Bitcoin based Bakkt Platform Moves to Acquire Bitlicense in New York: Bloomberg Report

Intercontinental Exchange Inc., the parent company of the New York Stock Exchange (NYSE), had announced the Bakkt Platform which was supposed to be launched in December 2018. However, due to delay in regulatory approval from the Commodity Futures Trading Commission (CFTC) in the US, the launch has been delayed ever since.
Bakkt platform is a revolutionary product built on Bitcoin. It would provide Bitcoin futures contract which would be settled in Bitcoin instead of the US dollar. When Bakkt’s one-day contracts expire, they will be paid out in Bitcoin tokens instead of U.S. dollars. Hence, the biggest concern of the approving authority is custody and money laundering.
Kelly Loeffler, the CEO of Bakkt platform noted in her recent blog post that:
“New product launches require solving for unknown variables, and I’ve seen first-hand that addressing these challenges can help clear the path for healthy, long-term growth.”
ICE Move to New York Department of State Financial Services (NYDFS)
Bloomberg reported from its sources that the other significant roadblock is that traditionally to offer derivatives trading the clearinghouse or platforms must deposit the margin or initial amount from the customer in a bank. Hence, CFTC is concerned over how the and where the funds would be managed if they are Bitcoins.
Moreover, this involves custody of Bitcoin on two levels, one for the clearinghouse to settle the transactions and for the trade orders of Bitcoin Futures.
Reportedly, the owner of ICE has suggested procuring a BitLicense from the State authority to allow for custody of Bitcoin. Moreover, the NYDFS has granted a license to several Exchanges and Trusts like Winklevoss’s Gemini Trust, brokerage firm Tagomi and Bitstamp, a crypto-FIAT exchange. However, Bakkt platform is an application based request for custody; i.e., the bitcoins will not be traded as it is, but other derivative products and payment modules will be built on it.
The approval from the State authority would not confirm the launch of Bakkt platform as the ultimate deciding authority would still be CFTC for Bakkt to launch Futures contracts, and other applications based on Bitcoin. Moreover, initially, it might be made available only to institutional ‘high-volume’ investors.
Furthermore, Bakkt also aims to enable retail payments to popular brands like Starbucks; the Bakkt platform would provide for conversion of Bitcoin to FIAT instantly to make payments.
Will Bakkt platform aims to offer a plethora of applications on Bitcoin. Do you think it will successfully launch any time soon? Please share your views with us.  

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Source: CoinGape

Bitcoin Bull Tim Draper says highly regulated countries become poor; shift from fiat to crypto inevitable

Tim Draper, an American venture capital investor and a strong believer in crypto, made another bullish claim suggesting that a flip from fiat currency to Bitcoin and other cryptocurrencies will take place in a couple of years. The Government would eventually have to give up control and be the service provider, he added.
Draper was of the opinion that regulators impede any development in the space by hindering innovation. Citing China as an example of exercising control and imposing strict rules on crypto use, the Bitcoin bull asserted that high regulations push a country deeper into poverty.
In a recent interview with TheBitcoinOfCryptoStreet, Tim Draper said that the best thing about cryptocurrency is the fact that they are not under government control. With the emergence of a new wave of digital asset businesses, Draper asserted that a switch in mindset was needed.
“How do I attract citizens to my government? As opposed to you live here, you work for me.”
According to him, the Japanese government is one of the few to have come to the realization and have attracted a pool of entrepreneurs, businesses and money in the country. He said,
“I think they need to recognize that the world is now open and as a government, you have to serve your people instead of the other way around.”
Draper also believes that people will no longer want to hold government-issued traditional money. With an existing alternative that is decentralized and not government-tied, people will eventually head towards Bitcoin and other cryptocurrencies.
Talking about the transition period from Dollar to crypto assets, Draper said that it would probably take a few years for engineers to build the required ecosystem. He also admitted that people who are older than 35 years would probably choose fiat over the new digital wave, while the younger generation would believe Bitcoin to be more valuable than the former.
The billionaire investor, who is also an altcoin-backer, said that he invests in altcoins which are tied to a lot of work. His investments are encouraged by new technology and the team working behind it, he added.
Draper was previously in the news after he predicted that the American coffee house chain, Starbucks, will accept Bitcoins in the next three years, fuelling massive adoption.
The post Bitcoin Bull Tim Draper says highly regulated countries become poor; shift from fiat to crypto inevitable appeared first on AMBCrypto.
Source: AMB Crypto

