Bitcoin’s Continuing Troubles in 2022 Indicate that a Crypto Winter May be on The Way

What followed, however, was a ‘crypto winter’ punctuated by virtually flat trading until the asset’s third halving event in 2020.

Following its most recent halving, a programmed event that halves the volume of BTC awarded to miners, Bitcoin underwent a blistering rally that saw its 2017 high of $19,834.93 shattered as a value of $69,044.77 was reached in November 2021.

However, following its new all-time high, the world’s most famous cryptocurrency tumbled by ~55% in value over a matter of weeks as complications emerging from record-breaking inflation rate rises began to cause widespread investor sell-offs.

(Image: CoinMarketCap)

As we can see from the price history of Bitcoin, 2017’s bull run ultimately gave way to around an 18-month period of considerable stagnation before a larger rally in 2020 emerged. With Bitcoin’s next halving event set to take place in 2024, could we be set for a fresh winter period?

Bitcoin’s status as ‘digital gold’ tested

Although it’s fair to say that Bitcoin’s most recent troubles have been influenced by ongoing economic downturns surrounding high inflation rates, geopolitical tensions, and the lingering threat of more complications from the Covid-19 pandemic, the cryptocurrency has so far struggled to maintain its reputation as a decentralized store of wealth.

(Image: BullionVault)

Although Bitcoin has fallen some 55% over the past six months, gold experienced a recent rally as geopolitical tensions surrounding Russia intensified. This may indicate that investors are still unwilling to acknowledge Bitcoin as a safe haven asset.

On paper, Bitcoin’s credentials make it an ideal refuge for investors to store their wealth during times of economic downturns. Because the cryptocurrency is decentralized, it has no physical location and operates externally from stock markets and domestic currencies.

However, the asset’s volatile reputation has meant that investors have been selling up their BTC positions as other markets began to struggle – leaving decentralized crypto markets adversely impacted.

“According to a new survey, in the current environment of high inflation, investors prefer equities over bitcoin,” said Maxim Manturov, head of investment advice at Freedom Finance Europe. “Based on the results of a Bloomberg Markets Live survey of 900 investors, value stocks were found to be the most inflation-proof, garnering 35% of the vote.

The data showed that bitcoin, the largest cryptocurrency by market value, scored a modest 4% of the total, with gold and inflation-linked bonds also lagging far behind the leader.”

“Choosing value stocks over bitcoin is the latest dismissive approach to the idea of cryptocurrency as “digital gold”, a term that suggests bitcoin is a safe haven – akin to the precious yellow metal – in times of high inflation, market turmoil and geopolitical crises.”

Is a crypto winter always a bad thing?

Despite the prospect of another crypto winter like that of 2018 and 2019 still being a very speculative notion, it shouldn’t negatively impact an investor’s decision to buy into cryptocurrencies.

Although its volatility may suggest otherwise, Bitcoin has historically proven itself as a long-term hold for investors who keep their exposure low and embrace the lows as well as the highs. Experts often recommend keeping crypto investments below 5% in their portfolios, and whilst a bearish trend will negatively impact the market, it can present better buying points for new investments.

Vitalik Buterin, best known as the co-founder of Ethereum, mentioned in a Bloomberg interview that crypto winter isn’t always a bad thing for the crypto ecosystem. In fact, Buterin acknowledged that the downturn could even help the cryptocurrency industry progress technological advancements at a better pace.

This counterintuitive move is down to the fact that a lower-priced cryptocurrency has the potential to maintain long-term projects whilst eliminating much of the short-termism of investors and market speculators.

Should Bitcoin’s cyclical halving events pave the way for a fresh bull run in 2024 and 2025, this may well provide enough time for the industry to vastly improve its technology before the next wave of adoption takes place.

With this in mind, the end of crypto winter could see even greater levels of price exploration for the ecosystem’s leading coins. Should the fintech landscape also grow to offer better potential for collaborative projects with crypto in the meantime, it may pave the way for a more sustained bull run in the future.

Although Bitcoin’s recent struggles may be a concern for investors, the future remains bright for the world of cryptocurrencies, and if we’re really on the verge of crypto winter, it may be looked back on as a necessity that paved the way for a stronger ecosystem surrounding digital finance.

Why Bitcoin’s Navigation of Recent Global Economic Downturns Shows that Crypto is Here to Stay

Around the world, venture capitalists have collectively invested $30 billion in cryptocurrency or Web 3.0 startups throughout 2021, with institutions like Tesla, Block, and MicroStrategy all incorporating Bitcoin into their balance sheets.

These astronomical figures are made all the more impressive considering that Bitcoin, the world’s first cryptocurrency, has only existed since 2008 – and has since accumulated a value of $41,000 per coin, at the time of writing.

2021 represented a boom period for Bitcoin, as decentralized finance and NFTs grew into the ecosystem, presenting fresh opportunities for investors and enterprises alike, but the year also ended with brand new challenges for the asset as global inflation rates hit the pockets of investors hard.

(Image: CoinGecko)

As geopolitical tensions in Eastern Europe spilled over, it represented an unprecedented test for the staying power of Bitcoin. Although it’s early days, we can see evidence of Bitcoin trending upwards in the wake of Russia’s invasion of Ukraine – suggesting that the asset is still regarded as a safe haven asset for investors amidst a testing economic landscape.

Institutional Interest Ensures Growth Prospects Stay Intact

Institutional interest in Bitcoin and the wider cryptocurrency landscape is rife. Besides leading trading platforms like Coinbase, a growing number of institutions are investing in various crypto projects. In the case of software developer MicroStrategy, the company is simply purchasing BTC with the intention of holding it on its balance sheet.

Others have developed tools to enable the broader integration of cryptocurrency into the economy. Silvergate Capital, for instance, operates a network that enables the around-the-clock remittance of dollars and euros – a key capability as cryptocurrency markets never close. To facilitate this, Silvergate acquired the stablecoin assets from Diem Association.

Elsewhere, financial services company, Block, has been looking at developing applications for everyday use as a digital alternative to fiat currency. Google Cloud also launched its own blockchain division to help customers accommodate the emerging technology.

As more institutions look to develop blockchain and cryptocurrency solutions, it’s highly likely that it will result in considerably better staying power for the likes of Bitcoin and other crypto. In turn, better institutional interest is likely to help to keep cryptocurrencies anchored in spite of their famous levels of extreme volatility.

Emerging use cases in the field of blockchain have also paved the way for NFTs and DeFi projects to gain prominence, broadening how cryptocurrencies can influence the world.

Bitcoin’s Utility Amidst Geopolitical Tensions

Perhaps most significantly of all is how Bitcoin has recently demonstrated that its technology is capable of becoming a mitigating force against factors that can cause economic downturns.

To illustrate this, Maxim Manturov, head of investment advice at Freedom Finance Europe, notes how Bitcoin was swiftly made legal tender in Ukraine in the wake of the Russian invasion in February 2022:

“Ukraine has legalised cryptocurrency. President of Ukraine Volodymyr Zelenskyy signed the law ‘on virtual assets’ adopted by the Verkhovna Rada of Ukraine on 17 February 2022,” Manturov noted.

“The National Commission on Securities and Stock Market (NSSM) and the National Bank of Ukraine will regulate the market of virtual assets. What provision does the adopted law on virtual assets make? Foreign and Ukrainian companies will be able to work officially with crypto-assets, open bank accounts, pay taxes and provide their services to the people.”

Significantly, the move also helped Ukraine to set up an avenue to receive humanitarian aid in BTC.

Due to Bitcoin’s decentralized nature, the asset may help during national emergencies throughout countries around the world – particularly when economic complications lead to the devaluation of fiat currencies through hyperinflation.

The Road to the Mainstream

Despite Bitcoin still sitting some 40% adrift from its all-time high from November 2021 today, institutional faith in the cryptocurrency remains. Deloitte figures suggest that 88% of senior executives believe that blockchain technology will eventually achieve mainstream adoption.

It’s worth remembering that it wasn’t until recently that Bitcoin’s blockchain framework finally began to achieve the levels of global recognition for its technological framework that it deserved. Since then, we’ve seen the rise of DeFi and NFTs as a taster of what distributed digital ledgers can achieve.

Although it’s hard to predict just how the adoption of cryptocurrency will grow, and whether it may take another NFT-style emergence to act as a catalyst for more mainstream applications, the fact that Bitcoin’s technology is playing an active role in aiding economies in the face of an economic crisis shows that there’s enough potential for the asset to not only outlast its expectations but to outperform its benchmarks during downturns.

Although there are likely to be more twists ahead before the global economic outlook recovers, Bitcoin is already showing that its use cases can ensure that crypto is very much here to stay in one form or another.

Is Gold the Safest Place to Invest During Times of Widespread Market Uncertainty?

As a result, we’ve seen the performance of gold rise to nearly unprecedented levels, but is the precious metal still the place to go for safe-haven investing?

Gold’s reputation as a safe space to store wealth during times of economic downturns remains unscathed as the commodity continues to outperform other markets in the wake of the recent inflation-driven cost of living squeezes being experienced around the world.

As we can see from the value of gold over the past five years, the commodity has continually rallied in the wake of wider market uncertainty. Although it experienced a similar dip that was felt across the market as the extent of the Covid-19 pandemic became fully known, gold’s recovery was so strong that the asset soared to new all-time highs by the summer of 2020.

Although the asset’s momentum has tapered off in the months that have followed, news of Russia’s invasion of Ukraine prompted more investors to take their money out of traditional stocks and fiat currencies and instead align it with the precious metal.

Compared to just five years ago, the price of gold has grown by some 55.11% in spite of a highly volatile stock market in the wake of factors amounting to inflation, the pandemic, and geopolitical tensions.

Does gold’s recent performance indicate that the asset is the safest place for investors to turn to as the stock market continues to reel from widespread uncertainty? Let’s take a deeper look at what to expect from the archetypal safe haven commodity:

Is Gold a Safe Investment During Times of Geopolitical Conflict?

Despite the value of gold climbing to within $30 USD of its all-time high in the immediate aftermath, Warren Buffett has warned against investors looking to sell off their stocks in order to sit on their liquidity or to invest in assets like gold or bitcoin in response to the outbreak of war. Buffett firmly believes that the best way to navigate these times of uncertainty is to invest in businesses to build wealth over time.

The world-renowned investor and Berkshire Hathaway CEO told CNBC that he had no interest in selling his stocks.

“If stocks are cheaper, I’ll be more likely to be buying them,” Buffett explained. “You’re going to invest your money in something over time. The one thing you could be quite sure of is if we went into some very major war, the value of money would go down.

“I mean, that’s happened in virtually every war that I’m aware of,” he added. “So the last thing you’d want to do is hold money during a war.”

Despite Buffett’s confidence that investing in stocks will provide more growth potential over time, the recent rise of inflation rates has negatively impacted stocks and shares around the world.

The subsequent sell-offs for these stocks have presented the market with a fresh problem that wasn’t present during the 2014 invasion of Ukraine. With this in mind, holding wealth in gold may still be a good choice for investors whilst markets continue to suffer from volatility.

