CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Cryptocurrency update: Bitcoin eyes new all-time high on ETF boost
Bitcoin sets its sights on fresh all-time highs after getting ETF-shaped support this morning.
Bitcoin bounces as SEC gives crypto ETFs the green light
We spoke on Friday about the US Securities and Exchange Commission not being opposed to the idea of crypto ETFs.
Well, the SEC lived up to its word by okaying the introduction of cryptocurrency exchange traded funds on Friday.
Initially, BTC retreated to about $59,000 on the news, but Monday morning bought better price action. Bitcoin reached over $62,600 – its highest level for over 6 months – before finding a home more around the $61,100 mark.
Bitcoin has had a torrid time since peaking in April 2021. The volatility rollercoaster keeps on rollin’. But with the introduction of ETFs to the digital token trading sphere, the sector has been opened up wider. Can this stabilise prices? Maybe. It’s certainly possible that we’ll see a new all-time for Bitcoin as soon as the first exchange traded fund goes live.
Proponents of digital token ETFs reckon this is a good chance for traders and investors looking to enter crypto land to do so without needing to own any underlying assets. Plus, exchange traded funds by their very nature have to be regulated. That might attract those who are put off by crypto’s almost Wild West vibes.
ProShares Bitcoin ETF to start trading in 3,2,1…
It’s thought that ProShares’ Bitcoin ETF will be the first fund to start trading.
ProShares has said its newest fund will be available for trading on Tuesday.
The ProShares Bitcoin Strategy ETF, which will give exposure to bitcoin futures contracts but not the spot market, will trade under the BITO ticker.
NYSE Arca certified the fund’s approval for listing on Friday afternoon, around the time the SEC was mulling over approving such funds.
Let’s be clear: the SEC hasn’t actually given an explicit, formal declaration of crypto ETF approval. It may never give one. However, it’s clear to see that, with the upcoming launch of ProShares’ fund, that they’re fine.
So, brace for a bit of a deluge of digital token-tracking futures funds soon. Roughly 40 are alleged to be in the approval process.
Why the futures focus? According to SEC Chair Gary Gensler, futures-based products may be able to offer stronger investor and trader protections under current legislation.
As we know, there is little to no regulation in pure token trading right now. It is on the US’ agenda. For now, however, exchange traded funds may present a potentially “safer” option to traders. They are still pegged to crypto token prices though. I would expect to see some of that volatility spill into ETF performance.
Grayscale close to Bitcoin exchange traded fund filing
This week may see another big hitter punching its way into the new Bitcoin ETF frontier.
Reports suggest Greyscale is planning to convert its $38.7bn Bitcoin Trust (GCBT) into an ETF. It could make its application early this week.
This would be an interesting move. Greyscale is the world’s largest digital asset manager and the GCBT is also the largest trust of its kind in the world.
Where Greyscale’s plans differ to, say, ProShares is that the Trust is not linked to derivatives. It is composed of digital BTC tokens. Its ETF would do the same. That might throw up regulatory roadblocks during the approval process.
Based on the fact Greyscale’s proposed ETF would NOT be futures or derivatives based, some analysts believe there’s little chance of it gaining approval.
Once Greyscale makes its filing, authorities have 75-days to review it.
Cryptocurrency update: Bitcoin bounds upwards
Bitcoin continues its big comeback by reaching five-month highs in trading this morning.
Buoyant Bitcoin clears $57,000
The Bitcoin rally looks like it’s got some teeth.
The token reached its highest levels since May on Monday morning after clearing the $57,000 mark. Prices have subsequently pulled back, leaving BTC at around $56,500, but the coin is still up around 4.75% on the day.
This comes after Bitcoin notched 14% gains across last week. For the last two consecutive weeks, BTC has made double-digit gains.
Things are bullish in Bitcoin town.
For now, Bitcoin appears to be more resilient against potential macro trends that usually send the token’s price on a wild spiral. For example, China’s continued crypto crackdown does not seem to have blunted Bitcoin’s edge at all.
Other revelations like the Soros Foundation announcing it had started investing in Bitcoin have helped. These include US SEC Chairman Gary Gensler coming out and saying the Securities and Exchange Commission has no plans to pull a Beijing and ban Bitcoin transactions in the US.
Even the anti-crypto comments JPMorgan CEO Jamie Dimon made last week were not enough to knock BTC of its stride.
