CoinDesk Crypto

Bitcoin is up only slightly on Monday after seeing its biggest weekly decline in over four months. 

At press time, the cryptocurrency is trading 0.2% higher on the day near $35,838, according to CoinDesk 20 data. Prices fell by 6% in the seven days leading up to Jan. 17, a weekly fall not seen since the first week of September. 

Bitcoin took a beating a week ago, falling from $40,000 to $30,305 in a matter of few hours, mainly due to heavy selling in the spot market. The cryptocurrency spent the rest of the week trimming losses and tested $40,000 at one point before ending the week (Sunday, UTC) just under $36,000. 

Related: Chainlink Hits Record High, Altcoins Rally Amid Bitcoin Consolidation

The quick recovery from $30,305 amid the continued accumulation by whales paints a bullish longer-term picture. The options market is also biased bullish, with the Jan. 29 $52,000 call option attracting good demand in the past few days. 

However, it may be too early to call an end of the bull market correction, as the cryptocurrency is still trapped in a narrowing price range or triangle pattern on the hourly chart, according to Parick Heusser, head of trading at Swiss-based Crypto Finance AG.

A move above the top end of the triangle pattern would confirm a breakout and imply a continuation of the broader uptrend. 

However, as per Heusser, a rally to a fresh all-time high above $41,962 would offer more credible evidence of a bull revival. That hinges on the pace of institutional inflows, strategists at JPMorgan said in a note Friday. 

Related: Bitcoin’s Massive Swings Give Pause to CFOs Mulling Reserve Investment: Bloomberg

“The flow into the Grayscale Bitcoin Trust would likely need to sustain its $100 million per day pace over the coming days and weeks for such a breakout [above $40,000] to occur,” the strategists wrote. 

Grayscale Bitcoin Trust (GBTC), the biggest publicly traded crypto investment trust, reopened last Tuesday after a month-long break. Since then, the trust has accumulated at least 4,700 BTC, according to the Twitter-based GBTC Bitcoin Tracker. If accurate, that’s $171 million-worth of purchases in six days – significantly less than JPMorgan’s required daily average of $100 million.

Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.

Global stock markets are trading on a weak note on Monday, while the U.S. dollar is gaining ground against major currencies. The stronger greenback could hurt bitcoin’s price, as discussed last week. 

A potential triangle breakdown could pave the way for a re-test of the last week’s low of $30,305. According to trader and analyst Nick Cote, $28,500 is key support, which, if breached, could invite intense selling pressure.

Also read: Crypto Long & Short: No, Bitcoin Is Not in a Bubble 

• Coinbase Redoing Infrastructure to Prevent Outages During Peak Times
• ‘America and Sound Money,’ the Most Important Bitcoin Essay of the Last Year

Bahrain-based cryptocurrency exchange Rain Financial has raised $6 million in Series A funding from Coinbase and other investors.

• Rain Financial, the first cryptocurrency exchange with a crypto-asset service provider license from the Central Bank of Bahrain, announced the funding news via Twitter on Sunday.
• The $6 million funding round was led by Middle-Eastern VC firm MEVP Capital, with Coinbase, Vision Ventures, CMT Digital, Abdul Latif Jameel Fintech Ventures and DIFC also participating.
• “We are confident that our investors, who are regional and international leaders, will support us as we continue to drive towards our vision of reaching mass adoption of crypto-assets,” the team said in a joint statement via Twitter.
• Rain received its Bahrain license in 2019 following a two-year regulatory sandbox process.
• In 2019, the exchange closed a $2.5 million funding round co-led by BitMEX Ventures and Kuwait-based cryptocurrency fund Blockwater.

Read more: Bitcoin in Emerging Markets: The Middle East

• CoinShares to Launch a Bitcoin ETP on SIX Swiss Exchange
• Nvidia May Restart Production of Crypto Mining GPUs if Demand Sufficient
• Gary Gensler Named as Joe Biden’s SEC Chair Pick
• Huobi Global Connects to European Banking System via UK’s BCB Group

Authorities in Iran have seized tens of thousands of bitcoin mining machines that they claim have been using illegally subsidized electricity from state-run energy provider Tavanir.

• According to a report by local media outlet Tasmin News Agency on Sunday, 45,000 mostly application-specific integrated circuit (ASIC) machines were confiscated.
• The powerful machines had purportedly been consuming 95 megawatts per hour of electricity at a reduced rate, according to Tavanir’s head Mohammad Hassan Motavalizadeh.
• Earlier this month, Iranian authorities shut down 1,620 illegal cryptocurrency mining farms said to have collectively used 250 megawatts of electricity over the past 18 months, per a different news source.
• The country’s recent blackouts across major cities have been blamed in part on cryptocurrency mining, drawing the ire of officials who have sought a temporary stay on bitcoin mining until further notice.
• Cryptocurrency researcher Ziya Sadr told the Washington Post on Sunday miners had “nothing to do with the blackouts,” claiming they only made up a “very small” percentage of overall electricity capacity in the country.
• In July of last year, Iran penned a registration directive forcing miners to disclose their identities. It also forced them to disclose the size of their mining farms and their mining equipment type to the Ministry of Industry, Mines and Trade.

