Day: September 1, 2021
Most Europeans Want Local Governments to Regulate Crypto, Not The EU: Survey
According to recent research, around 60% of Europeans prefer their own countries to regulate digital assets rather than the European Union. Interestingly, a growing number of people believe the creation of national digital currencies would grant their nations some financial independence from the EU.
Crypto Regulations Coming from The EU Is Not Preferable
A survey conducted among 31,000 participants from 12 different countries – all part of the European Union – revealed that the vast majority, around 60%, would want their own authorities to regulate cryptocurrencies. On the other hand, roughly 25% believe that the EU would serve as a better watchdog.
Taking a closer look, the residents of the Netherlands and those of Estonia are the biggest supporters of their own governments, with respectively 76% and 70%. On the contrary, Spain, Poland, and Latvia registered the lowest figure in that statistics – 50%. The Iberian county is also the biggest proponent of the European Union, with 36% of the local participants answering they would like to see crypto regulations coming from it.
It is worth noting that a rising proportion of the European population is in favor of the creation of national digital currencies as an option to gain monetary independence from the EU. Italy (41%), Greece (40%), and Estonia (39%) are the top three countries in that statistic, while 37% of the Dutch think the opposite.
Dimitar Lilkov – a Research Officer at the Wilfried Martens Centre for European Studies in Brussels – opined that the Netherlands is one of those nations that should be supportive of the European Union’s native currency:
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“For a county like Greece or the Netherlands to opt for a national digital currency different from the euro (a hypothetical e-drachma or e-Guilder), this would mean seceding from the Eurozone. This will not happen.”
Europe Needs to Regulate Crypto ASAP
While the aforementioned research showed that the majority of Europeans do not want the EU to regulate operations with cryptocurrencies, the Head of the French Central Bank – François Villeroy de Galhau – opined rather differently.
The Governor of Banque de France claimed that the European Union needs to build a regulatory framework around cryptocurrencies to preserve its financial dominance:
“Whether it is digital currencies or payments, we in Europe must be ready to act as quickly as necessary, or take the risk of an erosion of our monetary sovereignty.”
The banker stressed that the international performance of the euro is also threatened if the EU does not step up with the regulatory changes. In his opinion, the move should be implemented in the upcoming months, or the organization would “lose its momentum:”
“I must stress here the urgency: we do not have much time left, one or two years.”
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These Are the NBA, NFL Stars In Bored Apes, CryptoPunks and Other Ethereum NFTs
In brief
- NBA star Stephen Curry purchased an NFT from the Bored Ape Yacht Club for $180,000 worth of ETH on Saturday.
- Several other NBA and NFL athletes own Bored Apes, as well as valuable NFTs from other popular Ethereum-based collections.
You might know Stephen Curry from his three NBA championship wins with the Golden State Warriors, or maybe you’ve seen him on ABC’s Holey Moley or in Subway commercials. But if you follow him on Twitter right now, you won’t see his face next to his handle: you’ll see an image from the Bored Ape Yacht Club NFT collection.
Curry is one of the latest prominent athletes to “ape into” (or purchase a piece from) the collection, buying one of the Ethereum-based NFTs for $180,000 worth of ETH on Saturday.
The Bored Ape Yacht Club bills itself as a membership club, and it’s one that has generated a heap of cash: some $397 million worth of trading volume since launching at the end of April. The cheapest one you can buy right now on NFT marketplace OpenSea costs more than $157,000 in ETH. Ownership also comes with privileges, such as additional free NFTs from the subsequent Bored Ape Kennel Club and Mutant Ape Yacht Club collections.
Stephen Curry isn’t alone as a prominent athlete in the Bored Ape Yacht Club, and some of his contemporaries in the NBA and NFL have also invested in other popular NFT collections, such as CryptoPunks, World of Women, and Koala Intelligence Agency. An NFT acts like a receipt for a digital item, and in this case, notable athletes are buying images from an array of popular artwork collections.
NBA player Josh Hart of the New Orleans Pelicans is one of the most avid NFT collectors in the league, or so his Twitter feed suggests. He sports a CryptoPunks avatar, which is the most valuable NFT profile picture set around (with over $1 billion in lifetime trading volume).
Last month, Hart mentioned the possibility of fractionalizing one of his Bored Ape NFTs, which means allowing many investors to own a share of it and potentially benefit from its rising value. On Sunday, he tweeted an image from the Mutant Ape Yacht Club, a new collection that rolled out over the weekend.
Fellow NBA player Tyrese Haliburton of the Sacramento Kings has shared images of the NFTs he owns in the Bored Ape Yacht Club and Koala Intelligence Agency. Charlotte Hornets star LaMelo Ball is reportedly a Bored Ape owner, too, although he doesn’t use it as his Twitter profile picture. Meanwhile, the Phoenix Suns’ Javale McGee tweeted over the weekend that he purchased a World of Women NFT as his first crypto collectible, after asking for recommendations.
