When BitMEX launched its Bitcoin (BTC) perpetual futures market in 2016, it created a new paradigm for cryptocurrency traders. Although this was not the first platform to offer BTC-settled inverse swaps, BitMEX brought usability and liquidity to a broader audience of investors.
BitMEX contracts did not involve fiat or stablecoins and even though the reference price was calculated in USD all profits and losses were paid in BTC.
Fast forward to 2021, and the Tether (USDT) settled contracts have gained relevance. Using USDT-based contracts certainly makes it easier for retail investors to calculate their profit, loss and the required margin required but they also have disadvantages.
Why BTC-settled contracts are for more experienced traders
Binance offers coin-margined (BTC-settled) contracts and in this case, instead of relying on USDT margin, the buyer (long) and the seller (short) are required to deposit BTC as margin.
When trading coin-margined contracts there is no need to use stablecoins. Therefore, it has less collateral (margin) risk. Algorithmic-backed stablecoins have stabilization issues, while the fiat-backed ones run risks of seizures and government controls. Therefore, by exclusively depositing and redeeming BTC, a trader can bypass these risks.
On the negative side, whenever the price of BTC goes down, so does one’s collateral in USD terms. This impact happens because the contracts are priced in USD. Whenever a futures position is opened the quantity is always in contract quantity, either 1 contract = 1 USD at Bitmex and Deribit, or 1 contract = 100 USDat Binance, Huobi and OKEx.
This effect is known as non-linear inverse future returns and the buyer incurs more losses when BTC price collapses. The difference grows wider the further the reference price moves down from the initial position.
USDT-settled contracts are riskier but easier to manage
USDT-settled futures contracts are easier to manage because the returns are linear and unaffected by strong BTC price moves. For those willing to short the futures contracts, there is no need to buy BTC at any time, but there are costs involved to keep open positions.
This contract doesn’t need an active hedge to protect collateral (margin) exposure, thus it’s a better choice for retail traders.
It is worth noting that carrying long-term positions on any stablecoins has an embedded risk, which increases when third party custody services are used. This is one reason why stakers can obtain over 11% APY on stablecoin deposits.
Whether an investor measures returns in BTC or fiat also plays a massive part in this decision. Arbitrage desks and market makers tend to prefer USDT-settled contracts as their alternative investment is either staking or low-risk cash and carry trades.
On the other hand, cryptocurrency retail investors usually hold BTC or switch into altcoins aiming for higher returns than a fixed APY. Thus, by being the preferred instrument of professional traders, USDT-settled futures are gaining more traction.
The views and opinions expressed here are solely those of theauthorand 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.
Macroeconomics guru and Real Vision co-founder Raoul Pal is predicting that Ethereum will surge to $20,000 this cycle.
In a Marco Insiders article, the former Goldman Sachs executive says that his models, including Metcalfe’s Law which states that the value of a network is directly correlated with its number of users, suggest that a crypto asset’s value is based on adoption.
Looking at Ethereum, Pal highlights that the leading smart contract platform’s market cap is highly correlated with its number of active addresses just like Bitcoin.
Source: Real Vision
Pal says the correlation between adoption and network value is not a coincidence.
He explains that Ethereum’s price distribution versus its number of active addresses mirrors Bitcoin’s exact performance at the same stage. He notes that Ethereum is six years younger than Bitcoin and that market participants will have to wait for the same network effects to kick in.
Source: Real Vision
Pal also looks at a key milestone when BTC and ETH achieved 1 million active addresses. According to the Real Vision CEO, ETH’s growth is virtually identical to Bitcoin, just 4 years apart.
“Please note that the prices are EXACTLY the same too. We didn’t fit for prices, we fitted for 1m active addresses.”
Source: Real Vision
Based on Ethereum’s growth trajectory in terms of price and adoption, he believes the second-largest crypto asset will follow in the footsteps of Bitcoin.
“It is the SAME as Bitcoin, at the SAME point in its adoption cycle, with the exact SAME price and its market cap is rising faster… and suggests that its adoption cycle might be more dramatic too…
ETH will outperform Bitcoin by almost 2x and is driven by the exact same mechanism – a great narrative – the platform for programmable money and, obviously, Metcalfe’s Law.”
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Bitcoin’s (BTC) definitive breakout above $50,000 may have to wait longer to materialize as spot buying pressure on Coinbase Pro shows signs of weakening — at least, in the short term.
The Coinbase Premium Index, which measures the gap between the BTC price on Coinbase Pro and Binance, has flipped negative, according to CryptoQuant. In other words, selling pressure on Coinbase appears to be strengthening compared with other exchanges like Binance.
A negative reading on the Coinbase Premium Index could be a precursor to short-term resistance. On the other hand, when the premium is high, it indicates strong spot buying pressure on Coinbase.
Based on the index, CryptoQuant CEO Ki Young Ju believes topping $50,000 “looks pretty tough” in the near term.
Breaking 50k looks pretty tough as Coinbase premium becomes -$45
— Ki Young Ju 주기영 (@ki_young_ju) February 14, 2021
“Current buying power doesn’t come from Coinbase,” he added. “No more Coinbase premium compared to Binance/Huobi/OKEx. Be careful.”
