Weekly letter of most important stuff we’ve seen previous week in crypto world with personal comment
Whole week major drivers
We have been seeing market falling for around 11 weeks. This difficult period causes panic or resignation among many investors. There are several signs that this current market selloff can be linked to cashing out by ICO’s projects which earned a lot of Ethereum during last year. There are three main factors for that. Firstly they are cashing out because they need money for development and marketing. Secondly, looking at how the valuation of collected funds is going down, teams are starting to calculate whether it is better to realize profits now. Lastly, there were many projects lately which can be afraid of latest SEC movements about suspecting of violating securities laws by making token sales.
Some time ago we prepared “ICO money flow diagram” to help better understand how ICO money circulation looks like. As you can see on it, without ICO projects succeeding in mass adoption the economy of tokens is broken. Hope we will soon see mass few projects gaining mass popularity.
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Furthermore, there are important developments in mining profitability. Bitcoin currently trades at the break-even cost of mining, currently at $8000.
Profitability of mining is approaching levels which we could see in 2015.
Also, the profitability of mining other algorithms decreased significantly last weeks, but still mining Ethash or Equihash coins is above electricity costs. It’s interesting to see if mining profitability will fall below costs and if this will trigger shutting down mining rigs (as it was in the 2014–2015 years).
Price action
Another week of major coins selloff behind us. All major coins felt significant and we hit the major resistance at about 280 million dollars. Fortunately, we did not get through it yet.
Weekly crypto performance — 12–19 March 2018 (by coin360.io)
Major events
SEC confirmed numerous investigations into ICO’sOn Tuesday, SEC confirmed that the agency is conducting dozens of investigations into ICO’s. The statement came after press reports from the end of February that the SEC sent requests to companies suspected of violating securities laws through their participation in ICO.During the past year, the SEC has expanded its activities against crypto businesses, which it perceives as not complying with securities laws. SEC officials have said previously that they are looking into space for illegal activity, with a particular focus on token sales. South Korea thinks about regulating and lifting the ban on ICO’sThe Korean ban on ICO may be eased in the coming months. In September last year, the National Financial Services Commission decided to ban the ICO. However, a new report from the Korea Times suggests that the ban may be partially lifted, particularly for sales that meet conditions that have not yet been determined. Despite the local ban, many Korean users continue to participate in international ICOs. Google to ban cryptocurrency and ICO ads starting June 2018According to Google’s recently updated policy for financial products, “Cryptocurrency and related content will not be accepted (including but not limited to the first offers for coins, exchanges, wallets and trading tips)”. This action applies to all Google advertising products, which means that companies will not be able to display ads related to cryptos on the websites of the search engine giant, as well as on third-party websites. South Korea prosecutors raids exchangesSouth Korean prosecutors raided three cryptocurrency exchanges over suspicions that staff embezzled funds from customers’ accounts. Exchange staff, including executives, are suspected of siphoning off money from customer accounts and using it to purchase cryptocurrencies at other exchanges.Another report indicates that the exchanges have been taken over by the country’s financial watchdog, the Financial Services Commission (FSA), and that the operators of the companies are being charged with embezzlement.
US Congress economic report highlights cryptosThe “The 2018 Joint Economic Report”, published by the US Congress, has an entire chapter devoted to cryptocurrencies, including Bitcoin, Ethereum, and future of blockchain regulation; The comprehensive report, tracks cryptocurrencies rise to prominence, noting that Bitcoin and Ethereum, in particular, saw significant price growth, outpacing both the Dow Jones Industrial Average and the S&P 500. The report is just the latest sign that the U.S. government is taking the subject of blockchain and cryptocurrencies seriously.
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Our next “What changed in crypto” letter is due on March 26th, 2018