Earlier this year, many NBA players revealed themselves as fans of Dapper Labs’ NBA Top Shot NFT collectibles platform, which exploded in popularity in February and March and has amassed more than $703 million in volume to date (per CryptoSlam). Players like Tyler Herro, Damion Lee, and Terry Rozier are among the notable collectors, while McGee and fellow players Andre Iguodala and Spencer Dinwiddie are investors in Dapper.
NFL stars past and present have gravitated towards the Bored Ape Yacht Club, meanwhile. Free agent wide receiver Dez Bryant—who is working on his own athlete NFT initiative called Personal Corner—is a notable Bored Ape backer who has tweeted about and collects other projects, too. Over the last day alone, Bryant has added a pair of Lazy Lions, along with a couple of Avastars NFTs and a Creature World profile picture.
A number of players from the Denver Broncos, past and present, have also joined the Bored Apes. Linebacker Von Miller announced his own purchase of his NFT in early August, following similar moves from placekicker Brandon McManus and retired Broncos players Tyler Polumbus and Brandon Stokley. In fact, Polumbus tweeted that he owned three Bored Apes NFTs before selling one to Stokley. Polumbus also said that he owns Micah Johnson’s Aku NFT collection, and has tweeted about Alphabetty NFTs.
While the trend of prominent athletes collecting NFTs from popular collections is new, it follows the well-established trend of athletes releasing their own NFTs. Along with NBA Top Shot and Major League Baseball NFTs from both Candy Digital and Topps, there’s also NFL quarterback Tom Brady’s Autograph.io startup and many others. Additionally, athletes such as NFL star Rob Gronkowski and tennis pro Naomi Osaka have released their own NFT collections.
Now, however, athletes aren’t just dropping their own NFTs: they’re buying what’s hot and meeting the market where it is right now—and joining the club of collectors.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
COC#4: On-Chain Silence Before The Storm
September 1, 2021
Cycling On-Chain (COC) is a monthly column that uses on-chain and price-related data to better understand recent market movements and estimate where we are in bitcoin’s market cycle. This fourth edition briefly reflects on the recovering hash rate and then takes a more in-depth look at the relatively low on-chain transfer activity on Bitcoin. After introducing several contributing factors, we discuss to what extent low on-chain activity is reflective of market demand for bitcoin (the asset) or whether monitoring HODLing behavior is actually more useful in the context of bitcoin’s value proposition.
Two months ago, in COC #2 (July 1, 2021), we pointed out two important factors that needed a bit of time to settle, before potentially creating a favorable situation for Bitcoin from a fundamental perspective later this summer — which is now starting to unfold. One was the El Salvador government making bitcoin a legal tender in their country, which is now set to go into effect next week (September 7, 2021).
The other was the major crackdowns on bitcoin by the Chinese government, driving miners out of their country, potentially actually improving the geological distribution of bitcoin mining activity that was heavily concentrated in China up to that point. Some feared a hostile takeover (a 51% attack) of the network by the Chinese government, which has not happened (yet?).
Hash Rate Recovery
After reaching a low of 89 TH/s on July 9, 2021, the two-week moving average of Bitcoin’s hash rate has already recovered to 127 TH/s (+43%) since then, as Bitcoin’s difficulty needed to be increased three times in a row to account for the new hash rate. It is unknown to what extent this hash rate is miners that relocated from China or actual new miners, but it is a positive sign either way. Figure 1 displays the bitcoin price (black) and difficulty (green), as well as the 14-day moving average of its hash rate (red) and number of blocks mined (purple).
Figure 1: Bitcoin price (black), difficulty (green) and the 14-day simple moving average of its hash rate (red) and number of blocks mined (purple) (Source).
After the massive drop in Bitcoin’s hash rate during May and June, the hash ribbon indicator signaled severe miner capitulation. Now that the hash rate is recovering, figure 2 shows that the 30-day moving average of Bitcoin’s hash rate (green) has crossed the 60-day moving average (blue) to the upside. This bullish crossover on the hash ribbon indicator is interpreted as a buy signal, as this type of hash rate recovery after miner capitulation has historically preceded subsequent price increases.
Figure 2: Bitcoin price (black) and the hash ribbons indicator that consists of the 60-day (blue) and 30-day (green) moving averages of the Bitcoin hash rate (Source).
Block Space Galore
One implication of the rapidly rising hash rate during this recovery period is that many more blocks are being created than normally would be. After all, Bitcoin’s difficulty adjustment mechanism adjusts every 2,016 blocks (~two weeks), but if hash rate rises steeply throughout that period, Bitcoin block creation is like a runaway train. Logically, when more blocks are created, it means that there is more block space available to include transactions.
Besides this actual (temporary) increase in available block space, the adoption of several Bitcoin technologies that optimize block space usage (so effectively, scaling) means that every bit of block space is also starting to be used more efficiently. One example of this is transaction batching, where exchanges combine many transactions into one, limiting their claim on Bitcoin block space and thus also their own transaction fees.
