Bitcoin Is Worth $1T and OKCoin Delists BCH and BSV

This article is excerpted from Blockchain Bites, a daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.


Bitcoin is a trillion-dollar asset. The first and largest cryptocurrency set a new high of $53,739.48 Friday morning, the magic number at which the market value of all bitcoins in circulation is worth $1 trillion. This is up from a $178 billion market capitalization last year, CoinDesk’s Zack Voell reports.

While in some sense a meaningless event, it is also a serious milestone on the path for bitcoin to become a significant part of the global financial ecosystem. The open protocol is now more valuable than Facebook, and could soon overtake Alphabet, Google’s parent, or Amazon if prices continue to rise.

In February 2011, just two years and one month after the Bitcoin “genesis block” was mined, the cryptocurrency hit dollar parity, or the moment when one BTC could be exchanged for $1. This was an important psychological event, proving that bitcoin wasn’t just a usable currency, but a viable, alternative monetary system.

“[I]t’s like going from kids playing an early version of a game on the street with sticks and rocks, to 10 years later it being the fastest-growing, most important, most impactful game that’s taking over the sports world,” CoinDesk podcast editor Adam B. Levine, an early adopter, told Blockchain Bites.

“Initial viability is important. Mainstream acceptance is important,” he said. Institutions are rapidly entering the bitcoin economy at a moment when the U.S. dollar’s longevity has never been more in question.

Indeed, the trillion dollar sign post may signal a future where a dollar price quote for bitcoin hardly matters. It’s unlikely the entire global economy is denominated in satoshis – even less so in “bits” – but bitcoin could become a viable global reserve asset. Not just sitting on disruptors like MicroStrategy or Tesla’s balance sheets, some predict a world where governments hold.

As Michael Venuto of Toroso Asset Management said this morning on CoinDesk TV, “[Bitcoin’s] price is more or less a meme. It gets people excited but perhaps for the wrong reasons, preventing them from going down the rabbit hole.”

CeFi and DeFi paddycakes

PancakeSwap is the latest automated market maker (AMM) clone looking to unseat Uniswap as the top DeFi trading platform. The protocol is developed by Binance and offers reprieve to soaring gas prices on the Ethereum-based original. Liquidity, volumes and the price of its native CAKE token are skyrocketing, perhaps to the ire of stone-cold Ethereum stans.

This exchange ain’t big enough …

OKCoin is delisting bitcoin cash (BCH) and bitcoin SV (BSV) to prevent new customers from confusing these two forks for bitcoin (BTC). “This is not an easy decision. We had a choice and there is collateral damage, but we had to stand up for the bigger principle we believe in,” OKCoin CEO Hong Fang told CoinDesk. Bitcoin Cash is a clone of Bitcoin, with minor adjustments to increase block sizes. BSV, championed by Craig Wright, known for his claims to be the inventor of the original Bitcoin, is itself a fork of Bitcoin Cash. CoinDesk tech reporter Colin Harper dives in.

Systemically important: bank says

Bitcoin, and the wider crypto market, could face a severe liquidity shock if traders lost faith in tether (USDT), according to JPMorgan analysts. In a new report, bank analyst played catch-up to the interminable tether conversation, saying the dollar-equivalent stablecoin’s implosure could trigger a bank run-like event. There are more than $33 billion USDT in existence, up from $4 billion just 12 months ago.



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Money Reimagined: Tucker Carlson Is Right About Financial Privacy

Welcome to Money Reimagined. 

I’m on vacation. So this week’s main-bar column comes to you from Executive Editor Marc Hochstein. In it, Marc draws deeply on his objective consistency to remind us that wherever you stand on the politically charged issues of our day, we all lose when our right to privacy is breached in pursuit of them. 

Before I took two days off, my podcast co-host Sheila Warren and I got to record the first in a multi-part series on the nonfungible token craze. To explore why people in the art and entertainment world are so excited about NFTs right now, this week’s stage-setting episode starts with a look at how human beings decide how to value something.

For this, we were joined by perhaps the perfect guest: Nanne Dekking, the former vice chairman of Sotheby’s who is now the CEO of blockchain company Artory. This was an especially fun one! Check it out after reading Marc’s insights.

– Michael Casey

Bank of America: World police

Trigger warning: This column has something nice to say about Tucker Carlson.

On Feb. 4, the Fox News host broke a story that should concern all Americans, even those who normally blanch at his populist brand of right-wing politics. Indeed, the revelations should interest anyone who cares about the future of money, even if Carlson’s TV broadcast could have used more context.

