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Bitcoin Retakes $50K on US Stimulus Progress; Uniswap’s UNI Cracks the Top 10

5 years 7 months ago

Bitcoin, a perceived store of value asset, trades higher on Sunday, with U.S. President Joe Biden on the verge of passing an historic $1.9 trillion fiscal stimulus plan aimed at accelerating economic recovery. 

The top cryptocurrency is changing hands near $50,500 at press time, representing a 4% gain on the day, having clocked a high of $51,320 early today, according to CoinDesk 20 data. 

The Senate approved Biden’s stimulus plan on Saturday, paving the way for $1,400 checks and jobless aid. The bill heads back to the House where it will be voted on Tuesday, according to media reports. 

Related: Crypto Long & Short: Is ETH Coming to Corporate Balance Sheets?

Improved prospects of fiscal spending look to have put a bid under bitcoin (BTC), waking it up from the two-day slumber in the range of $49,500 to $46,200. Fiscal spending is inflationary and often bodes well for the store of value assets such as bitcoin and gold. 

Also adding wind to the cryptocurrency’s sails was news that Hong Kong-listed Meitu, which makes image and video processing software, said it had purchased $22 million in either (ETH) and $17.9 million of BTC for its treasury.

Bitcoin’s rise portends dollar weakness in the foreign exchange markets and improved risk sentiment in the stock markets on Monday. The cryptocurrency has largely moved in the opposite direction to the dollar and behaved more or less like stocks/risk assets since the March 2020 crash. 

It remains to be seen if bitcoin can extend gains during the week ahead, as the stimulus approval could lift the U.S. Treasury yields. The 10-year yield has been on a tear of late, pricing a strong rebound in the economic activity and high inflation and putting downward pressure on both bitcoin and stocks. 

Related: IRS Initiates ‘Operation Hidden Treasure’ to Root Out Unreported Crypto Income

Aside from bitcoin’s rise, the other important story of the weekend is the decentralized finance (DeFi) protocol Uniswap’s UNI token’s entry into the list of the top 10 cryptocurrencies by market capitalization. It’s the first DeFi coin to achieve that feat. 

UNI is currently trading near $32 – up nearly 14% on a 24-hour basis. With a market cap of $16.79 billion, the DeFi token is now the eighth largest cryptocurrency and ranks higher than litecoin and chainlink, as per data source Messari. 

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Goldman Digital Asset Lead Sees Mergers Ahead for Crypto Infrastructure Providers

5 years 7 months ago

A Goldman Sachs executive predicts there may be consolidation coming for cryptocurrency infrastructure providers as the market matures. 

In a recent company podcast, Matt McDermott, global head of digital assets for Goldman Sachs Global Markets Division, hinted that “incumbent banks” – like Goldman – could face pressure to increase their crypto business lines, with one obvious path being mergers and acquisitions. 

“This is a fast-evolving landscape where the crypto incumbents have certainly made huge progress over the last couple of years,” McDermott said. “There is an expectation from clients now that the incumbent banks will develop their offerings to satisfy that demand. And so, certainly anticipate a certain amount of consolidation across that space.”

Related: How NFTs Became Art, and Everything Became an NFT

Goldman has had a bullish view on bitcoin and other crypto assets since at least 2014, once calling these monetary technologies part of a “megatrend” moving to disrupt finance as we know it. At times, the bank has seemed to favor blockchain technology over individual assets like bitcoin. 

That’s changed in the last three to six months, however, as institutions (from “hedge funds, to asset managers, to macro funds, to banks, to corporate treasurers, insurance and pension funds,” McDermott said) show an increasing appetite for bitcoin.

To meet that growing demand, Goldman said it will revitalize its crypto trading desk, announced in 2017, but shelved months later due to regulatory concerns. The offering could see light as early as mid-March, CoinDesk reported, though “will be quite narrow initially,” according to McDermott. 

The bank will offer Chicago Mercantile Exchange (CME) bitcoin futures and non-deliverable forwards, he said, as well as disseminate “bitcoin content” to institutional clients. CME offers cash-settled bitcoin contracts, meaning that traders never take physical possession of the underlying asset. 

Related: JPMorgan Posts 34 Blockchain Jobs as It Beefs Up JPM Coin

Asked “what’s kept Goldman and others from taking a bigger role in crypto?” McDermott replied there are restrictions in place preventing banks from dealing directly with the commody. Which is a shame, because there is reportedly increasing demand, particularly, from macro-focused hedge funds, to “access the physical,” McDermott said.

“That’s been something that we’ve had to think cleverly how we can facilitate that demand in a different way,” he said. “We’re seeing certain banks [in Asia] look at developing institutional exchanges and other avenues to execute the physical with institutional clients.”

McDermott didn’t go into detail about what exactly is preventing U.S.-based banks from “trading the physical.” In 2020, former acting head of the Office of the Comptroller of the Currency (OCC), Brian Brooks, put forward a number of progressive policies that would allow banks to safely enter the industry. 

In several interpretative letters Brooks opened the door for banks to custody cryptocurrencies, take on stablecoin clients and even act as nodes on public blockchain networks. Spot trading crypto, however, appears to be out of the question, according to McDermott.

See also: Few Banks Will Touch Crypto Firms, but Silvergate Wants to Touch Bitcoin Itself

In the podcast, McDermott noted that a recent survey of 300 Goldman clients found that 40% already have exposure to crypto, either through holding the asset directly, derivatives or securities products. The survey also found 32% were most interested in prime brokerage for physical or spot to gain exposure to cryptocurrencies.

