The Bitcoin trading dominance has hit a three-year high for the first time since BTC hit its all-time high price of almost $20,000.
The cryptocurrency market has suddenly shifted back to Bitcoin (BTC) after several months of a decentralized finance (DeFi) frenzy. While market cap dominance remains below 60%, earlier this month, the trading dominance of BTC has spiked to levels not seen since 2017 when the price hit an all-time high at $20,000.
The trading dominance of Bitcoin against other major cryptocurrencies. Source: TheTie
Due to the growing dominance of Bitcoin in terms of market volume, the alternative cryptocurrency (altcoin) market is stagnating. The trading dominance of the bellwether for altcoins, Ether (ETH), for instance, did not see a similar spike in the same period.
Why does the altcoin market underperform when Bitcoin is going up?
As seen from July to early September, when Bitcoin is climbing upwards gradually, it can cause an “altseason” to materialize. In fact, ETH has outperformed BTC so far this year in terms of percentage, which is partially why the momentum may be returning back to Bitcoin.
Especially during August, many DeFi tokens increased between 5 to 20-fold, causing a massive altcoin craze.
But when the price of Bitcoin goes up quickly in a short period, it can cause the altcoin market to slump. Profits are likely cycling in from altcoins back into stablecoins and Bitcoin, leading BTC to rally by itself.
Su Zhu, the CEO of Three Arrows Capital, emphasized that Bitcoin going up quickly could be bearish for altcoins. He explained:
“BTC going up swiftly is not only not bullish for alts but it's bearish. Reasons for this are myriad but boil down to the fact that money is a coordination game and Bitcoin is the Schelling point; this is independent of how you feel about it, community is literally irrelevant.”
A similar trend has been spotted across major cryptocurrency exchanges. On Huobi, Bitcoin trading volume’s market share has been increasing, as shown by the data from Skew.
The share of major cryptocurrency volume on Huobi. Source: Skew
The trading data on Huobi is significant because the exchange has 1.1% of the Bitcoin supply in its cold wallet. It remains one of the biggest exchanges in the world in terms of cryptocurrency reserves, alongside OKEx and Binance.
What does this indicate for BTC?
In the past 13 days, the price of Bitcoin has increased by more than 12% against the U.S. dollar. The strong performance of BTC comes after a series of negative events that could have caused a major pullback.
As Cointelegraph extensively reported, several exchange-related news, including the suspension of withdrawals by OKEx, caused BTC to drop below $11,300. Despite the uncertainty in the market and the slump of U.S. equities, BTC pushed above $11,700.
Analysts remain relatively confident in the optimistic medium-term trajectory of Bitcoin. But if BTC pulls back in the short term as the market seeks for relief, it could cause a bigger altcoin correction.
A potential Bitcoin scenario in the medium-term. Source: Michael van de Poppe
Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, believes BTC would likely drop back to $11,100. Referring to a chart that expects a BTC pullback to $11.1K. He wrote:
“Still standing behind this view, there's such a big hurdle coming up for $BTC.”
The platform would aid central banks in Asia with developing a central bank digital currency.
Line, a Tokyo-based subsidiary of the South Korean internet search engine company Naver, is building a platform for developing central bank digital currencies, South Korean news agency the Chosun Ilbo reported on Oct. 19.
Sources familiar with the matter reportedly told Chosun Ilbo that Line aims to support the development of a so-called “customized CBDC.”
The messaging company is discussing the application of its blockchain-based CBDC platform with several central banks in major Asian countries, according to the report. Line executives said that they cannot disclose the exact countries that are considering the platform’s application.
A Line spokesperson told Cointelegraph that the firm aims to “provide a blockchain platform that is fit for CBDCs based on Line Blockchain.”
Line has been actively exploring the crypto and blockchain industry. In August 2020, it launched a blockchain development platform for decentralized applications and services and a digital asset wallet named Bitmax. Earlier this year, Line’s crypto subsidiary LVC Corporation launched trading of its proprietary cryptocurrency Link (LN) in Japan.
A number of Asian countries are making plans for their own CBDCs. On Oct. 9, the central bank of Japan officially announced that it will start a CBDC proof-of-concept in 2021. On Oct. 7, the South Korean central bank reportedly claimed that it will begin the distribution phase of its CBDC pilot scheme next year.
At least 20 crypto executives and customers of an Israeli telecommunications company were targeted in a sophisticated SS7 attack last month.
Hackers compromised Telegram messenger and email accounts of multiple cryptocurrency executives last month by exploiting a vulnerability in a decades-old protocol.
The fraudsters are believed to have been trying to intercept two-factor authentication codes of victims in an attack on Israel-based telecommunications provider Partner Communications Company, formerly known as Orange Israel.
The attacks are currently being investigated by Israel’s National Cyber Security Authority and national intelligence agency Mossad.
According to cybersecurity publication Bleeping Computer, the devices of at least 20 Partner Communications Company subscribers were compromised.
Israel-based cybersecurity firm Pandora Security’s analysis of the event suggests the devices were likely breached via a Signaling System 7 attack. SS7 comprises a set of protocols that are used to facilitate the exchange of information within public switched telephone networks interacting over digital signaling networks.
Hackers can exploit SS7 to intercept text messages and calls by using a roaming feature and “updating the location of their device as if it registered to a different network.”
Despite first being developed in 1975, the SS7 protocol is currently in widespread use globally.
Pandora co-founder Tsashi Ganot warned that national governments must update their telecommunications infrastructure to protect against modern security threats.
He said the hackers had also impersonated their victims on Telegram in unsuccessful attempts to lure close acquaintances into making crypto trades:
“In some cases, the hackers posed as the victims in their [Telegram] accounts and wrote to some of their acquaintances, asking to exchange BTC for ETC and the like [...] as far as we're aware no one fell for the bait.”
The SS7 attacks are reminiscent of SIM-swapping that reassigns the phone number associated with a victim’s SIM-card to a device under the hackers’ control.
Uniswap’s first governance proposal has ended in defeat, with votes in favor falling a whisker short of the required threshold.
The first governance vote for decentralized exchange Uniswap has ended in failure, despite the proposal attracting overwhelming support of 98% of votes cast. Despite this, it fell roughly 1% short of the 40 million vote threshold needed for approval by the close of voting.
The poll ended earlier today, with almost 39.6 million UNI staked in favor, compared to roughly 700,000 opposed. DeFi blogger Danger ”Safetythird” Zhang described the vote as “the DeFi equivalent of winning the popular vote but losing the electoral college.”
Ironically, the proposal sought to reduce the number of tokens needed to submit and pass proposals. It was put forward by open-source lending protocol and major UNI token holder, Dharma.
Currently, proposals can only be made by entities holding at least 1% of UNI’s circulating supply (10 million UNI, worth around $30 million), and need to surpass 40 million total votes (worth $130 million) to pass. Dharma’s recommendations would lower the thresholds so holders of at least 3 million ($9 million) UNI could suggest upgrades, and only require 30 million supporting votes ($100 million) for a proposal to pass.
Responding to the vote’s conclusion, Dharma CEO and co-founder Nadav Hollander described the result as “a disappointing outcome that demonstrates the impetus for the proposal in the first place.”
However, Dharma’s proposal was not welcomed by all within the DeFi space, with critics pointing out that if it passed just two entities, Dharma and blockchain simulation platform Gauntlet would almost have the number of tokens needed to find quorum between them. Dharma currently controls 15 million UNI in a single address.
Some onlookers hailed the vote as a success, with crypto developer Agustin Aguilar arguing that voter abstinence should be understood as a barometer of opposition to the proposal:
It's impossible to know how many of the abstained votes wanted to vote no, with a quorum of >50% abstaining means voting no, and many voters knew that— Agustín Aguilar (@Agusx1211) October 19, 2020
An Ethereum 2.0 developer predicts the protocol’s deposit contract will be released in a matter of days, and that ETH 2.0 staking will go live this year.
ConsenSys developer Ben Edgington has published an update that predicts the ETH 2.0 beacon chain genesis will happen within the next six to eight weeks.
In a post announcing the launch of ‘V1.0.0 release candidate 0’, Edgington revealed the protocol’s deposit contract address feature should be announced this week. The deposit contract allows ETH to be sent between Ethereum and ETH 2.0, and is one of the few remaining updates needed to facilitate the roll-out of ETH 2.0 phase 0:
“As I understand it, we are good to go: deposit contract in the next few days; beacon chain genesis 6-8 weeks later.”
However, the PegaSys engineering group developer emphasized his prediction “is not an official statement.”
To complete phase 0’s launch, 500,000 Ether will need to be locked for staking after the beacon chain goes live, followed by a week-long genesis delay to give the network time to prepare.
According to Edgington, the new release also strengthens Ethereum against denial-of-service attacks, implements the genesis delay and a temporary quadrupling of penalty fees.
Penalties were increased in response to the “slightly bumpy” genesis “dress rehearsal” on the Spadina test network at the end of September, and what is now “very low participation” on the Medalla testnet.
The developer described the fee hike as “a temporary measure to give stakers more confidence in case we hit trouble.” Despite low testnet participation, Edgington firmly believes the network is ready to transition into phase 0:
“I think people are getting a bit bored of testnests. It’s time to move on [...] we need to launch Phase 0 asap.”
Edgington’s post comes after a successful trial on the Zinken testnet last week, which Set Protocol’s Anthony Sassano described as the “second last dress rehearsal testnet before we finally set an ETH 2 phase 0 mainnet launch date.”
“Miners are following the protocol, and making a ton of money doing so,” said Juan Benet on Twitter.
Juan Benet, the creator of blockchain-based data storage platform Filecoin, has called allegations that miners of its token have been on strike since last week “nonsense.”
According to a report by 8btc.com, five of the largest Filecoin miners turned off thousands of rigs to protest the platform's economic model. Under this system, miners are required to stake Filecoin tokens (FIL) as collateral when producing a block. However, many of them are apparently coming up short in the number of tokens needed.
Crypto Twitter user Nico Deva was one of the first to claim that “a majority of miners” were on strike following allegations that they needed to buy Filecoin tokens (FIL) to take advantage of mining capacity. This allegedly did not sit well with some of the top miners in China, leading to reports of a possible strike.
“A napkin calculation shows you early on that your mining system that requires $20K hardware also forces you to buy more coins,” said Deva, referring to Filecoin’s 2017 initial coin offering (ICO) which raised over $200 million in less than an hour. “In a country where ponzinomics is an art, the 2017 poster boy just [blew] it,” he continued.
Benet claimed on Twitter that this is not the case, however, stating that miners are simply producing blocks at a slower rate:
“What is happening is that miners are growing slower than before launch. This is in great part because the network is no longer subsidizing their pledge and fee costs — fees cost real money now, and miners need to match growth rate to token flow.”
The Filecoin founder claimed the project recommended that many miners "slow down growth rate to match their token flow, or pause until they can afford to grow steadily."