Coinbase has become a major bellwether for Bitcoin demand due to its popularity among large, institutional buyers. These market participants acquire their BTC via over-the-counter markets on Coinbase Pro. Although these large purchases don’t immediately impact the BTC price, they signify growing demand for the digital asset and, in turn, diminishing supply. The Coinbase Premium Index, therefore, is one way to gauge institutional demand for BTC in the short term.
A short-term fluctuation in the Coinbase premium doesn’t appear to have any bearing on Bitcoin’s long-term trajectory. The digital asset remains in a strong uptrend, having peaked well north of $49,700 on Sunday, according to TradingView data.
The Bitcoin price has gained a whopping 28% over the past week, thanks in large part to Tesla’s planned acquisition of the asset. Based on the electric vehicle maker’s most recent 10K filing with the United States Securities and Exchange Commission, it plans to allocate roughly 7.7% of its gross cash position to Bitcoin.
Publicly-traded companies and fund managers hold roughly 6% of Bitcoin’s circulating supply — a figure that doesn’t include Tesla’s $1.5 billion position.
Dogecoin is not a cryptocurrency you would expect to read about much in this column since it is not exactly an “institutional grade” asset. It has a market cap of over $8 billion at time of writing (less than 1/100th of bitcoin’s), no unique use case and no lively derivatives market.
But bear with me while I explain why it embodies two key themes impacting institutional interest in crypto assets: the role of “fundamentals,” and the likelihood of successful government bans.
You’re reading Crypto Long & Short, a newsletter that looks closely at the forces driving cryptocurrency markets. Authored by CoinDesk’s head of research, Noelle Acheson, it goes out every Sunday and offers a recap of the week – with insights and analysis – from a professional investor’s point of view. You can subscribe here.
The power of enthusiasm
At time of writing, Dogecoin (DOGE) is up almost 1,350% so far this year. Last week, rapper Snoop Dogg temporarily rechristened himself Snoop Doge. Kiss frontman Gene Simmons topped that with a “God of Dogecoin” tweet. Kevin Jonas of the Jonas Brothers joined in. Elon Musk has inspired so many Doge memes that it would be impossible to list them all here. This is getting fun in a wacky “whatever” kind of way.
But should “fun” drive value?
Why not? As we saw with the GameStop drama, the market’s understanding of “value” is shifting. The relentless rise of the stock market despite record uncertainty and risk, and the relatively new phenomenon of day-trader media stars, show that performance is increasingly a matter of message in a world where messages are coming at us thick, fast and everywhere.
Bloomberg columnist Matt Levine summed it up perfectly:
“Money and value are coordination games; what we use for money depends on the channels that we use to coordinate social activity. Once society was mediated by governments, and we used fiat currency. Now society is mediated by Twitter and Reddit and Elon Musk, so, sure, Dogecoin.”
The Dogecoin phenomenon may be a flash in the pan, and our attention may shift to something else tomorrow.
Or maybe not. The cryptocurrency’s co-founder Billy Markus told Bloomberg this week that he was “baffled” by the coin’s continued success, more than seven years after launch. The other co-founder Jackson Palmer said last year that it “makes no sense for people to have this devotion to it.” But here’s the thing: neither co-founder can do anything about it. Dogecoin runs on a public, decentralized blockchain that no one controls. It may dwindle into insignificance as people move on to the next shiny thing. But as long as there are fans who enjoy the silliness, it will have value.
Stop the tide
Which brings us to India and Nigeria (still with me?), which this week seemed to forget how public blockchains work.
In January, we reported the Indian Parliament was considering a government-sponsored bill that would ban cryptocurrencies. Needless to say, the community jumped into action with the #IndiaWantsBitcoin campaign, rallying citizens to email their government representatives to ask for progressive legislation.
Among the many arguments against the ban is the damage it would do to a lively ecosystem that includes 10-20 million cryptocurrency users, 340 startups and 50,000 employees. The full contents of the bill are not yet public, but it seems to be intent on clearing the field for a government-backed digital rupee.
Hopefully the Indian government will learn from Nigeria.
Last week, Nigeria’s central bank (CBN) ordered banks to close the accounts of cryptocurrency users. In response to the ensuing outcry, the CBN issued a press statement reminding the public that the rule was not new, and that it was for their own good.
The notable thing here is that the CBN felt the need to respond to social protest. This is possibly because of the still-fresh memory of the #EndSARS movement which rocked the country late last year, in which mass protests combined with global online support achieved the dissolution of a federal police unit with a reputation for fierce brutality.
This week, a court ordered the CBN to unblock the accounts of 20 people who had been involved in the movement. The fact that the accounts were frozen in the first place is one of the many reasons seizure-resistant cryptocurrencies are rapidly gaining in popularity amongst Nigeria’s young.
Another reason is the country’s reputation as Africa’s “Silicon Valley.” Lagos is the largest city in the continent, with a rapidly growing tech community. It is also a country with inflation of over 12% and almost 30% unemployment, where the young account for 70% of the workforce and where trading crypto assets is a way of life for many. A report this week showed that almost a third of Nigerians say they own cryptocurrency, making it the most invested country in Statista’s Global Consumer Survey.
