Skip to main content

CoinDesk Crypto

Crypto Traders Lever Up as Bitcoin Creeps Back Toward All-Time High

5 years 6 months ago

Bitcoin traders appear to be ratcheting up bets on a fresh rally, and they’re taking on more leverage – and risk – in cryptocurrency derivatives markets.

In the past few days, the cost to fund a long position in the market for bitcoin (BTC) perpetual swaps, a type of derivatives in cryptocurrency markets similar to futures contracts in traditional markets, has broken above neutral levels for the first time since mid-March, according to Arcane Research, a Norwegian analysis firm.

The average cost is now pushing toward 0.08%. That’s still well below a level close to 0.12% witnessed earlier this month when bitcoin surged to an all-time high price above $61,000, or earlier in the year, when the funding cost was roughly twice as high.

Related: What Do Advisers Tell Clients About Bitcoin Estate Planning?

But the recent rise appears to show traders finding a renewed appetite for risk taking following a market shakeout over the past couple of weeks. Bitcoin’s price fell to just above $50,000 as recently as March 25.

“The funding rate spikes coincide with strong optimism and high leverage from short-term traders,” according to the Arcane report.

  • “The funding rates have once again started to move upwards after two weeks in the neutral territory,” similar to the final weeks of January and February, according to Arcane.
  • “After the initial breakouts from the neutral territory, bitcoin began moving upwards towards new price highs, but not without volatility.”
  • A positive funding rate in cryptocurrency derivatives markets means traders with long positions pay those with short positions.
  • Eventually, rising payouts from long traders to short traders could make downward price bets more attractive using bitcoin perpetual swaps. But BTC optimism is not yet at an extreme, which means longs could remain active at support levels.
Related Stories

Indian Crypto Firms Suggest Policy Ideas to Government Ahead of Possible Ban

5 years 6 months ago

Crypto exchanges in India are planning to present the country’s government and central bank with their vision for a productive regulatory regime, The Economic Times reported Tuesday.

The group – including Unocoin, WazirX, CoinDCX, Paxful, Pocketbits, ZebPay and Coinswitch – compiled a package of documents explaining the current state of the crypto industry in India and possible ways to regulate it.

The industry entreaty comes as Indian lawmakers float a potential ban of private cryptocurrencies.

Related: What Do Advisers Tell Clients About Bitcoin Estate Planning?

The package will be sent to Indian Finance Minister Nirmala Sitharaman, the Reserve Bank of India, the Department of Economic Affairs and the Ministry of Electronics and Information Technology, according to the report.

The presentation, reviewed by CoinDesk, says India currently has more than 10 million crypto users, over half-a-million day traders and more than 3,000 people employed in the crypto industry. The presentation mentions the money-laundering and environmental concerns related to cryptocurrencies and suggests a package of policy proposals.

The exchanges suggested research on potential consequences if India bans crypto, proposals on the upcoming regulation, a draft code of conduct for crypto exchanges to adopt and an overview of crypto regulation practices around the world.

India is looking to pass its first-ever cryptocurrency legislation, though Sitharaman partly soothed industry fears of overreach. The finance minister said on March 15 the government will still “allow certain windows for people to do experiments on the blockchain, bitcoin or cryptocurrency.”

Related: PayPal Opens Crypto Payments for Millions of Merchants

However, around the same time, rumors started circulating Indian authorities might start blocking IP addresses of cryptocurrency exchanges.

Despite the regulatory uncertainty, India has an active crypto market, which grew significantly over the pandemic year of 2020, as CoinDesk previously reported. The country has a large young population and is the biggest online market in the world, according to research data.

Related Stories

Bakkt Digital Wallet, for Bitcoin to Starbucks Points, Goes Live After Long Delay

5 years 6 months ago

Bakkt is launching its digital wallet app with companies such as Starbucks among its roster of merchant partners.

  • The app drew 500,000 users in its invitation-only trial run prior to its public launch Tuesday, Bakkt said in a press release.
  • The app was announced in October 2019, with plans to launch in the first half of 2020.
  • The COVID-19 pandemic appears to have scuttled Bakkt’s original timeline, given the app’s focus on the hospitality and travel sectors.
  • Bakkt is aiming to aggregate cryptocurrency holdings with other digital assets such as airline miles, gift cards and loyalty points.
  • “Customers can now use Bakkt to reload their Starbucks Card through the Starbucks app for iOS,” Bakkt said.
  • Other partners include Best Buy, Choice Hotels, Fiserv and GolfNow.
Related Stories

Sumitomo Mitsui Trust Bank to Issue Japan’s First Security Tokens

5 years 6 months ago

Sumitomo Mitsui Trust Bank, one of Japan’s largest banks, has completed its first asset-backed security token issuance pilot.

The bank announced Monday it has converted Japan’s first certificates of ownership backed by securities into security tokens, and is conducting a trial on the digital asset issuance platform Securitize Japan, a unit of Securitize Inc., according to CoinDesk Japan. 

The method of raising funds through the issuance of security tokens is called a security token offering (STO). Investors are issued a digital token that represents a physical investment to be stored on a blockchain.

Related: What Do Advisers Tell Clients About Bitcoin Estate Planning?

Security tokens became famous in 2018, following the initial coin offering (ICO) boom. Unlike ICOs, STOs were meant to represent a security regulated and traded in accordance with securities regulation. Despite the hype, STOs failed to take off for the most part, particularly in parts of Asia. In fact, in 2018, Beijing’s financial authority warned that STOs were illegal. 