See also: Iran Amends Law to Allow Imports to Be Funded With Cryptocurrency

• CoinShares to Launch a Bitcoin ETP on SIX Swiss Exchange
• Nvidia May Restart Production of Crypto Mining GPUs if Demand Sufficient
• Gary Gensler Named as Joe Biden’s SEC Chair Pick
• Livecoin Exchange Announces Closure After December Hack

An offline mobile map for travelers has raised $50 million in a funding round led by Alameda Research.

Announced Monday, the fresh capital will go toward the launch of a multi-currency wallet on Maps.me and enable a decentralized finance (DeFi) ecosystem on the platform.

Cryptocurrency lender Genesis Capital and institutional cryptocurrency firm CMS Holdings also participated in the round.

Related: Optimism ‘Soft Launches’ Ethereum Throughput Solution With DeFi’s Synthetix

According to a press statement shared with CoinDesk, the Maps.me wallet is expected to “unlock DeFi tools” for its 140 million users by allowing them to access a range of payment and investment tools.

“By embedding and democratizing access to yield-earning finance to millions of users via an everyday app, Maps.me has the potential to really propel DeFi mainstream adoption,” said Alameda Research CEO Sam Bankman-Fried.

The move intends to remove intermediaries and banks from the financing-of-travel equation by enabling users to store value and earn yields of up to 8%. Users will also be able to send and spend money in multiple currencies for cross-border travel, offer cashback on transactions and exchange funds without hidden costs, per the statement.

With its wallet offering, the travel platform said it’s aiming to combat high foreign exchange fees and commissions charged by banks and third-party travel booking providers. Maps.me intends to allow users to make travel bookings directly through its integrated wallet with “near-zero” fees.

Related: MahaDAO’s Algorithmic ‘Valuecoin’ Goes Live on Ethereum

The Maps.me app provides offline access to turn-by-turn routing, travel guides, hotel bookings and maps which is targeted toward travelers without cell phone reception or pre-paid phone plans.

“A seasoned developer team combined with a sharp product design has the potential to bring a huge amount of traffic to … DeFi through the Maps.me app,” Bankman-Fried told CoinDesk via Telegram.

CORRECTION (Jan 18, 3:59 UTC): A press release incorrectly referred to the funding as a seed round. Maps.me raised its seed round in 2013, according to Crunchbase.

• Lido Protocol Does Eth 2.0 Staking but With a DeFi Twist
• Some Asian Traders Are Using Polkadot to Predict Bitcoin’s Future

China’s Blockchain-based Service Network (BSN)  – a permissioned blockchain network for building decentralized applications and tokens – plans on releasing a beta central bank digital currency (CBDC) as early as the second half of 2021, according to a Jan. 15 blog.

• The Chinese-state sanctioned BSN is currently designing a universal digital payment network (UDPN) over the next half decade. CBDCs from different nation-states will be supported by the network, the blog claims.
• The UDPN network will be available through API connection as well for “any information system such as banking, insurance, ERP, and mobile applications. . . to enable a standardized digital currency transfer method and payment procedure.”
• The network is currently in the design stage, although public city nodes (PCN) are being rolled out through China in various states of completion, the blog states.
• As CoinDesk reported, the BSN recently incorporated connections to multiple public projects into its network such as the cloud-computing project Oasis, meta-protocol Polkadot and China-based public blockchain Bityuan.
• The BSN further expects to complete integrations with a total of 30 public blockchains this year, the blog concludes.

• Central Bank Digital Currencies Not a ‘Fad,’ MetLife Investment Says
• Some Asian Traders Are Using Polkadot to Predict Bitcoin’s Future
• Bitcoin in Race for Adoption Before Central Banks Launch Digital Currencies: Australia’s Macquarie
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Michael Sonnenshein, CEO of digital asset manager Grayscale Investments, tweeted the firm raised more than $700 million on Jan. 15 seeing increased momentum from Q4.

• In Q4 2020, the company raised $3.3 billion across its cryptocurrency investment vehicles, a record for the digital asset manager and further evidence of this rally’s institutional base.
• The Grayscale Bitcoin Trust, which is the company’s most popular product, led the pack in Q4 with an average of $217 million raised every week.
• The latest data from Grayscale shows on Jan. 15 the firm has a record $27.1 billion under management; it entered 2020 with just $2 billion.
• Eric Balchunas, senior ETF analyst at Bloomberg, compared Grayscale as the “ARK” of crypto via Twitter explaining that there are a number of similarities with both defying trends and seeing increased interest.
• “The similarities are pretty amazing. I think both hung in relative oblivion for 3-4 yrs, had like $2b 12mo ago ago and then boom, 10x increase. Both defy trends: ARK w stock picking and grayscale w very high fees and 20%+ premiums,” said Balchunas.
• ARK Investment Management, an asset-management firm led by Cathie Wood has a flagship ARK Innovation ETF (ARKK) which over the course of a year has returned more than 171%, seeing its assets under management by more than tenfold, to $21.8 billion.
• New York-based, SEC-regulated Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.