“Talking to those clients, they’re much clearer on why they want to invest. Really what they’re interested in is broader market behavior. And really identifying what are the most efficient ways for them to get exposure and to think about hedging,” McDermott said.

“In terms of kind of institutional demand, we have seen no signs of that abating,” he said.

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JPMorgan Posts 34 Blockchain Jobs as It Beefs Up JPM Coin

5 years 7 months ago

U.S. mega-bank JPMorgan has 34 open blockchain job positions posted on its website.

It’s quite possibly a record for any company in the space (JPMorgan has been noted for its enthusiastic blockchain hiring in the past).

The majority of the job openings, posted this month and last, are spread across the U.S., India and Singapore. Many of the jobs relate directly to Onyx, the division created in October of last year to oversee JPM Coin, the bank’s wholesale payments token. 

Related: How NFTs Became Art, and Everything Became an NFT

A number of the blockchain engineer roles are focused on integrating both JPM Coin and Liink (previously known as the blockchain-based Interbank Information Network, and which now counts over 400 other banks as participants) into JPMorgan’s payments architecture.

When Onyx was launched, JPMorgan said the new division housed around 100 jobs. 

JPMorgan did not respond to requests for comment by press time. 

Recently, big banks have been making noise about entering the cryptocurrency space, looking at areas like crypto custody and potentially the trading of digital assets. While JPM has been relatively quiet on these fronts, clearly there’s a lot going on behind the scenes with payments. 

Related: Goldman Digital Asset Lead Sees Mergers Ahead for Crypto Infrastructure Providers

In contrast to JPMorgan’s 56 “blockchain” job search results, Goldman Sachs, which recently told Reuters it was restarting its crypto trading desk, has just two blockchain/cryptocurrency job openings. Morgan Stanley also has two blockchain jobs open, while BNY Mellon shows four positions with blockchain and digital assets in the title.

Thirteen of the JPMorgan jobs relate to Onyx and Link, with three based in Bangalore, India, two in Singapore, and the rest in the U.S. Also listed are open positions for a marketing manager for Liink, as well as a blockchain adjacent position in commercial real estate based in Palo Alto, California.

JPMorgan engineers developed the Quorum blockchain protocol, a privacy-centric version of Ethereum aimed at banking use cases. JPMorgan is building its JPM Coin and Liink system on Quorum, which has now been handed over to NYC-based Ethereum hub Consensys.

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India Needs to Assess Crypto Risks Before Deciding Whether to Ban, Minister Says

5 years 7 months ago

India’s Minister of State for Finance Anurag Thakur said the government needs to study national security risks posed by virtual currencies before making any decision on their legality.

  • “We understand there is immense interest in these virtual currencies, but we also need to look at national security and security of Indians and individuals,” Thakur said while addressing an event organized by Entrepreneurs’ Organisation Punjab on Saturday.
  • Thakur took a jab at the high price volatility of cryptocurrencies, saying that these coins often chart 10x price moves in weeks. “That doesn’t happen in fiat currencies” such as the Indian rupee or U.S. dollar, Thakur said.
  • Billionaire investor Rakesh Jhunjhunwala, popularly known as India’s Warren Buffett, recently voiced similar concerns, calling bitcoin as “speculation of the highest order.”
  • The Supreme Court of India overruled the Reserve Bank of India’s two-year-old banking ban on cryptocurrencies in March 2020, bringing cheer to the Indian crypto community.
  • The Indian government, however, is now planning to insert a bill that would ban private cryptocurrencies into the parliament’s ongoing budget session.
  • The Indian government has formed a high-level Inter-Ministerial Committee to look into cryptocurrency and may present a legislative proposal in Parliament based on the committee’s recommendations, Thakur told the Entrepreneurs’ Organisation, adding that the government welcomes new technology such as blockchain and Prime Minister Narendra Modi is a strong advocate of embracing technology in various aspects of governance.
  • On Friday, Finance Minister Nirmala Sitharaman said the government is still formulating its opinion on cryptocurrencies and will take a calibrated position.
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Software Firm Meitu Buys $22M of Ether, $17.9M Bitcoin for Its Treasury

5 years 7 months ago

Hong Kong-listed Meitu Inc. , which makes image and video processing software, said it had purchased $22 million in ether (ETH) and $17.9 million of bitcoin (BTC), making it the first time a firm has disclosed a major purchase of ETH for its treasury.

  • Meitu said it bought 15,000 ETH and 379.1 BTC in open market transactions on March 5.
  • The purchases were under the terms of a previously board-approved cryptocurrency investment plan that allows the company to put up to $100 million of crypto, financed by cash reserves other than any remaining proceeds from Meitu’s IPO.
  • While the company said that while buying crypto helps diversify its holdings away from cash, “More importantly, the Board considers this a demonstration to investors and stakeholders that the Group has the vision and determination to embrace technological evolution, and hence preparing its foray into the blockchain industry.”
  • The company said it’s evaluating the feasibility of integrating blockchain tech into its overseas business, including launching Ethereum-based dApps. ETH is the native token of the Ethereum blockchain. It’s also evaluating potential investments in blockchain-based projects, many of which accept ETH as consideration for investment.

This story is developing.

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US Senate Approves $1.9T Stimulus Plan; Measure Now Returns to the House

5 years 7 months ago

The Senate passed President Joe Biden’s $1.9 trillion Covid 19 relief package Saturday, a possible positive development for cryptocurrencies.

  • The measure, which was passed by a 50-49 party-line vote, now heads back to the House, which would have to approve Senate changes to the package before it can head to the president for signing.
  • The House is expected to take up the measure next week, according to The Wall Street Journal.
  • The legislation would provide $300 in weekly unemployment benefits through early September, send $1,400 payments to some Americans and direct $350 billion to state and local governments.