The security tokens issued in Japan’s effort have a short-term rating of “a-1” given by the Japan’s leading credit rating service, Rating and Investment Information, and will be launched within the month, according to the announcement. The security tokens are also compliant with Japan’s Financial Instruments and Exchange Act (FIEA), according to a statement from Securitize Japan. 

For the pilot, the bank created beneficiary certificates representing the asset-backed securities and tokenized them on the Securitize platform, the statement said.  

Another influential Japanese financial institution, SBI Holdings, announced three days ago it had also completed registration requirements to handle STOs. Additionally, Nomura Holdings, Mizuho Financial, Mitsubishi UFJ Financial and others have been researching and developing digital securities backed by assets such as bonds, stocks and real estate, according to CoinDesk Japan.

Related: PayPal Opens Crypto Payments for Millions of Merchants

Sumitomo Mitsui Trust will continue to research the issuance and management of security tokens for the STO market, according to the announcement. The bank will also be looking into security tokens as a way to connect investors with long-term social impact objectives like the United Nations Sustainable Development Goals (SDG) and Environment, Society and Corporate Governance (ESG).

Related Stories

Michael Jordan Joins $305M Investment in Firm Behind NBA Top Shot

5 years 6 months ago

Dapper Labs announced a $305 million funding round Tuesday from another batch of NBA stars and a venture capital firm backing its runaway hit, NBA Top Shot.

Kevin Durant, Michael Jordan, the investment firm Coatue and a deep bench of 30 athletes, plus the rapper, 2 Chainz, have piled into the non-fungible token (NFT) firm, the startup said. Citing a person with knowledge of the situation, USA Today reported the funding round places Dapper’s current valuation at $2.6 billion.

The mega-round comes as Dapper’s NBA Top Shot platform continues to monetize fans’ growing demand for digital collectibles. Sitting atop Dapper’s Flow blockchain, the card-like crypto platform has raked in nearly $500 million in sales and seen its secondary trading market eclipse $2 million in volume almost daily.

Related: Sumitomo Mitsui Trust Bank to Issue Japan’s First Security Tokens

While the hype remains centered on NBA Top Shot, Dapper Labs signaled in a press release it intends to bring yet more digital collectibles to Flow through “experiences” by Warner Media Group and UFC (Ultimate Fighting Championship), among others. More experiences are coming this year, the startup said. The company has raised $357 million to date.

Here’s the full list of investors, per the Dapper Labs press release:

The company received support from NBA legend Michael Jordan as well as current players and funds including Kevin Durant, Andre Iguodala, Kyle Lowry, Spencer Dinwiddie, Andre Drummond, Alex Caruso, Michael Carter-Williams, Josh Hart, Udonis Haslem, JaVale McGee, Khris Middleton, Domantas Sabonis, Klay Thompson, Nikola Vucevic, Thad Young, and Richard Seymour’s 93 Ventures, as well as entertainment and music heavyweights including Ashton Kutcher and Guy Oseary’s Sound Ventures, Will Smith and Keisuke Honda’s Dreamers VC, Shawn Mendes and Andrew Gertler’s AG Ventures, Shay Mitchell, and 2 Chainz. Other strategics participating include a16z, The Chernin Group, USV, Version One, and Venrock.

Additional investors in the round include: MLB players like Tim Beckham and Nolan Arenado; NFL players: Ken Crawley, Thomas Davis, Stefon Diggs, Dee Ford, Malcom Jenkins, Rodney McLeod, Jordan Matthew, Devin McCourty, Jason McCourty, DK Metcalf, Tyrod Taylor, and Trent Williams; team ownership including Vivek Ranadive (Kings), and notable sports investors Bolt Ventures.

Related Stories

Cuban, Palihapitiya Back NFT Marketplace SuperRare’s $9M Series A

5 years 6 months ago

SuperRare, one of the leading marketplaces for non-fungible tokens (NFTs), has cashed in on NFT mania with a $9 million funding round led by tech venture capitalists Velvet Sea and 1confirmation.

Mark Cuban, Chamath Palihapitiya, Marc Benioff (CEO of Salesforce.com) and other well-heeled tech backers also participated in SuperRare’s Series A, the three year-old startup told CoinDesk.

The round comes as crypto worth millions pours into blockchain-linked digital collectibles. While huge sales by relatively established artists such as Beeple catch headlines in mainstream media, an army of lesser-known NFT creators are also selling for six-figures on marketplaces such as SuperRare.

Related: Sumitomo Mitsui Trust Bank to Issue Japan’s First Security Tokens

Artists are now generating over $25 million in total sales per month on SuperRare, the startup said. When it launched three years ago, a given month might have seen just $8,000 total. 

But the crowd driving SuperRare’s boon remains surprisingly small. 

Just 727 wallet addresses combined for $5.47 million in SuperRare trading volume in the past week, according to on-chain data site DappRadar. It was the fifth-largest NFT marketplace by volume during that period.

Read also: It’s an NFT Boom. Do You Know Where Your Digital Art Lives?

Related: Meet the DeFi Data Firm Backed by Mark Cuban

SuperRare occupies a relatively small but gilded corner of the surging $400 million NFT market. Unlike competitors OpenSea and Nifty Gateway, which are larger and more akin to collectible clearinghouses than swanky digital art showrooms, SuperRare only lists one-for-one editions, making its fare feel almost gallery-like.

