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First Mover: Wacky Bitcoin-to-DeFi Crypto Markets Might Be New Home of Capitalism

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PRICE POINT

Bitcoin was slightly lower early Friday, leaving the cryptocurrency on track for its first weekly price decline since mid-July. 

The largest cryptocurrency broke above $12,000 earlier in the week and failed to hold the gains, though John Willock, CEO of crypto asset manager Tritum told CoinDesk Thursday that “maybe we’ve got $13,500 in the next phase up in the coming days.” 

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here.

European stocks were up and the euro was down early Friday as investors continued to bet on technology shares and a vaccine breakthrough while shrugging off fresh signs that the economic recovery is faltering. The dollar was headed for its first weekly gain since mid-June. 

“It does almost seem as if the entire crypto market is taking its cues from the U.S. dollar,” Mati Greenspan, founder of the foreign-exchange and cryptocurrency analysis firm Quantum Economics, told subscribers in an email. 

MARKET MOVES

Even after growing 100-fold in the past five years, the entirety of the cryptocurrency asset class, which has a total market valuation of $372 billion, is just fraction of the $35 trillion U.S. stock market

What’s surprising is that these still-fledgling digital-asset markets might be more rational and functional these days than Wall Street: The various ups and downs of token prices are sending out bona fide market signals that point to projects and opportunities where capital is warranted, and investors are responding. 

Mainstream investment analysts and Wall Street Journal columnists now assert matter-of-factly that the stock market is merely propped up by this year’s $3 trillion of money-printing by the Federal Reserve.

Sure, bitcoin has benefited from the perception that the largest cryptocurrency might benefit from inflation, since many investors see it as a hedge against currency debasement, similar to gold. 

Far more fascinating are the capital flows into the semi-autonomous lending and trading systems being built atop the Ethereum and other blockchains under the rubric of “decentralized finance,” or DeFi.

A real market?

Soaring token prices for projects like AaveChainlinkCompound and Curve, not to mention good-luck-explaining-this-to-your-friends outliers like  Yam and Spaghetti, have indeed attracted capital, at least for stretches. According to DeFi pulse, total value socked away into the platforms has jumped 10-fold this year to $7 billion. 

It might all just be speculative hype, but that might actually be preferable to global foreign exchange markets that are heavily influenced if not controlled by central-bank officials. 

Within the digital-asset ecosystem, investors have figured out how to quickly allocate and reallocate capital whenever new opportunities arise.   

CoinDesk’s Daniel Cawrey reported on Thursday that juicy returns in the DeFi market are making some investors shift away, at least temporarily, from putting their money into options contracts on bitcoin.

“Every derivatives trader that was looking for incremental yield and levered returns has been besotted by the magnitude of moves in DeFi,” Viashl Shah, founder of derivatives exchange Alpha5, told Cawrey. “So, naturally, cost of capital dictates at least some attention that way.”

skew_total_btc_options_open_interest-13-2
Open interest in bitcoin options has dipped recently.
Source: Skew

Traders are even are putting their bitcoins into DeFi platforms to take advantage of the higher yields in the fast-growing arena. 

Since the start of the year, the number of bitcoin locked in DeFi has grown 34-fold to about 49,000. 

It might be a bubble, but at least it’s not a game of trying to anticipate the Fed’s next move. In fact there’s even room for investors to take bets on which projects might become dominant players in the future, without struggling so much to understand what exactly is happening, as often seems to be the case these days in so many traditional markets. 

“DeFi long-term will revolutionize finance, but this short-term bubble is bound to pop eventually, in my opinion,” Michael Gord, co-founder of trading firm Global Digital Assets, told Cawrey. At that point, the locked-up bitcoins might flow back out of DeFi, and more money might flow back into bitcoin options. 

Almost like a real market. 

fm-aug-21-defi-rates
There’s a thriving market for borrowing and lending cryptocurrencies.
Source: DeFi Rate

BITCOIN WATCH

skew_btc_25d_skew-4-2
Bitcoin put-call skew.
Source: Skew

Bitcoin has pulled back more than 5% from the 13-month high above $12,400 reached on Monday. 

  • Unless buying action comes quick, downwards momentum could push prices down to $11,000, the cryptocurrency trading firm QCP noted earlier this week.
  • Open interest in bitcoin options has risen back to near record high levels seen in July.
  • However, that is not necessarily a bullish development, as investors have recently sold call options. That is evident from the recent recovery in the one-month put-call skew from -10% to -3%.
  • Investors typically sell call options when they expect prices to consolidate or drop. 

