Current State of The Crypto Market (June 30th, 2019)

Hackers:  Eight crypto exchanges have been hacked year-to-date with major exchanges in the likes of South Korea’s Bithumb reporting high-profile security breaches.  In the upcoming months, despite the emergence of highly sophisticated technologies and tools employed by hackers, it may become significantly more difficult to hack into crypto exchanges. Beginning this week, smaller exchanges will be able to use big-data from Binance which would allow exchanges to detect and block certain transactions that are suspected to be connected to a security breach.  In the case of Bitrue, for instance, an exchange that lost more than $4 million in XRP and ADA this month in a hacking attack, the exchange swiftly contacted Huobi, Bittrex, and ChangeNOW when stolen funds were sent to those three exchanges and were able to recover some of the funds.

Bullish Key Players:   Since late February, bitcoin has been marching higher again, as major companies began to announce cryptocurrency-related projects. Fidelity rolled out a cryptocurrency custody and trade execution operation in March. But it was perhaps news of Facebook’s Libra cryptocurrency that helped boost bitcoin.  Jehan Chu, co-founder of Kenetic Capital, an investor in blockchain start-ups believes “The price surge is due to two major factors, one is an increasing consensus among the investment community that bitcoin is a legitimate store of value for the digital age, and two Facebook’s Libra cryptocurrency launch has forced every CEO to take crypto seriously.”

Banks & Institutions:  After bitcoin fizzled and popped early last year, Wall Street seemed to lose interest. Goldman Sachs went quiet on plans to open a desk trading digital asset as the price of the cryptocurrency plummeted, falling as much as 80 per cent. In October last year JPMorgan Chase chief Jamie Dimon doubled down on his initial scepticism, saying he did not “give a shit” about bitcoin at a conference.  But now that prices for bitcoin and other cryptocurrencies have climbed back up, some senior figures in the financial services industry are thinking again, wondering whether it was the spike or the crash that was the anomaly. Flow Traders, an Amsterdam-based listed trading firm specializing in exchange-traded products, announced in April it was adding cryptocurrencies to its line-up. Last month a group of 50 companies including Jump Trading and DRW — two high-frequency trading houses — and Mike Novogratz’s Galaxy Digital, a crypto merchant bank, formed a group to develop a “deep, efficient and secure” market.

Adoption: Major American cryptocurrency exchange Coinbase released key findings about awareness and adoption trends related to digital currency in the United States in a blog post published on June 28.  Coinbase’s survey that spans the past year and 2,000 participants revealed that cryptocurrency awareness in the U.S. has continued growing, with 58% of Americans having heard about bitcoin. Of them, some expressed a desire to diversify their investment portfolios with digital currencies, were excited by crypto’s idea of a worldwide currency, or liked the absence of high transfer fees.  The top 10 states with the highest crypto ownership are California, New Jersey, Washington, New York, Colorado, Utah, Florida, Alaska, Nevada, and Massachusetts. States such as Delaware, Nevada, and Wyoming have a lower overall percentage of crypto owners, but a higher per-capita ownership, meaning a smaller number of people hold a larger than average amount of crypto each.  As cryptocurrency adoption grows, regulators and policymakers worldwide have enacted legislation to address cryptocurrency and its underlying blockchain technology. Thus, as of June 2019, over 70% of U.S. states have reportedly enacted regulations pertaining to crypto or blockchain.