FT Cryptofinance: Bitcoin needs a story to sell

Bitcoin prices have been steadfastly earthbound since the crypto credit crisis in June instead of going to the moon.

The most active digital token in the world has been around $ 21,000 to $ 24,000 in the past six weeks, an oasis of relative calm after the roller coaster ride of the past two years.

For the believers, a break was perhaps necessary after a loss of 70 percent since November. The memory of May and June - when the collapse of the now notorious (un) stable coin Terra and their counterpart Luna brought prices to collapse and companies such as Three Arrows Capital, Voyager Digital and Celsius affected - is still raw.

The past nine months have contributed to nullening some of the optimistic claims that were made on behalf of Bitcoin. It is not a protection against inflation or digital gold or a replacement for US technology shares that also recorded oversized profits after pandemic. In the past six months, the Nasdaq has fallen by 4 percent, while Bitcoin has fallen by a whopping 46 percent.

But like Jeff Dorman, Chief Investment Officer of the asset management company Arca, emphasized, "is Bitcoin stuck".

In the same period of six weeks, shares have recovered, as well as digital brands such as ether, uniswap, Aave and Matic, since the investors look out for signs of optimism. Not so with Bitcoin.

"Bitcoin... It has lost his narrative completely - it is not a protection of inflation, it is not uncorrelated and it does not act defensively. As a result, Bitcoin was acted as" Nasdaq beta "without his own narrative and will continue to do so until it regains a new story," said Dorman.

What should this narrative concentrate on? It began as a censor -resistant tool for bypass the regulation. It was still not hacked, but it has not found any real benefit.

his pseudonymous creator Satoshi Nakamoto introduced it as a "peer-to-peer electronic cash system", but this dream is as far away as ever. Yes, Bitcoin became legal payment for the first time last year when El Salvador introduced cryptocurrency, but it is not widespread. Significant technical barriers such as scalability remain. Even Sam Bankman-Fried, managing director of the FTX crypto exchange, says that she has no future as a payment system.

"If the price of Bitcoin remains stable relative to a shopping cart, it could theoretically be a medication," said the computer programmer and pronounced crypto critic Stephen Diehl, with the restriction that this would not be long enough to have certainty.

But Bitcoin's paradox is that if it is stable enough to be used as a exchange, it is a bad investment because the value does not increase.

market developments indicate that Bitcoin is still considered a speculative asset. Just last week, Blackrock, the world's largest asset manager, put on a private Bitcoin trust and referred to the “considerable interest” of customers, although digital assets have fallen from a cliff since its climax.

earlier breakdowns have led to enormous climbs a few years later, a fact that stimulates speculation that this doldrum could give time to prepare for another bull run.

"Great asset managers are now under greater pressure to make their customers available.. "We don't see Bitcoin as digital cash. Traditional fiat and stable coins are better means of payment."

Nevertheless, a brave investor is needed to get in. A world with high inflation and rising interest rates is new territory for the crypto industry.

"It is still a poor background for risk systems, whereby the fed and inflation image will probably continue until the end of this year," said Dan Ives, Senior Equity Analyst at Wedbush Securities.

Maybe it is not worth analyzing the movements of the cryptocurrency prices excessively, and the main priority is to be well positioned for the moment when it starts. Nevertheless, Bull Runs need the rocket fuel of a decent story to maintain it.

The Highlights of the Week

• do not miss this FT tech-tonikum podcast, which looks back on the drastic decline of the cryptoma market. My colleague Jemima Kelly and I guide you from the collapse of Terra by dissolution of digital assets and speak to a "rect" crypto investor who still cannot admit how much money he has lost. Jemima asked the CEO of Microstrategy and Bitcoin fanatic Michael Saylor, what if he had been wrong to buy Bitcoin worth billions? "We would already be out of business if we hadn't done it," said Saylor.

• A dispute between Galaxy Digital, one of the largest asset management companies in the industry, and the Bitgo custodian bank went public. Galaxy, led by (Reformed?) Luna-Tic Mike Novogratz, should take over Bitgo in a deal worth $ 1.2 billion. After months of delays, Galaxy canceled it and claims that Bitgo had failed to submit tested annual financial statements. Bitgo struck back. His legal assistance said that it was an "improper decision" to quit, and added: "Either Galaxy owes Bitgo as promised a termination fee of $ 100 million, or it acted with evil and is faced with damage of so much or more."

• Make sure that you read my colleague Kadhim Shubber's fantastic Celsius scoop about Alex Mashinksy, who took control of the trading strategy of the crypto loan in January.

• Even more waves reach the coast from the consequences of the collapsed crypto hedge fund Three Arrows Capital, which fell into bankruptcy in July. Genesis is the crypto broker company, which the now bankrupt group from Singapore borrowed almost $ 2.5 billion. CEO Michael Moro leaves the company in this position after six years and a fifth of the 260-member workforce.

• The cryptoplatt form Hodlnaut (no, not either) is the last one that was surprised by the Terra-Luna crash. After the company had stopped operating at the beginning of this month, it has now released four fifths of its workforce (around 40 people) and applied for bankruptcy protection in Singapore because it does not want to carry out its crypto assets in a weak market. Users should not be too hopeful. One of the prepared FAQs asked: "Is my money gone?" The company replied: "No, Hodlnaut is currently in a difficult financial situation, but not her entire fortune is gone."

SoundBite of the week: CDPQ closes the door for further cryptoinvestitions

Review is 20/20. The Canadian pension fund giant Caisse de Dépôt et Placement du Québec (CDPQ) wrote down its entire investment of $ 150 million in Celsius last October, the crypto loan platform, which has now collapsed, led by Alex "Unkind YouSelf". CDPQ boss Charles Emond tried to explain:

"It is clear to us if we look at it all.

data-mining

This year is the year of crypto hacks, as a survey by the blockchain analysis company Chainalysis about crypto crime.

cybercriminals needed about seven months to cross the 1 billion dollar threshold for the entire crypto hacks last year. This year you managed to break this barrier in just three months. By the end of the last month, Hacker had put almost $ 2 billion together, Chainalysis found out. Groups sponsored by the North Korean state were particularly active and stolen around $ 1 billion from the defi protocols.

The data also show that the "income" from crypto -related fraud has decreased significantly - around 65 percent less this year compared to July last year.

This is hardly surprising when you consider that ordinary investors have left the market when it collapsed. Nevertheless, if you cannot cheat a fraudster, you can at least chop it.