Bitcoin Rally Supported by More Busy Miners and Lower Fees
As bitcoin (BTC) rallied, with the trading volume rising as well, the transaction fees moved in the opposite direction as miners turned more of their machines on.
Bitcoin has made quite a move upwards since the beginning of November, with analysts predicting further volatility, but also appreciation in this month. The world's number one coin surpassed the USD 16,000 level for the first time since January 2018 just yesterday, and today jumped above USD 16,400 before correcting lower.
At the same time, the trading volume has been rising. At the time of writing, on November 13, Coinpaprika shows BTC 1,552,121 changing hands so far, worth around USD 25n. This is already up from yesterday's BTC 1.52m, as well as 31% more from the BTC 1.18 seen three days ago - which was the lowest amount recorded this week so far. In comparison, the highest number seen last week was BTC 1.87m, and the lowest was BTC 1.2m.
Meanwhile, the fees have been dropping in the last ten days. After jumping to USD 11.99 on November 3, the 7-day moving average fees dropped 41% to USD 7 recorded yesterday. This is still a lot higher than USD 2.18 recorded before the latest jump in fees.
The median transaction fees show a similar picture, dropping 56.6% between November 3 and November 12. Their USD 2.9 is still higher than USD 1.17 seen in mid-October.
BTC mempool, where all the valid transactions wait to be confirmed, is also less busy compared to October.
That said, hashrate, or the computational power of the Bitcoin network, shows something of an inverted fee picture: after dropping substantially in late October, it started climbing again on November 2. It's gone up 17.7% between then and November 12 to 127.36 EH/s. It's still a lower than the all-time high of 147.21 recorded in mid-October.
Bitcoin mining difficulty, or the measure of how hard it is to compete for mining rewards, is expected to drop again during the next adjustment in three days, following the second-largest drop in the network's history.
As bitcoin (BTC) rallied, with the trading volume rising as well, the transaction fees moved in the opposite direction as miners turned more of their machines on.
Bitcoin has made quite a move upwards since the beginning of November, with analysts predicting further volatility, but also appreciation in this month. The world's number one coin surpassed the USD 16,000 level for the first time since January 2018 just yesterday, and today jumped above USD 16,400 before correcting lower.
At the same time, the trading volume has been rising. At the time of writing, on November 13, Coinpaprika shows BTC 1,552,121 changing hands so far, worth around USD 25n. This is already up from yesterday's BTC 1.52m, as well as 31% more from the BTC 1.18 seen three days ago - which was the lowest amount recorded this week so far. In comparison, the highest number seen last week was BTC 1.87m, and the lowest was BTC 1.2m.
Meanwhile, the fees have been dropping in the last ten days. After jumping to USD 11.99 on November 3, the 7-day moving average fees dropped 41% to USD 7 recorded yesterday. This is still a lot higher than USD 2.18 recorded before the latest jump in fees.
The median transaction fees show a similar picture, dropping 56.6% between November 3 and November 12. Their USD 2.9 is still higher than USD 1.17 seen in mid-October.
BTC mempool, where all the valid transactions wait to be confirmed, is also less busy compared to October.
That said, hashrate, or the computational power of the Bitcoin network, shows something of an inverted fee picture: after dropping substantially in late October, it started climbing again on November 2. It's gone up 17.7% between then and November 12 to 127.36 EH/s. It's still a lower than the all-time high of 147.21 recorded in mid-October.
Bitcoin mining difficulty, or the measure of how hard it is to compete for mining rewards, is expected to drop again during the next adjustment in three days, following the second-largest drop in the network's history.
New Bitcoin Narrative Targets Multitrillion Bond Market
Major Australian investment fund Pendal Group considers that government bonds could become a "dead asset class" as they continue to lose their relevance in portfolios due to trillion-dollar quantitative easing programs run by central banks, pushing investors towards bitcoin (BTC).
“We think ultimately that government bonds will turn into a dead asset class, so we now have to imagine what it will be like for other assets classes when bonds are no longer relevant to hold in a portfolio,” Vimal Gor, Head of Bond, Income and Defensive Strategies, told the Australian Financial Review. According to him, as bond yields are going to "stay low for a very long time," investors are looking for alternatives and "commodities and cryptocurrencies have a part to play in the answer."
However, Gor said that bitcoin is superior to gold as a social contract and store of wealth because its easier to transact, there are flat running costs, and BTC has a finite and decreasing supply.
"We have been positioning in gold for our clients for many many years now. Now we're doing it with bitcoin," he said, adding that many of their high-net-worth clients and wholesale investors are asking about BTC. In either case, according to Gor, the fiat currency system will collapse but evolve.
As of August 2020, the overall size of the global bond markets in terms of USD equivalent notional outstanding, is approximately USD 128.3tn, according to estimates by the International Capital Market Association.
As reported, last week, Rick Rieder, BlackRock's Chief Investment Officer of Global Fixed Income said that BTC is "much more functional" than gold and the most popular cryptocurrency could replace the yellow metal. At the end of last year, BlackRock had USD 7.4 trillion in assets under management.
With some AUD 101.4bn (USD 74bn) in funds under management as of end 2019, Pendal Group says it is one of Australia’s largest investment managers. The company is listed on the Australian Securities Exchange.
Su Zhu, CEO of crypto investment fund Three Arrows Capital, commented on the Pendal’s approach by stating that “if pensions begin divesting from the zero/negative yielding global sovereign bond market to buy BTC that would be a veritable deluge of capital”.
Meanwhile, Michael Saylor, CEO and Founder of business intelligence firm MicroStrategy, expects BTC and other cryptocurrencies to strengthen its position of a “better store of value” for the USD 300 trillion that are currently “trapped & rapidly depreciating in bonds, stocks, real estate, cash, & gold”.
At pixel time (10:38 UTC), BTC trades at USD 18,726 and is up by 3% in a day and 15% in a week. The price rallied by 44% in a month and 159% in a year.
Major Australian investment fund Pendal Group considers that government bonds could become a "dead asset class" as they continue to lose their relevance in portfolios due to trillion-dollar quantitative easing programs run by central banks, pushing investors towards bitcoin (BTC).
“We think ultimately that government bonds will turn into a dead asset class, so we now have to imagine what it will be like for other assets classes when bonds are no longer relevant to hold in a portfolio,” Vimal Gor, Head of Bond, Income and Defensive Strategies, told the Australian Financial Review. According to him, as bond yields are going to "stay low for a very long time," investors are looking for alternatives and "commodities and cryptocurrencies have a part to play in the answer."
However, Gor said that bitcoin is superior to gold as a social contract and store of wealth because its easier to transact, there are flat running costs, and BTC has a finite and decreasing supply.
"We have been positioning in gold for our clients for many many years now. Now we're doing it with bitcoin," he said, adding that many of their high-net-worth clients and wholesale investors are asking about BTC. In either case, according to Gor, the fiat currency system will collapse but evolve.
As of August 2020, the overall size of the global bond markets in terms of USD equivalent notional outstanding, is approximately USD 128.3tn, according to estimates by the International Capital Market Association.
As reported, last week, Rick Rieder, BlackRock's Chief Investment Officer of Global Fixed Income said that BTC is "much more functional" than gold and the most popular cryptocurrency could replace the yellow metal. At the end of last year, BlackRock had USD 7.4 trillion in assets under management.
With some AUD 101.4bn (USD 74bn) in funds under management as of end 2019, Pendal Group says it is one of Australia’s largest investment managers. The company is listed on the Australian Securities Exchange.
Su Zhu, CEO of crypto investment fund Three Arrows Capital, commented on the Pendal’s approach by stating that “if pensions begin divesting from the zero/negative yielding global sovereign bond market to buy BTC that would be a veritable deluge of capital”.
Meanwhile, Michael Saylor, CEO and Founder of business intelligence firm MicroStrategy, expects BTC and other cryptocurrencies to strengthen its position of a “better store of value” for the USD 300 trillion that are currently “trapped & rapidly depreciating in bonds, stocks, real estate, cash, & gold”.
At pixel time (10:38 UTC), BTC trades at USD 18,726 and is up by 3% in a day and 15% in a week. The price rallied by 44% in a month and 159% in a year.
South Korea’s Banking Giant to Co-create ‘Crypto Bank’ for Exchanges
South Korean banks are rapidly stepping up their crypto game, with Kookmin (KB), one of the biggest commercial banks in the country, co-creating a “digital asset management company” with a number of the nation’s leading blockchain players that will safeguard the bitcoin (BTC) holdings of corporate customers such as crypto exchanges.
KB appears exceptionally keen to roll out crypto custody-related services for institutional investors before its nearest banking rivals, with some functionality becoming available as of next month.
Per CNews, KB has made a “strategic investment” of an undisclosed amount in a new firm called Korea Digital Asset (KODA), along with blockchain accelerator Hashed and fellow blockchain investor and developer Haechi Labs – both of whom have also invested undisclosed sums in the new company.
KODA will roll out a beta service for corporate customers starting next month.
An official from Kookmin Bank said that they plan to start with handling the digital assets of corporate customers including crypto exchanges.
Hashed CEO Kim Seojoon told,
“KB is the largest bank in Korea. I’m sure [this deal] has tones of meaning for the industry.”
And KODA will also evolve new layers of functionality in the future, with the firm’s architects claiming that it would also function as a sort of trading platform for enterprises – a B2B “digital assets bank” for crypto, initially only compatible with bitcoin, but with ethereum (ETH) handling capacities set to be added in the near future.
KODA added that it plans to provide a wide range of services such as cryptoasset trusts, anti-money laundering (AML) solutions, tax and legal compliance tools and over-the-counter (OTC) services for corporations and institutions – such as exchanges – who deal with digital assets.
South Korean banks are rapidly stepping up their crypto game, with Kookmin (KB), one of the biggest commercial banks in the country, co-creating a “digital asset management company” with a number of the nation’s leading blockchain players that will safeguard the bitcoin (BTC) holdings of corporate customers such as crypto exchanges.
KB appears exceptionally keen to roll out crypto custody-related services for institutional investors before its nearest banking rivals, with some functionality becoming available as of next month.
Per CNews, KB has made a “strategic investment” of an undisclosed amount in a new firm called Korea Digital Asset (KODA), along with blockchain accelerator Hashed and fellow blockchain investor and developer Haechi Labs – both of whom have also invested undisclosed sums in the new company.
KODA will roll out a beta service for corporate customers starting next month.
An official from Kookmin Bank said that they plan to start with handling the digital assets of corporate customers including crypto exchanges.
Hashed CEO Kim Seojoon told,
“KB is the largest bank in Korea. I’m sure [this deal] has tones of meaning for the industry.”
And KODA will also evolve new layers of functionality in the future, with the firm’s architects claiming that it would also function as a sort of trading platform for enterprises – a B2B “digital assets bank” for crypto, initially only compatible with bitcoin, but with ethereum (ETH) handling capacities set to be added in the near future.
KODA added that it plans to provide a wide range of services such as cryptoasset trusts, anti-money laundering (AML) solutions, tax and legal compliance tools and over-the-counter (OTC) services for corporations and institutions – such as exchanges – who deal with digital assets.
The USD 4.2bn Question: Has China ‘Dumped’ PlusToken Bitcoin, Ethereum & Co?
Crypto community members are wondering what has become of a huge stash of crypto worth a combined USD 4.2bn seized by the Chinese authorities who closed down the PlusToken crypto scam earlier this year – with some asking if the funds were already “dumped” onto the market months ago, and others suggesting the state may still be holding onto the funds.
Per a court report issued yesterday and posted online by The Block, the authorities claimed they had seized the following from seven of the scam’s masterminds in their raids:
Bitcoin: BTC 194,775 (USD 3.297bn)
Ethereum: ETH 833,083 (USD 425m)
Litecoin: LTC 1.4m (USD 95m)
EOS: EOS 27.6 million (USD 79m)
Dash: DASH 74,167 (USD 6.7m)
XRP: XRP 487m (USD 263m)
Dogecoin: DOGE 6bn (USD 19m)
Bitcoin Cash: BCH 79,581 (USD 21m)
Tether: USDT 213,724 (USD 214,217)
And internet-based Twitter sleuths believe that the tokens have indeed been sold, although mystery still surrounds exactly how, where and when Chinese authorities have managed to do so considering crypto exchanges have been outlawed in Mainland China since September 2017.