Could Bitcoin Challenge Gold’s Dominance?

Bitcoin has long been heralded as ‘digital gold’ due to its functionality as a more agile store of wealth. After all, BTC can be stored in blockchain wallets and sent and received all around the world almost instantly.

Although it’s seen some exceptional growth during its relatively short lifespan, BTC has struggled in the wake of record-breaking inflation rates – owing to mass investor sell-offs prompted by the cost of living squeeze.

Despite bitcoin’s reputation as a safe haven asset, the cryptocurrency’s well-documented volatility has led to more investors choosing to opt-out of holding the asset during market downturns.

Maxim Manturov, head of investment advice at Freedom Finance Europe, has suggested that the future of bitcoin remains bright as adoption opportunities for the asset continue to grow.

“Cryptocurrency is currently one of the most attractive alternatives to investing in stocks, bonds, and commodities. Cryptocurrencies are generally highly volatile, which means investors can generate high returns. Yet, with volatility come greater risks,” Manturov noted.

“You no longer need a crypto wallet in order to trade cryptocurrencies. In 2021, large funds have started rolling out ETFs with direct or indirect links to crypto assets. Some of the largest and most popular Crypto ETFs include ProShares Bitcoin Strategy ETF, Grayscale Bitcoin Trust (GBTC), Amplify Transformational Data Sharing ETF (BLOK) and Grayscale Ethereum Trust (ETHE).”

Today, cryptocurrencies like BTC carry plenty of potential, and their respective ETFs are set to open up unprecedented investing opportunities without the need for investors to immerse themselves into the crypto landscape.

Although this may point to a bright future for bitcoin, gold’s outperformance in 2022 ensures that it remains a relatively safe bet during these jittery times for global markets. Until we see more confidence returning, it’s likely that bullion will remain a tried and tested safe haven asset.

Will Bitcoin Overcome Instability to Replace Gold?

After a blistering start to 2021 and two impressive rallies towards breaching all-time highs, confidence in BTC reached new heights last year, with many investors expressing confidence that the asset will surpass $100k at the beginning of 2022.

Sadly, such optimism was short-lived, and BTC/USD tumbled more than 50% from its $69,044.77 peak on November 10th, 2021 at one stage.

As we can see from Bitcoin’s price chart, the cryptocurrency hasn’t quite fallen back to its July 2021 levels, but there’s a clear consistent decline that we’re yet to see a meaningful bounce from.

“At one point, Bitcoin became one of the protections against inflation and an alternative to gold, which generally drove crypto-assets,” said Maxim Manturov, head of investment advice at Freedom Finance Europe. “Therefore, it is worth keeping in mind that the Fed will start to raise rates, cut QE and balance sheets to fight inflation, and in such an environment Bitcoin could become more volatile and rebound attempts will be more moderate, there will be more competition for cash and therefore better opportunities for investors and a more realistic risk and reward environment.”

With this in mind, the ongoing uncertainty surrounding Bitcoin’s performance may offer a buying opportunity for investors.

“Since early November 2021, bitcoin, after testing a high of $69,000, and cryptocurrency, in general, is moving in downward trends and correction channels. To begin with, it is worth understanding the reasons behind the rise of BTC and other crypto assets, first and foremost the unprecedented liquidity in the financial system, which contributed to the rise of all risky assets on the planet, setting the stage for the subsequent imbalance in demand in the market” he added.

(Image: CNBC)

Significantly, Bitcoin’s ability to recover from its current price struggles could have a significant impact on the cryptocurrency’s perception as ‘digital gold.’ Although gold is a popular commodity to hold during inflationary times, its performance, as shown above, has become far more disappointing in comparison to other commodities and REITs.

Replacing ‘Relic’ Gold

Jeremy Allaire, Circle CEO, believes that Bitcoin shouldn’t be regarded as digital gold because the cryptocurrency has the potential to go much further than the precious metal.

“I don’t actually like the ‘digital gold’ analogy, because gold is such a relic. It has extremely limited value as a form of exchange and it’s never had utility in modern society as a form of money. I think the demand for bitcoin is actually going to be much, much larger,” Allair explained.

Allaire is optimistic about the future of Bitcoin and believes that the asset is likely to reach a value of over $1 million over time.

Because Bitcoin is the first and best-known cryptocurrency, the coin’s technical framework and blockchain are less functional than other coins like Ethereum. Whilst it’s still entirely possible that we’ll see a future built on widespread BTC transactions, it’s more likely that Bitcoin will be primarily regarded as a store of wealth.

This makes Bitcoin more similar to gold than other fiat currencies, and this can be a good thing for its investors – many of whom remain optimistic over the coin’s recovery.

Fred Schebesta, co-founder of Finder, shares Jeremy Allaire’s bullish outlook on BTC.

“Bitcoin is in a phase of correction and this could last for the rest of the year as it settles into more stability,” Schebesta noted in a recent interview. “It’s highly volatile but over time it will become less volatile and the swings will be fewer and not as sharp.”

Schebesta believes that by December 2022, BTC will have mounted a strong recovery from its current lows, and will have reached a value of $105,000.

The Fallacy of Mainstream Adoption

Although the prospect of mainstream adoption has followed Bitcoin investors and helped them to justify the notion that the coin is set for more price increases as more individuals buy up the asset, Goldman Sachs has argued that this isn’t necessarily going to be the case.

According to a note from the banking giants, mainstream acceptance of cryptocurrency assets would be likely to increase their correlation to other mainstream asset classes.

“While it can raise valuations, it will also likely raise correlations with other financial market variables, reducing the diversification benefit of holding the asset class,” the note, authored by Zach Pandl and Isabella Rosenberg claimed. They also added that mainstream adoption would be a “double-edged sword” for cryptocurrencies.

If such a correlation begins to take place, it’s likely to mean the end of the parabolic price rallies that cryptocurrency has become famous for.

Although the future for Bitcoin remains unclear, its digital nature means that it can represent a more functional store of wealth than gold, and it’s reasonable to expect the trend of investors buying into BTC as opposed to the precious metal continuing to grow over time.

Whether BTC’s purchase prices will remain at around $37,000, $100,000, or $1,000,000 for investors over the longer-term future, however, remains to be seen.

Coinbase Stock is Wall Street’s Opportunity to Embrace Crypto’s Volatile Price Rallies

But with such a strong relationship with the volatile world of cryptocurrency, this is perhaps seen as a perk by investors looking to cash in on the famous price rallies of major crypto assets.

As an example of the price movements of COIN on the Nasdaq, the stock is currently down some 13% on its listing price, but within two months of its debut COIN was down 32% following a cryptocurrency market crash throughout Q2 of 2021. The recent market upturn paved the way for a 59% rally on the stock between late September and early November before its value embarked on a 20% dip over the course of the past month.

Such erratic behavior would typically scare away many stock market investors, but wild 20% and 30% price swings are part and parcel of cryptocurrency investing.

Significantly, Coinbase’s price movements trace, rather accurately, the path taken by Bitcoin since its Nasdaq debut on April 14th 2021. Although the price drop of COIN in recent weeks has been more pronounced as rising inflation rates have seen more tech stock sell-offs across Wall Street.

“Coinbase’s recent growth is primarily due to the bitcoin rally, as the assets are pretty solidly correlated with each other, while the company also has additional growth drivers,” explained Maxim Manturov, head of investment research at Freedom Finance Europe.

“First and foremost, it is worth noting that Coinbase has officially launched its Prime service for all the institutions to make Coinbase the most versatile platform for institutional investors. Coinbase Prime combines cutting-edge technology within a single solution to allow more assets to be traded,” Manturov added.

Manturov’s words indicate that Coinbase could become more than just a Wall Street-based mirror to Bitcoin. In improving its own business model whilst growing alongside the cryptocurrency market, COIN may be a stock that can offer significant levels of growth for investors.

The Lure of Cash Flow

Despite Q3 of 2021 being down from that of 2020, which hosted the early stages of a crypto market bull run that rallied for around seven months, Coinbase still managed to generate more than $300 million in free cash flow. This must be regarded as a huge sum of money for what may be described as an underwhelming quarter for cryptocurrencies.

The fact that Coinbase is accustomed to huge cash flows as a relatively young company means that there’s huge potential for transactions and revenue growth over the long term. Of course, these insights are still part of an extremely small sample size, and investors should expect wild volatility to remain – but given that the company is still generating cash whilst other new companies generally take many years to even project positive cash flows needs to be taken into account when looking at COIN’s prospects.

It’s this hefty cash flow that can deliver great potential for investors and users of the platform alike. The money being made can and is being pumped back into the business model to leverage better products and innovative services – with Coinbase’s upcoming NFT marketplace set to become a big part of the company’s future.

Innovating into NFTs

Significantly, Coinbase is soon set to launch its own NFT marketplace on its network. The upcoming feature already has a 2.5 million-strong mailing list in which users have opted to sign up to receive updates. According to some within the company, there’s the widespread belief that Coinbase’s NFT marketplace may grow to become even bigger for the company than cryptocurrency trading.

NFTs, on non-fungible tokens, are new to the cryptocurrency ecosystem and have grown significantly in terms of popularity. Through the release of its own platform, Coinbase could offer users swift and frictionless services for users to buy, sell, and create their own NFT artwork of collectables.

Although there are already functioning NFT marketplaces online, there’s certainly space for Coinbase to build a product to emerge as a market leader. As the world’s most popular cryptocurrency platform, Coinbase’s accommodation of NFTs could act as a catalyst for the company, positively impacting its bottom line.

Unique features like enabling users to showcase their NFTs on the platform and allowing other users to follow different creator profiles is likely to build a more social foundation for Coinbase too.

Could Coinbase be a Buying Opportunity for Investors?

It’s essential to caveat any predictions regarding the future of cryptocurrency assets by noting that the extreme volatility of the ecosystem means that nothing is certain, and that the rate of evolution is so fast that the technology within cryptocurrency is regularly outpacing itself. This means that COIN could easily find itself adversely impacted by a mass sell-off, or face unexpected challenges from newer tech.

However, Coinbase is also a leading cryptocurrency exchange that’s not only traced the recent rallies of Bitcoin, but boasts the rate of cashflow to evolve as a business whilst the crypto landscape continues to grow.

With this in mind, if you’re an investor who’s bullish about the future role that cryptocurrency can play in finance, Coinbase makes sense as a strong growth stock to add to your portfolio.

The IPO is Just the Start: Brazilian Fintech Nubank is Set to Become a Global Financial Trailblazer

After initially hoping to achieve a $50 billion market cap upon its arrival on the New York Stock Exchange, Nubank scaled back its ambitions to $41.5bn in the wake of an increasingly jittery equities market following the emergence of the omicron variant of Covid-19.

