Bitcoin was up slightly Monday along with European equities, U.S. stocks, gold, copper and oil.
Venture capital is no longer just for the rich, as crypto markets let traders bet on early-stage digital-asset startups, risks included.
What's Hot – or Not: Polkadot jumps in days after debut, U.S. debt hits "death spiral" level and bitcoin exchange volumes grow in Turkey.
PRICE POINT
Bitcoin was up slightly at about $11,776 early Monday, rising along with European equities, stock futures, gold, copper and oil amid optimism over a coronavirus vaccine and treatments. The dollar weakened.
The largest cryptocurrency is coming off a 2.2% decline in the seven days through Aug. 23, breaking a four-week string of gains.
On the positive side, prices have now spent 27 straight days above $10,000, the third-longest period in the five-digit zone in bitcoin's 11-year history. According to Cryptoslate, the streak suggests "$10,000 as strong support, which typically is a positive medium-term sign."
MARKET MOVES
A week after First Mover wrote that cryptocurrency markets are now looking more capitalist than Wall Street, a new report suggests they also might be more democratic.
"The open nature of crypto networks has largely removed barriers that restricted early-stage investing to hedge funds or venture capitalists," Nystrom wrote. "Hopefully, this will result in better capital allocation over time and democratize an industry that has for too long been limited to the wealthy few."
Because of investor-protection rules imposed by the Securities and Exchange Commission, clubby venture-capital funds have mostly been restricted to "accredited" individuals — those with a net worth of at least $1 million or annual income of $200,000.
Now, quick-to-market digital tokens like Compound's COMP and Spaghetti's PASTA are allowing anyone to bet on the fast-growing realm of decentralized finance, or DeFi. According to Token Daily, some of the projects come with "frothy DeFi token valuations."
But check out the demand from investors: No fewer than seven DeFi projects have market valuations of $500 million or more. That's 10 times the size of the Series C funding round that the centralized crypto lender BlockFi announced last week.
Top DeFi projects by market capitalization. (DeFi Market Cap)
It's unclear why the SEC has allowed this culture of unfettered tokenholder democracy to proliferate, with its potential for fast riches alongside the risk of steep losses due to poor execution, scams or fraud.
This month witnessed the meme-worthy spectacle of YAM, whose market value plunged to $0 from $60 million within a span of 35 minute because of a programming bug in the unaudited protocol.
Perhaps the SEC is taking a wait-and-see approach. Perhaps the market is too small, young and irrelevant in the midst of a global pandemic to allocate precious agency resources. Perhaps "governance tokens" in "decentralized autonomous organizations" are just too complicated. Maybe they're even structured in such a way that they don't run afoul of the rules.
"Accredited investor regulations are designed in theory to protect average investors from losing a bunch of their money, but they also prevent people from investing in startups, or in certain crypto assets where some people might actually have a decent amount of knowledge," Messari's Nystrom said in a Zoom interview.
There's a lot of similarities between crypto markets and Wall Street, such as fear and greed, leverage and luck. But at least for now, the playing field in crypto might be more level.
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Bitcoin CME commitment of traders report (Skew.com)
Bearish bets in bitcoin futures from leveraged funds recently rose to record highs on the Chicago Mercantile Exchange (CME) – though that doesn’t necessarily imply a fresh sell-off is coming.
In the week ended Aug. 18, leveraged funds – hedge funds and various types of money managers that, in effect, borrow money to trade – increased their short positions by 110% to a record high of 14,100 contracts.
The data comes from a Commitment of Traders (COT) report published by the U.S. Commodity Futures Trading Commission (CFTC) on Friday.
Institutional investors held 1,400 short contracts last week too, per the COT; a number that has also more than doubled.
Spot prices:
Having put in lows below $11,400 over the weekend, bitcoin has rebounded to over $11,790 at press time, according to CoinDesk’s Bitcoin Price Index.
A series of higher lows (marked with arrows) seen on the daily chart suggest the path of least resistance is to the higher side.
The low of $11,367 registered on Saturday is the level to beat for the bears.
Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.
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