Cryptocurrency update: Bitcoin stutters while Ethereum makes ground

Bitcoin starts the week in a subdued fashion, whereas Ethereum is hoping to quietly build gains going forward.

Cryptocurrency update

Bitcoin drops from all-time high while ETH makes ground

Bitcoin was flying last week, surpassing its all-time high records to reach a new peak above $65,000. But what goes up, must go down. Newton’s iron-clad laws don’t just apply to physical objects. Bitcoin and crypto ETFs rarely stay at peak performance forever.

As of Monday, Bitcoin had gained over 3% over its weekend value. The token was trading for $62,909 but had dipped below $60,000 for the first time since mid-October on Friday 22nd.

It’s hard to say what caused Bitcoin to fall away. We have seen in the past a significant drop off when a new high has been reached. The decline hasn’t been quite so drastic compared to April’s when prices fell from over $64,000 to under $30,000.

It does appear that complex rules in PureShare’s Bitcoin ETF and a subdued opening from the Valkyrie BTC on Friday have knocked some of the momentum out of the coin.

Ethereum, on the other hand, is quietly making new ground. The token reached a five-month peak last week and continues to trade strongly.

ETH, which is the world’s second-largest crypto coin by market capitalisation, reached $4,367 last Wednesday. It has managed to claw back weekend losses. As of Monday, Ethereum was trading for $4,133.

The Ethereum blockchain is currently undergoing major developments. Its owners promise power requirements can drop 99.9% upon Ethereum 2.0’s full implementation. Developers are also planning up the level of transactions on the platform from 30 per second up to 100,000, which may increase demand for ETH. Ethereum tokens are used to pay “gas” fees on the blockchain as a way of validating transactions.

There is plenty at work on Ethereum. Whether the token can close the gap on Bitcoin is another matter. At present, ETH’s market cap is around $500bn – less than half of Bitcoin’s total valuation.

Ethereum’s developers appear to be doing all they can to make the blockchain more useable. This in turn should lead to more use of ETH tokens, and potentially increase their value.

Valkyrie BTC ETF launch fizzles as BTC drops

While ProShares stole headlines and boosted Bitcoin with the launch of the US’ first BTC futures exchange traded fund, Valkyrie was not so lucky.

Valkyrie Investment’s Bitcoin Strategy ETF, which trades under the BTF ticker, launched just as Bitcoin prices were starting to turn last Friday. As prices fell, the fund fell with them. It had dropped nearly 3% from its $25 launch price when trading opened, before closing more than 4% down.

More than 3.1 million shares worth about $78 million changed hands during the session after BTF made its public debut.

It’s interesting. Maybe crypto ETFs are like busses. The US waits for years for one to show up, then two come at once. Only ProShares’ fund appears to be flying. Over $1 billion in assets were taken by its ETF within just two days of trading.

Are retail customers already getting wary of crypto ETFs? It seems the purest play to get exposure to Bitcoin would be simply just buy Bitcoin or trade futures using CFDs. Are funds really necessary? Maybe it’s just a question of public perception.

It’s still very, very early days for ETFs of this nature, at least in the US.

If anything, ProShares’ Bitcoin Strategy ETF is proving almost too popular…

ProShares asks CME for futures purchasing wager off the back of strong Bitcoin ETF debut

ProShares has asked the Chicago Mercantile Exchange to remove limits on the amount of new BTC futures customers can buy in the wake of its ETF’s popularity.

Starting with November’s front-end contract, the CME is implementing futures purchasing restrictions. Customers will be limited to buy 4,000 futures in the ProShares Bitcoin Strategy fund initially, dropping to 2,000 three days prior to expiration.

Total ownership is effectively limited to 20,000 Bitcoins. Each contract represents 5,000 BTC.

ProShares has already split its futures portfolio with half in October and half in November as a workaround.

ProShares could shift assets into later-dated contracts, structured notes or swaps, ProShares CEO Michael Sapir said. ProShares also says the fund could also invest in equities with crypto exposure.

Cryptocurrency update: Bitcoin eyes new all-time high on ETF boost

Commodities

Bitcoin sets its sights on fresh all-time highs after getting ETF-shaped support this morning.

Cryptocurrency update

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: 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: Bitcoin passes $50,000 in 3-month uptick

Bitcoin starts the week in fighting form as it reaches heights not seen since mid-May.