Read more: Bitcoin Options Open Interest Nears All Time High – But Rise in Puts Could Presage Drop

– Omkar Godbole

TOKEN WATCH

Dai (DAI): Stablecoin gets on Binance’s new DeFi staking platform. Dai, the dollar-linked stablecoin for crypto lending platform MakerDAO, has become the first available digital asset on Binance’s DeFi staking program. The Binance initiative aims to tap into this year’s booming DeFi market by offering users the ability to earn “staking rewards,” similar to interest on a bank deposit. Dai will be used to participate in Compound staking, according to Binance. Compound, another DeFi money market protocol, has more than $993 million worth of dai supply right now, according to its website. As CoinDesk previously reported, users of Compound were rushing to deposit their dai on the platform to maximize yields.

Tether (USDT): 1 billion of the dollar-linked stablecoins are shifted to the Ethereum blockchain from Tron.

Kyber (KNC): DeFi token looks cheap based on a discounted cash flow analysis, and comparison with Synthetix (SNX) and Balancer (BAL), according to a new report by TradeBlock.  

Ethereum Classic (ETC): Frequently-attacked blockchain could be in line for upgrades to help protect against more 51% attacks.

OMG (OMG): Token price doubles in past week as record Etherum fees stoke interest in layer 2 solutions.

ANALOGS – On the economy and traditional finance

European economic activity unexpectedly slowed in August (Bloomberg)

U.S. cutback of $500B in emergency aid could shave $940B off economy. (Peterson Institute)

Costa Rica, Greece, Morocco, Portugal, Thailand hit by “precipitous drop” in tourism. (IMF)

JPMorgan reportedly pushing to provide banking services in U.S. post offices. (The Capitol Forum) 

Federal Reserve has been putting a floor under the Treasury market for 84 years. (New York Fed)

Asian Banks face “challenging” revenue environment from near-zero interest rates (Fitch) 

U.S. Jobless claims jump back above 1M as labor-market recovery stalls (Labor Department)

screen-shot-2020-08-20-at-4-31-58-pm
U.S. jobless claims continue to far outpace losses after the 2008 crisis.
Source: St. Louis Fed

TWEET OF THE DAY

WHAT’S HOT

Chinese nationals might be using tether to spirit capital out of China (Bloomberg)

Grayscale trusts “sold in secondary market to the public at large premiums” (Arcane Research)

Mining industry increasingly “financialized” and hashrate “capitalized” (TokenInsight)

Crypto-Friendly U.S. congressman turns to crypto-friendly fund-raising via BitPay (CoinDesk)

FTX hires former Robinhood crypto exec as COO of U.S. crypto exchange (The Block)

Newest-generation Bitmain, MicroBT rigs portend “neck and neck competition” (BitMEX Research)

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Disclosure

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Source: https://www.coindesk.com/first-mover-bitcoin-defi-crypto-markets-capitalism

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Finnovex East Africa 2021: Live Experience at Virtual Event

February 9-10, 2021| Finnovex East Africa 2021 Virtual Summit: The Leading Summit on Financial Services Innovation and Excellence East Africa currently is home to some of the quickest growing economies in the world and the entire continent is set for a vast economic transformation. Africa already leads the world on telecom infrastructure and uptake and … Continued

The post Finnovex East Africa 2021: Live Experience at Virtual Event appeared first on BeInCrypto.

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February 9-10, 2021| Finnovex East Africa 2021 Virtual Summit: The Leading Summit on Financial Services Innovation and Excellence

East Africa currently is home to some of the quickest growing economies in the world and the entire continent is set for a vast economic transformation. Africa already leads the world on telecom infrastructure and uptake and digital innovation and this pandemic crisis has brought to the fore the possibilities of transforming into a digital economy.

Today it presents a chance to continue to build the economy in the post-Covid-19 environment and even for East Africa to aspire to become a global hub for innovation. Within the region, we have seen a broad range of fiscal policies that have been rolled out rapidly and are now being scrutinized, evaluated, and fine-tuned to achieve the desired results.

Keeping in mind the excellence in financial services and innovation in East Africa’s economy Exibex is proud to present Finnovex East Africa 2021 Virtual edition as a platform for Devising Transformational Strategies for The New Normal and be a driver in creating a roadmap to recover from the aftereffects of the pandemic and emerge stronger to not just achieve the expected levels of innovation and excellence, but to supersede them.

