Yemi Osinbajo sees potential for crypto and blockchain.
Nigeria’s vice president, Yemi Osinbajo, delivered a speech at an economic summit on Friday in which he spoke positively of crypto and blockchain.
“There is no question that blockchain technology generally, and cryptocurrencies in particular, will in the coming years, challenge traditional banking, including reserve banking, in ways that we cannot yet imagine,” Osinbajo said on Friday during the Central Bank of Nigeria, or CBN, Bankers’ Committee Economic Summit. "We need to be prepared for that seismic shift, and it may come sooner than later," he said.
The Nigerian vice president also noted the broadness of the crypto industry, mentioning decentralized finance, or DeFi, in the mix. "Decentralized finance, using smart contracts to create financial instruments, in place of central financial intermediaries, such as banks or brokerages, is set to challenge traditional finance," he said.
Osinbajo’s speech, which included a number of other points, is posted on his YouTube channel. The Nigerian vice president also tweeted out a video clip highlighting of some of his crypto comments from his talk.
“The point I’m making, is that some of the exciting developments we see call for prudence and care in adopting them and these have been very well-articulated by our regulatory authorities,” he said, adding:
“But we must act with knowledge and not with fear. We must ensure that we are in a position to benefit and in a position to prevent any of the adverse side effects, or any of the possible, even criminal, acts that may arise in consequence of adopting or taking any of these options.”
The comments come in contrast to recent developments in Nigeria. Earlier in February, Nigeria forbade banking interactions with crypto exchanges, as per a ruling from its central bank. The CBN’s governor also called crypto assets illegitimate. Bitcoin recently traded at a significant premium in the region.
Growing concerns over rising U.S. Treasury yields are putting pressure on global financial markets and possibly dragging cryptocurrency prices lower.
The cryptocurrency market faced another day of downward pressure as the unease in the traditional markets continues to spread following the recent interest rate spike on the 10-year U.S. Treasury bond.
Data from Cointelegraph Markets and TradingView shows that the price of Bitcoin (BTC) fell to a low at $44,710 late on Feb. 25 before buying at the key support returned to help the digital asset recover back above $46,500 but generally, analysts are looking for $50,000 to become an established support before expecting bullish continuation.
Despite major BTC purchases by MicroStrategy, Tesla and MassMutual, a majority of institutional investors still have security and tax treatment concerns that prevent them from investing in Bitcoin, according to Galaxy Digital co-president Damien Vanderwilt.
Institutional investment has been a significant source of optimism in the cryptocurrency sector in 2021, but its influence in helping BTC reach a market cap of $1 trillion may be overstated as recent analysis shows that stablecoin whales and retail traders still hold the most buying power.
Interest rate increase puts pressure on GBTC
On Feb. 25, the interest rate for the 10-year U.S. Treasury spiked to 1.52%, its highest level in over a year.
According to Chad Steinglass, Head of Trading at CrossTower, the move led to market-wide pressure that pushed the “GBTC premium down as low as negative 6% and it closed around negative 2% today.” The analyst sees interest rate volatility as a major source of market volatility, as the long end of the curve steepens while the U.S. dollar is pushed lower.
Cryptocurrencies fell under increased pressures as equity markets deteriorated throughout the day, possibly due to a “scramble for liquidity” resulting from traders “pushing up against margin calls and needing to free up cash.”
“I interpret the GBTC premium collapse as a sign that either retail is dumping to free liquidity, or large fund holders like ARKW are seeing outflows, which causes them to sell GBTC along with everything else.”
Traditional markets are still choppy
The 10-year Treasury yield pulled back .0582 basis points to 1.46 on Feb. 26, marking a 3.82% decrease from its high on the previous day. This leadi to a choppy day in the markets which saw the major indices close mixed.
The NASDAQ finished the day up 0.56%, recovering some of its losses from the 3.5% drop on Feb. 25. Meanwhile, the S&P 500 and DOW finished the day in the red, down 0.48% and 1.51% respectively.
A majority of the top cryptocurrencies also took on sharp losses on Friday, with the exception of Cardano (ADA), which became the third-ranked cryptocurrency by market cap after its price broke out to a new all-time high at $1.29. The current excitement for the altcoin appears to be connected to the upcoming 'Mary' mainnet launch scheduled for March 1.
Basic Attention Token (BAT) has also battled back against the market sell-off to post a 6.43% gain following the Feb. 23 announcement of the upcoming Brave Decentralized Exchange (DEX).
The overall cryptocurrency market cap now stands at $1.533 trillion and Bitcoin’s dominance rate is 61.3%.
Alpha Finance Lab’s recent integration with Binance Smart Chain and Compound Finance triggered an 85% rally in the protocol's ALPHA governance token.
Alpha Finance Lab (ALPHA) experienced a price breakout on Feb. 25 as a series of significant partnerships has brought renewed interest in the cross-chain DeFi platform.
Data from Cointelegraph Markets and TradingView shows that following the announcements, ALPHA price surged to $1.78 but Bitcoin's recent struggle to hold $50,000 as support led to a sell-off among altcoins and ALPHA currently trades at $1.31.
One of the reasons for the sudden surge was the Feb. 25 announcement of a partnership with Compound Finance (COMP) that will allow Compound users to integrate with Alpha Homora and lend assets across platforms.
Due to the deposit APY on Ether (ETH) being higher on Alpha Homora, Compound users are presented with an opportunity to yield farm by borrowing ETH against collateral in their accounts and lending it on the ALPHA protocol.
Users are lured by lower fees on Binance Smart Chain
Alpha has is also benefiting from its recent integration with the Binance Smart Chain, which has been growing in popularity for being a low-fee alternative to transacting on the Ethereum network.
The team at ALPHA hinted at what lies ahead for the protocol in the following tweet acknowledging the recent progress of the Binance Smart Chain:
Following the Feb. 1 launch of Alpha Homora v2, which included the release of a limited edition NFT, the protocol has continued to expand its reach and establish new integrations with partners in the blossoming decentralized finance ecosystem.
The project also received a renewed boost of optimism on Feb. 22 after an agreement was reached on the terms of how Alpha Finance would repay Cream Finance (CREAM) for funds lost during an exploit of Alpha’s “Iron Bank” on Feb. 13. This exploit involved a hacker draining $37 million from the protocol.