However, the future looks extremely bright for the world’s most valuable challenger bank, which has recently attracted huge volumes of investment from legendary Wall Street stalwart, Warren Buffett. Berkshire Hathaway, Buffett’s investment firm, invested $500 billion in a fundraiser for Nubank in June to deliver a valuation of $30 billion. Now, if Nubank can reignite its ambitions for a $50 billion market cap as markets settle, Buffett could feasibly see his investment continue to grow towards doubling his money in a matter of months.

(Image: Tanay Jaipuria)

It’s worth noting that growth is something that Nubank has a strong history of undergoing at a rapid rate – particularly over the past four years.

Following the arrival of Nubank’s credit card on the market in 2014, the company has been consistently adopting more advanced financial products which have helped to deliver an accelerated rate of customer adoption – with 48.1 million users accessing the app in Q3 of 2021.

Maxim Manturov, head of investment research at Freedom Finance Europe, believes that Nubank’s success wasn’t an accident – it was the culmination of a concentrated campaign towards positioning the customer as a priority.

“If you think back a little bit to the history of the company, the founders wanted to build a bank without any of the restrictions imposed by traditional banks,” Manturov explains. “The big banks, which occupy more than half of the market, started setting high-interest rates, which was beneficial for the banks themselves, but not for the development of the market.”

“Nubank became successful because of its customer focus, which allowed it to attract customers who had not previously used banking services. The bank’s main objective in founding it was to offer services to as many people as possible, as there is a huge wealth gap in Latin America. The company is also continuing its development, offering new products to customers and investing in its technology and development,” Manturov added.

Despite Nubank lowering its expectations for its IPO, the $8.5 billion downsizing of the challenger bank’s valuation still places it above Itau Unibanco, which had been Latin America’s largest financial institution with a market cap of around $38bn at the time of writing. This means that Nubank’s floatation makes it the biggest bank in the region, but the company is showing no signs of slowing down in driving significant growth.

Community-Centric Growth

Nubank’s financial services have been created with its user base in mind, and this has helped to leverage substantial growth across the company.

It’s possible to see evidence of a community-centric approach adopted by Nubank’s users through the company’s stock market debut, too.

In the buildup to its IPO, Nubank launched a program called NuSócios, which gave users the chance to become active shareholders in the company. NuSócios, Nubank has said, allowed customers to buy “a little piece” of the company ahead of its floatation.

The scheme worked through the distribution of free Brazilian Depositary Receipts. Known as BDRs, these receipts equate to around one-sixth of a class A common share – allowing users to gain exposure to Nubank’s stocks whilst learning more about some of the financial tools at the fintech’s disposal.

The distribution of these BDRs was capped at R$180 million (approximately $33m), with the NuSócios being central to the company’s Brazilian listing.

Furthermore, Nubank is also showing significant signs of growth intent as the company continues to ramp up its marketing efforts to attract fresh customers. In November, Nubank became an ‘Official Regional Supporter’ of the FIFA 2022 World Cup in Qatar – a move that’s set to deliver significant levels of exposure across Latin America throughout the tournament, which will begin later next year.

Developing eCommerce Tools

Prior to its IPO, Nubank teamed up with a range of retailers to develop an eCommerce platform within its app.

The move has paved the way for tens of millions of customers across Brazil to be capable of shopping at major retailers like AliExpress and Magalu via the Nubank app, with more partners set to arrive over the coming months.

Once again, this acts as clear evidence that the company is not only interested in growing, but also growing into fresh industries that fintech still has plenty of room to emerge into.

As it reaches the lofty status as Latin America’s largest financial institution, Nubank will receive plenty of interest regarding its next market moves. With a continued emphasis on community-centric growth that looks to reinvent what financial services can do for their users, the future certainly looks bright for Brazil’s innovative challenger bank.

After the Bull Run: Is Another Seismic Bitcoin Crash on the Horizon?

2021 saw all-time highs broken throughout the year followed by a series of harsh corrections. Today, as we head towards 2022, it’s worth asking whether another major Bitcoin crash is on the horizon, or if BTC will enjoy a stronger end to Q4.

Bitcoin is a famously volatile asset, but following a series of good news surrounding major institutional acceptance, it was hoped that more stability would be secured across the cryptocurrency market.

These hopes were dashed in April 2021 as Bitcoin shed more than 50% of its value in the space of little more than a month.

(Image: Visual Capitalist)

As Visual Capitalist data shows, the correction may have shaken up plenty of 2021’s newcomers to the crypto market but the scale of the crash corresponded with the coin’s history of significant price drops – with the current record dip standing at some 86.7% between 2013 and 2016.

(Image: CoinGecko)

As the table above shows, despite its long history of crashes, Bitcoin has still been extremely successful in terms of its impressive rallies and price accumulation.

At present, Bitcoin sits near its all-time high price, but there appears to be little clarity on what the world’s oldest cryptocurrency will do next. Whilst some speculators are expectant of a major bull run, the disappointing performance of BTC in recent weeks has led to others predicting the beginning of a sharp downturn and bear market. With this in mind, let’s take a look at the history of Bitcoin to see if we can identify whether a crash may be on the way:

Learning from Bitcoin’s Cycles

Arguably the most important quality that Bitcoin has in relation to most other cryptocurrencies is its scarcity. When Bitcoin’s pseudonymous creator, Satoshi Nakamoto, built BTC, he opted to program the asset to undergo a ‘halving’ event every four years in a move that would continually halve the number of BTC rewarded to miners over time.

These halvings have occurred three times in the past, in 2012, 2016, and most recently in May 2020. Halving events are programmed to occur within BTC continually as the asset reaches its capped circulation of 21 million coins.

(Image: Natixis)

As the chart above shows, the scheduled ramping up of Bitcoin’s scarcity traditionally sparks significant bull runs that can see the coin make significant gains on its value. However, we can also see that the bull run peaks are always followed by heavy crashes.

However, it’s also worth adding that Bitcoin’s next halving event, scheduled to arrive in 2024, is likely to trigger another price run that may see the value of the asset climb beyond its 2021 peaks, despite the significant volatility that will inevitably fall in between.

(Image: AMB Crypto)

The chart above analyzes Bitcoin’s stock-to-flow model (S2F). In a nutshell, stock-to-flow has emerged as a popular model that looks at how scarcity can generate value. It’s the ratio of the current stock of an asset and the flow of new production.

Mapped out by crypto market commentator PlanB, we can see that – even when accounting for its crashes – BTC generally follows its stock-to-flow model over time. Although we can see that 2021’s bull run is yet to peak above its S2F in 2021 in a similar way to all of its past halving cycles. This implies that the cryptocurrency may yet climb higher in value in the short term before a correction drives it back towards familiar territory.

What will happen to BTC?

So, what will happen to Bitcoin? Is a seismic crash inevitable over the coming months? PlanB’s stock-to-flow model indicates that Bitcoin’s halving cycle is yet to run out of steam, which may result in a short-term price rally towards a peak of around $100k. However, as we can see from the history of the coin, a crash is inevitable also – though BTC has never dipped below its pre-halving prices.

“There is a risk to “run up against” FOMO, which, together with substantial volatility inherent to crypto-assets, can lead to a reasonably strong pullback in case of a decreased risk appetite and the absence of a breakout of the inclined channel,” warns Maxim Manturov, head of investment research at Freedom Finance Europe. “Therefore, one should be careful at current levels and understand the speculative nature of such assets.”

However, Manturov also added that Bitcoin has been enjoying more prominence of late owing to the asset’s strength in the face of rising inflation rates globally: “Overall, the recent bitcoin rally reflects the broader use of the coin as a hedge against inflation and the availability of enormous liquidity in the markets due to low rates and QE,” he confirmed.

Fundamentally, Bitcoin’s short term potential will be governed by the highly speculative market that it’s a key part of. However, investors should be wary of an upcoming correction. In the case of BTC, the future may not be written, but it’s certainly coded into the framework of the coin.

Driving Cryptocurrency Adoption: Fintech’s Key Role in Bridging the Gap Between Crypto and Fiat

However, there are still a number of significant barriers that are standing in the way of the mass adoption of digital finance. Perhaps most notably, there’s still some work to be done before crypto is as accessible and usable as fiat money when making purchases and leveraging transactions – but with the rise of exciting emerging fintech, we’re already being treated with an insight into a more agile future.

Although the likes of Bitcoin and various other cryptocurrencies have recently begun to attract widespread institutional interest, crypto assets are still widely viewed as a store of wealth, rather than a functional unit of finance.

(Image: CoinGape)

Despite limited perceptions of the practicality of cryptocurrencies, adoption rates are loosely mirroring the growth of the internet. This indicates that the realization of the practical capabilities of crypto could help to drive adoption further.

Although it may yet be some time before we’re paying for our grocery shopping in BTC, the emergence of hybrid payment services can provide us with an insight into a future built on more practical use cases for the cryptocurrencies we like to buy and hold. With this in mind, let’s take a deeper look at how more practical use cases for crypto can drive mainstream adoption:

Blending Functionality with User Experience

For cryptocurrencies to be truly functional, it needs to become significantly more user-friendly, according to Sam Bankman-Fried, CEO of FTX, who believes that “we have absolutely no beautiful user experiences yet.”

For cryptocurrency to be more practical, the development of user-friendly blockchain wallets and more seamless integration with fiat-based finance are essential for adopters to gain more financial freedom when it comes to spending their money and making transactions.

One of the biggest hurdles to overcome in terms of user experience can be found in the excessive blockchain fees that occur when setting up a transaction. “People can’t be paying $25 in transfer fees for purchasing a $5 cup of coffee,” notes Bankman-Fried, who believes that the bridging of gaps between cryptocurrency and fiat will require something of a leap of faith that must be taken by both customers and merchants alike.

To accompany this leap of faith, we’re seeing plenty of cases of technology evolving to accommodate the growing cryptocurrency landscape. The likes of PayPal, Visa and Checkout.com have all acted to adapt their models to accept cryptocurrency in recent months, but one of the companies making the biggest waves emanate from inside the crypto ecosystem itself.

Uniting Crypto and Fiat

Hybrid fintech platforms like Sila and Blockonomics have been developed with the goal of enabling cryptocurrencies and traditional fiat currencies to operate together.

These types of payment solutions have the potential to vastly improve the global payment market by improving transaction speeds on an international scale, reducing the cost of transactions, and eliminating the need for intermediaries.

The development of fintechs that champion hybrid technology come at a time when the wider fintech ecosystem is undergoing periods of significant growth. With the development of companies like Connectum, which focuses on multi-currency one-click payments through high-security artificial intelligence fraud-monitoring systems.

Revolutionizing Spending

As more individuals and businesses alike look to blockchain technology to leverage their financial transactions, it makes sense for firms to promote and facilitate the use of crypto in a transparent way and in conjunction with existing regulatory laws to play their part in driving mainstream adoption.

Although the bridge between crypto and fiat is still vast, the foundations may be laid by stablecoins like Vemanti and Circle – both of which are SEC reporting companies. These asset-pegged tokens can help to remediate any hesitations emanating from consumers, investors and businesses alike towards transacting with crypto.