"Some of miners' growth decrease is from following our advice," said Benet.
He showed data claiming blocks were still being produced, with the top miner bringing in $352,000 within 24 hours, while the top 50 reportedly earned $3.7 million in rewards. The Filecoin creator stated that adding capacity to the network was “very hard right now.”
"There are some miners that no doubt want to push things and try to get more. If they could guilt the community into giving them a lot more money, it may be worth a shot. A thing you learn quickly when there’s lots of money at stake is people will come out of the woodwork to take it, and they will try all kinds of manipulative tactics."
The platform's mainnet launched last week, allowing trading of FIL tokens across major exchanges. The token price surged 118% in less than two days before a nearly 80% plunge. CoinMarketCap shows FIL currently trading at $34.79 at the time of writing.
Bitcoin price may rise to a new 52-week high if it can break above the ascending channel and this move could ignite the altcoins.
Crypto market sentiment appears to be improving across the board and the global push to mainstream central bank digital currencies is also making headway.
In China’s Shenzhen province about 2 million people had applied for the digital yuan giveaway and the lucky 50,000 among them received “red envelopes” of digital yuan totalling $1.5 million.
By the end of Oct. 18 about 47,573 of the recipients had spent roughly $1.3 million of the bounty, amounting to 88% of the total giveaway. This suggests that the pilot program was a success and shows that China is far ahead of other developed economies in developing their central bank digital currency..
To speed up the process of launching its CBDC, the Bank of Canada recently listed a job opening for an economist with thorough knowledge of financial technology and digital currencies.
However, U.S. Federal Reserve Chair Jerome Powell seems unfazed by the progress other countries are making with CBDCs. According to Powell, “it’s more important for the United States to get it right than it is to be first.”
This figure is far less than Nigeria where the penetration rate is 32%, but also higher than Germany and Japan. This shows that the asset class has a long way to go before it can truly become a ‘mainstream’ currency.
Currently, the bearish sentiment that dominated the markets for the past month appears to be alleviating as Bitcoin price moves closer the the $12K level.
Let’s study the charts of the top-10 cryptocurrencies to spot the ones that may perform well in the short-term.
Bitcoin (BTC) has risen to the resistance line of the ascending channel where it could face selling pressure from the bears. However, the upsloping 20-day exponential moving average ($11,201) and the relative strength index above 67 suggests that bulls are in command.
If the bulls can exploit this advantage and push the price above the channel, the up-move could pick up momentum and quickly rally to $12,048.05. A breakout of this level may challenge the yearly highs at $12,460.
However, the bears are unlikely to give up without a fight. They will try to stall the rally at the resistance line. If the price turns down from the current levels but stays above $11,500, then the BTC/USD pair could slowly grind higher inside the channel.
The first sign of weakness will be a break below $11,178, and the trend will turn in favor of the bears if they can sink the price below the support line of the channel.
The bears could not sustain Ether (ETH) below the moving averages on Oct. 16 and 17. This attracted buying and the bulls will now try to push the price above the overhead resistance at $395.
The 20-day EMA ($368) has started to turn up slowly, and the RSI has risen above 57, which suggests that bulls are attempting a comeback.
If the bulls can push and close (UTC time) the price above $395, it will complete an ascending triangle pattern. This bullish setup has a target objective of $478, just below the 52-week highs at $488.134.
This positive view will be invalidated if the pair turns down from the current levels or from $395 and plunges below the uptrend line. Such a move could keep the pair range-bound between $308.392 and $395 for a few more days.
Although XRP broke below the moving averages on Oct. 15, the bears could not capitalize on this advantage and sink the price to the bottom of the range at $0.2295. This suggests a lack of sellers at lower levels.
The bulls have currently propelled the price back above the moving averages. If they can sustain the higher levels, there will be another attempt to clear the $0.26 hurdle.
A breakout and close (UTC time) above $0.26 is likely to start a new uptrend that may reach $0.2905 and then $0.303746.
However, the flat moving averages and the RSI just above the midpoint suggest a balance between supply and demand. If the XRP/USD pair turns down from the current levels or $0.26, the range-bound action could continue for a few more days.
The bulls have held the critical support at $242 for the past two days, and Bitcoin Cash (BCH) is now attempting to resume its up-move.
The upsloping 20-day EMA ($241) and the RSI above 58 indicates that the bulls are in control. The first target on the upside is $266.46, and if that is scaled, the up-move can reach $280.
However, if the bulls fail to push the price above $266.46, the BCH/USD pair could remain range-bound for a few days. A break and close (UTC time) below the moving averages will indicate weakness and could pull the price down to $200.
The support at $29.5646 is acting as a new floor for Binance Coin (BNB). Both moving averages continue to rise, and the RSI has been sustaining in the positive zone for the past few days, which suggests that bulls are in command.
The bulls will now again try to push the price above the $32– $33.3888 resistance zone. If they can pull it off, the pair is likely to pick up momentum and challenge the all-time highs at $39.5941.
This bullish view will be negated if the BNB/USD pair turns down from the current levels or from the overhead resistance and sustains below the 20-day EMA ($29.17). Such a move could drag the price down to the 50-day simple moving average ($26.83).
Chainlink (LINK) has held above the 20-day EMA ($10.52) for the past three days but the bulls have not been able to push the price back above the $11.1990–$11.8028 resistance. This suggests that demand is drying up at higher levels.
However, the gradually upsloping 20-day EMA and the RSI in the positive territory suggests a minor advantage to the bulls. The momentum could pick up after the bulls push the price above the overhead resistance zone. The first target is $13.28 and then $18.
This bullish view will be invalidated if the LINK/USD pair turns down from the current levels or the overhead resistance and breaks below $10.15. Such a move could pull the price down to the $8.7975 support.
The failure of the bears to sink Polkadot (DOT) to $3.5321 suggests that lower levels are attracting buying by the bulls. If the buyers can push the price above the downtrend line, the bearish descending triangle setup will be invalidated.
Above the downtrend line, the DOT/USD pair could move up to $4.6112 and if this level is crossed, the rally may extend to $5.5899.
However, the bears are unlikely to give up without a fight. The sellers will try to reverse the direction from the current levels and again at $4.6112. If the pair turns down from either resistance, it could again drop to $3.5321.
A breakdown and close (UTC time) below $3.5321 will signal that bears are back in command.
Cardano (ADA) has bounced off the 20-day EMA ($0.103), which shows that the sentiment is positive and the bulls are accumulating at lower levels. The buyers will once again try to push the price above the resistance line of the rising wedge pattern.
If the bulls can manage a close (UTC time) above the resistance line, a rally to $0.128062 and then to $0.1445 is possible. The upsloping 20-day EMA and the RSI above 61 suggest that the path of least resistance is to the upside.
Contrary to this assumption, if the ADA/USD pair turns down from the resistance line, the bears will once again try to sink the price below the 20-day EMA and the support line of the wedge. If they can do that, the advantage will tilt in favor of the bears.
Litecoin (LTC) has bounced off the uptrend line and the bulls will now try to push the price above the moving averages. If the buyers can sustain the price above the moving averages, a move to the overhead resistance zone of $51–$52.36 is possible.
However, the bulls are unlikely to have it easy as the bears will try to defend the moving averages. If the LTC/USD pair turns down and breaks below the uptrend line, a drop to $42 will be on the cards.
Currently, the flat 20-day EMA ($47.99) and the RSI at the midpoint suggests a balance between supply and demand. Hence, the price action could remain volatile for the next few days as both the bulls and the bears try to dominate proceedings.
A breakout and close (UTC time) above the resistance zone will complete an inverse head and shoulders pattern that may signal the start of a new uptrend.
Bitcoin SV (BSV) is attempting to stage a recovery but the rebound off the Oct. 16 intraday lows lacks strength. This suggests that the bulls are in no hurry to buy as they are not confident that the bottom is in place.
The downsloping moving averages and the RSI in the negative zone suggest that the advantage is with the bears. If the bulls do not push the price above the moving averages within the next few days, the bears will make one more attempt to sink the price to $146.20.
Conversely, if the bulls can push the price above the moving averages, the BSV/USD pair could move up to $180.63. A breakout and close (UTC time) above this resistance could start a journey to $189 and then to $227.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.
The results could be a good sign for the proliferation of distributed technology.
A report called “Encryption Trends in Mexico 2020/2021” surveyed a total of 353 representatives from companies throughout Mexico.
The study, published by privacy research center the Ponemon Institute, indicated that 40% of the Mexican companies surveyed were looking to adopt blockchain and cryptocurrencies in some form. Out of this segment, 71% were focused specifically on crypto usage.
The figures also showed that 51% of these companies were intent on implementing blockchain for asset management and transaction handling purposes, while 37% expressed an interest in the implementation of smart contracts. Many of these companies could ultimately use blockchain to improve their security systems and guarantee proper encryption processes, the study said.
Though Mexico is not often viewed as a major blockchain player on a global scale, the country has played an active and ongoing role in terms of adoption. In September, Mexico announced plans to enable a blockchain-based electronic voting system for certain citizens residing abroad. The county aims to make this available in time for its 2021 election cycle.
Cointelegraph Spanish reported in August that Mexican companies had raised over $1.3 billion in the fintech sector. Part of these funds went toward blockchain technology development within the country.
He stated that he does not “question the reliability and traceability of all blockchain technology,” but denounced crypto.
French Finance Minister Bruno Le Maire, who once said Facebook’s Libra token would risk the "monetary sovereignty of states,” is continuing his criticism of cryptocurrencies.
In an Oct. 19 tweet, Le Maire claimed some cryptocurrencies are associated with purchasing drugs and weapons in addition to being used for money laundering. However, he also wrote that he does not “question the reliability and traceability of all blockchain technology.”
Cher @cyrilpaglino, nous ne remettons pas en cause la fiabilité et la traçabilité de toutes les technologies de la blockchain. Mais certaines cryptomonnaies ont pu être utilisées pour faciliter des transactions frauduleuses (drogue, armes, blanchiment) de manière anonyme. Nuance. https://t.co/m2YFNa9ipd— Bruno Le Maire (@BrunoLeMaire) October 19, 2020
Le Maire was responding to Cyril Paglino, a general partner in crypto fund Starchain Capital, who said blockchain transactions had “no interest in terrorists.” Paglino referenced the recent FinCEN leak, which showed that many banks were in fact enabling money laundering.
This story is developing and will be updated.
CME data shows Institutions are long Bitcoin while hedge funds are aggressively shorting BTC.
According to CME, the amount of Bitcoin (BTC) long contracts held by institutions are at an all-time high. Yet, CME’s most recent Commitment of Trader report shows hedge funds are at a record-high for BTC shorts.
There seemingly is a major difference in the perception of Bitcoin’s short to medium-term trend between hedge funds and institutions.
Why are hedge funds aggressively shorting Bitcoin but not institutions?
