Bitcoin’s recent mining rewards halving event was long looked upon as a catalyst for the cryptocurrency to see further strength – from both a fundamental and technical perspective.
In the months following this event taking place, however, Bitcoin’s price has stagnated, with bulls and bears both reaching an impasse as it trades sideways between $9,000 and $10,000.
Although the cryptocurrency is currently seeing historically low volatility levels despite the recent adjustment to its block rewards, this isn’t unprecedented.
Data shows that a similar trend took place following the 2016 halving, and it took nearly a year before the benchmark cryptocurrency was able to embark on an intense uptrend.
Bitcoin consolidates following May’s halving, mirrors 2016’s trend
Since the start of May, Bitcoin has been caught within a broad and unrelenting trading range between $9,000 and $10,000.
It has been unable to surmount either of these levels and has been trading between them over the past ten weeks.
There have been a few occasions in which buyers or sellers surmounted the upper or lower boundaries of this trading range, but each move out of this channel has been fleeting.
Despite not seeing the immediate bullishness that many analysts predicted the halving would generate for the cryptocurrency, the recent event could still help create a tailwind that lifts BTC higher.
Data shows that after the 2016 halving, the benchmark digital asset saw a prolonged consolidation bout – similar to that seen currently.
This sideways trading ultimately evolved into a slight uptrend that allowed the cryptocurrency to end the year up nearly 40 percent from where it traded at following the halving.
BTC only gained momentum from here, which eventually transformed into the parabolic uptrend that led it to highs of $20,000 the following year.
“2 months after the halving bitcoin’s done… well nothing… But reminder this was no different than 2016 which we know how that looks zoomed out.”
Bloomberg researchers: BTC’s 2016 similarities suggest a move to $20,000 is imminent
In the June edition of Bloomberg’s crypto outlook report, researchers also pointed to the striking similarities between 2016’s post-halving price action and that seen presently.
They conclude that these similarities suggest Bitcoin’s price is likely to rise towards its all-time highs of $20,000 by the end of this year.
“After 2014’s 60% decline, by the end of 2016 the crypto about matched the 2013 peak. Fast forward four years and the second year after the almost 75% decline in 2018, Bitcoin will approach the record high of about $20,000 this year, in our view, if it follows 2016’s trend.”
This possibility will likely depend on how BTC’s current sideways trading phase resolves.
Because many analysts view Bitcoin’s consolidation phase as being akin to a spring coiling up for a significant movement, a breakdown from here could spark a downtrend that spans throughout the rest of 2020.
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Zip unlocks everyday payments with Tap & Zip
Zip Co today announces the official launch of Tap & Zip, a new product feature that reimagines buy now, pay later (BNPL) instore by enabling Zip Pay users to shop effortlessly anywhere that accepts Visa1.
Tap & Zip builds on Zip’s mission to be the first payment choice everywhere and every day. It will see Zip expand into more everyday spend categories and capitalise on the significant instore payments opportunity. Currently, just 13%2 of stores in Australia are able to accept buy now, pay later options. Tap & Zip addresses this significant and untapped customer need.
Today’s announcement underscores Zip’s obsession with providing merchants and customers the best possible payment experiences. For merchants, this initiative greatly increases access to new customers, bigger basket values and increased sales volumes. For customers, it means they can use Zip Pay to shop everywhere and pay later, always interest-free. Customers can also continue to check-out using Zip’s existing instore solutions, if that is what they prefer.
Tap & Zip follows a strategic product review of Zip’s instore payments experience, which to date has been based on barcode and QR technology, which requires complex point-of-sale integrations. Ever since contactless payments were introduced in Australia in 20063 Australians have universally accepted tapping as the preferred experience. With 24% of Zip transactions occurring in physical stores compared with the broader Australian retail data, which sees approximately 87% of payments instore – the opportunity to grow the BNPL share is significant.
Larry Diamond, Co-Founder and CEO, said, “BNPL has seen phenomenal growth over the last few years, as customers switched traditional forms of credit for flexible, digital alternatives. However, until now that growth has been restricted by a clunky instore checkout experience and limited acceptance.
“We continuously hear from Zip customers that they want to use their digital wallet to pay for everyday purchases like groceries and petrol, or to buy products and services from merchants that don’t accept BNPL. As a customer-obsessed organisation, we are excited to announce Tap & Zip, which completely changes the game, enabling Zip to compete with the credit card at every checkout in Australia. Everywhere Australians can pay with a Visa contactless card, they’ll now also be able to Tap & Zip, interest-free.
