The narrative is wrong
The popular narrative today is that a report about Goldman Sachs shelving its plans to open a cryptocurrency desk is undermining confidence in cryptocurrencies as an asset class.
First of all, that's not necessarily true. Goldman says it hasn't abandoned the plans and that it's working on custody, which is the first step towards big-league trading anyway. Naturally, regulation remains a hurdle but I don't think that's anything new.
For me, the real bearish news today is from ShapeShift.
That's a spot where people go to exchange cryptocurrencies anonymously. Without any registration or signup, users can exchange altcoins for bitcoin and vice versa.
The company announced today that it's eliminating anonymity and forcing people to register. They try to spin it as part of an 'advanced loyalty program' but it's undoubtedly an effort to crack down on illicit activities and money laundering.
He cites 'customer demand' as one of the reasons but also notes know-your-customer rules and anti-money laundering provisions. The company is headquartered in Switzerland.
The move is being phased in but privacy will be eliminated before year-end and the company says it will hand over personal information to authorities.
"There are only a few cases where our staff need to use your identity information...The other example would be if we are legally compelled to do so by a valid subpoena or similar document."
What makes me so confident this is a response to the ShapeShift news? It's the skew in the market.
At the moment, you can see heavy selling of altcoins and much less selling of bitcoin. That's a reflection of exactly what ShapeShift offers. All those who valued anonymity and owned altcoins are getting out. There are alternatives to ShapeShift but the noose is slowly tightening on the illicit sector of crypto (or those who highly value anonymity). Ultimately, maybe that helps crypto but I'm confident that a big part of crypto value currently is the black market. If that's flushed out, cryptos can fall much further from here.
As for the trade on this, the next phase may be to get into cash or to stay in Bitcoin. In any case, the golden era of illicit activities in crypto is quickly coming to an end.