However, regulatory reform is probably on its way. Certainly, the perceived threat digital token traders have felt regarding tighter regulation has caused price wobbles in the past. Will a White House executive order waylay Bitcoin’s progress? Reports indicate that reform could be closer than it looks.
Is the White House planning a crypto regulation surprise?
Reports from Washington suggest the Biden administration is working on an executive order that could lead to wider crypto industry regulation.
According to White House insiders speaking to Bloomberg, the order would see the creation of federal agencies tasked with making recommendations on Bitcoin and Crypto. It would also touch on financial regulation, economic innovation, and national security.
A new crypto Czar could even be appointed if the order goes through.
That said, there is no hard or fast date attached to this measure. A White House spokesperson told Bloomberg that, regardless of the order making it into law, the US’ crypto strategy will be made public. It’s just a question of when.
Pressure has been building on US financial authorities to make some sort of noise regarding crypto. The market has been burning white-hot for the past couple of years, and with markets caps zig-zagging between $1.5 and $2 trillion given BTC’s performance, it’s clear something has to budge.
Treasury Secretary Janet Yellen has been agitating for a regulatory framework for digital currency regulation for some time now. Elizabeth Warren is also one of the influential voices calling for more to be done.
We don’t know when regulation will be stepped up in the US – but if these reports are accurate then we may see some sort of framework or regulatory tightening in the near future.
Blockchain firm ConsenSys announces funding round
ConsenSys, a blockchain firm specialising in Ethereum-based projects, is in talks for a new funding round. The Brooklyn-based business is hoping this fresh cash injection would take its value up to $3bn.
If it does reach this valuation, then ConsenSys would be a good case study in just how much blockchain and digital finance systems have expanded over the past 18 months.
In April, the business acquired $65m from the likes of JPMorgan and Mastercard in April. According to reports, ConsenSys is looking to raise $250m in its current funding round. Golden Tree Asset Management and Arca are alleged to be holding talks with ConsenSys.
ConsenSys mostly operates on the Ethereum platform, which is fuelled by the token of the same name.
Its projects have been used in several major Decentralised Finance (DeFi) operations. The most prominent of these is MetaMask – an important gateway for the DeFi ecosystem. More than $9bn has been facilitated by MetaMask via its token swap feature across its lifetime so far.
Cryptocurrency update: Bitcoin eyes $50k
After a strong weekend, Bitcoin travels upwards. Could it really be ready to punch above the $50k level once more?
Bitcoin makes gains
Sometimes tracking Bitcoin undulations can be exhausting.
The token gained over 8% on Friday and continued on its upward path to scrape slightly above $48,000 over the weekend. Analysts are now putting the psychologically important $50k level as BTC’s new target.
But this IS Bitcoin we’re talking about here. Even when making gains it does still feel like a case of one step forward, two steps back. At the time of writing, Bitcoin was in the red, trading down 1% at $47,559.
Even so, Bitcoin has made solid gains across the end of September and into October. In fact, it’s still up 60% this year, despite major price swings and volatility.
There are a couple of reasons why Bitcoin could be on the up.
For starters, US Federal Reserve Chairman Jerome Powell said they have no plans to ban crypto transactions. This pro-digital finance move stands in stark contrast to China. Last week, the People’s Bank of China ruled cryptocurrency transactions were illegal, sending BTC down.
The Bitcoin hash rate, the rate at which new tokens are mined, is reaching all-time highs. This is a bit surprising as just five months ago China began to kick crypto miners out of the country. After this clampdown, the world was expecting the hash rate to fall dramatically.
Despite the hash rate and the computing power required to complete the complex algorithms required to mine new coins being basically unmeasurable, the overall trend is broadly upward.
CoinWarz recorded 201 exahashes per second (EH/s) on October 2nd, while MiningPoolStats currently shows just 138 EH/s. At the highest estimates, the hash rate would be a full 32 exahashes higher than the previous peak.
Exahashes per second is the preferred metric analysts use to measure hash rate.
“China kicked out nearly 90% of bitcoin miners in the country earlier this year. Hash rate fell approximately 50% as a result,” Morgan Creek Digital co-founder Anthony Pompliano said, regarding the hash rate. “Only a few months later and we are almost back to an all-time high. Economic incentives drive further network decentralization.”
PlanB bets on Bitcoin bull run…
In response to the upward trend, Bitcoin showed across the last week, some of the more well known Twitter analysts are saying the best is yet to come.