Founders John Crain and Jonathan Perkins will invest the capital to fund the platform’s growth, they said. Future features include social rollouts, upgrades to the marketplace backend, a foray into virtual reality and taking steps to ensure featured works remain accessible in the long-term.

Related Stories

CME to Launch Micro Bitcoin Futures in May

5 years 6 months ago

Derivatives exchange Chicago Mercantile Exchange (CME) will launch smaller-sized bitcoin futures contracts in May, potentially expanding the number of people who bet on the future price of the leading cryptocurrency.

  • In an announcement on Tuesday, the CME said the new contracts sized at one-tenth of one bitcoin will be available for trading on May 3 and will be cash-settled based on the CME CF Bitcoin Reference Rate.
  • “The introduction of Micro Bitcoin futures responds directly to demand for smaller-sized contracts from a broad array of clients and will offer even more choice and precision in how participants can trade regulated bitcoin futures in a transparent and efficient manner at CME Group,” Tim Court, CME Group global head of Equity Index and Alternative Investment Products, said in a press release.
  • The micro futures will offer features and benefits of CME Group’s standard bitcoin futures, launched in 2017.
  • The CME climbed ranks in the second half of 2020 and became the biggest bitcoin futures exchange as per open interest by the end of December, in a sign of increased institutional participation. Recently, the exchange has slipped to the number four spot.
  • A futures contract is a standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future.

Related Stories

CME Announces Launch of Micro Bitcoin Futures in May

5 years 6 months ago

Derivatives exchange Chicago Mercantile Exchange (CME) will launch smaller-sized bitcoin futures contracts in May, potentially expanding the number of people who bet on the future price of the leading cryptocurrency.

  • In an announcement on Tuesday, the CME said that the new contracts sized at one-tenth of one bitcoin will be available for trading on May 3 and will be cash-settled based on the CME CF Bitcoin Reference Rate.
  • “The introduction of Micro Bitcoin futures responds directly to demand for smaller-sized contracts from a broad array of clients and will offer even more choice and precision in how participants can trade regulated bitcoin futures in a transparent and efficient manner at CME Group,” Tim Court, CME Group global head of Equity Index and Alternative Investment Products, said in a press release.
  • The micro futures will offer features and benefits of CME Group’s standard bitcoin futures launched more than three years ago in 2017.
  • The CME climbed ranks in the second half of 2020 and became the biggest bitcoin futures exchange as per open interest by the end of December in a sign of increased institutional participation. Recently, the exchange has slipped to the number four spot.
  • A futures contract is a standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future.

Related Stories

UK to Focus Regulation on Stablecoins Rather Than Crypto in General: Report

5 years 6 months ago

The U.K. will focus on regulating stablecoins rather than cryptocurrency in general, according to statements made by a treasury minister, Reuters has reported.

  • Speaking at a City & Financial conference Tuesday, Economic Secretary to the Treasury John Glen said stablecoins could pose a threat to competition.
  • “There is the potential for some firms to swiftly achieve dominance and crowd out other players, due to their ability to scale and plug into existing online services,” Glen said.
  • It is likely he was referring to a stablecoin like Diem. Announced by Facebook in June 2019 as Libra, the proposal was met with widespread concern from governments and central banks.
  • The U.K. treasury released a consultation paper in January to gather feedback on the government’s approach to regulating stablecoins and other cryptocurrencies.
Related Stories

PureStake Raises $6M From Binance Labs, Coinbase Ventures

5 years 6 months ago

PureStake, a company that builds blockchain infrastructure for proof-of-stake networks, has raised $6 million in a funding round with contributions from investment firm CoinFund and Binance Labs, the incubation and seed funding arm of the world’s largest crypto exchange.

ParaFi, Fenbushi Capital, IOSG Ventures, Divergence Ventures, Signum Capital and others also participated in the round.

The company said the funding will be used to launch the Moonbeam network later this year on mainnet, hire staff, build developer tools, perform third-party security audits and expand its operations in Asia. 

Related: Sumitomo Mitsui Trust Bank to Issue Japan’s First Security Tokens

PureStake’s Moonbeam parachain launched its testnet last September as part of the Polkadot ecosystem. Since then, it has formed the foundation for many new projects that have have begun to build on its network or have planned integrations with it, such as SushiSwap, Balancer, IDEX and Ocean Protocol.

In an interview with CoinDesk, Austin Barack, senior investment analyst at CoinFund, praised what he called the Moonbeam network’s strong Ethereum compatibility.

“Applications that are built on Ethereum can be deployed in parallel onto Moonbeam without having to reconfigure their code, and from there they have interoperability into the entire Polkadot ecosystem where they can benefit from fast transaction times and low transaction costs, but also connectivity to all of the other applications built on Moonbeam and other parachains within the broader Polkadot network,” he said.

Read more: Binance Labs Leads $1M Seed Round in Crypto Tor Alternative HOPR

Related Stories

Tether Takes Step Toward Transparency With First Accounting Firm Report Card

5 years 6 months ago

Tether, the world’s largest stablecoin issuer, published an attestation on Tuesday verifying that it had $35 billion in assets backing a similar amount of its USDT token last month.

Produced by Cayman Islands-based accounting firm Moore Cayman, the document examines Tether’s holdings as of Feb. 28, 2021, at 23:59 UTC, finding the company had at least $35.28 billion in total assets against total liabilities of $35.15 million. 

Tuesday’s attestation is the first third-party verification Tether has produced indicating its reserves match the amount of USDT in circulation since 2018, the first from an actual accounting firm since September 2017, and by far the least equivocal of the bunch. As such, it may help resolve some long-standing questions about the stablecoin’s backing.