Another example is Segwit adoption, which saw a large increase recently (figure 3). Segwit transactions segregate the signature data from bitcoin transactions, which effectively allows more transactions to be included within each block.
Figure 3: Bitcoin Segwit adoption (Source).
This recent surge is the result of Blockchain.com, a semi-custodial wallet and exchange platform that is under scrutiny within parts of the Bitcoin community, finally upgrading its software — four years after Segwit became available. Since Blockchain.com is estimated to account for ~33% of the bitcoin transactions, this action effectively takes away a large chunk of the market demand for Bitcoin block space, leaving more room for everyone else. (Fun fact: This also means that Blockchain.com has been overpaying for transaction fees for nearly four years, effectively subsidizing bitcoin miners all this time.)
Lightning Network Adoption
When it comes to optimizing the number of real-world transactions that can be fitted into a Bitcoin block, Layer 2 technologies like the Lightning Network are much more promising than any existing on-chain scaling solution. By using a smart-contract-like solution on Bitcoin, the Lightning Network allows users to open up a payment channel and send an infinite number of transactions (within the limitations of the available funds off course), limiting the used block space of all those transactions to just two on-chain transactions to open and later close the channel.
As can be seen in figure 4, Lightning Network adoption is absolutely soaring right now, as for example the number of public nodes, the number of public channels and the value within those channels are going parabolic. The Lightning Network is going to play an important role in El Salvador’s bitcoin adoption as well, which means that this Lightning Network adoption will likely continue to grow in the upcoming years.
Figure 4: Several Lightning Network adoption metrics (Source).
Finally, it should be pointed out that other Layer 2 technologies than Lightning exist. An example is Blockstream’s Liquid Network, but to some extent custodial solutions like those of large players like Square, PayPal and Visa that (plan to) allow their users to make BTC-denominated transactions. Skeptics would rightfully point out that using a custodial solution is not using bitcoin but a bitcoin IOU, but the existence of these services impacts the demand for Bitcoin block space nonetheless within the context that we’re discussing here.
Cooled Down Block Space Market
As a result of the hash rate recovery and lowered block space demand due to the recently increased adoption of Segwit and the Lightning Network, the supply of available block space has increased. At the same time, the bitcoin market saw a large price downturn that scared away a lot of speculators, also lowering the demand for block space as there are less entities looking to transact on-chain. During this period, the Bitcoin mempool (the queue of transactions that are waiting to be confirmed) has gotten a chance to clear — and has stayed nearly empty over the last couple of weeks (figure 5).
Figure 5: The Bitcoin mempool according to mempool.space (Source).
As with any market, a supply shock where an increase in the market-available supply is combined with a decrease in market demand, prices drop. This also applies to the Bitcoin block space market, where transaction fees have recently dropped to levels that are even below those of the 2018–2019 bear market (figure 6). This figure, therefore, also shows that it is not just demand for block space being lower after the price drop that caused the on-chain silence, as surely there are more entities looking to transact now than at the depth of that previous bear market.
Figure 6: The 14-day moving average of the median bitcoin transaction fee (Source).
This chain of events is quite unique in Bitcoin’s history, both fundamentally, in terms of actual scaling solutions being adopted, and in terms of the divergence between the trends in the bitcoin price, and Bitcoin’s underlying on-chain activity.
The low transaction fees are concerning to some, as Bitcoin’s long-term security model depends on transaction fees overtaking the block subsidy as the primary source of miner revenue. Although I agree with that statement, I do believe that we have a lot more time to find an appropriate equilibrium in Bitcoin’s block space market.
Mining Is Still (Very) Profitable
A short-term example for this is that the current (USD-denominated) miner revenue per hash is already close to the yearly highs again (figure 7). China’s hard crackdowns were painful for Chinese miners, but thanks to Bitcoin’s ingenious incentive structure, their pain was actually someone else’s gain. Thanks to the actions by the Chinese government in combination with the global chip shortages that are limiting opportunities of competing mining operations to come online, bitcoin mining is actually very profitable right now — despite only ~1.3% of their current revenue coming from transaction fees.
Figure 7: Bitcoin miner revenue (in USD) per hash (source)
When it comes to Bitcoin’s long-term security guarantees, we should zoom out, as the adoption of bitcoin (the asset), Bitcoin (the system) and related technologies such as the Lightning Network guarantee volatile times in bitcoin-related markets — both for the bitcoin market and the Bitcoin block space market.
Low Demand For Block Space Does Not Equal Low Demand For Bitcoin
When on-chain activity increases a lot within a short timeframe, it means that there is a clear increase in the demand to move bitcoin around on-chain. Since part of that demand could come from investors looking to buy or sell their position, such spikes could certainly be related to short-term price volatility, including increased demand for bitcoin.
