Volatility is back, Tim Draper exclusive | Hodler’s Digest

Paul Manafort was meant to sing like a canary for Mueller to avoid jail time, but this week it was revealed that he lied to the special Counsel and at 69, a pardon notwithstanding, might be facing life behind bars. Perhaps you should take notes from SEC chair Jay Clayton, who gave an interview to CNBC and said almost nothing. His poker face was impenetrable as he spilled no beans on Bitcoin ETF applications. He did, however, say just enough to criticize most ICOs for being non compliant. Less tight lipped and more talkative are crypto heavyweights Tom Lee and Tim Draper, who took time to talk to us this week about all things crypto. Also this week, volatility is back. Ohioans can pay taxes in bitcoin NASDAQ to launch BTC futures, and Buterin thinks some industries are simply wasting their time with blockchain. I'm Molly Jane and this is your weekly Hodler's Digest. After months of relative tranquility, the market has been shaken by a fresh wave of volatility following a sharp fall that brought Bitcoin below 3600. The beginning of this week witnessed a significant recovery which brought the coin's value back up to the mid-4000s. Let's take a look at the latest market updates. We met Hodler's favorite Tom Lee at Block show in Singapore this week where he told us about his predictions and what's going on in the market.

So let's say we're talking about bitcoin going from 6,000 to under 4,000. I think it really is tied to three factors. The first is the contentious hard fork with Bitcoin cash. It did divert not only hash power, but miners were selling Bitcoin to sort.

Of fund that.

Resolution. The second is there were some regulatory actions. One of them was the SEC actually requiring two ICOs to potentially refund to investors. And we heard from several OTC deaths that there was some panic preemptive selling of ICO of Treasury balances from some ICOs. And the third is that global markets have just done terrible. Global markets are down more than 10% between October to November, and while crypto actually initially had negative correlation, in the last six weeks it's flipped to one of the highest levels of correlation to global markets.

We also spoke to Tim Draper.

I'm looking at this as just a fluctuation that moves up and down. I'm sure there are people trying to move the market and manipulate the currency, and I'm sure there are bankers that are loving it when things are going down for Crypto because hey, they control all your fiat currency. If everybody is following the same press and the press all says there's a panic, then they say, oh, there must be a panic. And so then they'll all send and then they sell more and it goes down further. And then when the press says it's a boom, oh it's a boom and we'll all jump on and it'll end up being a bigger boom than it should. I always look at crisis like this as an opportunity and that's the way I'm looking at this one.

I think people need to be patient, but I think one of the most important things that we advise our clients is, you know, crypto as an investment should really be 1 to 2% of their allocation. So number one, they're not worrying about it every day. But also that 2% could become 50% in a decade. It can grow dramatically. I think the other thing is to realize that some of the crypto projects are probably hopeless, but things like Bitcoin and Ethereum I think have long term or ripple XRP have staying power. And these are the ones where unless you think the protocol is actually completely broken, you're seeing price distortion caused by panic selling. I think Bitcoin is going to do very well next year. So I think if anyone is even worried that Bitcoin could go down in the next few months, it's possible. It doesn't change the fact that adoption is going to grow and that we have institutional investors that will have opportunities to invest. And I think that you want to be in front of that investment wave. So I think 2019 is going to be a great year for bitcoin.

