Cryptocurrency update: China’s crypto clampdown intensifies

Commodities

Beijing announces some of the toughest measures against cryptocurrency to date.

Cryptocurrency update

China announces harshest anti-crypto measures yet

Bitcoin was rocked on Friday by a big right hook delivered by the People’s Bank of China.

China’s central bank has ruled that all cryptocurrency transactions made in the country, and all those coming from overseas made by domestic Chinese citizens, are illegal.

Naturally, this caused a landslide in BTC prices. The coin dropped over 8% on the day – although it has since clawed back some of those losses and is trading into the green as of Monday 27th September.

This is the harshest and most blatant anti-crypto measure undertaken by China to date.

Beijing’s official stance is that cryptocurrency is a) illegitimate, b) an environmental disaster, and c) something it cannot control completely. Freeing finances from government oversight is the entire point of decentralised finance (DeFi) after all. In a country as centralised as China, that’s a no-go.

From here on out, it’s pretty much a given that Chinese measures against crypto will get even tighter.

The POBC has said monitoring will step up to stop banks handling any crypto-related transactions. Bank bitcoin transactions were ruled out by China as early as 2013, so really this shouldn’t come as a surprise.

Authorities will now seek to eradicate mining operations entirely. Recently, over 10,000 mining rigs were seized in Inner Mongolia, one of the busiest regions for cryptocurrency mining in China, as the nation steps up its efforts.

This could have major consequences for global Bitcoin supplies. The hash rate slowed dramatically when the last wave of Chinese anti-mining operations went into overdrive back in June. Expect more of the same – although that could benefit prices (scarce supply + high demand = profit?).

Now it’s a scramble from international exchanges to drop Chinese customers.

Huobi and Binance, two of china’s biggest exchanges, has stopped registrations for new Chinese clients. Wallet supplier TokenPocket has also said it will be winding up services for mainland Chinese customers and would willingly embrace regulation.

Twitter rolls out Bitcoin tipping

The rest of this article will look at those who feel more positively about crypto. Twitter CEO Jack Dorsey is certainly one of them.

It was announced last week that Twitter will now start accepting tips in the form of Bitcoin payments. That’s right: if you like a tweet you can show your appreciation by sending the original poster a little chunk of cryptocurrency for their troubles.

Twitter has turned to Lightning to enable Bitcoin integration. The feature is currently available for iOS users only. Android Twitter browsers will support it soon, according to Dorsey, but the launch date is yet to be revealed.

Clicking on the feature enables users to tip creators through third-party services like CashApp, which is operated by Square, Jack Dorsey’s payment platform.

There is also talk of Twitter going in hard on non-fungible tokens (NFTs) – a new digital way to present and own media.

These digital assets — often JPEG artwork — have exploded in popularity and are often used as profile pictures. Twitter is working on a solution to authenticate whether a user actually owns said JPEG.

This could give NFTs a fresh sheen of legitimacy.

Either way, it’s very clear that Jack Dorsey is a big crypto fan. It might also be helping crypto prices in general. On Friday, following the POBC statement, the market was a sea of red. Now, it’s much more balanced with key tokens back in the green.

That’s the power of social media for you.

Cardona to pump $100m into DeFi

While China has made its stance on decentralised finance abundantly clear, there are others who are convinced it is the future.

Emurgo, the investment wing of the Cardano network, which uses the coin of the same name, has pledged to invest $100m into developing DeFi.

The announcement was made by Emurgo CEO Ken Kodama at the 2021 Cardano Summit – an annual conference dedicated to everything involving the world’s fourth-largest blockchain.

Kodama said this major investment would accelerate the development of the Cardano ecosystem.

Emurgo’s plan seems to cover all bases, seeking to boost blockchain education, NFT solutions, and pioneer DeFi as a whole.

This isn’t the only thing Emurgo plans to invest in. At Sunday’s Summit, the company announced it also plans to pump more funding into African artificial intelligence, blockchain, and smart technologies firm Adanian Labs.

As well as being a blockchain network, Cardano is also one of the world’s foremost altcoins (i.e., a token that is not Bitcoin). Despite this big announcement, the token was in the red. Cardano had fallen 2.5% in trading on Monday morning.

