A new report on the UK banking industry has identified Fintech startups as a key potential disruptor in the eyes of the industry’s biggest participants. The recently released MoneyLive Banking Report compiled by Marketforce LIVE concluded that Britain’s banking space sees such startups as a “significant threat” to their business models, after consulting with 600 prominent figures from across the industry.

The report polled respondents in an attempt to find out how traditional financial institutions view the growing prevalence of services provided by fintech companies in relation to their existing customer base and future business prospects.

Better User Experience and Brands

According to the data presented, 81 percent of respondents believe that customer experience and service quality are bigger drivers of consumer acquisition and retention than trust in large institutional brands. Adding to the dilemma faced by British banks is the fact that 79 percent of them also believe that fintech startups have “more engaging brands”.

Perhaps unsurprisingly, 59 percent of respondents agreed that customer-facing fintechs have the potential to replace them altogether or at least pose a “significant threat” to their relationship with customers if their models do not change substantially in the near term.

46 percent of surveyed banks believe fintech startups pose a “significant threat”

Corroborating this, an excerpt from the report reads:

Almost six out of ten (59 per cent) of the bankers we surveyed perceive new intermediaries to be a significant threat to their relationship with their customers…From Amazon to Airbnb, Netflix to Uber, the story of digital disruption has not ended well for those incumbents unable to match the personalised experience and compelling cost savings of the newcomers.

71 percent of survey respondents also agreed that in terms of brand messaging, banks have not kept pace with consumer priorities regarding speed, simplicity and convenience. Despite this, the report notably reveals that there is no consensus regarding what the fate of banking services will be after fintech disruption achieves the projected critical mass. 31 percent of respondents expect challenger banks to benefit the most from the disruption, while 30 percent believe that fintechs will take over from banks.

In the meantime, the banks expect that fintech adoption will continue to race toward a critical mass of majority usage as illustrated in the figure below.

Adoption of fintech solutions continues to grow

Based on the perceived threat posed by these Young Turks along with their growing and seemingly unstoppable adoption over the medium to long term future, fully 93 percent of survey respondents agreed that over the next five years, their business and revenue models will have to undergo fundamental changes if they are to survive and co-exist with fintechs.

The full MoneyLive Banking Report is available here.

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Bitcoin mining giant Bitmain is going to sack almost half of its staffers by the end of this week, sources from the Chinese media reported.

The Beijing company today laid off a team which was working on the development of Bitcoin Cash client. The news broke to the wire when Samson Mow, Blockstream Chief Strategy Officer, and former BTCC Chief Operational Officer, tweeted about it. Mow claimed:

Bitmain has quietly laid off their entire Copernicus team. Only 1-week notice. Some had just joined the company. Layoffs just in time for Christmas.

Rumors gained more credibility as people, claiming to the ex-employees of Bitmain, started sharing their exit stories on LinkedIn.  Dovey Wan, managing director at Danhua Capital, brought the matter to notice via her series of tweets.

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Dovey Wan 🦖@DoveyWan

⚠️⚠️⚠️

there’s post on Chinese Linkedin (usually very high accuracy, posted by employees themselves) saying Bitmain will start a layoff the coming week … 😳😳😳

A separate rumor said the plan is for more than 50% of its headcount ???!

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Sanyan Finance, a Chinese media outlet, also reached out to Bitmain employees for further confirmation. While they confirmed that the human resource team at Bitmain was speaking to employees about “something,” they refused to add anything more to their claims that could prove that these employees are certainly getting canned.

Global Layoff?

Before the layoff rumor took off, Bitmain had already suspended its operations in the State of Israel. As a local daily reported, Bitmaintech Israel, a development center Bitmain had founded just two years back, fired its entire team, including vice president Gadi Glikberg, citing losses incurred during the latest crypto crash.

“The crypto market has undergone a shakeup in the past few months, which has forced Bitmain to examine its various activities around the globe and refocus its business by the current situation,” Glikberg confirmed.

