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Satoshi&Co Daily Crypto Newsletter

September 25 · Issue #235 · View online
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Check out past issues of the newsletter along with more interesting crypto content as well as short (but great) conversations with leading crypto industry participants at our newly-launched website

Bitcoin experienced one of the worst single-day declines in recent times as the price plummeted by more than a $1000 from $9700 to $8500 in a flash. After having reached a yearly high of $14k in June, BTC has been in a consolidation phase since then with price very much oscillating between $9500 and $12000. 
The primary reason behind the selloff is anyone’s guess but the factors that triggered it could be a combination of a sudden fall in BTC’s hash rate, the US Fed’s decision to inject more funds into the economy, and margin calls and liquidations on derivatives exchanges such as BitMEX that perhaps exacerbated the price decline. 
Although price does not necessarily follow hash rate and hash rate fluctuations are common, an astounding 40% drop in hash rate is a concern that cannot be overlooked. BTC’s hash rate has been on an upwards trend throughout the year, reaching a new high of 100 EH/s last week. A drop of this size perhaps indicates that a big miner pulled out of the mining pool all of a sudden for reasons we don’t know yet. 
Whatever is the trigger behind the selloff, margin calls and liquidations on derivatives exchanges had a big role to play in aggravating the price decline further. A small fall in price triggers liquidations for high-leverage orders, which leads to exchanges selling more BTC to prevent counterparty risk, which then puts more downward pressure on the price and turns into a vicious spiral in which more positions are liquidated and sold. 
Yesterday’s liquidations on BitMEX were so pronounced that they amounted to over $600 million in a span of two hours, which translates to roughly 6% of long liquidations since the beginning of this year. Hourly trading volume peaked to a record high of $1.5 Bn, about 10 times more than the usual average of $100 - $150 million per hour. 
Remember CDO-Squares and synthetic CDOs from circa 2008, and their impact on the overall financial system? Crypto derivatives might yet be deja vu all over again.
Meanwhile in Crypto Wonderland....
“Indian Banks Join JP Morgan’s Blockchain Platform”
JP Morgan gave a big boost to its global transactions business by bringing in seven top Indian lenders such as ICICI and Axis Bank to its blockchain platform that enables payments to reach beneficiaries faster with fewer steps in cross-border payments. Christened as IIN (Interbank Information Network), the platform is the first live blockchain service by JP Morgan and represents the largest number of banks to join a live application of blockchain technology. The seven banks include Yes Bank, Union Bank of India, Federal Bank of India and Canara Bank. 
“SoFi Offers Zero-fee Crypto Trading”
California-based financial firm SoFi has added zero-fee cryptocurrency trading to its platform SoFi Invest. According to an official announcement on Sept. 25, crypto trading on SoFi Invest joins the list of previously introduced trading of stocks and exchange-traded funds. SoFi Invest now offers clients to buy three major cryptocurrencies such as Bitcoin (BTC), Ether (ETH) and Litecoin (LTC), with the firm claiming that users do not even need to set up a crypto wallet, according to the platform’s website.
“bitFlyer Announces New Offerings”
New cryptocurrencies are coming to the European and American subsidiaries of BitFlyer. According to a release from the exchange today, bitFlyer Europe is adding buy and sell trades for bitcoin cash (BCH), ethereum classic (ETC), litecoin (LTC), lisk (LSK) and monacoin (MONA). bitFlyer USA is adding bitcoin cash, ethereum classic, and litecoin to its trade offering as well. One of the oldest crypto exchanges, bitFyler operates out of Japan. Recently it was recognized as a ‘Real-10’ exchange by a Bitwise report to the U.S. Securities and Exchange Commission. In the spring report, Bitwise claimed only ten of the top cryptocurrency exchanges–equal to five percent of the market–displayed real trading volumes.
“1Confirmation Raises $45 Million For Its Second Fund”
Nick Tomaino, a former Coinbase employee who launched one of the first crypto investment funds, announced on Wednesday that his firm, 1Confirmation, has raised $45 million for a second fund. Notable for being early to the crypto investing space, 1Confirmation has attracted a list of high profile investors including Founders Fund head Peter Thiel, as well as Andreessen Horowitz namesake Marc Andreessen and Dallas Mavericks owner Mark Cuban. In an interview with Fortune, Tomaino said the crypto industry is still waiting for a mainstream application beyond speculation, but added that the use of crypto for savings and lending is getting traction.
Crypto Twitter Pick
Jill Carlson
Sure, the fate of every tech company is to become a bank. But does that mean they will all start originating loans?
What We Are Reading / Listening To
Overnight Performance of Top 10 Currencies
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This newsletter does not constitute an offering of securities in any jurisdiction. The contents of this note should not be construed as investment advice or as a recommendation to purchase securities. This note is intended for the consumption of the recipient alone and not for public distribution. Please consult a certified financial advisor or other appropriate practitioner as may be appropriate as per your jurisdiction.
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