Matt Zhang, a former trading executive at the multinational financial institution Citibank has launched the Hivemind Capital Partners to back unique and innovative startups or protocols in the digital currency ecosystem.
Hivemind Capital’s Targets
Hivemind unveiled the inaugural sum of $1.5 billion to invest in crypto companies, digital trade assets and feature a first-of-its-kind, dedicated “play-to-earn strategy” in the gaming space. The first tranche of the funding, according to the firm, will be deployed to verticals, including crypto infrastructure, blockchain protocols, open internet, programmable money, and virtual world.
“We believe blockchain technology is a paradigm shift, and we are still in the early innings. Our mission is to provide start-to-finish capital and infrastructure solutions to visionary entrepreneurs and category-defining crypto projects,” said Matt Zhang, Founder and Managing Partner of Hivemind.
“The traditional asset management model is not designed to do this, which is why we are building a tailor-made crypto investment platform from the ground up that also offers the infrastructure institutional investors need for risk management, compliance, and security.”
The venture fund said it has inked Algorand as its first technology partner, reiterating its intention to extend the partnerships to other layer-1 blockchain networks. Zhang’s 14-years of experience in the banking industry will be deployed in carving out an exceptional operational performance for the fund’s investors.
Increasing Venture Funding Pouring into the Crypto Industry
The launch of the Hivemind Capital crypto fund is not an uncommon push by mainstream investors to gain a closer and more direct appreciation of the growing digital currency industry. As early as June this year, popular venture capital company Andreessen Horowitz (a16z) floated a $2.2 billion dedicated to the digital currency ecosystem.
A number of venture capitalists have also been backing crypto startups, all in a bid to catch on to the growth of the fast-growing industry.
Every time a new Bitcoin (BTC) all-time high is formed, excessive expectations follow. This time was no different as its price briefly touched $69,000 in the early hours of Nov. 9.
Bitcoin 8h, we got our November 9th historical correction, seems to be very minor for now. Naturally I expect at bigger correction after we hit the 84k region, and then into blast off.$BTC #Crypto #Bitcoin pic.twitter.com/cfbBkOIFEK
— Miles J Creative (@JohalMiles) November 9, 2021
Words are just words, so there’s no loss from being excessively bullish or bearish, but in options markets there’s a cost for placing those bets. For example, on Nov. 10, a right to buy Bitcoin (call option) at $100,000 on Dec. 31 is trading at BTC 0.022, or $1,460. For this privilege the investor pays an upfront fee which is also known as the premium.
Analysts and pundits quickly issue their $100,000 targets after Bitcoin posts its highest monthly close ever. However, history has proven that short-term price estimates seldom work, and it doesn’t matter if you’re an anonymous Twitter figure or a well-versed multi-million dollar crypto fund manager.
Bitcoin price estimates are often far off
Despite being a widely successful venture capital investor, Tim Draper’s $250k price guess for 2020 was off by 88%. Even renowned bank analysts can get it very wrong, as did a Citibank FX Wire “Market Commentary” from Nov. 2020 where they cited a potential $318k high in 2021. Still, with 50 days till year-end, maybe some of those prophecies will turn out true, but the majority remains no better than random numbers.
Bears are possibly eyeing regulatory hurdles, for example, Singapore became the latest region to ban crypto derivatives exchanges services. Huobi Global announced on Tuesday that it would shut down accounts of all Singapore-based users by the end of March 2022. In September, Thailand’s Securities and Exchange Commission also recommended revoking Huobi’s local operating license.
An initial analysis based on the open interest of call (buy) options and put (sell) instruments presents a balanced situation for Nov. 12’s $1.3 billion options expiry.
Bitcoin options aggregate open interest for Nov. 12. Source: Bybt
At first sight, the $630 million call (buy) options dominate the weekly expiry by a mere 12% compared to the $565 million puts (sell) instruments.