Since the Jan. 6 Capitol Hill riot in Washington, D.C., Bank of America has been helping federal investigators search for extremists by combing through its transaction records, “Tucker Carlson Tonight” reported, without naming its sources (standard journalistic practice with sensitive stories).

Specifically, the country’s second-largest bank searched for customers who:

  • Transacted with debit or credit cards in Washington on Jan. 5 and 6
  • Paid for hotel or AirBnB reservations in the area after Jan. 6
  • Bought weapons, or anything else (“t-shirts included”) from a “weapons-related merchant,” between Jan. 7 and “their upcoming suspected stay in D.C. area around Inauguration Day” (Jan. 20)
  • Made “airline-related purchases” after Jan. 6 – “not just flights to Washington, but flights anywhere, from Omaha to Thailand.”

Of the 211 customers who met the “thresholds of interest,” at least one was interviewed by the authorities before being cleared of suspicion, Carlson told his more than 4 million nightly viewers. 

“Bank of America is, without the knowledge or the consent of its customers, sharing private information with federal law enforcement agencies,” he thundered. “Bank of America effectively is acting as an intelligence agency, but they’re not telling you about it.”

What else is new?

To seasoned observers of the financial services industry, including regulated cryptocurrency businesses, it’s tempting to scoff, “no kidding, Columbo.” 

Banks have been providing customers’ private information to the government without their knowledge or consent for decades under the 1970 Bank Secrecy Act and related anti-money-laundering (AML) regulations. 

“For B of A, as well as any other regulated entity, it’s not like we’re sheriff deputies or an extension of law enforcement, but because we’re regulated, we have regulatory obligations. That’s how the regulatory framework was designed by our legislature and politicians,” said Tim Byun, global government relations officer at crypto exchange operator OK Group and a former Visa executive and bank examiner. “The public and customers should and need to be aware of this.” 

Read more: Why Ledger Kept All That Customer Data

Financial institutions routinely file suspicious activity and currency transaction reports (SARs and CTRs), hundreds of thousands each year, to the Treasury Department. These reports contain sensitive personal information about customers who may not have committed any crime. As CoinDesk’s Ben Powers reported last year, they are stored indefinitely by a bureau that appears ill-equipped to guard them. A trove of them would make a comely prize for hackers. The SolarWinds breach only reinforced doubts about Uncle Sam’s cyber defenses.

After 9/11, the Patriot Act heightened banks’ “intelligence agency” role decried by Carlson. Particularly pertinent here may be Section 314(a), which authorizes the government to share with financial institutions the names, addresses and other data about individuals and groups suspected of terrorist and money laundering activity, and in turn requires those firms to search their records and tell the authorities if they find a match.  

On Fox, Carlson asked his viewers to put themselves in the shoes of the B of A customer. “The FBI hauls you in for questioning in a terror investigation, not because you’ve done anything suspicious, but because you bought plane tickets and visited your country’s capital,” he said. “Now they’re sweating you because your bank, which you trust with your most private information, has ratted you out without your knowledge.”

Don’t tell a soul

(Rachel Sun/CoinDesk)

Carlson’s indignation is understandable – but so would any bank’s reticence to notify customers they were being “ratted out.” Tipping off a customer to an investigation by disclosing a SAR filing, for example, is illegal, and both the bank and the officer responsible may be held liable for lapses. “All banks have responsibilities under federal law to cooperate with law enforcement inquiries in full compliance with the law,” B of A noted in its response to Carlson’s questions.

Some details of Carlson’s report were fuzzy. For example, he complained that B of A cast “an absurdly wide net,” but it’s not clear how absurdly wide. The broadcast didn’t explicitly say whether the bank reported only those customers who met all four of the criteria described, or all who satisfied any one of them.  

Read more: Marc Hochstein – Who Are the Real Monsters?

Also, while Carlson noted that B of A retrieved the information “at the request of federal investigators,” it would be helpful to know the exact nature of the request: a warrant backed by probable cause and signed by a judge? A subpoena? An order by the shadowy, Kafkaesque FISA court? (Neither Fox News nor B of A answered requests for clarification by press time.)

Here’s where the Patriot Act may come into play. Did B of A search its records in response to a Section 314(a) notification? If so, was this tool used because the suspects were considered domestic terrorists? (Remember, the law was written when the popular idea of a terrorist was Osama Bin Laden, not the QAnon Shaman.) 

Does a search for broad types of purchases, rather than named individuals, fall under the scope of Section 314(a)? How much leeway did B of A have to push back against the Feds’ demands, as Carlson implies it should have? Was law enforcement simply looking to supplement information already gleaned from public video footage, names to put to faces? It’ll be interesting to see what further reporting finds. 