Currently, Compound finance is the third-ranked DeFi protocol by total value locked (TVL) and the partnership between it and Alpha Finance could further Alpha's growth and exposure to new users in the months ahead.
The NFT market continues to expand, with upcoming tokens based on a mainstream TV show.
Curio, a platform which sells non fungible tokens, is helping to bring to life NFTs based on the TV series American Gods. The show is based on a novel of the same name by author Neil Gaiman.
“We are working with Fremantle on creating officially licensed digital collectibles for the hit TV show American Gods, which airs on STARZ in the U.S. and Amazon Prime Video internationally,” Curio’s CEO, Juan Hernandez, told Cointelegraph, adding:
“This is a first-of-its-kind use of NFTs with mainstream media, and it shows how larger marquee brands are starting to embrace them as an integral piece of their broader digital strategy. Curio enables Fremantle to modernize how they engage with fans, to develop emotional connections for a more digital native generation of viewers who are hardwired to do more with the things they love. Now they can own a piece of the action wherever they go, in a manner that is certified and authentic.”
Fremantle, a media production company, and Canada Film Capital serve as the producers behind the American Gods tv show, according to IMDB.
What is an NFT though? NFTs are non-fungible tokens, meaning they provide a provably unique sense of ownership over the property they represent. Fungibility refers to an item’s uniqueness, or lack thereof. If something is fungible, it can be traded or act interchangeably one-for-one with another item of its kind.
“Technically speaking, an NFT uses blockchain technology to prove that a digital item is unique (scarcity), or that it is what it says it is (verifiable authenticity),” Hernandez explained, adding:
“But many people simply think about NFTs as ‘digital Beanie Babies,’ with limited utility outside of collecting. However, we see the potential for NFTs to create unique digital experiences that weren't previously possible before the advent of the technology; to modernize fan engagement. This is what we're excited to enable for our brand partners.”
Last fall, a digital artwork NFT called “Right Place & Right Time” by artist Matt Kane fetched over $100,000. In the months since, NFTs have become an even hotter market. Bidders recently paid millions of dollars for NFT’s based on a former Major League Baseball second baseman’s artwork. Other NFTs have also recently hit multi-million dollar price tags as well.
Why is the crypto market’s interest in NFTs on the rise? Hernandez said the world is going more digital. “There are generational trends on the shift away from physical to digital, and certainly the COVID pandemic accelerated these trends as people have been forced to stay home,” he said.
“Philosophically, the same elements of verifiable scarcity and immutability that have given rise to Bitcoin's market dominance are at play with NFTs,” he added. “The ability to have full sovereignty over a digital asset is a new experience for many, and it causes you to truly rethink your ‘ownership’ of goods within the digital economy.”
Longstanding sagas in crypto saw major plot development and even a conclusion or two in this week's newsletter.
Every Friday, Law Decoded delivers analysis on the week’s critical stories in the realms of policy, regulation and law.
One day in the not-so-distant future, the curious experience of episodic television with its week-by-week gaps will be a weird thing that old people strain themselves not to talk about around the youths, until they eventually get, like, really old and stop caring and start turning all of the logistical inconveniences of their early memories into little moral parables. And by “they,” I mean me. And I’m looking forward to it.
It’s possible that entertainment’s on-demand, all-the-time availability is a pipeline to an obsession with news (and maybe professional sports). They are the last stories that make us wait. Where else do you find a cliffhanger these days?
For example, today is also the day that we learn that the person the world assumed to have ordered the torture and death of Jamal Khashoggi in fact did order the torture and death of Jamal Khashoggi.
The big policy stories in crypto this week are also long-anticipated events, must-see episodes to drawn-out dramas. And though, after a while, all big events start to look linked, crypto has seen a set of especially fascinating plot points reaching conclusions.
Coinbase sets out for public listing
It’s been one of the most hotly discussed prospective events in crypto for years: Coinbase, the giant of U.S. crypto exchanges, goes public.
An S-1 form, also known as an initial registration, filed with the SEC yesterday is a major step in that journey. It’s the first proper public disclosure a company makes in advance of public trading.
Consequently, a venn diagram of separate but linked worlds — crypto, tech and Wall Street — has been crowding together to pour over info about Coinbase that is available publicly for the first time. We all knew the company was big, but how big?
Quite big. Founder and CEO Brian Armstrong raked in a cool $60 million last year. Revenue topped $1.1 billion last year. And, based on the backstage scurrying of private shares, it’s set to hit a valuation of just over $100 billion, which would make it the biggest tech IPO to hit American markets ever, a record that Facebook currently holds. Sort of.
Here begins the speculation. We’re seeing a retracing in crypto markets following record surges that were synchronous with a massive inflow of revenue to Coinbase at the end of last year. What if this is a long-term retraction? Coinbase’s net valuations have shifted wildly, and it’s pretty clear that it’s heavily tied to crypto markets in general, and Bitcoin’s price in particular. The specific qualities of its ever-finicky trading platform? Not so much. More extreme: What if Coinbase puts its public vehicles back up on the blocks?
While the company hasn’t publicized a date for its IPO yet, it really does seem past the point of no return. As for its valuation and BTC price, there’s little doubt that a public Coinbase will serve as some sort of barometer for public interest in crypto, which really does correlate to bull markets. So while radical shifts in valuation both before and after the IPO are likely, that’s hardly new to anyone used to holding crypto.
The tale of BitFinex, Tether, and the New York Attorney General
To spoil the ending: No, they did not live happily ever after.
That is, despite the groundswell of crypto public opinion calling the recent settlement between the IFinex clan and the New York regulator an exoneration, a repudiation of longstanding accusations that Tether printed stablecoins without having reserves of dollars, because those reserves were off solving BitFinex’s capital problems. It’s a settlement, and, despite being bearable, a pretty expensive one. The agreement not to press criminal charges is, however, a license to live.
Effectively, the Attorney General has banished the IFinex family that houses Tether and BitFinex, run by the maybe-fictional Jan Ludovicus van der Velde, from New York. The AG also maintained that the reserves that were supposed to be here, on-hand, were in fact way over there, offshore and inaccessible. Per the AG, Tether was unbacked or underbacked for the bulk of the 2017 bull run.