Bitcoin [BTC] will be used to purchase coffee at Starbucks by 2022: Tim Draper

Bitcoin bull Tim Draper has always predicted soaring highs for the top cryptocurrency, but now he has veered from his valuation prediction to one that hinges on adoption. The billionaire predicted that the coffee chain, Starbucks Coffee, will accept Bitcoin in another three years.
With cryptocurrency adoption increasing with each passing day, the relevance of fiat is dwindling, according to Draper. To his above prediction, he added that if one was to pay for their frappuccino with fiat currency, they would be laughed at.
Coincidentally, Draper’s crypto-coffee revelation comes in the same year, 2022, as his $250,000 price prediction of the top cryptocurrency. If his prediction does come to fruition, the price of a Venti frappuccino will be 0.00178 percent of Bitcoin’s price in 2022.
What should be noted about Draper’s prediction, however, is not the price or the purchase of a $3 coffee with a $250,000 financial asset, it is the valuation drive. The Bitcoin mogul predicted a retail acceptance of the top cryptocurrency, which will be a massive driver for adoption, and given Starbucks’ reach to international markets, this adoption drive will not be isolated.
Currently, Bitcoin is seen more of a store of value and by some, as a ‘risky bet,’ but not a lot of people outside the cryptoverse see digital assets as a means for retail payments. Certain cryptocurrencies like XRP have broken that barrier, and have been used in payments, but more in the banking and institutional finance fields and less in retail.
Draper’s claims will provide impetus to the cryptocurrency industry to develop more platforms that help push Bitcoin and other cryptocurrencies into traditional markets.
Furthermore, the venture capitalist believes that Bitcoin could be the store of value for more than two-thirds of all the world’s wealth, which equates to a lot of frappuccinos.
Starbucks joined Microsoft, the Boston Consulting Group and others in backing the Bakkt project, a digital assets platform spearheaded by the Intercontinental Exchange. The coffee chain is touted to play a huge role in encouraging customers to opt for mobile payment as opposed to credit cards, adding fuel to the Draper prediction fire.
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Source: AMB Crypto

Could 2020 be the Year of Bitcoin Purchased Frappuccinos? One Venture Capitalist Believes So

Analysts and investors alike widely believe that increased adoption of cryptocurrencies, like Bitcoin, will help drive their price higher while also providing more stability to the nascent markets. Despite the persisting crypto bear market, over the past year there have been multiple advancements in the industry that will likely lead to increased adoption down the road.
Now, one prominent venture capitalist is claiming that he believes one of the first widespread consumer uses of Bitcoin will be to pay for user’s daily coffee habit at Starbucks – the largest coffee chain in the world.
Starbucks’ Complicated Relationship with Bitcoin 
Starbucks has always prided themselves as being ahead the curve in adopting new technologies that enhance their customer’s coffee purchasing experience. They were one of the first major chains to introduce payments via a mobile app, and also led the mobile ordering charge that has since swept across multiple industries and companies.
Naturally, it seems, adopting cryptocurrencies as a form of payment would be the next step in a natural technological evolution that allows the coffee giant to maintain their position as technologically savvy innovators.
Last year, rumors swirled throughout the crypto community that Starbucks would be allowing customers to pay for their coffee or food through a partnership with the up-and-coming cryptocurrency platform Bakkt.
Despite this, much to the dismay of crypto enthusiasts, it has since been reported that the partnership will not allow for customers to pay directly with Bitcoin, as their crypto will be converted to fiat prior to them making the purchase.
Will Paying for Coffee with Bitcoin Become a Normal Thing by 2020?
Tim Draper, a notable (and controversial) venture capitalist, recently explained in an interview that he believes paying for Starbucks coffee with Bitcoin will become a usual occurrence.
“I think when you go to Starbucks to buy a cup of coffee, and you try to pay with dollars, they will laugh at you because you are not using bitcoin or other cryptocurrency… They’ll laugh at you – it will be like the old lady paying out with pennies,” Draper explained during a recent podcast with NBC Bay Area.
Draper further lauded Bitcoin as a technological innovation, noting that it is one of the “greatest” that the world has ever seen, and that it will likely lead to a bigger societal change than anyone could have imagined.
“This is one of the greatest technological advances that humanity has ever seen… and it can make a bigger change in society than any of us ever imagined,” he notably exclaimed.
Assuming that Bitcoin does become a typical means of payment in the near-future, its price would clearly reflect this, and Draper believes that increased adoption rates could lead its price to skyrocket towards $250k by 2022.
“There is a market for bitcoin right now. People are buying and selling bitcoin, and they are buying and selling things and services with bitcoin. As it spreads, it will go up in value. And it is spreading,” he bullishly concluded.
Featured image from Shutterstock.
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Starbucks Secretly Holds Significant Equity in Bakkt Crypto Platform – Sip Coffee on Crypto