The Chinese police completed an 18-month international hunt for the scam operators earlier this year, and began sentencing convicted ringleaders back in September.
But some Twitter-based observers have stated that they believe the tokens were sold (or “dumped”, as one said) earlier in the year – with one opining that the news was possibly “stale“ by “six or more months.”
An analyst named @ErgoBTC claimed to have traced the sales back to the Huobi platform, going back as far as 2019, with a Twitter user opining that this was simply a case of the Chinese government “putting a bow on the saga.”
Another yet claimed that this was simply another demonstration that China’s policy on crypto is crystal clear: Beijing will continue to crack down hard on tokens unless it retains an iron grip over them. These thoughts echo the sentiments of a prominent Japanese China observer, who also claimed China was pursuing a centralized approach to digital finance.
But the possibility of a major state – particularly a superpower – becoming a major player in the crypto markets appears to have given some pause for thought.
Crypto community members are wondering what has become of a huge stash of crypto worth a combined USD 4.2bn seized by the Chinese authorities who closed down the PlusToken crypto scam earlier this year – with some asking if the funds were already “dumped” onto the market months ago, and others suggesting the state may still be holding onto the funds.
Per a court report issued yesterday and posted online by The Block, the authorities claimed they had seized the following from seven of the scam’s masterminds in their raids:
Bitcoin: BTC 194,775 (USD 3.297bn)
Ethereum: ETH 833,083 (USD 425m)
Litecoin: LTC 1.4m (USD 95m)
EOS: EOS 27.6 million (USD 79m)
Dash: DASH 74,167 (USD 6.7m)
XRP: XRP 487m (USD 263m)
Dogecoin: DOGE 6bn (USD 19m)
Bitcoin Cash: BCH 79,581 (USD 21m)
Tether: USDT 213,724 (USD 214,217)
And internet-based Twitter sleuths believe that the tokens have indeed been sold, although mystery still surrounds exactly how, where and when Chinese authorities have managed to do so considering crypto exchanges have been outlawed in Mainland China since September 2017.
The Chinese police completed an 18-month international hunt for the scam operators earlier this year, and began sentencing convicted ringleaders back in September.
But some Twitter-based observers have stated that they believe the tokens were sold (or “dumped”, as one said) earlier in the year – with one opining that the news was possibly “stale“ by “six or more months.”
An analyst named @ErgoBTC claimed to have traced the sales back to the Huobi platform, going back as far as 2019, with a Twitter user opining that this was simply a case of the Chinese government “putting a bow on the saga.”
Another yet claimed that this was simply another demonstration that China’s policy on crypto is crystal clear: Beijing will continue to crack down hard on tokens unless it retains an iron grip over them. These thoughts echo the sentiments of a prominent Japanese China observer, who also claimed China was pursuing a centralized approach to digital finance.
But the possibility of a major state – particularly a superpower – becoming a major player in the crypto markets appears to have given some pause for thought.
US Regulations Key To Ripple’s Relocation Decision As Customers Worried About XRP
As the California-based major blockchain company continues to mull an initial public offering (IPO), Ripple CEO Brad Garlinghouse said the US regulatory framework is out of step with a number of markets such as the UK, Singapore and Japan. This lack of regulatory clarity and certainty for investors is a key factor hampering the company’s development in the US and the recruitment of new customers, he said in an interview with CNN.
“We have been big advocates of a bill that was introduced in the Congress called the DCEA, or the Digital Commodity Exchange Act … which could be a very important step in providing that clarity and certainty here in the US,” Garlinghouse said.
The CEO was making reference to earlier statements suggesting his firm was considering to leave the US, and some of the potential destinations to which the company could move include countries in Asia and Europe.
According to Garlinghouse, the lack of a clear regulatory framework in the US was impacting on the company’s talks with numerous customers who were hesitating whether to join its network because of country-specific reasons.
“Often times when I’m speaking with customers and we’re talking to them about our product that uses XRP in the payments flows, they will ask me about the regulatory dynamics, and they will [say] … look, until there’s clarity in the regulatory frameworks, we’re going to hold off,” the CEO said. “Now, that has not been the case because of the clarity and certainty in countries like… the UK, or the UAE, or Switzerland.”
Given that 95% of Ripple’s customers are based outside the US, the company said “one of the dynamics causing this is we have US companies who are waiting for clarity” in particular from the US Securities and Exchange Commission.
Commenting on its potential IPO, Ripple’s CEO said the company has “not been public about what our plans are with the exception that I’ve said there will be public crypto companies. I originally predicted we’d see them in the year 2020” but “the pandemic affected a lot of things, slowed down things a bit”.
At pixel time (10:36 UTC), XRP trades at USD 0.627 and is up by 1% in a day and 19% in a week. The price rallied by 169% in a month and 192% in a year.
As the California-based major blockchain company continues to mull an initial public offering (IPO), Ripple CEO Brad Garlinghouse said the US regulatory framework is out of step with a number of markets such as the UK, Singapore and Japan. This lack of regulatory clarity and certainty for investors is a key factor hampering the company’s development in the US and the recruitment of new customers, he said in an interview with CNN.
“We have been big advocates of a bill that was introduced in the Congress called the DCEA, or the Digital Commodity Exchange Act … which could be a very important step in providing that clarity and certainty here in the US,” Garlinghouse said.
The CEO was making reference to earlier statements suggesting his firm was considering to leave the US, and some of the potential destinations to which the company could move include countries in Asia and Europe.
According to Garlinghouse, the lack of a clear regulatory framework in the US was impacting on the company’s talks with numerous customers who were hesitating whether to join its network because of country-specific reasons.
“Often times when I’m speaking with customers and we’re talking to them about our product that uses XRP in the payments flows, they will ask me about the regulatory dynamics, and they will [say] … look, until there’s clarity in the regulatory frameworks, we’re going to hold off,” the CEO said. “Now, that has not been the case because of the clarity and certainty in countries like… the UK, or the UAE, or Switzerland.”
Given that 95% of Ripple’s customers are based outside the US, the company said “one of the dynamics causing this is we have US companies who are waiting for clarity” in particular from the US Securities and Exchange Commission.
Commenting on its potential IPO, Ripple’s CEO said the company has “not been public about what our plans are with the exception that I’ve said there will be public crypto companies. I originally predicted we’d see them in the year 2020” but “the pandemic affected a lot of things, slowed down things a bit”.
At pixel time (10:36 UTC), XRP trades at USD 0.627 and is up by 1% in a day and 19% in a week. The price rallied by 169% in a month and 192% in a year.
Bitcoin, Blockchain: Most Americans Don’t Know the Difference – Survey
Blockchain and crypto awareness in the United States is highest among the young, per a new survey. But few people know the difference between the two terms, and many think Bitcoin (BTC) and blockchain are one and the same thing, despite the fact that BTC and altcoins are now grabbing headlines in the mainstream media.
The report’s authors wrote,
“In the general population, only 25% of American adults have any idea what blockchain is, but this rises to 42% in the age 18-34 demographic.”
However, the authors noted that of the adults who said they recognized the term blockchain, “most don’t understand it,” with a staggering 62% “stating that “blockchain is the same as cryptocurrency” and almost half of the same group believing that “blockchain is the same as bitcoin.”
Well, they're not far from each other as blockchain is used by Bitcoin, which itself is a network, protocol, and the most popular cryptocurrency.
In either case, adoption appears to be on the rise, regardless of how knowledgeable (or not) the American public is about these emerging forms of technology.
The authors noted,
“Only 18% of United States adults say they’ve used a product or service related to blockchain, but this rises to 25% among the 18-34 demographic.”
And 63% of gamers responded that they would be keen to spend more on game-related cryptoassets and blockchain if they saw “virtual goods had real-world value, and could be traded or sold.”
Furthermore, more than a third of the total sample and almost 50% of the 18-34 year age group said their trust in blockchain was “strong or complete.”
Meanwhile, at the time of writing (14:40 UTC), BTC trades at USD 18,952 and is down by 1.4% in a day and 1% in a week. The price rallied by 24% in a month and 151% in a year.
Blockchain and crypto awareness in the United States is highest among the young, per a new survey. But few people know the difference between the two terms, and many think Bitcoin (BTC) and blockchain are one and the same thing, despite the fact that BTC and altcoins are now grabbing headlines in the mainstream media.
The report’s authors wrote,
“In the general population, only 25% of American adults have any idea what blockchain is, but this rises to 42% in the age 18-34 demographic.”
However, the authors noted that of the adults who said they recognized the term blockchain, “most don’t understand it,” with a staggering 62% “stating that “blockchain is the same as cryptocurrency” and almost half of the same group believing that “blockchain is the same as bitcoin.”
Well, they're not far from each other as blockchain is used by Bitcoin, which itself is a network, protocol, and the most popular cryptocurrency.
In either case, adoption appears to be on the rise, regardless of how knowledgeable (or not) the American public is about these emerging forms of technology.
The authors noted,
“Only 18% of United States adults say they’ve used a product or service related to blockchain, but this rises to 25% among the 18-34 demographic.”
And 63% of gamers responded that they would be keen to spend more on game-related cryptoassets and blockchain if they saw “virtual goods had real-world value, and could be traded or sold.”
Furthermore, more than a third of the total sample and almost 50% of the 18-34 year age group said their trust in blockchain was “strong or complete.”
Meanwhile, at the time of writing (14:40 UTC), BTC trades at USD 18,952 and is down by 1.4% in a day and 1% in a week. The price rallied by 24% in a month and 151% in a year.
BTC, ETH Slide Lower Despite Insurers’ USD 100m Bitcoin Buy & Ether ETF
The crypto community has been buoyed as – despite sliding bitcoin (BTC) and ethereum (ETH) prices – two major breakthroughs were reached for both tokens.
At pixel time (09:03 UTC), BTC trades at USD 17,883 and is down by 3% in a day and 8% in a week, while ETH is down by almost 4% to USD 545. Its price declined by 11% in a week.
Last night, the news broke that America’s Massachusetts Mutual Life Insurance (also known as MassMutual) has purchased USD 100m worth of bitcoin to add to its general investment fund – on the same day as the world’s first-ever ethereum exchange-traded fund (ETF) made its market debut in Canada.
Per Bloomberg, Mass Muttual’s holdings are now 0.04% held in BTC, but the firm also moved to also snap up a USD 5m minority equity stake in NYDIG, a Stone Ridge-run subsidiary firm that provides crypto services to institutional investors.
Meanwhile, across the border, The Ether Fund, an ETH-backed offering organized by crypto investment management firm 3iQ finally listed on the Toronto Stock Exchange, after raising some USD 76.5m prior to listing.
Although the Investment Industry Regulatory Organization of Canada (IIROC) announced that there had been a hiccup with a temporary halt prior to the start of trading.
But after around two hours, trading did eventually resume, reaching a high of 11.48 dollars per share – with 345,331 shares traded on its first official day on the market.
The ETH backing the token is being held by the Gemini Exchange’s crypto custody subsidiary, Gemini Custody. Gemini co-founder Tyler Winklevoss wrote on Twitter,
“Huge news for Ethereans. […]To the moon!”
Reacting to the bitcoin news, journalist Laura Shin took to Twitter to state that the development was “a big deal” as the company “isn’t and hasn’t been an advocate for bitcoin.” She added that the move “seems like a sober, non-ideological move” on MassMutual’s part.
Another observer said that the move was a “woke” measure, pointing out that it was telling that MassMutual was “an insurance company whose only job has been to manage risk for 170 years” had decided to take such a bold bitcoin plunge.
A redditor, meanwhile, wrote that investments of this kind were one very rare, but “it seems new large investors are entering on a daily basis now.”
And one more optimistic pundit claimed that with BTC and ETH experiencing so many “watershed moments” it was only a matter of time before “Amazon, Apple and/or some other behemoth is going to get involved in bitcoin.”