By taking these measured steps towards the future, stablecoins may play their part in heralding an entirely new global financial ecosystem that’s built on frictionless, borderless and trustless digital payments – bringing with it new ways in which we can transact with each other and the companies we use.

Robinhood’s 1m Strong Crypto Wallet Waiting List Points to Future Growth but SEC Uncertainty Lingers

There are few companies that have endured a more tumultuous year than Robinhood. In January, the online brokerage found itself at the center of the GameStop short squeeze in which a coordinated group of Reddit investors used the app to collectively buy the shares of the shorted stock to send its price soaring by some 4,000%.

The company’s controversial payment-for-order flow operating model has drawn criticism from Wall Street stalwart, Warren Buffett, while others have claimed that Robinhood has been promoting the gamification of trading.

Despite this, the fact that more than one million customers are now on the waiting list for Robinhood’s upcoming cryptocurrency wallet means that the company is continuing to thrive despite picking up a wide range of adversaries throughout the year.

“We’re very proud of our cryptocurrency platform and giving people more utility with the coins they have,” Robinhood CEO Vlad Tenev told CNBC.

“We rolled out our wallets waitlist. A lot of people have been asking for the ability to send and receive cryptocurrencies, transfer them to hardware wallets, transfer them onto the platform to consolidate and the crypto wallet’s waitlist is well over a million people now.”

Robinhood unveiled its cryptocurrency wallet in September 2021, announcing that the product would be tested based on user feedback in October before going public. Significantly, this move will enable users to manage their cryptocurrency investments through a dedicated wallet within the app.

Robinhood’s Rocky Start to Public Life

Despite Robinhood’s big announcement, the company’s stock appears to be struggling to gain traction after an impressive early rally following its arrival on the Nasdaq in late July 2021.

Robinhood’s stock initially soared following the company’s lowered IPO expectations but has struggled to keep up momentum and build on its early investor interest. However, it’s worth noting that Robinhood’s stock price is still trending higher than its initial public offering price.

Although late October brought the news that Robinhood’s cryptocurrency wallet had generated a seven-figure waiting list, we can see that the company’s stock has slumped further in the early stages of Q4. So, what’s holding Robinhood back? It’s likely that there are a few factors hindering the stock’s growth.

Significantly, retail traders – many of whom were heavily active during the Covid-19 lockdowns of 2020 and early 2021 – have returned to more active lives in going back into the office and socializing more frequently, rather than spending more hours of self-isolation studying stocks to buy and sell. This trend has been represented in data when considering that Robinhood’s app downloads have fallen by 78% in Q3 of 2021 in comparison to Q2, according to Apptopia.

It’s also important to acknowledge that the rise of fintech investing apps has encouraged large traditional financial players to enter the market. Notably, Revolut is gearing up to crack the American brokerage market with its own take on commission-free trading. Financial giants PayPal has also reportedly been exploring its stock investing options.

Robinhood stock also has a fairly limited float, which may be causing some pressure in the anticipation of when lockup expires and large shareholders decide to liquidate their shares. For instance, in August the company stated in their S-1 filing that some existing investors who bought into the companies via a private placement intend to sell almost 97.9 million shares over time.

Regulatory Fears Mount

One of the biggest challenges that Robinhood faces comes in the form of regulatory pressure. The US Securities and Exchange Commission has long been vocally critical of the popular payment-for-order flow business model that Robinhood operates on, and chairman Gary Gensler confirmed recently that a ban on the practice is “on the table.”

“Our markets have moved to zero commission, but it doesn’t mean it’s free,” Gensler told CNBC. “There’s still payment underneath these applications. And it doesn’t mean it’s always best execution.”

While other online brokerages like Schwab and E*Trade also benefit from payment-for-order flow, but, significantly, Robinhood is more dependent on the practice than its more-traditional counterparts.

However, the regulatory threats facing Robinhood have been shrugged off by Dan Gallagher, Robinhood’s chief legal advisor who was also the agency’s commissioner between 2011 and 2015. On the topic of a prospective ban, Gallagher explained that the SEC was “going to arrive at the conclusion that payment for order flow is undoubtedly an amazingly good thing for retail investors and they’re not going to ban it.”

Maxim Manturov, head of investment research at Freedom Finance Europe is similarly optimistic that the future for Robinhood’s stock is bright despite regulatory threats.

“Robinhood’s long-term prospects remain positive. Even with these short-term concerns, Robinhood is well placed to create long-term value,” Manturov said. “It is also possible that the current price already takes into account the news about the SEC attention.”

With this in mind, it may be the case that Robinhood can turn a corner on its dwindling recent stock prices and begin a period of accumulation once the threat of a payment-for-order flow ban alleviates.

Although the online brokerage market has become a congested space for fintechs, and the dangers of SEC scrutiny may seem ever-present, but Robinhood has grown into a market leader in its own right in terms of retail investing. It’s unlikely that the popular platform is going anywhere fast.

The Other Side of the Coin: Can Coinbase Overcome a Slow Start on Wall Street to Recover its Value?

After floating on the cusp of a cryptocurrency market downturn, can we expect Coinbase to deliver a strong end to 2021 for investors?

Coinbase opted to launch on the Nasdaq via a direct listing in April 2021 with a reference price of $250 – however, the poor performance of the cryptocurrency market since the arrival of COIN and the threat of regulatory scrutiny has caused shares to dip below the company’s opening price.

Despite COIN struggling to hold its opening price, it’s important to acknowledge the company’s blistering fundamentals. Coinbase’s revenue climbed some 144% to $1.28 billion in 2020, before rocketing some 969% year-on-year to $4.03 over H1 of 2021.

The company also became profitable in 2020 with a net profit of $322 million, and accelerated these margins to net profits of $2.37 billion over the opening six months of 2021. At the same time, Coinbase’s trading volume accelerated by 142% to $193 billion in 2020, and then to $335bn and $462bn respectively across the first two quarters of 2021.

So with such mind-boggling numbers in mind, surely COIN’s poor market performance of late is merely a blip? Well, experts are split on the outlook of a stock that’s been battered by a wide range of external threats from regulators and the wider cryptocurrency market alike.

With this in mind, let’s take a deeper look into what the future holds for Coinbase as the world’s first publicly traded cryptocurrency exchange:

Arresting COIN’s Development

Despite its position as a leading cryptocurrency exchange and holding its market cap at around $50 billion at the time of writing, the outlook isn’t necessarily positive for Coinbase when considering the exchange’s exit velocity for 2021.

“In our view at the moment, it is not worth buying Coinbase shares amid recent news,” said Maxim Manturov, head of investment research at Freedom Finance Europe, in reference to SEC threats against the company’s rollout of a new lending feature and the recent decline in value of Bitcoin.

“Also, after the Q2 report, the company expects trading volumes to decline in Q3, which could lead to higher costs and lower profitability for the company,” Manturov added. “In the short term, this could put pressure on Coinbase’s price, which could lead to a weak rise in the company’s shares. For example, analysts at Mizuho Securities believe Coinbase may have lost some bitcoin market share, with retail users trading less and institutional investors’ returns continuing to fall.”

Although Coinbase has since scrapped its plans to introduce a cryptocurrency lending platform amidst threats of lawsuits from the US Securities and Exchange Commission, Manturov noted that it’s possibly worth waiting for Bitcoin to show signs of stability before looking to COIN as a long term investment option.

We’re seeing further evidence of Coinbase’s symbiotic relationship with Bitcoin in the wake of the Evergrande crisis within Chinese real estate. Although the cryptocurrency ecosystem is largely decentralized, investor sell-offs in traditional stocks, like that of Evergrande, can create profound problems in the world of digital finance – with Bitcoin’s value dropping 10% in the wake of the fire sale.

With this in mind, any investment in COIN must come with the awareness that a stock so intrinsically linked to crypto may also become severely affected by market downturns.

Luring Growth Investors

Despite there being legitimate concerns regarding the external pressures that Coinbase faces, the stock is still drawing interest from world-renowned investors.

Notably, Coinbase has lured in Cathie Wood as a speculative investor. The famed CEO of Ark Invest has allegedly built a combined interest of 5.95 million shares in Coinbase – amounting to a total of around $1.46 billion at the time of writing. This level of investment amounts to some 3.4% of total assets under management, making Coinbase one of Ark’s biggest collective holdings.

Wood’s faith in the stock stems from the wider belief that cryptocurrency adoption will continue to grow over the course of the coming decades as more companies opt to hold coins like BTC on their balance sheets.

(Image: Statista)

As the data above shows, there’s a clear and sustained rise in the prevalence of blockchain-based wallets over the course of the past six years. Coinbase’s fundamentals reflect a trend towards both higher assets on platform (AOP) and consistently greater trading volumes. Though the platform makes money on both the buy and sell aspects of crypto, it’s naturally better positioned to make more money if cryptocurrency prices are trending upwards.

Although the cryptocurrency landscape is impacted by many things, inflows typically correlate with higher cryptocurrency prices as new investors are attracted to appreciating assets – whilst existing users benefit from capital gains.

With this in mind, it’s worth zooming out of Coinbase’s recent trials and tribulations and taking into account the wider cryptocurrency ecosystem. As one of the world’s first crypto-oriented arrivals on Wall Street, COIN represents an excellent opportunity for investors to speculate on the future growth of Bitcoin and Ethereum whilst staying in tune with traditional stocks. When playing the long game, a bet on Coinbase represents a bet on the cryptocurrency ecosystem – which, historically speaking, has been a highly rewarding wager of late.

Tulip Mania in the Digital Age: How CryptoPunk NFTs Have Taken the World by Storm

We’ve become accustomed to seeing cryptocurrencies as Bitcoin likened by onlookers to ‘tulip mania’ – a 17th Century craze that saw the price of the colorful flower soar to as much as $750,000 in today’s money. But in the 2021 rise of NFTs, we’ve finally found our digital tulips.

NFTs have been growing in popularity across the world of cryptocurrencies for some time now. The term stands for non-fungible tokens, and it means that each NFT has unique properties that make them one of a kind assets – like a painting or a collectible that can’t be replicated. The tokens have smart contracts attached to them that act as certificates of ownership for virtual assets.

(Image: 4IRE Labs)

As we can see in the chart above, interest in NFTs is at an all-time high, with the total market capitalization of the tokens soaring towards $25 billion recently.

NFTs can come in all shapes and sizes. They can be meme-based, or the products of artists showcasing their works.

(Image: Opensea)

One quick look at the assets listed on NFT marketplace OpenSea shows that many NFTs currently take the form of avatars – portrait images or profile shots or cartoon-like characters. This has helped to kick-off a social media frenzy as cryptocurrency traders seek to buy their own unique profile pictures for their Twitter, Instagram and TikTok accounts.

Although it seems like a fun way of expressing yourself on social media, these NFTs can sell for big money. The most expensive non-fungible token to date is a work of art, called Everydays: the First 5000 Days by Mike Winkelmann sold at Christie’s for $69 million – inadvertently placing the creator among the top three most valuable living artists today.