Related: What Do Advisers Tell Clients About Bitcoin Estate Planning?

Moore Cayman has a small team, according to its “People” page, and the firm says it specializes in working with financial-services firms.

To be clear, an attestation is not the same thing as an audit. The latter is designed to look for potential risks, while an attestation only evaluates whether the data being examined by the auditor is accurate. However, no stablecoin issuer has been able to secure an audit, including companies regulated by U.S. entities like the New York Department of Financial Services. In other words, the attestation puts Tether on par with stablecoin issuers such as USDC’s Centre, GUSD’s Gemini or PAX’s Paxos, at least when it comes to financial clarity.

As the largest stablecoin – with over $40 billion worth issued as of press time, according to Tether’s transparency page — USDT plays an important role in the $1.8 trillion global cryptocurrency market. Because it usually trades at or near $1, USDT allows traders to move fiat currency (or a serviceable substitute) between exchanges quickly to capture arbitrage opportunities.

Tether plans to issue another attestation for March after it ends, followed by quarterly attestations thereafter. 

Related: PayPal Opens Crypto Payments for Millions of Merchants

These attestations are separate from the disclosures Tether intends to produce for the New York Attorney General’s office (NYAG).

“We are doing this on our own initiative to honor Tether’s commitment to further transparency. And although it is unrelated to our release of this assurance opinion, the settlement is another example of our commitment to transparency,” said Stuart Hoegner, general counsel at Tether and its sister firm, Bitfinex. 

Tether, Bitfinex and the NYAG settled a nearly two-year investigation into whether Bitfinex covered up the loss of nearly $1 billion in customer funds using Tether’s reserves last month. Part of the settlement entails Tether filing quarterly reports detailing its reserve composition for the next two years.

Tuesday’s attestation does not describe this composition, only noting that Tether’s “consolidated total assets amount to” over $35 billion. 

While the attestation uses similar language to reports produced by Grant Thornton for the USDC stablecoin or Withum for the Paxos dollar, Moore Cayman notes that its attestation was conducted in accordance with a trio of international standards. 

Centre, the issuer behind USDC, and Paxos are both based in the U.S., and their attestations are conducted in accordance with U.S. standards, according to notes on both documents.

“Since the founding of Tether, we have made earnest and continuing efforts to enhance our public disclosures and communications,” Hoegner said in a statement. “As a leader in the growing cryptocurrency industry, we remain committed to being among the most transparent stablecoins. This latest assurance opinion – and our dedication to providing further reports moving forward – is a reflection of that commitment.”

UPDATE (March 30, 2021, 14:25 UTC): Removed the phrase “in the bank” from the first paragraph. It was meant colloquially, but as noted later in the article the composition of Tether’s assets is not spelled out in the attestation, so it is unclear what percentage is cash in a literal bank. Adds additional detail about Moore Cayman.

Related Stories

Blockstream Issues Security Token Tied to Bitcoin Hashrate, Payable in BTC

5 years 6 months ago

Bitcoin development company Blockstream is launching a token that is tied to the company’s Bitcoin mining production and which is redeemable in bitcoin.

One Blockstream Mining Note (BMN) represents 2,000 terahashes per second of hashrate from one of Blockstream’s mining facilities. The first tranche of 62.5 BMN will go on sale next week, April 7, and can be redeemed after three years for the bitcoin equivalent to the total hashrate the note represents.  

(Hashrate is the total estimated number of hashes or “guesses” being used to mine bitcoin at any given time and is generally a good gauge for measuring how much power Bitcoin consumes at a give time; currently, Bitcoin’s hashrate is roughly 164 exahashes per second).

Related: Sumitomo Mitsui Trust Bank to Issue Japan’s First Security Tokens

Blockstream is issuing the token on its Liquid sidechain, a semi-privatized, trusted blockchain that runs in parallel with Bitcoin, and will sell it initially through a private token sale on STOKR. The first batch of tokens will go for £200,000 ($275,836) each, and there’s a purchase minimum of 1 BMN (payable in bitcoin, or BTC and USDT on the Liquid network).

The sale is open to all non-U.S. qualified investors, and the tokens can be split and transferred in amounts down to 0.1 BMN and traded over the counter (OTC) after the sale.

“The BMN leverages our extensive experience in the Bitcoin mining space and offers investors up-front, fixed rates with improved tradability,” explained Blockstream CEO Adam Back in a statement. 

Hashrate tokens

Hashrate tokens are a recent development in the Bitcoin derivatives market, lead by Bitcoin miner Poolin and the Binance exchange.

Related: Meet the DeFi Data Firm Backed by Mark Cuban

These contracts exist as a way for high-caliber investors to gain exposure to bitcoin and bitcoin mining without owning the bitcoin outright or fumbling with mining hardware. Typically, they are traded OTC before being integrated on exchanges.

“In an ASIC and colocation market that is prohibitive for retail investment, hashrate tokens and contracts are a great way for investors to get exposure to the mining sector. Given the ease of purchase, exchange-grade liquidity, and low barriers to entry, hashrate tokens trade at a premium to physical ASICs, ” Ethan Vera of Luxor Mining told CoinDesk. He added that the North American Mining firm expects this premium to dip to 10-15% with the new hashrate tokens coming to market.