IFinex managed to avoid admitting guilt as part of the settlement, but that’s a far cry from being innocent. The optimism we see from the crypto industry is likely a sigh of relief that IFinex is not likely to capitulate, an event that would ultimately be catastrophic for all corners of the crypto industry. Tether daily volumes continue to dwarf all others, as it is the preferred medium of transaction to or from all other crypto currencies on exchanges all over the world.
It will be interesting what sort of impact this settlement has on the huge class action market manipulation suit in Manhattan, which is gunning for Tether’s largesse by claiming it manipulated the market into the 2017 bull run. But what will be really interesting is what the decision does for future requirements that stablecoins will have to report and verify their reserves.
Not so much a decent through the concentric rings of hell as an hour-long collapse of the undergirdings of America’s payments system, the recent tech issues at the Federal Reserve were nonetheless their own sort of divine comedy.
The central infrastructures of American money are not as dependent on armored truckloads of cash and bullion as they once were. They are networks, and any time two banks are trying to transfer value, those Fed systems are their trusted third party.
So while it’s good that the outage was as brief as it was, the crypto community took no little joy in pointing out the frailty of even that most revered of third parties — a central bank being but another centralized point of failure.
Is that crash in systems likely to change anything in federal policy towards crypto? Eh, probably not. But crypto stakeholders will certainly get to add it to their books as a cool little parable from which to preach the righteous resilience of strong peer-to-peer systems.
Attorneys for Osbourne Clark spell out recent developments in UK law that are adding legal protections to crypto ownership.
The Wall Street Journal’s Alexander Gladstone writes on the role Reddit-enhanced trading played in saving AMC’s line of movie theaters, which have been shuttered amid the pandemic.
DeFi developers are considering legal implications of their projects in a new way, but they are still advancing the industry, argues Anthony Tu-Sekine of Seward & Kissel.
The Risk Alert seemed to take particular aim at broker-dealers, who have been "inadequate" in their AML compliance.
The Security and Exchange Commission's Division of Examinations published on Friday a blueprint for investment managers and institutions on how the division will inspect the handling of crypto assets, or “digital asset securities,” moving forward.
The division (formerly the Office of Compliance Inspections and Examinations) is the second-largest wing of the SEC and is tasked with overseeing securities industry players to ensure regulatory compliance.
Targeted toward investment advisors, broker-dealers, exchanges and transfer agents, this Risk Alert provided a broad list of specific procedural, bookkeeping and advisory steps the division will be expecting from securities companies in future examinations.
“As more securities industry participants seek to engage in digital asset-related activities, this Risk Alert provides transparency about areas of focus for the Division’s future examinations,” the office wrote.
Investment advisors should be aware of risks associated with forks and airdrops, and the Division will be reviewing advisors’ “fulfillment of their fiduciary duty with respect to investment advice,” a comment presumably related to disclosing the risks associated with crypto.
Investment custodians, meanwhile, should have “continuity plans” in situations where key executives have access to private keys, and the division will be examining private key management going forward.
Among the most thorough sections is guidance around Anti-Money Laundering considerations for broker-dealers, which the division seemed to imply has been a point of failure for some institutions.
“Certain pseudonymous aspects of distributed ledger technology present unique challenges to the robust implementation of an AML program,” the division wrote.
“The staff has observed broker-dealer AML programs that have not consistently addressed or implemented routine searches or, to the extent they implemented routine searches, have not updated those searches to check against the Specially Designated Nationals list maintained by the Office of Foreign Assets Control (“OFAC”) at the U.S. Department of the Treasury.”
The Risk Alert also noted “inadequate” AML procedures and documentation, noting that it would be examining for “filing suspicious activity reports and performing customer due diligence.”
Cardano is soaring, though Ada's price still has a long way to go to beat its record high vs. Bitcoin.
Cardano's Ada received a fresh wave of optimism and buying volume on Feb. 26 that pushed its price to a new all-time high of $1.29, making it the third-ranked cryptocurrency by market capitalization.
Momentum for the project has been building throughout the month of February following the integration of the Mary upgrade to Cardano’s testnet on Feb. 3. The upgrade enables smart contract functionality, helping transform the blockchain into a multiasset network similar to Ethereum.
Mary’s mainnet launch date revealed
The latest rise in price coincided with Cardano founder Charles Hoskinson posting the following tweet, indicating Mary would be live on the mainnet at the beginning of the next epoch on March 1:
Ladies and Gentlemen, the rocket is in the air. Mary will reach orbit in one epoch: https://t.co/7D9WTH68iw welcome to the Mary era: “I was benevolent and good; misery made me a fiend. Make me happy, and I shall again be virtuous.”— Charles Hoskinson (@IOHK_Charles) February 24, 2021
Ada briefly spiked to $1.17 following the announcement before pressures in the broader cryptocurrency market pushed it back below the $1.00 level on Feb. 25.
Thereafter, the trading volume for Ada has surged to a new record of $12.8 billion, helping elevate it to a new all-time high. The open interest for Ada futures also rose to $580 million, surpassing Litecoin (LTC) to become the third-largest derivatives market.
According to data from Cointelegraph Markets Pro, meanwhile, market conditions for Ada have been favorable for some time.
The VORTECS™ score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
As seen on the chart above, the VORTECS™ score for Ada reached a high of 79 on Feb. 25, around 24 hours before the price began to spike 27% to a new all-time high.
Smart contract functionality is the key component of the Mary upgrade and is expected to usher in a new era of functionality for the Cardano ecosystem. Once integrated, decentralized finance applications will be able to operate on the network and provide an outlet for users who are looking to escape high gas fees on the Ethereum network.
With a number of mainstream entities buying into Bitcoin, what's holding some back?
In recent months, companies such as MicroStrategy and Tesla have picked up sizable positions in Bitcoin (BTC). This trend has not yet become the norm for most companies, however. Damien Vanderwilt, co-president of Galaxy Digital, believes security and taxes may be acting as deterrents for crypto investing.
"When we think about the conversations we have with corporates and institutional clients and any part of those constituencies considering investing in the sector, the first order problem is safety and are the assets that they're buying going to be safe and available and secure,” Vanderwilt told Bloomberg in an interview on Thursday.
“The second order problem, particularly for the corporates, is tax treatment and the way that particularly under GAAP accounting in the U.S., Bitcoin is viewed as an intangible asset," he added.
