Cryptocurrency News: New Exchanges Could Boost Crypto Liquidity

cryptocurrency news 8 august
iStock.com/blackdovfx

Cryptocurrency News

Even though the cryptocurrency news was upbeat in recent days, the market tumbled after the U.S. Securities and Exchange Commission (SEC) rejected calls for a Bitcoin (BTC) exchange-traded fund (ETF).

That news came as a blow to investors, many of whom believe the ETF would open the cryptocurrency industry up to pension funds and other institutional investors. This would create a massive tailwind for cryptos, they say.

So it only follows that a rejection of the Bitcoin ETF should send cryptos tumbling, correct? Well, maybe you can follow that logic. To me, it seems like a dramatic overreaction.

I understand that legitimizing cryptos is important. But there’s more than one way to skin a cat. For example, take a look at the following stories, each of which is a positive step for the cryptocurrency movement.

Canadian Exchange Adds XRP

Those of you hoping to scoop up Ripple (XRP) at its current discount should turn north of the 49th parallel. Coinsquare, a leading Canadian crypto exchange known for fast transactions and low fees, is providing investors with another way to trade the world’s third-biggest cryptocurrency. (Source: “XRP (Beta Launch),” Coinsquare, last accessed August 3, 2018.)

It’s important to note, however, that Coinsquare is only running a beta test at the moment. So, while you can deposit funds and buy XRP, you won’t be able to make withdrawals until the entire program goes live.

Nevertheless, this is an unexpected boon for XRP liquidity. North America remains an under-weighted market for XRP demand, mainly because Coinbase refuses to list it on its incredibly popular platform. That has been XRP’s Achilles heel on this side of the globe.

Just so you understand how absurd it is to keep XRP off Coinbase, consider the other tokens on that platform: Bitcoin, Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC).

Listing BTC and ETH ahead of XRP makes sense. Both are bigger and more widely used than XRP.

BCH, though, is a toddler compared to XRP. At the time BCH was listed, there simply wasn’t enough data to assume it would make a healthy addition to Coinbase. Yet the company chose it over XRP.

As for LTC, its market cap is less than one-third of XRP’s, yet it too found its way onto Coinbase.

My point is the XRP price has been shackled by too little liquidity. The addition of a new exchange, particularly one so accessible to North American investors, might help it break above $0.50 again.

Coinbase Adds British Pound

As you can probably tell, I have my complaints about Coinbase. That said, there’s no denying it’s a popular currency exchange with enormous brand name recognition.

So when you consider that Coinbase recently added the British Pound Sterling, it only stands to reason that each crypto on the platform might benefit from an influx of U.K.-based investment.

If that logic seems shaky to you, consider what British investors had to go through before Coinbase added this functionality.

They had to convert pounds sterling into U.S. dollars, thus exposing themselves to exchange-rate risk, and then dabble in whatever cryptos they found interesting. It was unnecessarily difficult and expensive.

“Customers will now be able to deposit and withdraw pound sterling and use it to directly buy and sell cryptocurrency – for the first time,” said Coinbase U.K. chief executive Zeeshan Feroz. (Source: “Coinbase Adds British Pound for UK Crypto Users,” CoinDesk, August 1, 2018.)

“Customers will not only benefit from increased speed, but reduced cost as well. By no longer having to convert funds from GBP to euros and vice versa to add and remove funds, there will be no more exchange rates.”

My guess is that a lot of investors were discouraged by the layers of transactions and cost needed to use a U.S.-denominated exchange. This should help bring them into the fold and, in turn, boost cryptocurrency prices.

Square Inc Shows Profits From Adding Bitcoin

As a cutting-edge mobile payments company, Square Inc (NYSE:SQ) was among the first financial firms to embrace cryptocurrencies. Now it has revealed that six percent of its second-quarter revenue came from a crypto feature added last year. (Source: “Form 10-Q Filing,” U.S. Securities and Exchange Commission, August 1, 2018.)

While the cost of mounting the feature was enormous, Square managed to eke out $420,000 in net income. It’s not much, I know, but at least the profit was nearly double that from the previous quarter.

Analyst Take

I’m not particularly excited about the over-arching narratives moving cryptocurrency prices at the moment. There’s far too much sensitivity to negative stories, and not nearly enough attention to positive developments happening on the ground.

The silver lining is that bear markets don’t last forever. Like all things, good and bad, they come to an end, so perhaps it’s best to wait out the storm.