The CBN’s actions are being presented on social media as a generational call to arms where the young, tech-savvy army has new tools in its arsenal and a deepening disrespect for institutions. Sound familiar?
They’re also not giving up on crypto. Exchanges such as Binance have been affected because local payment partners are no longer willing to deal with them due to the directive. But sources confirm that trading is moving to peer-to-peer channels.
What’s more, the #EndSARS movement has not gone away even after its victory. It is now attacking what it sees as repression more broadly, and could end up uniting with the #WeWantOurCryptoBack movement to push for – and probably achieve – radical change in Africa’s largest democracy.
The politicians have noticed. The Nigerian senate has invited the governor of the central bank and the director general of the securities regulator to testify on the matter, with one senator coming out as “strongly against” the ban.
Other countries thinking of banning bitcoin will no doubt be watching how this plays out. They will also be taking note that rules can make it harder to transact in cryptocurrencies, and could certainly dampen investor enthusiasm, but – just as the Dogecoin community could not care less about what the network’s founders think – they can’t make it go away.
And the very act of attempting to repress cryptocurrency’s use could light a fire under a generational understanding of why it’s necessary.
The rear guard
What does this have to do with institutional investment in cryptocurrencies?
One of the main risks to bitcoin is overly repressive regulation. Some believe that, as the network becomes more powerful, governments will see it as a threat and decide to intervene. It has been a suggested that national security issues might come into play as Iran, North Korea and Russia ramp up their bitcoin mining.
So, investors – and probably some western regulators – should be paying attention to the developments in India and Nigeria, to see whether an attempt to ban cryptocurrencies could be successful.
Only, now it’s about much more than pushing consumers to public protest and unregulated peer-to-peer platforms. Now the institutions are involved.
Even just looking at the U.S., this week BNY Mellon, the world’s largest custodian bank, announced that it was planning to roll out a digital custody unit later this year. Goldman Sachs, JPMorgan and Citi are rumored to also be looking at crypto custody. Payments giants are stepping up: this week Mastercard revealed it is planning to give merchants the option to receive payments in cryptocurrency later this year. Last week we saw Visa unveil cryptocurrency plans. Cryptocurrency buying and selling appears to be growing into an increasingly significant part of PayPal’s activity. This list is just scratching the surface of public announcements; there is plenty of institutional work going on behind closed doors, as well.
Furthermore, cryptocurrencies now play a significant role in regulated markets in North America and elsewhere. From listed assets to indices to data businesses, traditional markets and crypto markets are becoming inextricably intertwined.
And there is considerable retail support. A study released last summer showed that around 15% of Americans own cryptocurrency, most of whom invested for the first time in the first half of 2020. If that rate of growth is even only partially accurate, the percentage is significantly higher today.
Would any government focused on repairing public trust have the stomach to take on a retail army as well as invested institutions?
As Dogecoin has demonstrated, cryptocurrency holders can be vocal and passionate. It’s not just about love for memes, nor is it just about profit. It’s about innovation, choice, freedom of expression and changing what seems to be broken. With social tension on a slow boil that sometimes spills over, the retail market’s enthusiasm for cryptocurrencies and what they represent – supported by growing institutional investment and market infrastructure relevance – should be enough to make any government interested in maintaining its influence wary of measures that could ignite a problem that just might be harder to control.
And as we watch crypto communities flex their collective muscle, as we accept that markets have changed, as we root for the young workers of tomorrow in developing regions, as we applaud the U.S. President’s nominations of individuals knowledgeable about crypto assets to positions of regulatory influence – we are also watching the risk of overly repressive regulation in large, developed economies recede into the distance.
Tesla’s big bet
The week started with a bang, in the form of the announcement that Tesla has invested $1.5 billion in bitcoin. The fact that Tesla has invested isn’t what’s startling – it would have been surprising if it did not get involved. It’s the size of the investment. This is very much a “go big or go home” statement, enough to make anyone sit up and take notice.
The size is also significant in that it reminds us the market is now capable of absorbing such large orders. We don’t know how it was executed, whether via an OTC desk, using a prime broker or directly on exchanges. We also don’t know when. But in late December, Musk was seen on Twitter asking Michael Saylor – yes, he of the very large corporate treasury purchases – if buys of $100 billion were even possible. And the SEC filing says that Tesla updated its policy in January 2021, and made the investment after that.
So, we can conclude that the buys most likely occurred over a few days in January.
You may recall that the beginning of January we saw a strong run-up in the BTC price, from $28,000 at Dec. 31 close to $40,000 on Jan. 9, an increase of over 40%.
The price increase coincided, not surprisingly, with a jump in trading volumes on leading fiat exchanges.
Source: skew.com
Was Tesla buying then? Is that what pushed the price up? As yet, we have no way of knowing. But we have seen that a market that now regularly trades billions of dollars a day has the capacity and the infrastructure to absorb seriously large orders.
