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As the U.S. dollar’s value slides, prices are suddenly rising for just about everything priced in dollars. 

That includes bitcoin, which shot up some 13% on Monday for its biggest gain in almost three months. Prices soared past levels reached in February, prior to the pandemic-induced sell-off, reaching a new 2020 high of $11,180.

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Related: Bitcoin Futures Volume Surges 186% as Price Hits $11K

Joe DiPasquale, CEO of the cryptocurrency hedge fund BitBull Capital, told First Mover in an email that the latest move up appeared “in sync” with gold’s climb in recent days to a new record. Bitcoin is seen by many digital-asset analysts as a hedge against inflation and currency debasement, similar to the way investors in traditional markets have historically used gold. 

“Bitcoin sprung into action,” DiPasquale said. 

It’s a remarkable development in the bitcoin market, where investors, as recently as last week, were despairing that the oldest and largest cryptocurrency had been stuck in a range between $9,000 and $10,000 for the past two months. 

So for bitcoin bulls, the jolt out of the doldrums was welcome, especially when the price went up, not down. The day’s gain came on strong trading volume, with levels not seen since early June. 

Related: Gold Reaches All-Time High as Bitcoin Breaks Above $11k

“The trend is clear and we are headed higher,” said Jack Tan, of Taiwan-based quantitative trading firm Kronos Research. 

Bitcoin is now up 57% year to date, more than double the 28% gain this year for gold, which climbed in recent days to a record. The Standard & Poor’s 500 Index of large U.S. stocks, meanwhile, is roughly flat for the year.  

“Given gold has just set a new all-time high, and with bitcoin’s correlation to stocks breaking down while being replaced by a strong correlation to gold, we envisage further tests to the upside this coming week,” the cryptocurrency-trading firm Diginex wrote in a daily market report. 

The U.S. Dollar Currency Index, a gauge of the greenback’s value versus other major currencies like the euro and yen, has fallen for seven straight sessions; the Wall Street firm Goldman Sachs predicts the dollar could lose another 5% over the next 12 months.  

“The U.S. dollar is eroding quickly, and people are starting to notice,” wrote Mati Greenspan, founder of the cryptocurrency and foreign-exchange research firm Quantum Economics, in his daily email. “It’s plain to see that people are ditching the buck as fast as they can.”

That’s good for bitcoin and gold: As the Wall Street Journal put it Monday, a weakening dollar “mechanically pushes up the prices of the commodities invoiced in greenbacks.” 

Investors appear worried the global economic recovery is faltering, with cases on the rise and a death toll globally that just passed 650,000. In the U.S. Congress, Senate Republicans proposed a $1 trillion relief package following negotiations with President Donald Trump, but that amount falls far short of a Democrat-led plan for $3.5 trillion in stimulus. 

Jim Reid, strategist for the German lender Deutsche Bank, wrote in a report that the Federal Reserve, which has already expanded its balance sheet this year by about $3 trillion to about $7 trillion, might need to pump another $12 trillion over the next few years. 

The Federal Reserve is scheduled to meet this week in closed-door discussions, with a statement due late Wednesday. With interest rates already close to zero, no major policy changes are expected, but the cryptocurrency investment fund Arca noted Monday that a sell-off in the U.S. stock market might provoke the U.S. central bank to respond. 

A report on Thursday is expected to show that U.S. gross domestic product declined during the second quarter by a staggering 35% on an annualized basis.

With so much fragility in the economy, and things not improving quickly, “the moral hazard is now so high that the stock market barely even has to blink,” Arca wrote. 

For bitcoin, according to Arca, “the breakout was just a matter of time.” 

Tweet of the day Bitcoin watch

BTC: Price: $10,773 (BPI) | 24-Hr High: $11,395 | 24-Hr Low: $10,215

Trend: Bitcoin is witnessing a low-volume technical pullback on Tuesday.

The largest cryptocurrency by market value is currently trading near $10,850 – down over 4% from the 11-month high of $11,394 reached on Monday. 

The drop in price suggests bitcoin may be overvalued. The 14-day relative strength index jumped to 82 as prices surged 11% on Monday. An above-70 reading indicates overbought conditions – meaning excessive demand has pushed prices unjustifiably high.  

The pullback may be extended further, as the 14-day RSI is still hovering above 70. In addition, the RSI on the hourly chart has dropped into bearish territory below 50. That said, the bullish bias might be invalidated if prices finish below $10,500 (the February high) at the UTC market close. 

That looks unlikely, as the decline from multi-month highs observed so far today is accompanied by a slide in trading volumes (above right). A low-volume pullback is often short-lived.

Besides, some analysts are convinced that Monday’s bullish move has put bitcoin on the path toward record highs. “[Monday’s] daily close is amazing and could very well resemble April 2019’s $1k candle that ended the bear market and fueled a rally to $13,000. Only this time, the rally should lead to new all-time-high for BTC,” popular analyst Josh Rager tweeted early Tuesday. 

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Ethereum’s Devcon 1, held in London in November 2015, was like Woodstock, except perhaps with less nudity.

Bankers and Big 4 consultants disguised in hoodies shared space with dreadlocked Ethereum coders, sitting cross-legged in the corners, their laptops open in front of them. 