Why this matters to the crypto world:

  1. Because the stimulus package would likely be a boost for stock markets, it could also provide a lift to the price of cryptocurrencies, particularly if stimulus check recipients use that money to buy cryptocurrencies.
  2. Crypto investors have been betting for months that the flood of government and central bank spending to fight the coronavirus-caused economic slowdown will eventually lead to inflation, which would also be beneficial for bitcoin.
  3. All the stimulus is calling into question the independence of the Federal Reserve, which to prevent short-term economic ruin has been basically printing money with abandon, leaving itself open to criticism about the mountain of debt these spending sprees are creating.
  • The price of bitcoin (BTC) moved back into positive territory after news of the bill’s passage broke, quickly rising $500. At press time, the price of BTC was $48.212.74, up 0.21% over the last 24 hours.

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JPMorgan Sends Its Private Clients a Primer on Crypto

5 years 7 months ago

JPMorgan has sent a report to its private banking clients to educate them on the risks and opportunities of investing in crypto.

The report, which was produced in February 2021 and obtained by CoinDesk Friday, has been distributed to clients of JPMorgan Private Bank, which requires a minimum balance of $10 million to open an account.

The comes after CNBC reported in February that JPMorgan co-president Daniel Pinto claimed “demand isn’t there yet” from clients for crypto services, but it “will be there at some point.”

Related: Today the Dogecar Races Again, Feat. Pinguino

The report breaks down how bitcoin could be valued, applying three different metrics: the number of users, the value of gold and the global money supply.

1. If applying a version of Metcalfe’s law – that bitcoin’s value is proportional to the square of the number of users – it would be worth $21,667.

2. If applying the current value of gold to the max supply of 21 million bitcoin, it would be valued at $540,814.

3. Whereas applying the global value of money to bitcoin’s max supply would place the crypto’s valuation at $1.9 million.

Related: Into the Money-verse: Central Banks Under Siege in 2028

The report plays down bitcoin’s common comparison to gold. Despite having diversifying properties, bitcoin’s “volatility characteristics and correlation profile refute the comparison to the traditional safe haven asset.”

See also: JPMorgan Survey: 78% of Institutional Investors Don’t Plan to Invest in Crypto

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Rewards-Focused Startup Eco Raises $26M in Round Led by a16z Crypto

5 years 7 months ago

Eco, a cryptocurrency startup that claims it’s building a new type of finance platform, has opened to the public with a fresh investment of $26 million under its belt.

According to a blog post Friday, the firm’s second fundraise was led by a16z Crypto – the digital asset investment arm of Andreessen Horowitz – with Founders Fund, Activant Capital, Slow Ventures, Coinbase Ventures, Tribe Capital, Valor Capital Group and more also participating.

Eco’s sales pitch is that its platform is “not a bank, checking account, or credit card — we’re building something better than all of those combined.”

Related: Twitter CEO Jack Dorsey Is Taking Bids for the First-Ever Tweet

It offers rewards on both crypto asset savings and spending at firms like Amazon and Uber. Users will see cashback of up to 5% on spending and will earn 2.5–5% annually with assets just sitting in their accounts, per the post. The top rate for savings is dependent on referrals to friends.

The startup says it can afford to do this by “cutting out the inefficiencies and misaligned business models of the existing financial system.”

“Eco’s mission is to reimagine not only how consumer financial products work — but also to reimagine money itself,” a16z Crypto’s Katie Haun and Arianna Simpson said in a blog post about the investment. “Without the burden of legacy, misaligned business models, Eco is able to offer rewards that sound almost too good to be true, but aren’t.”

The company, which has just opened up from private alpha mode, previously raised $8.5 million in a round led by Expa and Pantera Capital. 

Related: Galaxy’s Institutional Ethereum Funds Raise $32M at Launch – From a Select Few

See also: Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others

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Bidding Reaches $2.5M as Twitter’s Dorsey Highlights NFT Version of First-Ever Tweet

5 years 7 months ago

Bidding on the genesis tweet is heating up.

On Friday, Twitter CEO Jack Dorsey called attention to a tokenized version of his first tweet on the non-fungible token (NFT) platform Valuables. Even though the 2006 tweet was minted in December 2020, Dorsey’s Friday tweet has ignited a bidding war, reflecting today’s frothy market for crypto collectibles.

As of early Saturday afternoon, the high bid was $2.5 million, made by Sina Estavi, whose LinkedIn profile describes him as CEO of Malaysia-based (and TRON-affiliated) Bridge Oracle. Estavi has been vying for the historic tweet with Justin Sun, the founder of TRON and the CEO of BitTorrent.

Related: US Senate Approves $1.9T Stimulus Plan; Measure Now Returns to the House

Valuables is an Ethereum-based platform created by the social network Cent that allows users of Twitter to authenticate their tweets for sale to others (think of them as digitally signed copies). The tokenized tweets are only sold when the author of the tweet accepts a bid.

Anyone can offer to buy a tweet on the platform. For example, the first bid for the tweet in question was $1 from @TheGaloisCxn on Dec. 15, 2020.

This is the tweet that Estavi apparently now thinks is worth $2.5 million:

Dorsey is a well-known fan of bitcoin, making multiple forays into the space. Cash App, from his other company, Square, is a major venue for retail investors to purchase the cryptocurrency. Dorsey also invested in Lightning Labs, a second layer on the Bitcoin network, seen as a scaling solution.

Related: Today the Dogecar Races Again, Feat. Pinguino

This is Dorsey’s first time showing interest in Ethereum. Many people around the tech industry suggested that the recent boom in NFTs may partially explain Square’s announcement Thursday that it would acquire the music streaming site Tidal (prior to that announcement, Dorsey announced a collaboration with rapper Jay-Z to expand the use of bitcoin in Africa).