The Rise of CryptoPunks

The surge in popularity for CryptoPunks underlines the 21st Century’s tulip mania. CryptoPunks represents a collection of 10,000 algorithm-generated characters that have been produced since 2017 by Larva Labs.

These NFTs consist of 8-bit portraits of cartoon characters comprised of just 576 pixels. In June, Sotheby’s sold ‘CryptoPunk #7523’ – a rare alien CryptoPunk wearing a medical mask for $11.8 million.

Prices for CryptoPunks – particularly alien-themed creations – have been rocketing in 2021. In the case of ‘CryptoPunk #7804’, a ‘punk’ that sold for 12 ETH in January 2018, or $15,000 at the time, was purchased on March 11th 2021 for 4,200 ETH – amounting to a total of around $7.57 million.

“In 30 years, I’ve never seen such a reaction in the art world. It’s nothing less than an earthquake,” explained Kenny Schachter, a New York based writer and collector who has sold more than $200,000 NFT artworks on Nifty Gateway. “This is a whole new audience. They don’t know about the art world, and they don’t care about it.”

The Lure of Owning Something Unique

Although the new audience that Schachter speaks of rejects the world of traditional art, it’s clear that they share the same enthusiasm for owning a unique work of art – even though it may take a wholly digital form.

The driving force behind the CryptoPunk and wider NFT trend is the concept of ownership. Blockchain ensures that those who buy the works are legally the owners of the piece – even though their art can be copied and pasted many times by non-paying browsers.

Fundamentally, owning an NFT is different to owning the asset that it represents. Buying an NFT means that you’re purchasing a token on a blockchain – which is a digital ledger of transactions. While the token is unique, it’s usually linked to a reproducible asset.

For instance, let’s look at NBA Top Shot Moments, which are NFTs that represent a certain NBA highlight clip. The buyer of the highlight has the ownership rights of the NFT, and they can swap, sell or give away the token as they see fit – however, they can’t prevent others from accessing the highlight clips themselves, which are readily available on YouTube.

In buying an NFT like a CryptoPunk, much like in buying tulips at the height of the mania, ownership is aesthetic and sentiment based. Your NFT can go up or down in value, and believers in the potential of non-fungible tokens may see the artworks as a store of wealth, but there are no royalties to earn – your NFT simply belongs to you.

The Next Big Investment Opportunity?

As tulip mania took hold, the price of a single bulb reportedly climbed to the price of a large house in the Netherlands back in late 1636, before a massive market crash in early February of 1637.

Are there lessons to be learned here in buying NFTs after such a significant series of price hikes? Or will onlookers today live to regret failing to jump on the bandwagon as non-fungible tokens prepare for take-off?

It’s perhaps foolish to attempt to definitively answer these questions when discussing a cryptocurrency industry that’s built on dumbfounding skeptics. While NFTs are being sold for astronomical prices, their scarcity coupled with a market that’s constantly gaining new adopters means that there may be more room for NFT artists and collectors to maneuver in the future, but we may also be more likely to see non-fungible token marketplaces grow as the high-end of token prices also begin to relax.

The NFT industry’s current dependence on cryptocurrencies means that the industry is likely to grow as the native coin of each platform grows. As Maxim Manturov, head of investment research at Freedom Finance Europe, highlights, this could lead to trouble later on. “The crypto market lacks stability and can start being regulated any time, which actually already happened in China. In June, the Chinese government banned banks and payment systems from using Bitcoin, which led to a temporary collapse of the flagship crypto’s price.”

With an ever-broadening market of newcomers to the world of investing, we’re likely already seeing evidence of NFTs benefiting from an influx of individuals looking for new ways to hold their money in valuable assets. If such volumes continue, we could see further price appreciation. In this regard, whether NFTs continue their meteoric rise, or go the same way as the tulips, is wholly down to the people to decide.

Retail Investors Gain Unprecedented Chance to Participate in Robinhood’s Blockbuster IPO

Retail investors have been offered a greater level of access to the initial public offering than ever before, with over a third of its shares being reserved for public access. So just how can retail investors take part in this blockbuster IPO?

Robinhood has long professed its dedication towards ‘democratising finance’ and in opting to make more of its shares available to retail investors, the platform has taken a significant step in welcoming more smaller-scale investors in giving them access to IPOs that would otherwise only be accessible to their institutional counterparts.

When Robinhood lists on the Nasdaq on July 29th, the company will be shooting for a $35 billion valuation with a share pricing range of between $38 and $42. To help make its shares more accessible to retail investors, the IPO coincided with the arrival of a new feature in the Robinhood platform: IPO Access.

IPO Access has been developed as a way of putting retail investors in touch with the IPOs of Robinhood and other companies readying themselves to go public with the intention of finding more initial public offering participants away from the favoured realm of institutional investors.

(Image: CB Insights)

As we can see from the chart above, Robinhood has enjoyed a prosperous period in the wake of the Covid-19 pandemic, with as many as 20 million monthly active users arriving on average in January and February 2021.

Although the platform has had a largely controversial start to 2021 following the fallout of the GameStop short squeeze in late January and the criticisms of Wall Street stalwarts Warren Buffett and Charlie Munger, Robinhood is still winning new fans in the nations it serves.

With such clear evidence of growth, Robinhood’s move to offer such a large portion of its IPO to retail investors represents something of a risk. Will retail wake up to such an innovative move or could the platform miss reserving its offering to institutional investors?

Revolutionising Retail

In its S-1 filing, Robinhood took the bold step of reservice between 20% to 35% of its shares to be available to its customers through the company’s new IPO Access feature. Getting in on a stock at the IPO stage is generally reserved for institutional investors, whilst their retail counterparts generally have to wait for the stock to begin trading to buy in.

This can present itself as an opportunity for retail investors to involve themselves in stocks at an earlier stage – however there’s a potential downside. Buying shares at the IPO stage can be much riskier than investing in an established company. With this in mind, Robinhood users must conduct their due diligence before dipping their toes.

“Robinhood is following the market trend of today’s most innovative assets, such as bitcoin, by giving retail investors more or all of the first bite at the apple ahead of institutional investors,” said Rodrigo Vicuna, CFO of Prime Trust. “You no longer need to hit a certain level of financial eliteness in order to access portfolio-defining assets, and that is a meaningful win for retail investors.”

Writing for The Verve, Elizabeth Lopatto heralded Robinhood’s offering as “the first meme IPO,” claiming that if the move works, we may see other companies opting to boost the proportion of their shares allocated to retail investors.

Today, many IPOs rarely allocate more than 1% to 3% of their shares to retail investors – meaning that if Robinhood ends its first day of trading higher than where it started, more companies could adopt a similar strategy. Given that Robinhood’s IPO Access feature intends to make the initial public offerings of many companies available, it appears likely that Robinhood intends to be an investing trendsetter in this field once again.

How to Take Part in Robinhood’s IPO

To become one of the retail investors buying into the 20% to 35% of Robinhood’s pre-IPO shares, there are a few paths you can take.

The first and most straightforward way is to participate in the IPO through Robinhood’s IPO Access feature. Robinhood has created IPO Access as a means of allowing investors to buy initial public offerings with no requirements for a minimum account balance and no obligation to buy before the final price of the offering is set.

However, because Robinhood only allows US applications, retail investors from the EU and other countries around the world won’t be able to participate via the app itself – but there are alternatives available.

Fortunately, another platform that’s acted to enable participation in Robinhood’s IPO is Freedom24, which operates in a similar manner to the IPO Access feature.

However, Freedom24 serves users across Europe – creating the opportunity for Robinhood IPO participation where it’s not possible via the app itself due to geographical restrictions.

This means that Robinhood’s goal to democratize finance for all really can be enjoyed by all – whether they’re based in the US or Europe.

Hot Air: Confluent Aims to Become a Value Investment Within a Hype-Driven Tech IPO Market

With sights set on a valuation of around $8.3 billion and snowballing revenue thanks to surges in demand for live streaming software in the wake of the Covid-19 pandemic, Confluent is hoping to secure its future in a successful tech IPO. However, in a market that appears to be largely swept up in hype, can this IPO become a viable investment over the long term?

As part of its IPO, Confluent intends to offer 23 million shares at a price range of between $29 and $33 per share, according to its regulatory filing. The company hopes to raise up to $759 million in its initial public offering.

In the build-up to the IPO, Confluent claimed in its filing that the company’s revenue climbed by around 58% in 2020, and a further 51% over the first quarter of 2021 alone to $77 million. Although the company was valued at $4.5 billion in April last year, the company’s optimistic that it can achieve almost double that sum as it aims to hit an $8.3 billion valuation.

Over-Promising and Under-Delivering Tech IPOs?

Although Confluent’s arrival on the Nasdaq represents an excellent opportunity for the company to generate some revenue to secure its future growth, will investors also identify Confluent’s IPO as a key opportunity to secure long-term windfall?

(Image: VisualCapitalist)

As the data above shows, tech IPOs are by far the leading sector in terms of size, accounting for $21.9 billion in proceeds in 2019 when the data was collected, however, it also averaged out at a post-IPO return of -4.6%.

Does this data mean that tech IPOs are guilty of over-promising and under-delivering simultaneously? Brownstone Research suggests that this gulf between proceeds and investor ROI is down to companies waiting later before they choose to go public.

For instance, companies like Amazon opted to go public before they experienced significant growth. However, private companies in the tech sector today are generally choosing to remain private for longer. This means that when they eventually launch an initial public offering, these tech companies are much larger.

As most tech companies have already undergone their early stages of growth prior to going public, retail investors are liable to be left to pick up the scraps once they enter the public markets.

For instance, when Uber launched an IPO in 2019, its enterprise value of around $75 billion meant that the company was already 171 times larger than Amazon when it launched its initial public offering.

However, the recent IPO bull run of 2020 and early 2021 has helped to embolden more companies to go public sooner rather than later.

(Image: Financial Times)

Thanks to the unprecedented pace in which companies are going public, many tech firms are looking at the revenues they’ve generated in the wake of the Covid-19 pandemic and are aiming to use them to drive investor interest in their listing.

So far in 2021, the number of listings has eclipsed even that of the dotcom boom at the turn of the century – setting the pace for a record breaking year for IPOs.

What does this mean for companies like Confluent and retail investors alike? Well, it points to newfound levels of optimism in companies aiming to go public sooner rather than later, which means that retail investors have the opportunity to invest in more listings that may have more growth potential than usual.

Maxim Manturov, head of investment research at Freedom Finance Europe explains that the playing field between retail and institutional investors is far from level. “It is the latter who usually get the far greater share of an IPO: historically, institutional investors get around 90% of all shares, with only around 10% left for retail trades,” explained Manturov.

“This is where allocation comes from: when the demand is high, the broker will have to reduce order amounts so as to at least partially fill all of them. The allocation ratio, meanwhile, depends on the investor trading activity and volume.”

Confluent Listing Encapsulates Tech IPO Hype

Online brokerages have moved swiftly in accommodating the Confluent IPO and listing it for retail investors to buy.

