Bank of Korea Head Says Cryptocurrencies Have No Intrinsic Value

The head of the Bank of Korea, Lee Ju-yeol, said that Bitcoin and other major cryptocurrencies lack intrinsic value. However, he believes that all assets will continue to experience significant price fluctuations.

Price Surge Because of Pro-BTC Institutional Investors?

The chief of the Bank of Korea said cryptocurrencies, including Bitcoin, do not possess inherent value. In a recent news report, Lee Ju-yeol blasted the highly volatile nature of the digital asset industry.

“There is no intrinsic value in crypto assets,” said BOK Gov. Lee Ju-yeol at a parliamentary session on 23 February.

The news report quoted lawmakers asking BOK’s chief if the recent surge in the price of BTC is temporary or not.

“It is very difficult to predict the price, but its price will be extremely volatile,” Ju-yeol added.

The bank executive has also said that the recent rally in Bitcoin’s price followed by other significant digital assets may be led by multiple factors. Among them, Elon Musk’s Tesla – investing $1.5 billion. He highlighted that the latest price surge might be a continuation of institutional investors using Bitcoin as a hedge.

Ju-yeol also emphasized that BOK shouldn’t buy bonds issued by the country’s government directly. Otherwise, this would raise worries about fiscal stability and undermine the central bank’s trust. 

Bitcoin Volatility Bringing Some More Hard Times For Investors?

The primary cryptocurrency’s volatility has been causing quite some troubles for both retail and institutional investors. This particular character of the digital assets has been a stumbling point for many, thus, causing some hesitations in whether to allocate funds in it or not.

BTC’s price managed to initiate another notable surge during the last couple of months, marking a consequent all-time high. Just a few days ago, it skyrocketed above $58,000, dragging other altcoins like Ethereum behind it for a while.

However, almost immediately after its upgrowth, BTC suffered a significant correction, settling unsteadily around $50K as per the time of the writing. As a result, the cryptocurrency market capitalization lost more than $300 billion in two days.

Interestingly, JPMorgan strategists said recently that Bitcoin’s illiquidity could bring more problems. Analysts from the US multinational banking institution argued that BTC is in a liquidity shortage, warning investors that the primary crypto-asset could suffer another price drop.

Featured Image Courtesy of WSJ. 


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Grayscale’s Bitcoin Trust Is Trading at a Discount. Should Investors Worry?

In brief

  • Grayscale’s Bitcoin Trust is trading at a premium for the first time in years.
  • Some analysts are concerned it’s a bad thing for the market.
  • Others aren’t so worried. Here’s why.

Shares in Grayscale’s $32 billion Bitcoin Trust are trading at a discount to the price of Bitcoin for the first time in over five years. 

Some analysts are concerned that this could depress the price of Bitcoin. If this trend continues, the worry is that Grayscale might stop buying up Bitcoin. And as one of the biggest Bitcoin buyers, a lapse in demand could sink its price. 

Peter Schiff, a gold bug and noted crypto critic, said on Twitter: “If this persists the Trust will have no more inflows and will therefore not be buying any more Bitcoin. Without Grayscale, the biggest daily buyer, where will the new buyers come from to support the price?”

He continued: “The market needs new buyers coming in to allow existing holders who need actual cash to buy something to get out.” But analysts tell Decrypt that Schiff’s take is overblown, and the dip in price may be a normal feature of the market.

What is the Grayscale Bitcoin Trust?

The Grayscale Bitcoin Trust is a humongous pool of privately-invested money that Grayscale, a crypto fund manager, uses to snap up Bitcoin. Grayscale then sells shares in the Trusts on public over-the-counter desks.

In the absence of a Bitcoin Exchange-Traded Fund in the US, Grayscale’s trusts are one of the only ways that US investors can buy Bitcoin on the stock market. 

Investors might prefer stock markets over crypto exchanges for several reasons. First, it makes Bitcoin investments eligible for tax-sheltered accounts, such as pension accounts. 

It also makes it easier for people to trade crypto without actually dabbling in crypto itself; navigating the crypto market is still cumbersome and complicated to those unfamiliar with trading it. 

And Grayscale’s trusts are regulated with the US Securities and Exchange Commission; crypto exchanges aren’t as regulated. 

For the convenience, Grayscale charges investors management fees of about 2%, and its trusts are so popular that shares in them usually trade at a premium—each share is worth more than the Bitcoin that investment is used to buy. In other words, investors that use Grayscale are overpaying for Bitcoin. 

Until yesterday.

Since yesterday, Grayscale has traded at a -0.68% discount to the real price of Bitcoin, according to Grayscale’s site and yCharts, a financial metrics site.

Darius Sit, CIO of QCP Capital, said there’s nothing to worry about. “Most ETFs trade at discount to NAV,” he said. “It’s not a big deal.” 

