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Pirate Weekly Meeting | 2.19.2020

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Bitmex accelerates user verification program after anti-money laundering charges

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Bitmex has brought forward its user ID verification program after the company was charged with installing lax anti-money laundering controls

Cryptocurrency exchange Bitmex announced earlier today that it would launch its User Verification Programme for individual and Bitmex corporate customers earlier than expected. The exchange would launch the program starting November 5, three months earlier than the previous deadline of early February 2021.

Bitmex is making these moves after the United States government and a regulator accused it of facilitating unregistered trading. As per the charges, the exchange has lax anti-money laundering controls in place at the moment.

In its blog post, Bitmex stated that “We are introducing changes to accelerate the rollout of our User Verification Programme for individual and Bitmex corporate customers. Users must now be fully verified by November 5, 2020, at 00:00 UTC to continue trading on the platform”.

Once the ID verification process begins, unverified traders won’t be able to open new positions. Furthermore, starting from December 4 at 00:00 UTC, the unverified users will not be able to withdraw funds from their Bitmex account unless they complete their ID verification.

Bitmex started this move in August when it announced the Bitmex User Verification Programme. As per the original announcement, the programme was scheduled to launch in early February 2021, and all customers were required to complete ID checks. The new controls will enable Bitmex to create a secure and trusted trading environment.

Earlier this month, the U.S. Commodity Futures Trading Commission (CFTC) and federal prosecutors charged Bitmex with facilitating unregistered trading and other violations. According to the Assistant FBI Director William Sweeney Jr., Bitmex and its owners bragged about their company incorporated in a jurisdiction outside America. It costs lower to bribe regulators in that jurisdiction as compared to the U.S.

The CFTC accused Bitmex of receiving $11 billion in Bitcoin deposits and earning over $1 billion in fees. The exchange did this while conducting most of the company’s business in the United States and accepting orders and funds from customers in the country.

The charges brought against Bitmex has seen the crypto exchange fast-forward its User Verification Programme to avoid further trouble from the regulators. Bitmex stated that “Recent events have underscored the requirement for market operators to implement robust and compliant KYC programmes”.

Bitmex announced in August that it would be launching a trading tournament for traders who have completed verification. However, the latest development has forced the exchange to delay the tournament until a later date.

Source: https://coinjournal.net/news/bitmex-accelerates-user-verification-program-after-anti-money-laundering-charges/

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Hold ETH or Buy NFTs? Understanding Impermanent NFT Loss

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“Media lego” non-fungible tokens have surged in popularity in the Ethereum community this year, and among the NFT economy’s various sectors the digital fine art arena has been an early star.

Why’s that? Because NFTs give artists new programmable revenue avenues, and early innovators have taken notice. NFTs can have royalties automatically caked in, so that whenever a given piece sells in secondary markets, the creator instantly gets a 10% cut or so forth. There’s no traditional parallel to this in the traditional art world, and it’s unquestionably great for creators.

Accordingly, we’ve seen a lot of buzz kick up around the NFT assets ecosystem in recent months, which has brought in lots of new eyes. That’s awesome! But there’s a learning curve and risk involved, just as with all things crypto.

That said, one of my various professional goals is to help newcomers wrap their heads around NFTs shrewdly, like an expert would. So today, with a mind toward approaching risk in this space realistically, I wanted to introduce a concept that clicks as obvious once you think about it, but that I haven’t seen put forth in this way before: Impermanent NFT Loss.

First, What’s Impermanent Loss?

Another one of Ethererum’s major hits this year has been decentralized exchanges, and among the DEX genre automated market makers (AMMs) like Uniswap have been stealing the show lately.

Structurally, AMMs work via liquidity pools. Let’s take a Uniswap trading pool, ETH / DAI, for example. Users can provide liquidity to this pool by depositing equivalent portions of both assets, say 1 ETH and 380 Dai at today’s prices. Liquidity providers receive LP tokens (which can be redeemed for the underlying tokens at any time) and have the potential upside of earning trading fees from folks trading in and out of the ETH / DAI pool.

The risk of providing liquidity to AMMs, then? Impermanent loss, or the acute loss of funds from serving as an LP for a trading pair whose tokens’ prices diverge. Simply put, the grand IL question is this: would you have been better off simply holding ETH rather than providing liquidity to, say, the ETH / DAI Uniswap pool over a given span of time?

This same kind of assessment can be applied to NFT investing, even though AMMs and art NFTs are apples and oranges. Here’s what I mean.