Crypto update

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: 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.

 

Cryptocurrency update: BTC breaks $43,000 level

Commodities

Bitcoin made strides this weekend before settling over $43,000, yet the upcoming US Infrastructure Bill may put the brakes on further momentum.

Cryptocurrency update

Bitcoin makes weekend gains but could face further derailment

Bitcoin’s torrid month could be over as prices shot above $45,000 on the weekend.

The token reached a 3-month high on Saturday, reaching $45,300. Things have cooled a little since then, with BTC dropping back to $43,788 at the time of writing.

This is good news for Bitcoin traders. The token has struggled to keep a hold of gains over the past 3 months, sinking as low as $29,000 on some weeks. Could we be about to see a major breakout for the world’s most popular cryptocurrency?

According to Datamish research, the weekend’s price action was guided by a short squeeze when 126 BTC positions were liquidated on Friday. Bullish traders are helping keep the coin afloat, as it pushes towards the $45,000 200-moving day average.

It’s interesting because last week concerns over tax provisions within the proposed US infrastructure bill had caused a bit of market uncertainty. However, institutional activity from the likes of Grayscale is picking up again. That’s put more confidence back into the BTC market.

Amendments to the bill put forward by Democratic senators would exclude crypto miners involved in transaction validation on distributed ledgers, as well as firms selling private key hardware or software wallets, from tax reporting provisions.

It seems these proposals were enough to instil upward momentum back into Bitcoin.

But as ever there’s a twist in the tale: it’s been announced that the version of the Infrastructure Bill that will be voted on in the US Senate tomorrow will be the original bill without these key amendments. BTC Bulls are not happy with Biden right now.

We’ll have to see how the market reacts to the vote’s outcome tomorrow to gauge price action, but the BTC breakout could now be in jeopardy.

Brazilian BTC ETF promises a greener future

Much has been made of crypto mining’s environmental impact this year. Tesla u-turned on its pledge to accept Bitcoin as payment after citing environmental concerns earlier in the year, for example.

A new ETF launched in Brazil promises carbon neutrality in the hopes of inspiring industry-wide change.

BITH11 from alternative investment fund Hashdex Asset Management is claiming to be Brazil’s first green crypto ETF.

Carbon credits are the keys to the fund’s eco-friendly credentials. To offset the carbon produced in the mining process, Hashdex says it plans to spend big on carbon credits through a partnership with Germany’s Crypto Carbon Ratings Institute (CCRI).

The CCRI will produce annual reports estimating the level of energy consumed and the amount of carbon generated through the ETF’s Bitcoin mining activities. 0.15% of the ETF’s liquid assets will be pumped into carbon credit acquisitions, as well as investment in green technologies, every year, according to Hashdex.

This is not the first Bitcoin fund Hasdex has launched this year. Its first, HASH11, was launched on the B3 Brazilian Stock Exchange earlier in the year and has so far gained 33% since going live.

Dogecoin to soar by the end of the year?

Dogecoin, the novelty token-turned serious asset, could rally massively by the end of the year, according to industry observers polled by price comparison website Finder.

The coin’s “pump and dump” cycle could help inspire price action across 2021 after Dogecoin recently found a $0.20 floor. The industry now believes Dogecoin will end the year at $0.42 – a 60% rise against current prices.

Don’t get too excited, however. Of the 42 industry insiders surveyed by Finder, 80% of them agreed Dogecoin is in a bubble. And bubbles almost always burst. While the majority of respondents posit strong price action this year, 55% think it will collapse in 2021 too. 42% say it will happen next year, while only 3% forecast a bursting dogecoin-shaped bubble in 2023.

“Dogecoin seems largely dependent on Elon Musk’s erratic tweets,” said John Hawkins, senior lecturer at the University of Canberra. When surveyed, Hawkins predicted dogecoin will be worth 15 cents by the end of 2021 and will be completely worthless by 2030.

Cryptocurrency update: global crypto userbase soars

The first half of 2021 sees record numbers of people engaging with cryptocurrency markets.

Crypto update

Global cryptocurrency users skyrockets in H1

The number of people actively using and trading digital tokens exploded in the first half of 2021 according to data from Crypto.com.

