Bitcoin’s month of pain intensified on Sunday, as prices briefly fell below $3,500 for the first time since September 2017. The panic sale hit the market at a time when Lightning Network is registering record capacity and institutional investors are lining up to trade physically-backed bitcoin futures at the beginning of next year.
Amid the apparent disconnect between fundamentals and prices, one businessman has announced plans to go all-in on the technology that underpins bitcoin and other cryptocurrencies. As The Wall Street Journal reports, Patrick Byrne is in the process of selling the retail arm of Overstock, a multi-billion-dollar company, to focus exclusively on blockchain.
Bitcoin’s price touched new yearly lows on Sunday, extending a multi-week purge that has shaved more than $45 billion off the leading cryptocurrency’s market cap. Aggregate data courtesy of CoinMarketCap show an average price-per-coin of $3,802 at the time of writing, a decline of nearly 12% over 24 hours. At current prices, bitcoin has a total capitalization of $66.1 billion for a 54.3% share of the overall market.
Trading volumes on virtual currency exchanges have reached $6.5 billion over the past day, with BitMEX processing more than 38% of the turnover. The popular derivatives platform has become a major venue for shorting bitcoin, as have the futures markets offered by CBOE and CME.
It’s clear by now that bitcoin has more or less shaken off the remnants of the previous mania that drove prices toward $20,000. Although the price collapse has been painful to watch for long-term holders, it provides a silver lining in that bitcoin can now begin a new trend without the irrational hype. The difficulty now is establishing a firm price floor on the digital currency.
Hacked’s technical analyst Kiril Nikolaev has identified the weekly support of $3,620 as a “one of a kind” price target in the short term; this is the area that catalyzed last year’s parabolic bull run. In his view, “a drop to this level tells us that all the gains and hype behind that previous run is now totally gone.”
Overstock Bets on Blockchain
The Wall Street Journal reported last week that Overstock founder and CEO Patrick Byrne is selling the company’s retail arm to focus exclusively on his blockchain offering. The audacious gamble follows a highly successful funding round of tZero, an alternative trading system that seeks to revolutionize the cryptocurrency market. The company raised $134 million via initial coin offering.
Overstock has invested $175 million in a unit called Medici Ventures Inc., which houses tZero and several other blockchain startups. According to WSJ, Medici lost $39 million between January and September, following a $22 million loss in 2017.
“I don’t care whether tZero is losing $2 million a month,” Byrne told WSJ. “We think we’ve got cold fusion on the blockchain side.”
The news helped Overstock’s share price gain as much as 26% on Friday after being down for most of the year. However, the launch date for tZero remains elusive as the company works to secure regulatory approvals. Once live, all assets traded on the platform will be easily traced and tracked, offering investors and regulators with another layer of security and transparency. The alternative trading system will initially facilitate the buying and selling of security tokens, which are a hotly debated topic among regulators. In his interview with the Journal, Byrne said roughly 60 companies are developing their own security tokens with plans to list on tZero; another 2,000 have expressed interest in working with the platform to issue their own security token.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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