Packed into a Victorian banking hall in the heart of the City of London, the audience listened as ConsenSys chief Joe Lubin predicted a new future for firms; cryptographer Nick Szabo talked about decentralization in the context of Francis Drake and the Aztecs; and chief scientist Vitalik Buterin assembled shards of the path that lay ahead.  

Related: One Billion, Two Billion, Three Billion, Four? DeFi’s Knocking on TradFi’s Door

“The internet kind of sucks,” said Ethereum wallet designer Alex Van de Sande during his opening keynote. “It’s centralized, and it’s broken – but we can fix it this week.” 

Such was the optimism in the room. 

Keeping with the Woodstock motif, this moment in time possessed a kind of prelapsarian innocence: The DAO debacle and hard fork decision that followed was at least six months away, and further off still was the ICO gold rush.

An earlier confab, Berlin’s Devcon 0, preceded Ethereum’s launch. In London, things were starting to get real.

Shoestring budget

Related: CoinDesk Live Recap: Ethereum Culture, Explained

Today, Ethereum’s native cryptocurrency has a market cap of some $36 billion, but at that stage, the Ethereum Foundation, which had managed an $18 million token sale, didn’t have any fiat currency on hand, recalls DARMA Capital managing partner Andrew Keys, the then-head of business development at ConsenSys.

“I had to lend the Ethereum Foundation $35,000 because they only had crypto. I had to put it on my credit card so we could reserve the room,” said Keys. 

A couple of weeks before the London event, Keys had managed to broker a landmark deal with Microsoft Azure, the first big enterprise to really back Ethereum. The Wall Street Journal ran a story about Microsoft working with Ethereum, and on Oct. 27, 2015, the price of ether crossed one dollar. The publicity also enabled Keys and Marley Gray, principal architect at Microsoft Azure, to cobble together some vital sponsorship money.

“I had a very difficult time getting together the funds with Microsoft as a sponsor,” said Gray. “Then the WSJ interview went really well and I was able to secure $14,000, a sponsor table and a speaking slot to announce eBaaS, or Ethereum Blockchain-as-a-Service, on Azure. That table was just a card table of questionable stability, and the first thing out of most people’s mouths when they found out I was from Microsoft was, ‘What are you doing here?’”

OGs and FOMO

Another of the Ethereum OGs involved in the planning was venture investor William Mougayar, who remembers the general worry that the London event simply wouldn’t sell enough seats.

“We weren’t sure it was going to fill-up,” said Mougayar. “We were giving discounts to attend. Then a week or so prior to the event, there was a fear of missing out and a swelling of attendance, resulting in a standing room situation that we ended up with.”

On the subject of FOMO, Mougayar organized an evening event at the London City offices of law firm Orrick, to introduce a gaggle of investors to Ethereum. 

“We had some of the top Ethereum developers, such as the teams led by Gavin Wood, Jeff Wilcke, the nascent ConsenSys and the Foundation proper. But only three VCs showed-up from about 18 that I invited,” recalled Mougayar. “Two of these VCs are leaders today in backing blockchain companies.” 

Although investors never knew it at this stage, Ethereum was about to foster an explosion in crowdsales. In attendance at Devcon 1 was Fabien Vogelsteller, the inventor of the ERC-20 token standard that would launch a thousand ICOs.

“Devcon 1 showed us the sheer size of the developer community, just 10 months after the network launch,” said Vogelsteller, founder of LUKSO. “So, I did expect there to be an increase of ICOs, not only because of ERC-20, but because it just looked imminent.”

Bankers and boomers

This gathering of brave new disruptors found itself facing the old financial world, represented in a panel featuring the likes of Lee Braine of the technology office of Barclays Investment Bank. 

This besuited boomer from Barclays must have looked like “the man” that you wanted to stick it to, at least to the cypherpunks and libertarians in the audience. (It’s worth noting, at that time the entire financial world and large parts of the legal system were expected to be soon replaced by smart contracts.)

“It was a heady time,” Braine recalls, “with an explosion of innovation coming from startups, big technology companies, universities, open-source communities and also the financial institutions themselves.”

Before too long the Devcon banking panel took the form of a lecture, with Braine asking the room how a system of blockchain-based smart contracts might handle some rather complicated netting cycles used by a large investment bank to optimize trade processing at scale. 

In fact, Braine’s post-trade securities netting question is an example of where and when decentralization, though perhaps desirable, cannot achieve the efficiency of a centralized solution.

“It’s effectively a centralized batch optimization process,” said Braine. “I’m not aware of a genuinely distributed model that can achieve the same settlement efficiency.”

(Braine and his team have subsequently explored this problem using quantum computing power.)

Keys, who was moderating the banking panel, remembers Braine’s fiendishly complex challenge, and also the fact that the Barclays scientist was “fully suited.”

“But then he is a Brit,” said Keys, “and not some ding-dong from the U.S.”

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The Treasury Department of New South Wales (NSW), an Australian state, is exploring regulatory reform for blockchain and other emerging technologies.