But remember the big picture. Since the 1970s, courts in the U.S. have held that people have no reasonable expectation of privacy in information they voluntarily turn over to third parties. As a result, the investigative methods Carlson exposed, however shocking to Joe Sixpack, are pretty standard. Our financial transactions aren’t protected by the Fourth Amendment of the U.S. Constitution. 

Should they be? That’s a question we ought to revisit in this digital age. Say what you will about Tucker Carlson, but he deserves credit for drawing public attention to the matter. 

– Marc Hochstein

Ethereum’s whales

Signs of ownership concentration are emerging on the Ethereum network as participation grows in Ethereum 2.0’s stake-based validation system. The number of ether “millionaires,” or addresses holding 1,000 ETH or more, has dropped by 7% in 2021, as of Thursday, accelerating from 2020’s 6% annual decline, according to data provided by Coin Metrics. 

Meanwhile, at more whalish depths, populations are increasing. The number of addresses holding 10,000 units or more has increased by 8%, and Ethereum has added a single new “billionaire.” Since the start of the year, the number of addresses holding 1 million ETH or more has gone from seven, to nine, and back to eight as of Thursday. 

(Shuai Hao)

Source: Coin Metrics

Let’s be clear, these aren’t uncharted waters for ether ownership concentration. The number of 10,000 ETH addresses hit peak in February, 2018, at 1,284. As of Thursday, it’s 1,276.

These shifts in ownership are taking place as staking grows on Ethereum, with 90,349 active validators on the network, up from 77,890 at the beginning of February, according to CoinDesk’s Valid Points newsletter, which provides in-depth coverage of the Ethereum 2.0 roll-out. 

Fears of ownership concentration in proof-of-stake systems are not new. And it’s a little early for ETH bears to sound the decentralization alarm. For one thing, these are addresses. They don’t even necessarily indicate entities, let alone what kind of entities. They could be exchanges or other service providers representing many smaller entities. However, with Ethereum governance set to be tied to asset ownership in a proof-of-stake system, they bear watching.  

– Galen Moore, CoinDesk senior research analyst

The Conversation: Bitcoin’s energy

With bitcoin’s price rise pushing crypto back into mainstream conversation, Twitter alighted on a long-simmering question this week. Is bitcoin’s energy consumption – inevitably high because of its proof-of-work algorithm and decentralization – justifiable? 

Meteorologist and climate journalist Eric Holthaus said it this way:

But Yassine Elmandjra, an Ark Invest analyst, said a lot of bitcoin mining uses renewables these days:

CoinDesk columnist Nic Carter said bitcoin’s climate scolds fail to account for the dollar’s own impact:

And some said BTC could even restore stability to Texas’ troubled grid, with mining facilities (“bitcoin batteries”) helping to balance supply and demand:

Meanwhile, lawyer Jake Chervinsky said bitcoin was healthier for criticism:

– Ben Schiller, Features editor

Relevant reads: Adoption everywhere

Bidding up. In another sign of mainstream crypto acceptance, Christie’s is auctioning its first nonfungible token. “EVERYDAYS: THE FIRST 5000 DAYS,” by @beeple, is the “first purely digital work of art ever offered by a major auction house.” CoinDesk’s Jamie Crawley reports. 

Meme message. Dogecoin, which has seen year-to-date returns of about 1,000%, is often seen as a big joke. But in this op-ed, CoinDesk Global Macro Editor Emily Parker asks us to take the project seriously, if only because of what it tells us about the moment. Increasingly, she says, reality seems to be “shaped by collective belief, rather than underlying facts.” In other words, if a community wants a coin’s price to rise, it will rise, irrespective of fundamentals. 

ETF at last? Exchange-traded funds have long been seen as a prerequisite for Wall Street adoption of crypto, but they’ve fallen foul of regulatory approval. Is that about to change? CoinDesk’s regulatory expert Nik De stirs the tea leaves, including a change in regime at the Securities and Exchange Commission, strong institutional interest in bitcoin and a newly-launched bitcoin ETF in Canada. 

– Ben Schiller

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First Mover: Who ISN’T Dabbling as Bitcoin Passes $52K, Ether Tops $1,900

Price Point

Bitcoin was lower after surging on Wednesday to a new all-time high price above $52,000, while ether topped $1,900 for the first time, pushing toward the psychologically crucial $2,000 mark. 

“My sense is the technology has evolved and the regulations have evolved to the point where a number of people  find it should be part of the portfolio, so that’s what’s driving the price up,” Rick Rieder, head of global allocation for the $8.7 trillion money manager BlackRock, told CNBC. “We’ve started to dabble a bit.”