“The big boys are putting their funds into bitcoin as a hedge against being called Neanderthals who missed the crypto boat. And let’s not forget that they all have millennial kids or grandkids rooting them on," Tania Modic, the managing member of Western Investments Capital LLC, her investment family office, told Bloomberg.
The crypto community has been buoyed as – despite sliding bitcoin (BTC) and ethereum (ETH) prices – two major breakthroughs were reached for both tokens.
At pixel time (09:03 UTC), BTC trades at USD 17,883 and is down by 3% in a day and 8% in a week, while ETH is down by almost 4% to USD 545. Its price declined by 11% in a week.
Last night, the news broke that America’s Massachusetts Mutual Life Insurance (also known as MassMutual) has purchased USD 100m worth of bitcoin to add to its general investment fund – on the same day as the world’s first-ever ethereum exchange-traded fund (ETF) made its market debut in Canada.
Per Bloomberg, Mass Muttual’s holdings are now 0.04% held in BTC, but the firm also moved to also snap up a USD 5m minority equity stake in NYDIG, a Stone Ridge-run subsidiary firm that provides crypto services to institutional investors.
Meanwhile, across the border, The Ether Fund, an ETH-backed offering organized by crypto investment management firm 3iQ finally listed on the Toronto Stock Exchange, after raising some USD 76.5m prior to listing.
Although the Investment Industry Regulatory Organization of Canada (IIROC) announced that there had been a hiccup with a temporary halt prior to the start of trading.
But after around two hours, trading did eventually resume, reaching a high of 11.48 dollars per share – with 345,331 shares traded on its first official day on the market.
The ETH backing the token is being held by the Gemini Exchange’s crypto custody subsidiary, Gemini Custody. Gemini co-founder Tyler Winklevoss wrote on Twitter,
“Huge news for Ethereans. […]To the moon!”
Reacting to the bitcoin news, journalist Laura Shin took to Twitter to state that the development was “a big deal” as the company “isn’t and hasn’t been an advocate for bitcoin.” She added that the move “seems like a sober, non-ideological move” on MassMutual’s part.
Another observer said that the move was a “woke” measure, pointing out that it was telling that MassMutual was “an insurance company whose only job has been to manage risk for 170 years” had decided to take such a bold bitcoin plunge.
A redditor, meanwhile, wrote that investments of this kind were one very rare, but “it seems new large investors are entering on a daily basis now.”
And one more optimistic pundit claimed that with BTC and ETH experiencing so many “watershed moments” it was only a matter of time before “Amazon, Apple and/or some other behemoth is going to get involved in bitcoin.”
“The big boys are putting their funds into bitcoin as a hedge against being called Neanderthals who missed the crypto boat. And let’s not forget that they all have millennial kids or grandkids rooting them on," Tania Modic, the managing member of Western Investments Capital LLC, her investment family office, told Bloomberg.
Exchanges Send More USD 1M Bitcoin Transfers as Investors Look For a Hedge
In 2020, exchanges have reportedly been sending 19% more bitcoin (BTC) transfers worth USD 1m or more, as investors are looking for a hedge against inflation and devaluation.
BTC has been rallying recently, even hitting a series of all-time highs before correcting downwards. The market is actually being driven by North American institutional investors, according to Philip Gradwell, the chief economist at blockchain analysis firm Chainalysis, as cited by Bloomberg. The largest investors come from the region, he said, while North American exchanges are getting net inflows BTC from other areas in the world as well.
"And the investors have been large — exchanges are sending 19% more transfers worth USD 1 million or more this year while bitcoin’s price has been above USD 10,000 compared with 2017 when it was trading above those levels," the article cited Gradwell.
Major companies, such as software company MicroStrategy and payments company Square, have already invested in the world's number one crypto, as did some well-known individuals like hedge fund manager Paul Tudor Jones.
As another, the most recent example of an investor looking for a hedge, UK-based Ruffer Investment Company allocated 2.5% of it Ruffer Multi-Strategies Fund to bitcoin, worth some USD 15m. "This is primarily a defensive move, one made in November after reducing the company's exposure to gold," said an update to shareholders. "We see this as a small but potent insurance policy against the continuing devaluation of the world's major currencies."
These are examples of companies that are "laying out the groundwork for how you add bitcoin to your balance sheet, how you should think about bitcoin as a substitute for cash," Seth Ginns, a managing partner at investment firm CoinFund, was quoted by Bloomberg as saying. Ginns also claimed that there is "a lot" of interest from hedge funds in BTC, and that a broader institutional adoption trend is likely to continue in 2021.
Crypto market analysis firm Coin Metrics also noted that, though avoiding bitcoin as a risky asset, many institutions endorsed it in 2020. Many find that the reason behind it is "the growing narrative that bitcoin could serve as a good hedge against inflation," particularly in the midst of the COVID-19 pandemic, as well as the combination of rising fiscal deficits and quantitative easing pushing "federal banks to their limits" and creating "conditions that could lead to a significant inflation rate rise."
On the other hand, bitcoin's "predictable and transparent monetary policy is ultimately what makes it a good potential hedge against inflation," said Coin Metrics. New bitcoins are issued every time a new block is mined, meaning there is a predictable, transparent and auditable supply schedule, and there is a limited supply of BTC.
It should then come as no surprise that, in a poll taken in early December, some 15% of fund managers surveyed by Bank of America said that BTC is the third-most crowded trade, according to Bloomberg. Shorting the USD is found to be the second-most crowded trade and "long tech" as the most crowded one.
Furthermore, US senator-elect Cynthia Lummis is quoted by Market Insider as saying that she's a hodler, and that bitcoin is a great store of value which can help with the US national debt as an "alternative path" should an initial plan to retire the debt fail. Additionally, "if we reach the point where we have overspent so much that things start crashing down, the black swan event occurs with any regard to any fiat currency...there is a backstop available to every government in the world and that backstop is bitcoin," said Lummis.
In 2020, exchanges have reportedly been sending 19% more bitcoin (BTC) transfers worth USD 1m or more, as investors are looking for a hedge against inflation and devaluation.
BTC has been rallying recently, even hitting a series of all-time highs before correcting downwards. The market is actually being driven by North American institutional investors, according to Philip Gradwell, the chief economist at blockchain analysis firm Chainalysis, as cited by Bloomberg. The largest investors come from the region, he said, while North American exchanges are getting net inflows BTC from other areas in the world as well.
"And the investors have been large — exchanges are sending 19% more transfers worth USD 1 million or more this year while bitcoin’s price has been above USD 10,000 compared with 2017 when it was trading above those levels," the article cited Gradwell.
Major companies, such as software company MicroStrategy and payments company Square, have already invested in the world's number one crypto, as did some well-known individuals like hedge fund manager Paul Tudor Jones.
As another, the most recent example of an investor looking for a hedge, UK-based Ruffer Investment Company allocated 2.5% of it Ruffer Multi-Strategies Fund to bitcoin, worth some USD 15m. "This is primarily a defensive move, one made in November after reducing the company's exposure to gold," said an update to shareholders. "We see this as a small but potent insurance policy against the continuing devaluation of the world's major currencies."
These are examples of companies that are "laying out the groundwork for how you add bitcoin to your balance sheet, how you should think about bitcoin as a substitute for cash," Seth Ginns, a managing partner at investment firm CoinFund, was quoted by Bloomberg as saying. Ginns also claimed that there is "a lot" of interest from hedge funds in BTC, and that a broader institutional adoption trend is likely to continue in 2021.
Crypto market analysis firm Coin Metrics also noted that, though avoiding bitcoin as a risky asset, many institutions endorsed it in 2020. Many find that the reason behind it is "the growing narrative that bitcoin could serve as a good hedge against inflation," particularly in the midst of the COVID-19 pandemic, as well as the combination of rising fiscal deficits and quantitative easing pushing "federal banks to their limits" and creating "conditions that could lead to a significant inflation rate rise."
On the other hand, bitcoin's "predictable and transparent monetary policy is ultimately what makes it a good potential hedge against inflation," said Coin Metrics. New bitcoins are issued every time a new block is mined, meaning there is a predictable, transparent and auditable supply schedule, and there is a limited supply of BTC.
It should then come as no surprise that, in a poll taken in early December, some 15% of fund managers surveyed by Bank of America said that BTC is the third-most crowded trade, according to Bloomberg. Shorting the USD is found to be the second-most crowded trade and "long tech" as the most crowded one.
Furthermore, US senator-elect Cynthia Lummis is quoted by Market Insider as saying that she's a hodler, and that bitcoin is a great store of value which can help with the US national debt as an "alternative path" should an initial plan to retire the debt fail. Additionally, "if we reach the point where we have overspent so much that things start crashing down, the black swan event occurs with any regard to any fiat currency...there is a backstop available to every government in the world and that backstop is bitcoin," said Lummis.
How Many Spark Tokens XRP Holders Get - Question Answered
A little more than a week after blockchain platform Flare Network took a snapshot of the XRP blockchain, it has completed its calculations and found out how many spark (FLR) tokens the eligible XRP holders will get.
According to Flare's blog post, "after a week of analysis with Flare's partners, XRPLORER and Towo Labs, the XRP:FLR claim ratio can now be set out." They said that to maintain the strict minimum 1:1 distribution ratio, the distribution amount is increased from 45bn Spark tokens previously stated to FLR 45,827,728,412.
Therefore, "for each 1 XRP held then 1.0073 FLR (rounded to 4 decimal places) can be claimed," wrote CEO Hugo Philion.
As a reminder, Flare Network is backed by Ripple's investment arm RippleX, and it's working on a system that aims to help blockchains interact with XRP. Its native token is spark, created by a utility fork of XRP. The team behind the network took a snapshot of the entire XRP blockchain on December 12, searching for the addresses that held XRP in the crypto exchanges and wallets that participated in the 45bn-spark-heavy airdrop.
Flare is creating 100bn spark tokens, which will be distributed as they become available, with the network excepted to go live in Q1-Q2 2021. As for the airdrop, the eligible users need to nothing, given that they will receive the tokens automatically. They'll receive 15% of the total spark for which they are eligible at launch, and the rest should be distributed over a minimum of 25 months and a maximum of 34 months, after which any remaining undistributed spark will be burned or distributed based on a governance vote.
As reported, 110 exchanges supported the airdrop, including Binance, Coinbase, Kraken, OKEx, Huobi, and others, as well as a number of wallets.
At 10:54 UTC, XRP is trading at USD 0.53. It dropped 8% in a day and appreciated more than 7% in a week. Meanwhile, it went up 43% in a month, and 173% in a year. Out of the four time frames, it outperformed bitcoin (BTC) in the monthly gains one.
A little more than a week after blockchain platform Flare Network took a snapshot of the XRP blockchain, it has completed its calculations and found out how many spark (FLR) tokens the eligible XRP holders will get.
According to Flare's blog post, "after a week of analysis with Flare's partners, XRPLORER and Towo Labs, the XRP:FLR claim ratio can now be set out." They said that to maintain the strict minimum 1:1 distribution ratio, the distribution amount is increased from 45bn Spark tokens previously stated to FLR 45,827,728,412.
Therefore, "for each 1 XRP held then 1.0073 FLR (rounded to 4 decimal places) can be claimed," wrote CEO Hugo Philion.
As a reminder, Flare Network is backed by Ripple's investment arm RippleX, and it's working on a system that aims to help blockchains interact with XRP. Its native token is spark, created by a utility fork of XRP. The team behind the network took a snapshot of the entire XRP blockchain on December 12, searching for the addresses that held XRP in the crypto exchanges and wallets that participated in the 45bn-spark-heavy airdrop.
Flare is creating 100bn spark tokens, which will be distributed as they become available, with the network excepted to go live in Q1-Q2 2021. As for the airdrop, the eligible users need to nothing, given that they will receive the tokens automatically. They'll receive 15% of the total spark for which they are eligible at launch, and the rest should be distributed over a minimum of 25 months and a maximum of 34 months, after which any remaining undistributed spark will be burned or distributed based on a governance vote.
As reported, 110 exchanges supported the airdrop, including Binance, Coinbase, Kraken, OKEx, Huobi, and others, as well as a number of wallets.