Flying in the face of FUD merchants who malign Bitcoin for making tax avoidance easier. Ohio State treasury has made tax payment much easier. Ohio businesses can now pay in Bitcoin. This is a further sign that despite the naysayers and bearish trends in the market, crypto is here to stay. And forward thinking institutions are waking up to this fact. A total of 23 taxes can be paid in the leading crypto from this week, including the public utilities tax, sales tax and seller's use tax, to name just a few. Bitpay will set up a 15 minute window for each transaction where they assume all the risk during that period of any market fluctuations. Ohiocrypto.com where businesses can register to pay is the brainchild of Josh Mandel, state treasurer and crypto enthusiast. The move is intended to make the experience of paying taxes simpler, but more importantly in terms of adoption and in Mandel's own words, it is planting a flag for the state of Ohio. Earlier this year, Ohio state legislators and academics held a press conference outlining plans to make the birthplace of aviation into a hub of blockchain Ohio. House of Representatives Speaker Ryan Smith talked about building a blockchain ecosystem to prevent a brain drain from the state and also use the world changing innovation to improve government efficiency. Ohio appears to have succeeded where others have failed. Earlier this year, Arizona State Senate passed a bill allowing payment of taxes in crypto, but the bill has since stalled. Mandel will have to rely on the bullishness of his successor. Republican Robert Sprague, who will take office in January, was complimentary of Mandel's efforts, but was pretty vague about expanding or even continuing the program. He said, we applaud the pilot that makes Ohio more business friendly and sets us up as a leader in cryptocurrency. We will evaluate both currency and counterparty risk once we enter the office to see about the future.

Well, I think what we're doing here by allowing folks to pay their taxes with cryptocurrency is also helping to normalize cryptocurrency throughout America. My vision is by launching OhioCrypto.com to really inspire states around the country as well as the United States government, to ultimately allow folks to pay their federal taxes via cryptocurrency. So hopefully by doing this here in Ohio, we will ignite and inspire a national movement to allow other governmental entities to enable their taxpayers to pay via cryptocurrency. He's a friend and an ally and we've gotten very positive feedback from him. I think he's going to embrace it. I mean, from my conversation with him and my staff's interaction with them, we've received very positive feedback from them. Yeah, so it's growing. So actually, this weekend there's an initiative in the conference called Blockland and there'll be about 1500 attendees. And some of the keynote speakers are people like Joe Lubin at Consensys and Nick Szabo and then more mainstream people such as the CEO of Oracle who will be speaking. So I think it's really up and coming and we're hoping that Cleveland and the state of Ohio becomes.

Capital for.

Blockchain and cryptocurrency companies.

So we're starting to see that transition into Cleveland, saying, look, we don't really expect manufacturing to come back. So what's the next act for Cleveland? And technology seems to be that act. And so this Movement has kind of more solidified how narrow of technology. Like, are we looking at development? Are we looking at movie, film?

What are we looking at?

And so the blockland movement really put a fire in Cleveland to say we kind of think blockchain is going to be something extremely large for the next several decades. And there's not a lot of people who are really pioneering in this space, especially not in Cleveland. And so it's addressing those issues. So in my opinion, having spent most of my life in Northeast Ohio, this is the first time we've seen a big, massive transition from the top down into technology from other spaces.

Investors were not the only one to be impacted by the market meltdown. It also had a spillover effect on the crypto mining sector. In current market conditions, mining bitcoin had stopped being a profitable activity for many enterprises as the mining costs started exceeding the Rewards. In just one week of market crashing, approximately 800,000 miners shut down their activity. And even major US mining firm Gigawatt filed for bankruptcy while owing millions to creditors. According to data from blockchain.info in less than two weeks, the global hash rate dropped by 15% from around 47 million terahashes per second to around 40 million terahashes per second. China is considered the global hub of the industry and naturally was not spared the mining crisis, as a recent viral tweet shows Chinese miners are selling their equipment per kilo. However, the decline in the hash rate could also have a positive knock on effect as the mining difficulty is decreasing accordingly, allowing newbies to join the mining game. We asked crypto experts Anthony Pompliano and Tony Vaes to give us their take on the issue.

If you look at the mining perspective, we've got people that we've been talking with that are mining anywhere between 4,500 to 6,000. Most of those people are shutting off, but there's a, a very large portion of people who are mining at, you know, sub $3,500 price points. They usually are getting, you know, either free, low cost or like 2 cents a kilowatt hour power. And this is, you know, all the traditional areas, China, etc. And so we don't think they're going anywhere. We think there's a long way for the price to go before they, you know, get in jeopardy of mining at a loss. And so those are the people who are really worth paying attention to because that's the bulk of the miners. They're doing it commercially, and those are the ones that it would be scary if they start to shut off their machines.