The fight over the first-ever tweet on an Ethereum-based platform should only add fuel to that fire.

UPDATE (March 6, 13:24 UTC): Updates with latest bidding.
UPDATE (March 6, 13:42 UTC): Updates with latest bidding.
UPDATE (March 6, 14:51 UTC): Updates with latest bidding.
UPDATE (March 6, 16:20 UTC): Rewrites throughout.
UPDATE (March 6, 18:06 UTC): Updates with latest bidding.

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Bidding Reaches $2M as Twitter’s Dorsey Highlights NFT Version of First-Ever Tweet

5 years 7 months ago

Bidding on the genesis tweet is heating up.

On Friday, Twitter CEO Jack Dorsey called attention to a tokenized version of his first tweet on the non-fungible token (NFT) platform Valuables. Even though the 2006 tweet was minted in December 2020, Dorsey’s Friday tweet has ignited a bidding war, reflecting today’s frothy market for crypto collectibles.

As of Saturday morning, the high bid was $2 million, made by Justin Sun, the founder of TRON and the CEO of BitTorrent. Sun has been vying for the historic tweet with Sina Estavi, whose LinkedIn profile describes him as CEO of Malaysia-based (and TRON-affiliated) Bridge Oracle.

Related: Today the Dogecar Races Again, Feat. Pinguino

Valuables is an Ethereum-based platform created by the social network Cent that allows users of Twitter to authenticate their tweets for sale to others (think of them as digitally signed copies). The tokenized tweets are only sold when the author of the tweet accepts a bid.

Anyone can offer to buy a tweet on the platform. For example, the first bid for the tweet in question was $1 from @TheGaloisCxn on Dec. 15, 2020.

This is the tweet that Sun now thinks is worth $2 million:

Dorsey is a well-known fan of bitcoin, making multiple forays into the space. Cash App, from his other company, Square, is a major venue for retail investors to purchase the cryptocurrency. Dorsey also invested in Lightning Labs, a second layer on the Bitcoin network, seen as a scaling solution.

Related: Into the Money-verse: Central Banks Under Siege in 2028

This is Dorsey’s first time showing interest in Ethereum. Many people around the tech industry suggested that the recent boom in NFTs may partially explain Square’s announcement Thursday that it would acquire the music streaming site Tidal (prior to that announcement, Dorsey announced a collaboration with rapper Jay-Z to expand the use of bitcoin in Africa).

The fight over the first-ever tweet on an Ethereum-based platform should only add fuel to that fire.

UPDATE (March 6, 13:24 UTC): Updates with latest bidding.
UPDATE (March 6, 13:42 UTC): Updates with latest bidding.
UPDATE (March 6, 14:51 UTC): Updates with latest bidding.
UPDATE (March 6, 16:20 UTC): Rewrites throughout.

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Twitter CEO Jack Dorsey Is Taking Bids for the First-Ever Tweet

5 years 7 months ago

The Genesis tweet is up for sale.

Twitter co-founder and CEO Jack Dorsey has listed for sale on the NFT platform Valuables the first tweet ever made. As of press time, bidding was at $88,888.

Valuables is an Ethereum-based platform created by the social network Cent that allows users of Twitter to authenticate their tweets for sale to others (think of them as digitally signed copies).

Related: Galaxy’s Institutional Ethereum Funds Raise $32M at Launch – From a Select Few

This is the tweet Dorsey has offered for sale:

Dorsey is a well known fan of bitcoin, making multiple forays into the space. Cash App, from his other company, Square, is a major venue for retail investors to purchase the cryptocurrency. Dorsey also invested in Lightning Labs, a second layer on the Bitcoin network, seen as a scaling solution.

This is Dorsey’s first time showing interest in Ethereum. Many people around the tech industry suggested that the recent boom in non-fungible tokens (NFTs) may partially explain Square’s announcement yesterday that it would acquire the music streaming site Tidal (prior to that announcement, Dorsey announced a collaboration with rapper Jay-Z to expand use of bitcoin in Africa).

Dorsey’s offering of one of his earliest tweets for sale on an Ethereum-based platform should only add fuel to that fire.

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Galaxy’s Institutional Ethereum Funds Raise $32M at Launch – From a Select Few

5 years 7 months ago

Galaxy Digital’s institutional-grade ether (ETH) funds have raised over $32 million since their February launch, according to documents filed Friday with the U.S. Securities and Exchange Commission.

Early returns – for an “onshore” $22 million fund and its Cayman-domiciled $10 million sibling – reveal a small but deep-pocketed clientele participated in the twin funds’ earliest days. Just five total investors have joined the funds since Galaxy unveiled them in late January.

The funds debuted as ETH settled in the $1,500 range, well below highs set February when the native asset of the world computer topped $2,000 for the first time ever. But Galaxy’s executives, including ETH bull Mike Novogratz, are betting Ethereum’s programmability will spell future investment success.

Related: Twitter CEO Jack Dorsey Is Taking Bids for the First-Ever Tweet

“Bitcoin has solidified its lane as a store of value in which we continue to have conviction, while the Ethereum blockchain’s general programmability presents a distinct growth opportunity,” Galaxy’s asset management chief, Steve Kurz, told CoinDesk in January. “We’re excited to help our clients participate in that potential upside as a complement to bitcoin.”

On Friday, Kurz said the Ethereum funds are the “natural next step for our business.”

“With these funds, we aim to offer investors simple, secure, and institutional-grade access to this increasingly important asset,” Kurz said through a spokesperson.