At 10:54 UTC, XRP is trading at USD 0.53. It dropped 8% in a day and appreciated more than 7% in a week. Meanwhile, it went up 43% in a month, and 173% in a year. Out of the four time frames, it outperformed bitcoin (BTC) in the monthly gains one.
Young Investors Drive Increased Aussie Bitcoin & Crypto Investments
Younger Australian investors are driving the country's increasing crypto ownership, accompanied by rising investments by high-end crypto holders, a recent survey showed.
18.4% of respondents said they own some form of cryptoasset, up from 16.8% in 2019, Independent Reserve (IR), an Australia and New Zealand-focused crypto exchange with around 150,000 customers, said in its Independent Reserve Cryptocurrency Index 2020 report. The survey of 1,100 "everyday Australians" was carried out by consumer research firm PureProfile.
According to IR, most of the ownership growth was driven by the 25-44-year-old respondents.
"We need to find new ways to bring people into the industry, remembering that inclusion was one of the original principles of Bitcoin," Adrian Przelozny, CEO of IR, was quoted as saying in the report.
And it looks like the coronavirus pandemic was among the obstacles this year to get more crypto users on board.
While some other reports indicated that the pandemic has had more of an effect on the American bitcoin (BTC)-buying community than first thought, the Australian survey showed that 34% of those respondents who intended to purchase crypto in 2020 didn’t proceed with the purchase because they were either directly impacted by the economy or because of the uncertainty caused by it.
Also, it looks like the recent crackdown on XRP-affiliated Ripple in the US hit many Australians also as XRP is the number two coin among the respondents.
Younger Australian investors are driving the country's increasing crypto ownership, accompanied by rising investments by high-end crypto holders, a recent survey showed.
18.4% of respondents said they own some form of cryptoasset, up from 16.8% in 2019, Independent Reserve (IR), an Australia and New Zealand-focused crypto exchange with around 150,000 customers, said in its Independent Reserve Cryptocurrency Index 2020 report. The survey of 1,100 "everyday Australians" was carried out by consumer research firm PureProfile.
According to IR, most of the ownership growth was driven by the 25-44-year-old respondents.
"We need to find new ways to bring people into the industry, remembering that inclusion was one of the original principles of Bitcoin," Adrian Przelozny, CEO of IR, was quoted as saying in the report.
And it looks like the coronavirus pandemic was among the obstacles this year to get more crypto users on board.
While some other reports indicated that the pandemic has had more of an effect on the American bitcoin (BTC)-buying community than first thought, the Australian survey showed that 34% of those respondents who intended to purchase crypto in 2020 didn’t proceed with the purchase because they were either directly impacted by the economy or because of the uncertainty caused by it.
Also, it looks like the recent crackdown on XRP-affiliated Ripple in the US hit many Australians also as XRP is the number two coin among the respondents.
Binance CEO Says Expansion to Japan Is ‘Unlikely’
The Binance chief and founder Changpeng “CZ” Zhao has talked down the possibility of his exchange expanding to Japan. Although he stopped short of ruling out launching a Japanese branch, he indicated that the prospects of opening a Binance platform in Tokyo were “unlikely.”
The Binance boss was speaking in a Q&A session with the Japanese media outlet Coin Post, and gave a further indication that East Asian markets, particularly those in South Korea and Japan are hard to crack.
Last week, Binance Korea announced it was closing its doors, with a full “hard” shutdown slated for next month.
And earlier this year, Binance suffered another blow in its hopes to crack the Japanese market with the TaoTao crypto exchange ending a possible partnership deal after 10 months of negotiations.
Shortly after, TaoTao was taken over by domestic financial giant SBI, another indication that if rich pickings are to be had in the crypto market, it will likely be domestic players who are making them.
Zhao stated that he had “seriously considered establishing a base in Japan” after the Japanese government introduced its regulatory permit system back in 2017.
But, he added, a number of bottlenecks had hindered Binance’s progress into the Land of the Rising Sun. These included, he said, the fact that Binance’s international platform handles some 80+ tokens, but Japanese law strictly polices the tokens exchanges are allowed to handle. Only Financial Services Agency (FSA)-approved tokens can be offered in trading pairs.
The FSA has so far approved just 30 tokens.
“The situation in Japan hasn't changed much” since 2017, he added.
Zhao also stated that he had contemplated making an acquisition deal with an established Japanese player, but opined that Japanese legislation would minimize Binance’s advantages over Japanese competitors.
The 21 existing Japanese exchanges have close ties to banks and other market players, another factor that makes the market so difficult to crack for overseas players. They also have close ties to key media groups and have strong marketing departments with deep experience of working in the Japanese market.
These, Zhao concluded, “aren't Binance’s strong suits.”
As reported, Binance expects to have profits of USD 800m to USD 1bn this year, up from about USD 570m last year.
Meanwhile, while another major crypto exchange, BitMEX left Japan earlier this year, Kraken has returned to this market, while Coinbase is seemingly still working on this. Also this year, Japanese market-leading crypto exchange bitFlyer said it has linked its bitFlyer Europe operations with its domestic platform – allowing European traders to access bitcoin (BTC)-Japanese yen trading pairs.
The Binance chief and founder Changpeng “CZ” Zhao has talked down the possibility of his exchange expanding to Japan. Although he stopped short of ruling out launching a Japanese branch, he indicated that the prospects of opening a Binance platform in Tokyo were “unlikely.”
The Binance boss was speaking in a Q&A session with the Japanese media outlet Coin Post, and gave a further indication that East Asian markets, particularly those in South Korea and Japan are hard to crack.
Last week, Binance Korea announced it was closing its doors, with a full “hard” shutdown slated for next month.
And earlier this year, Binance suffered another blow in its hopes to crack the Japanese market with the TaoTao crypto exchange ending a possible partnership deal after 10 months of negotiations.
Shortly after, TaoTao was taken over by domestic financial giant SBI, another indication that if rich pickings are to be had in the crypto market, it will likely be domestic players who are making them.
Zhao stated that he had “seriously considered establishing a base in Japan” after the Japanese government introduced its regulatory permit system back in 2017.
But, he added, a number of bottlenecks had hindered Binance’s progress into the Land of the Rising Sun. These included, he said, the fact that Binance’s international platform handles some 80+ tokens, but Japanese law strictly polices the tokens exchanges are allowed to handle. Only Financial Services Agency (FSA)-approved tokens can be offered in trading pairs.
The FSA has so far approved just 30 tokens.
“The situation in Japan hasn't changed much” since 2017, he added.
Zhao also stated that he had contemplated making an acquisition deal with an established Japanese player, but opined that Japanese legislation would minimize Binance’s advantages over Japanese competitors.
The 21 existing Japanese exchanges have close ties to banks and other market players, another factor that makes the market so difficult to crack for overseas players. They also have close ties to key media groups and have strong marketing departments with deep experience of working in the Japanese market.
These, Zhao concluded, “aren't Binance’s strong suits.”
As reported, Binance expects to have profits of USD 800m to USD 1bn this year, up from about USD 570m last year.
Meanwhile, while another major crypto exchange, BitMEX left Japan earlier this year, Kraken has returned to this market, while Coinbase is seemingly still working on this. Also this year, Japanese market-leading crypto exchange bitFlyer said it has linked its bitFlyer Europe operations with its domestic platform – allowing European traders to access bitcoin (BTC)-Japanese yen trading pairs.
What's in Store for Ethereum in 2021?
The second-largest crypto network by market capitalization, Ethereum (ETH), had an eventful 2020 as many other players in the Cryptoverse. But what awaits the network in 2021? The picture looks green price-wise and busy when it comes to new developments, according to industry insiders.
ETH went up more than 400% last year, surpassing the USD 700 level for the first time since 2018. Not only was it a beneficial year price-wise, but the network also saw several testnets – some of which were more successful than others - on its road to the much-promised Ethereum 2.0 (ETH 2.0), culminating in the launch of the deposit contract, followed by the first phase of ETH 2.0, Phase 0, in December.
As 2021 is already here, what will it bring?
2021 will definitely see a bull market, according to Matthew Gould, Unstoppable Domains founder and CEO. “We could see ETH prices over USD 3,000 … a lot sooner than people think.” Ethereum will lead in non-store of value use cases this year, he said, adding: “Expect Ethereum daily users to grow the fastest of any blockchain - including Bitcoin (BTC) - with all the new DeFi apps it brings to the table.”
At the same time, the network will keep moving towards its second version.
“ETH 2.0 will continue to advance its roadmap, with the introduction of shard chains, and eventually lead up to getting rid of the proof-of-work consensus algorithm altogether, and merging the Ethereum 1 chain with Ethereum 2.0,” said Monica Singer, the South African Lead for major Ethereum and blockchain company Consensys. This, she argued, will result in increased throughput and flexibility, as well as new network economics through staking, further leading to higher adoption.
Then “the virtuous cycle will apply,” continued Singer.
With more applications deployed on Ethereum, the more developers will join the community, and the price of ETH will increase and not necessarily correlate to the increase in bitcoin’s price, she said.
As reported, Ethereum already has more developers than Bitcoin.
Philippe Bekhazi, CEO of stablecoin platform Stablehouse, also noted that 2021 will likely see “a continuation of a bull market” for both ETH and BTC.
With the user experience gap in crypto “soon to be solved,” as well as with Ethereum scaling, institutional interest in bitcoin, and growing interest in DeFi, 2021 will see crypto start to go truly mainstream, argued Jack O'Holleran, CEO and Co-Founder of SKALE.
As a result, the number of developers building on Ethereum will grow 5 times “as they chase after these new consumers." The Ethereum ecosystem is "emerging as the backbone on which Web3 is built and will pave the path for new business models that will pave the way for the decentralized economy.”
The second-largest crypto network by market capitalization, Ethereum (ETH), had an eventful 2020 as many other players in the Cryptoverse. But what awaits the network in 2021? The picture looks green price-wise and busy when it comes to new developments, according to industry insiders.
ETH went up more than 400% last year, surpassing the USD 700 level for the first time since 2018. Not only was it a beneficial year price-wise, but the network also saw several testnets – some of which were more successful than others - on its road to the much-promised Ethereum 2.0 (ETH 2.0), culminating in the launch of the deposit contract, followed by the first phase of ETH 2.0, Phase 0, in December.
As 2021 is already here, what will it bring?
2021 will definitely see a bull market, according to Matthew Gould, Unstoppable Domains founder and CEO. “We could see ETH prices over USD 3,000 … a lot sooner than people think.” Ethereum will lead in non-store of value use cases this year, he said, adding: “Expect Ethereum daily users to grow the fastest of any blockchain - including Bitcoin (BTC) - with all the new DeFi apps it brings to the table.”
At the same time, the network will keep moving towards its second version.
“ETH 2.0 will continue to advance its roadmap, with the introduction of shard chains, and eventually lead up to getting rid of the proof-of-work consensus algorithm altogether, and merging the Ethereum 1 chain with Ethereum 2.0,” said Monica Singer, the South African Lead for major Ethereum and blockchain company Consensys. This, she argued, will result in increased throughput and flexibility, as well as new network economics through staking, further leading to higher adoption.
Then “the virtuous cycle will apply,” continued Singer.
With more applications deployed on Ethereum, the more developers will join the community, and the price of ETH will increase and not necessarily correlate to the increase in bitcoin’s price, she said.
As reported, Ethereum already has more developers than Bitcoin.
Philippe Bekhazi, CEO of stablecoin platform Stablehouse, also noted that 2021 will likely see “a continuation of a bull market” for both ETH and BTC.
With the user experience gap in crypto “soon to be solved,” as well as with Ethereum scaling, institutional interest in bitcoin, and growing interest in DeFi, 2021 will see crypto start to go truly mainstream, argued Jack O'Holleran, CEO and Co-Founder of SKALE.
As a result, the number of developers building on Ethereum will grow 5 times “as they chase after these new consumers." The Ethereum ecosystem is "emerging as the backbone on which Web3 is built and will pave the path for new business models that will pave the way for the decentralized economy.”