The Bloomberg interviewer noted that “5% of finance executives” are considering Bitcoin purchases. This 5% figure came from a report recently published by research firm Gartner, detailing February survey results from 77 finance executives. “Just 5% of Finance Executives Polled in February 2021 Said They Planned to Hold Bitcoin as a Corporate Asset in 2021,” said a Feb. 16 public statement from Gartner on the report.
MicroStrategy, MassMutual, Tesla and Square have all allocated millions of dollars to Bitcoin. MicroStrategy has spent more than $1 billion on the asset and put an additional billion into BTC recently. Square also recently announced adding $170 million worth of Bitcoin to its stack. The firm spent $50 million on the coin last fall.
“They’re not unsolvable problems or things that companies can’t get comfortable with, but it does take a little bit of time,” Vanderwilt said of the two issues he mentioned.
Bitcoin and most major altcoins remain rangebound with the exception of Cardano.
Every bull market witnesses periodic pullbacks, where the weaker hands sell anticipating a top and the stronger hands accumulate for the long term. Data from Coinbase Pro shows two large Bitcoin (BTC) outflows this week, suggesting that institutions are likely continueing to buy the current dip.
Comparing historical data, on-chain analytics resource Whalemap, recently said that previous macro tops in Bitcoin in 2017 and 2019 coincided with thousands of large Bitcoin transactions worth $5-7 million. However, the researchers believe there is “no such FOMO in sight for BTC.”
JPMorgan strategists Joyce Chang and Amy Ho recently endorsed a 1% allocation to Bitcoin in multi-asset portfolios “to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio.”
With gold and the S&P500 both seeing a downturn in the short term, investors looking to hedge their portfolios may look for alternatives such as cryptocurrencie, which may limit the downside for Bitcoin.
While data suggests that the downside is limited, let’s analyze the charts of the top-10 cryptocurrencies to determine where buyers may step in.
There is a tug of war currently going on between the bulls and the bears. The bulls attempted to resume the up-move on Feb. 25, but could not sustain the higher levels. Bitcoin reversed direction and broke below the 20-day exponential moving average ($48,159), which shows selling by the bears at higher levels.
However, the long tail on today’s candlestick shows that bears are not able to sustain the price below the 20-day EMA. This suggests traders are buying on dips.
The flat 20-day EMA and the relative strength index (RSI) near the midpoint suggest a possible consolidation in the near term. The support of the said range could be at $41,959.63, which is just above the 50-day simple moving average ($40,914).
If bears can sink the price below the 50-day SMA, the selling could intensify and the pair could even drop to $28,850.
Conversely, if the bulls can propel the price above $52,040.95, a retest of $58,341.03 may be on the cards.
Ether (ETH) could not rise above the 20-day EMA ($1,686) on Feb. 24, which suggests the bears are defending this level. The biggest altcoin turned south on Feb. 25 and fell to the 50-day SMA ($1,498).
Although the price dipped below the 50-day SMA today, the bears could not break the Feb. 23 intraday low at $1,350. This shows a lack of selling pressure at lower levels.
The bulls have pushed the price back above the 50-day SMA. If they can sustain the momentum and propel the ETH/USD pair above the 20-day EMA, it could enhance the prospects of retesting $2,000.
On the other hand, if the price again turns down from the 20-day EMA, it will suggest a change in sentiment from buying the dips to selling the rallies. If the bears break the $1,350 support, the pair may drop to $1,000.
Cardano (ADA) is in a strong uptrend and has broken into the top-three cryptocurrencies by market capitalization for the first time. The bulls attempted to push the price above $1.20 on Feb. 25 but failed. However, the bulls successfully flipped $0.9817712 to support today, which suggests aggressive buying on every minor dip.
The buyers have driven the price above the $1.20 overhead resistance, indicating the resumption of the uptrend. The altcoin could now rally to the next target objective at $1.25.
Both moving averages are sloping up and the RSI in the overbought territory, suggesting that bulls are in control.
This bullish view will be invalidated if the ADA/USD pair fails to sustain the breakout and sharply reverses direction, breaking below the 20-day EMA ($0.92).
The failure of the bulls to push Binance Coin (BNB) above the downtrend line on Feb. 24 may have attracted another bout of profit-booking by traders. The altcoin has pared most of the gains made on Feb. 19.
If the current rebound sustains, the bulls will make one more attempt to push the price above the downtrend line. If they succeed, it will suggest that the short-term correction could be over. The BNB/USD pair may then rise to $300 and then to $348.6969.
The upsloping 20-day EMA ($192) and the RSI in the positive zone suggest bulls have the upper hand. Falling below the downtrend line and the 20-day EMA would invalidate this bullish scenario. Such a move could pull the price down to $118.
Polkadot’s (DOT) sharp recovery on Feb. 23 faltered on Feb. 24 as the bulls could not push and sustain the price above the resistance line of the ascending channel. This may have attracted profit-booking from the dipbuyers.
The buyers are currently attempting to defend the 20-day EMA ($30.30). If they manage to sustain the bounce, the DOT/USD pair will again try to break out of the resistance line of the channel and retest the all-time high at $42.2848.
Conversely, if the pair again goes down below the resistance line of the channel, the bears will try to sink the price under the 20-day EMA. If they succeed, the pair may drop to the support line of the channel.
The 20-day EMA is gradually sloping up and the RSI is above 61, indicating a minor advantage to the bulls.
The long tail on the Feb. 23 candlestick shows buying on dips, but the bulls could not keep up the momentum and push XRP price above the 20-day EMA ($0.048) on Feb. 24. This showed that demand dried up at higher levels.
The price has again dipped back to the 50-day SMA ($0.40). A lack of a strong rebound could attract further selling and the XRP/USD pair may drop to $0.359. A break below this support could clear the path for a fall toward $0.25.
Contrary to this assumption, if the pair sustains the current bounce, the bulls will make one more attempt to push the price above the $0.50 overhead resistance. If they succeed, the pair may consolidate between $0.65 and $0.359 for a few days.
Litecoin (LTC) rallied above the 20-day EMA ($192) on Feb. 25, but the bulls failed to sustain the higher levels as seen from the long wick on the day’s candlestick. This suggests that traders are booking profits at higher levels.
However, the long tail on today’s candlestick suggests that bulls are buying the dips to the 50-day SMA ($166). If the bulls can push the price above the 20-day EMA and the $205.186 overhead resistance zone, the LINK/USD pair may rise to $230.