“This is a huge day for Zip and the Australian retail sector. Tap & Zip is a new way for customers to pay that will dramatically increase instore transactions and conversion rates for thousands of retailers and merchants around the country, many of whom have been significantly impacted over the past year.
“Tap & Zip marks the future of BNPL: flexible and transparent payment options that are accepted everywhere.”
Zip has been granted a Principal Issuer license with Visa, the world’s leading payments technology company, and will leverage Marqeta’s leading open-API card-issuing platform, which together enables users to create Zip-branded virtual cards in real-time. This virtual card allows users to shop at any instore or online retailer where Visa is accepted4, and can be added to selected digital wallets. As a principal member and partner of Visa, Zip will earn interchange revenue on transaction volume processed on its cards.
Julian Potter, Visa’s Group Country Manager for Australia, New Zealand and South Pacific said, “Tap & Zip customers can enjoy the choice and flexibility that Zip provides, and know their transactions are backed by Visa’s global acceptance and multiple layers of security. Visa is proud to bring its scale and capabilities to enable fintechs like Zip to develop new payment solutions and to reach their global potential.”
1 Anywhere that accepts Visa payments online and Visa contactless payments in-store.
2 Insight from Australian Merchant Acquiring Program research, conducted by RFI Research and commissioned by Zip Co.
3 “Credit card purchases will give way to tap and go”, The Australian newspaper, October 21, 2013.
This Week in Fintech ending 16 October 2020
This week our experts brought you the following insights based on their experience as investors, entrepreneurs & executives.
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Late last year, we heard that Google was looking to get deeper into the financial world by partnering directly with banks. In early August, Google announced its foray into the banking world with another six U.S. banks pledging to offer digital-only bank accounts through Google Pay. Google is already working with Citigroup, Stanford Credit Union, and added to its partnership roster, Bank Mobile, BBVA USA, BMO Harris, Coastal Community Bank, First Independence Bank, and SEFCU. The digital accounts will launch in 2021 in both checking and savings flavors and will be insured FDIC or NCUA. Google is looking to boost the usage of its digital payment services in North America by partnering with banking institutions. Google’s strategy is to let partnered banks and credit unions provide the underlying financial infrastructure and navigate regulation while it builds smarter interfaces and user experience. Lately, it would seem that every major tech firm has set its sights on banking. In 2019 Apple partnered with Goldman Sachs on the Apple Card, which currently has over three million customers in the U.S. In 2020, Samsung announced a competitive product to the Apple Card in the U.K, and now Google is cooking up its own option.
Editor note: the acceleration of disruption due to pandemic is making life very hard for incumbents
Tuesday Efi Pylarinou @efipm our Swiss-based Fintech Adviser, founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019 wrote Knock & iBuying in US Real Estate Fintech
The SPAC trend continues in the US and Chamath Palihapitiya is one of the leading investors with his IPOA, IPOB,… series. The latest Fintech deal was focused on a real estate disruptor in the US, OpenDoor.
With Zillow, being the blue-chip name and already public, I wanted to dig into how OpenDoor`s positioning differs. Technology with all the B2B Software as a Service offerings (Saas) makes it so challenging to create and sustain a moat.
The secret sauce of a fintech business in real estate is not evident because the US real estate market is on the one hand mature but also very fragmented. On top of that, there are several uncertainties and moving pieces of the puzzle due to the current macro-economic environment and the emerging new normal life-style trends.
Editor note: Real estate it is a big broken market, but houses need creative selling. If Fintech can coop rather than eliminate realtors, it will be huge, just by eliminating the administrivia.
Bernard Lunn, CEO of Daily Fintech and author of The Blockchain Economy wrote:Could the Sidetree decentralized identity protocol enable both privacy and personalization?
I am a bit of a privacy nut. I don’t like being tracked and I don’t like anybody else controlling my identity. Yet I know that being tracked can create personalized services that are useful to me. That is why I am a fan of decentralized identity on the blockchain. (see Part 3/Chapter 6 of The Blockchain Economy digital courseware for more on how decentralized identity on the blockchain will disrupt today’s media business).