However, the 1.12 call-to-put ratio is deceptive because the recent rally will probably wipe out most bearish bets. For example, if Bitcoin’s price remains above $66,000 at 8:00 am UTC on Nov. 12, virtually every put (sell) instrument becomes worthless. There is no value in a right to sell Bitcoin at $58,000 or $62,000 if it’s trading above that price.
Bulls might aim for a $410 million profit above $70,000
Below are the four most likely scenarios for the Nov. 12 expiry. The imbalance favoring either side represents the theoretical profit. In other words, depending on the expiry price, the active quantity of call (buy) and put (sell) contracts varies:
Between $64,000 and $66,000: 2,440 calls vs. 310 puts. The net result is $135 million favoring the call (bull) instruments.
Between $66,000 and $68,000: 3,430 calls vs. 50 puts. The net result is $225 million favoring the call (bull) instruments.
Between $68,000 and $70,000: 44,070 calls vs. 10 puts. The net result is $305 million favoring the call (bull) instruments.
Above $70,000: 5,820 calls vs. 0 puts. The net result is complete dominance, with bulls profiting $410 million.
This crude estimate considers call options being exclusively used in bullish bets while put options in neutral-to-bearish trades. This oversimplification disregards more complex investment strategies.
For instance, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin above a specific price. Unfortunately, there’s no easy way to estimate this effect.
The bears’ best hopes turned out to be ineffective
After a 19% rally in 30 days, bulls dominate Nov. 12’s weekly expiry. One factor that may have been partially responsible for that move was the absence of an adverse price impact after the $1 trillion U.S. infrastructure bill passed the United States House of Representatives. The bill mandates all digital asset transactions worth more than $10,000 to be reported to the IRS.
Traders must consider that even bearish news has little to no impact on the price during bull runs. Moreover, the effort bears need to pressure the price is increased and usually ineffective.
Bulls might take advantage of the current situation by pushing BTC above $70,000, which would result in an additional $105 million estimated profit which would push their total to $410 million.
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.
Cryptocurrencies are redefining the entire payment infrastructure, says a new report from multinational Citibank. It added that digital assets have expanded from being merely an “internet novelty” to becoming a two-trillion-dollar market.
What Can Organizations Do to Embrace Crypto?
The report offers a blueprint for organizations considering adopting cryptocurrency payments or simply investing in such assets as a store of value, outlining three key aspects they should consider:
The accounting team should have the correct tools to deal with cryptocurrencies
Selecting which digital assets will be accepted as payment
And whether or not the organization will hold crypto on its balance sheet
“Cryptocurrencies have evolved from being an obscure internet novelty to reaching a two trillion dollar market cap. Whether or not cryptocurrency disrupts the payment system as we know it, it has sparked new thinking in payment infrastructure, processing, and accounting, in addition to its increasing adoption as a store of value,” Citi’s report reads.
Citibank Building. Source: Financial Times
Challenges of Embracing Crypto
Citi also offers two approaches for receiving crypto payments. One is through the Agent Model, which means finding a third party to collect and hold their digital assets. The other way is through the Direct model, in which organizations hold and control their private keys with their own wallets.
Yet one of the biggest challenges for institutions is managing price volatility.
“When accepting crypto, an organization is likely to want to fix the price back into their functional currency. As a result, the price flexes in crypto rather than fiat currency. While this provides the organization a tool to manage price risk, the real price risk sits with the crypto remitter, which is typically an organization’s client or customer.”
This report is the latest from Citibank analysts. Back in March, the division issued a 100-page report dubbed “Bitcoin, at the Tipping Point,” in which the team noted that Bitcoin could become the “currency of choice for international trade” as the crypto market saw massive interest from financial institutions.
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Citigroup, the parent company of Citibank, is also awaiting regulatory approval to trade BTC futures. As CryptoPotato reported, an anonymous source revealed the multinational giant is hoping to receive regulatory approval to trade Bitcoin futures on the Chicago Mercantile Exchange (CME).
