The Current State of Crypto is a weekly examination of events and market movements in the cryptocurrency economy.
Binance proposes lottery for Launchpad
After being overwhelmed with user demand during each Launchpad event so far, Binance is looking at solutions to the problem of excessively high demand (Launchpad is a launch platform that operates as an Initial Exchange Offering, or IEO,for Binance users). Binance announced a new approach to the Launchpad program that drew both cheers and jeers from the crypto community; cheers, presumably from BNB whale holders, and jeers from the rest of the crowd.
Binance proposed a lottery system whereby holders of large quantities of BNB (500 or more, equivalent to nearly $9,000 USD today) would receive 5 lottery “tickets” to participate in buying newly launched tokens. From there, the chance of participating diminishes with a minimum of 100 BNB in holdings to simply participate in the program.
This would go some ways to solving the problem of heavy server demand and excessive traffic during such events, but would eliminate the possibility for more casual traders to participate in the launch of new tokens and to enjoy the forthcoming profits usually associated with said launches.
Of course, this news caused a significant buying spike for BNB.
Fake volume everywhere!
In what initially seemed like bad news, Bitwise reported to the SEC with a detailed examination of trading volume on 81 crypto exchanges. The study was limited to exchanges that reported more than $1 million in daily trading volume. It was discovered that outside of the top ten or so regulated crypto exchanges, most other exchanges were fabricating volume via wash trading in order to entice new traders and to attract projects willing to pay huge listing fees.
It turns out that, once removing all of the fake volume, the market is substantially smaller, but also much healthier. The BTC trading volume to market cap ratio is highly similar to that of gold, for example. It was also noted that CBOE and CME futures had a much more significant influence on markets than was previously thought, now adjusted for more realistic volumes. This bodes well for SEC approval of a Bitcoin ETF, which would be extremely bullish for Bitcoin, of course.
Alt-coins ignoring Bitcoin dominance
A few alt-coins enjoyed a huge run this past week, ignoring the fairly stable pricing of Bitcoin, which lost some dominance against the rest of the market. Ravencoin (RVN) continued its positive trend. The token has enjoyed growth of greater than 400% against USD over the past month and recently surpassed 1500 satoshis from a low of around 260 satoshis only a month ago.
Cardano has seen strong growth with recent updates to its protocol and increasing market buzz around the possibility of an upcoming Coinbase listing. If recent Coinbase listings are anything to go by, the price is likely to see more growth during the rumor phase than it will following any news regarding such an addition to the popular exchange. In other words: Buy the rumor, sell the news.
Other major movers this week were Tezos — a coin with plenty of room for growth considering it is yet to be listed on a number of major exchanges — and Kucoin Shares, which is seeing massive growth due to the recent announcement of an IEO program called Spotlight. Spotlight will operate in a manner not terribly different from Binance’s Launchpad, instead requiring — you guessed it — Kucoin Shares to participate. It looks like the traditional ICO is going the way of the dodo bird, with IEO’s becoming the more effective and safer, albeit more exclusive method for launching a new offering.
It should be noted that all of these observations are just that — observations I have made about the market over the past week. This is not professional financial advice and is intended only to act as a quick examination of some of the week’s events for you to enjoy. Please do your own research before doing any investing and never risk more than you can afford to lose.