Hashrate contracts are just one of many roundabout ways investors can gain exposure to bitcoin. Bitcoin-holding companies, like Microstrategy and Square, have offered stock exposure through what some see as a de facto bitcoin ETF. 

Historically the most popular accredited investor option, Grayscale’s Bitcoin Trust (which is owned by CoinDesk parent company DCG) has been losing its premium recently as other options like NYDIG’s bitcoin products and futures volume snap up market share (and as Bitcoin ETF hopes through filings from Fidelity and others are high).

Related Stories

UK Tax Authority Updates Treatment of Crypto Assets to Incorporate Staking

5 years 6 months ago

Her Majesty’s Revenue and Customs (HMRC) has updated its guidance on taxation of crypto assets to incorporate income from staking in proof-of-stake networks.

This marks the first time that HMRC has released guidance specifically describing how staking is treated for taxation purposes. It has been assumed previously that staking comes under the umbrella of mining, thus the same guidance has applied.

The guidance issued today on staking is indeed almost identical in its wording to that on mining. However, the introduction of separate guidance for the two opens the door to divergence in the future.

Related: Sumitomo Mitsui Trust Bank to Issue Japan’s First Security Tokens

This guidance released Tuesday has been issued as part of a new internal HMRC manual on the tax treatment of crypto assets, which consolidates its previously separate guidance applicable to businesses and individuals into one manual.

A HMRC spokesperson said in a statement shared with CoinDesk: “The guidance manual demonstrates our commitment to providing clarity to our customers and will help individuals and businesses understand the tax consequences of different types of transactions in crypto assets.

“This builds on the previously published policy papers and will provide a more flexible approach to updating customers in this fast-moving sector.”

New staking guidance

According to the new guidance, the taxation of staking activity by businesses will depend on whether the activity “amounts to a taxable trade.” This depends on a range of factors, such as the degree of activity, nature of the organisation, risk involved and the commerciality of the activity.

Related: Meet the DeFi Data Firm Backed by Mark Cuban

If staking activity does not amount to trade, the pound sterling value of crypto assets awarded will be taxable as miscellaneous income.

If a business’ activity does amount to trade, however, profits “must be calculated according to the relevant tax rules.”

With regard to individuals, HMRC deems that “only in exceptional circumstances” would it expect “individuals to buy and sell exchange tokens with such frequency, level of organisation and sophistication that the activity amounts to a financial trade in itself.”

Any crypto assets that are kept by individuals or businesses would be subject to Capital Gains Tax and Corporation Tax on Chargeable Gains if they are later disposed of.

See also: ‘Thrill’ and ‘Status’ Driving Young People to Crypto Investment, Says UK Financial Watchdog

Related Stories

Bitcoin Uptrend Intact After Month-Long Consolidation; All-Time High Within Reach

5 years 6 months ago

The long-term uptrend in bitcoin (BTC) has stabilized after the price held support around $50,000 last week. Resistance is seen at $60,000, pending a breakout to a new all-time-high.

  • BTC held support at the 50-day volume weighted average, which has preceded strong rallies this year.
  • Lower highs on the daily relative strength index (RSI) suggests caution, although downside has been well supported around the neutral mark.
  • Intraday overbought signals are not yet extreme, which should keep buyers active towards $60,000-$61,000.
  • Lower support around $42,000 was defined by the February 8 breakout. Although the price successfully retested that level on February 28, which reignited the uptrend. Traders should adjust support levels higher to around $52,000.
Related Stories

Bitcoin Uptrend Intact After Month-Long Consolidation; All-Time-High Within Reach

5 years 6 months ago

The long-term uptrend in bitcoin (BTC) has stabilized after the price held support around $50,000 last week. Resistance is seen at $60,000, pending a breakout to a new all-time-high.

  • BTC held support at the 50-day volume weighted average, which has preceded strong rallies this year.
  • Lower highs on the daily relative strength index (RSI) suggests caution, although downside has been well supported around the neutral mark.
  • Intraday overbought signals are not yet extreme, which should keep buyers active towards $60,000-$61,000.
  • Lower support around $42,000 was defined by the February 8 breakout. Although the price successfully retested that level on February 28, which reignited the uptrend. Traders should adjust support levels higher to around $52,000.
Related Stories

First Crypto Fraud Case in Australia Involving $800K in Stolen Assets Filed to Federal Court

5 years 6 months ago

An Australian cryptocurrency company is being sued in Federal court for fraud in what is believed to be the first case of its kind in the country.

According to a report by ABC News on Sunday, French national Alexandre Raffin, 28, has brought a compensation claim against crypto company Modern Assets Australia for an alleged breach in duty of care.

Raffin claims Modern Assets and its directors, Jonathan Allison and Carlo Sciubba, failed in their obligation to him as an intermediary in facilitating an exchange of cash for a South Korean cryptocurrency called Klaytn.

Related: Sumitomo Mitsui Trust Bank to Issue Japan’s First Security Tokens

It is alleged Modern Assets was meant to provide Raffin with the cryptocurrency but when the deal fell through the crypto company put Raffin in touch with a seller directly. Sometime later, the seller made off with Raffin’s cash and disappeared.

Under the terms of the deal, the seller was to provide 937,500 units of the cryptocurrency for around $93,000 (US$71,000) which in today’s valuation places it at roughly $3.7 million (US$2.8 million), according to the report.

The French national is accusing Modern Assets of failing to perform the necessary research required before connecting him with the mysterious seller. As such, Raffin is seeking compensation for the loss of funds plus $800,000 – the value the cryptocurrency would have been worth last year.