Featured Image Courtesy of Citi
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Large American banking organizations are rushing into the cryptocurrency industry, according to recent reports. Goldman Sachs, a former Bitcoin critique, has enabled its institutional clients to trade BTC derivatives, while Citigroup is looking into releasing crypto-related services amid growing demand.
Goldman Clients Trade BTC Derivatives
Out of the largest US-based banking institutions, Goldman has perhaps the most controversial history with the crypto space. The entity had a digital asset trading desk in 2017, halted it a year later when prices were down, and restarted it in 2021 when the market exploded.
In the meantime, the giant investment bank claimed cryptocurrencies are not an asset class during a conference call. However, the tides have turned completely (for now), and Goldman is frequently dipping its toes into digital asset endeavors.
The latest one, reported by Bloomberg, reads that the bank has already enabled its institutional customers to trade with non-deliverable derivatives tied to BTC’s price paid out in cash.
The organization is also buying and selling Bitcoin futures in block trades on CME Group, using Cumberland DRW as a partner to protect itself against the cryptocurrency’s notorious volatility.
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Goldman’s Asia-Pacific head of digital assets, Max Minton, believes the new initiative is “paving the way for us to evolve our nascent cash-settled cryptocurrency capabilities.”
“Institutional demand continues to grow significantly in this space, and being able to work with partners like Cumberland will help us expand our capabilities.” – he concluded.
Other recent reports claimed that Goldman is actively exploring ways to launch a Bitcoin ETF and custodial services.
Goldman Sachs. Source: Reuters
Citi Looking Into Crypto Too
According to the Financial Times, Citigroup Inc, another massive US banking institution, is also planning to enter the cryptocurrency field.
Citi seems to be in an earlier stage as the coverage said the bank hasn’t decided on the precise services it will offer. Instead, the organization is discussing trading, custody, financial, or all of them.
Itay Tuchman, the bank’s global head of foreign exchange, noted that Citi had seen a “very rapid” increase in customer demand in bitcoin and other digital assets. He outlined that the interest comes from a broad spectrum of clients, including asset managers and family offices.
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In the latest issue of Citibank’s Global Perspective and Solutions (Citi GPS) entitled Future of Money: Crypto, CBDCs and 21st Century Cash, the bank points its searchlight on MakerDAO (MKR) and the importance of decentralized finance (DeFi). Citibank is selling off its retail banking service in 12 countries and it appears the bank is looking to venture into the world of digital assets management.
Citibank Enlightens Fund Managers on DeFi
Citibank, the consumer division of financial services multinational Citigroup,announcedon April 16, 2021, that it is selling off its retail banking business in India and 12 other nations, in a bid to focus more on its wealth management business.
If the latesttweetby Twitter user @asiahodl is anything to go by, it appears the 209-year-old lender is looking to start playing an active role in the rapidly evolving cryptocurrency ecosystem which is now a hot cake for forward-thinking institutional investors.
As seen in @asiahodl’s Twitter screenshot of Citibank’s Global Perspective and Solutions (Citi GPS) report entitled “Future of Money: Crypto, CBDCs and 21st Century Cash,” the financial institution explains the workings of MakerDAO and the benefits of decentralized finance (DeFi).
“Maker can be thought of as a digital pawnshop, where users post something that is already valuable in exchange for a cash loan. If they repay that loan with the required interest, they get their asset back. If they default, or if the collateral value falls below a predefined threshold, the collateral is automatically liquidated,” Citibank explained.
Decentralized Finance to Upend Traditional Systems
That’s not all, Citibank also pointed its searchlight on the importance of decentralized finance over traditional financial systems, stating categorically that DeFi’s openness allows for “greater innovation and competition,” while fostering interoperability by making it possible for “any user to move capital seamlessly between Maker, Compound, Uniswap and UMA in minutes,” in a cost-efficient way.