PlanB, a favourite of the crypto Twitterati, says Bitcoin may hit $63,000 by the end of October before pushing on to a bumper $98,000 November close.
On-chain analyses finished tonight: IMO we are midway, no sign of weakness (red) yet. Note color overlay is not months to halving but an on-chain signal. My guess: this 2nd leg of the bull market will have at least 6 more months to go. pic.twitter.com/HAEMYfQ1pT
— PlanB (@100trillionUSD) October 2, 2021
PlanB is a pioneer of the “stock-to-flow” charting model. Stock-to-flow measures the current stock of an asset against the flow of new production or how much is mined in a year. A higher ratio indicates more scarcity, which in turn indicates a higher value.
…but South African hedge fund manager warns off crypto
It’s fair to say Bitcoin and cryptocurrency as a whole has had an equal share of champions and detractors.
While the likes of PlanB are putting all their chips on crypto, others remain unconvinced.
Jean-Pierre Verster, founder of South African hedge fund Protea Capital Management, has joined the chorus of those who believe digital tokens have “no intrinsic value”.
In an interview with Biznews, Verster said: “I think the technology of blockchain is a wonderful technology. And will find applications when it comes to having open ledgers – when it comes to transactions that you need to make sure are captured somewhere or recorded somewhere in a way that people can’t after the facts – fiddle with those recordings. For that blockchain is great.”
Even so, Verster was keen to point out that volatility is off-putting for some investors.
“It [crypto] has got these elements of a Ponzi scheme, which means that for a long period of time, prices go up, go up, and it looks like value increases, and then it all comes crashing down,” Verster said. “So, I have not invested in crypto myself.”
Apart from the government of China, there have been other major players that have called into question the validity of digital tokens as investment vehicles.
In May, Bank of England Governor Andrew Bailey called cryptocurrencies “dangerous”, and advised people only invest if they are prepared to lose all their money.
Bitcoin battered by POBC crypto punch
Bitcoin has taken a major body blow after the latest Chinese crypto crackdown was announced this morning.
People’s Bank of China rules crypto transactions are illegal
Volatility and Bitcoin: name a more iconic duo.
With the token starting the day in the green, traders were hoping to see a reversal to the bearish patterns and price action seen in September so far.
A fresh ruling from the People’s Bank of China put paid to that.
China’s central bank has said that all cryptocurrency transactions in the country are illegal and must be banned. As anti-crypto signals go, they don’t come much tougher than that.
A statement by the POBC said that all cryptocurrencies, including Bitcoin, Tether and Ether, are not fiat currency, thus they should not be circulated on the market.
The ban includes services provided by offshore and international exchanges to domestic Chinese citizens.
China’s crackdown on digital currencies has been rumbling along across the year, but this is the most overt statement yet.
The nation already moved to ban crypto mining earlier in the year. China’s economic planning agency said efforts to completely root mining out are underway, which could pose big problems for the global BTC supply.
Additionally, the POBC is stepping up its monitoring of cryptocurrency transactions, including speculative investing.
“Financial institutions and non-bank payment institutions cannot offer services to activities and operations related to virtual currencies,” the bank said
Bitcoin, as well as other tokens such as Ethereum, have been sent reeling by this news. Associated stocks such as Coinbase and MicroStrategy have also begun to slide on the PBOC’s comments.
BTC had been trading over $45,000 prior to the bank’s proclamation. At the time of writing, it had lost 5% as it spirals back into the red. Bitcoin is now being traded for around $42,500 but will likely slide further as the day progresses.
Some analysts were expecting higher prices towards the weekend with talk of $47,000. Now, it looks like BTC is going to continue to trend downwards into next week.
Looking at crypto boards just shows red. Ethereum is down nearly 10% and so is Litecoin. Polkadot has dropped over 11% while Ripple has also dropped by 8%.
Consternation over another market drop has never been far away from the Bitcoin sector after it tumbled from all-time highs of over $65,000 earlier in the year.
Arcane’s Fear & Greed index, which measures general market attitudes regarding BTC performance, was flashing bearish signals at the start of the week and this has continued.
On a scale of 0-100, with 0 being extreme fear and 100 being extreme greed, BTC registered a 27 rating on Tuesday, suggesting fears the market may bottom out are coming to fruition.
Realistically, this move should have probably been spotted earlier. As mentioned above, China has not exactly been subtle in its government-led distaste for decentralised finance. This is a nation where pretty much everything passes through government control after all.
