Bitcoin price has finally slipped below the USD 8,000 support levels today, with sellers meeting next to no resistance en route to its daily low of USD 7,420, before settling at current levels near USD 7,604 (CoinDesk).
But if anyone believes that the market sentiment could not possibly go up before the end of the year, it is worth nothing that it was only just weeks ago when we were exactly at this price level, before a sudden bull surge brought us up briefly to Bitcoin price above USD 10,000.
Savvy crypto institutionals are probably enjoying this buying opportunity, in anticipation of higher crypto volatility in the coming weeks, expected to boost trading volumes and crypto deposits. One such player is Silvergate Bank in California, who is spending November injecting cash raised from its initial public offering to expand the services it offers.
— Alert Shark (@Alert_Shark) November 21, 2019
In an interview with CoinDesk, Silvergate CEO Alan Lane said the new capital would fund the development of new products to satisfy the huge demand for institutional investors, such as crypto lending and deposits. And once Bitcoin price volatility returns, when the long term bullish trend is established, Lane expects greater price differentials and profit opportunities in digital asset markets. He stated:
“We don’t predict when it will happen but we know that there might be an additional period where the volatility drives up volumes, and want to make sure that we can help our customers when that happens.
While some analysts believe that the coming Bitcoin block reward halving in May 2020 has run its course, and that the expected dip in new Bitcoins getting generated has long been priced in, the Silvergate CEO believes that there is still plenty of time for the idea to catch on and fan prices up. If not, he believes there are plenty of other events on the way that could do the same: regulatory approval of exchange-traded funds for Bitcoin, sentiment-affecting news like high-profile hacks or even hard forks that instantly create new assets.
“In our experience, it’s not so much about the absolute price of the asset, but rather the volatility in the price where we actually see potential changes in the behavior of some of our customers.”
Silvergate raised about USD 40 million in its IPO this month, and has outlined plans to launch a virtual currency lending product before the end of the year. By June 2020 at the latest, it has promised settlement and custody services for fiat currencies and digital assets.
“We’ve already been working with the New York DFS, and submitted an application with them to form a New York licensed trust company for our settlement and custody services,” Lane explained
Silvergate is one of only a handful of financial institutions in the US recognized as crypto banks. Among the others are Metropolitan Commercial Bank, Signature Bank, and Cross River Bank.
Lane may not be far off with his prediction of sweeping regulatory changes, with recent news from Singapore suggesting the Monetary Authority of Singapore (MAS) might soon welcome the first regulated crypto-based derivatives. MAS, which is the central bank authority in the island nation, put out a consultation paper yesterday, calling the public to comment on a possible approval of a “payment token derivatives” for listing and trading on “approved exchanges” in the country.
If the proposal goes through, these activities would be regulated under Singapore’s Securities and Futures Act (SFA).
Like Silvergate, the nation is apparently getting a lot of demand from institutional investors from above, asking for crypto-products that allow them to hedge exposure to the hard crypto assets like Bitcoin and Ether. The agency already oversees four exchanges: Asia Pacific Exchange, ICE Futures Singapore, Singapore Exchange Derivatives Trading and Singapore Exchange Securities Trading Limited.
Currently, Bitcoin and Ether are classified as payment tokens and not as underlying assets for a derivative product, that would place them under SFA oversight.
Earlier in the week, Bakkt Bitcoin futures made its products available on ICE Futures Singapore, but their products have been said by MAS to be “not suitable for most retail investors” because they have “little or no intrinsic value”.
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