In traditional markets, European shares slid and U.S. stock futures pointed to a lower open, amid concern that rising bond yields might sap this year’s momentum in equity markets. That’s despite a U.S. government report Wednesday showing that consumers rushed to spend stimulus checks in January, bolstering retail sales, while minutes from the Federal Reserve’s meeting last month showed officials expected their $120 billion-a-month of asset purchases would continue for “some time.” 

A growing number of investors say that bitcoin might serve as a hedge against inflationary policies as governments and central banks pump trillions of stimulus money into the coronavirus-racked economy.   

The News

COINBASE VALUATION: Coinbase, the cryptocurrency exchange readying a public listing, is valued at $77 billion based on trading in privately held shares on the Nasdaq Private Market, ConDesk’s Ian Allison reported. The amount is greater than the market capitalization of Intercontinental Exchange Inc., owner of the New York Stock Exchange. (For what it’s worth, Tesla used Coinbase for its $1.5 billion bitcoin purchase, according to The Block.) 

ROBINHOOD REBOUND: Beleaguered online brokerage app Robinhood says it plans to enable withdrawals and deposits of cryptocurrencies including dogecoin (DOGE). In a tweet Wednesday, the app provider said it “fully intends” to provide the extra functionality, without giving a date. Currently, traders can only buy and sell crypto assets within the app, according to its support page. The tweet came an hour before Bloomberg published an article asserting that Robinhood was the owner of the world’s largest dogecoin wallet. (EDITOR’S NOTE: Go here for a livestream of the U.S. House of Representatives hearing starting at noon Washington time (17:00 UTC) on the GameStop stock-trading saga, featuring Robinhood CEO Vlad Tenev (prepared remarks here), Reddit CEO Steve Huffman and Citadel CEO Kenneth Griffin.)

MASTERCARD PAYS IN SAND DOLLARS: People in the Bahamas now have the option of loading the country’s central bank digital currency, known as the Bahamas Sand Dollar, onto a prepaid Mastercard to enable use anywhere in the world, the payments giant has announced.

BITWISE DEFI: Bitwise Asset Management has launched a decentralized finance index fund, CoinDesk’s Danny Nelson reports. The money manager aims to capitalize on growing investor demand for digital tokens associated with the fast-growing “DeFi” arena, a segment of the cryptocurrency industry where entrepreneurs are building software-automated versions of banks and trading platforms atop blockchain networks.    

Bitcoin Watch

Decline in “whale” entities worth watching, CoinDesk’s Omkar Godbole writes  

The number of bitcoin addresses with at least 1,000 bitcoin (roughly $50 million worth) has trailed off recently after rising over the past year.

Source: Glassnode

The number of large bitcoin investors or “whales” has declined recently after rising over the past year, blockchain data show, potentially a bearish signal if it means there’s less buying pressure from large accounts. 

Wallet addresses or clusters of related addresses holding at least at least 1,000 bitcoins (roughly $50 million worth) have dropped by a little over 1% to 2,200 in the past nine days, according to Glassnode, a blockchain data provider.

The cryptocurrency, however, has risen from $40,000 to $52,000 during the same timeframe.

So spot-market inflows might need to pick up soon to keep the bullish momentum going, as derivative markets are looking overheated.

Token Watch

Ether (ETH): Ethereum cryptocurrency looks overleveraged after rising to new all-time-high price over $1,900. Signals from derivatives market suggest that traders are heavily skewed toward leveraged bet on further upside, potentially a harbinger of fresh volatility.  

Cosmos (ATOM): Upstart “ecosystem of blockchains” plans to go live Thursday with “Stargate” upgrade. “Stargate represents an important milestone for the Cosmos project on the way to launching its inter-blockchain communication (IBC) protocol that will allow the 200+ Tendermint-based blockchains to interoperate easily,” CoinDesk’s Brady Dale writes. 

PoolTogether (POOL): “Lossless lottery” set up in 2019 will airdrop new token to all users who have joined it for the ride so far. “No-loss prize savings is one of the most, if not the most used consumer financial primitive in the whole world,” PoolTogether founder Leighton Cusack said.

Opinions and Observations

BITCOIN ON THE BALANCE SHEET? The U.S. will eventually adopt bitcoin as a reserve asset, argues Zabo co-founder Alex Treece in an op-ed for CoinDesk Opinion. 

DOGECOIN DREAMS: Rise of the Shiba Inu-themed “meme token” dogecoin (DOGE) reflects the power of collective belief and a longing for a more ideal form of crypto, CoinDesk’s Emily Parker writes in op-ed: “It may be tempting to write this off as a speculative frenzy or just a fluke, but that would be missing the larger picture.”  