In November, the cryptocurrency market cap lost $70 billion worth of investments after Bitcoin Cash fork threatened the stability of the entire crypto space. Bitmain, which supported one of the Bitcoin Cash camps led by Roger Ver in its quest to attain lead over the other, reportedly suffered millions of dollars worth of losses while diverting Bitcoin’s surplus hash power to its ally. The extent of their overall damages, including depreciation incurred during a year-long crypto bear market and by the drop in mining equipment sales, could have led Bitmain to go on a firing spree.

Although it is currently not known whether or not it is a global layoff, Beijing layoffs are already active, reported 36kr.

Bitmain had almost 2,000 employees working across its mining and blockchain development verticals. It is expected to drop to 300 by the time the reported sacking concludes.

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The Nasdaq is in a bear market. On December 23, the Nasdaq Composite fell to a new yearly low at 6,332 points, as stocks and securities listed on the exchange plummeted in value.

A bear market is commonly referred to as a 20 percent drop from a market, index, or asset’s all-time high. Since its newly established all-time high on August 29 at 8,109 points, the Nasdaq Composite has fallen by nearly 22 percent to 6,332 points.

As technology stocks in the likes of Amazon and Cisco recorded a daily drop of 3 to 6 percent on the day, the Nasdaq Composite struggled to sustain any sort of momentum and dropped by 3 percent within a six-hour span.

Nasdaq in Trouble, What Investors Can Anticipate

The U.S. government and the Trump administration have attributed the poor performance of the U.S. stock market to the latest rate hike by the Federal Reserve.

The increase in the federal funds rate has made it more costly for businesses, especially small to medium businesses, to lend money from financial institutions, placing more pressure on the struggling economy of the U.S.

Jeff Kravetz, a regional investment director at U.S. Bank Wealth Management, said that the Fed believes the economy of the U.S. is still strong. But, the country’s central bank has failed to consider key variables that may affect the short-term prospect of the global economy including the tension between the U.S. and China over the long-lasting trade war and high tariffs.

“The Fed is making the case the economy is still good, but there’s so many things investors are worried about,” Kravetz said.

Although several analysts have claimed that the Fed cannot alter the rate purely based on the performance of the U.S. stock market, such an argument was relevant prior to decline in the Nasdaq Composite and the Dow Jones.

Both the Nasdaq Composite and the Dow Jones are up quite significantly from early 2017. However, with about a week of trading left before the year’s end, if the sell-pressure on the U.S. stock market continues to grow and it does not demonstrate signs of a drastic trend reversal, an additional drop in value can be expected throughout December and the first month of 2019.

UBS Global Wealth Management executive Jason Draho told the WSJ that investors in the stock market are refraining from initiating in any investment until the year’s end, and without buy volumes, the intensifying sell pressure could lead to a steeper sell-off for U.S. markets.

Draho said:

The fear of slowing growth and a bear market has become much more prominent. There’s not many buyers who want to step up and say they’re willing to buy today, and many are waiting for the new year.

Dow Jones Also Approaching Bear Market Territory

The Dow Jones has dropped by 16.3 percent from its all-time high at 26,828 points and is approaching bear market territory.

On the day, the Dow Jones recorded a 1.81 percent drop, ending the week as the market’s worst week since the 2008 financial crisis.

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According to Daniel H. Gallancy, the CEO of SolidX Partners, it was unrealistic to anticipate Goldman Sachs to run a Bitcoin business before the year’s end.

Speaking to Bloomberg, Gallancy, who has been working with a major investment firm in VanEck to introduce a Bitcoin exchange-traded fund (ETF) in U.S. markets, said that investors prematurely expected Goldman Sachs, Morgan Stanley, and other financial institutions in the U.S. to provide Bitcoin custodial solutions and operate digital asset exchanges.

He said:

The market had unrealistic expectations that Goldman or any of its peers could suddenly start a Bitcoin trading business. That was top-of-the-market-hype thinking.

Goldman Sachs is a Bit Different

Morgan Stanley, Citigroup, and many other large banks that were rumored to launch Bitcoin-related ventures by the end of 2018 were most likely not going to aggressively enter a market built upon an asset class that is still at its infancy.