Bitcoin On The Move Again, Touches USD 36K, Outperformed by XLM, ADA
The most popular cryptocurrency, bitcoin (BTC), just briefly touched the USD 36,000 level for the first time with a double-digit jump in a day before correcting lower. The majority of other top cryptoassets are rallying too. (Updated at 08:33 UTC: updates throughout the entire text).
At pixel time (08:28 UTC), BTC trades at USD 34,680 and is up by 10% in a day and 22% in a week, increasing its monthly gains to 85%. Bitcoin reached the USD 30,000 level on January 2.
And while the second-largest cryptoasset by market capitalization, ethereum (ETH), is also up (+7%, to USD 1,106), stellar (XLM) is back into the top 10 club as it rallied by 66% in a day, reaching USD 0.27. Cardano (ADA) is the second-best performing coin in the top 10 club (+27%, to USD 0.286).
Other top coins are up by 2%-5%, except XRP that is down by 2.5% in a day.
"Bitcoin has entered into a new phase of price discovery, largely driven by amplified institutional interest in the digital asset. We have not yet seen peak retail participation, as highlighted by the low search and social activity relative to 2017," Craig Russo, Director of Innovation at Polyient, an infrastructure underpinning decentralized virtual economies, said in an emailed comment.
According to him, retail participation, coupled with accelerated institutional participation, will likely continue to drive the bull market in Q1.
"Bitcoin successfully cemented itself as a legitimate asset in 2020 and will continue to be adopted across the financial industry, regardless of any positive shift in the traditional global economy," he added, warning that there will be high volatility during this bull season as the market is still very thin and there is potential for enormous volatility if BTC whales begin to dump.
Crypto intelligence platform Glassnode claims that widespread retail interest in bitcoin is increasing, with the number of address holding a non-zero amount of BTC reaching an all-time high of over 33 million. However, the number of daily new BTC addresses has still not reached 2017 levels.
"These metrics, therefore, paint a bullish picture of a market characterized by healthy, sustainable growth as opposed to hype," they added.
Also, according to popular BTC analyst Willy Woo, inventory depletion on spot exchanges has stopped, signifying the re-accumulation phase of the macro cycle is likely complete.
"Since we already know institutions are buying in large quantities, the flattening of spot inventory depletion is a sign that retail buyers are now entering in large volumes, attracted by recent price rises," Willy Woo was quoted as saying in a blog post by Glassnode.
Meanwhile, according to Konstantin Richter, CEO and Founder of Blockdaemon, the third Bitcoin halving means that BTC 300K will be minted this year, compared to BTC 600K in previous years.
"Since a significant portion of existing bitcoin is illiquid, 300K is far too little supply for the exponential demand coming from institutions and triggered by the global covid crisis (new financial assets are needed to hedge against inflation). This represents an example of the flywheel in motion--half the supply and a probable doubling in demand, which in turn drives further demand due to price increases," he said.
While BTC cycles are inherently unpredictable (regulatory changes in certain key countries could have a significant effect), according to Richter, the next big hurdle for bitcoin is USD 50,000.
The most popular cryptocurrency, bitcoin (BTC), just briefly touched the USD 36,000 level for the first time with a double-digit jump in a day before correcting lower. The majority of other top cryptoassets are rallying too. (Updated at 08:33 UTC: updates throughout the entire text).
At pixel time (08:28 UTC), BTC trades at USD 34,680 and is up by 10% in a day and 22% in a week, increasing its monthly gains to 85%. Bitcoin reached the USD 30,000 level on January 2.
And while the second-largest cryptoasset by market capitalization, ethereum (ETH), is also up (+7%, to USD 1,106), stellar (XLM) is back into the top 10 club as it rallied by 66% in a day, reaching USD 0.27. Cardano (ADA) is the second-best performing coin in the top 10 club (+27%, to USD 0.286).
Other top coins are up by 2%-5%, except XRP that is down by 2.5% in a day.
"Bitcoin has entered into a new phase of price discovery, largely driven by amplified institutional interest in the digital asset. We have not yet seen peak retail participation, as highlighted by the low search and social activity relative to 2017," Craig Russo, Director of Innovation at Polyient, an infrastructure underpinning decentralized virtual economies, said in an emailed comment.
According to him, retail participation, coupled with accelerated institutional participation, will likely continue to drive the bull market in Q1.
"Bitcoin successfully cemented itself as a legitimate asset in 2020 and will continue to be adopted across the financial industry, regardless of any positive shift in the traditional global economy," he added, warning that there will be high volatility during this bull season as the market is still very thin and there is potential for enormous volatility if BTC whales begin to dump.
Crypto intelligence platform Glassnode claims that widespread retail interest in bitcoin is increasing, with the number of address holding a non-zero amount of BTC reaching an all-time high of over 33 million. However, the number of daily new BTC addresses has still not reached 2017 levels.
"These metrics, therefore, paint a bullish picture of a market characterized by healthy, sustainable growth as opposed to hype," they added.
Also, according to popular BTC analyst Willy Woo, inventory depletion on spot exchanges has stopped, signifying the re-accumulation phase of the macro cycle is likely complete.
"Since we already know institutions are buying in large quantities, the flattening of spot inventory depletion is a sign that retail buyers are now entering in large volumes, attracted by recent price rises," Willy Woo was quoted as saying in a blog post by Glassnode.
Meanwhile, according to Konstantin Richter, CEO and Founder of Blockdaemon, the third Bitcoin halving means that BTC 300K will be minted this year, compared to BTC 600K in previous years.
"Since a significant portion of existing bitcoin is illiquid, 300K is far too little supply for the exponential demand coming from institutions and triggered by the global covid crisis (new financial assets are needed to hedge against inflation). This represents an example of the flywheel in motion--half the supply and a probable doubling in demand, which in turn drives further demand due to price increases," he said.
While BTC cycles are inherently unpredictable (regulatory changes in certain key countries could have a significant effect), according to Richter, the next big hurdle for bitcoin is USD 50,000.
Bitcoin at USD 50K 'in Sight' As There's 'Room to Run Higher' Before Correction
"Assuming history is destined to repeat, one could expect further upside appreciation until BTC trades at 10x - 15x its 200-week moving average; at a weekly close of USD 7,904, such would imply a price between USD 79,040 and USD 118,560," said Kraken Intelligence, the exchange's team of in-house researchers, in their December 2020 Market Recap & Outlook report.
Per the researchers, as BTC’s correlation with both risk-on and risk-off assets has seemingly strengthened and petered out, the months before us "could bring a shift in trend amid an inevitable mean reversion." They argue, however, that BTC’s rally is a sign of "market participants seeing incremental near-term upside despite historic price levels being realized." And that's not all the good news, as per the researchers' data,
"the case can be made that BTC has room to run higher."
But Kraken's researchers are not the only ones seeing more room for BTC to grow. Chamath Palihapitiya, CEO of venture capital firm Social Capital and Chairman of commercial spaceline Virgin Galactic, stated in an interview with CNBC that BTC is "probably going to USD 100,000, then USD 150,000, then USD 200,000." He couldn't say in what period will the price reach this level, but gave five or ten years as possibilities.
Also, Anthony Pompliano, co-founder of Morgan Creek Digital, argued in an interview that BTC is "at least 10x better than gold in every way, "so if you just think of a bitcoin product that is 2x better and market cap kind of follows that, that would put bitcoin at a million dollars a coin." Bitcoin's market capitalization will eclipse that of gold by 2030, he finds.
Furthermore, "we believe bitcoin's meteoric rise will continue, as institutional investors continue to recognize its finite nature and attempt to hedge against global inflation and uncertainty," said in an email Joe DiPasquale, CEO at crypto fund manager BitBull Capital. "Remember, a 300% rise like in 2020 is not out of character for bitcoin. Its median rise in the last 10 years is 182%, and in 2019 it rose 92%."
Institutions like MassMutual and Guggenheim Investments, and company treasuries like Square and Microstrategy, investing in BTC, as well as rumors of others entering the space, are "just the beginning of a stampede into a finite asset," he said, adding,
"Bitcoin at [USD] 50K is in sight."
And as BTC is finite, with demand for it is "now at over 3x new supply," the US has printed 68% more USD in the last 12 months than were ever in existence, "leading to a largely expected devaluation of the dollar," he said.
Meanwhile Galaxy Digital CEO Mike Novogratz stated in his recent interview that young people were using the previous stimulus checks to invest in BTC, among other things, so we can't know where the money from the next one will go to. "Some of that, if not a lot of that, will find its way into the markets. One of the most unique things last time is seeing how many people bought bitcoin with the exact amount of stimulus. The market is sensing all of that."
However, both the Kraken researchers and DiPasquale had some warnings to share as well, and even Novogratz said that the markets don't go up every day forever, meaning a correction is bound to happen. DiPasquale noted that bitcoin is inherently volatile, and "while we expect the volatility to continue, we also expect higher highs and more support, leading to higher lows."
Meanwhile, Kraken Intelligence said that, historically, the first quarter of a year is typically a negative-yielding period for the first coin by market capitalization, arguing that "market participants ought to be considerate of BTC and the broader market potentially posting less favorable monthly returns in 1Q21."
Others seem to suggest there will be a downward correction relatively soon, possibly after the price hit USD 40,000 - but also that the price will continue on its upwards trajectory, or as economist and trader Alex Krüger said, "Upwards trend is unscathed."
"Assuming history is destined to repeat, one could expect further upside appreciation until BTC trades at 10x - 15x its 200-week moving average; at a weekly close of USD 7,904, such would imply a price between USD 79,040 and USD 118,560," said Kraken Intelligence, the exchange's team of in-house researchers, in their December 2020 Market Recap & Outlook report.
Per the researchers, as BTC’s correlation with both risk-on and risk-off assets has seemingly strengthened and petered out, the months before us "could bring a shift in trend amid an inevitable mean reversion." They argue, however, that BTC’s rally is a sign of "market participants seeing incremental near-term upside despite historic price levels being realized." And that's not all the good news, as per the researchers' data,
"the case can be made that BTC has room to run higher."
But Kraken's researchers are not the only ones seeing more room for BTC to grow. Chamath Palihapitiya, CEO of venture capital firm Social Capital and Chairman of commercial spaceline Virgin Galactic, stated in an interview with CNBC that BTC is "probably going to USD 100,000, then USD 150,000, then USD 200,000." He couldn't say in what period will the price reach this level, but gave five or ten years as possibilities.
Also, Anthony Pompliano, co-founder of Morgan Creek Digital, argued in an interview that BTC is "at least 10x better than gold in every way, "so if you just think of a bitcoin product that is 2x better and market cap kind of follows that, that would put bitcoin at a million dollars a coin." Bitcoin's market capitalization will eclipse that of gold by 2030, he finds.
Furthermore, "we believe bitcoin's meteoric rise will continue, as institutional investors continue to recognize its finite nature and attempt to hedge against global inflation and uncertainty," said in an email Joe DiPasquale, CEO at crypto fund manager BitBull Capital. "Remember, a 300% rise like in 2020 is not out of character for bitcoin. Its median rise in the last 10 years is 182%, and in 2019 it rose 92%."
Institutions like MassMutual and Guggenheim Investments, and company treasuries like Square and Microstrategy, investing in BTC, as well as rumors of others entering the space, are "just the beginning of a stampede into a finite asset," he said, adding,
"Bitcoin at [USD] 50K is in sight."
And as BTC is finite, with demand for it is "now at over 3x new supply," the US has printed 68% more USD in the last 12 months than were ever in existence, "leading to a largely expected devaluation of the dollar," he said.
Meanwhile Galaxy Digital CEO Mike Novogratz stated in his recent interview that young people were using the previous stimulus checks to invest in BTC, among other things, so we can't know where the money from the next one will go to. "Some of that, if not a lot of that, will find its way into the markets. One of the most unique things last time is seeing how many people bought bitcoin with the exact amount of stimulus. The market is sensing all of that."
However, both the Kraken researchers and DiPasquale had some warnings to share as well, and even Novogratz said that the markets don't go up every day forever, meaning a correction is bound to happen. DiPasquale noted that bitcoin is inherently volatile, and "while we expect the volatility to continue, we also expect higher highs and more support, leading to higher lows."