If you run a very efficient, very well researched mining operation then you're probably doing okay. I'm pretty sure there are miners where their cost of Production is between 2 and $3,000 per bitcoin and if your mining operation was not properly designed then your mining operation is going to shut down. It's going to separate those that know what they're doing when it comes to mining and those that don't.

However, not all crypto miners felt the crash equally. In the small country of Georgia, electricity costs and lack of regulation allowed some mining enterprises to survive the crisis. We talked to Becca Avaliani, CEO of Georgia based mining company Bitforks, to explain how his company went through the market crash.

We have few competitive advantages that helped us to to overcome this crisis. First advantage is that our data center is located in pre industrial zone and in Kutai western Georgia. So these places are quite sufficient for crypto businesses because you don't pay taxes, only the income tax and prices of electricity as I told in our case is $0.05. So for existing moment we are mining just bitcoin but previously we were mining cash, litecoin and dash also. But because of this negative trend market, these three cryptocurrencies are unprofitable to mine. It was our strategic decision to start offering the new contract for the new customers, but we are seeking to offer them again the new contracts mining contracts when the market will recover once again.

Despite bearish trends, another big player is signaling that they still have skin in the game. Major U.S. stock exchange NASDAQ apparently intends to launch Bitcoin futures contracts Bitcoin futures will provide professional traders with a regulated marketplace where they can speculate on the future price of bitcoin, according to unnamed sources close to the matter. Bloomberg reports the exchange has been working to meet the requirements of US Regulator Commodities Futures Trading Commission and plans to launch these futures in the first quarter of 2019. Nasdaq already intended to launch bitcoin futures contracts earlier this year, but the plan did not go ahead as the product was not deemed unique enough to face competitors. This time, chances to have the project realized seem higher, especially since Gabor Gerbachs of investment firm Vaneck tweeted that Nasdaq and Vaneck are to jointly launch transparent, regulated and surveilled digital assets products such as Bitcoin futures contracts. Nasdaq's intention to launch futures contracts is seen by many as a sign that institutional players are not scared by the seemingly never ending bear market as well as a huge step forward toward the institutionalization of crypto Vitalik Buterin is not just a blockchain believer. As the co founder of Ethereum, he is pretty much a blockchain deity. This week it appears lesser mortals have angered him, particularly industries that have adopted blockchain but don't really need it. According to the Ethereum co founder, this folly leads to a lot of wasted time. Buterin explained that although companies might think blockchain will improve standards, the technology is not applicable in every industry. Buterin said, sometimes it is for marketing hype, sometimes it is just people who are genuinely excited about blockchains and want the thing they are personally excited about and their job to align more with each other, which is a totally legitimate human thing to want to do. Buterin identified cryptos and cross border payments as suitable industries. He was very critical of other projects such as tech giant IBM's Blockchain for Food tracking. Buterin noted, I don't understand this deeply, but the detail that jumped out at me is that they're saying hey, we own all the IP and this is basically our platform and you're getting on it. And like that's totally not the point. Buterin does think the project has potential, but doubts the company's ability to execute. He was much more positive towards efforts to authenticate university degrees on blockchain. I Applauding Singapore is a recent success story. Earlier this year PwC conducted their global blockchain survey, which included 600 executives from 15 different territories, and it found that 84% of the respondents surveyed were at least dabbling in blockchain. Dabbling doesn't necessarily suggest competence, however, and this year we saw some companies values shoot up as much as 200% when they added the word blockchain to their names, only to experience a sharp drop when evidence of Syria's plans to adopt the tech failed to materialize. Most recently, UK Chancellor Philip Hammond suggested Irish border issues arising from Brexit could be solved using blockchain. They can't. Vitalik is right. Blockchain is somewhat overhyped. It is the savior for some, but not for all. Floyd Mayweather is no longer undefeated and DJ Khaled played himself after the SEC landed a blow on both of them for not disclosing promotional payments. Payments for ICOS Major key Before promoting an ICO educate yourself on Cointelegraph.com and as always, remember to like subscribe and Hodl if you haven't already sold all your bitcoins. Last week Cointelegraph like subscribe and Hodl.