Read more: Grayscale’s Crypto Products Raised Over $3B Last Quarter, the Most Ever

• Grayscale Once More Accepting New Clients for Most Crypto Trusts
• Crypto Investment Firm Grayscale Names New CEO, Plans to Double Staff in 2021
• Grayscale Has $19B in Crypto Assets Under Management, Up From $16.4B Last Week
• Grayscale Has $16.4B in Crypto Assets Under Management, Up From $13B a Week Ago

Blockchain firm Ripple is hiring a new director of engineering to lead the team building its open-source developer services for its payments platform RippleX.

• In a blog post, the blockchain firm said it is looking for an engineer to expand its infrastructure that supports Ripple technologies such as XRPL as well as other developer tools and services.
• The role involves shipping products that make it easier for its developers to actualize the future of the “Internet of Value” which is a concept proposed by Ripple where value is transferred as easily as data.
• Ripple has been expanding its services, on Jan. 15 Ripple inked a deal with a Malaysian money transfer business and Bangladesh’s largest mobile financial services provider to enable a remittance corridor between the two countries.
• Malaysia’s Mobile Money and Bangladesh’s bKash will leverage Ripple’s global payments network, RippleNet, for wallet-to-wallet transactions.
• The expansion and planned new hire show Ripple does not seem deterred by the legal troubles in the U.S. The company is being sued by the U.S. Securities and Exchange Commission over the claim it violated federal securities laws by selling the XRP cryptocurrency to retail consumers.

Read more: Ex-Ripple CTO Can’t Remember Password to Access $240M in Bitcoin

• Russian Metals Firm Norilsk Nickel Backs IBM’s Responsible Sourcing Blockchain Pact
• 3iQ’s Canadian Bitcoin Fund Hits C$1B in Market Cap
• Kraken to Halt XRP Trading for US Residents
• Advisers Allocating Crypto in Clients’ Portfolios Rose 49% Last Year: Survey

Wall Street chief financial officers (CFO) are more wary of putting company funds into bitcoin after last week’s 30% price plunge, Bloomberg reports.

Publicly traded companies such as MicroStrategy and Square Inc. have invested millions of dollars of company cash reserves in bitcoin during 2020. Other firms followed suit including insurance giants Ruffers and MassMutual.

But given the return of bitcoin’s infamous price volatility – which saw the largest cryptocurrency’s price drop thousands below its peak of $41,900 set on Jan. – the attraction of that strategy may have lessened, according to company executives Bloomberg spoke with. Bitcoin has since recovered some of those losses and is now trading hands at $35,700, according to the CoinDesk 20.

Related: Coinbase Redoing Infrastructure to Prevent Outages During Peak Times

Severe fluctuations diminish the attractiveness of the leading cryptocurrency because company cash reserves are mainly rainy day funds for maintaining core business needs during unexpected down turns. 

“It would be a red flag for investors if a corporation bought financial assets for speculation purposes unrelated to their core business,” JonesTrading chief market strategist Michael O’Rourke said.

Columbia Business School adjunct professor Robert Willens told Bloomberg investing in bitcoin with those funds poses a risk CFOs might not be willing to stomach after last week’s price action.

“Is it a smart strategy? It could be. But, of course, if it’s not, it would become something that could threaten the very existence of a corporation,” Willens said.

• ‘America and Sound Money,’ the Most Important Bitcoin Essay of the Last Year
• Market Wrap: Bitcoin Dips to $34.4K as Big-Name DeFi Tokens Trounce ETH
• First Mover: Biden’s $1.9T Plan Shows ‘Blue Wave’ Bitcoiners Saw Coming

Coinbase will break apart certain parts of its Coinbase.com and app infrastructure in a bid to keep the cryptocurrency exchange from going down during periods of high volume.

During the recent bitcoin bull run, Coinbase has struggled to keep itself up during stretches of heavy volume, leading to snarky comments on Twitter and Reddit that it’s only news when the exchange doesn’t go down during peak periods. Given the exchange has filed preliminary documents for a public listing of the company’s shares, fixing its infrastructure undoubtedly has undoubtedly taken on an even greater urgency. 

According to an updated Jan. 8 post mortem on the Jan. 6-7 outages, Coinbase said it will break its “monolithic” backend into “discrete” parts in order to limit individual parts breaking and taking down the whole system. 

Related: Bitcoin’s Massive Swings Give Pause to CFOs Mulling Reserve Investment: Bloomberg

“We are further decomposing our monolithic application server into separate discrete services. This will allow us to have different scaling profiles for different sections of our API surface that receive heterogeneous load,” the exchange said in the blog. “In addition, this will reduce the blast radius if we have issues in any one surface, as it will only affect the APIs or functionality that it is responsible for.”

Coinbase specifically cited record breaking exchange volumes on Jan. 7 that were “easily 6x what had already been an elevated steady-state request rate.”

The exchange said trading and buying was still available during this period, but other dependencies related to the function limited the apps functionality.