Cryptocurrency update: Bitcoin wobbles on China concerns

Bitcoin starts the week in the red thanks to stock market woes and a potential tightening of regulatory oversight.

Cryptocurrency update

China and regulation fears rock Bitcoin

As Bitcoin becomes ever more prevalent, the influence of non-crypto markets on futures contracts is becoming larger.

As of Monday 20th September, Bitcoin had dropped roughly 5% on the day, thanks to a fall in S&P 500 futures triggered by the China Evergrande Group situation.

Property giant Evergrande fell 10% in Hong Kong during Asian trading this morning, causing globe-spanning stock market ripples. As the S&P 500 fell 1%, Germany’s Dax had also fallen 2%.

The fallout from this is investors looking to mitigate risks across their portfolios. As cryptocurrencies exhibit high volatility, Bitcoin and other tokens may be on the chopping block.

Anticipation of an October or November stimulus taper from this week’s Fed meetings has also strengthened the greenback, making the BTC/USD pairing a little weaker, hence the price drop.

Additionally, further scrutiny is being paid to stablecoins. Stablecoins are crypto tokens backed by the USD. The most prominent of these is Tether. This is meant to cut out much of the volatility we see in the most popular coins, but regulators aren’t so sure.

There are rumblings that further regulation is going to hit stablecoins, which promises big changes for the crypto market as a whole. Some observers believe they may be a threat to the US’ entire crypto situation. A formal review into stablecoins by the Financial Stability Oversight Council could be on the way.

The total market capitalization of all stablecoins has reached $115 billion, growing over ten times over the past 12 months.

Essentially, it will be a rocky week for cryptocurrencies. Right now, all of the major tokens are in the red.

AMC to accept crypto payments

Every so often, you get an overlap of two great internet sensations. Now, the worlds of crypto and memestocks are colliding as AMC Entertainment Holdings announces its plans to accept Bitcoin and crypto tokens as payment.

AMC is the meme stock de jour; one of the stocks exceptionally popular with a new breed of traders. The likes of GameStop have already seen their prices somewhat artificially pumped by a younger generation of traders and investors in an attempt to rattle the old guard.

We know cryptocurrencies are also a favourite of new, younger investors. It seems only right that these two paths should cross.

AMC CEO Adam Aron has been fairly clever here. By aligning AMC with the crypto market, he’s continuing to appeal to the types of investors and traders already interested in the meme stock.

Additionally, the crypto sector may help create further revenue streams for the cinema chain. One idea that Aron allegedly loves is tapping into the non-fungible tokens (NFT) sector. This burgeoning digital asset market has picked up steam massively across 2021, and AMC’s entry point could be to offer its own NFTs in the form of commemorative movie tickets users can buy and keep.

It’s a shrewd move from AMC no doubt – but is banking on NFTs help alleviate the company’s potential future woes around declining cinema attendance?

Litecoin activity outstrips Dogecoin and Bitcoin Cash

Move over Doge: crypto users have a new best friend.

According to Litecoin Foundation Director Jay Milla, the number of active addresses on the Litecoin network has overtaken the number using Dogecoin and Bitcoin Cash.

The growth of wallet activity has overtaken many other large-cap tokens, as Milla recently tweeted:

At 450,000, active Litecoin addresses is over double that of Cardano’s 214,000. Bitcoin Cash’s network user numbers clock in at 101,000. Surprisingly, Dogecoin’s only totals 60,890.

Active addresses are used to monitor and rate on-chain network activity across the crypto market. Analysts use it to sport patterns across the wider sector. It is not necessarily an indicator of the number of traders or investors buying a particular cryptocurrency.

Litecoin recently took a hit thanks to some fake news. It was reported that Walmart had agreed to partner with Litecoin to accept the token as payment. This is false. No such partnership exists.

According to Litecoin, the confusion was caused by an employee tweeting the partnership announcement without authorisation. Walmart has subsequently confirmed it has not partnered with the Litecoin foundation.

Cryptocurrency update: BTC rally pushes crypto market above $2 trillion

Key tokens start the day with greens across the board, with Bitcoin and Ethereum leading the charge.

