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More thoughts on Custody; Bitcoin dominance peaking

Yesterday’s post on custody kicked off a debate; A couple of readers pointed out the irony of something as centralized as custody as being critical to the growth of the decentralization revolution.

To be honest, that argument captures only part of the picture. Those crying out for custody are basically traditional institutions that are using legacy frameworks to evaluate crypto primarily as an asset class. Even if you are a fund manager that completely believes in crypto and decentralization and are comfortable with Metamask and DEXs and various type of wallet solution, if you ever want to raise capital from a large institution (pension fund, endowment, etc), you are bound by the strict rules that govern these LPs. One such iron-clad rule is third-party custody with one of the big custodians of Wall Street. Come to think of it, just like the rating business, custody is another that owes its existence solely to regulations and policies and laws.

Cryptocustody is an exciting, evolving field, and in addition to exchanges, also overlaps with the DeFi stack. Fully decentralized custody is still some distance away, but efforts like Anchorage are hugely promising.

Binance hack?The water of the BTC duck’s back. Possibly aided by the fiasco of Tether being undercollateralized and the subsequent flipping of Tether into BTC, the price of Bitcoin has surged upwards by more than 20% in the past few weeks. Normally, you would expect altcoins to mirror Bitcoin’s price movement very closely, as has been the case for most of 2019. However, the recent price rally has taken Bitcoin dominance close to the high levels last seen during the great bull run of 2017. The high levels of Bitcoin dominance could perhaps point towards a bullish market for altcoins, which have underperformed Bitcoin by around 30% in recent weeks.

Another reason for bitcoin peaking could be the spate of bullish news coming out from institutions and existing technology giants ( Facebook, IBM, JPMorgan), etc as we head into one of the busiest weeks of the year in crypto – Blockchain Week NYC and Consensus Week. Will BTC price move up sharply after that?

Source: coinmarketcap

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