A double dance with the devil
Interesting piece on Bloomberg today, apparently a new study has shown that 56% of of crypto startups that raise money through token sales die within four months of their initial coin offerings, and 1000 tokens have already been rendered valueless. With that said
We find evidence of significant ICO underpricing, with average returns of 179% from the ICO price to the first day’s opening market price, over a holding period that averages just 16 days
Another good one from Bloomberg. Fresh off the press.
Thanks for sharing these guys!
“These are stakes in platforms that have not yet been built, that have no participants yet. There’s a lot of risk. The majority of ICOs do fail.”
Also from the same article, but pertinent to all things investing, I thought this was a really valuable reminder when considering where to invest your hard earned cash.
“People often look at returns and say this is a great deal, but we teach in finance that return is a compensation for risk," Kostovetsky said
@justin, did you read the full July outlook? Where are the :eak: and :gulp: emojis?!
I found this interesting - I suspect our community would prefer to trade crypto over a legit regulated exchange if given the choice? I’d pay a premium to avoid Mt Gox style hacks, anyone expert enough to know if this regulated approach would make much of a difference?
Coinbase hasn’t had any hacks from what I recall. Guess some of this is competence?
Somewhat related, did you see
On the Monday morning I visited Monzo’s offices, just 12 hours earlier there had been a “pan enumeration” attack on its computer systems. This is where fraudsters, often based overseas, bombard a bank’s computers, trying to guess passwords and logins, or attempting to do transactions by generating card expiry dates and three-digit CVCs (card verification codes) in the hope that some might break through.
I guess this happens with cryptocurrency exchanges and stock trading services?
By no means an expert, but a I see a big benefit of SIX and FINMA’s announcements lending crypto as an asset class legitimacy and credibility, with the potential to encourage other regulators to follow suit off the back of SIX experiences. I’d also expect the experience from their work in digital exchange space to spill over to their equities and bonds exchanges… reduction in settlement time down to near real time as an example?
Particularly interested by this from the SIX website:
the tokenization of non-bankable assets will make previously untradeable assets tradeable.
Different participants will have different needs, but I think for most investors, institutional through to retail, a transparent exchange and secure custody service in a trustworthy and competent jurisdiction would be pretty desirable. I’m not sure a regulated exchange will necessarily appeal to die hard no state libertarians though.
Offering access to SIX via Freetrade would make for a compelling proposition and could be a big selling point for the business. Essentially, it’s saying crypto is growing up and we’re the broker to provide access to a legitimate, regulated market, whilst providing the best product and experience. Key questions are: what will initially be tradable, and what’s an acceptable premium? Still more questions, but it’s really encouraging to know FINMA are supporting this.
From what I understand they have the most secure setup with the vast majority of coins stored offline and the stuff they keep online for trading liquidity is insured. https://www.coinbase.com/legal/insurance?locale=en
Good question. Coinbase is super expensive. But compared to say Robinhood at least you know what you’re paying for.
Sounds like something Freetrade can disrupt @adam?
Keep those spreads tight and fees low.
Cboe’s recent submission to the SEC to apply to list the ‘first’ bitcoin ETF (at least in the US) is a fascinating read in terms of the regulation of crypto.
Some important quotes and notes I jotted down:
- Exchanges: whereas the issuer primarily prefers to obtain supply OTC, if for any reason it cannot, it will buy on regular exchanges with Coinbase and Kraken mentioned, amongst others. “All of these exchanges follow AML and KYC regulatory requirements.” - despite not being ‘regulated’ in the traditional sense, they are clearly happy with the legality and security of dealing with these parties.
- Physical security: “The Trust will utilize bitcoin private keys that are generated and stored on air-gapped computers. The movement of bitcoin will require physical access to the air-gapped computers and use of multiple authorized signers. For backup and disaster recovery purposes, the Trust will maintain cold storage wallet backups in locations geographically distributed throughout the United States, including in the Northeast and Midwest.” This is widely accepted best practice.
- Insurance: “the Trust will maintain comprehensive insurance coverage underwritten by various insurance carriers. The purpose of the insurance is to protect investors against loss or theft of the Trust’s bitcoin. The insurance will cover loss of bitcoin by, among other things, theft, destruction, bitcoin in transit, computer fraud and other loss of the private keys that are necessary to access the bitcoin held by the Trust.” As well as having “the goal of maintaining insurance coverage at a one-to-one ratio with the Trust’s bitcoin holdings valued in U.S. dollars such that for every dollar of bitcoin held by the Trust there is an equal amount of insurance coverage.”
- Manipulation: “there is not inside information about revenue, earnings, corporate activities, or sources of supply; it is generally not possible to disseminate false or misleading information about bitcoin in order to manipulate; manipulation of the price on any single venue would require manipulation of the global bitcoin price in order to be effective; a substantial over-the-counter market provides liquidity and shock-absorbing capacity; bitcoin’s 24/7/365 nature provides constant arbitrage opportunities across all trading venues; and it is unlikely that any one actor could obtain a dominant market share.”
- Intended audience: “the Sponsor expects that the Shares will be purchased primarily by institutional and other substantial investors (such as hedge funds, family offices, private wealth managers and high-net-worth individuals), which will provide additional liquidity and transparency to the bitcoin market in a regulated vehicle such as the Trust. With an estimated initial per-share price equivalent to 25 bitcoin, the Shares will be cost-prohibitive for smaller retail investors while allowing larger and generally more sophisticated institutional investors to gain exposure to the price of bitcoin through a regulated product while eliminating the complications and reducing the risk associated with buying and holding bitcoin.”
- Derivatives: “For investors simply wishing to express an investment viewpoint in bitcoin, investment through derivatives is complex and requires active management and direct investment in bitcoin brings with it significant inconvenience, complexity, expense, and risk. The Shares would therefore represent a significant innovation in the bitcoin market by providing an inexpensive and simple vehicle for investors to gain exposure to bitcoin in a secure and easily accessible product that is familiar and transparent to investors.” - this is pretty consistent with our position on derivatives in that investment need not be complicated or difficult to manage. Therefore, contrary to every other tube ad, using eToro is not investing in crypto.
A long post there - but the original is 52 pages!
To see systemically important institutions discuss bitcoin with such positivity and acceptance (and post-‘bubble’ pop) is very meaningful, in my view.
Thanks for the summary!
Absolutely this. I really think the ‘normalising’ effect of these moves are going to create some big opportunities. And we will see these assets become safe havens during wider market turmoil, reflexivity notwithstanding?
So, another one for the list?! A fractional crypto ETF in the universe. That would be a pretty stellar product in the line up.
for distilling this down @freetrade_cal thank you
This is an interesting read, I wish there was an easier way to short cryptocurrencies!
It never hurts to highlight this point though, especially here -
It should be noted that shorting comes with huge risk, unlike buying a Bitcoin where potential losses are capped at the value you buy in at, with a short, traders can be left on the hook for many times their original position if prices rise.
Would love to see in the future, surely the way medical advice will go in the future. App with a doctor online so you don’t have to go and wait at the Hospital for 5 hours to get seen.
Also amazing for countries with particular poor healthcare.
Time will tell, got a small stake in them.
I love this article
Its not the first scam coin and won’t be the last