Contrary to this assumption, if the bulls fail to sustain the current rebound, the pair may U-turn and drop below the 50-day SMA and the uptrend line. If that happens, the pair may slide to $120.
Chainlink (LINK) could not climb back into the ascending channel on Feb. 24, attracting profit-booking from the aggressive bulls who may have purchased the dip on Feb. 23. The altcoin turned down on Feb. 25 and dipped back to the 50-day SMA ($24.70) today.
The downsloping 20-day EMA ($28.80) and the RSI in the negative zone suggest bears have the upper hand. If the price slips below the 50-day SMA, the decline could extend to the critical support at $20.111.
Contrary to this assumption, if the current rebound off the 50-day SMA sustains, the bulls will make one more attempt to push the price above the 20-day EMA. If they succeed, the LINK/USD pair may begin a new uptrend.
The relief rally in Bitcoin Cash (BCH) could not even rise to the 20-day EMA ($578) on Feb. 24 and 25, indicating a lack of urgency among the bulls to buy at these levels. The price turned down on Feb. 25 and dropped to the uptrend line.
The downsloping 20-day EMA and the RSI in the negative zone suggest bears are in control. If the sellers sink the price below the uptrend line, the BCH/USD could start a deeper correction to $370.
On the contrary, if the bulls can build up on the current rebound off the uptrend line, the pair may rise to the 20-day EMA. A breakout of this resistance could push BCH price to $631.71.
Stellar Lumens (XLM) could not rise above the 20-day EMA ($0.430) on Feb. 24 and 25, which shows the bears are selling on rallies to this resistance. The altcoin pulled back on Feb. 25 and fell to the critical support level at $0.35.
The downsloping 20-day EMA and the RSI in the negative territory suggest advantage to the bears. If the sellers can sink the price below the support line of the descending channel, the XLM/USD pair may decline to $0.23.
Conversely, if the bulls can sustain the current rebound off $0.35, the pair may rise to the 20-day EMA. A breakout of this resistance will suggest the bulls are back in the game. The pair could then rally to the resistance line of the channel.
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 research, media and investment company adds a development wing.
Why wait for one of your investments to release a new feature when you can just build it yourself?
Delphi Digital’s newly announced expansion aims to do just that. The cryptocurrency investment, media and research company is now adding a Delphi Labs department that will be focused on contributing to Ventures portfolio company development.
0/ We’re happy to announce the next stage in @Delphi_Digital's evolution: Delphi Labs— Delphi Digital (@Delphi_Digital) February 26, 2021
Our goal with Delphi Labs is simple: to become the leading contributor helping to build out the decentralized futurehttps://t.co/DEmgfPORmQ
The move will help expand Delphi’s current developmental wing, which presently houses nine employees, according to Delphi Digital analyst José Macedo. Before it branched off from Research, the Labs team assisted with tokenomics design for multiple projects, and it is currently spearheading an overhaul of Aave’s $1.4 billion Safety Module.
According to Macedo, the impetus for the new company wing is the lack of developmental and smart contract engineering resources endemic to the space.
“I think what led to this model was working with top projects and witnessing first hand how much work needs to be done and how there just isn't the talent to do it. We realised the IP we've gained compounds and can be leveraged across the entire space.”
While Labs' current focus will continue to be on tokenomics and governance proposals, as it expands it will eventually help to incubate younger projects, and potentially launch entirely new protocols under the Delphi brand, per a two-year timeline in the announcement.
Big money governance
Delphi isn’t alone in taking a more active role in the protocols it invests in. How venture capital funds interact with decentralized autonomous organizations has been a hotly debated topic as of late, with some crypto community members arguing against preferential treatment (and/or governance token investment terms) for deep-pocketed investors, while others say that funds are welcome, like any other participant, to become a part of public good governance.
So far, protocol founders remain resolutely in favor of venture capital involvement, particularly when the firms make material contributions. Uniswap founder Hayden Adams argued as much in a long Twitter thread two weeks ago:
1/— Hayden Adams (@haydenzadams) February 12, 2021
I think it's worth briefly explaining the positive and mutually beneficial experience I've had working with @paradigm @a16z @usv and other investors.
I've seen a lot of negativity and propaganda so I think it's worth sharing my personal experience.
Likewise, earlier in the month, Synthetix announced a $12 million raise from three venture capital funds, noting that the institutions would help with protocol development and participate in governance where able.
It’s a model Macedo said makes sense: Projects can leverage Delphi’s research and developmental heft, and Delphi will, in turn, see its investments flourish:
“We only want to work with projects whose tokens we intend to hold for several years and our goal is to be long-term participants with aligned incentives.”
Komodo’s AtomicDEX seeks to connect Ethereum with Bitcoin and other UTXO networks.
The Komodo project launched on Friday the public beta of its latest product, AtomicDEX. The platform seeks to enable trustless atomic swaps between different blockchains, currently connecting Ethereum and its tokens to blockchains like Bitcoin, Litecoin and Dogecoin.
Using atomic swaps allows users to trade directly with the native tokens. Someone buying Ether (ETH) with Bitcoin (BTC) would just exchange ownership of the respective coins on their blockchains, without having to use intermediary tokenized representations.
The integration comes within a dedicated multiblockchain wallet built by Komodo, which includes the atomic swap feature. The beta of the trading system officially launched on Friday at 6 pm UTC.
Atomic swaps are a type of cross-chain interaction where special cryptographic techniques — usually based on hash-time locked contracts, or HTLCs — ensure that two transfers either occur completely or not at all. This means that two parties in an exchange transaction will swap funds simultaneously, and if either party backs, down the transaction is canceled.
In a conversation with Cointelegraph, Komodo’s pseudonymous chief operating officer, known as JC, said that the project aims to connect most blockchain environments, with upcoming integrations including the Cosmos ecosystem and Qtum. In general, the mechanism can support almost any kind of blockchain, though each integration must be added manually. The team is also working on integrating privacy coin Monero (XMR), though with a lower priority.
The exchange uses a more classical model of a decentralized order book supported by torrent-based technologies. This is in contrast to the most popular type of decentralized exchange today, based on automated market makers like Uniswap. The project is also using Band Protocol oracles for setting target prices, though for assets not supported by the oracle network the system relies on CoinGecko. In the future, the team is planning to integrate Chainlink, “as we don’t have to be married into just one oracle solution only,” said JC.