CHAIN LINKS
Investors talking:
“We see fundamental reasons to believe that — regardless of where the price of bitcoin goes next — cryptocurrencies are here to stay as a serious asset class. One is growing distrust in fiat currencies, thanks to massive money printing by central banks. Another is generational: younger people hear the “crypto” in cryptocurrency as new and improved, an exciting digital advance over metal coins.” – Morgan Stanley Investment Management
“Every treasurer should be going to boards of directors and saying, ‘Should we put a small portion of our cash in bitcoin?’” – Jim Cramer
Takeaways:
BNY Mellon, the world’s largest custodian bank, revealed plans to launch a new digital custody unit later this year. TAKEAWAY: This is a very big deal. A couple of years ago, when we first started hearing about the “wall of institutional money” that was poised to flood the crypto markets, some of us natural skeptics thought “hmm, not until Goldman Sachs and BNY Mellon offer crypto services.” We assumed that big traditional funds would rather wait for familiar names that they already work with, than trust startups in a new industry. If the reports about Goldman Sachs are correct, this year will see both of those boxes checked off, as well as many other blue-chip names that are either already involved or are poised to reveal projects they have been working on behind closed doors.
Deutsche Bank is also planning to launch crypto services such as custody, trading, lending, staking, valuation services and fund administration, according to a WEF report. TAKEAWAY: Deutsche Bank is the largest bank in Germany (Europe’s largest economy) and the sixth largest in the EU, ranked by total assets. Its entry into crypto services is likely to make a difference to asset managers considering alternative investments, in that they will be able to do so with a familiar name and with Deutsche Bank’s “blue-chip” reputation validating crypto as an investable asset class. Corporate interest in putting bitcoin on the balance sheet continues to spread. Twitter’s CFO Ned Segal said in an interview on CNBC that the company is considering adding bitcoin to its company reserves, and is looking into bitcoin payment options. TAKEAWAY: This is an interesting twist to the corporate treasury debate, which Tesla brought to light when it revealed its buy and tentative plans to accept bitcoin for customer purchases. It makes more sense to hold some reserves in a currency your company will use in some way.
On Monday, the Chicago Mercantile Exchange (CME) launched ether futures. TAKEAWAY: The move is significant, as it gives traditional institutional investors – who probably already trade on the CME – access to a hedging and liquidity tool that could encourage more to take a look at the second largest cryptocurrency in terms of market cap. ETH futures volumes on the CME are still tiny ($40 million on Thursday compared with $6 billion on Binance, according to skew.com), but it’s early days yet.
The Purpose Bitcoin ETF received approval from the Ontario Securities Commission to list on the Toronto Stock Exchange (TSX). TAKEAWAY: This will be the first bitcoin ETF in North America. No doubt its inflows will be monitored by the big securities regulator to the south. They could even accelerate approval of a bitcoin ETF by the U.S. Securities and Exchange Commission, as it is relatively easy for U.S. investors to trade on the TSX.
San Francisco-based crypto trading platform Apifiny is planning to go public by the end of the year. TAKEAWAY: So far, all of the planned and rumored public listings for this year that I know of are for companies building and running crypto market infrastructure. This gives investors of all types another way to invest in crypto markets, beyond a direct position in the assets – if asset prices do well, there will be more investor interest and more revenue for market infrastructure firms, which will help their share prices.
JPMorgan has added Signature Bank, one of the few financial institutions in the U.S. to service crypto companies, to its “focus list” of recommended stocks, saying the bank is “positioned to ride the crypto wave.” TAKEAWAY: Just because planned listings seem to be in market infrastructure, there are other ways to bet on crypto market expansion – through the companies that support the companies that support the markets. Oh, and JPMorgan seems to think there’s a “crypto wave” coming.
Crypto lender BlockFi launched its bitcoin trust for accredited investors, with 1.75% management fee (0.25% lower than market leader GBTC). The trust will not list on the OTC markets for another 6-12 months. TAKEAWAY: The competition to market leader Grayscale’s funds (Grayscale is owned by DCG, also parent of CoinDesk) continues to grow, as BlockFi’s trust now joins those run by Bitwise and Osprey. The emerging competition could be one of the reasons the premium retail investors have traditionally been willing to pay on popular trusts such as GBTC has been falling.
Canadian bitcoin mining firm Bitfarms (BITF) has entered into a CAD$40 million ($31 million) agreement to sell 11.5 million common shares, plus an option to buy another tranche for the same number of common shares, to institutional investors. TAKEAWAY: This is the firm’s third financing sale in a month, and reflects the growing investor interest in listed crypto mining companies as a proxy play on the bitcoin price. Over the past three months, BITF’s share price has increased by almost 700% – it’s not surprising they’re taking advantage of the opportunity to shore up the balance sheet while they can.
Source: Google
Mastercard is planning to give merchants the option to receive payments in cryptocurrency later this year. TAKEAWAY: This is another big step forward for the use of cryptocurrencies in payments. It’s not clear which cryptocurrencies Mastercard is thinking of including in this service. Whether it includes bitcoin or not (it’s more likely to focus on stablecoins), it will be a big boost for mainstream use of cryptocurrencies and could trigger a wave of innovation in related point-of-sale and working capital management services.