However, the opposite is not necessarily true. As shown in figures 3 through 6, a decrease in on-chain transfer volume can also be the result of scaling technologies. To further support this claim, figure 8 shows that the total bitcoin transfer volume per entity on the network has been in a steady decline ever since Bitcoin’s infrastructure has seen significant maturation improvements (introduction of futures markets and many new exchanges, Segwit, Lightning, Liquid, etc.).
Figure 8: The 14-day moving average of the entity-adjusted total transfer volume on Bitcoin (Source).
The significance of this trend for the interpretation of transaction-related, on-chain metrics should not be understated. A popular example of this is the Network Value to Transactions (NVT) ratio that we’ll take a closer look at.
How Bitcoin Scaling Is Skewing The NVT Ratio
The Bitcoin NVT ratio was introduced by Willy Woo in February 2017 as a Bitcoin-alternative to the price-per-earnings (PE) ratio that is used in (value) stock investing. By introducing the NVT ratio, Woo not only introduced an interesting new metric but essentially started the on-chain analysis sector that has become very popular since then. The NVT ratio is calculated by dividing Bitcoin’s market cap by its daily transfer volume (USD) and is displayed in figure 9.
Figure 9: Bitcoin Network-Value-to-Transactions (NVT) Ratio (Source).
As was already discussed, since the introduction of this metric, a number of scaling solutions have been adopted that are lowering the amount of on-chain transfers per entity, and thus the “T” part of the NVT ratio. Figure 10 displays a 365-day moving average of the entity-adjusted transfer volume that we introduced in figure 8 (green), as well as the 365-day moving average of the NVT ratio (orange).
Figure 10: The bitcoin price (black) and 365-day moving averages of the NVT ratio (orange) and entity-adjusted transfer volume (green) (Source).
Figure 10 also shows that since early 2013, the NVT ratio has been in a general uptrend, with a temporary decrease during the 2016–2017 bull market, where the NVT ratio decreased as Bitcoin’s on-chain transaction volume outpaced its market cap growth. During the 2020–2021 bull market, such a temporary decline did not happen, as the adoption of scaling technologies limited the on-chain footprint of the recent influx of new investors.
Under the assumptions that the adoption of the Lightning Network and infrastructure that has a similar impact in limiting the on-chain footprint per transaction will continue and the bitcoin price also keeps increasing, the NVT ratio can be expected to keep trending up over time.
In theory, the NVT ratio can still be a relevant metric to assess more short-term changes in the ratio between bitcoin market valuation and transaction volume, but within that context it is only stable on timeframes where the adoption of scaling technologies is also stable. Either way, analysts should be careful to still use the NVT ratio within the context of more long-term bitcoin price valuation strategies.
Does ‘Using’ Bitcoin Mean Transacting Or HODLing?
On a more philosophical level, one can also wonder if a ratio of the total bitcoin market valuation and its transaction volume is actually the right metric to look at within the context of Bitcoin’s overarching value proposition. Historically, there are two schools of thought regarding Bitcoin’s ultimate use case.
The first one considers Bitcoin to primarily be a censorship-resistant medium of exchange, and thus for transacting bitcoin to indeed be its ultimate use case. Within that frame of mind, the idea behind the NVT ratio indeed is quite reflective of Bitcoin’s relative valuation compared to its ultimate use case.
The second school of thought considers Bitcoin to primarily be a store of value — a dilution-proof money that is designed to maintain its purchasing power over time. Within that frame of mind, HODLing bitcoin is its ultimate use case, whereas transacting it is more of an occasional (yet still essential) functionality. Within that mindset, it is not transaction volume but investor time preference and hardiness to hold onto the asset that are central in its value proposition.
Looking at Bitcoin from that perspective, current “usage” does not look bleak at all.
HODLing Is On The Rise Again
Figure 11 displays the long-term holder (LTH) and short-term holder (STH) supply as a percentage of the circulating bitcoin supply. In this figure, any existing bitcoin is quantified as LTH supply when it has not moved on the blockchain in 155 days or more (~five months).
Figure 11: LTH and STH supply as a percentage of the circulating bitcoin supply (Source).
The supply that is in the hands of long-term holders has been fairly constant at around 50–75% of the total supply (excluding bitcoin that is estimated to be lost). The percentage of STH supply has been on a downtrend since bitcoin first received a market price, but temporarily increases during euphoric market conditions that attract new investors.
During the 2020–2021 bull market we also witnessed a clear decrease in LTH supply and increase in STH supply, which has almost completely retraced to pre-bull-market levels. This re-accumulation of bitcoin by long-term holders is, in itself, not necessarily a short-term signal for a market turnaround but has historically shown to often coincide with price levels that end up forming a price floor.
