Cryptocurrency update: Coinbase delay, China power play & BTC whales stay

This week’s cryptocurrency update sees an interesting move from the CCP, Coinbase delay its IPO, and BTC whales hoarding their tokens.

Cryptocurrency update

Coinbase delays direct listing

The Coinbase IPO, one of the most hotly anticipated public offerings of the year so far, has been pushed back to April.

No reason was given for the date change, according to Bloomberg, but it has been reported that the US Securities Exchange Commission (SEC) has been reviewing Coinbase’s direct listing plans. The San Francisco-based company is the world’s most popular crypto exchange, and it is believed that the success of Coinbase’s IPO will have a big effect on both digital currency legitimacy and their prices.

Coinbase announced its intentions to go public back in January. In the past week, it had registered for as many as 114.9m shares to be sold on the NASDAQ. Once its direct listing is available, Coinbase Class A shares will debut on the NASDAQ Global Select Market under the COIN ticker.

Alongside the skyrocketing popularity and prices of cryptos, Coinbase revenues have been growing at a rapid rate too. Total revenues rose to $1.3bn in 2020 from $533k in 2019, while net income rose to +$322k last year vs a loss of $30k in the prior year. The number of users has risen to 43m.

However, the news that Coinbase will have to settle with the Commodities Futures Trading Commission (CFTC) for $6.5m might have been one of the reasons behind the delay.

It was announced on Friday 19^th March that Coinbase will pay $6.5 million in a settlement with the Commodity Futures Trading Commission (CFTC) over allegations the exchange “self-traded” digital assets between 2015 and 2018.

China eyes potential crypto powerplay

This week, China begins rolling out testing of blockchain and cryptocurrency technology in its key financial centres: Beijing, Shanghai and Shenzhen.

Trials of ‘e-renminbi’ (eCNY) position the People’s Bank of China as a global leader in moves towards implementing Central Bank Digital Currencies (CBDCs), reports Investor Chronicle.

While blockchain transparency has been good for consumers, it does give central banks the shakes somewhat. After all, digital currencies and blockchain are part of the decentralised finance movement. Central banks don’t really figure into that – but they do need to move with the times in order to stay relevant.

In China’s case, though, it’s more than that. Some commentators have said its move towards blockchain and digital currencies isn’t so much driven by market headwinds as by political control. The ease at which the CCP could monitor and track blockchain transactions may help it crack down on businesses and individuals who refuse to toe the party line.

By embedding eCNY in the country’s financial system, China can use technology that is nominally all about decentralising financial control to implement even more scrutiny. If its banks begin using its eCNY, then they will have to adhere to China’s regulatory systems.

China crypto exchanges like Binance are becoming busier and busier, though for retail clients rather than institutions like the banks. However, trading is done either using crypto pairs tied to USD.

But China’s latest experiment with cryptocurrencies is an interesting one. In a sector that is about democratising and decentralising financial control, it’s interesting to see a different side of digital coin.

Bitcoin whales aren’t selling

Like digital Smaugs, sleeping atop glittering blockchains and wallets stuffed with digital gold, glittering in cyberspace, Bitcoin whales are hoarding their tokens. According to Finance data published by crypto analytics firm Glassnode, BTC’s liquid supply is plunging during the latest bull runs.

Whales aren’t selling. Glassnode reports that in previous highs, up to 50% of BTC tokens would be sold and released back onto exchanges.

Bitcoin whales are known for their large transfers. In the last few months, however, BTC whales have reduced the selling of Bitcoin tokens significantly. This supply squeeze has, allegedly, helped fuel a lot towards the recent BTC surge. Bitcoin hit an all-time high on March 14^th, reaching over $61,000.

Consequently, BTC investors are holding their cryptocurrency assets for larger gains in the future.

“In bull markets, old coins tend to move more. This increases the relative supply of younger coins in the network. In previous BTC tops, around 50% of the Bitcoin supply was younger than 6 months. We are currently significantly below this level (36%),” Glassnode said.

BTC is not the only cryptocurrency suffering from the supply crisis. According to the data published by Santiment, Ethereum’s token supply on leading digital exchanges has hit the lowest level in 28 months.