Sit said that plenty of large trading desks wanted to make the most of GBTC’s high premiums. That’s often to get around tax issues; trading GBTC allows them to hold greater positions in Bitcoin, he said. 

The catch is that Grayscale will issue these shares in GBTC in about six months. So, in six months, the lending desk could get that GBTC, which they expect to trade at a premium, and use the money to buy back the Bitcoin for a profit. 

So when the premium drops, that’s just trading desks cashing out their premiums, he said.  “GBTC trading at a discount to the price of Bitcoin doesn’t necessarily indicate bearish outflows,” he said.


The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.


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Dubai Private Equity Firm to Invest $4.8 Billion of Bitcoin in Miami

In brief

  • IBC Group is creating the Miami 2.0 Blockchain Strategy Foundation.
  • Miami Mayor Francis Suarez has been trying to attract cryptocurrency firms and investment.

Miami Mayor Francis Suarez has been making the rounds promoting his city as a global cryptocurrency hub.

As it turns out, investors are taking him seriously. 

IBC Group, a Dubai private equity firm that invests in real estate and tech, has earmarked $4.8 billion in Bitcoin for the Magic City. According to a press release last week, IBC will use the 100,000 BTC to establish the Miami 2.0 Blockchain Strategy Foundation and support other projects.

“Making the largest Bitcoin investment in history is proof of our commitment to assisting cities adopt Blockchain, which we see as the key to enabling widespread adoption,” said IBC Chairman Khurram Shroff.

The investment in Miami is no coincidence, in more ways than one. In January, Mayor Suarez voiced his plan to make Miami “the most crypto competitive city in the world.” He’s subsequently hired a chief technology officer and forwarded a resolution to the city commission that would facilitate municipal use of Bitcoin. 

The city commissioners voted 4-1 to look for a vendor that could facilitate municipal payments of taxes and fees in cryptocurrency as well as for a third party that could make payments in Bitcoin to employees who chose that option. The city will also research whether to hold Bitcoin as a municipal asset. However, the city has made no promises that it would actually hire a vendor or hold Bitcoin on the city’s books.

IBC Group’s involvement in Miami makes sense in another way. The press release notes that real estate developer Burkhan World Investment, headed by CEO Shahal Khan, approached IBC; it has over $1 billion invested in Miami real estate projects. “Enabling investment into Real Estate utilizing Bitcoin as a collateral asset will further enhance its use case as a tool to create a hybrid investment vehicle for BTC holders,” said Khan.

Though Burkhan is new to Bitcoin investment, IBC is not. Shroff previously announced that he had invested 21,984 ETH (then worth $10 million) toward staking the Ethereum 2.0 proof-of-stake network. Shroff has kept his family’s net worth under wraps, but IBC Group has been investing in blockchain projects since at least 2014. In January 2018, on the downslope of the last bull run, he said his family had “substantial stakes in currencies such as Bitcoin, Ethereum, Dash, Ripple and many others.”

The Miami mayor’s office has not yet responded to a request for comment on whether it has had dealings with IBC. Decrypt also reached out to IBC for details about the Miami 2.0 Blockchain Strategy Foundation.


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Janet Yellen Sounds Like She’s Scared Of Bitcoin

This week, CNBC published a headline that recently-appointed U.S. Secretary of the Treasury Janet “Yellen sounds warning about extremely inefficient bitcoin.” Ironically, two days later CNBC published another article because the Federal Reserve’s systems are down.

The article amplified her criticism of bitcoin’s value and energy consumption. The kicker is that it does so without actually comparing it to anything, which is absurd. So, here I am to address this one-sided journalism and lack of research.

”Treasury Secretary Janet Yellen issued a warning Monday about the dangers that bitcoin poses both to investors and the public,” CNBC reported.

It then noted that Elon Musk’s Tesla had purchased $1.5 billion worth of bitcoin before pivoting back to Yellen, reporting that she said “there remain important questions about legitimacy and stability.”

“I don’t think that bitcoin … is widely used as a transaction mechanism,” Yellen told CNBC. 

To be able to report this statement, you might think CNBC would quantify Bitcoin’s total throughput, usually in comparison to something else, but perhaps that’s wishful thinking.

“I fear it’s often for illicit finance,” Yellen proceeded to tell CNBC. “It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.”

Let’s break this down…

“Illicit finance”: There is no comparison of bitcoin to another currency in regards to how often it is used for nefarious purposes. How much illicit financing is conducted with the USD? Or any other currency for that matter? How could you even begin to quantify that with the anonymity of cash?