But just when things were looking good for BTC, it’s down once more. It only goes to show just how volatile cryptocurrency trading is and how susceptible the market is to external pressures.
Perhaps wider global regulation may cause stabilisation across the board, but for now, cryptocurrencies are probably going to continue to pitch on volatile seas.
Cryptocurrency update: Bitcoin passes $50,000 in 3-month uptick
Bitcoin starts the week in fighting form as it reaches heights not seen since mid-May.
Bitcoin continues fightback after breaching $50,000
Bitcoin started the week strongly by building on weekend momentum to break above $50,000 for the first time in three months.
The world’s most popular cryptocurrency is currently trading at $50,345 and is up over 3.25% in a 24-hour period. According to Coindesk data, Bitcoin is now up 71.4% year-to-date.
A couple of new reports have helped push BTC towards new highs.
Firstly, Coinbase has announced it plans on adding a further $500 million worth of new crypto assets, including BTC, to its holdings. Institutional support tends to be a big support for Bitcoin. It’s no different here.
We’ve also seen PayPal announce it will offer crypto wallet services to UK customers. More on that later.
Price action remains above the 200-day moving average. That could mean we’re seeing a sustained rally, rather than a flash-in-the-pan trading moment. That said, trading volumes have remained relatively flat since the weekend, despite the uptick in price action.
Bitcoin is the crypto industry’s bellwether. With it back in the green, several other popular tokens are subsequently rallying. Cardano is up over 7%, XRP, is up over 3.75%, and Ether is showing a 2.31% rise.
Is Bitcoin back in business? We all know how quickly things can change in the world of digital finance and token trading. We’ll just have to wait and see, but the fundamentals suggest we could at least see the rally continue across the week.
PayPal offers crypto services to UK customers
As digital token trading gets more popular, an increasing number of platforms are starting to offer crypto buying, selling, and holding on their platforms.
The latest to throw its hat into the digital currency ring is PayPal. It is now offering crypto services to its UK customers. Users will be able to exchange or hold four cryptocurrencies: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.
Crypto derivatives, like CFDs, are banned for retail customers in the UK. However, retail clients can still buy and hold the physical coins themselves, circumventing this ban. That’s essentially what PayPal is offering here.
The same service was launched in the US fairly recently. Users there can also pay for transactions using their crypto holdings too.
For some, PayPal’s decision to accept digital currencies on its platform came as a bit of a shock. There have been questions around money laundering and potential fraud caused by cryptocurrency users’ anonymity. Such critics have thought maybe PayPal and other institutions may have been put off by this.
There’s also volatility to consider. While we’ve seen Bitcoin reach a new 3-month high this week, it fell away dramatically from its all-time highs in April to below $30,000 weeks later. This may have been seen as an impediment to adoption by the likes of PayPal in the past.
This is obviously not the case. PayPal is now happy to ride the crypto train until the wheels fall off.
Jose Fernandez da Ponte, vice president and general manager for blockchain, crypto and digital currencies at PayPal, said his company’s new service could help introduce more people to cryptocurrency.
“The pandemic has accelerated digital change and innovation across all aspects of our lives, including the digitisation of money and greater consumer adoption of digital financial services.
Global digital currency adoption soars over two years
The adoption of cryptocurrencies has grown 2,300% over the past two years Chainanalysis research has revealed.
Those stats represent the acceleration in crypto trading at the end of Q2 2021 against Q2 2019. Chainanalysis data also reveals it is up 881% across the last year.
The blockchain specialist said it rated activity in 154 countries against three criteria to establish its results:
- The amount of on-chain crypto received
- On-chain retail value transferred
- Peer-to-peer (P2P) exchange trade volume
The above metrics were weighted by purchasing power parity (PPP) per capita. P2P exchange trade volume was weighted by the number of internet users in a given country.
Institutional support, i.e., that from banks, businesses, and brokers, is what drove adoption in North America, Western Europe, and East Asia.
According to Chainanalysis’ report, digital tokens have been seen as “compelling” by such players, particularly as prices were reaching all-time highs at the start of the second quarter.
On the other hand, peer-to-peer activity pushed growth in emerging markets. Crypto users and investors in these areas see digital currencies as a to preserve savings in the face of currency devaluations. They also can use it for overseas remittance or carry out business transactions.
“Central and Southern Asia, Latin America, and Africa send more web traffic to P2P platforms than regions whose countries tend to have larger economies, such as Western Europe and Eastern Asia,” the report states.
