For the price of bitcoin, the summer was anything but smooth.

Markets boomed on news of 'the Brexit', tapered off through the long-awaited halving and tumbled on the news yet another exchange had been hacked. Since then, the price has fluctuated between $550 and $600, returning to the "relative" calm observed earlier in the year.

But given bitcoin's historical volatility, analysts are already beginning to question what may trigger bitcoin's next big price swing.

As we head into the fall and winter months, a diverse set of theories are beginning to emerge about conditions that could either boost the price, or see it return to its 2015 lows.

Institutional approval

Among the potential triggers cited by analysts, the emergence of a bitcoin exchange-traded fund (ETF), an investment vehicle that generally tracks a basket of stocks or commodities, was perhaps the most often discussed.

Many market observers have been watching the status of two proposed ETFs with great interest, but for a while, there wasn't any reason to hope for developments. However, excitement for a potential market first has grown in recent weeks following the July announcement of the SolidX Bitcoin Trust and amid new filings by the Winklevoss Bitcoin Trust.

The approval of either could represent a milestone for the bitcoin community, analysts say, as the ETFs would enable authorized participants to issues shares tied to real bitcoin holdings, which could be a catalyst for new liquidity.

Daniel Masters, director of Global Advisors Bitcoin Investment Fund (GABI), noted recently that many commodities have enjoyed sharp increases in price and more robust trading activity once ETFs based on the underlying assets hit the market. 

He wrote in an August blog post:

"From the early 2000s onward, there was a proliferation of ETFs covering all manner of commodity interests. In each and every case – for gold, silver, oil, natural gas, platinum, copper and even indices – the advent of the ETFs led to higher prices, more trading volume of futures and cash exchanges and higher levels of commodity futures open interest."

Should either ETF receive approval, bitcoin could enjoy a notable increase in liquidity. It was this variable that Du Jun, co-founder of Chinese exchange Huobi, singled out as potentially driving the digital currency's price higher.

"Bitcoin's liquidity depends on the future of bitcoin's value and investors' expectation to a large extent," Du said.

Technical improvements

Yet another potential boost for the bitcoin price could come in the form of a long-awaited resolution to the "scaling" debate.

Currently, blocks of transactions on the bitcoin blockchain have a storage size of just 1MB. As this puts a limitation on the number of transactions the network can process (and therefore, some argue, adoption), there has been a sometimes messy and contentious drive in the community to change it.

But due to the tricky specifics of how a change to this hard-coded limit would need to be enacted, no consensus has yet been reached. Still, that doesn't mean solutions aren't on the way, the most notable of which is Segregated Witness (SegWit), an upgrade that recently saw a preliminary code release.

While promising for the network, though, analysts seemed less enthusiastic about SegWit’s potential impact on bitcoin prices.

Cryptocurrency investment fund manager Jacob Eliosoff, for example, said investors have likely already priced in the coming change as it was announced in December and originally expected to be deployed in April.

"SegWit's release seems too gradual and widely expected (not to say overdue) to really bump the price," Eliosoff said.

Tim Enneking, chairman of investment manager EAM, struck a similar tone, adding:

"I don’t think SegWit will have anything more than an incremental and marginal impact on BTC prices, at least in the short term."

Post-Halving pressures

In one of the more unique claims, investor and entrepreneur Vinny Lingham singled out the halving of rewards on the bitcoin network as a potential influence. 

The prediction may be surprising given that a planned technical change the reduced the mining reward from 25 BTC to 12.5 BTC took place earlier this summer, largely without fanfare.

But while bitcoin prices experienced little change this July, Lingham asserts its true impact has not yet been felt. In the next two-to-four weeks, forces resulting from the shift could cause the digital currency to surge, he said.

As detailed in a recent post, miners who aren't turning enough profit, he contends, may soon be forced to buy bitcoin from exchanges, an event he said was likely to trigger a "short squeeze", or a sharp increase in the price based on the lack of available supply.

He wrote in May:

"It’s the same as selling crops in the futures market and then being hit by a storm that wipes out half of your fields. The only way, technically, that this doesn’t happen, is if the price doubles on halving day (it won’t)."

Financial (in)stability

Finally, some predicted bitcoin's next major price event would be dependent on the stability of the global financial system.

Traders have repeatedly flocked to the digital currency in times of crisis, leading many market observers to label it a risk-off asset or even a "digital gold" that appeals during times of economic stress.

In the past, bitcoin has benefitted from situations such as the 'Brexit', as well as during periods of economic volatility in Greece and Cyprus.

It remains debatable how much of these increases is based on real capital flight, but there is still widespread belief that such events could come to be a powerful influencer going forward.

Huobi's Du spoke to this matter, telling CoinDesk that when the global financial system experiences volatility, investors will "look for more safe-haven investments" like bitcoin.

Another variable remains government responses to the digital currency. If major countries accept bitcoin, analysts said, it will affect both the currency's trading activity and value.

Pete Rizzo contributed reporting.