But, Goldman Sachs, the $61 billion investment banking giant, has been preparing to offer Bitcoin services to its clients for awhile.

As CCN reported in June, for the first time in the company’s history, David Solomon, who is now the CEO of Goldman Sachs, directly confirmed that the bank has been clearing some Bitcoin futures for its clients with the intent of establishing a cryptocurrency trading desk in the foreseeable future.

“We are clearing some futures around Bitcoin, talking about doing some other activities there, but it’s going very cautiously. We’re listening to our clients and trying to help our clients as they’re exploring those things too. Goldman Sachs must evolve its business and adapt to the environment,” said Solomon in an interview with Bloomberg TV in China.

Although Goldman Sachs could clear Bitcoin futures with the assistance of CME, CBOE, and other established futures markets in the U.S. market, it cannot hold onto the cryptocurrencies owned by its investors or invest in the asset class on behalf of its clients without obtaining an approval to operate as a custodian.

In November, Justin Schmidt, a Goldman Sachs executive, said that the bank has not been able to receive approval from local financial authorities and in a period in which a bill pertaining to the legal definition of digital assets is still pending, it is risky for the institutions to provide services around the market.

“Custody is this foundational piece that is absolutely necessary. Custody is part of an overall integrated system where different parts need to work well with each other and safely with each other and you have to be able to trust all the different parts in that chain, from buying something to transferring it to storing it in for the long-term,” Schmidt said at the time.

Can Investors Expect Bitcoin Services in 2019?

It could have been unrealistic to expect Morgan Stanley, Citigroup, and many major banks in the global financial landscape to abruptly begin providing services on top of Bitcoin, and many of these institutions also likely saw a PR opportunity to alter their public image as some innovative and forward-thinking organizations.

However, some institutions like Fidelity and Goldman Sachs are seriously considering the long-term prospect of the market and in the long run, the two institutions could serve investors in the digital asset market.

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Following Christmas and a strong corrective rally on Christmas Eve, the crypto market lost over $18 billion within a 48-hour period.

The Bitcoin price dipped below the $3,800 mark after a promising price surge to $4,300 and the Bitcoin Cash price suffered a large decline from $230 to $170 within a one-week span, losing 26 percent of its value against the U.S. dollar.

Factors Behind Wild Volatility in Crypto

Throughout the past week, investors in the cryptocurrency market have been generally positive on the short-term trend of Bitcoin and other major crypto assets, given the dominant cryptocurrency’s strong recovery to the mid-$4,000 region.

But, many analysts also cautiously suggested that the cryptocurrency market is still in a bear market and while it may be in the last phase of a year-long downtrend, a high level of volatility in a low price range is expected.

On December 21, prior to a rally that allowed the crypto market to add over $40 billion to its valuation, a cryptocurrency trader with the online alias “The Crypto Dog” said that a rally above key resistance levels in the $5,000 to $5,500 range is unlikely in the short-term despite some momentum major crypto assets showed.

The trader wrote:

Bitcoin found support near historical highs at $3,000. Earlier this week, I watched Bitcoin’s volatility and sell volume stall the further its price fell, leading me to wonder if the fabled ‘$3,000 support’ would be front ran. It was. If bulls are able to push past $4500, $4800 is the last bump in resistance that stands in the way before $5,400. At this time I am not anticipating a rally beyond $5,500, nor can I guarantee more relief even past $4,500, though we must not count any scenario out.

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The Crypto Dog📈@TheCryptoDog

1/ #Bitcoin found support near historical highs at $3,000. Earlier this week, I watched Bitcoin’s volatility and sell volume stall the further its price fell, leading me to wonder if the fabled “$3,000 support” would be front ran. It was.

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For the crypto market to initiate a proper bull rally and a mid-term uptrend, it will have to undergo a several-month-long consolidation and accumulation period during which the value of cryptocurrencies rise gradually against the U.S. dollar.

