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Current State of The Crypto Market (January 20th, 2019)

Hackers:  In what seems to be one of the first major security breaches of 2019, New Zealand-based digital assets exchange Cryptopia was allegedly hacked this week. The platform reported the incident via Twitter on January 15, mentioning “significant losses.” While the incident has been confirmed by the local police, many crucial details, including the amount and types of stolen tokens remain undisclosed.  Cryptopia Limited, the company behind the self-titled exchange, was registered in July 2014, and the platform itself was launched later the same year. It is run by founders Rob Dawson and Adam Clark, who initially started it as a hobby born out of negative experiences with other crypto exchanges. Around January 2017, they allegedly quit their full-time jobs to focus solely on Cryptopia. The firm’s office is located in Christchurch, Canterbury, and there are around 50-100 employees there.  The incident appears to have occurred on January 14th, when Cryptopia published a series of short tweets regarding “unscheduled maintenance.” On the next day, Cryptopia officially announced that it was hacked. According to the note shared by the platform, after finding out about the security breach, the exchange’s staff freezed all operations to assess damages.  The exchange has also reportedly notified government agencies and authorities, including the New Zealand Police and High-Tech Crimes Unit, who have opened an investigation into the matter and are reportedly treating the incident as a major crime.

 

Bullish Key Players:  The co-founder of Union Square Ventures, Fred Wilson believes that the bears grip on the market and the losses that many people have had is nearly over saying, “I expect we will see some bullish runs, followed by selling pressures taking us back to retest the lows.” Wilson goes on to say that the bulls will run once more in 2019 and that the end of the bear market is just around the corner stating: “I think this bottoming out process will end sometime in 2019 and we will slowly enter a new bullish phase in crypto.”

In a similar sense, experts such as Paul Veradittakit (partner at crypto investment fund Pantera Capital) and Anthony Pompliano (founding partner at Morgan Creek) have made predictions on the market saying that a lot of players in the sector will fade away. They contend that cryptocurrency firms without valid use cases will struggle and entities like hedge funds will disappear as the market makes its way to the bottom.

Alistair Milne, chief investment officer at Digital Currency Fund, recently tried his hand at the prediction game, stating that Bitcoin used to be an “asymmetric investment opportunity.”  Milne explains that “the asymmetric opportunity is absolutely explicit” due to increased regulatory certainty and the fact that Bitcoin has fallen around 80% from its all-time high. Milne went further to say that “Bitcoin may drop and/or eventually retest its ATH.”  He explained that “each wave adoption is an order of magnitude bigger than the last.” Therefore, with the increased number of consumers and the ever-increasing predictions of HODL’ers, Bitcoin will climb past $20,000. Furthermore, with Bitcoin now reaching mainstream awareness, the FOMO will be “larger than ever.”

 

Banks & Institutions:  A couple of days back news broke that researchers from seven colleges across the United States are working together on an apparently groundbreaking cryptocurrency project which they say will offer scalability beyond anything that bitcoin can offer.  Dubbed Unit-e, the cryptocurrency is the first research movement launched by non-profit Distributed Technology Research, made up of the academics and funded by Pantera Capital Management LP. It is hoped that Unit-e will be able to process up to 10,000 transactions per second. In comparison, Bitcoin is able to manage up to approximately seven per second. The goal is to make sure rapid transactions can be made without removing decentralization, the heart of cryptocurrency and the blockchain itself.

One of Switzerland’s major private banking firms, Vontobel, is offering regulated cryptocurrency custody services to institutional clients such as banks, fund managers, and crypto asset managers.  The newly launched crypto custody solution is named “Digital Asset Vault” and complies with the standards set by industry regulators and financial intermediaries.  In a recent press release on the matter, Vontobel’s investment banking head Roger Studer describes the Swiss bank’s move as a world’s first.  This development is not Vontobel bank’s first crypto-related venture; they have been offering cryptocurrency-related investment products such as Bitcoin-based certificates since 2016. Now, they simply want to increase their cryptocurrency integration.

 

Adoption:  Russia is moving a step closer towards cryptocurrency and its Prime Minister, Dmitry Medvedev made it clear as he claimed that the ongoing crypto bear market should not be a reason to “bury” cryptocurrencies. The Prime Minister said this on January 15 in a speech at the 10th Gaidar Forum.  Meanwhile, the Russian parliament is yet to decide the approach to a much-awaited bill on the digital assets. Russia is trying to maintain and develop a crypto-friendly environment by developing such regulations.

It is impossible to say how increased use of cryptos will influence the price. The rocket ride that cryptos experienced in 2017 wasn’t backed by a massive increase in usage, but now it looks like crypto adoption is on a steady climb higher.  According to a recent report from statistics aggregator Coin ATM Radar, the number of crypto ATMs just shot past 4,000 globally. Instead of following crypto prices down over the course of 2018, the number of crypto ATMs is actually rising. In fact, according to the report, there are almost 5 cryptos ATMs being added to the global fleet on a monthly basis.  It is even more impressive that the amount of crypto ATMs is rising despite their legal status in nations like India. The vast majority of crypto ATMs are in North America. Coin ATM Radar says that 71.8% of crypto ATMs are in North America, with 56% in the United States and 15% in Canada. Europe has 23% of the world’s crypto ATMs, and Asia has just and 2.6%.

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