JC reassured that the system does not custody or control funds at any point in the mechanism, noting that “Decentralization slows down the [development] process, we can’t just slap bang it all together.” One potential drawback of the mechanism is the requirement of higher security, which requires waiting for blockchains to confirm the trade, JC noted, though this is common to DEXs in general.
Atomic swaps can be a valid alternative to bridging tokens to other blockchains, a process that is usually centralized due to technical limitations. For example, many popular Bitcoin wrappers on Ethereum are facilitated by custodial agents, like BitGo in the case of Wrapped BTC (WBTC). At the same time, wrapping a token simplifies the process of using it on another blockchain, as once initial liquidity hurdles are overcome, it becomes a relatively seamless process. The DeFi boom has allowed Wrapped BTC to reach wide acceptance, making it easy to swap or use in lending protocols.
There may be liquidity hurdles for atomic swap platforms as well, but the solution could be particularly attractive for purists who do not wish to rely on centralized entities overseeing the token’s issuance.
Mettalex claims to be fully decentralized, meaning “no counterparty and no single point of control.”
Mettalex, a spinoff project of Fetch.ai, announced Friday that it has officially launched a decentralized exchange for commodities trading, offering another compelling use case in how blockchain technology is disrupting traditional finance.
The new exchange aims to disrupt the commodities market through blockchain applications and other emerging technologies, such as machine learning and the Internet of Things. Mettalex has been designed to improve upon existing automated market makers and blockchain oracles. The company has said its automated market markers act as a party to all trades and ensure that the platform is fully collateralized.
Initially, the exchange will provide access to several commodities, including lithium carbonate, steel recyclables, zinc, iron ore, natural gas and BTC/gold spreads.
In debuting the platform, Mettalex also announced Javelin Global Commodities, a trading firm of thermal coal and other commodities, as its first customer.
Mettalex is accessible to anyone 24 hours per day, 365 days per year. When asked how it can reconcile round-the-clock trading with the defined schedule of major commodities exchanges like the Intercontinental Exchange and the New York Mercantile Exchange, the company told Cointelegraph that it remains open “based on the last reported price while real-world markets are closed.”
The company explained:
“The prices of long/short positions on Mettalex during that time could still vary depending on user sentiment, but only the oracle-reported price can settle a market.”
Mettalex also clarified that its markets are based on oracle-reported data from spot and futures markets and that it doesn’t offer physically settled commodities.
When asked about the regulatory implications of its platform, particularly in the United States, Mettalex said it acts on the legal advice of its attorneys. “Initially, we don’t expect to allow U.S. participants,” the firm said.
On the topic of decentralization, representatives of the firm explained that this means “no counterparty and no single point of control.”
Decentralized exchanges have become one of the hottest decentralized finance growth stories of the past year. More than $53 billion is currently locked into DeFi, with DEXes accounting for a large portion of the total.
Fetch.ai CEO Humayun Sheikh believes incorporating commodities into decentralized exchanges will enhance the transparency of pricing data. "By making this type of market intelligence and the ability to trade more readily accessible, Mettalex aims to bring one of the oldest forms of trade in human history into the present century," he said.
Bitcoin’s market cap broke the $1 trillion barrier without a final push from institutions — could their influence be overrated?
In the history of financial markets, there are only a few tradable assets that have conquered this frontier. Currently, Bitcoin has the eighth-highest market cap among all tradable assets in the world, including equities and commodities. Among the top 10 exchange-tradable assets, it sits right above Tencent, which Bitcoin flipped on its eventual surge past the $1 trillion mark, below which stands Facebook, which was flipped earlier this month.
Bitcoin is only one step away from surpassing Google and two steps away from silver. Considering the history of commodities like silver and gold, which have been traded for centuries now, Bitcoin’s history is extremely short, starting only in January 2009 as no more than an experiment. Even stocks like Google and Tencent have histories over two decades, while Apple and Microsoft have over four decades.
Was Bitcoin’s final surge organic?
In analyzing the timing of Bitcoin finally smashing this landmark, it’s evident that there were no big institutional announcements leading up to the surge in market cap. The Bitcoin Coinbase Premium Index by on-chain data provider CryptoQuant — when the premium is high, it indicates strong spot buying on Coinbase — suggests that at the time when this breakthrough occurred, the Coinbase premium was negative.
Ki Young Ju, CEO of CryptoQuant, explained to Cointelegraph what this suggests: “The buying power seems mostly to come from stablecoin whales and retail investors, not institutional investors or high-net individuals in the U.S.”
At long last, Bitcoin (BTC) broke the $1 trillion market capitalization frontier on Feb. 19, with its market cap tripling in just three months. This important landmark came almost a year after it tanked to less than $100 billion on March 12, 2020, more commonly known as “Black Thursday” in the cryptocurrency community.
It is also important to consider the proportion of BTC actually in circulating supply before assuming the price implications of Bitcoin volumes. According to research from Glassnode, 78% of Bitcoin’s supply is illiquid, thus implying the supply-demand economics of the asset is only a small aspect of how its price is influenced.
Fortunately, or unfortunately, for the market, Bitcoin’s price is still mostly dependent on sentiment. This is evident in the fact that Robinhood has already acquired more than 6 million retail crypto investors this year alone.
While acknowledging the presence and overall influence of institutional investors, Jay Hao, CEO of cryptocurrency exchange OKEx, told Cointelegraph that a Twitter trend could be responsible for the push to $1 trillion: “This frenzy that included Elon Musk, Michael Saylor, and Senator Cynthia Lummis, could have helped BTC break the $1 trillion market cap without any final push from institutional investors who generally don’t buy when the markets are looking overstretched.” He added further:
“At this point, many technical indicators suggest that BTC was beginning to look overbought as retail traders jumped in fueled by the ‘laser-eye’ trend that stormed Twitter with participants shooting for $100K BTC, including many leading CEOs and politicians.”
Institutional involvement in Bitcoin could be overrated
Crypto venture capitalist Brock Pierce outlined to Cointelegraph that in his view, institutional involvement could indeed be “overrated” but that it is still present as evidenced by their long positions:
“There has been a mix of retail and institutions and other factors driving the markets higher. In terms of the on-chain metrics, we are seeing large amounts of bitcoin leave the exchanges and also miners that are reluctant to sell — both of which serve to reduce the supply and reduce any selling pressure on the market.”
