When Crypto meets puberty

Maturing into puberty has its good sides and bad. like a teenage kid, the crypto industry is growing and becoming more mature than ever before, and while, in the long run, it is almost always a good thing, like in puberty, maturation also brings about many less-reputable behaviors.

Counting from Bitcoin’s genesis block, the crypto market is over ten years old but is still relatively young in many aspects. While I’ve written extensively on the Institutionalization trend as part of the market’s maturation, during the last week we’ve seen more than a few signs pointing to a more mature, sustainable market. Not all of them are good, but each of them separately and all of them together indicate that Bitcoin, Blockchain, Crypto and digital assets are here to stay.

#1: Tether is no longer 100% backed by USD.

Up until a few weeks ago, the terms of use on Tether’s website, as well as their public announcements insisted that the company is backing the Tether stablecoin with a 100% of its reserves in US Dollars. Last week the company revisited its terms and conditions (See 1.1.32), now stating that its reserves can now be:

“traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”

While the bad side of this move is obvious (Fractional reserve has been the primary disease of the fiat world), there is another side of this story. The fact that Tether is now becoming more transparent as to the nature of its work, as well as the fact that they are pursuing new revenue streams is somewhat encouraging. If we look at the glass-half-full side of things, we can see that even the so-called “shady” Tether operation now understands that to survive a maturing market, they would need to stay honest, become transparent and create a sustainable cash flow. That last part is of most importance as “Crypto winter,” and decreasing volumes (amidst the fierce stablecoin competition) has made its current business model “less sustainable.”

Again, I am not saying that fractional reserving is in any way good for us or the industry as a whole, but it is one (bad) sign that the market is maturing.

#2: CBOE discontinues its Bitcoin Futures trading.

A lot can be said about the Bitcoin Futures trading and its effect on the crypto market in general and Bitcoin specifically. Most people would argue that introducing Institutional-grade futures on the CBOE and CME in late 2017 was what introduced the hype, and later the fall of the market in early 2018.

It is somewhat ironic that it is the CBOE, who finally capitulated in the midst (some would say peak) of this prolonged crypto winter. The decision on not renewing the crypto futures contracts on CBOE’s Futures Exchange was apparently due to the lack of trading volume after the product couldn’t quite match the volumes of other “futures” products and didn’t justify the “hassle” required to maintain it.

While this appears as a negative sign for lack of institutional interest, you don’t have to look further than down the same Chicago road to its rival CME exchange, which has peaked in terms of Bitcoin Futures trading volume last month.

There are a few reasons why the CME futures got better traction, such as better pricing mechanism (the CBOE used Gemini as a reference while the CME uses an aggregate of several markets), greater position limits and better accessibility.

How is this a sign for market maturation? It shows that the law of competition is working, and that is something that didn’t exist before in the crypto market. During the hype, the market was so small, that new thing popped up and immediately got considerable attention. These dozens if not hundreds of projects, doing the almost the exact same, went on and raised absurd amounts on money.

While comparing crypto projects to traditional exchanges might be a bit awkward, the fact that one product succeeded over another shows that there is a market, and it is “intelligent” enough to choose a better option when one appears.

#3: Bittrex scrapes its first Initial Exchange Offering

I’ve written and discussed (a 10-minute video take on what are IEOs, where they came from and are they here to stay) the topic of IEOs at length last week, but what happened during what was supposed to be the debut of Bittrex’s first IEO was both surprising and a great sign of the market developing self-regulation capabilities.

Originally, Bittrex has chosen a project called RAID, to be its first Initial Exchange Offering project to launch on-top of its “Binance Launchpad” competitor platform. The project aimed to raise “only” 6 Million US Dollars for 17 Billion XRD tokens for a new Blockchain-based technology that “rewards gamers for sharing data that fosters improvements.”

A few hours before the token sale was about the start, Bittrex surprisingly announced that it has canceled the upcoming sale due to :

“significant changes in the business status of RAID. Specifically, a few hours ago, OP.GG terminated its strategic partnership with RAID, which was a vital part of the RAID project. When Bittrex International became aware of this significant event, we did not feel that it was in the best interest of our customers to move forward with the IEO.”

While it feels like there is something more to the story than what was shared in the announcement, it appears that Bittrex finally owned the fact that their due-diligence process wasn’t as good as they thought (they can get away with). Considering the rush of all the top exchanges to launch their own IEO platform, it would only make sense that someone at Bittrex was so in a rush to be the first to join the party (and hopefully enjoy it while it still lasts), that they didn’t dig deep enough before they chose their first candidate for launch.

In the good old days of the ICO fever, it is unlikely we would see such a move. This behavior is another sign of market maturation. Even though IEOs still feel like another “get-rich-quick” scheme, the fact that Bittrex thought that the quality of the project is more important than just getting a few more dollars from the initial sale of the tokens, points to a shift towards long term thinking. When someone cares about their reputation, it means they see themselves a part of this industry for the long, and that is another (great) sign that market is maturing.

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