• A new research paper released on Tuesday reveals the state government’s concerns over falling behind on disruptive technologies like blockchain.
• The current climate of “uncertainty” has given way to unexpected scenarios, prompting the need to update regulations around such emerging technologies, the paper reads.
• The Treasury acknowledged regulators need to catch up, saying falling behind the times is a growing problem.
• The NSW Treasury is responsible for the management of the state’s finances, advising on policy and developing governance frameworks, and supplying analysis and advice to industry.
• With traditional regulatory models that oversee industry risk being challenged by societal changes, technological advancements and economic circumstances, the department recommends an “outcome-based” regulatory approach.
• Such a model would provide “flexibility” for businesses to innovate and show appreciation for the potential of emerging technologies, without the need to seek approval from regulators.
• An acceleration of reforms could bring benefits worth $4 billion for the NSW economy stemming from a 5% cut in regulatory compliance costs for emerging tech providers, the Treasury suggested.

See also: ASX Under Pressure to Further Delay Rollout of DLT Settlement System

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CORRECTION (July 28, 13:35 UTC): An earlier version of this article misstated the timing of the platform launch. TASE said it expects to go live Nov. 2; it has not done so yet. The earlier version also misplaced Tel Aviv, which is in central Israel, not the north.

The Tel Aviv Stock Exchange (TASE) has said it is launching a new blockchain platform that it claims will become the “one-stop-shop” for lending securities in the country.

• TASE said Monday the Central Blockchain Securities Lending Platform will provide a single national market where Israeli institutions can lend securities directly to one another
• The platform is set to go live on November 2.
• Based in the city of Tel Aviv, TASE is the only public stock exchange in Israel.
• Blockchain facilitates peer-to-peer trading and escrow all with near-guaranteed immutability, the exchange said in a statement.
• Not only does the new platform give traders greater flexibility and versatility, but it can also cut costs and enhance security, it added.
• This replaces a complicated and disjointed lending system and allows the securities lending market to reach its full potential, TASE concluded.
• The blockchain securities lending system has been in the testing phase since March 2020.

See also: ASX Under Pressure to Further Delay Rollout of DLT Settlement System

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The Tel Aviv Stock Exchange (TASE) has launched a new blockchain platform that it claims will become the “one-stop-shop” for lending securities in the country.

• TASE said Monday the Central Blockchain Securities Lending Platform will provide a single national market where Israeli institutions can lend securities directly to one another
• Based in the northern city of Tel Aviv, TASE is the only public stock exchange in Israel.
• Blockchain facilitates peer-to-peer trading and escrow all with near-guaranteed immutability, the exchange said in a statement.
• Not only does the new platform give traders greater flexibility and versatility, but it can also cut costs and enhance security, it added.
• This replaces a complicated and disjointed lending system and allows the securities lending market to reach its full potential, TASE concluded.
• The blockchain securities lending system had been in the testing phase since March 2020.

See also: ASX Under Pressure to Further Delay Rollout of DLT Settlement System

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The transition to Ethereum 2.0 and its proof-of-stake consensus mechanism is finally underway.

• Announced Monday, Ethereum developers have released a “validator launchpad” on the Medalla testnet to educate and prepare future validators as part of a multi-year, multi-stage roll out of the Ethereum network’s most important upgrade to date.
• Eth 2 will radically transform the world’s largest smart contract platform as it shifts from proof-of-work (PoW) to proof-of-stake (PoS).
• In PoW, miners do the job of validating transactions through complex math solved by computer hardware and then adding them to a data block in a series, or chain, that is cryptographically secured.
• PoS, on the other hand, lets entities known as validators lock up holdings of a network’s cryptocurrency as collateral for the right to validate a transaction without the need for computer hardware. Validators are rewarded based on how much crypto they initially stake.
• The transition to PoS is aimed to improve Ethereum’s scalability issues that arise from its inability to handle a large quantity of transactions under PoW. PoS also expected to be more cost-effective than mining.
• Three phases of the roll out are planned, with the first, phase 0, focusing on the underlying tech behind staking by tracking validators and their balances.
• The launchpad, which comes before phase 0, will enable validators to track and deposit test stakes on the upcoming Medalla multi-client testnet.
• When phase 0 arrives, validators will start securing Ethereum 2’s network with real stakes.
• Phases 2 and 3 will revolve around adding and storing Eth 2 data and enabling programs to be run on the network, respectively.
• The legacy Ethereum platform will exist for some time as its own independent PoW chain, but the developers stressed the “transition toward PoS starts now” in yesterday’s announcement.

See also: Everything You Need to Know About Ethereum 2.0

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Fasset, a fintech company headquartered in the U.K., has launched what it claims is the world’s first operating system built on the Ethereum blockchain dedicated to the ethical financing of sustainable infrastructure.

• Announced Tuesday, the system is aimed to democratize investments in sustainable infrastructure including the construction of solar power plants, wind farms and fiber optic networks by tokenizing, or creating digital representations of, those assets to make them accessible to a global pool of investors. 
• Mohammad Raafi Hossain, Fasset’s CEO and a former technology adviser to the UAE prime minister, told CoinDesk that infrastructure assets are some of the most resilient and long-yielding financial assets, continuing to provide dividends long after the project is complete, because they provide important utilities to the public.
• These infrastructural assets are useful and accessible to anyone, he said, irrespective of where they come from, just like a decentralized blockchain.
• In a press release, Hossain also said that climate change is expected to cost the world economy $7.9 trillion by 2050 and that the need for sustainable infrastructure has never been more urgent.
• The Fasset Enterprise Platform (FEP) enables hard asset owners in sustainable infrastructure to tokenize their assets for fundraising purposes. 
• By moving the entire sustainable infrastructure financing process to the blockchain, the firm intends to improve liquidity in the sector and lower barriers to entry that will enable asset owners to avoid costly middlemen and directly list their assets on exchanges.
• The initiative, inspired by the UN Sustainable Development Goals, is a response to rapid climate degradation and the lack of capital entering the sustainable infrastructure sector, which is moving toward a $15 trillion deficit by 2040.
• Fasset’s primary objective is to bridge that deficit with blockchain-backed investments, Hossain said.
• Founded in early 2019, the firm has already won the support of the UAE, Saudi Arabia, Singapore, Kuwait and Bahrain, and has raised over $4.7 million.
• It also plans to launch a regulated exchange for hard assets in the near future. 