Today we give up our privacy/identity to Big Tech/Media and that is a massive business for them. So, as a media entrepreneur in a niche domain (Fintech) I want to understand how one can make money if identity is decentralized and under user control. I think keeping advertising to contextual (avoiding all tracking technology) is part of the answer, but users want personalisation (and the networked community enabled by personalisation) and that requires access to identity.
This got me to look at the Sidetree approach to decentralized identity to see if it could be win/win ie for both users and media owners.
Editor note: bleeding edge technology alert, but all big disruption starts this way.
Wednesday Alan Scott Managing Director EMEA at 24 Exchange @Alan_SmartMoney wrote Stablecoin News for the week ending Wednesday 14 October 2020.
This weekly snapshot is the news that matters in the Stablecoin market.
Rintu Patnaik, an Insurtech expert based in India, wrote: Taking Root, the Next Insurtech IPO. Clover Chooses SPAC.
After Lemonade and other successful IPOs including Snowflake and Palantir, Root Insurance has its sights set on the primary public market. In its S-1, Root minces no words about its intent to reinvent the $266 billion US auto insurance.
Five insurtech companies established after 2015 have each raised private capital in the region of $500 million. Lemonade has gone public, Root has announced plans and there are signs of more to come.
Root Insurance which focuses on automotive, claims to be the only P&C insurance carrier with a scaled proprietary telematics solution and largest proprietary dataset of miles driven, driving behavior and claims experience.
Editor note: Public market investors finally get a chance to ride the Insurtech wave – at rich valuations of course because of stimulus and investment bankers doing a good job.
Christian Dreyer @x3er, our Swiss based CFA who focusses on how XBRL changes our world wrote XBRL News:SupTech, future of reporting, taxonomy guidance
Editor note: This weekly snapshot is the news that matters in the XBRL market.
Editor note: This weekly snapshot is the news that matters in the Alt Lending market.
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Alt Lending Week Ended 16th October 2020
Despite the pessimistic tone Matthew Lynn is in fact doing us all, Banks and Alt Lenders alike, a favour. In this piece he reminds us that that there has never been a recession yet which has not been accompanied at some point by a financial crash. And of course it is difficult to argue that the COVID recession is any different. You cannot regulate away an economic shock as big as this one and the impact of the sharp fall in economic activity is bound to manifest itself sooner or later. The big banks in the UK seem to be taking this pretty seriously reining in lending policies and being more selective. The Alt lenders however are behaving quite differently. Certainly their algorithm driven lending policies will steer them clear of the most obvious problem sectors but it is difficult to see how they will not undergo a certain amount of financial pain within the immediate future. I was given the unenviable task of managing a whole loan portfolio in decline. Computers are great at increasing efficiency in reaching lending decisions and processing documentation and data, even, perhaps, assisting in getting money back more quickly, but it will not help if there is a systemic collapse. To use the current situation as a means to build loan portfolios to me looks questionable as a strategy.
In January of this year the Federal Reserve published the Small Business Credit survey which looked at the business practises of online small business lenders from all over the United States. This was of course before COVID changed everything. The business showed a small number of common characteristics which include an automated online application process, proprietary algorithms to determine credit worthiness and a focus on speed and inclusivity. Succinctly the conclusion was that borrowers generally liked working with online lenders upfront but not later in the journey. This is obviously tied to the likelihood of approval which, not surprisingly, is the critical factor for a lender but it also points to the fact that credit is easier to obtain for online lenders than from traditional institutions such as banks. Satisfaction levels from borrowers working with digital lenders were significantly lower with the new boys clients citing inflexibility, high interest rates onerous repayments etc. It is much easier to dole out the cash than to get it all back together with interest and on time. Since January the whole situation has become a lot more risky. Next year’s report will be very interesting.
The UK national audit office has warned that up to £ 26 billion in Government bounce back loans are at risk either through fraud or the inability of borrowers to repay. I cannot say that I am surprised by this as it was a hurried scheme and was probably not thought through thoroughly. The loans are made either through existing banks both traditional and digital and are guaranteed by the government. The institutions that rushed in to capitalise on the government guarantee had better start looking very closely at their documentation and compliance with stipulated process. Looks like a lot of organisations might find out the hard way that a guarantee is not cash.
Howard Tolman is a well-known banker, technologist and entrepreneur in London,
We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.
For context on Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives.
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