Crypto market price slump – Not only the Bitcoin price has dropped

Prices continue to tumble. With a Bitcoin price of less than 6,500 euros, a market capitalisation of just over 100 billion euros and a 24-hour trading volume of just under 6 million euros, it is not only the Bitcoin that is in the red.

Not only the Bitcoin left springs. The same can be seen with the other leading crypto currencies. Thus the Ether is at present with 661 euro, Ripple with 64 cent. The Bitcoin lies thereby with the same conditions of at the end of of November of the yearly. A small view into the crypto-ecosystem draws an altogether negative picture, which explains the uncertainty of many investors.

Negative signals of the Bitcoin evolution

Since yesterday, for example, customers of the US financial Bitcoin evolution companies JPMorgan Chase, Citigroup Inc. and Bank of America can no longer buy crypto currencies with their credit cards: Due to the high volatility of crypto currencies, the leading financial companies in the USA decided to only allow their customers to buy by debit card, where the amount is debited directly.

There were also voices from Goldman Sachs that aggravated the negative sentiment towards Bitcoin & Co. As we reported, Goldman Sachs’ annual report also read little positive about crypto currencies. With the current downward trend in connection with the news mentioned above, it is not surprising that many want to hedge their profits and are waiting for the right moment for a new start.

But it was not only outside the crypto ecosystem that inconveniences occurred. In this context, one should mention above all the decline in confidence in the stock markets. In addition to the recurring security gaps, there have been problems with tether and bitfinex in particular. It is unclear whether tether, which is allegedly linked to the US dollar, is actually covered by sufficient fiat money.

These factors ultimately mean that frightened investors are more likely to withdraw their money, while little new capital flows into the ecosystem. A lack of confidence in the stock markets and negative reports from the established financial sector discourage new investors and tempt many to leave for the time being and wait for the right moment to enter the market. In addition, the stock markets were at times so overloaded that they did not allow new registrations, but most of them have now settled down again.

The fall in the Bitcoin evolution share price does not alter its value

The current signals are of course unattractive, especially for short-term investors – but the much quoted opportunity is once again in the current dip. Also the current course of prices is not to be equated with the value of the crypto currencies. If one remembers the original idea of the Bitcoin evolution as a decentralized payment system, the current crash will not change anything about its fundamental value. As a decentralized alternative to the traditional financial system, the Bitcoin and the underlying blockchain technology will continue to assert themselves. In this way, occasional setbacks – especially due to external factors – cannot be avoided.

What is also becoming increasingly apparent is that the stock markets must develop better, above all more securely, in order to grant more trust. An important basis for a more stable cryptographic market is ultimately only a more secure ecosystem that neither discourages new investors nor frightens away existing users.

“An investment without a fundamental analysis is impossible” – Laurenz Apiarius of Blockwall

Laurenz Apiarius is Managing General Partner at Blockwall, the first German BaFin-registered fund manager to give its investors access to the development of Blockchain technologies. We talked to him about his personal background, the product offered by Blockwall and his view on crypto currencies.

Were you already involved with the Bitcoin evolution before this project and what was your attitude in this regard?

The topic of crypto currencies has been with my partners and me for several years. Initially it was more of a game with “digital money”, but this changed quite quickly after we understood what it was all about and what incredible potential is hidden behind Distributed Ledger Technologies (DLTs). Since then, it has been difficult to find other Bitcoin evolution issues that have a similarly disruptive effect.

What were the reasons for setting up a closed fund instead of an open fund?

Our fund is a bridge through which professional investors can participate in the development of these technologies. Since the technologies are still in an absolute early phase, the prices for the crypto currencies are still very speculatively driven and therefore not always comprehensible and volatile. It was therefore a compelling approach for us that the fund should be closed in order to protect our investors from these speculatively driven market fluctuations and thus be able to focus on technological development.

Which investor group is your fund targeting? How high is the minimum deposit?