The event will discuss the roles of banking and non-banking institutions, financial organizations, investment firms, fintech companies, and other stakeholders in developing inducements to the paradigm shift in this sector.

Join us at this VIRTUAL SUMMIT on February 9-10, 2021 from the comfort of your home or office. Despite the challenges created between every aspect of our community due to the pandemic, we’re confident in delivering a dynamic experience that fosters interaction among all our attendees through our virtual event with live experience.

Finnovex will feature thought-provoking presentations engaging discussions and focused roundtables aimed at delivering a thorough and nuanced outline of what the future will hold. Join us as we discuss the best and next practices with leaders and experts from the financial services industry.

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Source: https://beincrypto.com/finnovex-east-africa-2021-live-experience-at-virtual-event/

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Crypto hedge fund CEO testifies to Washington State Senate about the challenges of regulating digital assets

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Crypto regulations have proven to be a slippery slope so far, with governments around the world continuing to suppress the industry’s organic growth by instilling poor policies and a general disregard for cryptocurrencies.

But builders, developers, and crypto fanatics are fighting back to ensure a fair industry. One such individual is Jesse Proudman, the CEO of crypto hedge fund Strix Leviathan

Proudman, whose company operates out of Washington state in the US, who recently testified at the State Senate about the stark lack of crypto and blockchain regulations in the country and the potential of a huge exodus of talent as other countries embrace the technology more formally.

Be friendly towards crypto firms

In a release shared with CryptoSlate, Proudman said that startups choosing to do business in Washington are expending resources to interpret existing regulation and anticipate future regulation as it pertains to these new business lines in good faith.

However, Proudman noted that as these technologies evolve faster than the state of regulation, many startups are left behind in a “nebulous grey zone.” “Retroactive penalties for regulatory violations that may not have been clear at the time of infraction will continue to deter blockchain startups from establishing a presence in Washington State,” he stated.

It’s not just small companies facing such ill-effects. Large players like Ripple, the issuer of XRP, are also considering a move away from US shores as ever-changing and tightening laws, lack of recognition, and the slow pace of policies have crippled the organization in several ways.

The environment is worse for upstarts. Regulatory uncertainty and conflicting information lead to an expensive legal burden for startups in the state, explained Proudman, adding that this aspect has a “direct impact on job growth in the industry.”

He added that while Strix Leviathan is a “very lean” team, the legal and regulatory costs are a significant drain on resources. As such, the team has paid $189,101 in legal fees in 2018 (15% of all expenses), $206,708 in legal fees (21% of all expenses) in 2019, which has caused a drain on its resources and ability to expand.

2017 ICO mania is long gone

In the testimony, Proudman raised several points to the Senate regarding the various differences of today’s crypto market compared to the one in 2017, a time when ICOs ran abound and raised billions of dollars from the market with little to show.

Some of these points were:

  1. Blockchains are Transparent Ledgers: More transparency than most appreciate. AML / KYC / OFAC Checks are industry standards. Money laundering as a fraction of total transaction volume is orders of magnitude smaller than in traditional fiat currencies.
  2. Functioning Products and Platforms: 2017’s “ICO” fundraising craze resulted in lofty ideas with limited execution. Fast forward three years and we’ve seen an enormous shift in the sophistication and capabilities of this asset class. 
  3. Industry Security Has Improved Dramatically – Hacks and theft prevalent in the 2015-2017 era markets have been reduced given focused industry attention and the rise of qualified custodians focused on safe storage.

As Proudman best put it, “The charlatans have largely been banished after a three-year drought.”

You can watch the full video of Proudman’s testimony below:

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Source: https://cryptoslate.com/crypto-hedge-fund-ceo-testifies-to-washington-state-senate-about-the-challenges-of-regulating-digital-assets/

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Bitcoin Fundamentals Paint Bullish Picture Despite Latest Pullback

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Bitcoin Fundamentals Paint Bullish Picture Despite Latest Pullback | Crypto Briefing


















The uptrend in Bitcoin has paused near all-time highs. On-chain indicators now show more strength to keep climbing. 