Also read: EU-Based Universities Say Blockchain Could Help Meet Paris Agreement Carbon Goals

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Longtime peer-to-peer exchange LocalBitcoins, a former hub for anonymous bitcoin swaps, has added two blockchain-tracing tools from analytics company Elliptic as it continues to chip away at criminal crypto cashouts.

• LocalBitcoins announced Tuesday it’s using Elliptic’s Navigator risk analysis tool and Lens wallet screener to crack down on illicit crypto. Blockchain analysis firms have previously claimed that LocalBitcoins receives the bulk of Finland’s criminal coin.
• The Helsinki-based platform has been bolstering its anti-money laundering (AML) safeguards in response to the European Union’s AMLD5 and tough new Finnish business regulations, both of which turned up the heat on regional crypto businesses.
• In the run-up to Finland’s enforcement deadlines, LocalBitcoins ditched cash-for-crypto trading and added mandatory identity verification. It also banned Iranian users from trading bitcoin, likely in response to U.S. sanctions.
• Elliptic Chief Scientist Tom Robinson told CoinDesk that such policy shifts have contributed to a 50% drop in darknet crypto inflows for the year.  
• “The reduction in flows from dark markets to peer-to-peer exchanges is a clear consequence of these businesses introducing strong KYC and AML controls,” he said. “Criminals are now thinking twice before trying to cash-out through the major peer-to-peer exchanges.”
• LocalBitcoins did not respond to requests for additional comment.

Ian Allison contributed reporting.

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What makes Ethereum culture click?

Maker Foundation board member Tonya Evans and former ConsenSys chief marketing officer Amanda Cassatt joined CoinDesk senior reporter Leigh Cuen on Monday to discuss Ethereum’s ethos in an hourlong conversation streamed to the CoinDesk homepage.

“In terms of its structure and what it accomplishes in the world, it’s by default a global movement,” Cassat said of the world’s leading smart-contract blockchain.

Related: Market Wrap: Bitcoin Blasts Past $10,000; Ethereum Fees Up 550% in 2020

Read more: Ethereum as Lifestyle Brand: What Unicorns and Rainbows Are Really About

Evans, also a law professor at Penn State’s Dickinson Law School, said Ethereum can yield a more equitable version of global finance. Inclusion is baked into the platform but shouldn’t be taken for granted, she said.

“We have a better chance with this system than we do with the existing infrastructure. But will this end up being a microcosm of tech and finance? In many ways, it looks like that now but there is promise.”

The CoinDesk Live session was the first in a five-day series of live-streamed conversations. It comes as part of CoinDesk’s Ethereum at Five package.

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Cryptocurrency hedge fund Tetras Capital is calling it quits.

• The New York-based fund is shutting down and returning investors’ money after quarters of low returns, according to a person with direct knowledge of the matter who spoke to CoinDesk on condition of anonymity.

• The fund struggled to perform and posted about a 75% loss life-to-date since opening in 2017, the source said. 

• Tetras Capital managed upwards of $33 million at one point for more than 60 investors who pitched in at least $100,000 apiece, according to financial filings.

Tetras Capital’s closure adds to a growing line of cryptocurrency hedge funds folding after crypto prices slid from peak highs in 2017. 

• According to a Crypto Fund Research report, at least 68 crypto hedge funds closed last year internationally, almost double the number – 35 – in 2018.

The fund launched in 2017 with a focus on altcoins, Tetras Capital co-founder Alex Sunnarborg said in a 2019 Forbes interview. 

• Alternative cryptocurrencies, or altcoins, are digital assets other than bitcoin.

• One altcoin trade Tetras claimed to have made was a short position on the cryptocurrency ether at a price of $700 in May 2018, according to the interview and a fund investment report.

• The short view appears to have been the right call, as ether tumbled below $100 last year and has lately been trading in the $200 range.

• Sunnarborg, a former Raymond James and CoinDesk analyst who sold crypto-asset market research app Lawnmower to this news publication, managed Tetras Capital with partners Brendan Bernstein and Thomas Garrambone. 

• Bernstein and Garrambone have worked as analysts for a number of investment banks, including Goldman Sachs, JPMorgan, Deutsche Bank and Torreya Partners.

Related: Whale Alert: $27M From 2016 Bitfinex Hack Is on the Move

Requests for comment from Tetras Capital, Sunnarborg, Bernstein and Garrambone were not returned by press time.

See also: Prime Factor Capital Is Shutting Down: Lack of Capital Cited as Prime Factor

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U.K.-based fintech firm Revolut announced Tuesday it has added Stellar lumens (XLM) to its list of supported cryptocurrencies. 