An Ava Labs engineer gave a rundown of the small code bug that severely crippled the Avalanche blockchain earlier this week.
In a Sunday Medium post, blockchain engineer Patrick O’Grady wrote that increased congestion on the network triggered a “non-deterministic bug” related to how the high-throughput, proof-of-stake blockchain keeps track of transactions.
Funds were never at risk, O’Grady notes, though the high-profile misstep has a valuable lesson for the blockchain industry.
Avalanche launched in September 2020 with the claim it could process 4,500 transactions per second. It’s backed by prominent cryptocurrency firms including Mike Novogratz’s Galaxy Digital, Bitmain and Initialized Capital. It also has an academic stamp of approval, having been designed by Emin Gün Sirer, a computer science professor at Cornell University.
The blockchain is usually grouped with other so-called “Ethereum killers,” or blockchains designed to solve the scalability problems that have plagued the second-largest blockchain since inception. While positioned to steal market share from Ethereum, Avalanche also has been billed as a way to complement and connect – rather than strictly compete – with its forbear.
Avalanche has three “default chains,” including the so-called “contract chain” that supports the Ethereum Virtual Machine and its Solidity coding language. It’s this chain that was part of this week’s issue.
You can read a full accounting of the problem that arose here. But in short, in order to boost transaction throughput, Avalanche’s three chains remain separate and distinct from each other, each performing within a set range of transaction-types, up until the moment an asset has to hop over to another chain. That process was placed under an incredible strain, following the launch of a new decentralized money market called Pangolin.
An atypical amount of users and volume created an atypical amount of blocks to be processed. This, O’Grady notes, triggered a bug that was creating false cross-chain “mints.” In O’Grady’s words: “This caused some validators to accept some invalid mint transactions, while the rest of the network refused to honor these transactions and stalled the [contract]-chain.”
Importantly, no double-spends occurred. “The bug did not affect regular transactions, coin transfers, asset transfers, coin destruction, or smart contract invocations. Avalanche never allowed any user to successfully send the same funds to two recipients,” O’Grady wrote.
A read of the issue was ready just hours after the initial issue, though a fix was harder to come by. Given Avalanche’s decentralized nature, it would be impossible to get all the nodes to collude and rollback problematic transactions.
Instead, as O’Grady writes, a solution was found through incremental deployment of a patch – basically the way any software is updated.
Blockchains are complex things, built by human beings, but run by machines. An issue that was small enough to bypass during an initial inspection can snowball as a network grows. In Avalanche’s case, the bug didn’t bring down the network but it did pour ice water over some of the boasts made about the network’s ability to handle high-throughput prior to launch.
AVAX, the blockchain’s token, is trading hands at around $41.20, down from $53 on Feb. 11 when the problem occured.
Synthetix–a DeFi protocol enabling trustless derivatives trading, has raised $12 million in a round of funding spearheaded by three venture capitals, a confirmation on Feb 14 reveals.
Direct Investment from Crypto-Focused VCs
The three VCs are Paradigm, Coinbase Ventures, and IOSG.
They purchased SNX tokens directly from the protocols Decentralized Autonomous Organization (DAO). Accordingly, they will, whenever called upon, provide liquidity and participate in governance.
Technically, DeFi protocols are community-led with open-source code. However, the rapid growth of the sphere and the near-perpendicular rise of DeFi valuations have attracted venture capitals promising capital injection to high potential financial dApps.
Synthetix plays a critical role in open finance, providing synthetic assets ranging from commodities, fiat currencies, cryptocurrencies, and even stocks. Consequently, traders get exposure to traditional assets while swapping assets trustlessly.
Synthetix DAO holds over $1 Billion
Their unique governance, a divergence away from corporate structures, means token holders determine the protocol’s trajectory through a popular vote.
Reflecting the demand of DeFi and the diverse crypto community’s interest, the Synthetix DAO is one of the most active.
Recently, it surpassed the $1 billion holdings, generating more fees than it spends. This means the DAO is not short of cash and has more than it needs.
Two crazy things I realised today, the synthetixDAO treasury just crossed $1 billion USD last week. Even more crazy than that is the fact the sDAO now claims more monthly fees ~750k USD than it actually spends. So it is now cashflow positive on protocol fees alone! 🤯
— kain.eth (@kaiynne) February 11, 2021
The three VCs’ extra addition gives Synthetix financial muscle, enabling the protocol to have a competitive advantage, attract the sharpest minds, and venture into new territories like China.
VCs to Help in Synthetix Expansion
In a statement to CoinTelegraph, a crypto news outlet, Jordan Momtazi—a core contributor to the Synthetix DAO, Paradigm is already helping the protocol attract quality talent.
Coinbase Ventures is “helping with connectivity across different functions,” and IOSG will help the protocol make forays in China.
Despite the capital injection and a boost for SNX price, the crypto community is critical of venture capitalists’ involvement.
Although the first instance funds are making direct purchases from the DAO, community members argue that offerings should be fair without preferential treatment.
As BTCManager reported, Synthetix is innovating, seeking ways to reduce Gas fees. The Optimistic Staking is live with plans to activate L2 trading in the coming weeks.