Using coin-aging as a mechanism to estimate HODLing behavior is useful but leans on some assumptions that make it a somewhat broad estimation. Due to the transparent nature of the Bitcoin blockchain, it is (unfortunately, from a privacy perspective) possible to track the actual on-chain flows and identify certain groups of addresses that belong to the same entity. By doing so, it is possible to estimate how much percent of the total bitcoin supply is not on exchanges (figure 12, blue) and how much percent of the total bitcoin supply is in the hands of illiquid entities that have no history of selling (figure 12, green). (For advice on how to improve your own Bitcoin-related privacy and limit your own on-chain traceability, make sure to check out @BitcoinQ_A’s awesome “Bitcoin Privacy Guide.”)
Figure 12: The illiquid and non-exchange supply as a percentage of the total circulating bitcoin supply (Source).
Figure 12 clearly shows that during the market sell-off in May 2021, a good chunk of previously illiquid supply suddenly became liquid again (drop in green line) and that coins that were previously not on exchanges were sent there (drop in blue line). However, both trends have already retraced close to their pre-sell-off levels. This shows that the bitcoin that was dumped on the market during market uncertainty have likely already been re-accumulated into the hands of investors that are less likely to be shaken out of their positions.
Overall market demand for bitcoin is likely not as high as it was during the euphoric times that we saw at the start of the year. However, the bitcoin market appears to be in a state where if something sparks new bitcoin demand, the relatively low amount of market-available supply means that it could spark a rapid price increase (supply shock).
On the flipside, if something does trigger a significant portion of these long-term holders with a relatively illiquid market behavior history to sell their coins, the bitcoin price could rapidly move down as well. Monitoring these metrics is, therefore, necessary to pick up possible trend changes that could signal a market turnaround.
Signs Of A Cooled Down Bitcoin Market
The market downturn over the last few months has given the bitcoin price a chance to significantly cool down on a relative basis. One metric that gives a rather direct estimate of this is the Bitcoin Price Temperature (BPT), which compares the current bitcoin price to its four-year moving average (figure 13, blue line). Price temperatures of two (green), six (orange) and eight (red) have historically signaled possible market turnarounds. At the start of the year, the price bounced off the BPT6 band multiple times before retracing. The current BPT is just above two, despite being at similar price levels to the much higher temperatures that we saw at the start of the year, illustrating how the bitcoin price has cooled off on a relative basis compared to its own four-year market cycle.
Figure 13: The Bitcoin Price Temperature (BPT) Bands.
A similar conclusion can be drawn when looking at the funding rates in perpetual bitcoin futures. These funding rates can be seen as a general proxy for the extent in which futures markets are long (funding >0) or short (funding <0). Figure 14 shows that, during the recent market downturn, funding rates went from extremely positive to extremely negative, illustrating a clear shift in market sentiment. The recent local bottom funding rates have turned slightly positive again, but they are very modest in comparison to what we saw around the start of the year, suggesting that the speculative markets are not as overextended as they were back then.
Figure 14: Funding and open interest in perpetual bitcoin figures (Source).
Whales Are Liking The Discount
This recent re-accumulation period appears to be particularly attractive for relatively large market players (whales). Figure 15 visualizes the bitcoin price, overlayed by blue bubbles that represent large (1,00010,000 BTC) bitcoin addresses that saw capital inflows at those price levels.
Figure 15: Large bitcoin address (1,000–10,000 BTC) inflows (Source).
Two things stand out in figure 15: (1) the 2020–2021 cycle has more large wallet (1,000–10,000 BTC) inflows than the peak of the 2017 cycle, and (2) inflows during the recent price bounce over the last month have been fairly high in comparison to the rest of this cycle.
Current Market Sentiment
I hold a monthly bitcoin market sentiment poll on Twitter. Although the results of such polls always need to be interpreted with a grain of salt due to possible selection bias, this month’s poll suggests that (a portion of) the market still has high expectations for the bitcoin price development over the upcoming year (figure 16).
Figure 16: Results of a monthly market sentiment poll on Twitter (Source).
Halving Cycle Roadmap
As always, I like to close off this edition of Cycling On-Chain by looking at the Bitcoin Halving Cycle Roadmap for 2020–2024 (figure 17). This chart visualizes the current bitcoin price, overlayed by the BPT that we discussed above and with price extrapolations based on two time-based models (dotted black lines), the stock-to-flow (S2F) and stock-to-flow cross asset (S2FX) model (striped black lines) and cycle indexes for cycles 1 and 2 (white lines) and the geometric and arithmetic averages of those (gray lines). All these models have their own statistical limitations, but together they give us a rough estimate of what may be ahead for the bitcoin price if history does turn out to rhyme once again.
Figure 17: Bitcoin Halving Cycle Roadmap (2020–2024).
Previous editions of Cycling On-Chain:
Disclaimer: This column was written for educational, informational and entertainment purposes only and should not be taken as investment advice.
This is a guest post by Dilution-proof. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
Analytics Firm Santiment Points to ‘Historic’ Signals on Ethereum and Solana, Says Cardano Can Run Higher
Blockchain analytics firm Santiment is pointing to bullish on-chain data for Ethereum (ETH), Solana (SOL) and Cardano (ADA) as the crypto market heats up again.