See also: Australian Man Arrested for Trying to Launder $4.3M With Bitcoin

Related: Meet the DeFi Data Firm Backed by Mark Cuban

Modern Assets has since refunded its commission fees, Raffin says, while the matter awaits resolution in the Australian Federal Court.

Related Stories

Nayms Brings Blue Chips and Disruption to Crypto Insurance

5 years 6 months ago

The crypto sector is cursed by its dangerous image. British regulators recently warned potential investors they “should be prepared to lose all of their money.” But one obvious thing that might soothe the fear – insurance – is conspicuously scarce.

Currently, the market is not supplying nearly enough coverage to meet the demand. Even the biggest brokers in the world are having to tell clients they cannot get insurance for more than $10m of crypto risk. 

“Commercial insurers are still very cautious when it comes to providing insurance capacity for companies working with digital assets,” says Sarah Downey, co-head of the digital asset team at insurance broking giant Marsh & McLennan. “The commercial market’s supply is not keeping up.”

Related: Sumitomo Mitsui Trust Bank to Issue Japan’s First Security Tokens

With crypto now worth more than $1 trillion, there is a huge untapped opportunity for insurance business, and a new online insurance marketplace called Nayms is hoping to find a niche. 

See also: Insurance Giant Aon Is Testing the Waters of DeFi

It is proposing to facilitate insurance that pays out crypto, which would be a world-first, according to Downey. This March, it launched a pilot. Giant brokerage Aon used the Nayms platform to place the world’s first ever tokenized insurance contract underwritten by a regulated insurer. The test was with Teller Finance, a decentralized lending protocol.

The current disconnect of market size and insurance availability “doesn’t make sense,” says youthful British entrepreneur Dan Roberts, CEO of Nayms. Many crypto firms struggle to get any insurance against hacks or for personal indemnity. 

What it does

Related: Meet the DeFi Data Firm Backed by Mark Cuban

On the Nayms platform, regulated brokers and underwriters can find crypto capital providers to share in the premiums and the liability entailed in covering crypto risk. It is similar to Lloyd’s, the historic London marketplace that since 1688 has brought together investment capital, brokers and clients looking to get risks covered. Nayms is a play on Lloyd’s “Names,” the individuals and corporations who underwrite the risk.

Nayms does three main things, says Joseph Ziolkowski, CEO of Relm, a Bermuda-based pioneer of crypto-denominated insurance that is participating in the pilot. 

First, it connects brokers and underwriters with crypto capital providers. They can “utilize Nayms to source alternative capital… in the form of native crypto assets to match the risk” of their clients.

Second, Nayms trims administrative costs – what Roberts calls “passing bits of paper around” – by tokenizing the insurance contracts on the Ethereum blockchain and wrapping them in smart contracts. 

Finally, it answers to traditional regulators, unlike “pure DeFi” approaches that have been attempted before. Submitting to regulatory oversight stimulates confidence in the platform, which helps get established insurers like Relm on board, Roberts says. 

Finally, crypto is starting to get the insurance infrastructure that any emerging industry needs to grow. 

Odd couple

Roberts’ project germinated four years ago, when he met forty-something Ted Georgas at a wedding in Yorkshire, in England’s north. 

Roberts co-founded a startup that put cameras and microphones on bicycles to gather data about cities and their inhabitants. Georgas had been an IT consultant for PepsiCo, Saudi Arabia’s air force, and several other groups. There was a gulf of experience between the two men but, a few years later, Roberts and Georgas were building a business together. 

Commercial insurers are still very cautious when it comes to providing insurance capacity for companies working with digital assets

Roberts had became preoccupied with the problem of scarce crypto insurance and growing numbers of private investors are holding crypto as a hedge against traditional markets. Might they want to invest it in return for steady insurance yields, which are decoupled from traditional markets, and therefore double down on the hedge?

After Roberts brought in Georgas, he recruited a couple of young frontend developers. On the commercial side, they hired well-connected investor Lawrence Tilli who would go on to make their biggest introduction yet. Coinbase and the Maker Foundation invested in the seed round. 

Bermuda days

The job of reaching out to the biggest players in the global insurance business fell mainly to Tilli as the commercial lead. It was in that capacity, early last year, that he met with a man called Ben Peach in a bar.  

Peach had only joined multinational insurance broker Aon that Spring, when the pandemic was already shutting down Europe. Peach had no background in insurance. He had work experience with the West Midlands police and spent a couple of years advising startups with TokenMarket, a tokenized finance firm, a period he now refers to as the “wild west.” That Aon hired him shows the company’s openness to crypto.

Even so, putting together the partnership with Nayms was a long, drawn-out process. “You wouldn’t believe how difficult this has been,” Peach says. 

He was accustomed to the rapid decision-making of startups, where an idea can be hashed out and a press release drafted within 24 hours. At London-based Aon, a $26 billion giant, everything took much longer. Only in March 2021 were the two companies finally ready to announce their work together.

Custodians of crypto

Mark Robinson, head of the U.K. tech team at Verlingue, an insurance broker, says it’s getting easier for firms to find hack insurance but harder to get professional indemnity insurance. 

Hack insurance is a signal of the insurer’s confidence in the firm. Insurers make sure that a firm is unlikely to get hacked, before they promise to pay out in that event. 

But it’s not easy to get. Even crypto custodians that claim a high degree of cover often only have insurance for assets in cold storage, meaning those not connected to the internet, according to Alexandre Kech, boss of Onchain Custodian. 