In another blog, Coinbase’s customer service desk apologized for “delays in response time,” another source of frequent complaint on the internet. The exchange committed to hiring more team members, rolling out a chat feature with customer support along with being more vocal on major social media accounts.
The two blogs follow a Jan. 12 blog apologizing to UK and EU customers for system outages and trading restrictions.

• First Mover: Biden’s $1.9T Plan Shows ‘Blue Wave’ Bitcoiners Saw Coming
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• Market Wrap: Bitcoin Hits $40K Again While Ether Volume Is Erupting This Year

Institutional investor MetLife Investment Management (MIM) has released a new macro strategy primer outlining the forthcoming role of blockchain-based assets, particularly central bank digital currencies (CBDCs).

• MIM, founded in 1868, states that CBDCs are a logical progression of money and technology that are “unlikely [to] be a passing fad,” according to the primer released Jan. 8.
• The investments giant also notes that a “true CBDC launch among Western countries seems unlikely to occur anytime soon” as key technical questions have yet to be addressed.
• “However, just as the dreams of cryptocurrency developers tend to be rather lofty, so are those of various CBDC initiatives,” the document states.
• MIM had some $651 billion in assets under management (AUM), as of September 2020.

• Bitcoin in Race for Adoption Before Central Banks Launch Digital Currencies: Australia’s Macquarie
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Norilsk Nickel, a Russia-based metals company, has announced it backs IBM’s Responsible Sourcing Blockchain Network (RSBN), which supports responsible sourcing and production in mining.

• The Russian nickel and palladium mining company said it would use RSBN to share data with selected members and keep a supply chain record of mineral production.
• The agreement would include the creation of metal-backed tokens on the global Atomyze platform that represents physical assets in digital form.
• The RSBN and Atomyze platforms have been built on IBM blockchain technology and powered by the Linux Foundation’s Hyperledger Fabric.
• By joining the RSBN, Nornickel has agreed to have its supply chains audited annually against key responsible-sourcing requirements by RCS Global.
• “We believe that the digital technologies of RSBN and Atomyze will create the path for Nornickel and its partners to participate in a circular value chain, tracing commodity flows in near real-time as well as replacing cumbersome paperwork,” said Anton Berlin, Nornickel’s vice president of sales and distribution.
• In December 2019, one of the largest cobalt producers, Glencore PLC, joined the RSBN, announcing it would use RSBN’s Hyperledger Fabric platform for its cobalt production and become a full consortium member.

• 3iQ’s Canadian Bitcoin Fund Hits C$1B in Market Cap
• Market Wrap: Bitcoin Dips to $34.4K as Big-Name DeFi Tokens Trounce ETH
• Advisers Allocating Crypto in Clients’ Portfolios Rose 49% Last Year: Survey
• JPMorgan Provides $100M Financing Facility for Blockchain Mortgage Platform Figure

The bitcoin fund from Canada’s 3iq Corp (TSX:QBTC.U), listed on the Toronto Stock Exchange, has reached over CA$1 billion (US$785 million) in market capitalization.

• Digital asset manager 3iq Corp’s QBTC fund passed another milestone, reaching CA$1 billion in net asset value on Jan. 14.
• The first bitcoin fund listed in Canada, 3iQ spent three years in dialogue with the Ontario Securities Commission before it received approval for its fund.
• The Gibraltar Stock Exchange listed 3iQ’s closed-end fund in September, five months after it was first listed in Toronto.
• On Monday, Arxnovum Investments Inc. filed documents for the “Arxnovum Bitcoin ETF” applying to list on the Toronto Stock Exchange under the ticker “BIT.U.”
• Shaun Cumby, CEO of Arxnovum Investments, who previously held the position of CIO at 3iq Corp, was behind the launch of QBTC.U.

• Advisers Allocating Crypto in Clients’ Portfolios Rose 49% Last Year: Survey
• JPMorgan Provides $100M Financing Facility for Blockchain Mortgage Platform Figure
• Bitcoin ETP Trading at Levels Seen by Top European ETFs: FT
• Ex-Ripple CTO Can’t Remember Password to Access $240M in Bitcoin

Citing the recent U.S. Securities and Exchange Commission (SEC) lawsuit against Ripple Labs, cryptocurrency exchange Kraken announced it is halting trading of the XRP token for U.S. residents.

• The halt, which goes into effect Jan. 30 at 1 a.m. UTC, only affects Kraken clients residing in the U.S. Those residing elsewhere will be unaffected.
• With the halt, Kraken becomes the latest exchange to suspend or end trading in XRP, the cryptocurrency at the heart of a SEC lawsuit against Ripple Labs claiming the token is really a security.
• Kraken had been a holdout.
• The move follows Grayscale Investments’ dissolution of its XRP Trust earlier this week.

• Ripple Tech to Power New Malaysia-Bangladesh Remittance Corridor
• Market Wrap: Bitcoin Hits $40K Again While Ether Volume Is Erupting This Year
• Japan’s FSA Says XRP Not a Security: Report
• Grayscale Investments Begins Dissolution of XRP Trust Citing Ripple SEC Suit

Optimism has “soft launched” its solution to Ethereum’s transaction problem, the Optimistic Virtual Machine (OVM).