Hedge funds typically implement varying strategies to generate returns for investors. Oftentimes, hedge funds will utilize derivatives and employ a more high-risk strategy.
In contrast, institutional investors who are allocating a percentage of their portfolio to Bitcoin likely have a long-term strategy. This means they are not concerned about the short to medium-term performance of BTC.
Some analysts say that hedge funds are likely short on Bitcoin to provide liquidity to institutions longing the top cryptocurrency.
When institutional investors increasingly build up their long positions, there need to be sellers on CME to balance the order book. Mitchell Nicholson, a cryptocurrency analyst, said:
“Many HFs are likely shorting CME futures hedged to capture the basis or providing liquidity to the institutions going long.”
Technically, hedge funds might also be shorting Bitcoin after repeated rejections of a key resistance level. Bitcoin has been unable to break out of the $11,700 to $12,000 resistance range since August.
For over two months, Bitcoin has been mostly ranging between $10,500 to $11,700, struggling to show upside momentum.
After BTC’s recovery from $3,600, hedge funds may be expecting a significant pullback.
A pseudonymous trader known as “Bluntz” said that the current technical structure of Bitcoin looks similar to February. In March, BTC dropped to $3,596 on BitMEX in an abrupt capitulation phase.
Whether hedge funds are net short on BTC or providing liquidity to buyers on CME remains unclear based on open interest. Skew said:
“New CME Commitment Of Trader report just came in for BTC Futures: HFs all-time short. Institutions all-time long. Who's wrong?”
Institutions continue to demonstrate high demand
Despite the growing Bitcoin short positions from hedge funds, institutional investors are continuing to accumulate BTC.
On Oct. 17, Barry Silbert, the CEO of Grayscale, said the firm reached all-time high assets under management (AUM) at $6.4 billion. The figure from Grayscale is critical to measure institutional activity because their products mainly tailors institutional investors.
In the U.S., there is not a Bitcoin exchange-traded fund (ETF) approved by the U.S. Securities and Exchange Commission (SEC). As such, institutions rely on the Grayscale Bitcoin Trust, which operates more like an exchange-traded product (ETP) to gain exposure to Bitcoin.
Major multi-billion dollar conglomerates that have invested in Bitcoin, such as MicroStrategy and Square, also emphasized their intent to treat BTC as a treasury asset. At least in the short to medium term, these institutions are unlikely to sell their BTC holdings.
Central bank digital currency interest continues gaining global traction.
As part of DC Fintech Week, a digital conference on the governmental side of the financial technology sector, several international leaders gathered for an Oct. 19 panel called: Central Banks, CBDCs and Cryptoeconomics.
"I don't see technological barriers in this area, but I do see technological challenges," Cecilia Skingsley, First Deputy Governor of Riksbank, the central bank of Sweden, said on the panel.
"The challenge is not so much technology in itself, but it's more about — we have to choose what sort of policy objectives do we want to focus on, what is the problem we want to solve," she explained. "Depending on what that is, and the purposes we want to serve, then you choose the technology after that."
The panel saw discussion between four separate authorities on various aspects of CBDCs, including the global race toward toward such a currency, as well barriers. In addition to Skingsley, the panel hosted BIS executive committee member Benoit Coeure, Bank of England deputy governor Jon Cunliffe, and former U.S. CFTC chairman J. Christopher Giancarlo.
As far as the Bank of England is concerned, Cunliffe explained cash as a cumbersome part of the economy. "Physical cash is no longer convenient," he said. "It's becoming increasingly inconvenient for people to use in their everyday lives, and the COIVD crisis has accelerated that," he added. "On the other hand, it's becoming increasingly less acceptable to merchants for some of the same reasons, even merchants that are able to take physical cash."
Giancarlo specifically pointed out the competitive atmosphere around launching a CBDC, noting that winning the race is not the most important point — sentiment U.S. Federal Reserve chairman Jerome Powell also recently expressed.
"If there's a winner, I don't think the winner is necessarily who's first and the loser is necessarily who's last," Giancarlo said during the panel. "What matters is, which central bank successfully incorporates its societal values in a successful development of CBDC," he explained. "On the other hand, one can't be too late to the game here," he added.
Mentioning a report from the BIS from January 2020, Coeure reminded the audience that a large number of the world's central banks consider CBDCs a worthwhile research effort. China has notably charged forward with its CBDC development in 2020.
There was a time when Bitcoin seemed to be directly influenced by the daily news cycle.
Blockchain headlines have been awash with negative news tidbits lately. KuCoin suffered a major hack on Sept. 26; two United States regulatory bodies went after BitMEX on Oct. 1; the United Kingdom's Financial Conduct Authority, or FCA, banned crypto derivatives on Oct. 6; and news came to light that U.S. stimulus payment talks had stalled around Oct 9.
Bitcoin's (BTC) price has appeared largely unfazed, however, despite this array of seemingly unfavorable stories. This could be indicative of upside potential in the coming weeks, according to a report Monday from crypto investment solution company CoinShares.
"It tells me holders are not nervous and leverage is low — a theory supported by wallet activity and traffic — and skews my short term price expectations from neutral to positive," wrote Danny Masters, executive chairman of CoinShares.
In the days following each of these events, Bitcoin's price mostly held, dropping only slightly in comparison with its usual price activity, and often rising shortly thereafter.
"In my 30 years in trading my top golden rule was to act when the news was not matched by price movement," Masters wrote. "Having been around crypto during MtGox, the China ban, Bitfinex Hack, Trump comments and many of the other market-smashing stories that punctuate bitcoin's history I was struck by the lack of negative price movement, particularly around BitMEX," Masters added after noting the FCA and BitMEX events as recent, potentially bearish happenings.
Bitcoin has gained a number of large mainstream participants in the past several months, partly in an effort to preserve these speculators' capital against inflation. Masters details these mainstream entrants in the first part of the report, mentioning Square and MicroStrategy as two examples. MicroStrategy allocated $425 million of its treasury reserves to Bitcoin between August and September. Square picked up roughly $50 million in Bitcoin at the beginning of October.
"We think these actions are but the beginning of a treasury diversification strategy which will appeal to technology and payments companies around the globe," Masters wrote.
Earlier in the year, billionaire hedge fund manager Paul Tudor Jones placed his own heavy bet on Bitcoin as a hedge against inflation.
FinCEN has fined the operator of early crypto mixers Helix and Coin Ninja for Bank Secrecy Act violations.
The founder and operator of some of the first "mixing" services in crypto will have to cough up $60 million to United States regulators, even as he faces continued criminal charges.
The U.S. Treasury's Financial Crimes Enforcement Network, or FinCEN, announced on Monday a $60 million fine against Larry Dean Harmon, the man behind Helix and Coin Ninja.
Harmon was arrested in February for operating a stable of tumblers, or mixers, that Washington, D.C. prosecutors allege constitute unregistered money services businesses. Those charges against him say he laundered over $300 million in Bitcoin. According to today's announcement, "FinCEN’s investigation has identified at least 356,000 bitcoin transactions through Helix."
Mixing services attempt to privatize cryptocurrencies by sending them through a massive series of transactions involving various wallets. The process aims to obscure the origins of coins as well as the entity in control of them when they come out of mixing. Harmon's mixers were only accessible via the dark web.
FinCEN claims that Harmon deliberately flaunted the provisions of the Bank Secrecy Act, the cornerstone of U.S. Anti-Money Laundering legislation. It was violations of the BSA that led to criminal charges against the executive team of crypto exchange BitMEX earlier this month.
U.S. authorities have been on the prowl for criminal activity based on crypto. The Department of Justice recently released a report that highlighted privacy tokens like Monero (XMR) as a cause for alarm.
Despite facing hot-and-cold rules, growing crypto usage in sub-Saharan Africa is forcing regulators to reconsider the industry.
Sub-Saharan Africa has no doubt suffered many regulatory setbacks in adopting cryptocurrencies. With most countries in the region struggling not to buckle under economic uncertainties and pressures looming over them even as the ripple effects of COVID-19 set in, it would appear that many Africans, especially millennials, aren’t waiting for the government anymore.
The main issue inhibiting regulation seems to be a combination of resistance and indecision both from regulators, which has majorly been a result of little or no understanding of cryptocurrencies.
Speaking to Cointelegraph on the attitude of regulatory bodies in Africa toward cryptocurrencies, Andrew Nevin, partner and chief economist at PricewaterhouseCoopers Nigeria, said:
“I think it’s fair to say that around the continent, people are being cautious. There’s been a lot of problems with cryptocurrency and various kinds of fraud: initial coin offerings and projects that didn’t have sufficient value and have gone backwards or folded up. So, I think that the authorities are taking the right view in taking this step by step.”
For the most part, governments of most sub-Saharan countries have not taken any clear stance toward cryptocurrencies.
The waiting game
Many African governments pretty much don’t know what to do about cryptocurrencies, although recently, there has been some progress. For example, the Securities and Exchange Commission of Nigeria has officially defined digital assets under its regulatory umbrella in a recent statement. Before, the Nigerian Central Bank had flip-flopped, going from warning its citizens against doing business in digital currencies to launching research on potential policy proposals. In Kenya, authorities have gone from comparing cryptocurrencies to pyramid schemes to setting up a task force to study the challenges and benefits associated with the underlying blockchain technology.
Over the years, the legality of Bitcoin (BTC) and other crypto assets has varied significantly across the region, with over 60% of African governments yet to make their position known.
Blockchain and cryptocurrency in Africa — Geographical overview
Source: Baker McKenzie
While some nations have openly declared their support for cryptocurrencies, most countries have either issued complete or partial bans. The most common position, however, is one of caution. Countries such as Kenya, Ghana, Lesotho, Swaziland, Uganda, Zambia and Zimbabwe have warned its citizens about cryptocurrencies without actively banning crypto trading or use. Other countries such as Namibia and Burundi, while also not banning usage, have issued bans against trading, citing lack of consumer protection.
Similar to what we see in Kenya, a statement from the Ugandan government referred to “One Coin Digital Money,” as a cryptocurrency alongside Bitcoin, Litecoin (LTC) and XRP, among others, putting them all on equal footing as cryptocurrencies. OneCoin was a notorious multilevel marketing scheme that allowed “representatives” to earn incentives from selling memberships for an enterprise with no genuine product.
Taking a critical look at these countries, we could infer that Ponzi schemes have tainted the reputation of legitimate crypto projects and may be slowing things down. Paxful CEO Ray Youssef spoke with Cointelegraph on the subject. Paxful is a leading peer-to-peer crypto exchange platform that has the highest growth of P2P trading in Africa so far by providing on-ramps and off-ramps for cryptocurrencies within the region:
“We ought to understand that regulators are just starting to figure cryptocurrencies out. Many of them have just begun their exploration and they hear about this in the worst possible ways, especially in Africa. Because nine out of 10 people you talk to in Africa have been scammed in a cryptocurrency-involved scam or know someone who has been scammed. That’s a huge number, but then you consider the proliferation of multi-level marketing scams that operate upon Africa like OneCoin, this infamous Ponzi [...] plus the crypto mining scams. Everyone in Africa has been scammed.”