Starting with Ethereum, Santiment highlights that Ethereum miners have been stacking ETH aggressively throughout the asset’s recent recovery from its three-month low of $1,707.
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“Ethereum miner balances have absolutely skyrocketed in August, essentially tripling from 81,512 ETH to 243,000 ETH today (+198%). The historic reversal in miner coins held has reversed from an [all-time low] in late July to a virtual three-year high today.”
The second-largest crypto asset by market cap is currently trading at $3,388, up 3.8% on the day according to CoinGecko.
As for Solana, Santiment’s weighted sentiment tracker analyzes the positive and negative commentary surrounding a crypto asset. The analytics firm notes that crowd positivity surrounding Solana is reaching historically high levels.
“Solana’s run-up just keeps getting more historic. Crypto traders are discussing the NFT (non-fungible token) darling at rates most altcoins can only dream of. Weighted sentiment has surpassed four deviations above mean, sending crowd positivity and volume to historic levels. “
Santiment adds that as SOL has blasted off to new all-time highs, so has the conversation surrounding it.
“Solana is making up nearly 10% of crypto conversations right now as it blasted off to a new [all-time high] of $106.82. As Bitcoin and most other altcoins range, volatile and pumping coins like SOL will continue to intrigue traders looking for action.”
At the time of writing, Solana has pushed beyond $106.82 and briefly tapped the $130 level before cooling off. Currently, the asset is trading at $111.86.
Taking a look at Cardano, Santiment highlights that social dominance tends to be a reliable indicator for ADA’s price action. According to Santiment, Cardano’s decreased social dominance puts it in a position to launch another surge.
“Cardano is back to its pumping ways on a bullish Friday. Social dominance is a great leading indicator for ADA, and the percentage of discussions is at a modest 8% compared to a peak of 25% last week. It can run higher until the crowd euphoria returns.”
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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Here’s Where the Most Crypto Scams Are Happening, According to New Chainalysis Report
A new report from insights firm Chainalysis is shedding light on where the most crypto scams are happening around the world.
The report focuses on crypto-related crimes in Eastern Europe, which Chainalysis says is second for illicit crypto activity behind Africa.
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The firm gathers data showing the amount of exposure that addresses in each region have to illicit addresses.
Chainalysis notes that Eastern Europe sends more crypto to illegal darknet markets than anywhere else largely because of Hydra Market, the world’s biggest darknet market which caters to Russian-speakers in the region.
But overall, most illicit crypto transactions in Eastern Europe are tied to scams, rather than online black markets.
“As is the case with all regions, scams make up the biggest share of funds sent from Eastern Europe to illicit addresses – we can assume that most of this activity represents victims sending money to scammers. Between June 2020 and July 2021, Eastern Europe-based addresses sent $815 million to scams, second only to Western Europe.”
Chainalysis also says that Eastern Europe sends the most amount of web traffic to crypto-related scam websites, followed by Central and Southern Asia and Latin America.
The firm names Ukraine as the country which most visits crypto scam websites, surpassing the United States despite its modest population of roughly 44 million.
Chainalysis says that capturing the lion’s share of crypto-related scams is Finiko, a Russian-based company that was deemed a Ponzi scheme by the Russian central bank and saw its founder arrested in July. Finiko is alleged to have received over $1.5 billion in Bitcoin (BTC) through more than 800,000 separate deposits.
Finiko is one of nearly a dozen perpetrators Chainalysis identifies in a list of top 5 crypto scams within each region of the world.
You can read the full Chainalysis report here.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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We’re Right On Track For Bitcoin At $250,000, Billionaire Tim Draper
Bitcoin has been a part of billionaire Tim Draper’s investment portfolio for a while now. Draper had first gotten into bitcoin in 2011 when Peter Vincennes had convinced him to buy the digital asset. Draper had bought $250,000 worth of BTC, which he subsequently lost after the now-defunct Mt. Gox exchange crashed, where Draper had kept his coins.
Despite this, the billionaire was not deterred. So when another opportunity presented itself in the form of U.S. Marshalls auctioning off bitcoins seized from criminals, Draper took advantage of this opportunity. At the auction, Draper had bought 29,656 bitcoins at $632 apiece, which had totaled $18.74 since the coins were sold for $14 above the going rate on exchanges.
Related Reading | Quant Explains Why Bitcoin Bull Cycle Is Only In Phase 1
The investor has never backed down from his belief in the future of cryptocurrencies, especially bitcoin. Even giving some very optimistic predictions regarding the price of the asset in the coming years.
Draper Predicts Bitcoin At $250,000 By 2022
The first time the billionaire had made this prediction had been in 2018. Back then, the price of the digital asset was still trading below $10,000, so this did not seem as believable as it might be today. But Draper never faltered on his prediction.