• In a press statement emailed to Coindesk, Revolut said customers will now be able to trade and hold XLM on its platform.
  
• According to the statement, Stellar’s addition was in response to “overwhelming demand” from users. Revolut currently supports a total of six cryptocurrencies including bitcoin, ether, XRP and bitcoin cash.
  
• Earlier this month, Revolut announced its customers in all U.S. states except Tennessee could buy, sell or hold bitcoin and ether on its platform. While Revolut had started operating in the U.S. in March, it then partnered with Paxos to gain regulatory permission required to offer crypto banking services. 
  
• “Adding Stellar and passing ownership of cryptocurrencies to our customers are the first in a series of steps we are taking to seriously overhaul our crypto product,” Ed Cooper, the company’s head of crypto, said in the statement.
  
• In an email sent to its customers last month, Revolut said it would give users legal control over their cryptocurrencies starting July 27. Although the firm said it would cease to be the “legal owner” of the available cryptos, users would still be unable to transfer the funds outside of Revolut’s ecosystem. 

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The price of gold reached a new all-time intraday high of $1,942 Monday, extending a rally that started in 2019.

• A record high for the yellow metal comes during an approximately 28% rally since January.
• Gold’s previous record high of $1,924 was reached on September 6, 2011.
• Bitcoin, often viewed as digital gold, soared to $11,400 as the stalwart cryptocurrency keeps pace with gold. 
• Bitcoin gained more than 13% over the past 24 hours, according to OnChainFX. 

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A second private sale of the Polkadot token (DOT) netted the Web3 Foundation and Parity Technologies some 3,982.07 bitcoin (BTC) worth an estimated $43.3 million at press time, according to sources.

A bitcoin address shared with CoinDesk saw 1,059 transactions beginning July 24 at 5:22 UTC.

The token offering was not available in certain jurisdictions such as the United States, according to the sale’s website. DOTs were listed for $125 per token, according to Reddit users claiming to be involved in the sale. The Web3 Foundation did not return requests for comment.

Related: Polkadot’s Inaugural Vote Could Expand DOT Supply by 1,000x

Additionally, the Polkadot community voted to redenominate the smallest subunit of the DOT token, the Planck, this past weekend for a “simpler, smoother user experience when using DOTs within the network,” the Web3 Foundation said in a tweet.

“The community vastly favours a New DOT denomination which is defined as 10,000,000,000 Planck or, put alternatively, a ‘stock-split’ of the original, old DOT by one hundred,” Polkadot and Parity Technologies founder Gavin Wood said in a July 26 blog post.

Read more: Polkadot’s Inaugural Vote Could Expand DOT Supply by 1,000x

Polkadot raised $145 million in 2017, selling 50% of the network’s then 10 million DOTs, according to Messari. (The number of DOT tokens has since risen, following the redenomination vote.)

Related: Bitcoin News Roundup for June 19, 2020

Polkadot’s raise comes on the heels of last week’s $42 million public sale of the Avalanche blockchain’s AVAX token.

Zack Voell contributed reporting.

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Whale Alert said on Monday that Bitfinex hackers are shuffling around millions of dollars in bitcoin stolen during the massive Bitfinex exchange hack in 2016.

• The market-tracking and market-moving Twitter account documented nine transactions on Monday that saw about 2,550 total bitcoin (~$27 million) move from wallets associated with the 2016 hack into new unknown addresses.
• In 2016, a Bitfinex security breach resulted in the theft of nearly 120,000 bitcoin from the exchange. It is one of the costliest bitcoin hacks of all time and one of the single-largest by coin count, though it pales in comparison to the infamous Mt. Gox hack of 2014.
• Monday’s transactions came in two volleys: four at 16:41 UTC worth nearly $5.8 million, and five worth almost $22 million an hour later.

See the first tweet below:

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High spot bitcoin volume not seen since June is helping price while Ethereum’s DeFi expansion continues to include costly network fees.

• Bitcoin (BTC) trading around $10,829 as of 20:00 UTC (4 p.m. ET). Gaining 9.7% over the previous 24 hours.
• Bitcoin’s 24-hour range: $9,849-$10,964
• BTC above 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin hit $10,964 on spot exchange Coinbase Monday, a price level not seen since August 2019. “The bitcoin breakout seemed to finally have happened as we lifted off from $9,800,” said Jack Tan, of Taiwan-based quantitative trading firm Kronos Research. “The trend is clear and we are headed higher.” 

Read More: Odds of Bitcoin Hitting Record High in 2020 Are (Slightly) Up

Related: Leading Austrian Telecom Provider Adds Cryptocurrencies to Its Cashless Payment Network

Bitcoin trading volume on Coinbase Monday was at $292 million. This was the highest since June 11, when volumes hit $255 million. 

Traders have long discussed the $10,500 price range as a level to stay above to fuel a lengthy bull run, said Neil Van Huis, director of institutional trading at Chicago-based crypto liquidity provider Blockfills. “We need to stay over $10,500, so I would probably want to see a sharp interest in demand above that and to stay over it for more than 24 hours to see if the bullishness has legs,” Van Huis said.  

Despite the excitement Monday, bitcoin’s jump might compel selling in the alternative cryptocurrency, or altcoin, market, said Kronos’ Tan. “Unfortunately, this might actually suck the energy out of the altcoins and high-flying DeFi tokens.” 