Bitcoin’s (BTC) market capitalization now exceeds the valuation of some of the world’s largest financial institutions amid a sustained bull run that catapulted the largest crypto asset above $48,000.
CoinMarketCap shows that Bitcoin’s market capitalization has soared above $900 billion as it printed a new all-time high of $48,745 on February 12th, surpassing the valuation of financial giants Visa ($462.93 billion), PayPal ($349.44 billion), and Mastercard ($339.10 billion). Bitcoin’s market cap is also larger than the combined value of JPMorgan Chase ($430.72 billion), Bank of America ($288.67 billion), and Citigroup ($132.48 billion) with an aggregate market cap of $851.87 billion, according to data from CompaniesMarketCap.
The flagship cryptocurrency is ninth on the list of top assets by market cap. Gold, which has a market cap of $11.59 trillion is in the lead, followed by iPhone maker Apple, petroleum and natural gas titan Saudi Aramco, and tech goliaths Microsoft and Amazon.
The king coin sits above electric car firm Tesla, social media giant Facebook, and Chinese e-commerce company Alibaba in the ranking, but it is below silver, Google-parent company Alphabet, and Shenzhen-based tech firm Tencent.
Source: CompaniesMarketCap
Ethereum (ETH) also made it in the list of top 100 assets by market cap. The leading smart contract platform takes the 52nd spot with a market capitalization of $209.7, surpassing the valuations of Wells Fargo and Morgan Stanley.
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Russia’s opposition leader Alexei Navalny’s campaign has received 658 BTC since December 2016.
This year alone, it received about 6 BTC.
Analysts say the recent surge is related to the general interest in Bitcoin, Russia’s partial crypto liberalization, and anger over Navaly’s detention upon return to Russia.
Russia’s opposition leader Alexei Navalny’s movement has received 658 BTC in donations since 2016 to mount acampaignagainst incumbent strongman Vladimir Putin. At today’s price, that Bitcoin is worth $32 million.
And Navalny received 6.242 BTC, now worth $304,000, in donations this year alone. Political analysts toldDecryptthat Bitcoin donations provide a lifeline for democracy activists in Russia and remain a useful tool to subvert authoritarian governments.
“In authoritarian regimes like Russia,” Alex Gladstein, Chief Strategy Officer at the Human Rights Foundation, toldDecrypt, “the government has total control over the banking system, but doesn’t control Bitcoin.”
Who is Navalny and how much money has he received?
Navalny, Russia’sopposition leader, waspoisonedin Siberialast August. Navalny blames Putin; the Kremlin denies any involvement.
After Navalny spent five months recovering in a hospital in Germany, the Russian government arrested him upon his return to Russia on January 17,leading to protestsin the country demanding his release.
Since his arrest, the wallet has spiked in Bitcoin donations, as first picked up by the cryptocurrency websiteProtosand reported byReuters. A supporter donated one whole BTC the day after Navanlny’s return.
From January 1 to February 11, supporters sent his wallet a total of 6.242 BTC, today worth $294,000, according to Reuters’ calculation. Since February 11, supporters have sent Navalny a further 0.01685528 BTC, worth $826. Earlier today, Navalny’s campaign wallet sent 1.506 BTC, or $73,775, to another address.
Gladstein said that the surge in Bitcoin donations reflects the general interest in Bitcoin and “the outrageousness of Putin’s actions against Navalny,” referring to the alleged poisoning attempt and his imprisonment.
Russia on crypto
The Bitcoin donation surge also follows a recentcrypto liberalizationin Russia—as of January 1, crypto is legally tradeable but can’t be used as an everyday currency.
Despite the recent liberalization, the Russian government has generally pursued a particularly tough policy on crypto that involvedjail sentencesfor crypto holders tobans on crypto-related websites, such as cryptoexchangeBinance.
“This follows the—now largely justified—view of the government that crypto presents a threat to the status quo,” Filip Rambousek, a London-based political analyst specialized in Eastern Europe, toldDecrypt.
Leonid Volkov told me cryptocurrencies like Bitcoin act as a “deterrent” against the authority’s attempts to block Navalny’s fundraising
“Since officials realize that they can’t block our fundraising through Bitcoin, they are less encouraged to block our other channels too”
— Pjotr Sauer (@PjotrSauer) February 12, 2021
“They can’t stop it, can’t censor it, have trouble linking Bitcoin activity to real-world IDs, and, perhaps most importantly, can’t devalue it.”
Dmitry Buterin, the father of Vitalik Buterin, Ethereum’s co-founder. Father Buterin, whospoketoDecryptlast week,made a pleato theEthereumcommunity to donate to Navalny’s movement.
“Putinmet Vitalik Buterinin 2017, and there was a sentiment among some that Russia could go big on crypto,” said Rambousek, “but none of that has happened or is likely to happen.”
Last week, Vitalik’s father toldDecrypt, “Putin is KGB, and those are the people who tortured and killed millions of Russians and Ukrainians. Can we trust him?”