While many believe, Starbucks represent something beyond a cup of coffee – now they would probably sip its coffee with the taste of crypto. Although Starbucks’s name is already associated with the launch of Bakkt Bitcoin Futures, the firm had recently made a significant investment to become Bakkt’s first merchant for its customers.
Integrating Bitcoin Payments in Starbucks Stores
As per the reports, Starbucks holds a good amount of equity in Intercontinental Exchanged backed Bakkt – however, the specific amount is still out of sight but reports suggest ‘disproportionately high given that they did not make a cash investment’.
The report was first published on TheBlock and eventually shared on a social media by Mike Dudas Twitter enthusiast, stating;

SCOOP: @Starbucks received significant equity in @Bakkt in return for commitment to allow bitcoin payments in store in 2019 [GENESIS] via @i_woodford https://t.co/OBZE1vOzeo pic.twitter.com/rPqXXZVNlU
— Mike Dudas (@mdudas) March 4, 2019

While the well-known coffee brand holds significant equity – conversely – it is investing heavily in cards and app that would make it one of the early merchant of Bakkt crypto platform. By doing so, customers will be able to pay for the items at Starbucks with digital assets. Reports also mentioned that these assets will then be converted into fiat citing the volatility issue and then it would keep them off of the Starbuck’s books.
To remind, previously, Starbucks clarified to the rumors who claimed Starbucks was receiving bitcoin for Coffee – but the explanation made it clear that they’re just partnering with Bakkt platform and not accepting Bitcoin- eventually, Bakkt will enable its users to trade and convert the BTC into fiat currencies and then pay out for items at Starbucks.
“As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks.
To note, Bakkt’s Bitcoin future platform is still on hold due to regulatory approval (pending from the US Commodity Futures Trading Commission) – nevertheless to add that it carries a number of plans related to crypto services to roll out in the year 2019.
The Positive Move
The indirect use of Bitcoin on branded platforms like Starbucks which as high profile customers since a decade and more, would more likely influence the value of Bitcoin.

Interesting.
But probably well worth it on the long term. The Starbucks angle was the most interesting thing about the Bakkt announcement.$BTC needs more use cases and more retail adoption. https://t.co/xUd8L07yK8
— Richard Johnson (@_richjohnson) March 4, 2019

However, at press time the market is favoring across many cryptocurrencies, having the average trading volume of BTC as $66,402,996,992 with the positive mark of 0.59 percent over the past 24 hours. Additionally, as per the data from Coinmarketcap, one Bitcoin is trading at $3,778.91 against US Dollar.
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Source: CoinGape

Starbucks Receives Bakkt Equity to Start Accepting Bitcoin Payments in 2019

CoinSpeaker

Starbucks Receives Bakkt Equity to Start Accepting Bitcoin Payments in 2019

It seems that Starbucks has received a significant portion of equity in Bakkt despite not being a direct cash investor.

