We're Officially in the Longest Bitcoin Bear Market in History, 411 Days & Counting

  • Bitcoin (BTC) price has recorded downward movements since the past 411 days,
  • This is a new record, and crypto firms continue to either shut down or announce budget cuts and layoffs.

We are now officially in the longest cryptocurrency bear market ever seen. After hitting an all-time high near $20,000 in mid-December 2017, The the value of bitcoin (BTC), the flagship cryptocurrency, has been dropping throughout 411 days and counting. The cryptocurrency ecosystem has so far lost about $700 billion from its peak.

This, as in January 2018, the market cap of all cryptocurrencies surpassed the $815 billion mark, and currently the value of all cryptocurrencies combined stands slightly below the $115 billion mark.

Notably, this is the sharpest and longest depreciation bitcoin has endured throughout its 10-year history. The previous record for downward bitcoin price movement was between late November 2013 and mid-January 2015 - when BTC’s value declined from about $1,100 to only $200 after the largest crypto exchange at the time, Mt Gox, went down.

"Really Struggling" To Acquire Capital

Due primarily to the prolonged cryptocurrency bear market, there have been many cases where blockchain startups had to scale back their operations. In August 2018, Meltem Demirors, the chief strategy officer at CoinShares, a crypto treasury management firm, said during a CNBC interview that the crypto industry was “really struggling” to acquire capital.

Indeed, a large number of crypto-related service providers have revealed that they’ve had to lay off staff members and make other budget cuts due to lack of funding. Canada-based cryptocurrency exchange Coinsquare recently announced that it had laid off 27% (40) of its employees.

Making "Some Tough Choices"

Local news outlet BetaKit reported that Robert Mueller, the chief operating officer at Coinsquare, and Ken Tsang, the chief financial officer, were both laid off. Commenting on CoinSquare’s decision to reduce the size of its workforce, Martin Hauck, the exchange’s head of talent, remarked: 

Many similar companies in our industry have had to make some tough choices in recent months and Coinsquare has had to as well. The company has made the decision to part ways with a number of talented members of the Coinsquare team.

On January 8th, 2019, “instant” cryptocurrency exchange, ShapeShift announced it would be laying off around 37% of its staff members. ShapeShift’s CEO, Erik Voorhees, noted that the cutbacks in employees were “a deep and painful reduction, mirrored across many crypto companies in this latest bear market cycle.”

Voorhees, an early bitcoin adopter, explained that ShapeShift had “grown too fast” and that “by the time [the firm] learned to manage a 10-person team”, they had already added more personnel to their payroll.

Voorhees acknowledged that ShapeShift had “grown too fast” and that “by the time [the company] learned to manage a 10-person team”, they had already hired more employees. He added that the company’s “understanding of how to organize people grew, but not as fast as the people.”

Voorhees also pointed out that ShapeShift’s management made the critical mistake of not diversifying its invested capital. He remarked:

As a company, our greatest and worst financial decision is the same: to embrace substantial exposure to crypto assets. Much of our balance sheet is comprised of them.

Remaining Bullish 

Despite the cryptocurrency ecosystem's less-than-stellar performance in the last 411 days, many in the space remain bullish as there's a lot to look forward to. Bitcoin's layer-two scaling solution, the Lightning Network (LN) has surpassed a 600 BTC capacity this while, while the CBOE has resubmitted a proposal to list the VanEck-SolidX Bitcoin ETF.

Moreover, Fidelity Investments, a financial services giant with over $7.2 trillion of client assets under management (MAU), has revealed its crypto trading and custody platform is already "serving select clients." Bakkt, the Intercontinental Exchange's (ICE) cryptocurrency venture, is set to launch later on this year. The platform is set to help retail investors gain exposure to the space, while facilitating cryptocurrency adoption.

Bitfinex Wants to Offer 100x Leverage For Crypto Derivatives Trading

Michael LaVere
  • Bitfinex will offer 100x leverage trading for cryptocurrency derivatives
  • According to the exchange's CTO, the hedging product is "ready for prime time"

Cryptocurrency exchange Bitfinex revealed it wants to offer derivatives products with up to 100x leverage for cryptocurrency traders. 

Hedging On Cryptocurrency Derivatives

Chief Technology Officer Paolo Ardoino told The Block on June 25 that the cryptocurrency exchange was ready to ship a 100x leverage product for certain users. According to the post, the project has been under development for some time and is “now ready for prime time.” 

The product was referenced in last month’s whitepaper published by Bitfinex for its $1 billion private token sale of LEO, stating

“Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet.”

The whitepaper originally claimed that the new hedging mechanism would be released by the end of June, a timetable that fits with Ardoino’s “ready for prime time” statement. 

Ardoino confirmed that only “verified” customers will be allowed access to the product, given the risks involved in such highly leveraged trades. 

The CTO also took to Twitter to quell user concerns over Bitfinex’s existing 3.3x margin trading. Ardoino explained 100x leverage will be “optional,” and that their current leveraged trading products will be unaffected by the release. 

Big Risk, Big Reward

Bitfinex is looking to compete with rival exchange BitMEX, who already offers 100x leverage through its bitcoin perpetual swap contract. However, Bitfinex claims its product is designed as a legitimate hedging tool for clients, rather than a gambling mechanism. 

Max Boonen, CEO of trading firm B2C2, believes the product will only appeal to retail hedgers, as large investors will shy away from the risks involved in 100x trading. 

According to Boonen, 

“There’s nothing wrong inherently about 100x. But as a commercial hedger you want lower leverage margin. The larger investor wouldn’t want to take the risk of 100X, typically. They don’t want to go balls to the wall.”

The cryptocurrency derivatives market has been heating up. Last week bitcoin-bull Mike Novogratz’s Galaxy Digital announced plans to offer cryptocurrency options contracts.

Binance has also reportedly been exploring futures trading. On June 24, Binance CEO Changpeng Zhao tweeted the exchange had executed its first margin liquidation for a BTC short.