One dynamic to watch: The ETH/BTC pair Monday is down 4% on Coinbase as traders are selling ether for bitcoin on the spot market.

Related: Silvergate’s Bitcoin-Backed Lending Product Grew 80% in the Last Quarter

Regardless of the rebalancing, Chris Thomas, head of digital assets for broker Swissquote, says DeFi is the main reason for the cryptocurrency markets’ move up overall. “It’s purely DeFi driven,” said Chris Thomas. “We will likely see a lot more of this, resulting in ether driving higher and pulling everything else with it.”

Ethereum fees jump 550% in 2020

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Monday trading around $323 and climbing 5.6% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Ethereum Miners’ Income Soars by 60% in a Month

In January, the average fee on the Ethereum network was 0.000542 ETH. So far in July, average fees on Ethereum are at 0.003532 ETH, a 550% increase in the cost to conduct transactions on the second-largest blockchain by market cap, according to data aggregator Blockchair. 

“The recent rise of ether’s price could be explained by the fact that large users and investors in the DeFi ecosystem are buying ETH now in order to pay less gas fees for each transaction,” said Jean-Baptiste Pavageau partner at Paris-based quant firm ExoAlpha. 

Some traders may be taking advantage of this rise in fees, stockpiling ether as the situation may only exacerbate as 2020 continues. “Speculators are actively monitoring the DeFi ecosystem and are anticipating growth of the Ethereum network over the coming months, increasing the demand in ether to pay for the gas fee of each transaction,” added Pavageau. 

Read More: MakerDAO Passes $1B Milestone in DeFi First

Other markets

Digital assets on the CoinDesk 20 are mixed Monday. Notable winners as of 20:00 UTC (4:00 p.m. ET): 

• ethereum classic (ETC) + 9.5%
• bitcoin sv (BSV) + 9%
• bitcoin cash (BCH) + 8.9%

Read More: FTX to Launch ‘Scalable’ Decentralized Exchange in Weeks

Notable losers as of 20:00 UTC (4:00 p.m. ET): 

• tezos (XTZ) – 4%
• basic attention token (BAT) – 3.8%
• stellar (XLM) – 3.3%

Read More: You Can Now Buy Hedera Hashgraph’s HBAR Token via Simplex

Equities:

• The Nikkei 225 in Asia ended the day in the red 0.16% after a four-day weekend, dragged lower by anxiety in U.S.-China relations.
• The FTSE 100 in Europe slipped 0.31% Monday as travel stocks took a beating on fresh quarantine rules in Spain.
• The U.S. S&P 500 index gained 0.60%, with positive sentiment supported by the U.S. government's $472 million allocation to coronavirus vaccine research.

Read More: Silvergate’s Bitcoin-Backed Lending Product Grew 80% in the Last Quarter

Commodities: 

• Gold is up 2% at $1,938.40 as of press time. The yellow metal’s price hit an all-time high of $1,945.72 Monday. Its previous high of $1,921.18 occurred in 2011.
• Oil is up 0.86%. Price per barrel of West Texas Intermediate crude: $41.60

Read More: 85% of Italian Banks Are Exchanging Interbank Transfer Data on Corda

Treasurys:

• U.S. Treasury bonds were mixed Monday. Yields, which move in the opposite direction as price, were up most on the 10-year, in the green 3.2%.

Related Stories

• Odds of Bitcoin Hitting Record High in 2020 Are (Slightly) Up, Options Data Suggests
• First Mover: Bitcoin at Last Passes $10K, but Why Has It Struggled While Gold Shone?

China’s Blockchain Service Network (BSN), the government’s ambitious state-backed blockchain infrastructure project, has continued to show substantial growth despite significant internal friction between private and state contributors.

Crypto services provider Matrixport has launched its own derivatives exchange to go after surging activity in the options space.

• The Singapore-based company said the new derivatives exchange, dubbed Bit.com, would first list a BTC/USD perpetual swap on Aug. 3, before adding a series of options contracts on Aug. 17, according to a report by The Block.
• Monthly options volumes have increased sharply from $1 billion in January to $2.5 billion by June; it spiked to over $3 billion in May’s halving event.
• Bit.com said it wants to rival Deribit, the Panama-based exchange that constitutes 88% of market share, according to data site Skew.
• That Matrixport opted to launch a bitcoin/U.S. dollar perpetual swap could be seen as a bid to challenge market leader BitMEX – its “perp” has nearly $800 million in open interest at press time.
• Matrixport also provides over-the-counter trading, lending and custodial services; it was spun out of Bitmain in 2019 and both the chipmaker and co-founder Jihan Wu remain major shareholders.
• Earlier this year, Bloomberg said Matrixport was seeking to nearly triple its valuation to $300 million in a capital raise; COO Daniel Yan said the $300 million valuation was misreported.

See also: Odds of Bitcoin Hitting Record High in 2020 Are (Slightly) Up, Options Data Suggests

Related Stories

• Private Sector Could Bring Value to Future CBDC Launches, Says IMF Official
• US Government Files Fresh Charges Against PlexCoin ICO Organizers
• FTX to Launch ‘Scalable’ Decentralized Exchange in Weeks
• MakerDAO Passes $1B Milestone in DeFi First

Twitch is offering discounts to subscribers paying in crypto, a federal court ruled bitcoin is money and R3 Corda’s blockchain is a big thing in Italy’s banking system.