Crypto as activism
Unlike many other authoritarian governments such as Venezuela or Iran, where crypto is hailed as a way to evade international sanctions, the Russian government treats it as a menace, explained Rambousek.
“Russia has a long track record of cyberwarfare likehackingsorpolitical bots,” he said, “but the Kremlin doesn’t have a history of using it to pursue its goals. To the relatively old, 90s-crafted class of senior officials, this is a threat rather than an opportunity.”
That means that activists can use Bitcoin to stay one step ahead of governments.
“Human rights activists should learn about using Bitcoin before their governments do,” said Gladstein, who leads the Human Rights Foundation’s fund for open-source Bitcoin development. “We want them to be on the leading edge and have the advantage moving forward.”
If Navalny ever becomes the Russian president, it will be interesting to observe whether his government embraces the crypto that once aided him.
Venus Protocol announced that it would add Cardano to its platform and allow the asset to be used as collateral.
Given the high gas fees of DeFi apps on Ethereum, BSC projects such as Venus have risen in popularity recently.
While Venus may appeal to some ADA holders, others may choose to wait till Cardano gets its very own DeFi protocol.
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Holders of Cardano’s native cryptocurrency ADA can now access the lending market Venus Protocol, which runs on Binance Smart Chain.
Cardano Liquidity Mining Launches
In its 2021 roadmap, Venus announced that it would add Cardano’s ADA currency to its platform and allow the asset to be used as collateral for borrowing and lending.
ADA surged at the beginning of the month. The rally made Cardano the fourth-largest cryptocurrency, with a market capitalization of more than $26 billion.
Other leading crypto assets listed on the Venus platform include ETH, BTC, BCH, BNB, XRP, LINK, DOT, FIL, along with various stablecoins.
Venus has expanded rapidly since its initial launch in November of last year.
Within four months, the team claims it has acquired 18,000 users and about $2 billion of total value locked (TVL), one of the highest in the BSC ecosystem. It has the highest 24-hour volume of all DEXs according to CoinMarketCap, a data analytics site that Binance acquired in 2020.
Venus is built on the Binance Smart Chain (BSC). Activities like token swaps are often considerably cheaper than on Ethereum, which is known for its prohibitively expensive gas fees. The high prices have made it difficult for traders with less capital to access DeFi apps.
Meanwhile, the Cardano team also has plans for its own lending and liquidity provision protocol called Liqwid Finance.
Cardano successfully completed its Mary hard fork on Feb. 3, which is part of an update that will see the network transition from Shelley to the Goguen Era. Once Goguen rolls out, the initial work on Liqwid.Finance may begin. In the event of delays, Venus Protocol may be the most viable option for ADA holders looking to participate in the booming DeFi space.
Disclosure: The author did not hold crypto mentioned in this article at the time of press.
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Demand and supply metrics determine the price of an asset and data from Glassnode, an on-chain data firm, shows that Bitcoin’s (BTC) liquid supply has been decreasing since June 2020. This signals that traders owning Bitcoin are not selling their holdings.
While the supply is shrinking, demand has been going up in the past few months as an increasing number of institutional investors have been buying Bitcoin.
Bloomberg recently reported that Morgan Stanley Investment Management’s subsidiary Cointerpoint Global “is exploring whether the cryptocurrency would be a suitable option for its investors.”
According to Morgan Stanley’s website, Counterpoint Global chooses to invest in assets “whose market value can increase significantly for underlying fundamental reasons.” This suggests that the bank believes Bitcoin may be undervalued compared to its fundamentals.
Crypto market data daily view. Source:Coin360
JPMorgan Chase also hinted that it might eventually introduce Bitcoin services. JPMorgan’s co-president Daniel Pinto believes that if investors and asset managers start using Bitcoin, the bank “will have to be involved.” Pinto however said that the current demand was not strong enough, but conceded it may grow in the future.
Even though Bitcoin has risen sharply in the past few months, its dominance has fallen from about 69.71% on Jan. 4 to 60.9% currently. This shows that altcoins have outperformed Bitcoin in the past few weeks. With an eye on altcoins, let’s study the charts of the top-5 cryptocurrencies that may trend in the next few days.
BTC/USD
Bitcoin broke above the $41,959.63 resistance on Feb. 8 with a strong up-move, but since then, the momentum has weakened. Although the price has been nudging higher, the leading cryptocurrency is facing profit-booking at intermittent levels.
BTC/USDT daily chart. Source:TradingView
If the price turns down from the current levels and slips below $46,000, the correction could deepen to the strong support at $41,959.63. If the BTC/USD pair rebounds off this support, it will suggest the bulls continue to accumulate on dips, which is a sign that the uptrend is intact.
The bulls will then try to drive the price above the psychological barrier at $50,000 and resume the uptrend with the next target objective at $60,974.43. On the other hand, if the bears sink the price below the 20-day exponential moving average ($41,349), the pair may drop to the 50-day simple moving average ($36,070).
This is an important support to watch out for because the price has not dipped below the 50-day SMA since Oct. 9. Hence, a break below it will indicate a possible change in trend. The next support on the downside is much lower at $28,850.