Meanwhile, Kraken Intelligence said that, historically, the first quarter of a year is typically a negative-yielding period for the first coin by market capitalization, arguing that "market participants ought to be considerate of BTC and the broader market potentially posting less favorable monthly returns in 1Q21."
Others seem to suggest there will be a downward correction relatively soon, possibly after the price hit USD 40,000 - but also that the price will continue on its upwards trajectory, or as economist and trader Alex Krüger said, "Upwards trend is unscathed."
Not Only Bitcoin Price Is Changing During This Bull Run
As the most popular cryptocurrency, bitcoin (BTC), keeps scoring its new all-time highs, industry observers see important changes on the BTC adoption front too.
According to Anthony Lauriola, Chief Operating Officer at blockchain portfolio company Dan Holdings, in 2020, we saw “a significant shift in the way people view cryptocurrency,” as people are starting to see it more as a method of payment and not just a store of value - a trend Lauriola said will continue into 2021. “As we see more global entities entering the crypto space, we will likely continue to see bitcoin and other cryptocurrencies continue to increase in price, value, and popularity.” Additionally, crypto adoption in emerging markets will also play a part in overall market growth in the coming years.
Also, as governments are forced to print mass amounts of cash to offset negative effects on the economy, many people have turned to bitcoin to hedge against inflation. “We may start to see the effects of this in 2021 and I believe this could be the driving factor for a bitcoin bull market," Lauriola said, estimating that BTC will hit USD 100,000 this year.
Lauriola further argued that, last year, there was a large increase in the number of people who relied on cryptocurrencies and digital payments for remittances and bill payments in many regions of Africa.
“There is still a lot to be learned as far as individuals using cryptocurrency as a payment method, but we are beginning to see the barriers to entry being lowered as technology becomes more accessible for everyone.”
Similarly, Philippe Bekhazi, CEO of stablecoin platform Stablehouse, expects that "any further economic fallout from the pandemic will spur growth of payment networks predicated on bitcoin or ethereum in emerging economies."
Meanwhile, IBMR Managing Director Sinjin David Jung offered an historic perspective.
“While it might seem like a bubble there is a very big difference from other times in the past, like 2008 we had issues in terms of the financial markets and how opaque they were,” he said. The stock market was getting bigger at the time, as were tech stock valuations. And unlike the internet euphoria of 1995-1999, when the internet was “as a single network” … now you have layers of networks, networks upon networks.” He said that this is a very different time and expects this bull market to continue on for the next almost 2 years.
"After that all bets are off but we’re definitely entering into a new economic reality structurally because of the way technology now has changed the way production is globally to create this exponential network upon network framework," he added.
In either case, the general consensus seems to be that BTC will trade between USD 50,000 and USD 100,000 in 2021.
“Considering how well bitcoin has profiled itself thus far in the coronavirus aftermath and given the outlook from our current macroeconomic environment, we're expecting 2021 to be a phenomenal year for bitcoin. It's not entirely unlikely that we'll see bitcoin trade in the USD 50k - USD 100k range,” Eric Wall, the Chief Investment Officer of the crypto hedge fund outfit Arcane Assets.
According to CoreLedger CEO Johannes Schweifer, USD 100,00 is "only 5 times" from its historic all-time high of 2017: "Bitcoin has shown it can grow more than that in a shorter timespan than one year, so it is more than possible."
At the time of writing (09:14 UTC), BTC trades at USD 41,067 and is up by almost 128% in a month and 405% in a year.
Meanwhile, Sinjin David Jung argued that “as the vaccine kicks in and the stimulus comes out the economy is going to get a kick start but people are still going to be wary of traditional assets and while they probably will still sock something away in the current stock market it will also be in cryptocurrencies.”
As the most popular cryptocurrency, bitcoin (BTC), keeps scoring its new all-time highs, industry observers see important changes on the BTC adoption front too.
According to Anthony Lauriola, Chief Operating Officer at blockchain portfolio company Dan Holdings, in 2020, we saw “a significant shift in the way people view cryptocurrency,” as people are starting to see it more as a method of payment and not just a store of value - a trend Lauriola said will continue into 2021. “As we see more global entities entering the crypto space, we will likely continue to see bitcoin and other cryptocurrencies continue to increase in price, value, and popularity.” Additionally, crypto adoption in emerging markets will also play a part in overall market growth in the coming years.
Also, as governments are forced to print mass amounts of cash to offset negative effects on the economy, many people have turned to bitcoin to hedge against inflation. “We may start to see the effects of this in 2021 and I believe this could be the driving factor for a bitcoin bull market," Lauriola said, estimating that BTC will hit USD 100,000 this year.
Lauriola further argued that, last year, there was a large increase in the number of people who relied on cryptocurrencies and digital payments for remittances and bill payments in many regions of Africa.
“There is still a lot to be learned as far as individuals using cryptocurrency as a payment method, but we are beginning to see the barriers to entry being lowered as technology becomes more accessible for everyone.”
Similarly, Philippe Bekhazi, CEO of stablecoin platform Stablehouse, expects that "any further economic fallout from the pandemic will spur growth of payment networks predicated on bitcoin or ethereum in emerging economies."
Meanwhile, IBMR Managing Director Sinjin David Jung offered an historic perspective.
“While it might seem like a bubble there is a very big difference from other times in the past, like 2008 we had issues in terms of the financial markets and how opaque they were,” he said. The stock market was getting bigger at the time, as were tech stock valuations. And unlike the internet euphoria of 1995-1999, when the internet was “as a single network” … now you have layers of networks, networks upon networks.” He said that this is a very different time and expects this bull market to continue on for the next almost 2 years.
"After that all bets are off but we’re definitely entering into a new economic reality structurally because of the way technology now has changed the way production is globally to create this exponential network upon network framework," he added.
In either case, the general consensus seems to be that BTC will trade between USD 50,000 and USD 100,000 in 2021.
“Considering how well bitcoin has profiled itself thus far in the coronavirus aftermath and given the outlook from our current macroeconomic environment, we're expecting 2021 to be a phenomenal year for bitcoin. It's not entirely unlikely that we'll see bitcoin trade in the USD 50k - USD 100k range,” Eric Wall, the Chief Investment Officer of the crypto hedge fund outfit Arcane Assets.
According to CoreLedger CEO Johannes Schweifer, USD 100,00 is "only 5 times" from its historic all-time high of 2017: "Bitcoin has shown it can grow more than that in a shorter timespan than one year, so it is more than possible."
At the time of writing (09:14 UTC), BTC trades at USD 41,067 and is up by almost 128% in a month and 405% in a year.
Meanwhile, Sinjin David Jung argued that “as the vaccine kicks in and the stimulus comes out the economy is going to get a kick start but people are still going to be wary of traditional assets and while they probably will still sock something away in the current stock market it will also be in cryptocurrencies.”
This Is The Biggest Risk To Crypto Market According to Pantera Capital CIO
Leveraged trading is the biggest risk to the crypto market in terms of what could cause “something to pop down the line,” according to Joey Krug, Co-chief Investment Officer (CIO) at US-based major crypto investment company Pantera Capital. (Updated at 19:20 UTC with more comments by Joey Krug).
He was speaking during Pantera Capital’s conference call yesterday.
According to Krug, some people get complacent when they realize crypto is here to stay. As a result, they lever up on it, thinking it can’t go down that much because institutions will swoop in and buy, saving the day. But eventually, when the lid blows off and bids are not there, liquidations of levered longs will drive the price down.
During the market crash on January 10-11, more than USD 3bn worth of long positions were liquidated, according to bybt data. To compare, on January 12, over USD 200m worth of short and also more than USD 200m long positions were liquidated.
As reported, crypto researcher and analyst Willy Woo argued that "unlike previous crashes in the past 2 years, where over-leveraged markets lead by trader liquidation, this one started on spot markets, then was greatly amplified by a single exchange partially failing, yet did not turn itself off for the good of the ecosystem."
Leveraged trading refers to borrowing funds so that you can take a larger position than you would be able to with your existing funds so that you can potentially generate a higher profit. However, while margin trading enables traders to amplify their returns, it can also lead to increased losses and liquidations, which is why experienced traders tend to advise newcomers to stay away from leveraged trading.
As for Pantera Capital itself, the firm took some risk off the table when the Market Value to Realised Value (MVRV) ratio rose to its highest level since 2017 a few days ago. The indicator shows how much unrealized gains bitcoin (BTC) holders are sitting on. When this metric gets high, it means the market is overheated, and if it starts to decline, people sell in order to lock-in gains out of panic or fear, Krug explained on the call.
According to Krug, this recent crash was a healthy outcome for this space, noting that people realized some gains and the market pulled back a bit in a consolidation period.
Now, the CIO said, the market is in a good position for the next leg upward and it is his view that the rally is going to continue.
At the time of writing (19:18 UTC), BTC trades at USD 35,805 and is up by almost 3% in a day and less than 1% in a week. It rallied by 86% in a month.
Meanwhile, during the call yesterday, Pantera Capital CEO Dan Morehead described the global macro environment as “off the charts,” pointing to the unprecedented pace at which the United States is printing money each month and “pushing it like crazy.”
As a result, the main two cryptoassets - BTC and ethereum (ETH) - have soared, which illustrates the next point, which is that “this rally has consolidated around bitcoin and ethereum,” according to Pantera slides.
Krug also noted that institutional investors are primarily honing in on bitcoin and ethereum and outside of these two assets there is not a great deal of institutional interest. He also waded into decentralized finance (DeFi), saying that these tokens are getting “pushed up” indirectly by BTC and ETH. The CIO also noted that it will not be this cycle when institutions buy DeFi protocols, adding that it will probably be the next cycle or the one after that.
Another huge development has been the rise of central bank digital currencies (CBDCs), a trend that has been led by China, which Morehead noted “has a very big headstart on the world.” And while they don’t directly impact the price of tokens that are not pegged to fiat money like stablecoins, they will still introduce “billions of people” to the market including those without bank accounts but with smartphones, Morehead said.
Leveraged trading is the biggest risk to the crypto market in terms of what could cause “something to pop down the line,” according to Joey Krug, Co-chief Investment Officer (CIO) at US-based major crypto investment company Pantera Capital. (Updated at 19:20 UTC with more comments by Joey Krug).
He was speaking during Pantera Capital’s conference call yesterday.
According to Krug, some people get complacent when they realize crypto is here to stay. As a result, they lever up on it, thinking it can’t go down that much because institutions will swoop in and buy, saving the day. But eventually, when the lid blows off and bids are not there, liquidations of levered longs will drive the price down.
During the market crash on January 10-11, more than USD 3bn worth of long positions were liquidated, according to bybt data. To compare, on January 12, over USD 200m worth of short and also more than USD 200m long positions were liquidated.
As reported, crypto researcher and analyst Willy Woo argued that "unlike previous crashes in the past 2 years, where over-leveraged markets lead by trader liquidation, this one started on spot markets, then was greatly amplified by a single exchange partially failing, yet did not turn itself off for the good of the ecosystem."
Leveraged trading refers to borrowing funds so that you can take a larger position than you would be able to with your existing funds so that you can potentially generate a higher profit. However, while margin trading enables traders to amplify their returns, it can also lead to increased losses and liquidations, which is why experienced traders tend to advise newcomers to stay away from leveraged trading.
As for Pantera Capital itself, the firm took some risk off the table when the Market Value to Realised Value (MVRV) ratio rose to its highest level since 2017 a few days ago. The indicator shows how much unrealized gains bitcoin (BTC) holders are sitting on. When this metric gets high, it means the market is overheated, and if it starts to decline, people sell in order to lock-in gains out of panic or fear, Krug explained on the call.
According to Krug, this recent crash was a healthy outcome for this space, noting that people realized some gains and the market pulled back a bit in a consolidation period.
Now, the CIO said, the market is in a good position for the next leg upward and it is his view that the rally is going to continue.
At the time of writing (19:18 UTC), BTC trades at USD 35,805 and is up by almost 3% in a day and less than 1% in a week. It rallied by 86% in a month.
Meanwhile, during the call yesterday, Pantera Capital CEO Dan Morehead described the global macro environment as “off the charts,” pointing to the unprecedented pace at which the United States is printing money each month and “pushing it like crazy.”