You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here. 

It’s Settled
R3’s Corda blockchain is used by 55 (~85%) Italian banks for interbank reconciliation, speeding up the process of double-checking transaction logs. The country’s Interbank Agreement was updated in May 2019 to include data standardization opening a window for blockchain processes to be implemented. Using the old system, the average time for reconciliation was between 30 and 50 days. On Corda, reconciliation is completed within a day. Separately, BCB Group is launching a SWIFT alternative for instant cash-crypto settlements for several European currencies. 

Related: First Mover: Bitcoin at Last Passes $10K, but Why Has It Struggled While Gold Shone?

XRP Purchases?
Payburner is a new, non-custodial payments platform based on XRP that will work on the Chrome and Brave web browsers. Built as a labor of love by Ripple executive Craig DeWitt, the platform leverages Xpring, a Ripple project that provides tools and funding for developers and startups working with XRP. Released in beta, Payburner can be used to purchase goods online using the XRP cryptocurrency.

Twitch Hitches With
Twitch is giving subscribers a 10% discount if they pay in bitcoin, ether, bitcoin cash or litecoin. The Amazon-owned company, with around 3.8 million broadcasters in Q1 2020 and around 1.44 million concurrent users as of March 2020, announced the deal on Saturday. Twitch first introduced a cryptocurrency payment option in 2014, removed it in early 2019 and brought it back a few months later. The company uses the U.S.-based BitPay to process its crypto payments.

Decentralized Derivatives 
FTX will launch an exchange for the growing DeFi space on top of the Solana blockchain. Called Serum, the decentralized exchange will be geared towards derivatives, and aims to solve some of the structural vulnerabilities and limitations in the existing DeFi space. Solana claims it can process 50,000 transactions per second, compared to Ethereum’s 15. The new dex will be fully interoperable with Ethereum so it can tap into the existing DeFi space, which saw its market cap break the $4 billion boundary over the weekend.

Bitcoin Is Money 
Bitcoin is a form of “money” in Washington, D.C., a federal court said Friday. The ruling came as part of the United States v. Harmon, where Chief Judge Beryl A. Howell wrote that money “commonly means a medium of exchange, method of payment, or store of value… Bitcoin is these things.” The court’s decision to define bitcoin as money was in the context of a case alleging money laundering under federal law. Neeraj Agrawal, director of communications at Coin Center, said the court’s comments mean that bitcoin “is treated as money in the context of money transmission licensing in D.C., nothing more.”

Quick bites

• China’s BSN “has attracted more than 6,000 enterprise, government and individual users” (Bloomberg)
• Cardano’s latest upgrade is primed for launch (Decrypt)
• Bitmain spin-off Matrixport is launching a crypto derivatives exchange (The Block)
• How billion-dollar crypto scams lure victims (Bitcoin.com)
• Leading Austrian telecom provider adds crypto to a cashless payment network

At stake

Related: Blockchain Bites: Ghosn’s Crypto Payments, Russia’s Red Line and Why Banks Won’t Bite

The decentralized finance (DeFi) space crossed a milestone: MakerDAO’s total value locked-in is now over $1 billion. $1.1 billion, to be exact.

Built primarily on the Ethereum blockchain, DeFi has become crypto’s most vibrant sector. Nearly $3.6 billion is currently flowing through its interlinked protocols and applications, up from $1 billion in early February, according to DeFi Pulse.

It’s the latest emergent industry that the “world’s computer” has unlocked. In just five years, Ethereum has given rise to crypto’s most promising use cases – and some of its biggest regrets.

From ICOs to stablecoins, and dapps to DAOs, Ethereum’s programmable, decentralized network has grown into a platform for real financial and technological experimentation. Plus, as CoinDesk’s Leigh Cuen reporters, Ethereans know how to have fun while disrupting everything.

CoinDesk is marking Ethereum’s five-year anniversary this week with a special package of reported stories, live streamed conversations and a pop-up newsletter, all celebrating Ethereum at Five. You can subscribe to the special Substack newsletter here.

Market intel

The Golden Context
Bitcoin finally passed the $10,000 mark over the weekend. First Mover asks why this hadn’t happened sooner. In the past month, fears of stagflation have settled in due to the greenback’s devaluation and an underutilized labor market in the U.S. This has pushed gold’s prices – seen as a hedge against inflation – to all-time highs of $1,940 (passing the previous ceiling of $1,921 an ounce in 2011). Bitcoin, meanwhile, has been stuck in a narrow trading range since April and only recently passed the $10,000 threshold, approximately half of its 2017 all-time-high of $20,000. “Bitcoin has its own microeconomics very unique to crypto, including mining difficulty cycles, the changing regulatory environment and other factors that have little to do with inflation,” Richard Rosenblum, co-founder of GSR, said. Subscribe here to get First Mover directly in your inbox.

Mining Profits
Ethereum miners’ daily income has soared over 60% in a month, according to Sparkpool. The profitability is tied to soaring transaction fees and relatively slow growth in competition from other miners. Daily income was around $1.85 per 100 megahashes second (MH/s) on the network on June 27, rising as high as $3.27 on July 25. This surge has outpaced ether’s (ETH) price jump of 40% over the same period.