BTC/USDT 4-hour chart. Source:TradingView
The 4-hour chart shows the pair has formed a rising wedge pattern that will complete on a breakdown and close below the support line. If that happens, the pair may drop to $43,720.85 and then to $41,959.63.
Contrary to this assumption, if the price turns up from the current levels or the 20-EMA and rises above the wedge, it will invalidate the bearish setup. A breakout above $50,000 could attract short-covering from the aggressive bears and may result in a quick up-move to $55,000.
BCH/USD
Bitcoin Cash (BCH) broke above the $539 resistance on Feb. 12 and this attracted buying from the bulls. The altcoin picked up momentum and soared above the $631.71 resistance on Feb. 13
BCH/USD daily chart. Source:TradingView
The long wick on today’s candlestick suggests short-term traders may be booking profits after the recent runup. The BCH/USD pair may now correct to $631.71 and if the bulls can flip this level into support, it will indicate buying on every minor dip.
If the bulls can push the price above $730.02, the uptrend could reach $900. Both moving averages are sloping up and the relative strength index (RSI) is in the overbought zone, suggesting an advantage to the bulls.
Contrary to this assumption, if the price dips and sustains below $631.71, the correction could deepen to $539.
BCH/USD 4-hour chart. Source:TradingView
The 4-hour chart shows the bears are defending the $720 resistance and the bulls are buying on dips to $650. If the buyers can propel the price above $730.02, the uptrend could resume.
On the other hand, if the price again turns down from $720, the bears will try to pull the price down to $631.71. If this support cracks, the decline could extend to the 20-EMA and then to the 50-SMA.
EOS/USD
EOS broke out of the long basing formation and started a new uptrend when it soared above the $3.95 overhead resistance on Feb. 9. The altcoin picked up momentum and the bulls pushed the price above the $5.4861 resistance on Feb. 13.
EOS/USD daily chart. Source:TradingView
However, the failure to sustain the price above $5.4861 may have attracted profit-booking from the short-term traders. This has started a correction that could extend to the 38.2% Fibonacci retracement level at $4.5014.
If the price rebounds off this level, the bulls will again try to push and sustain the price above the $5.4861 to $5.6118 overhead resistance. Contrary to this assumption, if the bears sink the price below $4.5014, the EOS/USD pair could drop to $3.95.
Such a deep correction will suggest that the momentum has weakened and the pair could then consolidate in a wide range between $3.95 and $5.6118 for a few days.
EOS/USD 4-hour chart. Source:TradingView
The 4-hour chart shows that the bulls have purchased the dip to the 20-EMA. If the pair sustains the rebound, the bulls will again try to push the price above $5.6118. If they succeed, the uptrend could resume.
The next target objective on the upside is $6 and if that level is also scaled, the uptrend could reach $7.50. On the other hand, a break below the 20-EMA could extend the correction to the 50-SMA.
XMR/USD
Monero (XMR) broke above the $190 resistance on Feb. 12 and resumed the uptrend. The 20-day EMA ($174) has turned up and the RSI has moved into overbought territory, which suggests the bulls are in command.
XMR/USDT daily chart. Source:TradingView
The bears are currently defending the psychological level at $250. The first support on the downside is the 38.2% Fibonacci retracement at 213.6152. If the price rebounds off this level, it will suggest that traders are viewing the dips as a buying opportunity.
A break above $254.45 will open the doors for a rally to $300 where the bears may again mount a stiff resistance.
Contrary to this assumption, if the bears sink the price below $213.6152, the correction may deepen to $190. Such a deep fall may delay the start of the next leg of the uptrend.
XMR/USDT 4-hour chart. Source:TradingView
The 4-hour chart shows the bears are defending the $240 to $254.45 resistance zone but the positive sign is that the bulls have not given up much ground. If the price rises from the current level or rebounds off the 20-EMA, it will signal strength.
If the bulls can push the price above the overhead resistance, a rally to $268 and then to $300 is likely. This bullish view will invalidate if the XMR/USD pair dips and closes below the 20-EMA.
XTZ/USD
Tezos (XTZ) broke above the previous all-time high at $4.4936 on Feb. 12 and has made a new high at $5.6471 today. Whenever an asset hits a new high, it indicates that bulls are in control.
XTZ/USDT daily chart. Source:TradingView
Another thing that usually happens when a major resistance is broken is that the price turns down and retests the breakout level. In this case, the price could dip to the breakout level at $4.4936.
If the price rebounds off this level, it will suggest that traders are buying on dips and have flipped the previous resistance to support. The bulls will then attempt to resume the uptrend by pushing the price above $5.6471.
If they succeed, the XTZ/USD pair could rally to $7.1407. This bullish view will invalidate if the pair breaks and sustains below $4.4936.
XTZ/USDT 4-hour chart. Source:TradingView
The 4-hour chart shows that the bulls could not sustain the price above $5.40, which may have attracted profit-booking from short-term traders. The bulls are currently attempting to defend the 20-EMA.
If the price rebounds off this support, it will signal strength. A break above $5.6471 may resume the up-move. On the other hand, if the price dips below the 20-EMA and the $4.4936 support, the correction could deepen to the 50-SMA.
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.