As a result, the main two cryptoassets - BTC and ethereum (ETH) - have soared, which illustrates the next point, which is that “this rally has consolidated around bitcoin and ethereum,” according to Pantera slides.
Krug also noted that institutional investors are primarily honing in on bitcoin and ethereum and outside of these two assets there is not a great deal of institutional interest. He also waded into decentralized finance (DeFi), saying that these tokens are getting “pushed up” indirectly by BTC and ETH. The CIO also noted that it will not be this cycle when institutions buy DeFi protocols, adding that it will probably be the next cycle or the one after that.
Another huge development has been the rise of central bank digital currencies (CBDCs), a trend that has been led by China, which Morehead noted “has a very big headstart on the world.” And while they don’t directly impact the price of tokens that are not pegged to fiat money like stablecoins, they will still introduce “billions of people” to the market including those without bank accounts but with smartphones, Morehead said.
Legally Speaking, is Digital Money Really Money?
Countries are moving fast toward creating digital currencies. Or, so we hear from various surveys showing an increasing number of central banks making substantial progress towards having an official digital currency.
But, in fact, close to 80% of the world’s central banks are either not allowed to issue a digital currency under their existing laws, or the legal framework is not clear.
To help countries make this assessment, we reviewed the central bank laws of 174 IMF members in a new IMF staff paper, and found out that only about 40 are legally allowed to issue digital currencies.
Not just a legal technicality
Any money issuance is a form of debt for the central bank, so it must have a solid basis to avoid legal, financial and reputational risks for the institutions. Ultimately, it is about ensuring that a significant and potentially contentious innovation is in line with a central bank’s mandate. Otherwise, the door is opened to potential political and legal challenges.
Now, readers may be asking themselves: if issuing money is the most basic function for any central bank, why then is a digital form of money so different? The answer requires a detailed analysis of the functions and powers of each central bank, as well as the implications of different designs of digital instruments.
Building a case for digital currencies
To legally qualify as currency, a means of payment must be considered as such by the country’s laws and be denominated in its official monetary unit. A currency typically enjoys legal tender status, meaning debtors can pay their obligations by transferring it to creditors.
Therefore, legal tender status is usually only given to means of payment that can be easily received and used by the majority of the population. That is why banknotes and coins are the most common form of currency.
To use digital currencies, digital infrastructure—laptops, smartphones, connectivity—must first be in place. But governments cannot impose on their citizens to have it, so granting legal tender status to a central bank digital instrument might be challenging. Without the legal tender designation, achieving full currency status could be equally challenging. Still, many means of payments widely used in advanced economies are neither legal tender nor currency (e.g., commercial book money).
Uncharted waters?
Digital currencies can take different forms. Our analysis focuses on the legal implications of the main concepts being considered by various central banks. For instance, where it would be “account-based” or “token-based.” The first means digitalizing the balances currently held on accounts in a central banks’ books; while the second refers to designing a new digital token not connected to the existing accounts that commercial banks hold with a central bank.
From a legal perspective, the difference is between centuries-old traditions and uncharted waters. The first model is as old as central banking itself, having been developed in the early 17th century by the Exchange Bank of Amsterdam—considered the precursor of modern central banks. Its legal status under public and private law in most countries is well developed and understood. Digital tokens, in contrast, have a very short history and unclear legal status. Some central banks are allowed to issue any type of currency (which could include digital forms), while most (61 percent) are limited to only banknotes and coins.
Another important design feature is whether the digital currency is to be used only at the “wholesale” level, by financial institutions, or could be accessible to the general public (“retail”). Commercial banks hold accounts with their central bank, being therefore their traditional “clients.” Allowing private citizens’ accounts, as in retail banking, would be a tectonic shift to how central banks are organized and would require significant legal changes. Only 10 central banks in our sample would currently be allowed to do so.
Countries are moving fast toward creating digital currencies. Or, so we hear from various surveys showing an increasing number of central banks making substantial progress towards having an official digital currency.
But, in fact, close to 80% of the world’s central banks are either not allowed to issue a digital currency under their existing laws, or the legal framework is not clear.
To help countries make this assessment, we reviewed the central bank laws of 174 IMF members in a new IMF staff paper, and found out that only about 40 are legally allowed to issue digital currencies.
Not just a legal technicality
Any money issuance is a form of debt for the central bank, so it must have a solid basis to avoid legal, financial and reputational risks for the institutions. Ultimately, it is about ensuring that a significant and potentially contentious innovation is in line with a central bank’s mandate. Otherwise, the door is opened to potential political and legal challenges.
Now, readers may be asking themselves: if issuing money is the most basic function for any central bank, why then is a digital form of money so different? The answer requires a detailed analysis of the functions and powers of each central bank, as well as the implications of different designs of digital instruments.
Building a case for digital currencies
To legally qualify as currency, a means of payment must be considered as such by the country’s laws and be denominated in its official monetary unit. A currency typically enjoys legal tender status, meaning debtors can pay their obligations by transferring it to creditors.
Therefore, legal tender status is usually only given to means of payment that can be easily received and used by the majority of the population. That is why banknotes and coins are the most common form of currency.
To use digital currencies, digital infrastructure—laptops, smartphones, connectivity—must first be in place. But governments cannot impose on their citizens to have it, so granting legal tender status to a central bank digital instrument might be challenging. Without the legal tender designation, achieving full currency status could be equally challenging. Still, many means of payments widely used in advanced economies are neither legal tender nor currency (e.g., commercial book money).
Uncharted waters?
Digital currencies can take different forms. Our analysis focuses on the legal implications of the main concepts being considered by various central banks. For instance, where it would be “account-based” or “token-based.” The first means digitalizing the balances currently held on accounts in a central banks’ books; while the second refers to designing a new digital token not connected to the existing accounts that commercial banks hold with a central bank.
From a legal perspective, the difference is between centuries-old traditions and uncharted waters. The first model is as old as central banking itself, having been developed in the early 17th century by the Exchange Bank of Amsterdam—considered the precursor of modern central banks. Its legal status under public and private law in most countries is well developed and understood. Digital tokens, in contrast, have a very short history and unclear legal status. Some central banks are allowed to issue any type of currency (which could include digital forms), while most (61 percent) are limited to only banknotes and coins.
Another important design feature is whether the digital currency is to be used only at the “wholesale” level, by financial institutions, or could be accessible to the general public (“retail”). Commercial banks hold accounts with their central bank, being therefore their traditional “clients.” Allowing private citizens’ accounts, as in retail banking, would be a tectonic shift to how central banks are organized and would require significant legal changes. Only 10 central banks in our sample would currently be allowed to do so.
Regulators Ponder Strategy As Bitcoin & Co Are Too Large to Ignore
The writing is on the wall: regulation is coming for crypto. While a small handful of nations have already introduced specific cryptoasset legislation over the past few years, it looks as though the world’s major powers are gearing up to introduce substantial new regulations and laws.
This point was brought home forcefully by remarks made in mid-January by European Central Bank (ECB) President Christine Lagarde. Speaking to Reuters, she said “there has to be regulation” of crypto at a global level, mostly due to the fact that bitcoin and other coins are used for “totally reprehensible money laundering activity.”
However, according to Chainalysis, the criminal share of all cryptocurrency activity fell from 2.1% (USD 21.4bn) in 2019 to 0.34%, or USD 10bn in transaction volume in 2020.
In either case, together with recent actions from the US Treasury and Financial Crimes Enforcement Network (FinCEN), such overtures suggest that crypto is due for a legislative reckoning sooner or later, with nations using the excuse of money laundering to bring it more fully within their oversight.
Aims and motives
“As crypto has gained mind and market share among institutional and individual investors over the past year, it’s natural that international regulatory bodies would increase their scrutiny and potential oversight,” said Blockchain Association executive director Kristin Smith.
For Smith, there’s no single motive as to why regulators are now beginning to push more strongly for regulation. Rather, “a confluence of factors” have come together to push them to bring crypto within the purview of the wider financial system.
“And the reaction to that legitimacy and growth may manifest itself in defensive moves to protect sovereign financial institutions, or a reach to augment international financial power by developing national blockchain systems, as in the case of China. The basic point is that crypto has become too large a force to be ignored,” she added.
Other figures are less sanguine. For Bambos Tsiattalou, a lawyer and founding partner at the London-based Stokoe Partnership Solicitors, the overarching intention of regulators isn’t to make crypto ‘respectable,’ but to suffocate it.
“The ECB is now looking into the possibility of creating its own digital euro … [m]any of the world’s major powers are making similar moves. Their overall intention appears to be to regulate the existing private cryptocurrencies out of existence as they make way for their own official digital currencies,” he told.
Tsiattalou acknowledges that the focus of the ECB in particular on money laundering is somewhat hypocritical, given that high-denomination banknotes such as the EUR 500 bill are notorious as money-laundering tools. However, he suspects regulators are determined to hamper crypto as far as possible.
“The proposed state-backed digital currencies will be supported and managed by major central banks and the resources of major states,” he said, suggesting that businesses and consumers will much prefer these to decentralized cryptocurrencies. “Further regulation will also undermine the speculative value which some have unwisely placed in cryptocurrencies.”
When regulation?
While regulators, banks and governments will no doubt aim to reduce the illegal use of cryptocurrencies (at the very least), it’s not entirely clear when we can expect new regulations to arrive.
“In the US, as in many other countries, any major legislation is likely to be focused on controlling the pandemic and the attendant financial crisis, so we don’t expect any major legislation dealing specifically with crypto in the next few months. However, if and when the pandemic begins to wane, we think there will be new bills introduced in the later months of the year,” said Kristin Smith.
In the case of the EU, Bambos Tsiattalou also expects movements to be slow, with the proposed regulatory regime for crypto-assets not likely to come into force until 2024.
The writing is on the wall: regulation is coming for crypto. While a small handful of nations have already introduced specific cryptoasset legislation over the past few years, it looks as though the world’s major powers are gearing up to introduce substantial new regulations and laws.
This point was brought home forcefully by remarks made in mid-January by European Central Bank (ECB) President Christine Lagarde. Speaking to Reuters, she said “there has to be regulation” of crypto at a global level, mostly due to the fact that bitcoin and other coins are used for “totally reprehensible money laundering activity.”
However, according to Chainalysis, the criminal share of all cryptocurrency activity fell from 2.1% (USD 21.4bn) in 2019 to 0.34%, or USD 10bn in transaction volume in 2020.
In either case, together with recent actions from the US Treasury and Financial Crimes Enforcement Network (FinCEN), such overtures suggest that crypto is due for a legislative reckoning sooner or later, with nations using the excuse of money laundering to bring it more fully within their oversight.
Aims and motives
“As crypto has gained mind and market share among institutional and individual investors over the past year, it’s natural that international regulatory bodies would increase their scrutiny and potential oversight,” said Blockchain Association executive director Kristin Smith.
For Smith, there’s no single motive as to why regulators are now beginning to push more strongly for regulation. Rather, “a confluence of factors” have come together to push them to bring crypto within the purview of the wider financial system.
“And the reaction to that legitimacy and growth may manifest itself in defensive moves to protect sovereign financial institutions, or a reach to augment international financial power by developing national blockchain systems, as in the case of China. The basic point is that crypto has become too large a force to be ignored,” she added.
Other figures are less sanguine. For Bambos Tsiattalou, a lawyer and founding partner at the London-based Stokoe Partnership Solicitors, the overarching intention of regulators isn’t to make crypto ‘respectable,’ but to suffocate it.
“The ECB is now looking into the possibility of creating its own digital euro … [m]any of the world’s major powers are making similar moves. Their overall intention appears to be to regulate the existing private cryptocurrencies out of existence as they make way for their own official digital currencies,” he told.
Tsiattalou acknowledges that the focus of the ECB in particular on money laundering is somewhat hypocritical, given that high-denomination banknotes such as the EUR 500 bill are notorious as money-laundering tools. However, he suspects regulators are determined to hamper crypto as far as possible.
“The proposed state-backed digital currencies will be supported and managed by major central banks and the resources of major states,” he said, suggesting that businesses and consumers will much prefer these to decentralized cryptocurrencies. “Further regulation will also undermine the speculative value which some have unwisely placed in cryptocurrencies.”