The Confluent listing shows that one year on from the beginning of the IPO boom, listings are still generating excitement and investor interest at a quickening rate. Although Confluent will be conscious of the hype surrounding tech IPOs, the company will be looking to turn a promising 2020 into a fiscally secure future. If some of that growth can lead to healthy returns for investors along the way, it will be a good sign that the tech IPO boom encapsulates far more than a simple stock market hype machine.

The Rise and Rise of Micro-Cap Coins: Why Social Trading is Leading to a Crypto Penny Stock Craze

Huge volumes of dog and Elon Musk-themed coins built on online memes are arriving on the market and reaching huge trading volumes despite their small market caps making for extreme volatility for investors.

One key example of the volatility awash among these micro-cap coins can be seen in the Ethereum-based meme coin Dogelon (ELON), which managed to rocket 40,000% in a single day before undergoing a huge correction.

The significant rise of the asset comes after a trend of Ethereum-based coins created in tribute to Elon Musk and various dogs emulating the increasingly popular Dogecoin cropped up with significant levels of trading volume attached.

(Image: CoinGecko)

Another recent high-profile coin pump saw Shiba Inu climb drastically out of a six-month slumber to gain so much attention that the coin achieved a listing on reputable exchange Binance before buyers largely deserted the coin, leaving Shiba to fall 58% from its all-time high in the space of three days.

With more meme-based coins entering the market at a rapid rate and capturing the imagination of cryptocurrency investors looking to get rich from rapidly appreciating assets, the market appears to draw comparisons to the penny stock craze that’s currently sweeping Wall Street. But how is the rise of micro-cap coins impacting the world of crypto? And are investors aware of the risks associated with buying into such volatility?

The Rise of Crypto Gambling?

Is investing in micro-cap coins a gamble? Well, it’s fair to say that any cryptocurrency investment is a gamble considering the relatively delicate and volatile nature of the market. However, micro-investing carries a few distinctions that separate it from a straight-out gamble.

Notably, investing tends to offer much longer timeframes than gambling. When you place a bet on a roulette wheel, you’ll know the outcome in a few moments. Furthermore, your stake in the bet is final once the wheel starts spinning – meaning you can’t change your bet or decisions.

There should also be no external factors involved in a spin of a roulette wheel that impact the outcome over time.

When it comes to investing, these factors are a little different. Firstly, the bets you place on micro-cap coins could take a matter of months – even years – to play out. As we saw in the case of Shiba Inu, it took six months for the coin to appreciate. There’s also a continuous flow of information that investors are capable of accessing before they make their decisions.

However, it’s important to note that while some micro-cap coins have valid purposes – particularly as the world of NTFs is starting to see new projects arrive and offer opportunities for investors, some coins purely exist on a meme basis to pump and dump. The less-than-transparent world of crypto also opens the door to rug pulls from developers who hold a significant stake in the coins they create.

In the case of SafeMoon, another token that’s driven by social media sentiment, anti-scam crypto communities have warned about the coin’s owner holding over 50% of the liquidity of the coin – making it especially vulnerable to ‘rug pulls’ where the owner withdraws their stake, collapsing the value of the coin. Although it’s worth noting that SafeMoon has since undergone an independent audit.

Maxim Manturov, Head of Investment Research at Freedom Finance Europe, highlights that meme stocks in traditional finance are also prevalent and that it’s vital for investors to always research their investments: “An own research is always a top priority; however, everything what happened to these meme stocks is nothing but speculation. The more information one can get, the deeper understanding one will have.”

Mainstream Crypto’s Backlash Against Meme Coins

The twisting and turning narrative surrounding meme coins ramped up recently when Vitalik Buterin, creator of Ethereum and crypto billionaire, donated a collection of meme coin shares amounting to $1.5 billion to various non-profit organizations around the world.

Most significantly, Buterin transferred 500 ETH and over 50 trillion Shiba Inu (SHIB) – worth around $1.14 billion at the time of the transaction, to the India COVID-Crypto Relief Fund.

Although it appears that Buterin’s offloading of dog-themed meme coins came after the leading name in the crypto space received vast unsolicited donations from investors around the world, the remarkable act of philanthropy has had a catastrophic impact on certain micro-cap coins, and particularly on SHIB.

The huge transaction spooked investors, playing a key role in a 42.5% drop in SHIB’s price over the past 24 hours.

Some commentators have interpreted Buterin’s mass sell-off of meme tokens as a backlash against the rise of micro-cap coins. Due to the wild popularity of coins like Shiba Inu and larger meme coins like DOGE, Ethereum fees have rocketed to all-time highs as investors attempt to access their coins. The decision to sell off high enough volumes of dog coins, crushing investor confidence in meme tokens in the process, may have been a calculated move to ease the burden on ETH.

As the cryptocurrency market continues to gather new interest and attract more investment, it’s likely that we’ll see many more meme tokens blink in and out of prominence. Although some may have the potential to make early investors some significant profits, it’s absolutely vital that investors conduct thorough research into the coins that interest them before parting with their money. Just like in the world of penny stocks, some investments can make holders rich, but many more fail to get off the ground.

Capitalizing on IPO Mania: Will Stripe’s IPO Become The Biggest of All-Time?

Boosted by huge demand for technology and sustainability stocks, as well as a frenzied rush from blank-check SPAC companies, the volume of IPOs in the US doubled to 494 – raising a collective $174 billion. Now, with the news of payments giants Stripe intending to go public, we may see the biggest initial public offering yet.

According to FactSet, high profile IPOs from Snowflake, Airbnb and Rocket Companies were well received by investors, contributing to 150% year-on-year growth for money raised through offerings.

However, one company that’s seemingly been at the centre of speculation throughout 2020 without pulling the trigger on an IPO was Stripe. In August last year, Stripe sparked a furore when the company announced that it had recruited CFO Dhivya Suryadevara from General Motors to assume the same role at the startup. At the time, it was anticipated that the company was in the final stages of preparing to go public. But instead, the company opted to raise an additional $600 million in new equity from private investors at a seismic valuation of $95 billion.

At a valuation of $95bn, Stripe has become the most valuable US startup, pushing past huge industry players like Elon Musk’s SpaceX and grocery delivery service Instacart. However, the latest fundraising effort could lead the company to the biggest IPO ever.

Entering The IPO Frenzy

Stripe’s push towards an IPO comes at a time when a global IPO frenzy is in full swing. At the end of Q1 in 2021, global dealmaking stood at $1.4 trillion thanks to blank-check SPACs and newfound excitement for tech initial public offerings.

These figures represent a 103% increase in the same period last year, and a faster start to a year in over two decades – according to preliminary data from Dealogic. There’s no sign of the furore simmering down, either.

One of the key reasons behind such astronomical figures stems from the boom in special-purpose acquisition companies (SPACs), which offer private companies a faster route into public markets. SPACs have helped to push equity capital market fees up by almost 340% compared to the same period in 2020 to a total of $13.1 billion – more than double the revenues in any first quarter over the past 20 years.

(Image: Financial Times)

As the data above shows, IPO proceeds already soared to levels that haven’t been seen since the financial crisis of 2008 by the end of last year. Driven largely by unprecedented volumes of SPACs entering the market, more businesses feel emboldened to embrace the huge boom in IPO popularity.

Will Stripe Become the World’s Biggest IPO?

So, will Stripe use the current investment landscape to launch the biggest IPO ever? There are a few things to consider before we can gain a clearer idea of just how seismic the company’s arrival on the New York Stock Exchange will be. Firstly, it’s important to note that these metrics are largely determined by total deal size, rather than the company’s market capitalization. The current biggest IPO belongs to that of Saudi Aramco, which raised $29.4 billion through a home-country listing. Meanwhile, the biggest US-based initial public offering was the 2014 debut of Alibaba, which ultimately raised a total of $25 billion.

Weighing in with a $95 billion valuation means that Stripe has the potential for a huge IPO, but it remains to be seen that the company will beat the aforementioned records at its current valuation. Companies typically avoid releasing too many shares during an IPO as they can pursue follow-on offerings for insiders once the lockup period is over – which tends to be around 90 to 180 days after the initial public offering date.

Although holding the record for the largest IPO will no doubt hold plenty of appeal for the company, it’s unlikely that Stripe would willingly sell almost one-third of its shares for the sake of beating the existing stock market record – but this doesn’t mean that the company should be discounted. Stripe appears to be investing on a global scale and is producing results that have captured the imagination of institutional investors that have been willing to pay way over the odds for admission just one year on from the company’s last fundraising effort. With palpable excitement for both Stripe and the IPO market as a whole, all bets are off when it comes to anticipating the sheer scale of the upcoming floatation.

Buying Stripe’s IPO

With speculation rife about the ultimate size of Stripe’s IPO, many retail investors will likely find the notion of investing in the payments company a tantalizing one to say the least. However, the process of investing in initial public offerings can be tricky for individuals to buy into. This is because many companies choose to sell their shares to institutional investors who are capable of buying huge volumes of their IPO in one single transaction.

Maxim Manturov, Head of Investment Research at Freedom Finance Europe, says that: “Historically, institutional investors get around 90% of all shares, with only around 10% left for retail trades. This is where allocation comes from: when the demand is high, the broker will have to reduce order amounts so as to at least partially fill all of them. The allocation ratio, meanwhile, depends on the investor trading activity and volume.”

That said, there’s still a way for the general public to participate in IPOs – there’re online brokers that allow retail investors to take part in IPOs. However, there’s generally a vetting process to go through and a financial threshold to meet.

However, retail investors can still get in on the action when trading eventually begins on the New York Stock Exchange. In an IPO landscape that’s filled with huge levels of investor confidence, we may yet see Stripe’s initial public offering break plenty of records upon its arrival.

Could The Fallout From The Robinhood Saga Push More Investors Towards IPOs?

The no-fee trading app for millennials, which is valued at $11.7bn, has been in talks with underwriters about filing confidential IPO paperwork with the U.S Securities and Exchange Commission.

Rumours circulated that Robinhood had hired Goldman Sachs to do its IPO last year but this is yet to be confirmed. The company is hoping to convert some of its financing into equity, a first tranche will convert at a $30bn valuation or a 30% discount to the IPO.

According to reports, the company has also considered selling shares in its IPO directly to its own users. That could be a possible olive branch as retail investors usually do not get to buy into new listings at the offering price. Instead, they have to invest on the first day of trading in a rush that can drive up the stock price.

Robinhood’s Spectacular Growth

When Vladimir Tenev and Baiju Bhatt founded Robinhood in 2013, they promoted the app’s mission as “providing everyone with access to the financial markets, not just the wealthy”. Robinhood is an app that allows people to buy and sell shares, giving people the opportunity to make fee-free investments.

(Image: CBInsights)

Its main product is an app designed to make it easy to buy and sell stocks without a financial broker or commissions. Robinhood also offers cash management accounts and cryptocurrency trading.