The bank also highlighted other key benefits of DeFi, including the elimination of third parties, transparency, and programmability, amongst others.
At a time when heavyweight lenders such as HSBC have entirelyshut their doorsand mind against anything related to bitcoin and other cryptocurrencies, Citibank’s report shows the bank fully understands the importance of cryptocurrencies and maybe a hint that the latter is looking to latch onto the crypto bandwagon in one way or the other.
In a separatereport, Citibank also predicts a future where privately-issued stablecoins will disrupt the stability of commercial banking and the process of credit creation.
“The commercial banking system and fintech could be caught in the crossfire of a battle between CBDCs and privately issued stablecoins for monetary supremacy. This competition for deposits and payment services from two entirely new fronts could seriously impact the financial stability of the banking system and the process of credit creation,” it declared.
Indeed, bitcoin,blockchain-based stablecoins and some altcoins have come to stay! And forward-thinking lenders like Citibank, Goldman Sachs and a few others are already preparing themselves for the future.
At press time, the DeFi industry is worth$58.05 billionin terms of total value locked, while the combined market cap of the cryptocurrency market sits at$2.18 trillion.
Going by an April 10, 2021tweetfrom Documenting Bitcoin, the value of Bitcoin has exceeded a combination of America’s top financial institutions. The four banks included on the list include Citibank, JP Morgan, Wells Fargo, and the Bank of America.
Bitcoin’s Reign
According toInfinite Market Cap, Bitcoin is ranked 8th position with a market cap of $1.121 trillion. The leading digital currency is behind well-known assets such as silver and Google Alphabets, each with a market cap of $1.378 and $1.536, respectively.
Compared with financial institutions, Bitcoin is ahead of four banks combined, withJP Morganhaving a market cap of $473.85 billion, Citigroup $151.11 billion, Bank of America $345 billion, andWells Fargopossessing $167.43.
BTC has a price of $60,0497 at the time of writing, after hovering around the $58,000 and $59,000 price for a week. In 2013,Bitcoinexperienced rapid price bubbles where the digital coin began trading at $13.40 and shot up to $220 by April.
By mid-April the same year, the prices dropped to $70. Despite this volatile nature, BTC is still ranked number one among the existing 9000+ cryptocurrencies in the market.
Institutional Investors on the Rise
Several factors could lead to Bitcoin’s tremendous rise in value; however, the most notable one is institutional buyers’ increase. Microstrategy recently added another 19,452 BTCs worth $1.026 billion at an approximate price of $52,765 per bitcoin.Grayscaleis also among the most prominent investing institutions, holding close to 572,644BTCs, a value worth $34,607,740,140 billion based on its current prices.
JP Morgan has similar interests in the digital currency as it reportedly predicted that the price of Bitcoin might attain a long-term price target of $130,000. JPM continued to mention that a reduction in volatility could propel Bitcoin towards global institutional adoption.
Why BTC?
Bitcoin was first launched into the financial market in 2009, bringing along the concept of a decentralized system running on a blockchain network. In essence, miners are solely responsible for maintaining the network’s security as they verify transactions on the distributed ledger.
Furthermore, it automatically eliminates the need for intermediaries who will complete the transaction operation with miners on the system.
In return, Bitcoin creates an incentivized ecosystem whereby miners are rewarded for handling transactions on a blockchain. Each transaction takes place on an anonymous network as it only requires a wallet address to conduct transactions.
These and more features make Bitcoin a desirable asset to both retail and institutional investors. Payment companies such asPayPalhave moved to integrate Bitcoin payments across its global vendor-base system.
Bitcoin evangelist Max Keiser says that BTC has the potential to become the new base layer currency and replace the entire $5 trillion foreign exchange (FX) market.
In an episode of the Keiser Report, the Wall Street veteran takes note of Citibank’s recent report that argues Bitcoin has an advantage in global payments due to its decentralized, deflationary, and secure nature, which are characteristics that put the flagship cryptocurrency in a position to go mainstream.