From August to November, for just over three months, the cryptocurrency market demonstrated a record low volatility rate but it still was not enough to stabilize the market and establish a solid bottom.

$3,120, the lowest point the Bitcoin price achieved in 2018, could be the bottom for the asset. Immediately after the asset fell to $3,120, a large buy wall was created in that price range, allowing the market to recover.

The bottom was most likely reached at $3,120, but unless the market stabilizes and demonstrates gradual momentum, it is not possible to conclusively state that a proper bottom has been achieved.

When Will Volatility Stop

Until the cryptocurrency market shows a high level of stability in an extended time frame, the market will continue to demonstrate extreme volatility in a low price range.

The volatility of crypto assets shown in the past week was unexpected because of the intensity of the movements on both the upside and downside.

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Given that the next generation of investors will come of age having been immersed in the digital world from infancy, many crypto advocates believe that bitcoin or another cryptocurrency asset could one day function as “digital gold,” providing people with an easy-to-access hedge against market uncertainty and central banking malfeasance.

Gold Sees Resurgence as Crypto, Stocks Falter

But though bitcoin — this year’s crash notwithstanding — ranks as one of the top performing assets of the past several years, it remains firmly in the price discovery phase and consequently serves primarily as a speculative financial instrument rather than a true store of value.

bitcoin price gold price
Bitcoin (blue) has provided long-term hodlers with astronomical returns over the past half-decade, but it has also been wildly volatile relative to gold (red), as demonstrated by its performance in 2018.

Today’s investors, much like their ancestors, still turn to gold and other precious metals when faced with economic uncertainty. Google search data reveals that this remains the case, even as a growing cohort of investors signal that bitcoin is their asset of choice for long-term hodling.

Both Google searches for “gold” and the gold price itself have increased throughout the fourth quarter amid mounting concern over the near-term direction of the stock market following a prolonged bull run that may be finally running out of steam. Stocks made a historic recovery on Wednesday, but futures slipped after the market close, suggesting that investors haven’t seen the last of the downturn yet.

bitcoin gold google searches
Source: Google

Searches for “bitcoin,” meanwhile, are once again in decline after a moderate recovery from the yearly low set in October when the crypto market went through a period of uncharacteristic price stability.

Over the past 12 months, interest in bitcoin has dropped by 80 percent, mimicking the performance of the bitcoin price, and the flagship cryptocurrency, which as recently as mid-January was as popular among users as gold, now boasts just 15 percent as much search interest in the United States as the yellow metal. Globally, the gap is even more pronounced.

buy bitcoin vs buy gold google
Source: Google

Data on the search terms “buy gold” and “buy bitcoin” tells a similar story. In Dec. 2017, US residents typed “buy bitcoin” into their Google search bars more than six times as much as “buy gold,” only to see the terms reach parity just two months later after the crypto bubble popped. Now, more than a year after the bitcoin price reached its all-time high, users are three times more likely to seek information on purchasing gold than bitcoin.

Does Bitcoin Stand a Chance to Supplant Gold?

Of course, the news isn’t all bad for BTC. Even a profound drop in retail interest in cryptocurrency could not prevent “What is bitcoin?” from ranking among 2018’s top Google searches in the United States and several other large countries, as CCN previously reported. That’s no small feat given the gravity of this year’s bear market, and it indicates that crypto awareness still has significant room to grow as bitcoin aims to become “digital gold.”

Moreover, gold itself must at some point reckon with the unexpected appearance of at least one bearish fundamental, namely a new scientific discovery that purports to turn cheap, plentiful copper into a pseudo-gold substance that can replace the yellow metal in industrial applications. While the bulk of gold demand is speculative, a reduction in its use in industrial applications should nevertheless impact the gold price accordingly — one of several factors that could buttress bitcoin’s case to be the store of value for the digital age.

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Christmas came late for the bears, but Santa didn’t fail to deliver. Nearly all of the top cryptocurrencies stumbled by multiple percentage points, everything from Bitcoin down to Zcash. Unsurprising, demand for stablecoins rose and they were trading at a slight premium.