“Extremely inefficient”: Once again, this lacks any comparison to even be deemed as so, and in reality is proven to be the opposite. Bitcoin is a bearer asset, not the echo of a paper IOU. It may take ten minutes and cost a little bit of money to settle on the base layer but that is for *final settlement.* What are the costs for sovereigns to do this? There are secondary layers to Bitcoin which enable global transactions instantly, in any currency or money, and cost a fraction of a cent. Comparing this to the costs and time requirements of traditional finance and remittances, it is clearly extremely more efficient.

“Staggering” energy consumption: Again, without any comparison, this point is just wrong. I thought Nic Carter had the last word when he wrote that, “The Bitcoin-energy worriers need not despair, however. There is a solution. All they must do is persuade Bitcoin fans to use and value an alternative settlement medium. Their best bet will be to devise a system that is even more secure, offers stronger assurances, settles faster, is more privacy preserving and is more censor resistant – all without using Proof-of-Work. Such a system would be miraculous. I’m waiting with bated breath.”

The article then moved on to bitcoin’s volatility. Yellen stated, “It is a highly speculative asset and you know I think people should be aware it can be extremely volatile and I do worry about potential losses that investors can suffer.”

She is worried about the world’s best-performing asset over the last decade. It is a decentralized global monetary system and unit going through the monetization process with constant price identification 24/7. What did she expect? Instant smooth sailing to the moon with Saylor and Musk?

After giving Yellen a platform to bag on bitcoin with no comparisons and without any journalistic integrity, CNBC proceeded to bring up Central Bank Digital Currencies (CBDCs). 

“The Federal Reserve, where Yellen once served as chair, has studied the issue and discussed the possibility of a new digital currency along with a payments system it expects to roll out over the next several years,” it reported. “‘I think it could result in faster, safer and cheaper payments, which I think are important goals,’ Yellen said.”

Why is it about faster, cheaper and “safer” payments when the printing press is killing our savings, supposedly in the name of full employment?

I’m just a guy with laser eyes and diamond hands, so make your own opinion but I think it’s ridiculous when financial regulators and the media try to criticize bitcoin, without actually comparing it to fiat, when the world’s central banks are trying to gauge if they can implement draconian, Chinese Communist Part (CCP)-like CBDCs.

It’s clear that bitcoin is money, the International Monetary Fund (IMF)’s latest poll reflects this.

Are CBDCs really money, though? The entire purpose of a blockchain data structure is to enable decentralized control. Therefore, it’s nonsensical when deployed by a central authority that continues to debase its currency.

Can governments stop Bitcoin? 

“If no one wants a devaluation-proof, censorship-resistant, permissionless, borderless, non-discriminatory, teleporting financial asset, then no one will feed it energy, and it will die,” as Alex Gladstein wrote for Quillette.

The real question then, I’d say, is not can they stop it, but why in the world would they want to? 🤔

This is a guest post by Ben Jarvie. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.


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Traders remain bullish even as DeFi’s TVL falls to $54.4 billion

Decentralized finance and the numerous platforms offering investment services have been the talk of the cryptocurrency sector for several months and this has resulted in investors capturing spectacular gains for some of the top DeFi tokens like Uniswap (UNI) and AAVE. 

The fast-moving prices and 1,000% APY on staked tokens elicited cheers from investors when the market was going up, but the recent selling pressure seen as Bitcoin price dropped below $45,000 shows that the highest fliers are often the quickest to fall as traders rush to exit their positions and lock in their gains.

Daily cryptocurrency market performance. Source: Coin360

On Feb. 22 Bitcoin (BTC) price entered a sharp corrective phase which saw the top digital asset pullback by more than 20% from its all-time high of $58,274. As this occurred, the majority altcoins also saw double-digit corrections and DeFi tokens like PancakeSwap (CAKE) fell as much as 55%. 

Total value locked in DeFi shows resilience

The total value locked in DeFi platforms also took a hit as Bitcoin and altcoins corrected. Data from DeFi Llama shows the combined TVL of all DeFi platforms fell from $64.89 billion to $54.22 billion on Feb. 24. Cointelegraph also reported that this week’s correction led to the second-largest day of DeFi loan liquidations in history. 

Total value locked in DeFi. Source: Defi Llama

The decline in TVL is a result of decreasing token values rather than protocol outflows, indicating that token holders remain committed to the continued expansion of decentralized finance and that the current yields are still incentivizing investors to rem engaged.

Market analysis indicates that despite the recent $5.8 billion Bitcoin and altcoin liquidation, bulls remain optimistic and see this price pullback as a sign of a healthy market.

The same goes for the DeFi sector, which has been in a strong uptrend since the start of the year. Increasing DEX volume as well as a rising TVL show that DeFi is still in the early stages of growth, and while pullbacks are to be expected, the overall trend is positive as institutional and retail investors increasingly gain exposure to this emerging asset class.