See also: Ethereum-Based Nexus Mutual Expands Its Decentralized ‘Insurance’ to Centralized Exchanges

When crypto firms do get good insurance cover, the returns are clear. “Our insurance coverage helps us on a day-to-day basis to attract customers,” Kech says.      

There’s “a massive lack of knowledge in the broking sector,” Robinson says. He’s unusual in focusing on crypto cover. The scarcity of clued-up brokers naturally deters insurers, he adds.

Another obstacle: the insurance system is denominated in dollars or another fiat currency, introducing exchange rate risk. That’s when two currencies will shift in relative value between the agreement of the contract and the time of the claim, and even again before the actual pay-out. For insurers, covering crypto is like insuring Turkish lira with U.S. dollars. 

“Insurance regulators perceive crypto to be volatile and illiquid and as such not an acceptable way to meet capital requirements,” says Ziolkowski, from Bermuda. If the capital and pay-out are all in crypto, that helps drive down costs. 

“That would be ideal and I believe it is the future of crypto insurance,” says Kech, speaking of direct crypto payouts. 

On that score, the decision of the Bermuda Monetary Authority to give Ziolkowski’s Relm the first ever Innovative Insurer General Business license in December 2020 marked a quiet breakthrough for the space. The license means it can now charge crypto premiums, pay out in crypto, hold crypto on its balance sheet and transact insurance contracts on blockchains. It cleared the way for the company’s participation in the Nayms pilot. (More established insurers are not ready to move to crypto-denominated business.) 

Tokenizing insurance and administering it with smart contracts could bring efficiency gains in the wider insurance industry beyond crypto, according to Peach. The army of suits who work on resolving claims would be made obsolete overnight as algorithms would do it automatically. 

Robinson, a veteran of the industry, says smart contracts could eliminate brokers entirely. Clients could agree deals directly with insurers, with self-executing code doing the rest.

That all makes for a titanic potential reward for bridging the gap between crypto and insurance.      

Aon’s Peach cracks a smile at the thought. If Roberts could build a program that generated smart contracts for the biggest insurance applications, then his company “would be a unicorn within a week.” 

Cracking open crypto insurance is a captivating prize, with $1 trillion of crypto out there. But the global insurance industry generates more than $6 trillion a year in premiums. If Nayms’ smart-contract-driven crypto marketplace takes off, that’s where it will be heading next.

Related Stories

PayPal Pushes Crypto Further Mainstream With Checkout Service for 29M Merchants

5 years 6 months ago

PayPal, which last year added the ability to buy, hold and sell cryptocurrency, is pushing it as a payment method across the 29 million or so online merchants connected to the fintech giant.

Announced Tuesday, PayPal’s Checkout will allow bitcoin (BTC), ether (ETH), bitcoin cash (BCH) and litecoin (LTC) to be seamlessly converted into U.S. dollars or other fiat currencies when making purchases, the same as credit card or a debit card would work inside a PayPal wallet, said PayPal – meaning merchants will not actually be the recipients of cryptocurrencies.

Though the payments giant had said last year it was working on this feature, the news was enough to drive up the currencies involved, particularly BTC, which rose more than $1,000.

Related: Sumitomo Mitsui Trust Bank to Issue Japan’s First Security Tokens

Calling it “a new way for businesses to get paid,” the checkout service is all about driving mainstream adoption of cryptocurrencies, said PayPal CEO Dan Schulman.

“Enabling cryptocurrencies to make purchases at businesses around the world is the next chapter in driving the ubiquity and mass acceptance of digital currencies,” Schulman said in a statement.

Cryptocurrencies are going mainstream, with banks and institutional investors taking an interest, but the utility of bitcoin and other crypto tokens when it comes to buying goods has always been limited due to their volatility. 

PayPal, which made a huge splash when it officially entered the crypto space in October, wants to smooth those wrinkles out and get its wide network of merchants on board.

Related: Meet the DeFi Data Firm Backed by Mark Cuban

Since introducing the crypto service, PayPal has increased weekly purchase limits two times from $10,000 to $15,000 and then $20,000.

Visa announced this week that it was testing out payments functionality using USDC stablecoin, a cryptocurrency held at parity with the U.S. dollar, on the Ethereum blockchain, via crypto-backed Visa cards. 

PapPal said its merchants will not incur any additional integrations or fees, and fiat conversions will take place at the standard PayPal conversion rates, according to a press release.

Still, the terms and conditions for “Checkout with Crypto” include a number of important caveats. Chief among them is the tax liability: “Sales of Crypto Assets via Checkout with Crypto are taxable just like all other sales of Crypto Assets.”

PayPal will provide the consumer with a 1099 tax form and report to the U.S. Internal Revenue Service as necessary, but “it is your responsibility to determine what taxes, if any, apply to transactions you make.”

The T&C also warns the Checkout with Crypto service “may not be available as a funding option for all merchants, customers or purchases.”

UPDATE (March 30, 10:50 UTC): Adds details from PayPal’s terms and conditions and background on the company’s history in the crypto sector.

UPDATE (March 30, 10:50 UTC): Adds confirmation from PayPal, rewrites throughout. Adds coin activity.

Related Stories

Bitcoin, in Switch From February, Keeps Bullish Tone as U.S. Treasury Yields Rise

5 years 6 months ago

Bitcoin is charting gains amid rising bond yields, contrary to the last week of February when firmer yields knocked the wind out of the cryptocurrency’s bull market.