Our investor groups are primarily HNWIs, family offices and institutional investors who have identified DLT/Blockchain as an interesting addition to their portfolio strategy. The minimum investment in our first fund “Blockwall Capital I” was EUR 200,000, which was in line with our regulatory requirements.

Does your fund invest directly in tokens or are derivatives used to replicate prices?

The value added in the area of decentralised technologies is almost exclusively represented by the respective token, which is why we invest exclusively and directly in such tokens. Furthermore, we make investments exclusively without outside capital. We cover the entire investment cycle of a token – from equity to pre-ICO/ICOs to already tradable assets. The latter – the liquid part of the market – is our clear investment focus.

How is secure token storage ensured?

The issue of safekeeping is particularly important to us, which is why we only use solutions that are internationally recognised and “best practice”. We follow developments on this key building block with great care. For each of our assets, there is a safekeeping system that is optimal and secure for this particular value.

What criteria are used to select the crypto currencies? What diversification approach do you have?

The technology is still at an early stage of development and holds great opportunities as well as risks. From today’s perspective, we see the greatest potential in the technological basis, which will be relevant for the DLT ecosystem in the long term. These infrastructure technologies will enable the innovative and new business models on the blockchain and thus lay the foundation for further applications.

Most investors in this market still invest too much from the “belly”. Very few people actually read a white paper or try to analyze and evaluate the business case behind a token. For us, an investment without a fundamental analysis is out of the question. Here we rely on a self-developed valuation matrix and valuation model, which we continuously develop further. Our asset allocation is based on qualitative and quantitative due diligence.

Are further funds planned for the future?

Definitely. Within the framework of fundraising, we came across many interested parties for whom a kind of proof of concept was still missing at the time. With our current fund, we have now created the infrastructure and back office that also meet the standards of institutional investors. We are therefore currently aiming to close a second fund before the end of this year.

Cashless: Indian Central Bank RBI explores block chain

Could India’s blockchain technology help the transition to a cashless society?

The Indian government has already taken steps in this direction and has since published controversial plans to distance itself from physical money. A group of scientists, supported by the Central Bank, now called for an investigation into the blockchain. It is supposed to help achieve this goal.

According to the IDRBT, the blockchain could help achieve these goals

The full report presents the results of the central banks of Canada and the United Kingdom, as well as others. The authors of the paper wrote: “From a technical point of view, we see that it [the blockchain] is mature enough and there is the necessary attention among stakeholders, so this is the right time to take the necessary steps to digitise the Indian rupee [with the help of the blockchain].

The Indian government, led by Minister Narendra Modi, came under heavy criticism in early November after ordering banknotes with higher values to be declared illegal. Modi later went further, calling on India at the end of the month to adjust to digital money. Meanwhile, the government began to level the legislation for the next steps.

Drawing up a roadmap

The authors also pointed out that Indian banks also have other ways to explore the technology.

At the beginning, it is recommended that banks improve their internals with blockchain networks. On the one hand as a means of training and on the other hand to see how technology can help their own institution.

“Banks could use a private blockchain for internal purposes,” the authors wrote. “This could not only be seen as training for internal staff, it would also bring advantages in efficient assent management [and] cross-selling.

The Institute for Development and Research in Banking Technology (IDRBT) was founded in the 1990s by the Reserve Bank of India (RBI). Last week, the Institute published its first major white paper on blockchain technology (including a study on trade finance applications).

The paper first provides a broad overview of the mechanics of the technology and what possible applications for the Indian banking sector look like. The white paper notes that the time is ripe to explore how the rupee can be digitized using distributed ledger technology.

The IDRBT went on to point out that banks can work cooperatively in the areas of anti-money laundering/know-your-customer, credit syndication and trade finance.

“Other areas where blockchain technology could be beneficial in the BFSI (banking, financial services and insurance) sector are supply chain finance, bill discounting, cooperative account management, securities offering and asset management mandates,” the authors added.