin trading cryptocurrencies. This is huge as it signals that other institutional funds have entered and floodgates will soon burst wide open. This will possibly lead to huge price increases in what’s dubbed the “new asset class”. Obviously, many die-hard fans hope Soros don’t end up breaking crypto like he did to the British pound.

Soros – the financier of the world. He is known as the “old guard” in the world of finance, and his entry into crypto is very closely watched by many sides. Warren Buffett on the other hand, the “Oracle of Omaha” still shuns crypto, short of calling it a sham.

This trend has not gone unnoticed, as Coinbase (one of the largest exchanges in the US – valued at US$8 billion) shared plans to add block trading facilities to its professional trading platform GDAX. This news came to light when Coinbase announced plans to open its Chicago office, soon. The timing couldn’t be more impeccable as institutional investors are now starting to embrace crypto. Even lesser known players such as Japan’s FSA-approved Quoine is currently aiming its guns at institutional clients through the launch of World Book.

Sufficient to say, it doesn’t end there – as even the famed investor and Paypal mafia, Peter Thiel looks to bring big investors to invest into crypto.

Conclusion

Big money entering the market, more regulations, and increased scrutiny on ICOs are happening as we speak. We at Momentum Works believe this is only the beginning. It is possible that before the end of the year, the total market capitalisation of cryptocurrencies will levitate much higher than it is right now. Incase you forgot, we have issued our call much earlier this year for bitcoin to hit US$100,000.

That said, ICOs should remain a popular means to raise money – but initiators should be careful, and be willing to invest more into a good team (or find good partners) and setting up right infrastructures to deal with regulatory concerns. We know, because we are working with very experienced partners in this market.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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He has worn many hats in the past - selling advertising space, banking services, and even trading stocks. In 2013, longing for a change of scenery, he joined Rocket Internet’s (now Alibaba’s) Lazada as a online marketer in Bangkok, where he experienced first hand life in a startup. He never looked back since - landing lead roles at Rocket’s EasyTaxi (Singapore), Rocket’s MEIG (Dubai), and Bamilo (Tehran). After that, he launched (and ran) the Thai venture for one of Singapore’s biggest cross-border ecommerce. Last year, Chong put his expertise to work, helping an SGX-listed company relocate to and run operations in Thailand. Nowadays, he’s just chilling by the countryside.