Robinhood’s rise has been remarkable. Since its founding, the platform has gained 13 million users and added an extra 6 million during the first two months of 2021. The two-minute sign-up process and zero-commission model has democratised access to the stock market, where the average age is 26, and over half make a trade on the app on a daily basis.

Weekly downloads from the U.S app stores surged in the first half of 2020, making it the fourth most downloaded finance app. The app has struck a chord with users – especially during the COVID-19 pandemic which helped drive masses of new customers.

However, in the wake of this backlash, investors and traders have been turning to the likes of Freedom24, E*TRADE and TD Ameritrade as alternatives – all of which offer similar features.

Robinhood’s flood of new customers has been a hot topic on Wall Street. The company was reportedly valued at $12bn in September 2020, with that figure rising to $20bn by the end of the year. Valuation then doubled to an astonishing $40 billion in February 2021.

Trading Debacle

In January 2021, Robinhood blocked its users from purchasing shares in GameStop, citing significant market volatility as a reason for this. The company also halted trades for AMC, Blackberry, Nokia and other stocks that had been driven up by Reddit.

Robinhood faced political and customer backlash as GameStop and AMC stock dropped dramatically and users were quick to express their displeasure, flooding Google Play Store with tens of thousands of negative reviews.

A class-action lawsuit was filed in the Southern District of New York against Robinhood for restricting trades, accusing the company of purposefully and wilfully removing GameStop and depriving retail investors of the ability to invest in the open market.

The debacle sparked a debate between politicians as Democratic Representative Alexandria Ocasio-Cortez and Republican Senator Ted Cruz also voiced concerns.

Robinhood attempted to explain its actions by claiming that clearinghouse requirements prompted the company to limit trading in certain stocks. It claimed that the decision was prompted by a need to protect investors from a potential crash and since the clearinghouse-mandated deposit requirements spiked to 10 times the normal number, the company felt it “had to take steps to limit buying in those volatile securities” to ensure they could comfortably meet their requirements.

In addition, Robinhood’s most recent regulatory filing disclosed that the company could be ordered to pay $26 million in regulatory fines for violating Financial Industry Regulatory Authority (FINRA) rules. In a filing with the U.S Securities and Exchange Commission, Robinhood said that it is cooperating with investigations by a number of regulatory bodies including the SEC, FINRA and the New York Attorney General’s Office.

Robinhood, in its filing, said it is “engaged in discussions with FINRA staff regarding a possible negotiated resolution of certain FINRA matters, including the March 2020 Outages and options trading,” and that it expects that “any resolution, if reached, would involve charges of violations of FINRA rules, a fine, customer restitution, a censure, and a compliance consultant”.

Robinhood has differentiated itself since the trading debacle by offering investors the ability to buy Bitcoin and other cryptocurrencies. An IPO, which is expected to take place very soon, would allow Robinhood to raise fresh capital while allowing the company to access financing. As of September 2020, Robinhood Markets is valued at $11.70B.

The IPO will also provide an exit for its many investors, including D1 Capital Partners, Sequoia Capital, NEA, Unusual Ventures and 9 Yards Capital.

Despite the regulatory troubles and political backlash it has faced, many view Robinhood’s imminent IPO as a feasible investment. The company’s user growth, brand recognition and valuation appear to be stronger than ever despite the GameStop chaos. Ultimately the company is still seen as the main gateway for young investors to access the markets and this bodes well for its upcoming IPO.

Why The Ongoing War of Words Between Charlie Munger and Robinhood Underline The Lack of Inclusivity in Investing

With accusations of investing apps like Robinhood being labeled a “dirty way to make money” by Berkshire Hathaway vice-chairman, Charlie Munger in an attack that the app dismissed as “disappointing and elitist,” it’s clear that a war on inclusivity is only just beginning.

The battle lines were drawn following the Reddit group, r/WallStreetBets encouraging investors on the platform to buy GameStop shares en masse to pump its price up.

The plan was highly effective in the short term, as casual investors bought into GME shares, its stock peaked past $325 dollars – a significant rise for a company trading at lower than $5 per share in the summer of 2020.

In a short space of time, GameStop’s market capitalization flew from $300 million in August 2020 to $3 billion at the company’s January peak. However, the achievements of social investing on Reddit caused a form of friction across the market that hasn’t been seen before.

How Reddit Outpaced Wall Street’s Hedge Funds

The mass purchase of GMB stock came at a time when hedge fund Melvin Capital had looked to short GameStop shares in the anticipation of a drop in price. However, the mass social investments from Reddit led to not only Melvin Capital but multiple other hedge funds losing significant volumes of money.

(Image: Talk Markets)

In the chaotic timeline of events, we can see how heavily GameStop’s shares were influenced by the tug of war between hedge funds and Reddit. The unforeseen battle led to Melvin Capital losing 53% of its funds in January alone, but it was the actions of the retail investment platform, Robinhood that stole the headlines in the wake of the rally on GameStop.

Robinhood’s Moral Conflict

Robinhood is a commission-free stock trading app that promises to ‘democratize finance for all.’ However, as the price of GameStop began surging, the app took the step of freezing purchases of GMB stock, as well as that of AMC Entertainment (AMC), BlackBerry (BB), and Nokia (NOK) while claiming that the company ‘makes changes where necessary’ in light of market volatility. While the app continued to allow users to sell their shares, they weren’t permitted to buy more.

Robinhood was one of a group of trading platforms that curbed the purchases of its stocks. As an app that stood as a means of enabling people from all backgrounds to enter the stock market and invest their money, the notion of preventing them from buying into an asset in the minutes and hours after hedge funds were stung by retail investors provoked an outcry.

With at least 90 lawsuits filed against Robinhood in the wake of the fiasco, the app inadvertently exposed the significant lack of inclusivity when it comes to stock investing. The act of limiting the actions of its own users as the damage to hedge funds became clear has left more casual retail investors alienated by the market.

Dirty Way to Make Money or Elitism in Action?

When Berkshire Hathaway vice-chairman, Charlie Munger, gave his scathing assessment on Robinhood, and commission-free trading apps in general, he compared the investment platform to a gambling website.

“Robinhood trades are not free. When you pay for order flow, you’re probably charging your customers more and pretending to be free,” the 97-year old told the Daily Journal’s annual shareholder meeting. “It’s a very dishonorable, low-grade way to talk. And nobody should believe that Robinhood’s trades are free.”

Munger pointed the finger at brokerage apps for enabling the recent trading chaos by bringing together “a whole lot of people who are using liquid stock markets to gamble the way they would in betting on racehorses.”

“The frenzy is fed by people who are getting commissions and other revenues out of this new bunch of gamblers,” Munger claimed. “And of course, when things get extreme, you have things like that short squeeze.”

Robinhood responded to the criticism by claiming that Munger has actively dismissed the next generation of investors – labeling his words “disappointing and elitist.”

“In one fell swoop an entire new generation of investors has been criticized and this commentary overlooks the cultural shift that is taking place in our nation today,” explained a Robinhood spokesperson. “Robinhood was created to allow people who don’t have access to generational wealth or the resources that come with it to begin investing in the U.S. stock market.”

Sadly, the war of words between Charlie Munger and Robinhood signifies how much of a lack of inclusivity exists in trading, despite the development of technology that has the potential to bing new investment opportunities to scores of new users.

The Next Generation of Investor

In the past year, 10% of Americans bought a stock for the first time. On top of this, 7% began contributing to a retirement account.

There’s been a significant surge in retail investing since the beginning of the pandemic. In fact, over 10 million people in America have opened a new brokerage account in 2020. In a survey conducted by CNBC, 22% of Gen Z respondents claimed to have opened a stock market account in 2020.

Furthermore, the survey found that those without a college degree and in the income bracket of $50,000 or less were also more likely to buy a stock for the first time in the past year.

This data clearly shows that trading has taken strides towards new generations of investors that may have previously lacked the accessibility they needed to invest.

Platforms like Robinhood have opened the door to these traders, offering them access to investments that had seemed inaccessible before. However, in the wake of Robinhood’s kerfuffle, retail investors are now turning to other platforms offering similar features. For instance, NasDaq-listed Freedom Holding Corp. (NASDAQ: FRHC) has a platform called Freedom24, which not only enables retail investors to purchase stocks but also participate in selected IPOs. That said, not everybody is eligible as there’s an application process and a threshold of $2,000.

Alternatively, there are more traditional platforms like E*TRADE and TD Ameritrade that enable the general public to invest in stocks. TD Ameritrade, for instance, also allows its customers to take part in selected IPOs. However, the account value threshold is set at $250,000. Alternatively, the account must have completed 30 trades in the last 3 months.

The Covid-19 pandemic has offered individuals the chance to stop and reconsider how their money is best invested. With a brand new and broad generation of new investors entering the market, Charlie Munger’s comments may appear dismissive of the huge new collective drive towards trading. Likewise, Robinhood’s restrictive actions risk repelling new investors before they have a chance to see their first profits.

In a world that’s increasingly interconnected, fintech platforms and old hedge funds alike need to put in more effort to accommodate new entrants onto the market. After all, the free market will be a much more prosperous place when it’s accessible for all.

Readying For Altcoin Season: Will Small Cap Coins Rally in 2021?

However, now some analysts are forecasting the beginning of 2021 to belong to altcoins.

Altcoin season, or altszn, is nearly upon us, according to market analyst and influencer Nicholas Merten. In a video he uploaded to YouTube, Merten claimed that the 100-BTC dominance charts indicated that an uptrend was emerging between altcoins (alternative cryptocurrencies to Bitcoin) and the dominance of Bitcoin.

“After we set this new bottom here, back in mid-November, we’ve been holding up substantially well ever since we had this solid week of price action, going in towards the close or the later portion of November,” Merten explained in his video.

“We’ve been able to hold the vast majority of the gains and now are building into a wedge here. I have a lot of confidence that this is going to end well, that this is going to pick up and break out here in the short term.”

(Image: YouTube)

As we can see from the chart Merten’s highlighting, altcoins have spent recent weeks forming a wedge in which its been threatening to break out from.

However, is altcoin season really upon us? Or will Bitcoin’s price rallies draw too much investor interest away from lower cap coins?

Preparing For Alt-Season Takeoff

History suggests that altcoins may be set for takeoff as Bitcoin achieves record-high prices. Notably, in the past two bull cycles where Bitcoin has breached its all-time high, altcoins have typically rallied in its wake. For instance, Litecoin made a famous breakout in 2014 once Bitcoin had launched above its old high of $250. LTC hit highs close to $50 during this timeframe, while BTC rocketed to $1,200.

Notability, both Ethereum and Ripple also rallied after Bitcoin’s halving event in 2016. This sparked a surge towards an all-time high of $1,420 for Ether in early 2018, many weeks after BTC peaked at its new all-time high in late 2017. Following suit, XRP reached its all-time high of $3.34.