Starbucks Receives Bakkt Equity to Start Accepting Bitcoin Payments in 2019

Continue reading at Coinspeaker
Source: CoinSpeaker

The 100 Million Bitcoin Users Case – Could Bakkt Massively Boost Adoption?

Bakkt, a digital asset platform which is set to introduce the very first physically-settled bitcoin futures, will launch later this year. And, according to Alec Ziupsnys, the launch could legitimize the dominant cryptocurrency before 100 million potential users per week.
The chief innovation officer at BlockEdge Capital tapped on how Bakkt’s partnership with Starbucks was a key to bitcoin awareness. He suggested that the American coffeehouse chain was processing the mobile transactions of up to 25.6 million every day. In comparison, Apple Pay and Google were handling a lesser 24.5 million and 12.4 million sales every day, respectively.

Bitcoin will soon be legitimized in the eyes of 100 million customers per week through Starbucks and Bakkt.
Mobile payments:Starbucks: 25.6MApple Pay: 24.5MGoogle Play 12.4M
Worrying about catching the exact bottom is like trying to pick up a penny in front of a steamroller.
— Alec Ziupsnys (@AlecZiupsnys) February 23, 2019

The statement followed months of speculation about Starbucks accepting bitcoin as one of the payment methods. At the time of Bakkt announcement, media had wrongly perceived the story as the coffeehouse chain’s interest in bitcoin.
However, in a clarification shared with Motherboard, Starbucks admitted that it was not going to accepting bitcoins anytime in the future. At the same time, the company said that its partnership with Bakkt would focus more on helping people who want to spend their bitcoins.
“It is important to clarify that we are not accepting digital assets at Starbucks. Rather the exchange will convert digital assets like Bitcoin into US dollars, which can be used at Starbucks,” a Starbucks spokesperson told Motherboard. “At the current time, we are announcing the launch of trading and conversion of Bitcoin. However, we will continue to talk with customers and regulators as space evolves.”
Analyzing Ziupsnys’ Statementon Bitcoin
There are around 14,606 Starbucks stores across the world, according to Statista. As of now, these stores have an average of just over 500 customers every day. But, according to a report from Trefis, a US-based market analysis firm, the number would grow to more than 750 by 2020.
The study found that an expanded food menu, a mobile app, and introduce fresher mobile payment options would back Starbucks’ growth. That said, considering the coffeehouse chain will not open new stores, the total number of users it would serve could reach a minimum 11 million every day.

7/ Phase two is a mystery. Bakkt hasn't said what it is or when it's coming.
Given all the talk about "spending" via Bakkt, I'm guessing it's some type of consumer-grade payment system. Maybe the kind you'd use at Starbucks to buy coffee with bitcoin. We'll have to wait and see.
— Jake Chervinsky (@jchervinsky) November 6, 2018

Ziupsnys believes Starbucks to be a natural advertiser for bitcoin is the growth potential. Per the Bakkt announcement, it would be mainly focusing on “spending” in its phase-2 development.
It is not necessary that their so-called payment application would focus on bitcoin, which remains to be highly volatile in terms of pricing. It is possible that the company would look into using a stablecoin. But, in the end, at least those “100 million” Starbucks customers would know about bitcoin. At least, that is what we could interpret from Ziupsnys’ tweet.

It's older news, but I still think it deserves some continued excitement about it.
— Alec Ziupsnys (@AlecZiupsnys) February 23, 2019

The Bottoming Out
In near-term, Bakkt could be just the catalyst bitcoin needs to come out of its most extended bear cycle. A federally regulated platform would allow the digital currency to broaden its horizons among serious investors. Atop that, it would also pave the way for the approval of crypto-based exchange-traded funds by resolving the core underlying issue – the lack of trusted price information. As Bakkt CEO Kelly Loeffler stated:
“A critical element to price discovery is physical delivery. Specifically, with our solution, the buying and selling of Bitcoin are fully collateralized and pre-funded. As such, our new daily Bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset. This supports market integrity and differentiates our effort from existing futures and crypto exchanges which allow for margin, leverage, and cash settlement.”
Bitcoin could effectively bottom out after Bakkt’s launch. At the same time, Starbucks’ involvement in the project could boost digital currency’s awareness among a wider mass. It is the first step towards a potential adoption.
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Intercontinental Exchange (ICE) Chief Confident About Future for Bakkt and Crypto 