NZ Funds and Vision Hill Group are two of the five investors, Galaxy told CoinDesk.

Related: Market Wrap: Bitcoin Stuck Below $50K, and Blockchain Data May Show Why

Update (March 5, 23:57 UTC): Adds comment from Galaxy on the new ETH funds.

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Market Wrap: Bitcoin Stuck Below $50K, and Blockchain Data May Show Why

5 years 7 months ago

Bitcoin ended the first week of March with little fanfare as the market reset after the prior week’s 21% plunge. There are more signs the global economic recovery might come faster than previously expected, and traders are speculating on what that might mean for the largest cryptocurrency.

  • Bitcoin (BTC) trading around $49,196.78 as of 21:00 UTC (4 p.m. ET). Climbing 1.93% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $46,393.39-$49,462.13 (CoinDesk 20)
  • BTC trades above its 10-hour and 50-hour averages on the hourly chart, a bullish signal for market technicians.

This week’s muted price activity in bitcoin showed in the trading volume from eight U.S.-focused exchanges CoinDesk tracks. It has been flat over the past week, roughly a third of levels seen recently.

“Bitcoin is consolidating around $50,000 after rebounding from lows earlier in the week,” Jason Lau, chief operating officer at San Francisco-based crypto exchange OKCoin, said. “Most recently, its price action has been hovering within this range, while open interest in bitcoin futures has also remained consistent.”

Related: Twitter CEO Jack Dorsey Is Taking Bids for the First-Ever Tweet

$50,000 also appears to be a key short-term resistance level, according to IntoTheBlock’s newsletter Friday, citing a key blockchain data metric In/out of the money around price (IOMAP).

“A large cluster of addresses (1.46 million) and volume (650,970 BTC) had been bought slightly below $50,000,” IntoTheBlock wrote in the newsletter. “This price range, which already saw high levels of trading activity, is expected to act as strong resistance short-term as investors in this price range may look to break-even on their positions at this point.”

At the same time, another large cluster of addresses and volume, bought in a range of $45,600 to $47,000 currently at the money, are likely to provide strong support, IntoTheBlock’s data shows.

“Ultimately, a break past $45,000 may mean bitcoin will retrace further, while a breakout past $50,000 may suggest it is poised for new highs,” IntoTheBlock added. “These are the levels to watch out for before being certain of the correction being over or not.”

Related: Galaxy’s Institutional Ethereum Funds Raise $32M at Launch – From a Select Few

Investors will also have to weigh macro factors including a better-than-expected February job report in the U.S., as well as surging bond yields.

Read More: How Bitcoin Could Be Affected by February’s Positive Jobs Report

Ether underperforms bitcoin, market watches July hard fork

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up a little on Friday, trading around $1,534.25 and in the green 0.11% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

At press time, ether’s price was down approximately 25% from its all-time high at $2,036.55 on Feb. 19. That’s a steeper drop-off than bitcoin 17% retreat from a record $58,332.36 on Feb. 21.

The main reason ether has been underperforming “is that high ether prices are detrimental to Ethereum’s primary use case as a smart contract platform, making transactions extremely costly and resulting in activity moving to other platforms,” said OKCoin’s Lau.

As CoinDesk reported, Ethereum Improvement Proposal (EIP) 1559 is scheduled to take effect in July – regardless of the mining industry’s discontent with the proposal – with the goal of fixing part of Ethereum’s high transaction cost problem.

Read More: Ethereum’s ‘EIP 1559’ Fee Market Overhaul Greenlit for July

Other markets

Digital assets on the CoinDesk 20 are mostly in green Friday. Notable winners as of 21:00 UTC (4:00 p.m. ET): 

Notable losers:

  • xrp (XRP) – 2.78%
  • 0x (ZRX) – 2.22%
  • stellar (XLM) – 0.57%

Equities:

  • Asia’s Nikkei 225 closed in the red 0.23%.
  • The FTSE 100 in Europe was also lower, 0.31%.
  • The S&P 500 in the United States in the green 1.95%.

Commodities:

  • Oil was up 3.82%. Price per barrel of West Texas Intermediate crude: $66.27.
  • Gold was in the green 0.09% and at $1698.51 as of press time.

Treasurys:

  • The 10-year U.S. Treasury bond yield fell Friday at 1.556%.
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Sen. Sherrod Brown Says US Should ‘Lead the Way’ on CBDCs, Disses Diem and Bitcoin

5 years 7 months ago

The U.S. Federal Reserve should “lead the way” on a central bank digital currency (CBDC), said Sen. Sherrod Brown (D-Ohio).

The chairman of the Senate Committee on Banking, Housing and Urban Affairs endorsed the idea of a U.S. central bank–issued digital currency in a letter to Fed Chair Jerome Powell and Lael Brainard, who runs the Boston branch of the Fed.

“Some of our international counterparts are moving quickly to determine whether to implement a central bank digital currency,” Brown wrote, linking to a press release about a digital euro. “The United States must do the same. We cannot be left behind.”

Related: Twitter CEO Jack Dorsey Is Taking Bids for the First-Ever Tweet

Importantly, Brown specified the Fed should work both on token-based digital dollars as well as account-based efforts. Last year, he introduced a bill to the Senate Banking committee that would create a digitized version of the existing U.S. dollar and grant every U.S. resident financial access through so-called FedAccounts. 

In this week’s letter, dated March 1 but shared on Friday, Brown suggested that a token-based dollar based on a blockchain could complement the FedAccount version.

“Both are intended to ensure that working families have the same access to the payments system as Wall Street banks and wealthy corporations,” he wrote. “The Federal Reserve’s recent publication outlining the goals for a central bank digital currency is a step in the right direction.”