BUY THE TOP: People who bought bitcoin at the previous price peak in 2017 have outperformed the Standard & Poor’s 500 Index 3.5-fold, the crypto trader Alex Kruger tweeted.  

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Blockchain Bites: Why Buy an NFT?

Digital friction

Nonfungible tokens (NFT) are having a moment. In recent weeks, notable investors Mark Cuban and Chamath Palihapitiya have signaled their growing interest in this corner of the crypto economy, adding fuel to a rally that was already red-hot. 

It’s tough to measure the size of the total NFT market due to how these tokens are structured. Each NFT is a non-replicable digital asset. Because there’s only ever one NFT, each asset is essentially its own market. The total value of NFT-based crypto art is now above $100 million, according to, which tracks the largest platforms dedicated to art sales.

This article is excerpted from Blockchain Bites, a daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here. 

The technology isn’t limited to creating digital signatures on works of art, but has applications across anything online that needs to be verifiably unique from mortgages to sneakers. In fact,, an industry data site, estimates that crypto art accounts for slightly less than a quarter of the NFT market, according to its latest annual report. 

(Though, again speaking of data issues, estimates the total NFT market to be $250 million, which means “crypto art” as a sector is worth $62.5 million, far shy of the figure cited earlier.)

The largest market sector – the multiverse, an alternate, fully digital reality – is probably the least understood. While skeptics raise an eye when a digital portrait sells for hundreds of thousands of dollars, at least a painting is something comprehensible. 

In a recent CoinDesk opinion piece, Janine Yorio, head of real estate at Republic, wrote that the virtual real estate market is primed to boom. She cites the scarcity of digital land on platforms like Decentraland, the trend towards virtual socialization and the growing number of investors willing to take portfolio risk on digital assets. 

Of course, there have been virtual reality booms in the past that have petered out. In 2006, Reuters, the veritable news service, opened a bureau staffed by a real tech reporter in Second Life, though it closed about two years later.

See also: Virtual Property Sells for $1.5M in Ether, Smashing NFT Record

So what makes this time different? Has the simulation glitched, sending us through another repetition in an eternal cycle of boom and bust metaverses? That I cannot say. 

But there is one notable difference this time around. NFTs add friction to digital worlds. While a .pdf can be copied and pasted endlessly, there really is only one token to go around (even the image or document it represents is fully replicable).

It’s this programmatic scarcity that is at least in part driving prices sky-high. Investors may be realizing the same deflationary market mechanisms that apply to bitcoin’s scarcity – there will only be 21 million coins – creates similar opportunities to buy and hold NFTs on a much smaller scale. 

Sound bites

Decentralized destination

Erik Voorhees is taking his non-custodial exchange fully decentralized. By implementing open protocols, Voorhees hopes ShapeShift can eliminate know-your-customer (KYC) requirements for users and reduce the regulatory creep growing over centralized exchanges.

“The key is to follow the rules, and as the rules are written intermediaries are regulated as financial institutions and non-intermediaries are not. If the rules change, then the ecosystem will have to adapt to that,” he said on CoinDesk TV this morning. 

Other stories

Pre-market valuation

Coinbase is being valued above the Intercontinental Exchange Inc., the owner of the New York Stock Exchange, in private secondary market trading, CoinDesk’s Ian Allison reports. Shares on the Nasdaq Private Market are changing hands at $303 a piece, valuing the company at approximately $77 billion. Pre-IPO futures on FTX are trading at about $386 at the time of writing.

Not interested?

Only 5% of business executives surveyed by Gartner said they intend to invest in bitcoin as a corporate asset this year. Putting bitcoin on the balance sheet is still a rarity among U.S. corporations, though some have predicted Tesla’s $1.5 billion allocation would open the door for others to follow. Gartner’s survey of 77 firms found it could be a matter of time; 16% expect their corporations to be investing in the crypto by 2024 or later.

Volatility rocks

JPMorgan analysts think bitcoin’s adoption on corporate balance sheets and potential move beyond $50,000 is constrained by its volatility. In a new note, bank researchers compared bitcoin’s 87% three-month realized volatility to gold’s 16%, and reasoned that bitcoin is falling short of its primary use case as an inflation hedge.

Who won Crypto Twitter?

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First Mover: What’s Next After Bitcoin Hits $50K? Another $1K Gain

Bitcoin’s momentum carried through overnight, pushing upward to a new all-time high above $51,000 just a day after passing $50,000 for the first time. 