Bitcoin Loses Over 4% Over 24 Hours

When the Bitcoin price is as high as it is, a single percentage point is worth more than $30, so even a shift of 2% is notable. At time of writing, Bitcoin was trading under $3600. Earlier in the week, it was thought that the godfather cryptocurrency might make it back over the $4,000 line, but things broke the opposite direction.

Earlier in the week, it was thought that the godfather cryptocurrency might make it back over the $4,000 line, but things broke the opposite direction. Chart from TradingView.

There is speculation afoot that tomorrow’s expiration of more than 25,000 worth of Bitcoin futures on Deribit is fueling the downturn.

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skew@skew_markets

Tomorrow is the largest expiry of the year for bitcoin options – the “Dec expiry”. 25,500 bitcoin options will expire on Deribit ~ nearly $100mln of notional. 80% of options expiring are calls. Open interest below will mechanically drop by more than 50%.

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As the above tweet points out, this will cut open future interest in half. People may be selling on the news in the belief that demand for Bitcoin might drop when these options mature, while sell pressure might also increase.

The rest of the cryptos trade against BTC in virtually every single market where they are traded, so a lowered value of BTC normally lowers their value unless or until something corrects the trend. The changes are not mathematically exact, however, and often positive trading in altcoin markets can lead to lessened losses.

Ripple Forfeits Over 6%

Ripple’s price has lost about a nickel over the past 24 hours. Confidence in the bank-friendly blockchain platform remains high across the board, with Ripple CEO Brad Garlinghouse recently making statements to the effect that Ripple is overwhelmingly a decentralized platform.

Confidence in the bank-friendly blockchain platform remains high across the board, with Ripple CEO Brad Garlinghouse recently making statements to the effect that Ripple is overwhelmingly a decentralized platform. Chart from TradingView.

Ripple enjoys a strong community and as time goes on its price has divorced increasingly from its BTC peg, with more markets adding it as a base pair and trading it against fiat currencies. This could in the future result in more price stability for Ripple.

Ethereum Drops 10%

In the case of Ethereum, the charting was almost precisely parallel Bitcoin, however:

The charting was almost precisely parallel Bitcoin. Chart from TradingView.

Ethereum saw a drop from a 24-hour high of over $130. It had recently overtaken Bitcoin Cash in terms of price, but Bitcoin Cash bulls in more recent days have caught up with Ethereum and surpassed it yet again. The overall loss to Ethereum’s price is around 10% over the past 24 hours.

It still maintains a higher market capitalization than Bitcoin Cash, standing at time of writing at nearly $2.6 billion.

Chart from CoinMarketCap.

Bitcoin Cash Down More Than 12%

The 24-hour period started with Bitcoin Cash trading above $180, but by the end of it sellers would be lucky to get just over $150.

BCH has lost $30 over the past 24 hours. Chart from TradingView.

It’s unclear what drove the resurgent demand in Bitcoin Cash. One thing that is certainly clear is that the Bitcoin fork has yet to recover from the essential split in value it suffered when Bitcoin SV forked off and created a new blockchain.

Stellar Markets Chaotic, Losses Of At Least 5%

Stellar has been back and forth at the end of the 24-hour period, seeing a brief climb back to nearly 11.5 cents and then trending back downward.

Ripple had a market cap of twice Stellar’s at time of writing, around 40 billion to Stellar’s 19 billion. Chart from TradingView.

The Ripple fork has never yet overcome its predecessor and always seems to trade around 1/3rd of its value. Significant improvements to its business relationships would be required to increase the value. Both tokens suffer the curse of massive supplies in the billions, meaning that small changes in their per-token valuations multiply into wider changes in the market capitalization overall.

Ripple had a market cap of twice Stellar’s at time of writing, around 40 billion to Stellar’s 19 billion. Neither is anything to scoff at, of course, being that they could fit several of the tokens just a little lower on the rankings several times over.

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An attack on the Electrum bitcoin wallet has so far netted hackers over 200 bitcoin worth around $750,000. The attack began on December 21, 2018. Though it has victimized some unsuspecting users, it can be avoided.