He went further, writing that the Fed and the Treasury Department should “establish a concrete timetable in deciding whether to implement a CBDC.”

Related: Galaxy’s Institutional Ethereum Funds Raise $32M at Launch – From a Select Few

However, any digital dollar should address consumer protection, financial access, security and individual privacy concerns, he said. 

He referenced private efforts, like the Facebook-initiated diem stablecoin project, warning that efforts by technology companies could exploit the very people they claim to want to help.

“The Fed must not stop at regulating a privately issued digital currency. It must go further and explore a publicly issued digital dollar,” Brown wrote.

The digital dollar debate exploded into the congressional scene last year, when various bills introduced in both the Senate and the U.S. House of Representatives sought to find more efficient ways of sending funds to U.S. residents.

None of these efforts went anywhere, but research by the U.S. central bank expanded last year. Brainard announced the Boston Fed was looking into a digital dollar through a joint research project with the MIT Digital Currency Initiative. 

More recently, Consumer Financial Protection Bureau Director Nominee Rohit Chopra said the Fed should accelerate its efforts to build a modernized real-time payments system, though he didn’t specifically reference CBDCs.

In his letter, Brown warned that private efforts like bitcoin could undermine the dollar.

“The potential for non-sovereign crypto-assets, like bitcoin, to become more widely used as a payment mechanism, poses significant monetary policy and financial stability risks, including risk to our climate,” he wrote. “They are highly volatile and speculative, can be used for illegal activity, and consume incredible amounts of energy, driving up electricity use rates, and putting the resilience of local grids at risk.”

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Soaring Prices for Enjin, FLOW and Rarible Reveal Risks of ‘NFT Marketplace’ Tokens

5 years 7 months ago

A $6.6 million digital token representing an animated clip of a graffiti-covered Donald Trump lying face down in the grass. A $1 million batch of 34 “digital collectibles” known as CryptoPunks. A $69,000 dogecoin-inspired digital token representing a pixelated cat image.

The price tags for these “non-fungible tokens,” or NFTs, might seem daunting, inaccessible or downright ridiculous to the average person. 

That’s why some cryptocurrency traders, rather than buying NFTs directly, are buying digital tokens affiliated with the marketplaces that have popped up for trading NFTs. This way traders can bet on the NFT industry’s growth without having to go all-in on some sky-high priced digital artwork or trading card.  

Related: Twitter CEO Jack Dorsey Is Taking Bids for the First-Ever Tweet

Investors think these tokens “can serve, in a way, as index bets on the growth of the NFT marketplaces they power,” said Alex Gedevani, research analyst at Delphi Digital.

NFT frenzy

According to Messari, a data provider for cryptocurrency markets, the 10 biggest digital tokens that are associated with NFT platforms have returned in a year-to-date price range from about 60% to 900%.

The FLOW token, of the Dapper Labs-backed Flow blockchain, which powers the digital collectibles platform NBA Top Shot, is up 79% just in the past seven days to a market capitalization of $1.1 billion, according to CoinGecko. (Last week, some 10,631 packs of basketball videos hashed to the Flow blockchain sold for a record $1.05 million.)

And in a sign of just how frenzied the trading action has become, the ENJ token, from a startup company called Enjin, shot up 50% to surpass a market valuation of $1 billion. CoinDesk reported that Enjin planned to roll out two new product offerings focused on NFTs. ENJ is listed on big cryptocurrency exchanges including Binance and FTX, and there’s even derivatives contracts that can be used to bet on the price.

Related: Galaxy’s Institutional Ethereum Funds Raise $32M at Launch – From a Select Few

The outsize price gains offer a reminder of just how speculative cryptocurrency markets have historically been, with fast profits possible alongside steep risks.  

“Since NFTs are going through a hype cycle, that naturally raises the price of assets similarly associated with NFTs,” Mason Nystrom, research analyst at Messari, told CoinDesk. “We’ve seen this happen in previous cycles with Ethereum competitors, decentralized finance (DeFi) tokens, and so this type of market reaction is pretty common.” 

Even some NFT industry executives are agog at how rapidly the token prices are zooming. They characterize the binge as partly driven by a fear of missing out, or FOMO. For instance, the WAX token, WAXP, has tripled this year to a market value of $175 million. 

“It starts with the consumers or the token holders being uneducated about how the growth in the NFT ecosystem is going to benefit different blockchains, and which blockchains are going to benefit the most,” said William Quigley, co-founder of Worldwide Asset eXchange, an NFT marketplace. “So if you’re not doing that kind of work, you’re really just randomly throwing money based on the press releases you’ve read.”

Rationalizing the pump

Most NFTs are digital tokens created atop the Ethereum blockchain network under special-purpose standards known as ERC-721 or ERC-1155. Because they’re unique, their value is more subjective and their worth is in the eye of the beholder. 

The platform tokens, by contrast, use the more common ERC-20 or other similar token standards on non-Ethereum blockchains. They’re more widely distributed and traded, so their fair value is determined by the market. Many of them are listed on exchanges so the pricing is more transparent. 

What are they? That requires more research. They might seem like stocks in a company but they’re really more akin to in-house “utility” tokens that might benefit from increased trading volumes on a given platform, or as “governance tokens” that might offer holders a say in the rules of the marketplace and, perhaps eventually, a share of the payouts.

Read More: What Are NFTs and How Do They Work?

For example, both Rarible’s RARI and WAX’s WAX tokens are governance tokens for the respective NFT trading platforms, where token holders can earn rewards from trading fees while voting for the platform’s upgrades. Enjin’s ENJ, on the other hand, is a utility token of Enjin, which requires ENJ as collateral to issue new fungible or non-fungible items on the gaming platform.