The startup announced Friday that OVM is now live, at a time when gas fees have reached near all-time highs for decentralized finance (DeFi) traders. Indeed, the cost to send a single Ethereum transaction has hovered in the low single-digit dollars for the last month – a bit steep for the “internet of money.”

First on the docket is DeFi exchange Synthetix, which has been working on an integration for some weeks now. The platform allows traders to exchange Ethereum-based synthetic contracts of real-world assets including oil futures.

Related: MahaDAO’s Algorithmic ‘Valuecoin’ Goes Live on Ethereum

The transition will roll out in four phases to limit risk to the platform, Synthetix co-founder Kain Warwick wrote in a Jan. 14 blog post. Staking the platform’s native token, SNX, is now possible on OVM, the team said.

“We have opted for initiating the transition with the absolute minimum risk to [layer one], and then adding functionality over the course of the next few months as we build confidence in [Optimistic Ethereum],” Warwick wrote.

Optimism, formerly known as Plasma Group, has pioneered one implementation of what are known as Optimistic Rollups (ORs). ORs – or other rollup variants such as ZK-Rollups – are layer two solutions that act as throughput boosters for blockchains. (These are not dissimilar in a general sense from Bitcoin’s Lightning Network.)

A rollup allows a blockchain to settle more transactions across the whole network by sending transactions off-chain, validating them and then settling the lump value on the main Ethereum blockchain. Most dapps have a rollup solution on the agenda.

Related: Lido Protocol Does Eth 2.0 Staking but With a DeFi Twist

In conjunction with other technical solutions, the expectation is Ethereum will be able to execute and settle about 100,000 transactions per second (TPS) with rollups.

• Some Asian Traders Are Using Polkadot to Predict Bitcoin’s Future
• Fireblocks Rolls Out Staking Rewards for Eth 2.0, Polkadot and Tezos

Bitcoin was slipping Friday on lower-than-average volumes for 2021 so far. In other news, while BTC and ETH are up this year, some DeFi tokens are doing even better.

• Bitcoin (BTC) trading around $35,610 as of 21:00 UTC (4 p.m. ET). Slipping 9.4% over the previous 24 hours.
• Bitcoin’s 24-hour range: $34,425-$39,673 (CoinDesk 20)
• BTC below the 10-hour and 50-hour moving averages on the hourly chart, a bearish signal for market technicians.

The price of bitcoin fell Friday, a steady decline over the past 24 hours that saw the world’s oldest cryptocurrency bottom out as low as $34,425 before picking up to $35,610 as of press time. 

Read More: Biden’s $1.9T Relief Package Proposal Fails to Stir Bitcoin Market

Related: First Mover: Biden’s $1.9T Plan Shows ‘Blue Wave’ Bitcoiners Saw Coming

“The price rested at $40,000. Now we are waiting for a rollback to $34,000,” said Constantin Kogan, partner at crypto investment firm Wave Financial. “Most likely the next possible low will be at least $26,000.”

That’s a pretty bearish sentiment from an analyst, but the outsized volume numbers to open 2021 are certainly diminishing for the time being. For the first two weeks of the new year, bitcoin’s daily spot volume on the eight major exchanges tracked by CoinDesk (Bitfinex, Bitflyer, Bitstamp, Coinbase, Gemini, itBit, Kraken and Poloniex) averaged $6.1 billion per day. For Friday, spot volumes are at $4.2 billion, as of press time.

“There is a definite tug and pull between North American and Asian traders in crypto assets,” noted Joel Edgerton, chief operating officer of cryptocurrency exchange BitFlyer USA. “Since the U.S. is going into a three-day weekend the U.S. trading volume will be lighter, so Asia will likely set the tone.”

Many investors and traders will be off Monday for Martin Luther King Jr. Day including the U.S. equities markets, which along with other major indexes are ending the week in the red Friday.

• Asia’s Nikkei 225 fell 0.62% in a session that was capped by the tech sector as semiconductor manufacturer TSMC posted its best-ever quarterly profit. 
• In Europe the FTSE 100 ended the day slipping 1% as new lockdown measures and a rise in coronavirus cases in China left investors worried about the global economy.
• In the United States, the S&P 500 closed in the red 0.74% as President-elect Biden released a $1.9 trillion stimulus plan to help boost the coronavirus-afflicted global economy.

Related: Biden’s $1.9T Relief Package Proposal Fails to Stir Bitcoin Market

“The important thing to keep in mind is that the macro view has not changed,” said Bitflyer’s Edgerton. “There is growing demand for crypto assets, an unwillingness of current holders to sell and limited supply being added. This naturally leads to long-term price appreciation.” 

Read More: Advisers Allocating Crypto in Clients’ Portfolios Rose 49% Last Year: Survey

Andrew Tu, an executive of quant trading firm Efficient Frontier, pointed to the inverse relationship between the U.S. Dollar Index and bitcoin as a macro example. The index, also known as the DXY, is a measure of the greenback versus a basket of other fiat currencies.