Cryptocurrency update: Binance bounced out of the UK
The world’s largest cryptocurrency exchange, Binance, gets its UK marching orders as the FCA clamps down on unregulated activity.
UK FCA bans Binance
The UK’s Financial Conduct Authority has ordered Binance to halt all regulated activity in the United Kingdom.
This is the latest in a fresh spate of regulations affecting digital token exchanges globally. Citing issues like crypto’s role in money laundering and fraud, as well as weak customer protections, and even environmental concerns, many financial authorities are tightening cryptocurrency regulations worldwide.
Binance Markets Limited, a London-based affiliate of the main Binance business, has been ordered to cease its UK activities. The FCA has also noted that no other entity under the Binance umbrella has any form of authorisation allowing it to offer crypto exchange and trading services to British clients.
A defiant Binance has said the FCA’s decision “has no direct impact on the services provided by Binance.com”, as Binance Markets Limited is a separate entity.
As it stands, however, Binance will have to cease offering services to UK clients. It will also have to stop any marketing and advertising campaigns.
Binance Markets Limited had applied to become a registered cryptocurrency company with the FCA but pulled its application in May following intense scrutiny by the Financial Conduct Authority. For context, controls and tools for tackling fraud and illicit activities are analysed as part of the FCA review process.
Japan’s Financial Services Agency reported last week that it had warned Binance that it was conducting cryptocurrency trading without the proper authorisation. Binance was also warned by German financial authorities in April that the exchange had probably violated securities rules over the launch of stock token trading.
Despite intensification of regulatory scrutiny, Binance continues to be one of the world’s most foremost cryptocurrency exchanges. Peak trading volumes recently hit over $1.5tn. It will be interesting to see where Binance’s journey takes it next. The Chinese firm is probably already feeling shaky given the increasingly hard line stance pursued by China’s government, but its trading numbers suggest retail interest in digital token trading is still as high as ever.
Guggenheim predicts $10,000 Bitcoin bottoming
Bitcoin could drop as low as $10,000 during its current fluctuations, according to Guggenheim Partners’ Chief Investment Officer Scott Minerd.
Speaking to CNBC last week, Minerd made his bearish prediction. However, Minerd was also quick to say investors and traders should not be put off by putting money into Bitcoin right now. He also said Bitcoin could be trading sideways for the next few years before it turns bullish again.
Despite dropping massively from the recent $65,000 all-time high, Bitcoin is still up around 30% year-on-year. As of Monday 28th June, the crypto market was steering a bullish course, with BTC breaking above $35,000.
Showing the rollercoaster valuations that BTC is subject too, Minerd and Guggenheim’s Bitcoin price predictions are a window into how price actions are difficult to predict. In December, Minerd was touting a $400,000 BTC price. By January, he was saying there wasn’t enough institutional interest to support the token’s then $41,000 all-time high.
In early February, Minerd had predicted the highest BTC price prediction to date: $600,000.
Does this mean Minerd and Guggenheim are untrustworthy? Probably not, but what this does suggest is predicting what happens in Bitcoin markets is far from an exact science.
On the other hand, Vinny Lingham, CEO of Gyft, has said BTC can still hit $100,000 this year if it holds above $30,000 consistently. Lingham has been given successful BTC price forecasts in the past and is considered something of an oracle.
Which prediction will prove accurate? Time will tell. Bitcoin has had a bumpy couple of weeks but appears to be making gains once more.
Andreessen Horowitz raises $2.2bn to double down on crypto
Venture Capitalists Andreessen Horowitz has raised $2.2bn in financing for a third fund devoted entirely to cryptocurrencies.
This is double more what the firm hoped to raise in what has been deemed a sign of strong institutional demand for cryptocurrency.
The volume of the investment, Andreessen had previously hoped to raise $1bn for its new fund, shows how, despite the recent market setbacks, there is still massive interest in digital finance and tokens.
Andreessen Horowitz has a long history of investment into digital technologies and platforms. It backed Facebook, for example, and has already invested in the Coinbase crypto exchange.
In this newest fund, the Silicon Valley-based firm says it is focused on the next generation of visionary crypto founders.
“We believe that the next wave of computing innovation will be driven by crypto,” the company said in a blog post. “The size of this fund speaks to the size of the opportunity before us: crypto is not only the future of finance but is poised to transform all aspects of our lives.”