The top cryptocurrency by market value is trading near $59,325 at press time, representing a 3% gain on the day. Prices have risen about $8,000 since Thursday, based on CoinDesk 20 data.

The U.S. 10-year Treasury yield is seen at 1.77%, the highest since Jan. 23, 2020. The benchmark yield has gained six basis points today and nearly 20 basis points since March 25.

Related: Sumitomo Mitsui Trust Bank to Issue Japan’s First Security Tokens

Bitcoin’s resilience is noteworthy and implies a bullish mood in the market. “BTC remains extremely strong, particularly in the face of an appreciating USD and rising treasury yields,” Matthew Dibb, COO and co-founder of Stack Funds, told CoinDesk. “Despite historical correlations, bitcoin is bucking the trend even as gold sinks to below $1700.”

Rising yields dilute the appeal of perceived inflation hedges such as bitcoin and gold. The cryptocurrency has become sensitive to macro factors and, more recently, bond yields, with the influx of institutional money in the wake of the coronavirus-induced crash of March 2020. Prices fell by 20% in the last week of February after the U.S. 10-year Treasury yield rose sharply to the then 12-month high of 1.5%.

This time, however, rising yields are struggling to cast a pall on bitcoin‘s bullish mood. The ever-increasing institutional adoption of bitcoin looks to be overshadowing rising yields, helping the cryptocurrency stay bid.

Stack Funds is “extremely bullish” on bitcoin and expecting a move to new record highs above $62,000 over the coming weeks, Dibbs said.

Related: Meet the DeFi Data Firm Backed by Mark Cuban

The bearish channel breakout seen in the above chart has shifted the focus to highs above $61,000 registered on March 14. The latest bullish pattern looks similar to the one see at the end of January, following prices rose from roughly $30,000 to $58,000.

Bitcoin may face some selling pressure if yields rise at a faster pace, destabilizing stock markets, as discussed earlier this month. However, Goldman Sachs expects equity markets to digest a 10-year yield of roughly 2% without much difficulty, according to ForexLive.

In the past, bitcoin has performed well in a rising yield environment.

“87% of Bitcoin’s performance was delivered while the U.S. 10-year bond yield has been rising,” ByteTree CIO Charlie Morris noted in a blog post. Readers should note that institutional participation in bitcoin was quite low and the cryptocurrency was largely an uncorrelated asset during the previous episodes of yield spikes.

Also read: Cryptocurrency Fund Flows Now at Lowest Since October 2020 

Related Stories

Bitcoin Keeps Its Bullish Tone Even as Bond Yields Rise in a Switch From February

5 years 6 months ago

Bitcoin is charting gains amid rising bond yields, contrary to the last week of February when firmer yields knocked the wind out of the cryptocurrency’s bull market.

The top cryptocurrency by market value is trading near $59,209 at press time, representing a 1.8% gain on the day. Prices have risen by more than $8,000 since Thursday, as per CoinDesk 20 data.

The U.S. 10-year Treasury yield is seen at 1.77%, the highest since Jan. 23, 2020. The benchmark yield has gained six basis points today and nearly 20 basis points since March 25.

Related: Nayms Brings Blue Chips and Disruption to Crypto Insurance

Bitcoin’s resilience is noteworthy and implies a bullish mood in the market. “BTC remains extremely strong, particularly in the face of an appreciating USD and rising treasury yields,” Matthew Dibb, COO and co-founder of Stack Funds, told CoinDesk. “Despite historical correlations, bitcoin is bucking the trend even as gold sinks to below $1700.”

Rising yields dilute the appeal of perceived inflation hedges such as bitcoin and gold. The cryptocurrency has become sensitive to macro factors and, more recently, bond yields, with the influx of institutional money in the wake of the coronavirus-induced crash of March 2020. Prices fell by 20% in the last week of February after the U.S. 10-year Treasury yield rose sharply to the then 12-month high of 1.5%.

This time, however, rising yields are struggling to cast a pall on bitcoin‘s bullish mood. The ever-increasing institutional adoption of bitcoin looks to be overshadowing rising yields, helping the cryptocurrency stay bid.

Stack Funds is “extremely bullish” on bitcoin and expecting a move to new record highs above $62,000 over the coming weeks, Dibbs said.

Related: PayPal to Start Letting US Customers to Use Their Crypto at Checkout: Report

The bearish channel breakout seen in the above chart has shifted the focus to highs above $61,000 registered on March 14. The latest bullish pattern looks similar to the one see at the end of January, following prices rose from roughly $30,000 to $58,000.

Bitcoin may face some selling pressure if yields rise at a faster pace, destabilizing stock markets, as discussed earlier this month. However, Goldman Sachs expects equity markets to digest a 10-year yield of roughly 2% without much difficulty, according to ForexLive.

In the past, bitcoin has performed well in a rising yield environment.

“87% of Bitcoin’s performance was delivered while the US ten-year bond yield has been rising,” ByteTree CIO Charlie Morris noted in a blog post. Readers should note that institutional participation in bitcoin was quite low and the cryptocurrency was largely an uncorrelated asset during the previous episodes of yield spikes.

Also read: Cryptocurrency Fund Flows Now at Lowest Since October 2020 

Related Stories
Checked
11 minutes 8 seconds ago
CoinDesk Crypto
Leader in cryptocurrency, Bitcoin, Ethereum, XRP, blockchain, DeFi, digital finance and Web 3.0 news with analysis, video and live price updates.
Subscribe to CoinDesk Crypto feed