“It’s not exactly soaring, as it has with other major technical breakouts, but another 3% gain isn’t to be sniffed at,” Craig Erlam, senior market analyst for the foreign exchange broker OANDA, wrote in an email. 

In traditional markets, investors were focused on the recent rise in the U.S. Treasury yields to a 12-month high around 1.3% – taken as a sign that bond traders are growing more concerned about future inflation as the economy makes a fuller recovery. Bond yields sometimes rise when there’s a greater chance of inflation, since investors want the extra income as compensation for the extra risk. 

It’s also a key focus for cryptocurrency traders, since bitcoin has become a popular way for many big investors to bet on faster inflation and a reduction in the U.S. dollar’s purchasing power. 

A fresh concern this week is that the winter storm hitting the (usually warm) state of Texas might drive up gasoline prices, contributing to inflation. Crude oil held at over $60 a barrel, near highs not seen in more than a year.

Some investors also see the potential for a growing supply of Treasury bonds, given President Joe Biden’s push for a $1.9 trillion stimulus plan, which would likely have to be financed through extra borrowing. Theoretically, an increase in the supply of bonds causes yields to rise, since more investors have to be enticed to buy the securities. 

All things being equal, rising yields, while potentially a sign of heightened inflation fears, could make bitcoin incrementally less attractive on a relative basis compared with bonds: ”Momentum funds who bought bitcoin as a hedge against inflation might sell if real yields rise,” Avi Felman, head of trading at BlockTower Capital, told CoinDesk. 

On the other hand, a rise in yields might prompt the Federal Reserve to expand its monetary stimulus. The U.S. central bank has been buying $120 billion of bonds a month for most of the past year to help keep interest rates low. 

The News

BITCOIN AS A STOCK: As asset managers continue to push for a U.S. exchange-traded fund tied to bitcoin, while prices keep rising, the pressure is growing on the Securities and Exchange Commission to clarify its regulatory stance. 

  • NYDIG, a big digital-asset manager, has filed a new application for a bitcoin ETF, CoinDesk reported Tuesday. (VanEck and Valkyrie also have recently applied.) 
  • So far, the SEC has rejected all applications for bitcoin-based ETFs. In August 2018, it rejected nine such proposals on the same day.
  • The main question is whether the market has matured enough to meet the requirements listed under the Securities Exchange Act, the federal law that oversees securities trading within the U.S., CoinDesk’s Nikhilesh De wrote Tuesday in his “State of Crypto” newsletter on policy and regulation. 
  • Another question is what stance Gary Gensler, nominated as SEC chair, will take on the matter – if he even has time to make it a priority. Competing priorities include “likely having to form a response to the market volatility seen last month with the GameStop stock pump,” De wrote. 
  • Canadian regulators on Tuesday approved the country’s second bitcoin exchange-traded fund. Evolve’s bitcoin ETF was conditionally approved to trade on the Toronto Stock Exchange, following approval of Purpose Investment’s offering last week. “It’s a promising sign if there are no issues with launching a bitcoin ETF in Canada,” said James Seyffart, ETF research analyst at Bloomberg Intelligence.
  • “So much work has been done in the backend of this, the plumbing, to effectively allow something like this,” Purpose Investments CEO Som Seif said Tuesday on CoinDesk TV’s “First Mover” show.
  • Osprey Funds said its bitcoin trust is now available to retail investors via over-the-counter markets, joining a crop of new bitcoin funds aimed squarely at the market-leading Grayscale Bitcoin Trust (GBTC) before a bitcoin ETF is approved by the SEC.

TEXAS WINTER STORM HITS CRYPTO: Bitcoin mining farms in Texas go offline as an unusually harsh winter storm and cold spell in the southern U.S. strains the electricity grid. 

Market Moves

What comes next now that bitcoin has passed $50K?

Chart of daily price moves for bitcoin.

Source: TradingView/CoinDesk

The next key milestone for bitcoin would come when the cryptocurrency’s market capitalization tops $1 trillion, a threshold that would signal a new level of maturity for the asset. Based on the outstanding number of bitcoins, currently about 18.63 million, that would happen when bitcoin’s price clears $53,677

In the meantime, here’s a sampling of commentary from analysts and other observers on what’s next for the bitcoin market:

  • QCP Capital: Options market “is pricing a 10% chance of $400,000 by year’s end, 15% chance of $300,000, 30% chance of $160,000 and close to a 50/50 chance of higher than $100,000.”
  • Alessandro Andreotti, bitcoin over-the-counter broker: “In my opinion we are going to keep reaching fresh new highs soon.”
  • Matt Blom, head of sales and trading, EQUOS: “If the market remains strong and holds above $50,000, then we see momentum building and the race to a $1T market cap is well and truly on. $54,000 is still the target, and looking ahead, with very little to stop this trend, thoughts of $60,000 will not be far from traders’ minds.”
  • Edward Moya, senior market analyst, OANDA: “Every day, it seems there are fresh catalysts for Bitcoin.”
  • Denis Vinokourov, head of research at digital assets prime broker Bequant: “Yesterday’s news that MicroStrategy is to buy another round of Bitcoin using the proceeds from their announced $600 million note offering should be a net-positive for the price action. But there is a risk that, similar to QE announcements, that market participants will be demanding larger and larger ticket sizes or push prices lower.” (EDITOR’S NOTE: MicroStrategy has increased the size of the note offering to $900 million.) 
  • Mati Greenspan, founder, Quantum Economics: “At this point, people have to be asking just how much longer the party might last? The sheer interest in the space and new money that is reportedly being pumped into bitcoin as a hedge against copious amounts of brrrrrrr from J-POW and the Biden administration could well send bitcoin right past the $50,000 mark and into the stratosphere.”
  • JPMorgan: Bitcoin’s charge to a record north of $50,000 isn’t sustainable unless the cryptocurrency’s price swings cool down quickly, according to a research note published Tuesday. 
  • Wedbush Securities: “We believe the trend of transactions, bitcoin investments, and blockchain-driven initiatives could surge over the coming years as this bitcoin mania is not a fad in our opinion, but rather the start of a new age on the digital currency front.” 
  • Joel Kruger, cryptocurrency strategist, LMAX Digital: “Now that we’ve finally pushed through this next great barrier, we recommend exercising extreme caution over the short-term. The market has gone parabolic since breaking through $20,000, and technical studies are warning of the need for a healthy pullback in the days and weeks ahead to allow for severely stretched readings to unwind and normalize.”
  • James Bullard, president of the Federal Reserve Bank of St. Louis: “I just think for Fed policy, it’s going to be a dollar economy as far as the eye can see – a dollar global economy really as far as the eye can see – and whether the gold price goes up or down, or the bitcoin price goes up or down, doesn’t really affect that.”
  • Eric Demuth, CEO, Bitpanda: “In my opinion, it is just a matter of time until bitcoin becomes the new gold and will be added to the balance sheet of central banks.”

Bitcoin Watch

Weak spot-market volume might be cause for concern

Bitcoin’s daily chart shows bearish volume divergence on Coinbase Pro.

Source: TradingView/CoinDesk

Another day, another record high for bitcoin. The top cryptocurrency rose above $51,000 early Wednesday, taking the month-to-date gain to 54% amid a wave of institutional adoption.

  • The options market is biased bullish, with both short-term and long-term call options drawing higher prices than puts or bearish bets, CoinDesk’s Omkar Godbole writes.
  • The only cause for concern is the weak spot market volume on institution-focused exchanges such as Coinbase Pro. As seen in the chart above, the 10-day average of daily trading volume is trending south, putting a question mark on the sustainability of the breakout above $50,000.
  • As such, a sudden pullback, possibly to the 10-day average of bitcoin’s price, currently at $47,700, cannot be ruled out.

  • Pricing in futures market looks bullish, with the March contract on Chicago-based CME trading at 2.57% above the spot bitcoin price, representing an annualized premium of 24%, well above the average around 15%, the Norwegian cryptocurrency-analysis firm Arcane Research noted Tuesday in a weekly report. “The market is heavily tilted towards the upside, which can trigger brutal liquidations as we advance,” the analysts wrote. 
  • Most financial executives, including CFOs, are not planning to invest in bitcoin as a corporate asset this year, according to a new survey by consultant Gartner. Eighty-four percent of polled executives (representing 77 firms) told Gartner in February they were spooked by “financial risk due to volatility of Bitcoin” when considering whether to invest in the crypto.

Token Watch

Ether (ETH): Customers of the Coinbase cryptocurrency exchange can now sign up to stake ether into the Beacon Chain smart contract, which was set up to help facilitate the Ethereum blockchain’s planned “2.0” transition to a “proof-of-stake” system from the current “proof-of-work” system, which is what the Bitcoin blockchain uses. 

Dogecoin (DOGE):

  • The Shiba Inu-themed token started off as a joke cryptocurrency but now has a market capitalization of $7 billion and a huge global following. How did it all happen? CoinDesk’s Ollie Leach explains. 
  • “DOGE is indeed relatively concentrated,” the blockchain analytics firm Coin Metrics wrote Tuesday in a report. “The top 100 largest DOGE addresses hold 68.1% of total supply. Comparatively, the top 100 largest BTC addresses only hold 13.7% of total supply.”