Youssef also added that corruption ranks as one of the factors slowing down the regulation of cryptocurrencies within the region:
“Unfortunately in Africa, things are a little different from in the West. Everyone wants to wet their beak a little bit at the table, and that’s how regulators think [...] and that’s a challenge for people in the African crypto space.”
Possible catalysts to speedy regulation
Despite the regulatory weakness, it has become obvious that the region has seen a continuous increase in interest in cryptocurrencies. Countries such as Nigeria constantly rank first in online searches for “Bitcoin” as seen on Google Trends. A Sept. 10 blockchain analytics report from Chainalysis indicates that Nigeria, South Africa and Kenya cumulatively lead the continent in monthly crypto transfers, which totaled $316 million in June.
Africa’s interest in crypto could also likely be fueled by factors, such as worsening inflation, high remittance fees, low financial inclusion and political instability, among other factors, which, in turn, have made things difficult for the average person in sub-Saharan Africa. These would hasten the decisions of regulatory bodies in the future.
Inflation rates across the continent have historically been much higher than the global average. An extreme example would be Zimbabwe’s hyperinflation, which led Zimbabweans to a desperate search for a store of value even as the pandemic has increased economic uncertainties.
Inflation rate for sub-Saharan Africa vs. global average 1999–2018
Source: The World Bank
High remittance fees
This is another factor that could hasten the decision of regulators, as they already have a growing market. According to a report from the World Bank, remittances worth less than $200 to sub-Saharan countries cost an average of about 9% compared to a global average of 6.8%, while payments between countries cost even more. For example, sending money from South Africa to Zambia costs 18% of the value of the money sent.
Not only does political instability exacerbate inflation and currency volatility, but it can also result in forced migration, GDP collapse and wealth confiscation, all of which lead to an intensified search for sound money to preserve wealth. This increased attention would, in turn, hasten the hand of regulatory bodies to make a decision. According to data from the World Bank, just 10 of Africa’s 53 nations have a positive score on the political stability index.
Political Stability Index in Africa — Selected countries (-2.5 weak; 2.5 strong)
Source: The World Bank and The Global Economy
The challenges of hyperinflation, high remittance fees and economic instability are more pronounced in sub-Saharan Africa than other parts of the world. These issues put more financial pressure on the average citizen — pressure that makes regular people search for options for a safer financial future. Faster response from regulators can, therefore, be linked to the astonishing increase in the people showing interest in cryptocurrencies, which are now seen as an escape route from the harsh realities facing most Africans.
The situation in various countries within Africa is similar, as they mostly fall under regulators that are undecided when it comes to crypto. Most countries within sub-Saharan Africa have wavered. Below is an overview of what regulations in some of the largest crypto markets in sub-Saharan Africa feel like so far.
In a recent report, the Securities and Exchange Commission of Nigeria officially issued regulatory guidelines for digital currencies and crypto-based companies or startups. According to Nigeria’s capital market and investment regulator, the aim is to protect investors and create standards for ethical practices. The commission also added that it will regulate “all Digital Assets Token Offerings, Initial Coin Offerings, Security Token ICOs, and other Blockchain-based offers of digital assets within Nigeria.” Every crypto asset in Nigeria will be treated as securities unless the company or startup can prove otherwise. This development is a far cry from what was obtainable before now.
In 2017, the commission had taken a more antagonistic approach. It warned citizens to be cautious while investing in cryptocurrencies, as they might experience “financial losses” without guaranteed protection from the regulatory body. That same year, Nigeria’s central bank warned local banks against doing business in digital currencies. Meanwhile, the increasing adoption of cryptocurrencies in the country has brought with it a rise in bad actors seeking to exploit unsuspecting citizens.
However, it’s likely that interest in crypto from its citizens may have driven Nigerian regulators to latch on to this budding market.
Sub-Saharan Africa weekly volume. Source: UsefulTulips
Before Nigeria, South Africa had been the sub-Saharan jurisdiction most receptive to cryptocurrencies. In December 2014, the South African Reserve Bank put out a paper stating its position on virtual currencies. The SARB affirmed that it alone has the right to issue any legal tender and that decentralized convertible virtual currencies don’t constitute legal tender in South Africa. The SARB stated, “Only the Bank is allowed to issue legal tender i.e banknotes and coins in RSA, which can be legally offered in payment of an obligation and that a creditor is obliged to accept. Therefore the decentralised convertible virtual currencies are not legal tenders in RSA.” This was confirmed again by the SARB in its statement in 2017 as it confirmed that it does not recognize cryptocurrency as “currency” or “legal tender” in South Africa.
Continuing the trend of inconsistency, however, the Minister of Finance in South Africa distributed authority over crypto beyond the SARB. The Minister noted in mid-2017 in Parliament that “the National Treasury together with the SARB, [Financial Intelligence Centre], and [Financial Services Board] also established an Intergovernmental Fintech Working Group in December 2016, to develop an approach and revised policy stance towards fintech, including crypto-currencies.”
The country has been trying to affix a pro-crypto stance recently, as seen in a policy paper released by South Africa’s Intergovernmental Fintech Working Group, financial regulators in the country recommended “that crypto assets remain without legal tender status” in a roadmap outlining what could become the nation’s first comprehensive crypto laws.
Though many of the nations of sub-Saharan Africa have changed their attitude toward crypto recently, Zimbabwe has seen perhaps the most striking thaw in recent years.
The government banned crypto in 2018. The Reserve Bank of Zimbabwe instructed the private banks of Zimbabwe’s largest virtual currency exchange, Golix, to close its accounts and made Golix itself refund its customers.
Nonetheless, peer-to-peer trading of cryptocurrencies continues to grow in Zimbabwe as the country’s monetary policies falter. In mid-2019, the crypto rush in Zimbabwe reached such a high that rumors about Bitcoin’s price reaching a 600% premium began to spread.
In its monetary policy statement from February, the Reserve Bank of Zimbabwe revealed that its focus was on stabilizing its currency. Having suffered massive hyperinflation that peaked in 2007, the bank appears intent on eradicating the volatility of its exchange rate through the establishment of a currency stabilization task force. According to the RBZ, exchange rate stabilization will result in a corresponding decrease in inflation, thus leading to significant economic recovery for the country.
Consequently, Zimbabwe has made somewhat of a U-turn in its crypto policy. A local news source reports that the RBZ is reportedly developing a regulatory sandbox for cryptocurrency companies in the country.
Other parts of Africa
For other parts of sub-Saharan Africa, the situation seems to be pretty much the same. As regulators take their time to wrap their heads around this technology and how its implementation can influence the dynamics of their economic scene, citizens are seeing it as a haven for reasons ranging from remittances to hyperinflation.
As of last year, Ghana’s Securities and Exchange Commission confirmed that cryptocurrencies were still unregulated, issuing a public warning to investors in March 2019. Meanwhile, the regulatory space for cryptocurrencies in Kenya is currently nonexistent, with only a warning from its regulator for individuals and organizations to steer clear of transacting in digital currencies.
What the future holds for Africa
For the most part, the neutral regulatory stance on crypto in most countries within sub-Saharan Africa is due to a lack of education. However, it appears that this will not remain so for much longer. The level of interest from its citizens is growing. Beyond the need to hold cryptocurrencies for speculative reasons, Africa seems to be the region with the greatest need for cryptocurrency use cases. This increasing demand will play a key role in hastening regulation across the continent. With Africa’s most populous country, Nigeria, newly involved in the space, we may be about to witness a cascade of regulation from other parts of sub-Saharan Africa.
Wallets once again appear to be accumulating cryptocurrency at an increasing rate.
According to analytics data provider Glassnode, 16,159 Bitcoin wallets now hold 100+ BTC. A report Monday from the company stated that this figure tests the previous six-month high of 16,158, last seen on June 8.
Glassnode additionally shared that the number of non-zero Bitcoin addresses reached an all-time high of 31,913,3555 on Monday; approximately 5,000 of these were recorded within the past 24 hours.
On Oct. 5, Cointelegraph reported that analyst and market cyclist Cole Garner had highlighted a two-year record increase in new BTC addresses within the first week of October.
Using data from Glassnode, Garner determined that around 22,000 new Bitcoin “entities” had appeared in a single day — a significant jump above the normal figure of 5,000 to 10,000 per day.
In May, Bitcoin wallets holding a non-zero number of coins crossed the 30 million mark for the first time. More than 99% of these wallets contain less than the once-modest sum of 10 BTC.
On-chain data shows dormant addresses are selling BTC, leading some analysts to make bearish calls on Bitcoin price.
Old hands are selling their Bitcoin (BTC) holdings, according to Glassnode’s Coin Dormancy metric. As shown below, dormant addresses selling BTC marked previous tops in BTC.
On-chain analyst Willy Woo said old hands reliably sold the top until the most recent price cycle. He wrote:
“Dormancy is a measure of ‘old hands selling out.’ It's interesting to see old hands reliably sold tops until this present cycle. They sold the #bitcoin bottom at $3–$4k, they are selling right now.”
There are several reasons why long-time holders are selling BTC at the current price. BTC price has increased by three-fold since March, and it is a decent take-profit area for sellers. The $12,000 area has also served as a strong resistance level throughout the past two months.
Will the dormant Bitcoin HODLers be proven right this time?
Atop the various technical reasons, there are cyclical reasons that could encourage dormant Bitcoin holders to sell.
In the last two fourth quarters, Bitcoin recorded negative returns. The tendency of BTC to underperform during the last quarter, alongside the $12,000 resistance, could compel holders to take profit.
However, some technical analysts believe Bitcoin is at the cusp of starting a new cycle. In the upcoming months, BTC could continue to grind upward to higher resistance levels and not see a major pullback.
Filbfilb, a popular cryptocurrency analyst, pinpointed the post-halving cycle seen in 2017. He said that BTC reached an all-time high after it broke out in the same week four years ago. He wrote:
“Bitcoin's cyclical behaviour is difficult to escape from. Same week 4 years ago, Bitcoin was trying to finally break the 50% bear market fib retracement. It never looked back after that & tested ATH by January. This time it's different?”
The trader also noted that institutions are seemingly longing Bitcoin at record levels. Following the high-profile investments in Bitcoin from MicroStrategy and Square, the institutional demand for BTC has increased noticeably.
The volume of institution-tailored platforms, including Bakkt and LMAX Digital, has increased substantially in recent weeks. Filbfilb added:
“Although they dont make up much of the OI — Institutional sized traders were only holding long positions last week.”
BTC's technical setup is short-term bearish, but fundamentals are strong
Most of the short-term bearish signals for Bitcoin are technical rather than fundamental. Various fundamental metrics signify strengthening momentum, including the Bitcoin hash rate.