Cryptocurrency update

Global cryptocurrency market hits $2 trillion

With BTC and ETH reaching highs not seen for months, the total value of the global crypto market has exceeded $2 trillion for the first time since May.

Bitcoin crept above $48,000 on Monday morning, although it fell back towards $47,175 as the day progressed. Ether, which has strengthened on a successful network upgrade, is on a seven-day high after gaining 11% throughout the week. Cardano is up 53% across the last seven days.

It’s a good sign of market confidence in digital tokens. Bitcoin in particular had been experiencing a torrid couple of months recently. A strong sell-off in July, precipitated by falling token prices influenced heavily by China’s crypto crackdown, caused prices to dip below $30,000. Now, they’re rallying strongly and eyeing up the next resistance level.

During the BTC sell-off with prices at their lowest in July, the overall crypto market cap was around $1.12 trillion. Its peak, recorded in May when Bitcoin was trading at all-time highs, totalled $2.5 trillion.

There is still ground to recover. Volatility, however, is never far away from the world’s cryptocurrency markets.

While the bulls are feeling pretty good, there is still time for prices to go south again. Analysts predict the current BTC surge could top out at around $55,000. After that, the token may begin to fall away below $30,000 again.

The impact of the upcoming US Infrastructure Bill’s crypto tax provisions has yet to be truly felt.

That said, some are still optimistic. Others are predicting BTC hold its place above $40,000 and possibly over $50,000, going forward.

Singaporeans prefer Ether

A joint survey by digital token exchange Gemini, crypto market data analysts CoinMarketCap, and finance platform Seedly has revealed Singapore’s favourite coin: Ether.

78% of those surveyed by the group stated they hold onto Ether, compared to 69% that hold Bitcoin. Cardano was the third most popular token with 40% of respondents saying they had invested in it.

4,000 adults were surveyed as part of this study. 67% of respondents said they included digital tokens in their portfolios, and two-thirds of that group said they had increased their crypto holdings during the pandemic.

A fifth of those surveyed said that half or more of their investments are in cryptocurrencies.

Ether has been tipped to overtake Bitcoin as the world’s most popular digital token in the future. Many decentralised finance (DeFi) apps run off the Ethereum blockchain network, for instance, and users wishing to use said blockchain must pay a small fee in ETH to do so.

The network’s recent London Fork upgrade has introduced more user-friendly features, which may explain why ETH is rallying right now.

Still, with Bitcoin accounting for up to 68% of the total worldwide crypto market, Ether has some way to go before it can challenge for the top spot. It does appear, however, to be moving in the right direction – particularly if one nation’s traders and investors are seeing high potential in Ether.

The top five crypto-investing banks revealed

Institutional support for cryptocurrencies has been steadily building throughout the year, even with Bitcoin’s erratic price behaviour. Banks have stepped up their digital finance services and offers and been keen to grab their slice of the $2 trillion market.

A report from Blockdata has put together the 13 banks investing the most capital into blockchain networks and cryptocurrency wallets. Together, they represented over $3bn in investments. This includes token purchases and acquisition, as well as investment into tech companies and others in the digital finance ecosystem.

Blockdata said it reviewed banks in terms of size of funding rounds as a proxy of investment into the crypto space, saying it used that measure as banks participated in funding rounds with multiple or many other investors.

The top five crypto-investing banks as identified by Blockdata are:

  • Standard & Chartered – $380m in 6 investments
  • BNY Mellon – $321m in 5 investments
  • Citibank – $279m in 14 investments
  • UBS – $266m in 5 investments
  • BNP Paribas – $236m in 9 investments

While the above banks represent those betting the most on the crypto sector, it’s starting to pick up steam amongst other financial institutions.

55% of the world’s 100 biggest banks by assets under management are investing directly or indirectly in companies and projects related to digital currencies and blockchain, according to Blockdata research.

 

Thematic investing: cryptocurrencies

Investments

Cryptocurrencies are the focus of our latest thematic investing guide. Should you be putting your money in cryptocurrencies? What are your options? Have a read to find out.

A look at cryptocurrencies

What is a cryptocurrency?