“The rise in DXY was simultaneously accompanied by a drop in BTC,” Tu told CoinDesk. “On a fundamental level, the economy looks weak, thus probably driving a risk-off move into dollars.”

When bitcoin goes up, the DXY seems to go down and vice versa, at least so far in 2021. On Friday, the DXY was up 0.55% during bitcoin’s bearish past 24 hours.

The second-largest cryptocurrency by market capitalization, ether (ETH), was down Friday, trading around $1,139 and slipping 5.7% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

Read More: MahaDAO’s Algorithmic ‘Valuecoin’ Goes Live on Ethereum

Bitcoin’s is up over 20% in 2021. However, ether is easily beating that, in the green over 50% to start the year. Meanwhile, two well-known projects built on the Ethereum platform used for decentralized finance (DeFi) are doing even better than that. The token associated with derivatives liquidity platform Synthetix is up more than 83% so far this year, while lending protocol Aave’s token has climbed more than 69% in 2021 so far.

Jean-Marc Bonnefous, managing partner of investment firm Tellurian Capital, told CoinDesk DeFi tokens such as aave and synthetix have big upside potential in bullish markets. He recently tweeted about DeFi token performance over the last three months. However, Bonnefous cautioned that there’s also a downside to these lesser-known and less-liquid tokens. 

“Ether is the mothership, the main reserve currency layer for DeFi, whereas the DeFi coins are more application-related with a potential additional monetization component and some growth potential if well executed,” Bonnefous said. “So by nature the top DeFi assets will likely outperform in a up market for crypto in general, and conversely in a bear market.”

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

• cosmos (ATOM) + 21.7%
• chainlink (LINK) + 15.2%
• omg network (OMG) + 6.8%

Notable losers:

• bitcoin cash (BCH) – 8.9%
• litecoin (LTC) – 8%
• stellar (XLM) – 7%

Commodities:

• Oil was down 2.9%. Price per barrel of West Texas Intermediate crude: $52.12.
• Gold was in the red 1.1% and at $1,825 as of press time.

Treasurys:

• The 10-year U.S. Treasury bond yield fell Friday, dipping to 1.092 and in the red 3.4%.

• Tether’s Bank Says It Invests Some Customer Funds in Bitcoin
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U.S. banking powerhouse Goldman Sachs has issued a request for information (RFI) to explore digital asset custody, according to a source inside the bank.

When asked about timing, the Goldman source said the bank’s custody plans would be “evident soon.”

Goldman’s digital asset custody RFI was circulated to at least one well-known crypto custody player toward the end of 2020.

Related: Anchorage Becomes First OCC-Approved National Crypto Bank

“Like JPMorgan, we have issued an RFI looking at digital custody. We are broadly exploring digital custody and deciding what the next step is,” said the Goldman source, who asked not to be named. (An RFI on crypto custody was issued by JPMorgan in October 2020, as reported by The Block.) 

The Goldman insider said the bank’s digital assets initiative was “part of a broad digital strategy,” citing stablecoins in relation to recent missives from the U.S. Office of the Comptroller of the Currency (OCC).

A tectonic shift took place in the world of crypto custody this week, as San Francisco-based Anchorage attained conditional approval from the OCC to become a national digital bank and “unequivocally” meet the definition of “qualified custodian” in the process.

Anchorage President Diogo Mónica said in an interview this regulatory approval will invite many large and risk-averse institutional players into crypto. 

Related: Goldman Sachs Exec Says More Institutional Investment Would Calm Bitcoin Volatility

When asked about JPMorgan, Goldman and Citi – the three big U.S. banks most are watching in relation to crypto custody – Mónica said: “We are talking to all these guys.”

There has been chatter about Goldman perhaps offering something akin to prime brokerage services involving crypto. However, the Goldman insider said the bank is looking at custody but not prime brokerage.

“Anchorage, BitGo and Coinbase have quite grand plans in crypto prime brokerage and we would not be looking to duplicate those,” said the Goldman source.

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• SEC Gives Broker-Dealers Room to Handle Crypto Securities

Blockchain microservices startup Wireline will pay the U.S. Securities and Exchange Commission (SEC) $650,000 to settle charges stemming from its $16.3 million crypto token sale in late 2018.

• Wireline did not register its offering, called a simple agreement for future token (SAFT) sale, with the SEC at the time. Now, under terms of the settlement, the company is barred from giving its investors those tokens and must notify them of the fact.
• SEC prosecutors said in their filing that Wireline’s SAFT was an investment contract and thus subject to agency oversight.
• Commissioner Hester Peirce, an advocate for crypto on the SEC, agreed with the SEC’s action against Wireline’s raise. However, she framed the settlement’s mandate that Wireline’s SAFT tokens not be paid out as potentially damaging to innovation in cryptocurrencies.
• “This settlement perpetuates an approach that suggests that tokens themselves are securities and thus complicates the development of crypto networks,” she said in a statement.