On Oct. 19, the Bitcoin hash rate hit a new all-time high once again, which is a highly optimistic trend, especially after the May 11 halving. John Todaro, a cryptocurrency venture capitalist, said:
“Bitcoin hash rate hit new all time highs (again). The recent price rally has increased mining revenues, pushing more miners to allocate greater resources to the network, thereby increasing hash rate. What ever happened to that mining death spiral thesis after the halving?”
Mina applies zk-SNARKs to Cardano's Ouroboros consensus to achieve scalability and decentralization.
Mina aspires to be the world’s tiniest blockchain, with claims that its protocol maintains a constant size of around 22 kilobytes. This is ostensibly achieved by using recursive zk-SNARKs — the same technology that is used by the privacy-centric cryptocurrency Zcash (ZEC). However, whereas the latter utilizes this technology to provide greater privacy to its users, the former employs it for scalability.
A zk-SNARK, which stands for zero-knowledge succinct noninteractive argument of knowledge, allows a party to prove that they have possession of certain information without revealing what that information is. It is similar to how a smartphone can recognize its owner without storing the person's actual identity data.
There has been much discussion about using zk-SNARKs to scale various protocols including Bitcoin, though there are currently few practical applications of the technology. Evan Shapiro, CEO of O(1) Labs, the company behind the Mina blockchain, said that though it’s a beautiful idea, his team has had to solve many technological challenges to bring this concept to life:
“It's a very clean and beautiful idea at a high level. But then when you get into actually implementing it, there's a lot of complexity that you have to be aware of and manage to make this actually happen.”
When it comes to the project's nodes, their size will depend on the network's needs. A “normal” node will require just a few kilobytes, whereas a node that participates in consensus may require around a gigabyte:
“If you're a normal node which just needs trustless, permissionless access to a few accounts, that's in the range of kilobytes because you just need the proof and the actual accounts. If you like performing consensus, then you need all the accounts. So there's let's say a million accounts. Each one is a hundred bytes, probably a little more, like kilobytes, so you need a gigabyte to store that.”
Originally, the project was envisioned with a proof-of-work consensus, but the team decided to adopt Cardano’s Ouroboros consensus earlier this year. Even so, substantial work went into adapting this system to the zero-knowledge cryptography that Mina employs. Unlike Zcash, which is merely a cryptocurrency, Mina has a smart contract layer and its own version of decentralized applications, or DApps, which are called Snapps.
Shapiro said that Mina’s other distinction is that it will be able to consume outside data securely, without the need for oracles. This combination of outside data and zero-knowledge proof cryptography could open up a number of use cases. For instance, Mina could allow users to provide decentralized finance apps with the parameters of their credit history without having to reveal what that information actually is. This, in turn, could lead to lower inherent risks and reduced interest rates for borrowers. Users could potentially leverage Know Your Customer information verified by one exchange to bypass the verification requirements of another crypto service provider.
Mina recently changed its name from "Coda" due to a lawsuit from the R3 Consortium, which believed the name was too close to its own "Corda." Mina's mainnet is now expected to launch within the next few months.
The U.S. already has a “safe and active dynamic domestic payment system,” Powell argued.
The United States will not be issuing a digital dollar until the Federal Reserve resolves all questions around a potential central bank digital currency, or CBDC, according to the Fed's chairman, Jerome Powell.
Powell claimed that he is not worried about other countries having a first-mover advantage when it comes to issuing CBDCs.
Speaking at a Monday panel on cross-border payments hosted by the International Monetary Fund, Powell said:
"We have not made a decision to issue a CBDC, and we think there’s a great deal of work yet to be done. [...] In fact, I actually do think that CBDC is one of those issues where it’s more important for the United States to get it right than it is to be first.”
Powell elaborated that “getting it right” means that the U.S. is not only looking at the potential benefits of a CBDC but also the potential risks — particularly given the fact that the U.S. dollar is the world’s reserve currency.
The official noted that countries around the globe will have their own motivations for issuing a CBDC. He contended that the main focus for the U.S. would be determining “whether and how a CBDC could improve an already safe and active dynamic domestic payment system.” Powell continued:
"Unlike some jurisdictions, here in the United States we continue to see strong demand for cash. Moreover, we have robust and mature financial and banking sectors, and we have a highly banked population, so that many, although not all, already have access to the electronic payment system.”
The Fed chair emphasized that the bank will not make a decision on issuing the digital dollar until it resolves CBDC-associated risks involving cyber attacks, financial stability, privacy and security. He stated:
"In addition to assessing the benefits, there are also some quite difficult policy and operational questions. [...] Just to mention a few, I would mention the need to protect a CBDC from cyber attacks and fraud; the question of how a CBDC would affect monetary policy and financial stability; and also, how could CBDC prevent illicit activity while also preserving user privacy and security.”
Powell’s remarks come amid a number of global jurisdictions actively exploring and piloting CBDCs. Countries such as Russia and Japan are among the latest countries to jump on the CBDC bandwagon, while jurisdictions such as China and Sweden began testing their forthcoming digital currencies in 2020.
Despite the technology's growing popularity across the globe, citizens in the U.S. are also skeptical about the idea of the digital dollar. According to a recent survey, more than 50% of Americans are opposed to the U.S. Fed issuing such an asset. In late September, the Federal Reserve Bank of Cleveland revealed details of the Fed’s ongoing research into a potential digital dollar.
The Russian national linked to the laundering of $4 billion of Bitcoin stolen during the Mt. Gox hack is finally in court.
The trial of the alleged launderer of $4 billion worth of Bitcoin (BTC), Alexander Vinnik, got underway in Paris on Monday.
However, despite reported links to the 300,000 BTC hack of Mt. Gox in 2014, prosecutors are focusing on a 135-million-euro ($159 million) ransomware fraud targeting French businesses and organizations between 2016 and 2018.
According to The Associated Press, Russian national Vinnik is being charged with extortion, money laundering and criminal association after 20 victims of the "Locky" malware paid the ransom in Bitcoin through BTC-e.
Vinnik is alleged to be one of the creators of the malware and the former operator of the now-shuttered cryptocurrency exchange, although he claims that he was only a technical consultant at BTC-e and had no knowledge of any wrongdoing.
If found guilty, Vinnik faces up to 10 years in prison.
As Cointelegraph reported, Vinnik was originally arrested in Greece in 2017 at the behest of United States authorities.
There followed a legal tug of war, with prosecutors from France, the U.S. and Russia all petitioning for his extradition. Vinnik himself expressed a preference to be extradited to Russia, where he faces lesser charges.
Earlier this year, Greek authorities ruled that he would be extradited first to France, then to the U.S and finally to Russia
Even following his extradition to France, Russian authorities unsuccessfully requested that he be allowed to return to his home country under house arrest.
If tried in the U.S. in the future, Vinnik is likely to face charges related to the $4 billion hack of Mt. Gox. The 300,000 BTC stolen in the hack were allegedly laundered through the BTC-e exchange and Vinnik's own personal wallet.
A StakeHound collaboration allows Dash holders to earn masternode staking rewards and access DeFi services at the same time.
Dash holders will soon be able to access a wide range of decentralized finance, or DeFi, services through a collaboration with StakeHound.
According to an announcement on Monday, tokens that are deposited with StakeHound will also earn network rewards through the Dash masternode system.
In order to take advantage of the burgeoning DeFi market, Dash holders must send tokens to StakeHound, which will then instantly generate and send back a wrapped ERC-20 representation called stakedDASH.
StakedDASH will be tradable and usable in major DeFi platforms such as UniSwap, Aave, Curve and others, using the Ethereum or Radix networks. They will also be able to be converted back into the original Dash tokens at any point.
Meanwhile, the Dash tokens held by StakeHound will be held in a masternode and earn the standard rate of network rewards, which will be issued to users as additional stakedDASH.
This will enable Dash holders to gain the benefits of network staking, but without needing to lock up the 1,000 Dash necessary to create their own masternode. The minimum amount required to stake through StakeHound is just 1 Dash, worth $66.97 at publishing time.
According to Dash marketing manager Mark Mason, the collaboration will not only allow Dash users access to DeFi but also allow DeFi users access to Dash.
Mason said that the bridge “provides an additional on-ramp for DeFi, but more importantly a much-needed off-ramp for DeFi users who wish to easily convert their gains into a well established scarce cryptocurrency with utility beyond the DeFi ecosystem. This allows DeFi users to exchange DeFi tokens for Dash enabling them to actually spend and use those tokens in the real world.”
StakeHound founder and CEO Albert Castellana also stated an intention to build and integrate DeFi capabilities into the upcoming Dash Platform. As Cointelegraph reported, this proposed development will enable data to be stored within the network in the form of a decentralized cloud service.
The price of Ethereum is showing similarities with previous bull cycle beginnings as $800 ETH is coming back in play.
Markets tend to behave in massive cycles. One of those cycles is the previous Bitcoin (BTC) price cycle from 2014 to 2017. However, within those cycles, are multiple smaller cycles that could often repeat.
A similar approach and analysis can be made for Ethereum’s Ether (ETH), which is outperforming BTC year-to-date, as the majority of its impulse upward moves have corrected heavily to retest previous resistance levels.
When is the best period to buy ETH/USD and what potential levels can be hit in the next move? Let’s take a look at the charts.
Ether looking for a higher low to confirm new uptrend
ETH/USD 1-week chart. Source: TradingView
The weekly chart shows a clear breakout above the 100-week and 200-week moving averages (MAs) earlier in the year. A breakout that also caused the price to break above the crucial resistance level of $300.
This $300 barrier has been a resistance zone for close to two years, ever since the bear market for Ethereum began in February 2018.
Since this accumulation period, the price of Ether has been hovering between $80 and $300. Finally, after almost two years, ETH/USD broke above $300, rallying toward the next resistance zone around $500.
However, a breakout during this run is unlikely as the crypto markets still appear to be consolidating within a new cycle. This buildup is relatively dull and doesn’t provide massive volatility.
Another clear signal of this accumulation period is the incentive to continually back-test every previous resistance zone as support. These retests add further momentum for more upside later on.
$300 resistance zone could very likely be the support level
ETH/USD 1-week chart. Source: TradingView
a higher high is already established as the chart is showing regarding the current trend. After such a higher high, the market is looking for a clearcut higher low to confirm the existing trend switch.
However, the crucial question in this regard is at which level can a higher low be established? The most profound answer to this question is the previous resistance at $300 becoming support.
But even if the $300 level doesn’t support, the 200-week MA at $220-245 can sustain and confirm the higher low. These two zones should be watched for investors to see whether buyers are stepping in. The $300 level already held as support, increasing the likelihood of Ether holding above this level.
Second, as the markets tend to move in substantial cycles, new potential resistances can be defined. The impulse move usually lasts the shortest as accumulative and corrective movements tend to take the most prolonged period.
If the $300 area sustains support, new resistances and levels can be defined through horizontal price levels and the Fibonacci extension tool.