Data was taken from 24 digital asset exchanges, including Binance, Bitfinex, and Gemini.

Up to June 30th, 220,000,000 people – more than the population of Brazil – have had some level of interaction with cryptocurrencies this year. In January, the figure was closer to 106 million.

Crypto.com states its Bitcoin that’s driven the largest number of new users.

“We can see that January, February, and April were exceptionally strong months, driven by Bitcoin’s stellar performance,” Crypto.com said in a statement. “However, May was also extraordinary, given Bitcoin and Ethereum’s price plunge.

“Notably, it only took four months to double the global crypto population from 100 million to 200 million. By comparison, it took nine months to reach 100 million from 65 million since we began tracking these numbers.”

Institutional support also drove up the numbers.

“Bitcoin led growth from January to April, as heavyweight institutions like PayPal, MicroStrategy, Visa, and Mastercard announced plans to support crypto,” said Crypto.com Similarly, Ethereum saw significant growth in May and June as institutional investors continued to favour the token.”

In terms of altcoins, i.e., not mainstream tokens like BTC or Ether, it was perennial meme favourites Dogecoin and spin-off Shiba that helped attract more retail clients.

Bitcoin drops off on US infrastructure bill uncertainty

If you’re a keen crypto market follower, you’ll probably know that Bitcoin has had a bit of a struggle recently.

Falling away from record highs seen earlier in the year, the token has struggled to gain meaningful momentum. It climbed above $42,000 on Saturday, but as of now has fallen back below the $40,000 mark.

One of the key reasons for this is uncertainty around the new proposed $1 trillion US infrastructure bill currently being debated.

Provisions within the bill call for about $28bn to be generated from taxing cryptocurrency transactions. Bitcoin, being the most popular crypto for US and global traders, hasn’t responded well to this proposed idea. In fact, traders have got cold feet regarding Biden’s plans.

The definition of the word “broker” for tax purposes is what’s riling up BTC traders. In the amended bipartisan bill, people who provide digital asset transfers would be treated as a broker, thus be susceptible to greater information reporting and taxation requirements.

“Any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person” is now included in the definition, according to the bill.

This has caused a lot of doubt, fear, and uncertainty around the whole US BTC sector.

Other factors at play include China’s central bank aping the CCP’s tough crypto stance. The People’s Bank of China has said it will continue to crack down on digital asset trading throughout China, citing financial risks to the Chinese economy.

Bitcoin has now slumped 5.5% from its Saturday high.

Ether whales move over $500m in hours

Whales holding onto large Ether caches moved over half a billion dollars’ worth into new wallets last week.

Research from blockchain tracker Whale Alert revealed multiple transactions had taken place on Friday.  236,419 ETH tokens, worth approximately $$557,777,068, was moved in one ten-hour window.

Here’s the breakdown of key transactions:

  • 36,168 ETH worth $89.1 million transferred from unknown wallet to unknown wallet.
  • 36,168 ETH worth $88.4 million transferred from unknown wallet to unknown wallet.
  • 33,000 ETH worth $79.8 million transferred from unknown wallet to unknown wallet.
  • 25,119 ETH worth $59 million transferred from unknown wallet to unknown wallet.
  • 5,891 ETH worth $13.9 million transferred from unknown wallet to Gemini.
  • 33,000 ETH worth $77.5 million transferred from unknown wallet to unknown wallet.
  • 6,487 ETH worth $15.1 million transferred from OKEx wallet to unknown wallet.
  • 6,309 ETH worth $14.7 million transferred from unknown wallet to Binance.

Interestingly, ETH is trading down. Bitcoin falling tends to bring all of the other key tokens down with it, and Ether is no exception. The above tells us that there’s significant behind-the-scenes interest in ETH, as well as the scale of coins held by moneyed investors. Could these be institutional? It’s hard to say.

Cryptocurrency update: Bitcoin on the rebound?

Bitcoin makes some big strides in trading today. Are we looking at a BTC bounce back?

Cryptocurrency update

Bitcoin gains 35%, starts week in the green

What a torrid couple of weeks it’s been for Bitcoin. The world’s most popular cryptocurrency has been battered recently, with prices falling below $30,000 for the first time since last year.