Electrum is a Bitcoin wallet which doesn’t require the user to download the full blockchain. Instead, servers remotely provide users with the blockchain and they access it through their wallet. It is one of the most popular Bitcoin wallet implementations and forks of it for both versions of Bitcoin Cash as well as Litecoin, Dogecoin, and Dash have been created over the years.

Malicious Servers Crucial To Scam Attack

Malicious servers were been added to the Electrum wallet network. When users attempted a bitcoin transaction which reached one of these illegitimate servers the user received a message within the wallet application instructing them to download and install an update. The message led unsuspecting uses to the hacker’s GitHub page.

The resulting download was actually malware disguised as a new version of the Electrum wallet. The installed malware then prompted users to enter their two-factor authentication codes. This allowed the attackers to then use the authentication codes and steal bitcoin by transferring funds to their own bitcoin address.

An Electrum developer posted details of the hack in the last 24 hours on Github sharing the following screenshot of the hackers first false message and link which they had managed to infiltrate into the Electrum user interface:

Malicious Electrum Pop Up Source: Electrum Github

Electrum has since modified its software and released an update but, said SomberNight:

This is not a true fix, but the more proper fix of using error codes would entail upgrading the whole federated server ecosystem out there…

The Electrum Github repository detailing this issue also confirms that:

We did not publicly disclose this until now, as around the time of the 3.3.2 release, the attacker stopped; however they now started the attack again.

The latest malicious popup and link looked like this:

Latest Malicious Electrum Pop Up Source: Electrum Github

Reporting by ZDNet indicates Github admins have now removed the repository with the malicious wallet version.

That said, Electrum Wallet users should remain vigilant as the hackers have persevered and adjusted their efforts over the last week, so new attacks are likely.

Electrum has warned its users to only download software from electrum.org and not Github tweeting:

Electrum@ElectrumWallet

There is an ongoing phishing attack against Electrum users. Our official website is https://electrum.org  Do not download Electrum from any other source. More on the attack here: https://github.com/spesmilo/electrum/issues/4968 

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when broadcasting transaction, error message from server is displayed as is · Issue #4968 ·…

TL;DR: There is an ongoing attack against users where servers raise exceptions when a client broadcasts a transaction; in this case the error text is displayed as is in the client GUI. The attacker…

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Another red flag for users who unwittingly download the malware should be the request for two-factor authentication when starting the malware affected new wallet version. Two-factor authentication is only normally requested when making a transaction.

It’s not just Electrum wallet users that need to be vigilant, malware attacks on cryptocurrency users are increasing. Non-cryptocurrency users are at risk too, a McAfee report in the past few days also says that crypto mining malware incidences have risen 4,000% in 2018 alone.

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An Australian blockchain-based peer-to-peer electricity trading startup is on the receiving end of criticism for rewarding bounty hunters who used unscrupulous means to drive interest in its crypto token.

According to the Financial Review, Power Ledger has been criticized for allocating free tokens to bounty hunters who made exaggerated or false claims regarding the startup with a view of increasing the uptake of the Australian crypto firm’s tokens.

Some of the exaggerated or misleading claims included stating that the startup had drawn the interest of the renowned clean energy advocate and billionaire founder of Tesla, Elon Musk, who was keen on revolutionizing the retail electricity sector.

Currently, Power Ledger’s token, POWR, is trading around 20% below the issue price and has a market cap of over US$30 million.

‘Not our Fault’

Power Ledger has defended itself, arguing that it only used the bounty hunters because the startup wanted to create “grassroots support for the currency sale.” According to Power Ledger, 1.5 million tokens were set aside for the bounty hunters.

Per Dr. Jemma Green, the chairman and co-founder of Power Ledger, the startup had no way of supervising the behavior of the bounty hunters:

Rewards were offered to community members to share our project with their own networks. The means by which they did so were outside of our control, and we made it clear that our core supporters who believed in the project and the future of renewable energy were the main audience for this program.