NFT IL

Would you have been better off holding ETH rather than investing it into a particular NFT over a given time span?

For example, let’s consider a hypothetical involving Delphi Digital, the crypto research firm that made waves for picking up 5 rare Axies — the digital pets of the rising NFT game Axie Infinity — for a small trove of ETH back in September. The firm purchased Venom, a “triple mystic” Axie, for 104.25 ETH (which were roughly ~$345 each at the time).

So think about this: let’s say crypto stays steady for the next 5 years and the ETH price stays in the $300-$400 range, while in that same span Axie Infinity continues to explode in popularity and mystics like Venom become much more desirable. In this case, Delphi Digital could easily flip the NFT for a significant profit.

Yet what if the opposite happens, i.e. the NFT ecosystem stays steady and the ETH price rockets up to something like $2,000 each indefinitely? The firm would would face impermanent NFT IL, since they would’ve made more USD-denominated returns if they’d simply stayed in ETH rather than bet on Venom.

Of course, the growth of stablecoin usage and active, revenue-generating activities like NFT staking can be used to mitigate NFT IL, so we’ll see how things continue to shake out from here.

The Takeaway

The NFT economy is very promising and pulling in a lot of new attention lately accordingly. With that excitement brings FOMO (“Fear on missing out”), as new investors look to join in on the buzz.

That said, it’s important for newcomers to learn the ropes and understand what kind of risks they face in a sector they’re not yet familiar with.

There are no guaranteed returns in life, so spending ETH on a bunch of NFTs is far from a surefire get-rich strategy. The NFT IL concept illustrates just one of the basic layers of risk involved in this arena. But through better understanding, we can make more informed decisions and be better stewards for those who arrive to NFTs after us.

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Source: https://blockonomi.com/understanding-impermanent-nft-loss/

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Bitcoin price hits $12,300 as bulls eye new bull run

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BTC/USD price jumped more than 6% to touch highs of $12,314

Bitcoin price broke above $12,000 to hit an intraday high around $12,314 and although prices have retreated slightly, the next target is the 2020 highs around $12,500.

At the time of writing, BTC/USD is trading around $12,279 but is looking strong on the 4 – hour and daily charts.

Traders should recall that when Bitcoin crossed the $12k price level again in August, several analysts predicted that the bull cycle would feature multiple pullbacks of 20%. The latest leg of the correction saw Bitcoin drop to prices around $9,800.

From a technical perspective, where BTC/USD trends next depends on whether the current upside takes prices above the crucial resistance area around $12,500 or whether another rejection stalls the forecast bull run.

Analysts predict Bitcoin’s uptrend to continue

Analysts say Bitcoin’s technical picture suggests a higher close on both the weekly and monthly charts.

According to Blockroots.com co-founder Josh Rager, “Bitcoin hasn’t had a weekly close above $12,000 since January 2018”.

The rebound seen over the past few weeks, however, follows a recent 20% pullback, which the analyst says is a signal that Bitcoin is ready to “continue this uptrend”.

His sentiments are shared by the pseudonymous trader Filbfilb, who suggests that BTC has a “cyclical” price trajectory that is “difficult to escape from”.

In a tweet to more than 48.5K of his followers, the trader advises:

“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”.

According to Filfilb, Bitcoin has taken roughly the same number of days (1,057 days) to break above the 50% retracement level as it did before its last major bull run.

BTC price chart comparing 2017 trajectory and 2020 scenario. Source: Filbfilb on Twitter

Does this mean that BTC/USD will rip even higher? It appears so, with social sentiment turning extremely bullish, even as altcoins bleed on a BTC/USD surge.

The 4 – hour chart for Bitcoin shows that BTC/USD has healthy support at the SMA50 and SMA100 near $11,550 and $11,246, respectively. The RSI is slightly extended but isn’t hinting at a bearish divergence, while the MACD is super bullish.

Bitcoin price 4 – hour chart. Source: TradingView

The 1-hour chart, however, shows a dip in buying pressure over the past two hours. However, the bullish outlook will remain in place if the price stays above the SMA50, SMA10 and SMA200.

As noted above, the technical picture will strengthen if the price breaks above the crucial $12,500 resistance. The area has proved stubborn before and a sustained breakout to higher levels could bring into play attempts at the next resistance line around $13,800.

Source: https://coinjournal.net/news/bitcoin-price-hits-12300-as-bulls-eye-new-bull-run/

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