The driving factor behind this prediction has been that the billionaire believes bitcoin will become an accepted mode of payment everywhere. Another important factor lies in the fact that there is a limited supply of BTC. This self-induced scarcity of the digital asset has the billionaire believing that the price will keep going up, saying, “because there are only 21 million of them.”
Related Reading | Deloitte Survey Shows 76% Of Finance Execs Think Physical Money Is Nearing Its End
Only one thing has differed in Draper’s price prediction for bitcoin. The billionaire had adjusted the timeline for his prediction by moving it farther to late 2022 or early 2023. But the price prediction remains unmoved at $250,000.
Trends Put BTC On Track For $250,000
Venture capitalist Tim Draper was on Benzinga’s Crypto Festival to talk about the number 1 cryptocurrency. Draper noted some trends which he believes will be the driving force behind bitcoin hitting $250,000 in 2022. Widespread adoption was one of these trends. He noted that people will eventually be able to use BTC in the way they currently use fiat currency. “One that happens,” Draper said, “there’s going to be a switch thrown in people’s heads.”
Related Reading | Billionaire Who Predicted 2008 Housing Crash Says Bitcoin Is “Worthless”
A second trend the billionaire sees pushing bitcoin towards this price prediction is the inflation rate. Since governments have been constantly printing money, people have become worried about the future of their savings. This will push more investors into BTC as a way to hedge against the inevitable high rate of inflation that will follow limitless money printing.
The rise in bitcoin uses in retail spending was set to go higher, Draper said. Noting that women do about 80% of total retail spending, Draper sees women demanding more ways to pay with bitcoin. Explaining that the number of women investing in bitcoin had grown tremendously, growing from one in 14 BTC wallets owned by women to one in three BTC wallets currently owned by women.
BTC price still trading north of $47,000 | Source: BTCUSD on TradingView.com
When asked when he planned to sell his coins, the billionaire replied, “Why would I want to sell the future currency for the past currency? I just can’t imagine anything more important for humanity than this.” As for Draper’s $250,000 prediction for the digital asset’s price in late 2022 or early 2023, he said, “I think we’re right on track.”
Featured image from AtoZ Markets, Chart from TradingView.com
Honduras Opens Its First Bitcoin ATM Amid Crypto-Friendly Push
Following in the footsteps of other Latin American countries, Honduras is now making it easier for its citizens to access Bitcoin.
Just days ago, the country saw the opening of its first Bitcoin ATM. The machine was installed by TGU Consulting Group in Tegucigalpa, Honduras’s capital and economic center. According to Reuters, “La bitcoinera” (the ATM’s nickname) aims to meet the growing demand for cryptocurrencies in the region.
TGU Consulting Group’s 28-year-old owner, Juan Mayén, told Reuters that its Bitcoin ATM makes it easier for Hondurans to purchase crypto, which previously had to be done via unregulated peer-to-peer trading platforms, or in person.
“If you wanted to [buy Bitcoin], you had to do it peer-to-peer, look for someone who had [Bitcoin], who was willing to do it, meet them in person, and carry a certain amount of cash, which is very inconvenient and dangerous in Honduras,” he said.
For now, the ATM only allows Bitcoin purchases up to $380. Users must comply with the know-your-customer requirements stipulated by law, scan their identity documents, and fill out a form.
If the machine turns out to be hit, TGU Consulting Group may expand to other cities in Honduras, Mayén told Reuters.
Bitcoin in Latin America
Honduras joins a growing list of Latin American countries that make use of Bitcoin ATMs. In Central America, specifically, Bitcoin ATMs are active in El Salvador, Costa Rica, and Panama—the latter leading the way with 18 machines, according to industry tracker Coin ATM Radar.
Across Latin America, Colombia, Brazil, and Argentina have the most Bitcoin ATMs installed, and the newest one in Honduras brings the total count to 90 ATMs in the region, per Coin ATM Radar’s figures.
But Honduras may be poised to become increasingly crypto-friendly. The initiative to create Employment and Economic Development Zones (ZEDE) in the country has served as a catalyst for several cryptocurrency adoption proposals, and the president of the Central American Bank for Economic Integration, Dante Mossi, has expressed his willingness to support the country in such efforts—just as he did for El Salvador.
“The president of the Central Bank of Honduras can ask for technical assistance; if he wishes, we will give it,” Mossi told regional news outlet La Prensa. “The use of cryptocurrencies is like the internet: It is there; the issue is how to frame it within the law for the correct use of these new technologies.”
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
SEC Sues BitConnect Over $2 Billion Token Sale—Three Years Later
In brief
- BitConnect was a crypto lending platform.
- Many, including the SEC, saw it as a Ponzi scheme.
- The SEC wants the people behind BitConnect to return the funds they received.
Bitconnect, a crypto platform that was pilloried by the crypto community after allegedly bilking investors out of $2 billion, has been sued by the U.S. Securities and Exchange Commission over three years after it shut down.
The SEC is targeting not only BitConnect and founder Satish Kumbhani, but also promoter Glenn Arcaro and his firm Future Money for violations of the Securities Exchange Act, which requires companies selling investment products in the U.S. to register with the SEC.
