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BackNews covering the past week of market panic, community questions about the CSD, and some of Kevin’s thoughts about the global markets, all in This Week in Crypto!
Crypto Market News Highlights
1) Crypto lenders demand more than $100 million in margin calls
Considering the fact that the markets tanked, like every other market did, $100 million doesn’t seem like all that much.
With a loan to value ratio of 50-70%, it doesn’t take much volatility to put an issue on the table.
Goes to show that we haven’t created a solution yet. What we thought was a great solution, proved to not be so great.
2) Institutional Traders Caused the Bitcoin Price Drop, Chainalysis Claims
We use Chainalysis, and Kevin was hoping for some hardcore details in this article, but all it said was that 7/10 transfers during the price drop, were between 10-1000 BTC. So what?
Kevin wouldn’t bet against the fact that a good deal of money that flowed out of the market was from “institutional” traders. Mainly because the reason they had money in Bitcoin was because it was supposed to not correlate with other financial markets. And then it correlated. So they started to sell. It pushed the market lower, fear-based capitulation kicked in for retail guys and everybody started selling.
This data they provided in the article doesn’t say much, according to Kevin. Unless normally only 1/10 transaction is between 10-1000 BTC. Even then, that would just be one piece of data, and wouldn’t relieve the doubt.
3) Spanish Securities Watchdog Halts Short Selling Amid Coronavirus Caused Recession
We have seen circuit breakers both this week and last week in the US. Kevin actually did an interview recently about circuit breakers. Circuit breakers stop markets when they are moving in one direction, usually south. Kevin never heard of a circuit breaker when a market is moving up.
Limiting short selling doesn’t mean you can’t short. If you own the asset, you can sell it. You just can’t go short, meaning you can’t take on credit and sell something you don’t own.
You could argue that this limits access to the free market. Considering the crisis, Kevin thinks they probably made the right move. But it’s going to be controversial. If the market had gone up 40%, would they stop people from buying on leverage? No. From the trader’s perspective, it is just as risky. But it’s not risky for the actual economy, which is why they don’t care.
Some rules are in place, and they are not impartial. They don’t want markets to tank too hard, because it has a very direct effect on the underlying economy. And that’s kinda bullshit, if you think about it.
Check out our Medium post to read more crypto market news!
Live Questions
How is marketing going with the new Digital Marketing guy?
He is in full “get to know the brand”-mode, seeing if everybody sees the brand the same way. By the end of the next week, he should have a much better idea of CoinMetro’s vision, how to scope that vision, and how to adjust it with content.
Our vision was to get rolling by the end of March, but we might be two weeks behind schedule.
What’s new on BizDev?
Kevin is focused right now on payment gateways and banking relationships. We have got a bit complacent with LHV, but since we want to be able to list new assets as soon as we approve them internally, Kevin has really started to push forward to find new solutions. Not necessarily to get rid of LHV, but we need new banking partners. Also looking for providers in different countries, with local deposit options.
Montenegro is also very close to going live.
What’s next in terms of releases?
The Go! Dashboard remake is in process. We hope to have a working prototype on the sandbox by the end of the month. About increasing margin leverage, we have been discussing it internally during the past week. We will start to reduce limitations starting by next week, but it will be over time.
CoinMetro’s Pro Margin platform allows trading with 3:1 leverage.
When margin posting?
It is probably the next major project we will be working on. Early Q3, probably.
Will there be any coin buyback?
We are not necessarily going to buy back XCM using our treasury. But the way XCM works, we basically take money earned from fees, to buy back XCM with market orders from the book. So a form of buyback is already in place.
Learn more about the utility of CoinMetro’s XCM token!
How many more are you looking to hire for the marketing team?
We are looking to hire one Senior Content Provider/Creative Director, and we will probably have some part time/project work for helping with strategizing and structuring.
Kevin, there is a rumor that you will lose the banking partner LHV in May. Do you have a comment?
Kevin’s comment on that is — don’t believe everything you read on 4chan.
What’s your thoughts about Bitmex going “down for maintenance” on the 13th? And the 5-100% bounce in the following minutes?