From an investor’s perspective, evaluating individual NFTs such as CryptoPunks – collectible characters with proof of ownership stored on the Ethereum blockchain – requires experience and knowledge, said Nystrom at Messari. Collectibles, sports – one has to know what one is getting into.

Investing in NFTs “requires an investor to be precisely right – similar to betting that a bitcoin payment company will succeed – rather than just directionally correct like betting bitcoin will succeed,” Nystrom added.

Read More: Single Buyer Splurges $1M in Ether on CryptoPunk Digital Collectibles

With many of these tokens being built on ERC-20 token standard, they also offer much more liquidity, and as a result, “it is much more accessible for larger capital allocators rather than NFTs,” according to Delphi’s Gedevani.

Risks rise as prices skyrocket

“It’s important to be cautious as NFTs are an early-stage asset class and things are getting frothy,” Gedevani said. “There’s a lot of NFT issuance that will be coming onto the market going forward.”

With the skyrocketing appreciation of many of these tokens, the pressure of any near-term sell-off is also high.

Flow, for example, has a very low circulating supply, with many investors having bought the token at a very low price.

“We’ll likely see some short-term sell-off once tokens start vesting especially considering both institutional and retail investors are up many multiples since they had really low initial purchase prices – $0.1 per Flow – in some instances like the CoinList Auction,” Nystrom said.

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Wealth Managers Want Clarity on Bitcoin Rules: Reuters

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Leuthold Group Chief Investment Officer Jim Paulsen told Reuters he is frustrated by not being able to hold bitcoin for his clients.

  • Leuthold Group manages $1 billion but regulatory barriers prevent the firm from holding cryptocurrency.
  • “What I like about bitcoin is … its correlation to stocks and other assets is extraordinarily independent,” Paulsen told Reuters.
  • In lieu of holding the asset itself, wealth managers are clamoring for the approval of bitcoin exchange-traded funds (ETFs) that would meet the legal standards required of traditional investments, according to the report.
  • The U.S. Securities and Exchange Commission (SEC) has not ruled whether mutual funds can own cryptocurrency directly, according to Robert Jenkins, global head of research at Refinitiv Lipper.
  • The report comes as Wall Street players (and their clients) increasingly embrace bitcoin as an asset akin to gold.
  • BNY Mellon announced a crypto custody service last month; Goldman Sachs announced this week it was launching a cryptocurrency trading desk.
  • According to Jimmy Lee, CEO of Wealth Consulting Group, financial advisors are frustrated by not being able to manage crypto for their clients. Many investors end up pursuing it on their own, Reuters reported.
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Galaxy Digital Taps Blockstream for Hosted Mining Operations

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Galaxy Digital said its new bitcoin-mining business will use Blockstream facilities for an initial deployment of machines in the U.S. and Canada.

The public crypto company’s partnership with Blockstream, a bitcoin technology company, comes almost two months after the official launch of its mining unit.

Galaxy Digital Mining did not specify how many machines were deployed in the initial installation. But the company plans to continue expanding its mining operations, noting that it chose Blockstream’s facilities for “operational excellence,” according to Amanda Fabiano, Galaxy’s head of mining.

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Blockstream recently bought $25 million of mining machines from MicroBT for its own use, per CoinDesk’s prior reporting. “Galaxy has plenty of room to grow with us,” CEO Adam Back said in a statement shared with CoinDesk.

Galaxy’s shares, which are publicly traded on the Toronto Stock Exchange, are up 40% already this year. But they’ve taken a hit this week along with broader cryptocurrency and technology markets, down nearly 13% in March to below $16.

Note: This author was previously employed by Blockstream and holds no equity in either company.

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Paid Network Exploit Mints Attacker 60M Tokens: Report

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The Paid Network – a decentralized finance (DeFi) app that loosely describes itself as a smart contract program for businesses – has been exploited through the contract’s token minting feature. Some 60 million PAID tokens, worth about $37 million at press time, have been wrongly created. 

The PAID token is down some 70% as of press time, according to CoinGecko.

This story is developing.

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Bitcoin Slips as Traders Shrug Off Latest MicroStrategy Buy

5 years 7 months ago

Bitcoin was slipping on Friday, down 1.1% even after Michael Saylor’s MicroStrategy, which over the past year has become one of the world’s biggest corporate buyers of the largest cryptocurrency, announced an additional $10 million purchase.

Institutional demand for bitcoin from investors and corporations has been a big driver of price gains over the past year: The cryptocurrency has gained 65% this year after quadrupling in 2020.

But this MicroStrategy effect might be wearing off, raising questions over what level of buying – or economic indicators – might be needed to spark a fresh rally, given the cryptocurrency’s outsize gains already.

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Bitcoin’s price popped above $48,000 on Friday after MicroStrategy’s announcement before quickly losing momentum. MicroStrategy’s shares, meanwhile, were down by 11% at press time.

“In my view, bitcoin’s increasing reliance on purchase announcements for short rallies is not an entirely healthy trend,” said Hunain Naseer, senior editor at OKEx Insights, said.

Bitcoin was changing hands at $47,880 as of 17:29 UTC (12:30 p.m. ET), based on CoinDesk’s Bitcoin Price Index.

Read More: MicroStrategy, Its Shares Sinking, Spends $10M to Buy Yet More Bitcoin

Related: What Causes a Crypto Flash Crash? Sometimes, Business as Usual

“While the foundations of bitcoin remain strong, the coin is under much pressure to return gains to corporate investors who may need to declare earnings for the quarter,” Konstantin Anissimov, executive director at U.K.-based cryptocurrency exchange CEX.IO, wrote in a market report Friday.