The ongoing regulatory delays and hurdles imposed by the US government have not dampened the enthusiasm for crypto related products such as the highly anticipated Bakkt launch.
Bakkt Will be a ‘Moonshot Bet’
The Intercontinental Exchange (ICE) has recently announced its fourth quarter earnings which have beat some Wall Street predictions. Chief executive Jeffrey Sprecher took the opportunity to speak on the sterling performance and shed some light on the Bakkt crypto project. Seeking Alpha ran a full transcript of the conference call in which Sprecher referred to Bakkt as a “moonshot bet”.
Over a billion dollars has been spent on strategic investments in 2018, including the Bakkt crypto futures project, according to CFO Scott Hill. Sprecher added that Bakkt had raised over $180 million from ICE and twelve other investors and partners including Fortress Investment Group and Susquehanna International Group. He said that “as we look to 2019 and beyond we’re excited about the opportunities that lie ahead, not only for our core business but also for newer initiatives,” which includes Bakkt.
The launch delays have been largely the fault of the US government shutdown imposed by president Trump. The highly anticipated product has been seen as a major on-ramp for crypto as it includes some major players. The firm aims to create a crypto ecosystem to bring huge companies such as Starbucks and Microsoft into the crypto industry. Sprecher stated;
“That infrastructure has attracted a lot of very, very interesting companies that have come — some that have invested in Bakkt, some are just working with Bakkt to try to tap into that infrastructure for some new use cases that will involve blockchain and digital assets and other things that we can provide these people. Obviously, we’ve announced the Starbucks — our work with Starbucks and Microsoft. We have very, very large retail franchises global connectivity to end users that we hope will be brought into that ecosystem and could create a very, very valuable company out of that initiative if our business plan plays out.”
Regarding the Bakkt launch date there were no specifics mentioned, only that it is expected ‘later this year’. Last month the company revealed more details about its Bitcoin futures products. The Bakkt BTC (USD) Daily Future will be a 1 BTC contract that will be physically delivered.
Bakkt also announced the acquisition of assets from Rosenthal Collins Group (RCG) last month. The ‘back office’ infrastructure will be needed to develop the crypto ecosystem and ensure full security and a trusted fintech solution for its clients.
Image from Shutterstock
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Bakkt to Foster Institution & Consumer Participation, No Leverage & Margin on Bitcoin Contracts