If history were to repeat itself, altcoins could be set for a series of hefty runs towards brand new all-time highs. These movements could be made all the more plausible with the arrival of PayPal accommodation for cryptocurrencies, making it easier to exchange Bitcoin and other altcoins, which is opening the doors to more adoption alongside the development of more secure and trustworthy exchanges compared to the earlier crypto rallies of the past decade.

With Bitcoin dominance dipping before a recent recovery, it may indicate that altcoins may be readying themselves for larger investment. However, with Bitcoin’s market dominance leaping 2% in mid-December, there’s still some work to be done before history repeats itself again.

Could Alt-Season Give Way to Bears?

According to the total cryptocurrency market capitalization without the presence of Bitcoin, price action on monthly timeframes for the altcoin cap of over $200 billion locked up in altcoins was recently rejected at Ichimoku cloud resistance.

The Ichimoku cloud, also known as the Kumo, can act as support or resistance, and the mass of each cloud represents how turbulent each price action has been – similarly to how Bollinger Bands widen depending on levels of volatility.

(Image: NewsBTC)

While hitting cloud resistance isn’t great for altcoins, the December monthly candle is still holding above bottom support for the cloud. Bitcoin dominance also shows an important December close – coinciding with the total altcoin cap.

While November candles pushed altcoins into the cloud, it also triggered a bullish crossover of the indicator’s baseline and conversion line. However, a bearish crossover is also shown on the chart, which demonstrates the significance of trend change that takes place alongside the crossover if confirmed.

The Ichimoku observes past, current and future price actions, and the red cloud lasting another year ahead may show that altcoins are, in fact, in for a more bearish start to the year.

Although Bitcoin’s dominance appears to be strengthening as we move into 2021, history shows that altcoins can often rally in the wake of BTC all-time highs. The fact that momentum is still building for Bitcoin may mean that its own Bullrun is still underway. Either way, it doesn’t seem like it will be long before altcoin season reemerges.

Trading in Privacy: Will Litecoin’s New Privacy Upgrade Provide a Boost For The Embattled Altcoin?

For investors, the move to ramp up Litecoin’s privacy is an essential step in paving the way for truly sound money and trading in confidence. But after a challenging 2020, could the developments in the technology behind the embattled cryptocurrency help it on the path to recapturing its former glories?

Truly Private Transactions

MimbleWimble on Litecoin is an update that implements extension blocks to Litecoin’s chain – allowing users to effectively mask their identities and trade in full confidence.

Although it had been announced all the way back at the start of 2019, the development of MimbleWimble didn’t start until the arrival of David Burkett – developer of Grin++ – in December 2019. Subsequently, Burkett and the Litecoin Foundation successfully launched the Github code for peer review and contribution.

At present, the testnet only comes with rudimentary features like mining and adding LTC nodes to the testnet. For now, wallet capabilities will not be added.

While regulators have been wary of privacy-centric cryptocurrencies as a significant threat due to the potential it holds for promoting money laundering, for many crypto enthusiasts the promise of true privacy and fungibility is essential for truly decentralized finance.

Litecoin has long been championed for its practicality and the pace of transactions involving LTC. But could the arrival of truly private transactions lead the popular cryptocurrency to rally despite failing to live up to its late 2017 optimism?

Revival to $365?

During its late 2017 peak, LTC reached the astronomical figure of $365. Today, it’s a fraction of its former self in a bearish crypto market, but could the arrival of a long-awaited privacy upgrade be the shot in the arm that the coin was long craving?

(Image: Capital)

Litecoin’s performance in recent month leaves little inspiration for investors but in a market that’s becoming increasingly dependant on external events in order to perform, the move to a more private trading experience could help LTC to become a safe haven for adopters.

LTC was one of the early names to establish itself on the cryptocurrency market. Since then, it’s developed into one of the largest coins on the market based on their market cap. Today, Litecoin can be found on virtually every crypto exchange, and with a Bitcoin to Litecoin exchange rate of 220.7 LTC to BTC, there can be some perceived value investment opportunities for traders.

The appeal of Litecoin comes from the fact that it’s one of the most widely accepted cryptocurrencies on the planet. This means that it’s possible to buy a wide range of goods and services via LTC while also using Litecoin to invest in various other emerging crypto projects.

Litecoin was created in a way that was designed to mirror the world-famous Bitcoin. However, one of the key appeals of LTC is based around the currency’s scarcity. The currency is only produced at set intervals following the approval of a block of transactions to the network. As a result there will only ever be 84 million Litecoins produced – thanks to a simple equation from the coin’s developers.

LTC’s developers recognised that, because Litecoin processes transitions four times faster than Bitcoin, it could feasibly accommodate four times the tokens while performing just as well. Notably, the limited supply of LTC ensures that it will never be adversely affected by inflation over time.

It’s clear that Litecoin is a sturdy cryptocurrency that’s already stood the test of time over a tumultuous decade in the history of crypto. But could the coin ever recapture its 2017-peak of $365 as a more privacy-centric currency once again?

Well, Litecoin has been tipped as a fair bet to increase in value towards the end of the year, provided that LTC can make a breakaway from its current resistance pattern and start showing signs that it can outperform its current valuation at a maximum of $50. According to Invezz, if LTC can break above $50, there’s no reason why it can’t push towards $70 in the not-too-distant future.

Litecoin remains a powerful currency on the crypto market on a more technical level, and comfortably outpaces Bitcoin in terms of faster payment processing as well as showcasing significantly lower transaction fees to make LTC a more practical coin than some of the more famous names populating the cryptocurrency markets.

However, renowned crypto analyst Michaël van de Poppe doubts that Litecoin will ever deliver on its market potential and reach its former highs, and instead told Invezz that he expects the cryptocurrency to eventually fall out the top ten currencies based on market cap:

“The crypto markets are undergoing a series of transitions that will result in a shakeup for previously dominant assets. The first transition would result in maturation and market regulation for Bitcoin and blockchain, while the second would cause the jettisoning of ‘overvalued Top 10 coins,’ including XRP, Litecoin and Bitcoin cash,“ he noted.

The arrival of more privacy for investors and traders when it comes to Litecoin is undoubtedly a step in the right direction for the cryptocurrency. As a coin with highly practical features, it’s fair to say that these developments can help to restore the relevance of LTC. Although, we may be some way off seeing a sustained peak in an embattled crypto market. One thing’s for sure though, Litecoin has proved time and time again that it’s here to stay.

Trading in Turbulence: Why I lost Touch with Bitcoin

But how has Bitcoin become synonymous with the entire digital financial system?

Bitcoin has long been recognised as the king of altcoins, which is no doubt aided by its status as the earliest and most successful of its kind. This digital trendsetter has heralded a new wave of cryptocurrencies based on decentralised P2P networks and has led to numerous emulators and spin-offs. Given that Bitcoin has existed for over a decade now, many of its predecessors have made significant improvements in terms of stability, security and usability.

Can the grand old cryptocurrency keep up with the new kids on the block within an ever-developing landscape?

In Bitcoin’s defence, its cutting-edge infrastructure upon release has situated it in a dominant position in the altcoin world. Bitcoin can boast proven usage as a quantifiable unit of value. Its 10-year lifespan without major failure means Bitcoin has a considerable lead over the rest of the market and has withstood a rigorous test of time while more competitors have flooded the market. However, despite its healthy pedigree, the world’s most popular digital currency appears to be experiencing something of a decline – or at least is failing to expand alongside the rate of the market.

May 2019 saw Bitcoin slump by $1,000. Given its frequent market jitters and wild highs and lows, the seismic decline hardly caused a stir in financial news. Bitcoin is characterised by its ability to turn gigantic profits and losses for investors in a matter of hours.

(Despite large volumes of news coverage over the past 10 years, cryptocurrencies like Bitcoin remain mysterious to many. Image: Statista)

The chart above shows that 63% of respondents in the UK claim that they’re uninterested in using Bitcoin because they “don’t know enough” about the cryptocurrency. As a key player in shaping the crypto landscape and leveraging appeal for newer investors and users of the digital finance markets, Bitcoin has clearly failed in offering prospective buyers a healthy level of understandable and accurate information on the ins and outs of crypto usage.

Today Bitcoin finds itself immersed in an industry that’s evolving alongside newer and more efficient technology and forms of conducting transactions. Rivals in the world of digital currencies are becoming more efficient and technically able to support widespread usage. While in Bitcoin has offered very little in terms of solutions for the relentless volatility that drives the market, investors may be forced to pin their hope on a newer entity to provide a calming influence.

Market speculation typically drives the volatility that we see in cryptocurrency values. Demand spikes for certain coins are fuelled by trades and speculation rather than any external influences. It’s clear when we recognise that in 2018 the market capitalisation of cryptocurrencies hit an all-time high of over $800bn but hit an all-time low of $200bn just one year later.

Efforts to improve the conditions of the crypto market

Here is where the stablecoin enters the fray. Offering a fundamentally different structure to Bitcoin and its lineage, stablecoins have the potential to turn the crypto revolution on its head.

Stablecoins were developed as a means of tackling extreme crypto market volatility head-on. They aim to attain a level of stability by anchoring their values to tangible real-life assets. These assets can include fiat money like the US Dollar, exchange-traded commodities like gold, or even other cryptocurrencies.

While it’s hard to imagine a crypto market that’s free of erratic behaviour, the mass buying and selling of digital currency ultimately weakens the viability of what exists as a niche market.

The stabilising effects of stablecoins are two-fold. Asset-backed stablecoins like Digix Gold Token (DGX) have the ability to mitigate price volatility backed by exchange-traded assets, or by tethering to fiat currencies. While algorithmic stablecoins rely on computing logic to monitor the supply of currency to attain stability through mimicking the mechanisms of central banks.

Stablecoins are experiencing an exponential rise in popularity worldwide. CryptoCompare reports that the biggest market cap for a stablecoin already stands at $4bn.

The same report acknowledges that Bitcoin has pledged to develop a stablecoin solution within the coming years. However, their actions may prove too little too late, and with so much ground to make up on this side of the market we could be witnessing the first cases of Bitcoin losing key market territory to emerging rivals.

Some stablecoins like Tether (USDT), a digital currency that’s anchored to units of US Dollars, are often used to trade Bitcoins. One unit of Tether is designed to equate to $1 and should never deviate from this value – so far the cryptocurrency has delivered on this purpose.

So here we can see clear evidence that shows it’s possible for stablecoins to compliment Bitcoin as well as compete. In fact, they’re so versatile that they can provide a form of infrastructure from within the crypto market. As of yet, Bitcoin has been sluggish in its foray into the realm of the stablecoin – where its popularity would surely help to turn any entry onto the market into a pack leader – but emerging alternatives are continuing to thrive without such disruption.

Stablecoin developments are potentially vital for the future of the crypto market. Considering that currency is essentially a store of value, it should’ve been speculative so much as predictive and stable as a means of reaffirming investor confidence and establishing the ecosystem necessary to enter mainstream usage. The total stablecoin market value share has more than doubled over the past year and is only continuing to grow.

Time will tell whether or not we could be about to witness the crypto-giant surrender its monopoly on a market that it’s ruled over the past decade.