• What Crypto Can Expect From Gary Gensler at the SEC
• Grayscale Investments Begins Dissolution of XRP Trust Citing Ripple SEC Suit
• A New SEC Chair Who Actually Understands Bitcoin and Crypto?
• Gensler Said to Be Named SEC Chairman: Reuters

Creditors of the bankrupt cryptocurrency exchange Mt. Gox will be presented with the option to claim up to 90% of the exchange’s remaining bitcoin, according to Bloomberg.

• The deal between Mt. Gox’s bankruptcy trustee and MGIFLP, a unit of Fortress Investment Group, will be presented to creditors for a simple up or down vote, Bloomberg reported.
• Investors aren’t obligated to take the early payment and can wait for the lawsuits against the former exchange to settle, according to CoinLab, which announced the deal but is not involved in the settlement. CoinLab said it will continue its litigation.
• Japan-based Mt. Gox was a major early bitcoin exchange that filed for bankruptcy in 2014 after admitting it had lost 850,000 in bitcoins, 750,000 of which belonged to its customers.
• Creditors have been fighting for some form of reimbursement through seven years of legal standoffs.
• It was not clear at press time how many bitcoins are left for creditors to claim.
• Should a significant portion of those lost bitcoin come on the market, it could have a significant effect on the supply of the leading cryptocurrency and its price.

• Mt. Gox Creditors’ Wait Nearly Over as Trustee Announces Draft Rehabilitation Plan
• Coinlab
• Mt. Gox Deadline Extended Again After Creditors Criticize Refund Proposal
• Mt. Gox Trustee May Sell Some Crypto Assets, Says Draft Repayment Plan

The CEO of cryptocurrency lender Celsius believes CEL won’t meet XRP’s fate. 

In a Dec. 31 interview, Alex Mashinsky attributed a recent spike in CEL’s price to the token being registered with the U.S. Securities and Exchange Commission (SEC). Mashinsky said this would protect CEL – the native token of the Celsius lending platform – from being embroiled in an SEC lawsuit, like the one the securities regulator has filed against Ripple because of its XRP token.

The CEL token, however, isn’t actually registered with the SEC; Celsius filed a Form D, which was an exemption from having to register a securities sale with the SEC and only available to accredited investors. This is separate from other SEC registrations the crypto industry has completed, such as INX’s registration of securities it sold in its initial public offering and asset management firm Arca’s registration of its Ethereum-based fund.

Related: Babel Finance Is Letting Crypto Mining Firms Use Machines as Loan Collateral

“We did not determine that CEL token is a security,” Mashinsky said in an interview with CoinDesk TV last Friday. “What we said is that because we’re not sure what it is, and it’s not clear because the regulations are not clear, that we’re going to file it as if it were a security.”

CEL increased from a few cents to $6.50 on Jan. 3 and has since dropped to $4.97 as of press time. 

“Mass adoption from over 300,000 users worldwide is the driver,” Mashinsky said of CEL’s price action. “Half of our community … wants to be paid interest in CEL token.”

Related: Here Comes the Open Lending Era

If users choose to get rewards in CEL, they can get better interest rates on earning and borrowing in the app. 

In May 2018, Celsius raised what was then $50 million worth of crypto in CEL’s initial coin offering (ICO). (Financial statements filed with the U.K. registrar Companies House in May 2020 show proceeds of only $25 million from the sale; Celsius told CoinDesk it had not converted the crypto to fiat in the same month that it was raised.)

Mashinsky also clarified that Celsius makes under-collateralized loans only to institutions.

“On the institutional side we have 350 customers,” Mashinsky said. “Based on credit ratings, we will require some of them to give us 200% collateral. … There are one or two institutions which have multibillion-dollar balance sheets that we require less than 100%, so they may give us 75%. If you take our book of $6 billion in assets, less than 1% of those are uncollateralized loans.” 

Mashinsky also revealed Celsius is considering participating in crypto lender Cred’s bankruptcy auction, but said that Celsius has not yet made a decision about the company. 

“Just like Mt. Gox, every event like this is a trust withdrawal from the crypto community,” Mashinsky said. 

• Here’s What Happened at Crypto Lender Cred’s Latest Bankruptcy Hearing
• DeFi Startup Brings Corporate Lending Terms to Miners, Traders and Market Makers

Bitcoin is in the red today, following yesterday evening’s announcement of President-elect Joe Biden’s $1.9 trillion stimulus plan.

Stakeholders stake
The bitcoin exchange-traded product (ETP) from ETC Group (recently launched on Switzerland’s SIX stock exchange, though it trades elsewhere) has seen volumes far above all the other 1,800 ETPs listed on Deutsche Börse, the exchange said. Meanwhile, Bitwise found the number of financial advisers allocating crypto to client portfolios rose 49% year over year, according to a survey of 900 money managers.

Coinbase crowdsources coins
The popular exchange announced the Asset Hub yesterday, a new issuance portal that would allow users to nominate a cryptocurrency to trade on the exchange. “We appreciate that the growth of the cryptoeconomy depends on the success of digital asset issuers, and we are committed to supporting issuers every way we can,” an executive said.