Key Takeaways

  • Bitcoin’s total hashrate has recovered after dropping 35% in October, flagging a buy signal.  
  • The leading crypto is, however, witnessing movement from old BTC wallets as prices reached all-time highs. 
  • Analysts predict that Bitcoin’s price may witness a short-term pullback, but the momentum remains bullish. 

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In November, the Bitcoin network witnessed higher profit-booking tendencies after its price increased by 42.5%, reaching a peak value of $19,860.

New buyers and derivatives traders have been apprehensive of a bullish trend reversal. However, the growth of mining hashrate and the market’s liquidity points to a bullish continuation. 

Bitcoin’s Supply-Side Story 

Hash ribbons are a supply-side indicator developed by Charles Edwards, the founder of Capriole Investments. It plots the 30-and 60-day moving average of the network’s total hashrate. 

This indicator is now confirming the complete recovery of Bitcoin’s hashrate along with positive momentum in price, signaling a buy

After the end of the wet season in China, the recent miner capitulation caused a 35% drop in the hashrate. Every year, retail miners move from Southwest China to tap cheaper sources of electrical energy. The migration of miners usually takes about a month. 

BTC/USD daily price chart with hash ribbon indicator
BTC/USD daily price chart with hash ribbon indicator. Source: TradingView 

Historically, buying during miner capitulations has yielded positive returns. 

Large mining farms can hold Bitcoin during capitulations, forming an accumulation band allowing “price to stabilize and then climb,” according to leading on-chain analyst Willy Woo.

BTC Exchange Flows 

As the price lingers around all-time highs, concern around profit-booking has kept traders on edge.

Bitcoin’s blockchain reveals older BTC wallets moving tokens to sell at the resistance near the all-time high.

SIMETRI gains of 484%

The number of coin days destroyed (CDD) is a metric that measures old wallets’ movement. CDD measures the amount of BTC moved in transactions and the number of days since it moved last. The movement of Bitcoin from old addresses or large value transactions pushes this metric up. 

In November, the monthly sum reached an 18-month high, signaling profit-booking by holders. 

Bitcoin monthly coin days destroyed
Bitcoin monthly coin days destroyed. Source: Glassnode

Nevertheless, the percentage of BTC spends from addresses that haven’t moved their BTC for over a year is minuscule. It only makes up 4.1% of the overall Bitcoin spend in November. 

Another Warning Signal 

The Network Value Transfer (NVT) ratio is another robust indicator for assessing overbought or oversold market conditions. It measures the total value of transactions to BTC’s total market capitalization. 

Bitcoin price with NVT signal
Bitcoin price with NVT signal. Source: Woobull 

A lower ratio signals an under-priced situation where the network is handling more transactions relative to its market value. A higher ratio, on the other hand, points to over-priced conditions. 

Currently, the NVT represents over-priced conditions. Nevertheless, crypto analyst, David Puell, said: “NVT should be taken with a grain of salt.” He told Crypto Briefing: 

“The lack of velocity seen there may be misleading. A lot of the transactions are now shifting into off-chain mechanisms, and a lot of the supply is being held in large entities (such as exchanges) that hold a lot of the supply changing hands in the market.”

Momentum Indicator 

The Spent Output Profit Ratio (SOPR) is an oscillating indicator that gauges the market’s momentum. It is computed by dividing BTC’s realized price by the price it was last added to an address. Virtually, the paid/purchase price. 

The ratio pivots around one, signaling bearish or bullish momentum accordingly. 

In an uptrend, investors are reluctant to sell at a loss or even at break-even prices, reducing the selling pressure at pullbacks and pushing the price up—the SOPR trends above one in a bull market, which BTC has been in since May. 

Bitcoin SOPR indicator
Bitcoin SOPR indicator. Source: Glassnode

When entities spend a large number of Bitcoin, the SOPR ratio records spikes on those days. 

So far, there hasn’t been a significant spike in that metric, suggesting that the buying interest is equally strong. 

Lastly, analysts are also reporting a slow down in exchange outflows, signaling short-term pain. The exchange outflows have been the most sought out metric this year. More than 500,000 Bitcoin have left exchanges, pointing towards a hugely positive signal in the long-term. 

There is evidence to show the market sentiments are highly optimistic. The strong recovery in price after the recent pullback shows that “buy the dip” psychology is in play. At the same, the resistance at $20,000 still poses a significant psychological barrier. 

Bitcoin is changing hands at $18,984 at press time. 

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Source: https://cryptobriefing.com/bitcoin-bullish-despite-pullback/

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