Kevin has no opinion, but it’s definitely possible that they went down just because they couldn’t handle the load. Regardless of how it went down, if a platform is down and you’re panicking and you see everything else go nuts, and all of a sudden the underlying market moves in a contrary fashion, and then the markets come online and you have to replace the orders — it’s not too far out of the bounds of Kevin’s imagination to say that the bounce was legitimate.
Kevin wouldn’t put it past them that they would have orchestrated it. Either way, it shows that they can’t handle a black swan event. Which isn’t good.
You’ve said before that once the CSD is up and running, CoinMetro will be the only game in town for a little bit, before others join. Why?
Mainly because when the CSD is up and running in the sandbox, there won’t be any other connected MTFs, only CoinMetro. That’s why we would be the only game in town, in terms of anybody that wants to trade on the secondary market for those listed assets. And in some instances, perhaps even the primary offering.
Getting out of the sandbox, it’s possible that we may not be the only connected MTFs, depending on how the rest of the market matures, and how CoinMetro moves ahead with licensing. When Ignium and CoinMetro go to other sandboxes, and we run into a position where we can get licensed inside the sandbox, both companies will probably choose to do so. And we would be the only — or one of the only — connected MTFs. For a time.
When will the first issuance be taking place, and what will it be?
First issuance is probably going to happen in the first couple of weeks in April. We have been in talks with a few issuers, and can’t say exactly who the issuer is going to be, but it will probably be a plain vanilla bond product.
Reddit Questions
Kevin, please tell us what you think about the financial system, money printing and the status of banks.
Also, do you think people will escape fiat inflation by going to Bitcoin? – 6MyBad
We have proven that all our financial systems, including Bitcoin unfortunately, are not ready for a real worldwide economic crisis. It tells us that we haven’t learned much from our last crisis. And if we have learned anything, we haven’t really applied everything we learned.
If we see what the Fed in the US has done; they don’t have many weapons to fight an oncoming or a current recession. The main thing they can do is lowering interest rates. Lowering interest rates means that people don’t want to keep their savings in a bank, mainly to push them into stocks. Sure, people do also spend money, but for the most part, they push it into something that pays more interest. Which is mainly stocks or bonds, for the common investor.
Stock markets around the world are a game, a game that is not very transparent, where the value of stocks can be multitudes of the value of the underlying company. As we have seen, they are very fragile. Even a small issue like the underlying Coronavirus, creates a fear-based panic sell that basically implodes modern financial markets. And that’s kinda scary.
What does the Fed do? They immediately lower rates to almost zero. And now they are talking about flooding the market with cash. That’s it. It’s the worst way to enter into a possible recession. Why? They have used the only two tools they have.
People will not escape inflation by going into Bitcoin. You can put all your money into Bitcoin and assume you are escaping inflation — but is your rent, mortgage, car payment and all that good stuff priced in Bitcoin? No. You are still going to have to pay in fiat.You can make the argument that Bitcoin could rise in an exponential amount, over and above the inflation of the underlying asset, but that’s an argument that can’t really be proved. Not yet.
“Kevin Explains Crypto” Term: Futures
The generic term of Futures is basically where you are buying or selling something, based on a possible future price. So you are betting on a future price. Most future contracts, not all, but most of them, are not perpetual. In Bitcoin, most contracts are perpetual. That means there is no end date. You simply see a live price, and you are either buying or selling at that price.
In the real world, most futures have an end date. Usually monthly or quarterly. That means that the contract will automatically close on the ending date, unless you liquidate it.
Interested in learning more? Have a look at the video where Kevin explains “Futures”:
Listen to Last Week’s TWiC on the Go
Get the complete scoop by tuning in to our audio version of last week’s TWiC on SoundCloud. Happy listening!
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That’s a wrap for this week’s AMA with CoinMetro Founder Kevin Murcko! Please join us next week on CoinMetro’s Facebook and YouTube Channel at 1 PM (UTC) for another round and make sure you submit your questions to the CoinMetro subReddit!
As always, we’re available to answer any questions you may have on our Telegram Group 24/7. You can also find CoinMetro on other channels: Twitter, Facebook, Instagram, Medium, Reddit, LinkedIn, and YouTube.