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The Office of the National Coordinator for Health IT (ONC), a division within the US Department of Health and Human Services (HHS), has announced the winners of a blockchain research paper contest.

The "Use of Blockchain in Health IT and Health-related Research Challenge", announced last month, solicited white papers that would explore how the technology can be potentially used in healthcare settings.

The ONC said that it received over 70 submissions, and that it ultimately chose just 15 to spotlight.

National coordinator Vindell Washington said in a statement:

"We are thrilled by the incredible amount of interest in this challenge. While many know about Blockchain technology's uses for digital currency purposes, the challenge submissions show its exciting potential for new, innovative uses in health care."

At the time it announced the contest, HHS indicated that it was weighing blockchain tech as part of a broader push for interoperability in the country’s healthcare IT systems. The ONC has been pursuing this line of inquiry for the past several years, releasing a report last October on this goal.

HHS, along with the Department of Defense and the Department of Homeland Security, are among the major US agencies looking into the technology.

The ONC is set to host a blockchain-focused workshop to be held at the National Institute of Standards and Technology (NIST) between 26th and 27th September.

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Why would anyone want to use a coin issued by four large banks bailed out in 2008?

That's a question that many are asking after UBS, Deutsche Bank, Santander, BNY Mellon and ICAP announced last week that they had teamed up with blockchain developer Clearmatics to create a new digital currency. In a joint press release, the new consortium said that the "Utility Settlement Coin" would be used to clear and settle financial market trades on a blockchain.

But while it would be easy to see this as an alternative means of settlement using a private currency owned, issued and backstopped by the members of the consortium, that's not what the consortium is planning.

From the press release, here is Clearmatics CEO, Robert Sams:

"Cash is a leg to almost every trade, so this project is key to unlocking the benefits that the industry can gain from distributed automation technology in clearing, settlement and collateral management."

This explanation is less than clear, so let me translate. The consortium aims to speed up central bank settlement processes and reduce the need for banks to maintain expensive collateral to meet short-term liquidity needs in real-world currencies, so that banks can increase the frequency of trading and make better use of capital.

Instead of waiting to receive real-world currency via a central bank real-time gross settlement (RTGS) systems, banks could simply issue Utilities Settlement Coins to meet their obligations and carry on trading.

Of course, as Hyman Minsky said: "Anyone can create a currency, the problem is getting others to accept it."

Not so ambitious

Why would other market participants accept a coin magicked into existence by a large bank in final settlement of an obligation in real-world currency? Well, they wouldn't, of course – unless the coin was issued and backstopped by a central bank.

So, the consortium proclaims that the new coin will be CENTRAL BANK money.

Hyder Jaffrey, head of strategic investment and FinTech innovation at UBS Investment Bank, said:

"Digital cash is a core component of a future financial market fabric based on blockchain technologies. There are several digital cash models being explored across the Street. The Utility Settlement Coin is focussed on facilitating a new model for digital central bank cash."

But which central bank? Could this mean the establishment of an international digital clearing union, with a digital international settlement currency independent of any country, replacing the US dollar and decapitating the global ambitions of the IMF's SDR? Could the Utilities Settlement Coin become Keynes' bancor, in a form of which he never dreamed?

Although, the fact that this new international settlement currency would be native to a private blockchain owned by a consortium of large banks might give us pause for thought. UBS, Deutsche Bank, Santander and BNY Mellon would effectively become the world's central bank.

Sadly, this scheme is not so ambitious.

Buried in the press release is this:

"USC is a series of cash assets, with a version for each of the major currencies (USD, EUR, GBP, CHF, etc.) and USC is convertible at parity with a bank deposit in the corresponding currency. USC is fully backed by cash assets held at a central bank. Spending a USC will be spending its paired real-world currency."

So there would not be one single global Utilities Settlement Coin, but multiple coins. Each real-world currency would have its own Utilities Settlement Coin, with which it would be exchangeable at par.

Banks would deposit real-world currency at central banks and create an equivalent quantity of Utilities Settlement Coins for that currency.

Goodbye, bank reserves; Hello, Utilities Settlement Coin.

The backstop

But this simply replaces one electronic reserve asset with another. So what is the point? This is where the blockchain comes in.

Bank reserves can't be used for settlement on a permissioned blockchain: they can only be used for settlement via a central bank RTGS system. In contrast, our Utilities Settlement coins – we assume – would be used for settlement on a permissioned blockchain collectively owned and managed by the consortium. A private settlement system for real-world currencies, effectively backstopped by central banks.

Now, why would this arrangement be of interest to a bunch of banks? What advantages would it give them over existing central bank RTGS systems?

The first advantage is speed. Since central bank RTGS systems use double-entry accounting, settlement is instantaneous, no blockchain verification protocol could possibly match the speed of a central bank RTGS system where both sending and receiving banks have accounts. But, RTGS systems are merely the core of settlement processes that can take days to complete.