Bakkt, the digital asset platform by NYSE’s owner and backed by Microsoft and Starbucks is working hard at building a transparent and an institutional quality ecosystem for digital assets. CEO Kelly Loeffler explains that they are offering full collateralized or pre-funded bitcoin buying and selling meaning there will be no leverage or margin involved.
NYSE owner’s Bakkt hard at work
It’s been only two weeks that NYSE’s owner, Intercontinental Exchange announced the “launch of regulated, physical Bitcoin futures contract and warehouse planned for November 2018.” Bakkt, a global platform “designed to bring digital assets to the mainstream and help unlock the potential of this important technology.”
In its latest official blog, Kelly Loeffler, the CEO of Bakkt is talking about being already at work on creating an open and regulated ecosystem for digital assets. She shared how in 1999, Nobel Laureate Milton Friedman has predicted the emergence of e-cash and “now are we seeing the promise of a true digital currency.”
From regulated, institutional trading and security solutions to offering more transaction choices to a customer, Bakkt is working on the wider application of digital assets.
The news of the Bakkt has been seen as one of the most important ones for the investors and experts alike. And given the giants viz. Microsoft and Starbucks included in this, it certainly holds a lot of potential for the future of the crypto market. Loeffler acknowledged the “very strong” response they received from worldwide.
People are certainly feeling positive as Mike Strutton of Ironwood shared:
“We may think #ETFs are the big story for #Bitcoin. I believe @Bakkt & “physical” bitcoin futures are going to drive the price – their vision for institutional and consumer retail sounds strong. November will be exciting. Congrats to CEO Kelly Loeffler, woman in crypto.”
Also, read: PwC & NYSE Top Executives Quit to Join BitcoinFirms
Fully collateralized Bitcoin buying & selling
Talking about the widespread need for a trusted infrastructure for storing, spending and trading cryptocurrencies. In order to achieve this, they are working on the “proven framework” comprising of, a consistent regulatory construct, transparent, efficient price discovery, and an institutional quality pre- and post-trade infrastructure.
With a special emphasis on “price discover”, she shares that “trusted price formation is a fundamental part of advancing the promise of digital currencies.” She further talks about not allowing margin or leverage on their contracts stating:
“Specifically, with our solution, the buying and selling of Bitcoin is fully collateralized or pre-funded. As such, our new daily Bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset. This supports market integrity and differentiates our effort from existing futures and crypto exchanges which allow for margin, leverage and cash settlement.”
She further adds:
“Coupled with a secure, regulated warehouse solution, you can begin to see how this market infrastructure can help more institutions and consumers participate in the asset class.”
However, some were quick to point out as did Caitlin Long, a Wall Street veteran,
“Interesting response from @Bakkt today. For #bitcoin this is good news/bad news. First the good–Bakkt disclosed it’s not using margin or leverage (explicitly). That’s positive. But then the bad–it was silent about hidden leverage, which is subtle…”
The blog also points out the fact that the market cap recently dropped below $200 billion but ICOs, corporate R&D and venture investing is still going strong in this arena. This potential has the team excited about the upcoming launch.
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Source: CoinGape

Coinbase’s CEO Wants to Manage Bitcoin Adoption Expectations

As the cryptocurrency markets suffer from what appears to be a prolonged bear market, investors are looking towards long-term prospects that could aid the price. However the CEO of Coinbase has a warning for anyone getting too excited about widespread Bitcoin adoption in the near future.
Bitcoin’s price is currently sitting at $6,400, up from weekly lows of $5,950 on Coinbase. As Bitcoin’s price fell, many altcoins were pushed to yearly lows, including Ethereum (ETH) whose price dropped to around $250, and Litecoin (LTC) whose price hit lows of $51 earlier this week.
Altcoin and Bitcoin investors alike are looking towards upcoming developments like the Starbucks, Microsoft, and ICE Bitcoin payment provider in order to maintain hope for future success.
Widespread Bitcoin Adoption Could Take Years
While speaking to Bloomberg at a San Francisco tech summit, Brian Armstrong spoke about cryptocurrency adoption, saying that he thinks “it will be quite some time before you cross the street to Starbucks in the U.S. and pay with crypto.”
On this front, Armstrong may be correct. Initially, it appeared that Starbucks was working with Microsoft and New York Stock Exchange parent company ICE to provide a digital payment platform that would allow users to pay for their orders using a Bitcoin wallet. After the reports became widespread, however, Starbucks clarified their plans, saying that, “Customers will not be able to pay for Frappuccinos with bitcoin.”
Armstrong also shared a common sentiment that most cryptos are only used for speculative investing, saying that around 10% of currently traded cryptos are used to make purchases or to conduct financial transactions.
Many people are concerned that the bear market may persist until major developments are made that bring regulatory clarity and widespread adoption. These include the acceptance of Coinbase Commerce on more websites and the approval of the highly anticipated Bitcoin ETF.
Armstrong optimistically said:
“This technology is going through a series of bubbles and corrections, and each time it does that, it’s at a new plateau. People’s expectations are all over the map, but real-world adoption has been going up.”
Armstrong Bullish on Bitcoin Adoption in Countries in Economic Turmoil
Armstrong also spoke about regulation in some countries, explaining that he doesn’t feel that the amount of countries banning cryptocurrencies will negatively affect Bitcoin adoption any more than it did the adoption of the internet.
“Most places in the free world are adopting this technology. They rightly want to protect consumers though…There are going to be some countries in the world, just like the internet, where bitcoin and cryptocurrencies are restricted.”
Countries like India and China have notably banned crypto trading, which has unfortunately lowered trading volume significantly from where it could be otherwise.
Armstrong also shared his thoughts on the adoption of Bitcoin in countries going through economic crises and rapid currency inflation, explaining that citizens of those countries with internet and phone access will realize that it is more efficient to adopt Bitcoin and other cryptocurrencies as a means of banking and payment.
“I’m bullish on countries that are going through economic crisis, over the next three to five years, where everyone has the internet and a smartphone, you could see people adopting bitcoin and cryptocurrencies as an alternative.”
Armstrong is referring to countries like Venezuela and Turkey, who have seen hyper-inflation of their currencies due to poorly executed social changes and economic issues.
Coinbase’s user registration rates are a good signal of the market health, but unfortunately, recent reports claiming that they were bringing on 50,000 new users per day were found to be inaccurate, and were figures pulled from the height of the 2017 crypto bull run. It is unknown what Coinbase’s current daily registration numbers are.
Featured image from Shutterstock.
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What Has Caused the Bitcoin Price to Drop Below $7,000 in the Past 48 Hours?

