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Word on the Street: XRP surges amid SEC delay on VanEck ETF

22 Sep 2018

Considering the $60m Zaif exchange hack and the SEC's delayed decision put a sour note to the end of the week, the overall market cap still advanced almost 4% to $212 billion over the past 7 days.

SEC delays decision on VanEck Bitcoin ETF (high impact)

The Securities and Exchange commission released on Thursday an announcement that it hasn’t made a decision on the VanEck Bitcoin ETF proposal, which was due by September 30, and may extend the time for external submissions and consideration by up to 180 days. The price of bitcoin slumped about 1% immediately after the press release.

btc dump 1
The BLX global spot price of bitcoin took a dive on spike in volume just after the SEC press release.

The SEC said, as of September 19, it had received 1,400 letters of comment on the issue of the VanEck proposal and it hasn’t given any deadline date for a decision yet.

It has asked ‘commenters’ for more written submissions on their views on 18 different assertions made by VanEck in its filing, including the following:

  1. that bitcoin is arguably less susceptible to manipulation than other commodities that underlie ETPs;
  2. that "the OTC desks have a better measure of the market than any exchange-specific reference price, whether individually or indexed across multiple exchanges"?
  3. the dissemination of information on the Trust’s (VanEck) website, along with quotations for and last-sale prices of transactions in the Shares and the IIV and NAV of the Trust, will help to reduce the ability of market participants to manipulate the bitcoin market or the price of the shares
  4. What are commenters’ views on the Trust’s proposal to value its bitcoin holdings based on an index—the MVBTCO—that is calculated through a proprietary, non-public methodology
  5. the MVBTCO’s methodology decreases the influence on the MVBTCO of any particular OTC platform that diverges from the rest of the data points used by the MVBTCO,
  6. What are commenters’ views on the relationship between trading in the OTC bitcoin market and the wider global bitcoin market?

As bitcoin trades 24/7 but ETFs only trade within market hours five days a week, finding a fair global spot has been a moot point for the regulator. Whereas other ETFs before it have proposed to set their end-of-day Net Asset Value (NAV) by the futures price of bitcoin, VanEck proposes to derive its price from the OTC closing price set for bitcoin by the MVIS Bitcoin OTC Index ("MVBTCO") at 4pm each weekday.

The MVBTCO represents the value of one bitcoin in U.S. dollars at any point in time and the intra-day levels of the MVBTCO incorporate the real-time price of bitcoin based on executable bids and asks derived from constituent bitcoin over-the-counter ("OTC") platforms.

Bakkt teases more details (low impact)

The Intercontinental Exchange group (ICE) has revealed more details about its institutional crypto market project Bakkt. The CEO of Bakkt, Kelly Loeffler, confirmed that the project will roll out its institutional grade services first, using the existing futures market infrastructure as a second layer application on its blockchain.

The project will roll out several products, hinting at a form of merchant payment, but the main focus was on making a deliverable bitcoin futures market that would give BTC utility, said Loeffler.

_ "Our goal is to make digital assets more liquid, trusted and accessible; allowing meaningful innovation to follow."_

CME exec denies futures caused bear market (low impact)

Speaking at Consensus Singapore Tim McCourt, managing director and global head of equity products and alternative investments of CME Group, denied its role had any affect the bitcoin or crypto bear market.

In May, the Federal Reserve of San Francisco published a report that cited the introduction of bitcoin futures as a driving cause in the crash of the crypto market and the Fed likened it to what happened when collateralized debt obligations (CDOs) were brought into the housing market in the 2000s which allowed people to short house prices for the first time and compound the market crash in 2007.

In the report the Fed said: "Before December 2017, there was no market for bitcoin derivatives. This meant that it was extremely difficult, if not impossible, to bet on the decline in bitcoin price… Betting on the increase in bitcoin price was easy—one just had to buy it. Speculative demand for bitcoin came only from optimists, investors who were willing to bet money that the price was going to go up."

Outside of US trading, McCourt said a significant amount of bitcoin futures are being traded in Asia.

XRP rips up over 50% to the end of week (medium impact)

There was nothing obviously different outside the usual Ripple news cycle of exchange listings and new partnerships this week to suggest why XRP surged as much 80%. It now hovers around support at $0.43c.

xrp rippa
The price of XRP has found support around $0.43c

In a press release Ripple said that its network RippleNet is live in over 40 countries – a milestone apparently reached on Thursday with payment corridors now open in North America, Asia Africa, Europe and South America and with an announcement that it will partner with a Saudi bank, National Commercial Bank, to use RippleNet to connect all over the world. Asian exchange OKCoin also announced XRP as a new listing on its platform this week.

Ripple’s meeting next month, Swell, will feature Bill Clinton as a guest speaker and entertainment from the Counting Crows.

Dash opens SMS remittances in Venezuela (low impact)

Dash has been gaining traction in the ravaged economy of Venezuela, rolling out Dash wallets on new phones with a local network provider and supporting merchant payments at point of sale.

Apart from the regular Dash wallet the company has rolled out DashText – and a similar separate product CoinTextwhich allows transferring of crypto over SMS, has also added Dash.

dash price
The Dash price is up around 7% this week.

Dash Merchant Venezuela head of business development Alejandro Echeverría said, "Currently, remittances represent the income of millions of Venezuelans because there are millions of Venezuelan living abroad who send money to their families in order to help them overcome the crisis."

Overstock to sell bitcoin on website with biometric wallet (low impact), listed on the Nasdaq under OSTK, has revealed that it will sell the bitcoin through its wallet and portfolio platform, Bitsy, that was launched by a blockchain subsidiary Medici Ventures.

Overstock is a company that sells the surplus stock of retailers but the company’s CEO Patrick Byrne is also launching a new security token exchange, tZERO.

Bitsy will be comparable to Square’s Cash App, which allows investors to buy and sell bitcoin and in some cases pay in the cryptocurrency. Overstock’s share price has briefly benefitted from tZERO’s successful fundraising from VC rounds.


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