Andreessen’s fundraising efforts show the conflict currently sitting at the heart of the crypto market. On the one hand investors, from retail to institutional, want to invest their capital in digital coins. Regulators want to clamp down on crypto activity from a safety and money laundering perspective.
Both fine, but one appears to heavily impact the other. What’s clear is the regulatory and investment worlds must align for the market to really progress.
Cryptocurrency update: BTC slides as China intensifies mining crackdown
Bad news for Bitcoin. Earlier Chinese efforts to limit crypto mining have turned into a full-scale purge, hitting BTC prices with a significant body blow.
Bitcoin tumbles as China puts the squeeze on crypto mining
China has intensified its crackdown on cryptocurrency mining operations sending Bitcoin reeling.
As of Monday 21st June, BTC was trading for around $32,000 – some $32,000 lower than the $65,000 highs seen in April. Just last week, Bitcoin had climbed to around $40,000, but China’s efforts to curb mining activity has stunted recovery.
Authorities in China’s key crypto mining provinces are following Inner Mongolia’s lead by banning the energy-hungry practice. China has major climate change goals, so limiting mining for digital tokens from energy consumption chains is part of the strategy to reduce its CO2 emissions.
Every year, crypto mining globally consumers more energy than Sweden.
China is not content with limiting or halting mining operations. In May, the government moved to ban financial institutions and payment companies from providing services related to cryptocurrency transactions. Authorities also warned investors against speculative crypto trading.
The hash rate, the rate at which new Bitcoin tokens are minted, has dropped considerably with these latest measures. Bitcoin tokens are already scarce, it’s partly what gives them value, but authorities moving against miners, and kicking them out of China, is the real issue here.
China’s authoritarian stance is not unexpected – it’s a government that thrives on control of pretty much every industry – but it fits into a wider cautionary attitude displayed by regulatory bodies and governments worldwide.
We’ve heard Governor Bailey of the Bank of England speak out against cryptocurrencies, for example. Regulators in Thailand, India, and Turkey have been mulling over full-on bans too. Retail crypto trading is unavailable for UK customers.
While institutional support from banks and corporations like Tesla continues to mount, it’s being met by stiff resistance from governments.
How can Bitcoin recover? No doubt miners will be setting up shop elsewhere. El Salvador has an ambitious plan to turn itself into Central America’s crypto mining hub, harnessing the geothermic power of volcanos to run its mining operations. Will we see a spike in El Salvador-sourced tokens?
Bitcoin has been struggling to regain its massive April gains across May and June. It looks like its path to recovery just got longer.
Over 90% of UK financial advisors would avoid cryptocurrency
A survey of UK independent financial advisers (IFAs) undertaken by Opinium reveals 93% would never recommend investing in cryptocurrency to their clients.
A further 91% said they would be concerned if they were investing in such assets.
Retail clients are unable to trade digital tokens in the UK anyway, but this is still an interesting development. According to Opinium, crypto’s inherent volatility and close regulatory scrutiny turn IFAs against cryptocurrency investing.
Only a third of those surveyed said they had noticed an increase in interest regarding crypto trading and investing.
A new crypto unicorn emerges
A new unicorn, a tech firm valued at a minimum of $1bn, has emerged in the cryptoverse.
Amber Group (AG), an Asian crypto trading and technology firm, is the latest subject of venture capitalist interest, as they continue to pour capital into the space.
The Group dubs itself as “an integrated crypto financial services firm that offers 24/7 services ranging from market making to asset management and structured products”.
It passed the $1bn mark after a successful investment round raising $100m from China Renaissance, with participation from Tiger Brokers, Tiger Global Management, and other new investors. Its existing investors, such as Pantera Capital, Coinbase Ventures, and Blockchain.com have also joined the round.
Michael Wu, Co-Founder and CEO of Amber Group, says the company now accounts for 2%-3% of total trading volumes in the crypto spot and derivative market. AG’s cumulative trading volumes have doubled from $250bn since the beginning of the year to over $500bn as of June 2021.
“We have been profitable since inception, and with growing revenues across all business lines, we are now annualizing USD 500m in revenues based on January to April 2021 figures,” Wu said in an announcement.
Cryptocurrency update: BTC hits accelerator on Telsa u-turn
After hitting the brakes on BTC payments, Tesla appears to have changed its tune, while El Salvador is fully in the cryptocurrency fast lane with a daring new strategy.