ETH/USD 1-week chart. Source: TradingView
The next levels of potential resistance can be found through these indicators and tools at $600 and $775-825.
This would mean that Ethereum could surge more than 100% in the next impulse move, driving the markets to the next level. If Ethereum 2.0 gets released, the strength will only increase, indicating that the second level has been most likely reached.
Patience is required to buy ETH based on the BTC chart
ETH/BTC 1-week chart. Source: TradingView
Multiple arguments and analysis can be derived from the ETH/BTC chart. One of them is the range-bound construction between the 100-Week and 200-Week MA, which indicates that the upwards move was rejected at the 100-Week MA.
However, another indication is made that the price of Ethereum provided weakness throughout the fourth quarter of the year.
The bottom constructions were made in December and January, after which a large impulse move occurred. Therefore, the best period to get into ETH, therefore, is December and January, a move that has historically rewarded patient investors.
If the bottom construction is finished and history repeats itself, potential resistance zones can be found at 0.058 and 0.072 sats, similar to the USD values.
ETH/BTC 1-day chart. Source: TradingView
The daily chart of ETH/BTC is showing clear support at the 0.03 sats level. However, this support level has seen several tests, meaning another test would likely cause the price to drop further south.
This isn’t horrible, however, as the lower support level didn’t see a confirmation test (a support/resistance flip) yet. Traders should watch 0.026 sats if the level of 0.03-0.031 sats is lost for support.
In general, tremendous opportunities may be arising in the markets in the coming weeks/months as 2020 comes to a close, particularly if history repeats itself.
Moreover, the further you get into a cycle, the bigger the impulse moves will be. Another run of 100%+ for Ether is, therefore, likely to occur if the $450 breaks.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Fujitsu has been working on blockchain-based digital identity tools since 2019.
Major financial institutions in Japan are moving into blockchain to streamline digital identity systems.
Japan’s third-largest bank, Mizuho Bank, and local payment giant JCB are preparing to pilot a digital identity interoperability system based on blockchain technology. The new system will utilize a blockchain solution developed by Fujitsu Laboratories, Fujitsu announced on Thursday.
The new joint initiative will allow the companies to verify mechanisms to securely transfer and link member ID information by multiple business operators. This data includes names, addresses and employers stored on a cloud platform built by Fujitsu. The pilot will also involve 100 Fujitsu Group employees. The pilot is expected to last for about four months.
All three companies — Fujitsu, Mizuho Bank and JCB — have expressed some interest in the blockchain industry in recent years.
Fujitsu has been applying blockchain tech to digital identity management tools since 2019. In July 2019, Fujitsu Laboratories introduced its blockchain-based solution for evaluating user credential identity and trustworthiness in online transactions. The tool reportedly enables users to assign every member a “trustworthiness score” based on user ratings stored on a blockchain.
In late 2019, JCB — Japan’s top credit card issuer — announced plans to adopt a new business-to-business payments solution based on blockchain. In order to develop the platform, the company partnered with blockchain-based commercial-payments platform Paystand. In May, JCB also partnered with technology accelerator Techfund to build a sustainable transaction system on the blockchain.
In February 2019, Mizuho Financial Group also announced plans to launch a digital currency platform for payments and remittance services.
The Swiss government will enforce new blockchain laws in less than a year.
Switzerland’s Federal Department of Finance has initiated a consultation process for a blanket ordinance in the blockchain and distributed ledger technology space.
The consultation will happen among cantons, parties and other interested groups in this space. It is scheduled to continue for more than three months, ending on Feb. 2, 2021.
This is a part of the Swiss government's active interest in promoting blockchain and cryptocurrency. The consultation to create better laws for the blockchain industry comes only a month after the government amended several existing finance and corporate laws to incorporate provisions for blockchain technology and DLT.
According to an official announcement, the amendments to the existing laws have improved the regulatory framework for Switzerland. The country is now more aligned to promote blockchain and DLT innovation.
The blanket ordinance will help the government incorporate these amendments into laws at the federal ordinance level, and the Federal Council aims to put these laws into force starting in August 2021.
Switzerland’s support for blockchain and cryptocurrency companies has resulted in many firms from across the world setting up headquarters in the country, which hosts more than 900 blockchain companies that employ over 4,700 people.
The adoption of blockchain and cryptocurrencies by the Swiss government is such that the Swiss canton of Zug, also known as the “Crypto Valley,” now allows its residents to pay taxes in Bitcoin (BTC) and Ether (ETH). Even the government-run bank Basler Kantonalbank was reported to be planning to launch cryptocurrency services.
Crypto remains underregulated, so Latvian investors need to be extra vigilant, says the FCMC.
Latvia's Financial and Capital Market Commission has identified suspect transactions and attempted fraud in the domestic cryptocurrency space.
In an official warning published on Monday, the FCMC urged investors to "be particularly vigilant, as cryptocurrencies operate in an infrastructure that is currently characterized by lower regulation than in the financial and capital markets."
Within Latvia, the issuance and circulation of cryptocurrencies are mostly unregulated, with exceptions for certain types of investment services and contracts involving crypto that require a license from the FCMC.
The regulator has shared several details of the "signs of fraud" it has identified within the domestic cryptocurrency market. Online crypto adverts circulated by scammers may use "names and images of well-known individuals or licensed companies," the FCMC noted. These ads often direct investors to slick websites where they are asked to provide their phone number. Many of the attempts to persuade investors to "invest" in fraudulent schemes happen over a phone call, the regulator said.
Scammers may also imitate licensed market participants, appropriating legitimate firms' registration numbers or contact details to mislead investors.
"Fictitious companies may offer you investments in bonds, stocks, forex products and cryptocurrencies that are either not traded on exchanges, are worthless, exaggerated, or even non-existent," the FCMC wrote. In particular, the regulator emphasized that, in the absence of regulatory supervision, investors are not protected in the case of malpractice.
Rather than be lured by seemingly convenient online investment opportunities, the FCMC suggested:
"For non-financial services professionals who want to invest, we recommend that you go to a bank or investment brokerage firm that has been licensed or licensed. Such service providers are obliged to inform about possible risks and to provide an offer corresponding to the client's risk profile."
All accounts on Binance Jersey will be inaccessible as of Nov. 30.
Binance, the world's largest cryptocurrency exchange, announced that it will soon close down its Jersey-based subsidiary, Binance Jersey.
Binance launched its platform in Jersey as part of its expansion drive to tap into European markets. On Jan. 15, 2019, the exchange announced that Binance Jersey would allow fiat-to-cryptocurrency trading for European traders. At launch, the exchange supported Bitcoin (BTC) and Ether (ETH) trading against both the euro and the British pound.
While the exchange aimed to make Binance Jersey a “major driving force” in European markets, the statistics show that it fell short of its goals. According to the latest CoinMarketCap data, Binance Jersey has a 24-hour trading volume of $164,470. BTC/EUR and BTC/GBP trading-pair volumes are $76,597 and $46,974, respectively. Binance Coin, the native token of the Binance ecosystem, has a combined pound and euro trading volume of only $5,133.
Binance will restrict new deposits of pounds, euros and all supported cryptocurrencies on Oct. 30. After suspending deposits, the exchange will allow trading and withdrawals of all pairs and currencies until Nov. 9. The platform’s final shutdown is scheduled for Nov. 30, after which all user accounts will be inaccessible.
The exchange did not specify the exact reasons for shutting down operations in Jersey but said its main exchange platform, Binance.com, “will continue to offer services to citizens of Jersey through compliant banking channels and a wider range of trading pairs with deeper liquidity.”
Dan Tapiero shared a survey from Statista that showed only 7% of Americans previously used BTC, showing Bitcoin is still in an early phase.
According to new data from Statista, only 7% of Americans have previously used Bitcoin (BTC). This means current investors in BTC are still in an early stage of growth.
Dan Tapiero, the co-founder of 10T Holdings, said Bitcoin is still at the “birth” phase of a new asset class. He wrote:
“It's still so early for Bitcoin. Still at the birth of a new global asset class.”
In the longer term, Bitcoin has significant growth potential to evolve into an established store of value, like gold. If so, investors anticipate its valuation to increase exponentially over the next decade.
The percentage of people that previously used Bitcoin. Source: Statista
What is needed for Bitcoin mainstream adoption to pick up?
Currently, the majority of the demand for Bitcoin comes from investors that perceive BTC as gold 2.0. Investors believe BTC would eventually establish itself as a safe-haven asset.
Consequently, institutional investors have heavily accumulated BTC in recent months. MicroStrategy and Stone Ridge, for instance, purchased $425 million and $110 million worth of Bitcoin, respectively.
But if the retail demand for Bitcoin picks up in tandem across major regions, it could cause BTC to grow exponentially.
The data from Statistica shows only six countries have more than 10% of their population as Bitcoin users. The top countries in terms of Bitcoin users per capita are Nigeria, Vietnam, and South Africa, the Statista Global Consumer Survey found.
Tapiero emphasized that the survey does not include countries top to bottom, which might have missed large cryptocurrency markets. South Korea, as an example, is not on the list despite being one of the world’s bigger Bitcoin markets. He said:
“It's a survey of select countries. It's not a straight top to bottom survey. IE there are countries that belong on this list that are not listed.”
In recent years, the Bitcoin exchange and fiat on-ramp infrastructure have significantly improved across the U.S., Europe, and Asia. However, there are still many countries that lack a reliable exchange infrastructure to this day.
Canada, as an example, lacks a strictly regulated major local cryptocurrency exchange users can rely on, apart from Coinbase.
Once the exchange and fiat on-ramp infrastructure gets fully established, then it would become easier for retail investors to enter the market.
Without exchange-traded funds (ETFs) and major bank custodians, users still have to undergo a relatively complex process of using exchanges. Some exchanges require a thorough Know Your Customer or KYC verification process before users can initiate wire transfers to buy Bitcoin.
As such, until there are further improvements in the infrastructure to onboard retail investors, the broader mainstream population would likely struggle to enter the cryptocurrency market.
The monthly price chart of Bitcoin. Source: TradingView.com
Where would BTC go with mainstream adoption?
The long-term predictions of Bitcoin widely vary, anywhere from $20,000 to $1 million.
On Oct. 16, Cointelegraph reported that asset manager Raoul Pal, the founder of the Real Vision Group, believes BTC is heading to $1 million.
At a price point of $1 million, the fully diluted market capitalization of BTC would be at around $21 trillion. That would be more than two-folds of gold’s current market valuation of $9 trillion.
Bitcoin’s difficulty and hash rate are higher than ever as markets prepare for the outcome of the U.S. elections.
Bitcoin (BTC) starts a new week in familiar territory as markets move into the United States’ 2020 elections — where could it go next?
Cointelegraph takes a look at five factors that could influence BTC price action in the week ahead.