There is a legacy of delays from the days when processes were manually-intensive and banks and brokers could earn interest on money sitting in clearing. Now, they no longer need an army of clerks to process settlements, and in these days of negative interest rates, clearing delays are more likely to cost them money. No wonder they want to speed things up.

However, getting industry-wide agreement on moving to same-day settlement is like pulling teeth (even moving to T + 2 has taken years to implement). So, it looks like our consortium banks want to take matters into their own hands. Blockchain gives them a technical excuse to bypass the existing moribund processes.

There is another reason, too. Reserves and collateral are low-yielding assets that clog up bank balance sheets. Banks would really like to find a means of settling without having to pledge collateral at central banks. In fact, ideally they would like not to have to use central bank money at all.

So, although the Utilities Settlement Coins would be backstopped by central banks, once the majority of banks agreed to accept the Utilities Settlement Coins (aka joined the consortium), the banks could simply dispense with central bank money.

As Matt Irvine at Bloomberg points out:

"But for many purposes – for example, just doing more transactions with other banks – the pseudo-dollars are just as good as dollars. If every bank signs on for this, then they can go out and buy more securities with their pseudo-dollars, and rarely need to bother with the Fed."

Until, that is, everything started to go wrong, when banks would once again claim the Fed's backing.

After all, these are central bank coins, aren’t they? And by that time there would be FAR more of them in existence than cash assets backing them. This is how fractional reserve banking develops.

So, this is not fundamentally a story of cool blockchain technology superseding ancient creaking central bank processes. No, it is a story of banks trying to circumvent the capital and liquidity regulation that aim to prevent market freezes and bailouts such as happened in 2008.

Self-absorbed visualization via Shutterstock

Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.

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An affiliate of global electronics giant Samsung is among 17 new members to join the Hyperledger blockchain project.

The Linux-led blockchain initiative today announced new companies and organizations have joined its ranks including Samsung's IT services subsidiary Samsung SDS, Quickbooks developer Intuit and heavy machinery manufacturer Sany.

The announcement provides the latest sign that Samsung is developing an interest in the emerging technology, and that major institutions are increasingly viewing Hyperledger as a venue for further engagement.

To date, nearly 100 companies and startups have joined to contribute to the project since its launch in December.

Brian Behlendorf, Hyperledger's executive director, said in a statement:

"At a growth rate of nearly two new members joining per week – there's no telling where we'll be at by the end of the year – I look forward to working with this growing community to further our open blockchain development efforts."

The news follows an uptick in announcements for the project, including the admission of French aircraft manufacturer Airbus earlier this month and the unveiling of initial open-source projects spearheaded by contributors.

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Former Morgan Stanley managing director Caitlin Long has joined blockchain startup Symbiont as president and chairman of the board.

The New York-based blockchain firm, which is seeking to advance capital markets blockchain applications in syndicated loans and OTC derivatives, announced the hiring today. With the move, Long brings expertise honed during tenures at both Morgan Stanley and Credit Suisse, including time spent on the former firm's distributed ledger working group.

In statements, Long revealed she has also completed an undisclosed invested in Symbiont as part of its still-ongoing Series A first rumored in early 2016. Further, she used the platform to promote what she believes are the strengths of the company's technology.

Long wrote:

"Ours is the only smart contracts platform that was purpose­built for institutional financial markets. We’re ahead of our peers in the race to build production-­ready software, because it’s already going into production."

Overall, Long sought to position the company as one that is currently able to offer a working smart contracts platform, scalable blockchain technology and a team that is capable of executing on strategies in line with those of enterprise firms.

Founded in 2014 by CEO Mark Smith and Counterparty creators Adam Krellenstein and Evan Wagner, Symbiont has so far raised more than $1.25m in funding and boasts more than 10 employees.

Its most notable announcement came in May of this year, when it revealed it was working on a pilot project with the state of Delaware.

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A member of the European Parliament is proposing that €1m ($1.1m) be spent on a task force that would focus on studying digital currencies and blockchain technology.

The push for funding comes months after the legislative arm of the European Union (EU) first approved the task force, proposed by MEP Jakob von Weizsäcker earlier this year.

Legislative records indicate that von Weisäcker is now asking for financial support for the measure. In notes, he said that support should be approved in order to position the European Commission – the economic bloc's executive branch – at the forefront of an emerging technology.

The MEP wrote:

"This pilot project aims at creating a Task Force, staffed with regulatory and technical experts, in order to build up technical expertise, regulators capacity and develop use cases, especially for governmental applications, in the field of distributed ledger technology (DLT) as proposed in the Resolution of the European Parliament on virtual currencies."

The task force initiative is one of the more notable legislative efforts to emerge from Europe on the subject of blockchain, as it is expected to focus on the developing government use cases.

In legislative records, von Weisäcker reiterated past statements about the task force's potential role in creating a balanced regulatory environment.

"Too early hard regulatory measures would stifle innovation and hamper its potential," he wrote. "Waiting too long might lead to a materialization of (systemic) risks."

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