Some traders might be more focused on the rapid jump recently in U.S. Treasury bond yields, which might show growing anxiety over future inflation – a key focus for bitcoin traders who say the cryptocurrency might serve as a hedge against price increases.

Read More: Bitcoin Falls 4% as Fed’s Powell Sees ‘Concern’ Over Rising Bond Yields

A better-than-expected February jobs report released Friday by the U.S. Labor Department appeared to send U.S. stocks lower, potentially due to concerns that any response by the Federal Reserve to higher inflation – such as by raising interest rates – might end up stunting economic growth.

“Only after we see signs of a reversal in equities and bitcoin starts taking support from the $52,000 range, can we start considering further upside potential,” said Naseer.

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What Causes a Crypto Flash Crash? Sometimes, Business as Usual

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Before last week’s price crash really got underway, there was a brief crash in the price of ether on Tuesday, Feb. 22. The TradeBlock ETX, a spot reference rate for ETH, fell 15%, from about $1,765 to $1,534 in just over half an hour, before recovering almost as quickly. It was notable because it broke one of the most liquid markets in crypto. 

The Feb. 22 ETH sell-off came with larger than usual volume on all four of the exchanges that are components of the ETX. One of these exchanges, Kraken, experienced a “flash crash,” a rapid and anomalous drop in price. Flash crashes aren’t entirely uncommon in crypto – Binance experienced one on Friday when it was hit with a sudden influx of orders for Polkadot trading contracts – but Kraken’s was extremely notable since it saw ETH-U.S. dollar trades as low as $700, less than half the lowest price printed on any other ETX component exchange. 

An analysis of the Kraken ETH flash crash is inconclusive as to whether it was caused by a technical glitch. However, TradeBlock data shows that trading activity on Kraken wasn’t much different from what two comparable ETX component exchanges saw in the lead-up to the crash, which happened at 9:18 a.m. ET (2:18 p.m. UTC). [TradeBlock is a subsidiary of CoinDesk.] The analysis shines a light on the fragmented nature of crypto market structure, where market disruptions affect even the most liquid assets, even under normal market dynamics. CoinDesk reached out to Kraken for comment, but did not receive any statement in time for publication.

What happened, tick-by-tick

Related: Bitcoin Slips as Traders Shrug Off Latest MicroStrategy Buy

The chart above tracks the ETX ether price, alongside trades printed on each of the four exchanges that make up the ETX. Right up to about 9:18 a.m. ET, all four exchanges and the ETX reference rate are moving in sync, in what looks like a fairly normal ether price dip. The increasing size of the bubbles represents larger and larger trades as traders react to the price action, one way or another. At 9:18 a.m., the Kraken market, represented in yellow, suddenly crashes severely. Its trades drop out of the ETX calculation as it continues for the next 15 minutes or so to print trades way out of line with the rest of the market.

These four exchanges represent the most liquid ETH-USD markets that are accessible to U.S. investors. Kraken’s CEO has said the Kraken ETH flash crash was not the result of a technical glitch. As the following three charts will show, however, two comparable ETX component exchanges handled comparable increases in volume just fine, including the usually lower-volume ETH-USD market on Bitstamp. The ETX incorporates only executed trades, not orders.

Kraken volumes were high, not highest

The yellow, green and blue lines in the chart above show minute-by-minute volume on Bitstamp, Coinbase and Kraken. LMAX, the fourth ETX component exchange, is excluded because it represents exclusively institutional volume. The others are a mix of institutional and retail activity. 

The surge in volume on Kraken that preceded its ETH flash crash was not the largest of the three exchanges, nor was it a greater outlier compared with normal ETH-USD activity on the exchange. 

Kraken printed the largest trade

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Kraken did, however, see the largest single ETH-USD transaction of the three, represented by a spike in the yellow line that’s well above other large trades that morning. It was a 481.4 ETH trade executed at 9:08 a.m. ET, just as the ETX reference rate had slid to a hair above $1,700, and about 10 minutes before Kraken prices dove so far below the average. That could have been the culprit that dried up the order book, but it’s not such an outlier that it looks conclusive. Coinbase’s largest trade, seen on the blue line at 9:11 a.m. ET, was 376.7 ETH. Bitstamp’s was 184.1 ETH, at 8:52 a.m. ET.

A surge in large trades

Were there other large trades? Yes. At 9:18 a.m. ET, as the Kraken ETH flash crash began, Kraken handled 13 trades in volume of 50 ETH or greater. That’s significantly more large ETH trades than any other market at that time. However, it wasn’t the highest count of large ETH trades on the morning of Feb. 22. At 8:52 a.m. ET, Bitstamp printed 14 transactions of 50 ETH or more. By 9:29 a.m. ET, Kraken would match that number, presumably as arbitrage traders took advantage of the still-wide spread between prices printed on Kraken and the rest of the market, as represented by the ETX. 

As noted above, the ETX counts only executed trades. This is to prevent manipulation of the reference rate through order-book activities like “spoofing,” a kind of manipulative activity in which traders place disingenuous orders, to simulate demand. If it’s order-book analysis you’re looking for, Kaiko has a good breakdown of the Kraken ETH flash crash, along those lines. 

Kaiko didn’t find any conclusive evidence as to what caused the crash, either. Whether it was a technical glitch or a sudden run on the order book probably doesn’t matter. With price discovery taking place on multiple venues, technology risk is multiplied and liquidity is divided. Until capital is able to flow more freely into these fragmented markets, investors should expect more flash-crash events. 

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