When regulation?
While regulators, banks and governments will no doubt aim to reduce the illegal use of cryptocurrencies (at the very least), it’s not entirely clear when we can expect new regulations to arrive.
“In the US, as in many other countries, any major legislation is likely to be focused on controlling the pandemic and the attendant financial crisis, so we don’t expect any major legislation dealing specifically with crypto in the next few months. However, if and when the pandemic begins to wane, we think there will be new bills introduced in the later months of the year,” said Kristin Smith.
In the case of the EU, Bambos Tsiattalou also expects movements to be slow, with the proposed regulatory regime for crypto-assets not likely to come into force until 2024.
World's Richest Person, Tesla's Elon Musk Sends Bitcoin Sign, BTC Rallies
Tesla mastermind Elon Musk has sent the crypto world into a fresh frenzy with his latest Twitter activity – adding bitcoin (BTC) to his profile, and making a comment that scores of dogecoin (DOGE) advocates have taken as a ringing approval of the token. But it seems it was about BTC. (Updated at 10:28 UTC with the latest price data, comments, Google trends data).
Following the news, BTC went up more than 11% in less than an hour, later surging even more and hitting USD 37,851, before it corrected lower.
At 10:25 UTC, BTC is still up by 16% in a day and trades USD 36,119. It advanced by 17% in a week, increasing its monthly gains to 32%.
At the same time, USD 694m BTC worth of short positions were liquidated, per bybt.com data. In the past 24 hours, 295,072 positions, worth USD 1.32bn were liquidated.
Also, the interest in "bitcoin" spiked following the news, per Google data.
At the time of writing, Musk’s profile on the social media platform reads simply “#bitcoin,” and features the bitcoin symbol emoji.
And a cryptic tweet that read, “In retrospect, it was inevitable” appears to have been interpreted by many as a reference to the phenomenal recent performance of DOGE.
DOGE has come out of relative obscurity to rocket into the top 10 tokens per market cap in what appears to be an unprecedented community-led pump for the meme-powered token.
Twitter-based DOGE users have flocked to Musk’s tweet in their droves, posting all-too-familiar meme images of the dogecoin pooch clad in astronaut gear, preparing for a journey “to the moon.”
But some Twitter commenters have claimed Musk’s tweet was actually a reference to his own bitcoin-related profile update – a factor that has quite probably helped the BTC price to skyrocket yet again.
Musk, a famous Twitter trickster, has dropped hints about his interest in bitcoin and other tokens in the past, suggesting via a meme that he may be open to the idea of bitcoin buying as an investment strategy. Late last year he sparked a Twitter storm by tweeting, “Bitcoin is my safe word” – later going on to say he was “just kidding.”
Tesla mastermind Elon Musk has sent the crypto world into a fresh frenzy with his latest Twitter activity – adding bitcoin (BTC) to his profile, and making a comment that scores of dogecoin (DOGE) advocates have taken as a ringing approval of the token. But it seems it was about BTC. (Updated at 10:28 UTC with the latest price data, comments, Google trends data).
Following the news, BTC went up more than 11% in less than an hour, later surging even more and hitting USD 37,851, before it corrected lower.
At 10:25 UTC, BTC is still up by 16% in a day and trades USD 36,119. It advanced by 17% in a week, increasing its monthly gains to 32%.
At the same time, USD 694m BTC worth of short positions were liquidated, per bybt.com data. In the past 24 hours, 295,072 positions, worth USD 1.32bn were liquidated.
Also, the interest in "bitcoin" spiked following the news, per Google data.
At the time of writing, Musk’s profile on the social media platform reads simply “#bitcoin,” and features the bitcoin symbol emoji.
And a cryptic tweet that read, “In retrospect, it was inevitable” appears to have been interpreted by many as a reference to the phenomenal recent performance of DOGE.
DOGE has come out of relative obscurity to rocket into the top 10 tokens per market cap in what appears to be an unprecedented community-led pump for the meme-powered token.
Twitter-based DOGE users have flocked to Musk’s tweet in their droves, posting all-too-familiar meme images of the dogecoin pooch clad in astronaut gear, preparing for a journey “to the moon.”
But some Twitter commenters have claimed Musk’s tweet was actually a reference to his own bitcoin-related profile update – a factor that has quite probably helped the BTC price to skyrocket yet again.
Musk, a famous Twitter trickster, has dropped hints about his interest in bitcoin and other tokens in the past, suggesting via a meme that he may be open to the idea of bitcoin buying as an investment strategy. Late last year he sparked a Twitter storm by tweeting, “Bitcoin is my safe word” – later going on to say he was “just kidding.”
Crypto World Waits to See What Post-Bezos-era Amazon Will Bring
The world of crypto is watching developments at Amazon with great interest after the company’s founder Jeff Bezos announced that he would be stepping aside as the firm’s CEO.
In an official announcement, Bezos indicated that he was stepping down from the day-to-day operations of the e-commerce giant, but would still be involved at the company – taking up an executive chairman role at Amazon in the third quarter this year, while the former head of Amazon Web Services Andy Jassy takes over as CEO.
Bezos wrote that in his new role, he “intended to focus” his “energies and attention on new products and early initiatives.”
He also urged his employees to “keep inventing, and don’t despair when at first the idea looks crazy.”
Crypto-keen observers will be asking if these “initiatives” and “inventions” could well involve blockchain-powered cryptoassets.
And there is some evidence to suggest that Jassy could take Amazon a step closer to blockchain and/or crypto adoption.
As AWS boss, Jassy last year enthusiastically oversaw a deal with the Canadian payments firm Global Payments to co-build a cloud-based processing platform for card issuers and "to bring payment issuer solutions to new geographic regions & more customers throughout the world."
He also oversaw the launch of Amazon Managed Blockchain, a service that allows developers to work on Ethereum (ETH) in preview and the Hyperledger Fabric network without the need to arrange hosting or provide hardware. This service can be used to manage peer-to-peer payments, process loans and help businesses transact with distributors and suppliers.
But per Fortune, Jassy said back in 2018, when he was unveiling the details of the service that it was still “unclear what companies would actually use blockchain technology for.”
Back then, the media outlet also quoted Jassy as stating that when AWS had spoken to customers, “we just hadn’t seen that many blockchain examples in production or that couldn’t pretty easily be solved by a database.” The same argument is being made by many Bitcoin (BTC) proponents also.
As for Bezos, unsubstantiated rumors have linked him to BTC for years, but he has remained guarded on all things crypto-related – and Amazon has repeatedly shied away from the notion of enabling crypto pay on its platform. However, as reported, some independent projects were trying to bring crypto closer to Amazon.
In fact, others have suggested that Bezos is actually a crypto skeptic: He owns the Washington Post, which in 2016 published a scathing and now-infamous “obituary” for bitcoin, claiming that “pure greed” was “the clearest reason … for bitcoin’s failure,” adding it was time to issue an RIP on the token and “move on” from it.
Some optimists will perhaps hope that Bezos’ possible crypto skepticism will give way to Jassy’s seemingly more open-minded approach to the sector – and that the days of shopping on Amazon with crypto may not be too far off.
The world of crypto is watching developments at Amazon with great interest after the company’s founder Jeff Bezos announced that he would be stepping aside as the firm’s CEO.
In an official announcement, Bezos indicated that he was stepping down from the day-to-day operations of the e-commerce giant, but would still be involved at the company – taking up an executive chairman role at Amazon in the third quarter this year, while the former head of Amazon Web Services Andy Jassy takes over as CEO.
Bezos wrote that in his new role, he “intended to focus” his “energies and attention on new products and early initiatives.”
He also urged his employees to “keep inventing, and don’t despair when at first the idea looks crazy.”
Crypto-keen observers will be asking if these “initiatives” and “inventions” could well involve blockchain-powered cryptoassets.
And there is some evidence to suggest that Jassy could take Amazon a step closer to blockchain and/or crypto adoption.
As AWS boss, Jassy last year enthusiastically oversaw a deal with the Canadian payments firm Global Payments to co-build a cloud-based processing platform for card issuers and "to bring payment issuer solutions to new geographic regions & more customers throughout the world."
He also oversaw the launch of Amazon Managed Blockchain, a service that allows developers to work on Ethereum (ETH) in preview and the Hyperledger Fabric network without the need to arrange hosting or provide hardware. This service can be used to manage peer-to-peer payments, process loans and help businesses transact with distributors and suppliers.
But per Fortune, Jassy said back in 2018, when he was unveiling the details of the service that it was still “unclear what companies would actually use blockchain technology for.”
Back then, the media outlet also quoted Jassy as stating that when AWS had spoken to customers, “we just hadn’t seen that many blockchain examples in production or that couldn’t pretty easily be solved by a database.” The same argument is being made by many Bitcoin (BTC) proponents also.
As for Bezos, unsubstantiated rumors have linked him to BTC for years, but he has remained guarded on all things crypto-related – and Amazon has repeatedly shied away from the notion of enabling crypto pay on its platform. However, as reported, some independent projects were trying to bring crypto closer to Amazon.
In fact, others have suggested that Bezos is actually a crypto skeptic: He owns the Washington Post, which in 2016 published a scathing and now-infamous “obituary” for bitcoin, claiming that “pure greed” was “the clearest reason … for bitcoin’s failure,” adding it was time to issue an RIP on the token and “move on” from it.
Some optimists will perhaps hope that Bezos’ possible crypto skepticism will give way to Jassy’s seemingly more open-minded approach to the sector – and that the days of shopping on Amazon with crypto may not be too far off.
Bitcoin Returns Above USD 40,000 In Less Than A Month
The most popular cryptocurrency, bitcoin (BTC), rallied on Saturday, moving back above the USD 40,000 level for the first time in almost a month.
At the time of writing (14:38 UTC), BTC trades at USD 40,420 and is up by 6% in a day, increasing its weekly gains to 18%. BTC reached its all-time high of USD 41,940 on January 8th, per Coingecko.com data.
At the same time, other major cryptoassets are showing mixed results. After its recent rally to its new all-time high of USD 1,754 reached yesterday, ethereum (ETH) is down by 1% in a day, trading at USD 1,694. However it outperformed BTC in a week, increasing by 22%. Binance coin (BNB) is the best performer today as its price rallied by 25%, and jumped 73% in a week.
"Bitcoin and ethereum inflows to exchanges have declined slightly, with 7 day average inflows below the 30 day average, reducing sell pressure. Trade intensity has also declined slightly, which typically suggests buy pressure is reducing. However, for bitcoin at least, it is still high relative to the past," Philip Gradwell, Chief Economist at Chainalysis, wrote in his weekly report on Friday.
According to him, people cashing out after making a 25% or more USD gain has also declined since the large increase in the first week of January, suggesting people continue to hold despite their potential gains, now that some profit was taken following the price gains over the holiday period.
The most popular cryptocurrency, bitcoin (BTC), rallied on Saturday, moving back above the USD 40,000 level for the first time in almost a month.
At the time of writing (14:38 UTC), BTC trades at USD 40,420 and is up by 6% in a day, increasing its weekly gains to 18%. BTC reached its all-time high of USD 41,940 on January 8th, per Coingecko.com data.
At the same time, other major cryptoassets are showing mixed results. After its recent rally to its new all-time high of USD 1,754 reached yesterday, ethereum (ETH) is down by 1% in a day, trading at USD 1,694. However it outperformed BTC in a week, increasing by 22%. Binance coin (BNB) is the best performer today as its price rallied by 25%, and jumped 73% in a week.
"Bitcoin and ethereum inflows to exchanges have declined slightly, with 7 day average inflows below the 30 day average, reducing sell pressure. Trade intensity has also declined slightly, which typically suggests buy pressure is reducing. However, for bitcoin at least, it is still high relative to the past," Philip Gradwell, Chief Economist at Chainalysis, wrote in his weekly report on Friday.
According to him, people cashing out after making a 25% or more USD gain has also declined since the large increase in the first week of January, suggesting people continue to hold despite their potential gains, now that some profit was taken following the price gains over the holiday period.