Over the past 48 hours, the Bitcoin price has dropped by more than eight percent from $7,500 to $6,890, despite having seen some of the most positive developments in the history of the crypto market.
Bitcoin 1-day price chart, provided by Cryptowat.ch
OTC Sell-Off
The vast majority of short-term traders and casual investors utilize cryptocurrency exchanges such as Coinbase, Bitfinex, Binance, OKEx, Huobi, and UPbit to buy and sell major digital assets. Developments in the cryptocurrency sector pertaining to merchant adoption, institutionalization of cryptocurrencies, and technical breakthroughs can have a significant impact on the cryptocurrency exchange market.
However, according to Tabb Group’s report, the over-the-counter (OTC) market of Bitcoin is incomparably larger than its exchange market, by at least two to three-fold. Hence, if the cryptocurrency exchange market only accounts for 25 percent of the global market’s liquidity or volume, it is more likely that large-scale retail traders in the OTC market are manipulating the price of Bitcoin, rather than individual investors in the public exchange market.
If the OTC market’s dominance is accurately measured, then it also opens up an argument about the causation of price movements in the Bitcoin market. Specifically, it is difficult to justify the short-term movements of Bitcoin and other digital assets based on developments in the cryptocurrency sector because news can only have an impact on a market that moves swiftly and can reflect the result of timely events, such as the approval of an ETF or the integration of cryptocurrencies by a large retailer.
The OTC market, due to the sheer size of its orders, move slowly, often with the involvement of agents and brokers. Billionaire investors and institutions that intend to purchase at least several thousand BTC rely on the OTC market to process large orders, because doing so in the cryptocurrency exchange market could lead the price of Bitcoin to experience intensified movements on both the upside and downside.
If a large order in the OTC market is liquidated, it takes the public cryptocurrency exchange market a few days to reflect. As such, it is possible that most of the sell-offs seen in the cryptocurrency exchange market, as seen in the case of July 27 and August 7, are likely caused by the liquidation of large orders in the OTC market, rather than an abrupt switch in trend in the public cryptocurrency exchange market that cannot be tied to a certain event.
Market Manipulation
In the past 48 hours, the cryptocurrency sector has seen the New York Stock Exchange (NYSE), Starbucks, and Microsoft, the world’s largest stock market, coffee retailer, and technology conglomerate, lead a collaborative effort to increase the usability of digital assets for casual users and the mainstream.
The NYSE emphasized that Bitcoin has the potential to become the first worldwide currency of the world, competing against reserve currencies and government-backed fiat money.
”Bitcoin would greatly simplify the movement of global money. It has the potential to become the first worldwide currency,” ICE founder, Chairman, and CEO Jeffrey Sprecher said.
It is plausible that the OTC market has substantially increased the volatility of the market with the liquidation of large buy and sell orders, and in a period like this, it can be said with certainty that developments and news are not affecting the cryptocurrency market and its valuation.
Featured Image From Shutterstock, Bitcoin Price Chart From Cryptowat.ch
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