Now, it looks like BTC is preparing to bounce back. As of Monday, the crypto had gained 35% in early trading, reaching over $39,000. This was the first time Bitcoin had breached that level since June 16th – but still some $26,000 off the currency’s all-time highs.

At the time of writing, Bitcoin had retreated to around $38,355.

Datamish data shows a short squeeze appears to have driven prices higher in the short-term. Those taking short positions have apparently had to sell as price action turned positive.  Why is currently unknown.

Datamish is an independent service that tracks Bitcoin long and short positions.

One of the key reasons why Bitcoin may have rekindled its fighting spirit is the news Amazon is planning to accept BTC as payment, potentially by the end of 2021.

According to reports from City A.M., the online retail colossus is exploring how cryptos can be fully integrated into the Amazon ecosystem. Bitcoin would be the launch point, with Ethereum, Cardona and Bitcoin Cash potentially being acceptable payment for Amazon transactions going forward.

Either way, the bulls will be happy with this price action – but let’s not get too hasty. This is cryptocurrency after all. We’ve seen volatility that would sink any other asset become normal in the world of crypto trading. Anything can change at any minute.

While the outlook is currently good, there are some global stories and opinions that could knock BTC off its current upward course.

Bitcoin mogul suggests Chinese crypto trading could soon be a thing of the past

According to Bobby Lee, one of China’s first Bitcoin trading pioneers, cryptocurrencies could face an outright trading ban if the Chinese crypto crackdown intensifies.

Lee, the former owner of BTC China, the nation’s first Bitcoin exchange, is speaking from experience. He was forced to sell BTC China in 2017 following the first of the Chinese government’s crypto clampdowns.

Chinese authorities have been ruthless in their pursuit of crypto market regulation in 2021. So far, we’ve seen outright bans on crypto mining within China, and tougher restrictions on retail trading and institutional banking services.

According to Lee, the next logical step for China’s government to take is an outright ban on crypto trading.

“The next thing they could do, the final straw, would be something like banning cryptocurrency altogether,” Lee said in an interview with Fortune. “I put it at the odds of 50-50.”

Lee did not mention how this would be enforced from a practical standpoint.

China’s authoritarian stance on crypto trading has been the catalyst for BTC prices crashes in 2021. When China announced its mining ban back in May, Bitcoin prices were in free fall. While this has opened up mining operations in other countries, China was responsible for the vast bulk of BTC token mining.

The global hash rate, the rate at which new BTC tokens are created, as fallen dramatically since the ban.

Will Lee’s prediction ring true? It’s hard to say. Control is the Chinese government’s modus operandi. There are many exchanges, including Binance, still operational in Chinese jurisdictions. If the nation is really serious about clamping down on crypto trading, these could fall next.

Keep an eye on China. Its actions will likely define BTC price movements going forward.

Man Group chief likens cryptocurrency trading to Dutch tulip bubble

Luke Ellis of Man Group has claimed that cryptocurrencies hold “no inherent worth’, comparing the current situation to the 17th Dutch tulip bubble.

Man Group is the world’s largest listed hedge fund, controlling assets worth $127bn for clients worldwide.

According to Ellis, cryptocurrencies are mainly popular with traders because of their price swings, rather than any practical application. Much of the actual trading is done by market participants who doubt crypto’s ultimate utility.

“If you look at cryptocurrencies as a whole, it is a pure trading instrument. There is no inherent worth in it whatsoever. It is a tulip bulb,” Ellis said. Ellis also described crypto tokens as “things to trade because they go up and down a bunch”.

Tulip bulb refers to the Dutch tulip trading bubble. In the 17th century, prices of tulip flowers skyrocketed before massively collapsing, leaving hundreds of tulip traders and speculators bankrupt.

Could the same be happening with cryptos?

We’ve seen similar rhetoric from a number of institutional sources recently. Governor Andrew Bailey of the Bank of England, for instance, has warned cryptocurrency traders may stand to lose all their money due to the product’s inherent volatility.

But some tokens have an actual practical use. Ether is used as payments for transactions on the Ethereum blockchain. The Ethereum blockchain is rapidly expanding in scope and is thought to be the leading network for the decentralised finance sector. We’ve also seen the rise of non-fungible tokens (NFTs); artworks and media held digitally and bought exclusively with cryptocurrencies.