U.S. macro: Elections vs. stimulus
The U.S. is the firm focal point when it comes to macro markets this week. The Nov. 3 elections promise to set the mood as it becomes more apparent which side will control the White House.
Analysts have warned that a Democrat win would dent the dollar, the long-term prospects for which are already shaky. Donald Trump’s reelection, however, would not be enough to keep the greenback out of danger, Goldman Sachs said last week.
By extension, calls are coming for safe-haven gold to make serious progress upwards after November — regardless of the election outcome. For others, however, it is Bitcoin that will profit more impressively.
The dollar’s strength remains on the radar of Bitcoiners thanks to the inverse correlation between BTC/USD and the U.S. dollar currency index (DXY). Despite this correlation becoming less apparent in recent weeks, a sudden weakening of USD has the potential to be a boon for the largest cryptocurrency.
U.S. dollar currency index 6-month chart. Source: TradingView
Not only elections, meanwhile, but what comes before is a topic of interest. Specifically, fresh hints have come over a Coronavirus stimulus deal being done before polling day.
Should this occur, several trillion dollars of liquidity will add to the burgeoning U.S. debt pile, with Americans seeing perks such as another $1,200 stimulus check.
Europe hints at more intervention
In Europe, the picture revolves around the European Central Bank’s (ECB) own response to the Coronavirus, which continues to tighten its grip across the continent.
Speaking to French newspaper Le Monde on Monday, ECB president Christine Lagarde said that more financial tools were left to be deployed to support the eurozone if necessary. In addition, the ECB’s $878 billion recovery fund should become a permanent feature.
The bank’s Coronavirus stimulus program amounted to €1.5 trillion in asset purchases.
“The options in our toolbox have not been exhausted,” she said.
“If more has to be done, we will do more. On taking up my position, I was told that there was nothing left for me to do, that everything had been done. But that was clearly not the case!”
The potential for instability in the eurozone is compounded by Brexit, which is increasingly heading towards the “no deal” walk out of the bloc by the United Kingdom.
When prime minister Boris Johnson announced the likely outcome of the process last week, however, markets barely reacted to the news.
Bitcoin fundamentals hit new records
Bitcoin stayed practically rangebound over the weekend, with only a brief spike above $11,500 contrasting the flat activity.
Despite this, on a technical level, signs of record strength continue pouring in this month. The difficulty, which provides an estimate of miner competition and network security, is now back at all-time highs.
Two days ago, the latest readjustment saw difficulty increase by a larger-than-expected 3.5%.
At the same time, the hash rate also climbed to a new average all-time high on Monday. At press time, the estimated computing power dedicated to mining stood at 146 exahashes per second (EH/s).
As Cointelegraph often reports, the popular theory that price follows hash rate remains firmly in force as miners are more bullish than ever on Bitcoin as a long-term investment prospect.
Bitcoin 7-day average hash rate 1-month chart
Analyst eyes $12,000 BTC price breakout
For Cointelegraph Markets analyst Michaël van de Poppe, a pivotal price transformation for Bitcoin is becoming more and more plausible.
In his latest video update on Sunday, he highlighted that several years of weekly closes below the significant resistance level of $12,000 should soon come to an end.
Since the start of the bear market in early 2018, $12,000 has formed a rejection point for the weekly chart, but consolidation below cannot last forever, Van de Poppe argued.
“It’s very likely that we’re going to make a rally towards the area of $16,000 to $17,000 as that’s the obvious level and the final hurdle for Bitcoin to start breaking all-time highs,” he summarized.
Such a move would be followed by another consolidation period which could well be longer in duration than the current one. Nonetheless, if a bull market materializes, it will be Bitcoin-fuelled.
“The main driver of the next bull market will still be Bitcoin,” Van de Poppe added, recommending that viewers make an effort to accumulate BTC even in the $16,000 range.
“$11,400 is still a very cheap price per Bitcoin,” he added in a tweet.
BTC/USD 7-day price chart. Source: Coin360
Greed is back on the menu
In line with gradually increasing price strength comes investors sentiment, which according to one indicator is getting greedier.
In its latest market reading, the Crypto Fear & Greed Index is back in “greed” territory, having edged up from “neutral” over the past week.
This suggests that sentiment among Bitcoin investors is anticipating a bullish advance, but there’s a caveat — if price increases too fast, “greed” will become “extreme greed,” under which circumstances the Index says a correction is much more likely.
Crypto Fear & Greed Index as of Oct. 19. Source: Alternative.me
Some winners purchased additional digital yuan during the pilot.
The vast majority of China’s $1.5 million digital yuan lottery winners have received and spent their “red envelopes” of digital yuan.
As of Sunday, a total of 47,573 out of 50,000 lottery winners in China have received their prizes, Shenzhen authorities officially announced.
According to the announcement, the winners conducted a total of 62,788 transactions accounting for 8.8 million yuan ($1.3 million). This amount represents about 88% of the total 10 million yuan ($1.5 million) that was to be distributed in the giveaway pilot in Shenzhen.
Some winners have not only spent their “red envelopes” but also topped up their wallets, having purchased an additional 901,000 yuan ($134,000).
Shenzhen launched a pilot program to promote the digital yuan with a public giveaway on Oct. 9. Lottery organizers said they would take back the unused amount of the digital yuan packets if winners did not spend it by Sunday
As previously reported, a total of 2 million people applied to participate in Shenzhen’s digital yuan giveaway program as of Oct. 12.
Big Bitcoin prediction, OKEx spooks markets, Ripple exec’s crippling mistake: Hodler’s Digest, Oct. 12–18-
The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — one week on Cointelegraph in one link!
Coming every Sunday, Hodlers Digest tracks every important crypto news story from the previous week. Essential reading for all Hodlers!
Top Stories This Week
Bitcoin volatility has fallen to a 16-month low, indicating that a sharp move is on the horizon.
Large fluctuations tend to follow prolonged periods of consolidation, and according to a Bitazu Capital founding partner, Mohit Sorout, BTC could reach its previous all-time high if it was to break out today.
There are other factors at play. The U.S. dollar has been weak recently, and traditionally, this leads to strength across other safe haven assets. Bitcoin exchange reserves have also continued to plummet, indicating theres a shortage of sellers or a lack of trust in centralized platforms.
Cointelegraph analyst Michal van de Poppe says BTC must hold $11,000 for Octobers rally to continue paving the way for a retest of $12,000 in the short term. Meanwhile, a report by Stack Funds suggests BTC has support to climb all the way to $15,000 if historic trends repeat themselves this year.
But this optimism isnt universal. JPMorgan Chase experts believe Bitcoin is slightly overvalued and think the asset could see selling pressure ahead.
OKEx, a major crypto exchange, spooked the markets this week by announcing that it had suspended withdrawals.
The company said one of its private key holders was cooperating with a public security bureau concerning ongoing investigations.
In the immediate aftermath of Fridays statement, Bitcoin fell nearly 3%, while OKExs native token, OKB, crashed 15%.
According to Caixin, OKEx founder Mingxing Xu also known as Star Xu was the executive who was questioned by authorities. The Chinese news agency also reported that he was investigated at least a week ago and had been absent at work for some time.
Industry executives have expressed surprise at how events unfolded. The Bitcoin Associations president, Leo Weese, wrote: That one person sits in China holding the keys to an entire offshore cryptocurrency exchange is probably the most surprising thing about this industry I learned this year. That customers dont demand transparency about key management comes in at a close second, though.
Staff at Coinbase fear that the exchanges leadership are watching their every move and monitoring their messages, it has been reported.
According to Motherboard, the exchanges newfound apolitical stance has led to allegations of surveillance and censorship, but in a leaked recording of an ask me anything session, CEO Brian Armstrong said the silent majority supported the move.
Elsewhere, it was claimed that Coinbases management had stunted internal discussion and forced employees to delete political Slack messages. The exchange responded to Motherboards claims by describing the accusations as quite extreme and absolutely false.
During an AMA back in June, Armstrong had reportedly resisted the idea of making a public statement in support of Black Lives Matter following the killing of George Floyd by police. However, he later backtracked and posted a series of tweets in support of BLM.
Coinbase has been hemorrhaging employees of late, with at least 5% of its workforce opting to take an exit package if they were unwilling to avoid political and social issues at work.
Its been a wild ride for the FIL token following Filecoins long-awaited launch.
FIL initially rocketed by 118% before plunging by 80% as the cryptocurrency was listed on major exchanges three years after the projects ICO was held.
Now, the blockchain-based data storage platform is hoping to right the ship through a weeklong digital conference that begins on Oct. 19.
Filecoin Liftoff Week is going to be centered on education, infrastructure, interoperability, and future plans, with each day focusing on a different theme.
Despite the recent plunge in FILs value, the Filecoin team remains optimistic about the projects future prospects: This is only the beginning for the Filecoin network.
And we end our news roundup with a painful story courtesy of Ripples chief technology officer David Schwartz.
He revealed that he and his wife came up with a derisking plan for their crypto investments in 2012 and missed out on millions of dollars in profit as a result.
Schwartz sold 40,000 ETH for $1 each at the time a stash that would be worth more than $15.5 million at todays prices.
The Ripple executive also sold a significant sum of BTC for $750 apiece, and a large trove of XRP for $0.10.
He described himself as a risk averse person with people who depend on me financially and emotionally but admitted that selling his crypto at this bargain basement prices hurt.
Winners and Losers
At the end of the week, Bitcoin is at $11,435.68, Ether at $375.90 and XRP at $0.24. The total market cap is at $359,603,174,619.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are ABBC Coin (77.11%), Filecoin (44.49%) and Waves (28.70%). The top three altcoin losers of the week are Arweave (-32.22%), OKB (-23.80%) and Crypto.com Coin (-21.98%).
For more info on crypto prices, make sure to read Cointelegraphs market analysis.
Most Memorable Quotations
All your funds and assets are safe. The investigation concerns a certain private key holders personal issue only.
Jay Hao, OKEx CEO
That one person sits in China holding the keys to an entire offshore cryptocurrency exchange is probably the most surprising thing about this industry I learned this year. That customers dont demand transparency about key management comes in at a close second, though.
Leo Weese, The Bitcoin Association president
The Chinese government is cracking down on money laundering using cryptocurrency for telecom fraud, and centralized exchanges are in a very dangerous state.
Colin Wu, crypto reporter
I do believe well be seeing a relatively boring and corrective quarter on the cryptomarkets. In history; $ETH frequently bottoms out in December, to start running the quarter after. $BTC dominance to run up, to have an altseason in Q1 2021. Continuing the patience.
Michal van de Poppe, Cointelegraph analyst
You can only try to win the hand with the high hand: gold, silver and Bitcoin. You cant win playing the low hand unless youre a sovereign state or a major investment bank, and thats the game today.
Max Keiser, broadcaster
Wed like to keep tabs on what other central banks are doing and learn from them, not just from China but from other countries.