Musk’s Tesla Bitcoin handbrake turn
Bitcoin hit the accelerator this morning following yet another market-empowering tweet from Elon Musk.
The Tesla CEO and ardent cryptocurrency supporter has partially u-turned from the automaker’s decision to stop accepting Bitcoin as payment owing to crypto mining’s environmental impact.
Musk said Sunday 13th June that Tesla will resume bitcoin transactions once the electric vehicle maker confirms there is “reasonable” clean energy usage by miners.
In response to a tweet from cryptocurrency news aggregator Coin Telegraph, Musk confirmed his stance, while also addressing questions over Tesla’s own BTC holdings.
This is inaccurate. Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market.
When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions.
— Elon Musk (@elonmusk) June 13, 2021
It’s not clear how exactly Musk and co. plan to vet crypto miners, or how they would check their green energy credentials. However, this is the first indicator we’ve had that Tesla is shifting its stance following its self-imposed BTC payment ban.
Tesla still owns a substantial number of Bitcoin tokens, valued at anywhere between $1-2bn. In selling a 10% stake in Q1 2021, the carmaker allegedly made more profit from BTC sales than from selling actual cars.
As is commonplace when Musk powers up the Twitter app on his smartphone, this latest tweet has acted as propellant for BTC prices. As of Monday morning, Bitcoin was looking to test the $40,000 level after a few weeks of sideways trading – a 12% leap. We’re still someway off April’s $65,000 record highs, though, and it might take time for the token to reach those levels again.
The environmental cost of cryptocurrency mining has been under intense scrutiny in recent weeks. China has cracked down on mining operations citing massive energy consumption concerns. Iran has banned all such activity until September as blackouts in capital Tehran were triggered by mining operations guzzling up power.
Again, there has been no real indicator as to how Tesla ensures its supply of Bitcoin tokens come from environmentally friendly miners. But green power and clean energy are at the core of Tesla’s philosophy. Ensuring its crypto strategy is in line with basic principles is good for brand image, but it does leave you questioning with a carmaker is dabbling with crypto trading anyway.
That’s legal tender! El Salvador pushes ahead with ambitious BTC plan
El Salvador has become the first country in the world to accept Bitcoin as legal tender.
Under Millennial meme-loving President Nayib Bukele, the Central American state has taken the radical step of turning the world’s most popular crypto into actual, legal currency. It will gain full legal tender status in 90 days’ time.
Merchants were already free to accept payment in BTC at their own discretion, but now they must do so unless they lack the proper technology.
The US dollar will remain El Salvador’s primary currency. Prices for goods and services will be listed in USD rather than BTC for instance. But BTC can now be used for everyday purchases and even for paying taxes.
It’s an interesting move, especially for a digital currency that revolves around decentralised finance. How would paying taxes work exactly – especially when regulators worldwide are keen to crack down on crypto-led money laundering and tax evasion?
What about energy and mining? While the bill that passed BTC into law does not specifically mention mining, President Bukele tweeted a drone-shot video showing a geothermal powerplant in action. Bitcoin by volcano anyone?
I sent a drone to film one of the new wells…
Nice rainbow 🙂
— Nayib Bukele 🇸🇻 (@nayibbukele) June 11, 2021
The government has set about guaranteeing convertibility of BTC to dollars through a $150 million trust created at the country’s development bank BANDESAL.
Why has El Salvador taken this path? Bukele says the move will help foster financial inclusion, investment, tourism, innovation and economic development.
Bukele is particularly hopeful remittance, i.e. payments sent back home from citizens living overseas, can pick up. Using BTC to pay these would cut out the middleman, and possibly result in billions of extra cash by negating conversion fees.
Others are wary of the decision.
The IMF, with which El Salvador is hashing out a $1bn economic relief deal, states the Central American country’s move “raises a number of macroeconomic, financial and legal issues that require very careful analysis”.
We’ve seen institutional digital currency support rise in recent months – but we’ve also seen numerous regulatory bodies urge caution. An entire country taking the leap to legitimising BTC has legal tender is entirely new ground. Cryptocurrencies, and especially Bitcoin, are inherently volatile. What El Salvador is doing could have considerable blowback.
El Salvador is thus a Central American guinea pig with its legal tender experiment.
Cryptocurrency update: Bitcoin tracks big loss
Bitcoin switches to sideways trading as it sustains one of its worst-ever month-to-month dips.
Bitcoin still struggling
The recent Bitcoin plunge has caused a crisis of confidence for traders.