Opinion

Crypto’s Outthinking Fintech’s Box
Crypto is so much more than fintech. In the latest Crypto Long & Short newsletter, CoinDesk’s head of research, Noelle Acheson, argues fintech is a tired word to describe financial innovation. While crypto creates new pathways for moving money around and generating returns, it’s also a data innovation and an innovation of authority, leading to new and revised ideas of what money is and can be. “Given the impact of crypto-based innovation on our understanding and application of financial concepts, surely we can come up with something better. Using a tired catch-all for something so significant is like trying to put a formidable force into a tidy bucket. 

Podcast

Known Unknowns
What is the future of decentralized exchanges in a regulatory environment shifting towards greater transaction monitoring and know-your-customer (KYC) constraints. CoinDesk’s Anna Baydakova sits down with executives and contributors to Hodl Hodl and Bisq – which eschew centralized custody – to discuss the responsibilities, risks and rewards of dealing in crypto without revealing your identity. 

Who won #CryptoTwitter? Related Stories

• First Mover: Crypto’s $35T Moment Could Come From Analog-World Stock Listings
• Blockchain Bites: OCC’s Crypto Letter, Eth 2.0’s ‘Official’ Testnet and Dinwiddie’s Tokenized Airball

Industrial-scale bitcoin mining is an extremely capital-intensive business. Debt financing can be an attractive way to raise the funds needed to purchase equipment without diluting ownership through equity issuance. But the mining industry is volatile and loans generally carry high interest rates and strict collateral requirements, making it a double-edged sword for those that borrow to expand. Case in point: Canadian bitcoin miner Bitfarms.

CoinDesk Research presents an in-depth look into Bitfarms. With over 29,000 ASIC miners spread across five facilities, Bitfarms is one of Canada’s largest bitcoin mining companies. Throughout 2019, the company quickly grew its overall hashrate, which was financed primarily through a $20 million loan from Dominion Capital. In this report, we examine Bitfarms’ financial position and evaluate its ability to pay down debt coming due in 2021.

Some takeaways:

• At its core, Bitfarms operates decent equipment at a respectable cost of electricity, resulting in positive operating cash flows.
• However, the company used high-interest-rate debt with large balloon payments to expand operations. Now, with over $20 million in financial obligations coming due by the end of 2021 coupled with declining revenue output per terahash, Bitfarms may struggle to pay off its debt.

Related: First Mover: Bitcoin Miners Find Upgrade Financing Aplenty, Even as Prices Languish

Read more: In Canada They’re ‘Essential,’ In Argentina They’re Shut Down: Bitcoin Miners Reckon With COVID-19

• Assuming there’s no significant jump in bitcoin prices, the Toronto-based Bitfarms will likely need to expand operations with efficient mining equipment within the next 12 months, which will require the company to raise additional capital.
• A list of covenants and restrictions from its loan, however, hampers the company’s ability to raise capital through equity and debt, leaving Bitfarms with very few options.

Read the full report here.

Related Stories

• Binance Pool Poised to Grab More Bitcoin Hashrate in Russia and Central Asia
• Bitcoin Mining Difficulty Sets New Record High 2 Months After Halving
• Bitcoin Miner Maker Canaan Drops 3 Directors in Possible Boardroom Coup

A director at the International Monetary Fund (IMF) thinks the private sector could bring value to the technology supporting central bank digital currencies (CBDCs), should they be adopted by nations.

• Tobias Adrian, a financial counselor and director of the IMF’s Monetary and Capital Markets Department, gave a keynote address last week at the “Building CBDC: A Race To Reality” conference, sponsored by blockchain software firm R3.
• Adrian offered two models for the provision of a CBDC, varying in how they would pair the private sector with central banks.
• The first model looked at synthetic CBDCs (sCBDC), which are backed by the liabilities of a central bank but issued with the aid of a private entity, such as a commercial bank.
• Adrian noted the private sector should be left to deal with customer due diligence, wallet design and currency distribution, while the central bank would be in charge of regulation and supervision.
• The second, “two-tiered,” model puts central banks in charge of the issuance of a CBDC and transaction settlement, with technology likely to be occasionally updated.
• As such, the sCBDC model would spur private sector-led innovation at a more “fundamental level,” he said.
• Such innovation “could be extremely valuable, given the pace of technological change, and given many central banks’ limited experience in providing retail services,” according to Adrian.
• However, there are several potential challenges to central banks partnering with private firms, including interoperability, unfair competition and payment system stability.
• Overall, Adrian said both models could offer an “especially liquid and safe payment instrument.”
• Adrian spoke at a time when central banks are more widely expressing a willingness to examine CBDCs, with the Bank of England, Bank of Japan and Sweden's Riksbank among those already exploring, if cautiously, the possibility of a future launch.
• The People’s Bank of China (PBOC) is currently taking center stage with its two-tier model, and already has its digital yuan moving to testing with commercial enterprises.

See also: Private Firms Can Boost Central Bank Digital Currencies, IMF Official Says

Related Stories

• Bitmain Spin-Off Launches Crypto Exchange to Go After Booming Options Market
• US Government Files Fresh Charges Against PlexCoin ICO Organizers
• FTX to Launch ‘Scalable’ Decentralized Exchange in Weeks
• MakerDAO Passes $1B Milestone in DeFi First