Cryptocurrencies are digital currencies that can be exchanged online for goods and services. Another name for a crypto coin is a token. Cryptos are bought using real currency via exchanges or are tradeable via contracts for difference (CFDs).

Blockchain technology powers cryptocurrencies. Think of this a bit like a digital ledger. It manages and records crypto transactions. A blockchain is decentralised and is spread across many different computers. New tokens are generated using a process called mining. It’s essentially a complex computational algorithm that, when solved, creates a new token.

Over 10,000 different digital currencies are traded. The current total market cap, as of June 3rd, 2021, is above $1.5 trillion. While there is no such thing as the best cryptocurrency, some tokens are much more popular than other. Bitcoin is the world’s most popular and acts as a market bellwether. When its price rise, so too do other important tokens. The opposite is also true, as we’ve recently seen a big crash in Bitcoin prices.

As of June 3rd, 2021, the top five cryptocurrencies by market cap are:

  • Bitcoin – $706.1bn
  • Ether – $317.5bn
  • Binance Coin – $62.1bn
  • Tether – $61.7bn
  • Cardano – $56.4bn

Cryptocurrency prices & volatility

Cryptocurrency prices are some of the most volatile of any tradeable asset. This cannot be stressed enough. Just recently, the price of Bitcoin collapsed following outside influence. Elon Musk and Tesla’s decision to U-turn on accepting Bitcoin as payment, plus a crackdown on crypto mining in China set prices spiralling.

Bitcoin reached an all-time high in April when it broke above $64,000. Just a couple of weeks later, the world’s most popular cryptocurrency was trading below $31,000 for the first time since 2020. Its total market cap went from April’s $1.2 trillion reading to the $706bn figure mentioned above.

This kind of volatility is inherent to cryptos. There is a lot of supply and demand at play here, but digital currencies are certainly less stable than say gold or equities. Potential profits can be very high, but the losses can be huge.

Always do your research before you commit any capital. Trading and investing is inherently risky, but more so with cryptocurrencies.  Only invest or trade if you are comfortable taking any potential loss.

Investing or trading cryptocurrency

A couple of options are available to you.

Firstly, there is physically buying the tokens to store in a digital wallet in the hope they grow in value. Many investors are turning to cryptocurrency as a store of value, turning away from traditional assets like gold.

You must be very careful with this approach. Crypto investing can be a rollercoaster ride. One minute prices are nudging all time highs; the next billions have been wiped off open crypto positions.

If you do not wish to own any coins, but still want to trade cryptocurrencies, you may wish to look at contracts for difference. CFDs allow you to trade cryptocurrencies without owning any underlying assets. You instead trade on margin. This can allow you to open a position for a fraction of its total value – but you would be susceptible to higher losses.

You may also want to look at stocks based around the crypto industry as well. For instance, Coinbase went live with its initial public offering in April. Coinbase is the largest US cryptocurrency exchange, where users buy and sell bitcoins in a similar fashion to stocks listed on various global exchanges.

Volatility has struck again here, though. Because Coinbase is so tied in with the performance of cryptos, and especially Bitcoin, its share price rises and falls in line with the wider cryptocurrency market.

For example, when it went public, Coinbase’s initial share price was above $400. It’s currently trading at around $235. Despite this, according to Marketsx’s in-platform sanalyst tool, Coinbase is still considered a “buy”. It has a lot of potential to gain value alongside a recovery in cryptocurrency prices.

There is no best cryptocurrency. There are no best cryptocurrency stocks. What is a good or bad choice for your portfolio depends on your individual capital and your attitude to risk.

Remember: cryptocurrency prices are subject to high volatility, so only invest or trade if you can afford any potential losses.

Cryptocurrency update: Coinbase goes public, Bitcoin back down to earth, Cardano rallies

Coinbase is about to go public, while Bitcoin comes crashing down. Elsewhere in these week’s crypto update, Cardano looks like it could be about to jump.

Cryptocurrency update

Coinbase IPO is coming soon

Coinbase, the world’s largest crypto exchange, has made its SEC filing which means an IPO is coming very soon. Is this another step on the road to complete legitimacy for digital currencies? Very possibly.