Bitcoin, however, may have gained too much value to be used as an actual means of exchange. But when you have countries like El Salvador enshrining it as legal tender, it may still yet serve a purpose beyond simply being a tradeable project.

Digital currency is such a young asset that bubbles may likely occur during these development stages. However, this just requires extra vigilance on the part of traders and investors. Volatility is never far away – and all bubbles have to burst eventually.

Stocks bounce after sell-off, stagflation worries persist

Morning Note

In a word, stagflation. That’s how I’d sum up what this market angst is all about. Or at least, the spectre of stagflation. Simply put, growth is already decelerating and downside risks to the growth outlook are darkening due to rising cases, Delta and other emerging variants, as well as worries about potentially lower vaccine efficacy. At the same time, inflation is shooting higher. Supply side constraints (supply chain tightness, availability of labour/parts) are a problem central bankers cannot solve. 

 

As I detailed on August 12th 2020, the Fed was always going to struggle to get a grip on inflation as it let the economy run hot – AIT was developed before the vaccines had their effect and the Fed has been slow to respond. (US inflation hot, stocks keep higher as bonds slip). “The Fed should and could be relaxed about headline inflation running above 2% for a time, instead prioritising the employment level, but it also means inflation expectations can start to become unanchored as they did in the 1970s […] In a nutshell, if inflation expectations lose their anchors, then we are faced with a stagflationary environment like nothing we have seen for 50 years. High inflation, low growth for years to come is the unwanted child of a global pandemic meeting massive government intervention. And, expounding further on Aug 13th“The risk is that inflation expectations can start to become unanchored as they did in the 1970s when the Fed had lost credibility, this led to a period of stagflation and was only tamed by Volcker’s aggressive hiking cycle.” 

 

Are we going to see another Volcker? I doubt it very much, I doubt central bankers have the bottle or mandate even (full employment, remember) to engineer a recession to get everything back on an even keel.

 

Stocks slumped at the start of the week and bonds rallied, sending the US 10yr benchmark to its lowest since February at 1.17%. The S&P 500 declined 1.6%, whilst the Dow Jones industrial average was more than 2% lower for the session, though both closed off the lows of the day. It was the worst single day for the Dow since October, as the major cyclical plays – energy and financials – led the losers. The S&P 500 briefly traded below its 50-day SMA but managed to close above this level, and managed to just hold onto our horizontal support drawn across the May-Jun peaks. The Vix spiked to 25. 

 

As previously noted here, the whole story of the bull run since the vaccine news/Biden win in Nov is littered with ~5% type pullbacks to that 50-day line, before the uptrend is resumed. Could it be different now? Perhaps, but it would be betting against form to suggest so. We’re only about 3% off the recent all-time high and this pullback may not be over until at least that becomes a ~6% drop to about the 4150 area. Cyclicals have been selling off for a while now and the market was being propped up by an ever-narrower base of mega cap tech/growth. 

 

Chart showing S&P 500 price action.

European indices endured a brutal session, with all the major bourses registering declines of more than 2% for the day. The FTSE 100 tumbled through its 100-day moving average, hitting a three-month low. In early trade, stock markets in Europe staged a fightback, but I’d flag the risk that this a) a deceased feline and in any event b) is a market in a summer funk that can cut you up in both directions. UBS boosted sentiment with a net profit of $2bn for the quarter, up 63%. EasyJet shares rose as it signalled it would fly 60% of Q4 2019 capacity in the final quarter.

The FTSE rolled over after failing to sustain the 78.6% retracement above 7,200. Starting to look a tad oversold and we should anticipate a retest of 7,000 but further weakness cannot be ruled out a bears can look to a possible retreat to the 61.8%/23.6% at 6,650, close to the 200-day SMA.

FTSE 100 performance

It’s another story of moving averages in FX, with cable dropping below its 200-day line. It’s not traded under the 100-day and 200-day SMAs since Jun 2020. Not a heap of support below and a swift move back to 1.350 cannot be ruled out.

GBPUSD price movements displayed on chart.

Finally, Bitcoin futures: as I said yesterday the price action was dreadful and shouting out for another leg lower, duly delivered as risk took a beating yesterday (great hedge…). Price action now under $30k and eyeing the Jun low.

Bitcoin futures price action.

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