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Keiser highlights that Bitcoin’s advantages as a medium of exchange in global payments are already making banks, including Citibank, obsolete.
“It’s happening right now because the transaction is the settlement, so you don’t need Citibank. It obviates Citibank. It makes Citibank redundant, as are all banks, redundant with Bitcoin. I can trade with you as a currency and it doesn’t require any bank. It doesn’t require a central bank.”
While the Citibank report sees Bitcoin as having evolved from a form of payment to a store of value, Keiser believes it is the other way around.
“And they got it a little bit reversed. They’re saying it started off as a means of payment and people are looking at it as a store of value, but in fact, it started off as a store of value, and now it’s morphing into a means of payment. That’s the whole history of money. So Citibank should know at least the history of money and how money comes into existence but nevertheless, a good effort and I applaud them for at least recognizing that they’re about to go out of business.”
As BTC is starting to be viewed as a more neutral and better settlements layer, the Bitcoin firebrand sees the world’s leading cryptocurrency as something that could supplant trillions of dollars worth of foreign exchange activity.
“Right there’s what, $5 trillion a day in the forex market, foreign exchange, and that could be completely replaced with Bitcoin as the base layer. We’ve seen that demonstrated now buy sending currency from country to country, starting off in one currency, arriving at the destination in that local currency instantaneously, virtually at no cost.”
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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.
Cryptocurrency news and analysis, covering Bitcoin, Ethereum, Ripple, XRP, altcoins and blockchain technology
In a 100-page deep-divereportdubbed “Bitcoin, at the Tipping Point,” Citibank’s global perspectives and solutions teamnoted that the cryptocurrency could potentially “become the currency of choice for international trade.”
The analysts acknowledged that the massive interest shown by several large institutional investors like Tesla, Microstrategy, and PayPal is one of the major propellants for the digital asset gaining mainstream adoption.
The team further noted that several other factors, including a wide range of digital payment options like stablecoins and Central Bank Digital Currency (CBDC), could also increase the chances of bitcoin adoption for cross-border settlements.
An Uncertain Future
The report also pointed out that a side-by-side comparison of the risks associated with bitcoin and the opportunities it presents makes it very easy to conclude that the digital asset is at a tipping point.
They wrote:
“There are a host of risks and obstacles that stand in the way of Bitcoin progress… Weighing the potential hurdles against the opportunities leads to the conclusion that Bitcoin is at a tipping point… Bitcoin’s future is thus still uncertain, but developments in the near term are likely to prove decisive as the currency balances at the tipping point of mainstream acceptance or a speculative implosion.”
Bitcoin Going Mainstream Already
The concluding part of the report quoted the famous philosopher, Schopenhauer, who said,
“All Truths pass through three stages, first it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.”
The team states that the positive change in stance on issues about bitcoin by several financial institutions very well prove these words of Schopenhauer, which he said more than 150 years before the bitcoin idea was born.
Several banks had actively shunned bitcoin in the past, arguing that it has no intrinsic value as it is allegedly backed by mere speculations from its proponents.
However, bitcoin’s immense growth has forced its former critics to re-evaluate their stance and join the bitcoin adoption trend. Some of the biggest banks in the world have started offering bitcoin services to their clients.
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@Giokey @Visa @Mastercard @PayPal @jpmorgan @Citibank @BankofAmerica @TrumpHotels @POTUS @wikileaks The only think that is bad for #Bitcoin is economic freedom, fair elections and transparency, and we have the opposite.
The ultimate irony would be if all the payment platforms like @Visa @Mastercard @PayPal & Banks like @jpmorgan @Citibank @BankofAmerica, etc de-platform ALL @TrumpHotels & other business so @POTUS would be forced to use #Bitcoin just like @wikileaks & #Backpage did. https://t.co/o2qjanbXUH