The SEC earlier this year sued three BitConnect promoters, who received BCC tokens for attracting new investors to the scheme. In August, defendants Joshua Jeppesen, Michael Noble, and Laura Mascola settled with the SEC for 190 Bitcoin (worth $9.25 million) and $3.5 million in cash. This is the first U.S. action against BitConnect’s management.
BitConnect, which launched in 2016, claimed to be a crypto-based lending program. Users would deposit Bitcoin and receive a loan of the platform’s native BCC coin, while its proprietary trading bot would reinvest it and spit out double-digit monthly returns. Only, there was no bot, says the SEC. Instead, the defendants allegedly operated a Ponzi scheme, skimming investor funds into their own crypto wallets and using fresh money to pay off early investors.
And not just a little bit of money. The platform raised 325,000 Bitcoin, then worth $2 billion (now worth more than $15 billion).
The agency is asking the U.S. District Court for the Southern District of New York to order the defendants to return all the money and pay a civil penalty.
BitConnect shut down its lending platform in January 2018 after Texas and North Carolina securities regulators issued cease-and-desist orders and many started to view it as a scam. Though BitConnect vowed the token would live on in crypto exchanges, it announced it would transfer any funds in users’ lending wallets to their BCC wallets at a rate of $363.62 per BCC, an average of the 15-day closing price at that point.
Unsurprisingly, however, the embattled platform’s token was rapidly falling in value—and investors wanted to cash out the BCC in their wallets as fast as they received it. By the same day of the announcement, the exchange value of BCC dropped to $29; it had been as high as $425 just 10 days prior.
Though BitConnect, like other alleged token scams, has faded from popular memory, the SEC has not forgotten. It has brought actions this year against a number of token projects and initial coin offerings, the latter of which were a popular way for cryptocurrency projects to raise cash in 2017 and 2018.
Why The Terra Ecosystem Delayed A Major Mainnet Upgrade For Late September
After a 130% rally over the past month, Terra (LUNA) is one of the best-performing assets in the crypto market. At the time of writing, LUNA trades at $31.95, a little over a year ago it was barely breaking out above $1.
The massive price appreciation is driven by a growth in the LUNA ecosystem and an increase in demand for its stablecoin UST. In order to support this growth, Terraform Labs (TFL) has been planning to introduce an update.
Called Columbus 5, its mainnet deployment has been delayed for 3 weeks, according to an official post. The update will take place at the height of block 4,724,000, on September 30, 03:30 UTC.
The team behind Terra claimed that they want to “implement some extra precautionary measures” to roll out the update. They added:
(…) the Columbus-5 mainnet upgrade is massive. Behind the scenes, numerous moving parts require attentive and thorough examination from multiple perspectives + reviews between TFL, eco partners, the community, and projects dependent on Terra applications.
In addition, they provided 3 main reasons that led them to delay the update. First, the network will have a new version of Mantle, their framework to write indexes or Extract-Transform-Loan (ETL) logic.
This new version of Mantle will be more scalable and will be able to support “significantly” more traffic. It will be introduced with Colombus 5. Terraform Labs claimed:
Mantle plays a critical role in mediating application network traffic on Terra, ensuring the compatibility of the new version between Col-4 and Col-5 is paramount, requiring additional testing to verify the new design changes.
The second reason for the delay is due to Terra’s partners and third-party projects. The team behind the ecosystem wants these projects to have more time and “breathing room” to migrate to Columbus 5.
This includes projects like Mirror, Anchor, TerraSwap, Shuttle. Before the update, the developers behind these applications must be familiar with the updated mainnet.
Terra Will Update To Support Massive Growth
As Terraform Labs said, the LUNA ecosystem’s total value locked (TVL) stands at $7.3 billion with “tens of thousands” of new stakeholders, and builders coming into the platform. Thus, why they have decided to grant their community and developers more time to prepare:
The original timeline produced a hurried window for some projects to properly prep for Col-5. Giving projects more time to acquaint themselves with the Col-5 testing environment and migration plans for major apps ensures a smoother runway for projects launching post-Col-5.
In that sense, the team made a commitment to provide more documentation and educational material for the community to “use the update properly”. In this documentation, they will address some of the community and third-party project’s concerns on Col-5.
The official migration guides for Mirror and Anchor will be released on September 13th, meaning web apps, contracts, and bots will be functional and operational on Bombay for users by this time. TerraSwap has already been migrated.
In the coming weeks, Terraform Labs will give more information on the “sequence of events” leading to the mainnet. Thus, they will make it a priority to “guarantee” a “smooth” Col-5 launch.
14/ With swelling billions of TVL, tens of thousands of new users, and an amazing and devoted community, prudence is the optimal path forward for such a significant launch.
Thanks for your patience and understanding.
More updates to follow soon. Please stay tuned.
— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) September 1, 2021