Kazushige Kamiyama, Bank of Japans CBDC head
Our eyes are peeled on the $12,000 key resistance level, as we expect further consolidation around current levels going into the elections before breaking into the upside going forward.
So if I am to buy the dip, where would the perfect dip be? Well, the perfect dip would be… around $11,000.
Tone Vays, trader
Its definitely sending a message to the crypto world that when there are U.S. users of a product or a service, theres going to be enforcement of U.S. laws.
Crypto Mom Hester Peirce, SEC Commissioner
Prediction of the Week
Rapid growth of institutional investments in crypto has prompted 10T Holdings co-founder Dan Tapiero to warn that shortages of Bitcoin could be on the horizon.
He warned: SHORTAGES of Bitcoin possible. Barrys Grayscale Trust is eating up BTC like there is no tomorrow. If 77% of all newly mined turns into 110%, its lights out. Non-miner supply will get held off market in squeeze. Shorts will be dead. Price can go to any number.
Institutional demand surged rapidly after March when Bitcoin suffered one of its steepest falls in recent history. This indicates that big players see staying power in the worlds biggest cryptocurrency.
The speculation about a potential supply-side crisis around Bitcoin also coincides with the post-halving cycle. Bitcoin went through its third halving on May 11, and historically, halvings lead to extended bull runs in the two years that follow.
FUD of the Week
The G7 has warned that it will initially oppose the launch of Facebooks Libra project.
In a statement that pulled few punches, the Group of Seven wrote: The G7 continues to maintain that no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory, and oversight requirements through appropriate design and by adhering to applicable standards.
The statement was co-authored by central bankers and finance ministers from the United States, Canada, Japan, Germany, France, Italy and the United Kingdom.
The G7 has previously raised concerns over how to ensure digital assets comply with Anti-Money Laundering laws, consumer protection rules and other regulatory matters.
Last October, one of its reports also warned that global stablecoins pose a threat to the global financial system.
Europol has announced that 20 individuals suspected of working for the QQAAZZ criminal network have been arrested in an operation that spanned 16 countries.
The organization is accused of laundering tens of millions of euros for top cybercriminals since 2016. About 40 homes were searched as part of Operation 2BaGoldMule, with arrests made in Australia, the U.S, the U.K, Portugal, Spain, Latvia and Poland.
On the same day, a 40-year-old man was arrested in New Zealand for using cryptocurrency to launder more than $2 million for criminals as well as by purchasing luxury vehicles including a Lamborghini and Mercedes G63.
And in the U.S, six individuals have been charged for their participation in a conspiracy to launder millions of dollars of drug proceeds on behalf of foreign cartels.
The trustee of the now-defunct Japanese cryptocurrency exchange Mt. Gox has obtained another approval to extend the deadline for submitting a rehabilitation plan this time to Dec. 15.
As reported by Cointelegraph, Nobuaki Kobayashi received a number of similar deadline extensions in March 2020 and April 2019.
The Mt. Gox crypto exchange is known for encountering the largest cryptocurrency hack in history. The exchange lost a total of 1.35 million Bitcoin in two hacks in 2011 and 2014.
Despite the hacks happening years ago, Mt. Gox customers have still not received compensation for their stolen funds.
Kobayashi, a Japanese lawyer who was appointed to oversee the civil reimbursement process, reportedly has 150,000 BTC to repay users, but the refund process has been delayed multiple times since 2019.
Best Cointelegraph Features
Coinbases new apolitical culture has led to some employees taking severance packages, as the crypto community reacts with ambivalence.
The entry of firms like Square, MicroStrategy and Stone Ridge may open the BTC floodgates and provide confidence for the rest to follow, writes Andrew Singer.
Andrew Fenton talks to Jack Lu about his new DeFi platform Bounce, which has been described as a decentralized version of eBay, Sothebys or Christies.
The proposed EU crypto market regulation will raise many compliance obstacles for the next Libra-like project seeking to operate in Europe.
In cryptoland, the fall tends to be regulators’ open season. As unprecedented as it’s been, 2020 is no exception to this trend. Tensions are high on both sides of the Atlantic: As markets were still processing the news of the United States Commodity Futures Trading Commission cracking down on derivatives exchange platform BitMEX, the Financial Conduct Authority, the British financial watchdog, moved to ban retail investors from using cryptocurrency derivatives altogether.
The densely packed news cycle has somewhat muffled the impact of another regulatory bomb that dropped a week earlier and is bound to have major lasting effects on the global financial system: The European Union’s proposed legislation for crypto-asset markets.
The far-reaching framework, designed to bestow regulatory clarity upon digital finance businesses serving residents of the European Economic Area, is bound to be especially consequential for two interconnected domains of the crypto industry that have dominated the narrative throughout much of 2020: stablecoins and decentralized finance applications. What gives?
Stablecoins as a threat to stability
At the moment, the draft, known as the “Regulation on Markets in Crypto-assets,” or MiCA, exists in the form of a proposal put forth by the European Commission, the EU’s executive branch. It is still bound to go through a rather lengthy legislative process before it becomes law, meaning that it might take months and even years before the new rules kick in.
The text makes it apparent that stablecoins, which are also called “asset-referenced tokens” and “e-money tokens” in the document, have been squarely at the top of European lawmakers’ minds: MiCA singles out this asset class and affords it a bespoke regulatory framework.
Under the proposed law, stablecoin issuers will have to be incorporated as a legal entity in one of the EU member states. Other requirements include provisions related to capital, investor rights, custody of assets, information disclosure and governance arrangements.
Albert Isola, the minister for digital and financial services of Gibraltar, explained to Cointelegraph that the reason for the European Commission’s heightened attention to stablecoins is the authority’s concern for the Eurozone’s financial stability:
Stablecoins are widely considered to potentially bring significant benefits as a digital method of payment, providing for greater financial inclusion and a more efficient method of transferring funds. They are also viewed as a potential risk to financial stability and integrity and could dilute the effectiveness of monetary policy. It would appear logical that the European Union may not welcome an entity other than the European Central Bank issuing Euro in an electronic format.
Isola mentioned that “disruptors,” such as the prospective stablecoin Libra, have the potential to significantly decentralize the control of currencies.
Seamus Donoghue, vice president for sales and business development at digital finance infrastructure provider Metaco, cited the impressive growth of the stablecoin market in recent months as a prerequisite for regulatory attention, which he called a “positive response”:
The USDC stablecoin’s market cap alone has grown 250% in 2020 from $520 million to $1.86 billion, with a significant acceleration in growth over the last two months. Bank regulators have no doubt also observed that although the asset class in the context of the traditional payments space remains relatively small, it has the potential to have a huge impact on regulated banks and payments incumbents.
The specter of Libra
Illustrating the depth of the top EU officials’ concern over preserving the union’s monetary sovereignty is the fact that, earlier in September, “finance ministers of Germany, France, Italy, Spain and the Netherlands issued a joint statement outlining that stablecoin operations in the European Union should be halted until legal, regulatory and oversight challenges had been addressed,” said Konstantin Richter, CEO and founder of the blockchain infrastructure company Blockdaemon.
Richter added that some of the more visible figures in European financial policy, such as the German minister of finance, Olaf Scholz, have advocated for the introduction of the regulatory framework.
Most experts who talked to Cointelegraph mentioned Facebook-backed stablecoin Libra as the point of departure in the EC’s thinking about the dangers and opportunities that asset-referenced tokens present.
MiCA opens with an explanatory memo that discusses how the crypto asset market is still too “modest in size” to pose a serious threat to financial stability; however, things can change, the framers admit, with the advent of “global stablecoins, which seek wider adoption by incorporating features aimed at stabilizing their value and by exploiting the network effects derived from the firms promoting these assets.” There has been a single stablecoin project to this date falling into the scope of this description: Libra.
Mattia Rattaggi, board chairman at FICAS AG — a Swiss-based crypto investment management firm — opined that stablecoins are the application of blockchain technology with the highest probability of big impact — something regulators are well aware of:
Stablecoins have grasped the attention of regulators over 12 months ago with the presentation of project Libra by Facebook and have since been closely monitored by the public and regulators around the world. Regulators are realizing that stablecoins are bound to increase efficiency in the payment system — particularly the international one — and promote financial inclusion.
Further hedging against the potential disruption of the Eurozone’s monetary stability, the MiCA proposal specifies even stricter compliance requirements for issuers of asset-referenced tokens deemed “significant.” The significance criteria include the size of the customer base, market cap, volume of transactions, and even “significance of the issuers’ cross-border activities and the interconnectedness with the financial system.”
Bad news for DeFi?
Stablecoins largely power another sprawling domain of crypto financial activity: a diverse array of applications and protocols that exist under the umbrella of decentralized finance. Given the stringency of the proposed requirements around asset-referenced tokens, it is plain to see how complicated things can get if, say, the bulk of liquidity locked in a certain decentralized protocol is denominated in a stablecoin that is not compliant by the MiCA standards.
Another major source of uncertainty is the requirement for all crypto-asset service providers, or CASPs, seeking authorization to operate in the EU to be legal entities with an office in one of the member states. Whether the European authorities will treat individual DeFi apps as CASPs remains an open (and central) question, but if this is the case, developer teams maintaining DeFi protocols might be forced to come up with workarounds that will stretch the notion of “decentralized” incredibly thin.
In their response to the proposed regulation, members of the International Association for Trusted Blockchain Applications expressed their concern that MiCA could effectively bar European residents from participating in DeFi markets.
Martin Worner, the chief operating officer and vice president of blockchain tooling provider Confio, believes that compliance issues could be resolved by implementing on-chain governance mechanisms tailored to specific jurisdictions’ regulatory frameworks:
[This could be] achieved within a self-sovereign framework where the institutions can develop compliant DeFi instruments, which work within their jurisdictions. Just as there are rules about businesses in different jurisdictions and how they do cross-border transfers, the same would apply on the blockchain.
Elsa Madrolle, international general manager at blockchain security company CoolBitX, told Cointelegraph that by the time MiCA becomes law, the DeFi landscape will have likely changed, much as the ICO landscape changed rapidly after the initial boom. By that time, “it will be quite clear what is required of DeFi projects to operate in the EU or seek out EU customers.”
Madrolle thinks that at that point, DeFi projects will fall into one of two categories — regulated and unregulated — and the big question will be whether the rest of the world will align itself with the European framework.
Nathan Catania, a partner at XReg Consulting — a regulatory and policy firm that has recently published a breakdown of the proposed regulatory framework — is hopeful that it is possible for regulators to reconcile MiCA requirements with not regulating DeFi out of existence. Catania said:
I believe that a project which is sufficiently decentralized and does not provide the service on a professional basis to a third party cannot be considered a CASP and there is still room for DeFi projects to exist.
Today, many DeFi protocols are far from being fully decentralized. The battles over how much decentralization is good enough are still ideological and are primarily fought inside the crypto bubble. It looks like the day when regulators join this debate will come, but with some very tangible implications for crypto businesses.
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