He further opined that corporations are adopting “programmatic buying” as they attempt to reach a certain allocation. Moreover, as indicated by both Pierce and Hao, it is often the sentiment in the market that causes retail investors to get involved, thus causing major price movements in the BTC market.
Ju recently pointed out on Twitter that prominent miners often have private wallets separate from their mining wallets; hence, their power could be greater than what on-chain analysis may suggest. He further clarified the implications this may have on the price of Bitcoin:
“Affiliated miners (whales) seem to sell Bitcoins in exchanges, not via OTC deals. They have personal wallets other than mining wallets, so it’s important to see the trend, not an absolute number. The significant outflow happened when the price was 58k, and it has been cooled down lately.”
Institutions continue to buy the dip?
After Bitcoin breached the $1 trillion mark, it quickly went on to reach its all-time high of $58,352 on Feb. 21. But the very next day, BTC price dropped 20% alongside several other cryptocurrency assets in a correction now more commonly referred to as “Bloody Monday” in the cryptocurrency community. Its price continues to trade between around $45,000 and the previous $50,000 support level.
During this drop in price, it seems that institutional investors have taken it as a green light to buy the dip in large quantities. Jack Dorsey’s Square bought another round of Bitcoin, approximately 3,318 BTC for $170 million. Square first purchased Bitcoin in October 2020, buying 4,709 Bitcoin for about $50 million at an average price of $10,618 per BTC. Square’s motivation to buy the dip in a second round of investment could be driven by the fact that its gains on the first round of investment are around 400%.
In addition to Square, Michael Saylor’s MicroStrategy purchased another $1 billion worth of Bitcoin, an additional 19,452 coins at an average price of $52,765. This investment into Bitcoin comes just six months after its initial investment of $250 million in August 2020.
Now, MicroStrategy owns over 90,000 BTC, which accounts for 63% of its total market cap. Saylor has announced that MicroStrategy “remains focused on our two corporate strategies of growing our enterprise analytics software business and acquiring and holding bitcoin.” Hao further commented on the purchase:
“The MicroStrategy debt offering and subsequent purchase of additional $1 billion of BTC was a massive announcement, although we already know what a huge Bitcoin bull and evangelist Michael Saylor is! [...] Institutional investors do not chase trends, rather they wait for corrections to come in and buy at an acceptable price. I expect we will be hearing about more and more institutional activity shortly.“
David Donovan, executive vice president of Publicis Sapient — a digital transformation firm — expressed to Cointelegraph his reservations regarding the lack of regulation, especially because investing in BTC comes with risk and volatility: “Individuals should not invest their money in bitcoin if they are not in solid financial standing as there is no FCID protection for stored bitcoin at this time.”
JPMorgan Chase became the most recent financial giant to cautiously endorse Bitcoin when it advocated in a note to clients that “investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio.” Most would see this as a bullish announcement; however, as the price of Bitcoin continues to struggle below $48,000, it adds to the narrative that the influence of institutional investors on the market could be overrated in the minds of the average crypto consumer.
Besides securing approval from Swiss regulators, Diem seems likely to face opposition from government regulators in many countries.
Back in June 2019, social media giant Facebook released the details for a much-talked-about digital currency platform dubbed “Libra.” These days, Libra is known as Diem, with the project undergoing a significant rebranding in a bid to smoothen regulatory wrinkles.
A year and a half later, the Diem Association has yet to launch a digital token with regulatory approval from Swiss authorities yet to materialize. Even if Switzerland’s Financial Market Supervisory Authority, or FINMA, does grant a payment license to the digital currency project, Diem will be debuting its offerings to a global landscape that is significantly more fractured in terms of digital currency regulations than was the case 18 months ago.
Stablecoin regulations seem to be the focus of attention for governments in major economic blocs including the United States and the eurozone. China continues to accelerate the pace of its nation digital yuan project, and despite initial assertions to the contrary, authorities in Beijing appear to have a more domestic agenda for the e-yuan.
Major crypto markets in terms of trading volume like India and Nigeria are becoming increasingly anti-privately-issued digital currencies. In effect, if Diem were to launch today, that would be four prominent digital currency transaction theatres where the legality of the project’s “coin” would be tenuous at best.
When will Diem launch?
In November 2020, the Diem Association announced plans for a limited launch of its project with a U.S.-dollar-pegged digital token. Far from the ambitious plans of a “Facebook coin” backed by a basket of fiat currencies that heralded the debut announcement back in 2019, this new USD stablecoin was a consequence of the successive rebranding attempts necessitated by the vociferous pushback among global financial regulators.
January came and went, and now February is almost over, but no sign of the Diem USD stablecoin. The Swiss FINMA has not approved Diem’s payment system license yet but recent developments in the country around crypto and blockchain regulations likely put Diem’s application in good stead.
Switzerland has established itself as a crypto-friendly nation, allowing the digital asset space to flourish within its borders. Earlier in February, Phase one of the country’s blockchain law focusing on company reforms went into effect. Meanwhile, the second part of the new legal framework, which creates regulatory clarity for trading crypto securities, will become law later in the year.
Plans for the Diem launch received another boost with the announcement of the partnership between crypto security outfit Fireblocks and First Digital Asset Group — a payment provider on the Diem platform. As part of the collaboration, both companies have created a secure wallet allowing financial institutions to process transactions on the Diem network.
Responding to Cointelegraph, a spokesperson for FINMA declined to comment on the status of Diem’s application but confirmed that the licensing process was still ongoing. The Diem Association did not immediately respond to Cointelegraph’s request for comments on the matter.
According to Jackson Mueller, head of policy and government relations at blockchain compliance and financial markets infrastructure outfit Securrency, a Diem launch in Q1 2021 appears unlikely. In a conversation with Cointelegraph, Mueller remarked:
“Several representatives of the Diem Association have made it clear that a rollout will not happen until they meet regulatory expectations and requirements, and it is unclear, at this time, whether and to what extent the Association is close to achieving this.”