Related: Money Reimagined: Bitcoin’s Warning for Central Banks

Money moves
Blockchain mortgage platform Figure says it has closed a $100 million financing facility for its mortgage products from JPMorgan. The firm also reported its mortgage business grew nearly 50% month over month in the fourth-quarter of 2020. Coinbase’s venture arm has invested in the mining company Titan’s seed round, while merchant bank Galaxy Digital will start mining bitcoin and offering financial services for miners.

• BITCOIN CORE: Bitcoin got an upgrade. Here’s what you need to know. (CoinDesk)
• PRIVACY COINS: A number of exchanges have swepts dash, zcash and monero from their order books. At least one won’t disclose why. (CoinDesk)
• CFTC INSIDER: What the crypto world can expect from Gary Gensler at the SEC. (CoinDesk op-ed)
• BIDEN’S $1T: Does Biden’s stimulus plan vindicate bitcoiners? (First Mover/CoinDesk)
• $1B TRANSFER: It only cost $7 to move a large order on Ethereum. (Decrypt)
• ‘HIGH PRIORITY’: Jerome Powell says the Fed is working on stablecoin risks. (The Block)
• THE EFFECT: Does Grayscale Trust affect crypto prices? (Medium)
• NEW ERA: Of government-friendly bitcoin miners. (Vice)

DOT matrix?
As prices for bitcoin and other cryptocurrencies continue to surge this year, many traders are looking for any indicator for when – or if – the bull market will come to an end. Some are convinced they have the answer: They are examining polkadot (DOT), the native token of the Polkadot blockchain, as a potential canary in the coal mine for cryptocurrency. CoinDesk’s Muyao Shen covers the market maneuver.

Tethered
It’s been a while since we last covered Tether here, but a recent headline related to the bank where the stablecoin issuer parks its funds is as good a reason as any to check in. In a year-end video recording sent to its customers, and recently surfaced in the crypto media, Deltec Bank & Trust Chief Investment Officer Hugo Rogers said it was investing some client funds in bitcoin.

According to the video (which I haven’t personally seen), Rogers said the bank bought bitcoin before its latest run-up, at about $9,300. “[S]o that worked very well through 2020 and we expect it to continue working well in 2021 as the printing presses continue to run hot,” Rogers said in the video. The money machines go brrr.

Related: First Mover: Biden’s $1.9T Plan Shows ‘Blue Wave’ Bitcoiners Saw Coming

Apart from the revelation that an investment officer at a Bahamian bank is a bitcoin bull, the quote did raise questions about Tether’s reserves. Tether (USDT) is a U.S. dollar-pegged stablecoin. It’s issuer, Tether, a company that shares executives with the Bitfinex crypto exchange, is said to maintain the stablecoin’s one-to-one relationship with the greenback based on cash or cash equivalents held by Deltec.

Deltec has clarified that Roger’s statements “had no relation whatsoever to Tether’s depositary assets with Deltec.” So Tether’s reserves are definitely not backed by bitcoin. Or at least not bitcoin that investment officers at Deltec had begun purchasing in Q4 2020.

So what is backing tether?

There are now more than $24 billion in tether in existence, approximately a fivefold increase from the beginning of 2020, when there were fewer than 5 billion tethers. In theory, there should be approximately $24 billion in tether reserves parked in the Bahamian bank.

While many vouch for the company and coin, Tether has yet to produce a full audit of its reserves. In 2019, Bitfinex and Tether told the New York courts tether is only backed 74% by cash and short-term securities rather than maintaining a complete peg, though months later they walked back that claim.

In short, no one outside of Tether can be entirely sure what’s backing the popular stablecoin. Tether isn’t decentralized like other cryptocurrencies, nor does it have a hard cap to the amount that can be created. 

Now the third-largest crypto by market cap, tether is likely the most trafficked crypto in terms of trade volume. It’s used not only as a legitimate means of payment (CoinDesk reported it’s frequently used to skirt sanctions in China and Russia), but also as a common trading pair and a place for investors to park their money during periods of market volatility.

“Tether’s growth in 2020 has been spectacular. We are now starting to speak of the Tetherization of trading, with the lion’s share of spot trading volume now denominated in tether (USDT) tokens,” Chief Technology Officer at Bitfinex and Tether Paolo Ardoino told CoinDesk over email through a spokesperson in December. “As commercial activity rises, so does the use of tether,” he continued.

As Ardoino suggests, the amount of tether is based purely on demand for the preeminent stablecoin. The company mints tethers based on orders from exchanges, traders and others, though because of its limited know-your-customer rules it’s not always obvious who is calling to turn on the mint.

Some of these questions might soon be answered. As part of an ongoing lawsuit pursued by the New York Attorney General, Bitfinex and Tether face a Jan. 15 deadline to provide millions of pages of documents related to a loan Tether allegedly provided to Bitfinex to cover an $850 million hole.

• Tether’s Bank Says It Invests Some Customer Funds in Bitcoin
• Blockchain Bites: OCC’s Head Stepping Down, Anchorage to Become First National ‘Digital Asset Bank’