The criticisms that have been leveled against Power Ledger have, however, not dissuaded the P2P energy-trading startup from its mission. Earlier this month, a trial for trading solar power in the Australian coastal city of Fremantle on a blockchain-based platform provided by Power Ledger kicked off successfully.

CCN@CryptoCoinsNews

Australia: Power Ledger’s Blockchain Energy Platform Goes Live in Fremantle https://www.ccn.com/australia-power-ledgers-blockchain-energy-platform-goes-live-in-fremantle/ 

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Australia: Power Ledger’s Blockchain Energy Service is Live in Fremantle

Australia’s coastal city of Fremantle has kicked off a trial that will allow some residents to trade solar power on a blockchain-based platform provided by renewable energy-focused crypto startup…

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This enabled about 40 households in the coastal city to determine both the buying and selling price of renewable electricity generated on their rooftops.

A ‘World First’

At the time, the Minister for Finance, Energy and Aboriginal Affairs in the government of Western Australia, Ben Wyatt, dubbed the trial a “world first:”

The trial represents an innovative solution to virtual energy trading that may have implications for energy utilities working to balance energy supply and demand all over the world. These households are believed to be the first in the world to be taking part in an active, billed, peer-to-peer trading trial that allows them to effectively buy and sell solar energy generated by their rooftop system across the grid.

Across the Pacific, Power Ledger also inked a deal with energy supplier American PowerNet last month and this saw the Australian crypto startup deploy its blockchain-based electricity trading platform, xGrid, at the headquarters of the U.S. utility in Pennsylvania.

Credit: CCN

Amazon is now the fourth largest company in the world behind Apple, Microsoft, and Alphabet (Google) after suffering its worst quarter since the 2008 recession.

Merely three months ago, at the start of the fourth quarter of this year, Amazon was valued at $1 trillion. Currently, as of December 28, Amazon is valued at $680 billion, down $320 billion from its quarterly high.

Chart from TradingView.

Losing 32 percent in a three-month span, the fourth quarter of 2018 is officially the company’s worst-performing quarter since the financial crisis a decade ago.

Factors Behind the Amazon Stock’s Struggle

Amazon’s drop in share price is not exclusive to the e-commerce giant. As the main stock indexes of the U.S. market tumbled into a bear market, major companies in the likes of Facebook, Apple, and Microsoft lost over 30 percent on average.

Apple, for instance, which still remains as the second biggest corporation in the U.S. behind Microsoft, lost 35 percent of its valuation since October 3, losing an additional four percent on the day.

But, over the past several weeks, Amazon has struggled to meet the expectations of investors. The growth rate of the firm’s cloud computing unit fell short from the projected rate and the overall revenue of the company, despite high sales during the Christmas season, was not as high as investors anticipated.

In India, a key market for the e-commerce company, Amazon has also encountered a regulatory roadblock that may disallow the firm from selling certain products like mobile phones in the local market.

Having already spent billions of dollars in establishing its presence in India through the acquisition of a supermarket chain, “E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field,” the newly released rule by the Indian government read.

The rule was created to help bolster the local e-commerce sector by eliminating the leverage foreign companies have on the market.

Kunal Bahl, the CEO of Snapdeal, optimistically said that the restrictions will create a more competitive and even playing field for all merchants.

He said:

Marketplaces are meant for genuine, independent sellers. These changes will enable a level playing field for all sellers, helping them leverage the reach of e-commerce.

For Amazon and even for Walmart, which spent $16 billion on the acquisition of Flipkart, an e-commerce rival of Amazon, the newly imposed restrictions by the Indian government led to a steep drop in their share prices.

Key For Amazon’s Recovery
Like every other major technology stock in the U.S. market, Amazon suffered a steep sell-off over the past several months and as investors expect the stock market to continue declining across the first quarter of 2018, Amazon may see extended losses.

The key for Amazon and large corporations in the U.S. market for recovery is to focus on meeting the expectations of its investors through the prioritization of recovering their core revenue sources.

Credit: CCN