Prices slumped to $31,000 on May 19th following two hefty market body blows. The first was Tesla’s decision to backtrack on accepting BTC for payment. China’s clampdown on crypto mining was the other knockout punch, sending Bitcoin reeling.
The above triggered a panic-induced sell-off amidst newer traders unfamiliar cryptocurrency markets volatility.
As of Monday, May 31st, BTC was on track for its second-largest ever monthly percentage decline. Bitcoin was trading down 37.5% month-on-month in May. September 2011’s 40% monthly drop remains the largest so far.
Prices fell as low as $34,195 on Monday but had climbed back above $36,360 by midday UK time on Tuesday 1st June.
So, what can Bitcoin do to sustain a prolonged rally? Restoring market confidence is key here. Hope may lie in the whales.
Whales are clusters of blockchain addresses controlled by a single participant with at least 1,000. Sustained BTC accumulation by such entities may be the catalyst the market needs to feel confident about Bitcoin investment once again.
The last time whales scooped up more tokens, October 2020-February 2021, prices rose in tandem. Correlation does not equal causation, but this could be a good metric to follow.
For context, the supply of BTC held by such whales has increased to over 4.4m since the May 19th price collapse as wallet-owners buy the dip.
But as it stands, BTC looks like it’s trading sideways. It will probably be some time before whales can really make a visible splash on price action.
Tighter crypto regulations on their way around the world?
A tougher regulatory environment may also negatively impact cryptocurrency prices going forward.
We’ve already seen the effects of the Chinese government moving against miners. The UK has flat out banned sales of crypto derivatives to retail customers. Now, other countries are starting to develop stronger regulations regarding crypto production and trading.
New US OCC Michael Hsu has said he hopes different agencies will be able to form a “regulatory perimeter” for digital currency legislation and regulation. According to Hsu, while the will is there to go harder on crypto to protect traders, it’s more a case of establishing which agency is responsible for handling crypto regulation.
“It really comes down to coordinating across the agencies,” Hsu told the financial times. “Just in talking to some of my peers, there is interest in co-ordinating a lot more of these things.”
Sweden’s Riksbank Governor Stefan Ingves has he believes further regulation is on the way – not just in Sweden, but around the globe. His thoughts have been matched by Swedish Finance Minister Asa Lindhagen.
Sweden’s government is in the process of tightening standards for cryptocurrency exchanges, Lindhagen said, but labelled this “a work in progress at the international level.”
Thailand’s Securities and Exchange Commission may move to regulate decentralized finance (DeFi) projects in the country, including the issuance of digital tokens.
In a statement released on Sunday, May 30th, Thailand’s SEC said DeFi activity involving digital tokens such as liquidity provider tokens, governance tokens or tokens issued to those transacting in DeFi projects “must be licensed and abide by the specified rules.”
Essentially, the worldwide environment for trading cryptocurrencies is potentially going to enter a new phase of regulatory oversight and control.
For retail investors, the everyday folk who aren’t necessarily up to speed on the minutiae of crypto token trading, this can only be a good thing.
We’ve seen hundreds of billions wiped off crypto markets in the blink of an eye many times. Bitcoin’s latest crash removed $750m from the token’s total market capitalisation for instance. Perhaps new regulations will be able to finally tame cryptocurrency’s volatility? Maybe, but because the potential heights caused by rapid swings may turn off potential investors.
Ether makes big search engine noise
Traders are googling up an Ether-shaped frenzy.
Interest in ETH, the token for the Ethereum blockchain DeFi platform, is up in the wider crypto market dip.
When BTC drops, so too do the other major tokens. Ether, which recently broke $4,000 for the first time, has fallen. At the time of writing, ETH was trading for around $2,600.
But like whales snapping up Bitcoin supplies during this downturn, Ether is getting plenty of attention too.
Average monthly Ether internet searches in the US total over 1.1 million. In Germany, over 750,000 searches for the crypto are made annually. Turkey, Brazil and France combined to just over 915,000. In the UK, 230,000 active internet users are searching for Ether each month too.
Ether has exploded in value over the past year. Why? Ether actually holds practical value. The Ethereum blockchain network uses ETH as currency to process transactions. Ethereum is quickly establishing itself as the DeFi platform of choice, thus end-users are snapping up ETH tokens to pay for network transactions.
Because of this, the coin has been in high demand. The knock-on effect is higher investor attention because prices are increasing due to basic supply and demand principles.