As our Chief Markets Analyst Neil Wilson pointed out last Thursday, we’ve learned some interesting titbits ahead of Coinbase’s full public launch.

Firstly, because the exchange is based around a volatile asset, Coinbase earnings are volatile themselves.

“All of our sources of revenue are dependent on crypto assets and the broader cryptoeconomy. Due to the highly volatile nature of the cryptoeconomy and the prices of crypto assets, our operating results have, and will continue to, fluctuate significantly from quarter to quarter in accordance with market sentiments and movements in the broader cryptoeconomy,” the filing states.

Coinbase’ value is also completely tied in with Bitcoin prices. 70% of its revenue comes from BTC trades, with 13% coming from Ethereum.

“If demand for these crypto assets declines and is not replaced by new demand for crypto assets, our business, operating results, and financial condition could be adversely affected,” says the filing.

The filing went on to say: “More recently, we have experienced significant growth in the number of institutions on our platform, increasing from over 1,000 as of December 31, 2017, to 7,000 as of December 31, 2020.”

We’ve seen plenty of institutions and even corporations invest in cryptos and related digital economy infrastructure in recent times. The Coinbase IPO looks like it could be another important part of the puzzle.

Bitcoin tumbles but new all-time highs forecast

Newton’s Third Law of Motion states “what goes up must come down”. Maybe we could readapt it for Bitcoin to something more like “what goes up must come down but will very probably shoot back up again.”

Every time Bitcoin shoots up, it falls back down again as a serious market correction applies the breaks and momentum cools. Last week, the token shot to above $59,000, before higher yields and a pithy one-tweet analysis from the ever-present Elon Musk, dragged prices down to around $43,000. At the time of writing, BTC was above $48,000.

Are new all-time highs on their way? At the more optimistic end, Anthony Pompliano, partner at digital asset hedge fund Morgan Creek Digital, told Forbes he has set a BTC target price of $100,000 by the year’s end.

Some big names are urging caution though. Bill Gates is one of them. In an interview with Bloomberg, the Microsoft founder warned that, unless you have pockets as deep as Elon Musk, you should probably exercise restraint when looking into BTC.

“Elon has tons of money and he’s very sophisticated, so I don’t worry that his bitcoin will sort of randomly go up or down,” Gates said. “I do think people get bought into these manias who may not have as much money to spare. My general thought would be that if you have less money than Elon, you should probably watch out.”

More than $100bn was scrubbed off Bitcoin’s value on the latest price collapse, although subsequent gains will have gone a little way towards redressing those losses. As it stands, the world’s most popular crypto is up 50% this year.

In the world of Bitcoin, anything is possible, and it could start shooting back up at a moment’s notice. Volatility is never far away, so it might be best to heed Bill Gates’ warnings if your bank account doesn’t run into the billions.

Cardano has a busy week ahead

Cardano has been quietly soaring in recent weeks. The third-largest crypto currency in the world by market cap recently hit a new all-time high of $1.48 on Saturday but has pulled back to $1.28 at the time of writing.

Over the past twelve months, however, Cardano has been gaining value at a blistering pace. Across the year, it has gained 2000%, rising another 300% in February alone. Its market cap is now bobbing around at the $40bn level.

A fresh rally and new highs could be on their way too. Its developers are preparing a fresh update to the block-chain, preparing to turn it into an Ethereum-rivalling multi-asset network.

“We can today confirm that the ‘Mary’ Cardano protocol update is now fully confirmed for March 1,” the Cardano core development team, Input Output HK (IOHK), announced on Twitter last week. “The update introduces native tokens and multi-asset support, bringing exciting new use cases for Cardano.”

The update will allow Cardano to support stablecoins, digital tokens pegged to traditional currencies, as well as letting users create non-fungible tokens (NFTs). NFTs are a way to prove ownership and authentication of everything from social media posts to digital art using public blockchains—which have exploded in popularity in recent weeks.

Kiss bassist Gene Simmons has hopped aboard the Cardona train, buying $300,000 worth of the crypto. A sign of things to come? Possibly, but Cardona is one to watch across the next week at least.

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