Private stablecoins in the cross-hairs of regulators
The Diem announcement back in the Summer of 2019 seemed to spur financial regulators across the world to scrutinize stablecoins. The likely network effect of a digital currency enjoying such benefits of Facebook’s 2.8 billion users seemed to spur intense discussions among national and international regulatory agencies.
According to Mueller, government scrutiny surrounding privately issued stablecoins has increased: “The conclusions and follow-on outcomes from these efforts are unclear, at present, which, I imagine, adds further challenges to the rollout of Diem in the first quarter.”
Apart from the series of congressional hearings that took place in 2019 after the Diem announcement, some congresspeople are pushing for stricter stablecoin regulations. The measures, if passed, would force private stablecoin issuers to comply with banking standards.
Intergovernmental bodies, such as the G-7 and the G-20, have also expressed their concerns about stablecoins, with Diem often being singled-out. These bodies have issued numerous papers and research studies highlighting the potential for private stablecoins to disrupt legacy financial systems.
The European Central Bank recently asked European Union lawmakers for veto powers concerning stablecoins in the eurozone. If granted, the ECB would have the final say on stablecoin regulations with its pronouncement enforceable across the European Union. Indeed, the ECB laid down the crux of its reservations with stablecoins especially those not issued by recognized financial institutions, stating:
“The additional requirements laid down in the proposed regulation for significant stablecoin issuers are therefore welcome. Having said that, these additional requirements may not be sufficient to address growing risks where stablecoins become widely used as a means of payment or a store of value in multiple jurisdictions across the Union.”
Furthermore, ECB President Christine Lagarde is a noted critic of stablecoins and cryptocurrencies in general. Thus, it’s likely that the ECB having veto powers on stablecoin regulations would mean strict compliance mandates for issuers in the eurozone.
Officials in Germany are also among one of the more vocal opponents of Diem in the eurozone. While the country is by no means anti-crypto, Germany’s finance minister, Olaf Scholz, has stated on numerous occasions that the country’s government will oppose Diem’s operation in Germany.
According to Ran Goldi, CEO of First Digital Assets Group, much of the negative sentiments espoused by European regulators stem from a lack of understanding of the Diem model. “I think the ECB is still looking at Diem as a new currency instead of a representation of existing money (as in, they think this is still Libra, a basket of currencies),” Goldi told Cointelegraph, adding: “They should take the time to learn more and perhaps realize there is no threat to their economy.”
CBDC: Central banks answer to Diem and private stablecoins?
Apart from the threat of decidedly onerous regulatory measures, several governments have also begun exploring the creation of their own central bank digital currencies. These sovereign digital currency projects seem to be the response of central banks to the perceived threat of privately issued stablecoins.
Seeing as digitization appears to be the next phase in the evolution of money, legacy finance figures, such as Agustín Carstens, general manager of the Bank for International Settlements, have argued for central banks playing a key role in the pivot to digital currencies.
According to a recent BIS survey, about 86% of major central banks are studying CBDCs. China’s e-yuan project is currently undergoing several testing protocols, with banks in the country helping to bootstrap adoption by creating hardware wallets for the digital currency/electronic payment.
There also seems to be a significant level of international collaboration surrounding CBDCs. Recently, the central banks of China, Thailand, the United Arab Emirates and the Monetary Authority of Hong Kong inked a partnership to create a cross-border CBDC. These international collaborative projects appear to be geared toward establishing protocols for interoperability among national CBDC projects.
In India, the country’s central bank has confirmed that it is actively developing a digital rupee. According to a recent statement by Shaktikanta Das, governor of the Reserve Bank of India, the RBI is “very much in the [CBDC] game” and wants to follow China’s footsteps in creating a digital companion to its national currency.
Meanwhile, India’s government is reportedly close to issuing a blanket ban on cryptocurrencies, which will include stablecoins. People with knowledge of the plan have been speculating, saying that crypto owners will be given a transition period to sell their digital currency assets.
India is Asia’s third-largest economy and a potential market base for Diem payment transactions. Already, another major arena like China with its DCEP could be a difficult proposition for Diem to achieve significant adoption.
In Europe, the ECB wants stablecoin veto power but has said that any digital euro created by the central bank will be exempted from digital currency regulations enforced on other stablecoin issuers. Nigeria — Africa’s largest economy — has banned banks from servicing crypto exchanges.
Even with a license approval by FINMA, Diem might have a few regulatory hurdles to navigate seeing as major economies are not looking to allow the disintermediation of their legacy banking systems without a fight.
Ethereum protocols account for over a third of Grayscale's assets under consideration for listing as exchange-traded products.
Want to buy decentralized finance exposure from your stockbroker? Grayscale may be on the cusp of making it a reality.
In a press release today, the issuer of popular exchange-traded products such as Bitcoin (BTC)-backed Grayscale Bitcoin Trust announced a list of new assets under consideration — and over a third, or 8 of 23, come from Ethereum’s DeFi ecosystem.
Aave, Compound's COMP, MakerDAO's MKR, Reserve Rights (RSR), SushiSwap's SUSHI, Synthetix Network Token (SNX), Uniswap's UNI and Yearn.finance's YFI joined increasingly popular layer-one chain assets such as Polkadot's DOT, Cosmos' ATOM and Cardano's ADA on the list — a sign that the “great repricing” may be picking up steam.
“We're eager to expand our product offerings to better serve our investors,” said Grayscale CEO Michael Sonnenshein in the release. “The digital currency universe is constantly evolving and we seek to identify bold, interesting, and innovative opportunities that satisfy our investors’ demand for differentiated exposure to this burgeoning asset class.”
The announcement also noted that considerations such as “sufficiently secure custody arrangements, and regulatory considerations” will be factors in deciding which assets will go to market as exchange-tradable products — factors that could potentially slow DeFi’s debut on the stock market compared with some of the layer-one blockchains and other projects listed.
Grayscale has previously been criticized for its asset choices, including Bitcoin Cash (BCH), a fork of Bitcoin, and Ripple’s XRP. Last month, Grayscale filed for trusts for many of the assets listed, but made the selections official today.
The selections the investment manager made come with particular heft, given the importance of products like Grayscale Bitcoin Trust and Grayscale Ethereum Trust to institutional and retail investors. Grayscale’s products are often the preferred choice for large buyers seeking crypto exposure via traditional investment rails, and the “investment premium” for their products — the price per share versus the price of the underlying assets — is closely watched.