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Valid Points: How CME Ether Futures Work and Why They Matter

Trading in ether futures went live on the Chicago Mercantile Exchange (CME) late last Sunday with the February contract registering an opening price of $1,669.75. 

In less than two weeks, the open price of the February contract has jumped 5% to $1747.75 as ether spot prices have continued to climb upwards of $1,700.

In terms of weekly trading volume, CME ether futures contracts surpassed $160 million in its first full week of trading. 

CME ETH Futures Daily Volume

Source: Skew

According to Tim McCourt, Global Head of Equity Index and Alternative Investment Product at CME Group, the initial activity of the CME’s market for ether futures is promising but there’s still a long way to go before the product is fully established and mature enough to support other derivatives products such as options. 

“We’ve done a really good job the first few days but obviously we want to see more in terms of on-screen liquidity. Right now, about five out of the eight maturities have an active market. So we want to continue to round out that term structure. … We have some work to do in terms of continuing to onboard clearing members and customers. So ether futures will certainly keep us busy for a while,” said McCourt in an interview with CoinDesk.

Ether futures aren’t new

The CME Group isn’t the first to launch an ether futures product. In 2018, digital asset trading service Crypto Facilities based in the U.K. announced the launch of its ether futures product. Last year, U.S.-based crypto derivatives platform ErisX announced the same. 

What is significant about the launch of CME ether futures is that it is the first financially settled ether futures product that is also regulated in the U.S., meaning expiry of any futures contracts don’t warrant the transfer of 50 ETH to a U.S. buyer but rather an equivalent amount in dollars. Being financially settled, according to McCourt, is a feature that was in high demand from the CME’s customers. 

“Certainly when you’re looking at financially settled futures contracts, you have the ability to avoid some of the barrier to entry around wallets [and] custody of the assets,” said McCourt in an interview with CoinDesk. “Some of the institutional clients would need different types of insurance of the [crypto] assets if they do sort out their custody solution so financially settled just makes it easier for a lot of people.” 

A financially settled ether futures product relies heavily on a robust and reliable reference rate for price while also removing and abstracting away the need for interactions with Ethereum, the underlying technology behind ether. 

The only impact the Ethereum blockchain could have on CME ether futures products is if its issuance schedule and technical upgrades like Eth 2.0 were to somehow impact its listing on the five major exchanges that the CME pulls data from in order to calculate its ether-dollar reference rate. (More information on the CME CF ETH-USD Reference Rate here.)

But just as Ethereum 2.0 is crucial for the technical development of Ethereum, a U.S.-regulated and financially settled ether futures market is a crucial component for the market development of ether. 

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Why CME ether futures matter

The launch of ether futures on the CME, the world’s largest derivatives exchange platform, is the key to bringing new institutional players to market, according to James Putra, VP of Product Strategy at TradeStation Crypto. TradeStation Crypto’s sister company, TradeStation Securities, recently began offering its clients the ability to trade CME ether futures contracts on its platform.

“There’s a lot of firms that want crypto exposure but just can’t get access to [the spot market]. So they need to interact with futures,” said Putra in an interview with CoinDesk. 

Futures contracts enable the ability for traders and investors of an underlying asset to hedge against future price movements. They are also an important tool in the hands of market participants for price discovery. 

“Futures give you a long-short optionality so you don’t only have to bet one side,” said Putra. “[In the spot market,] you’re pretty much limited to long only. You can just buy and hold.”

Finally, futures are a critical step in the maturation of markets that pave the way for other sophisticated products and tools for investors to leverage. Tim McCourt, Global Head of Equity Index and Alternative Investment Product at CME Group, said:

“It is critical that the futures market take root [first] and develop that robustness such that it can support [ether] options overlaid on top of the futures.”

McCourt added that the upwelling of interest and demand for an ether futures product, in his view, mirrors increasing interest in what’s being built on Ethereum, pointing to innovations and ongoing projects such as Ethereum 2.0, decentralized finance (DeFi) and stablecoins.

“Interest in [CME ether] products also follows in a congruent manner to the interest in the network that has been growing in the past year,” said McCourt. 

The promise of Ethereum 2.0

Pulse Check Feb. 17

Source: Etherscan

On Ethereum 2.0 specifically, McCourt affirmed the benefits to scalability and energy efficiency that this new proof-of-stake network could achieve. However, like the ether futures market, he also mentioned that it would take time to see if the promise of Eth 2.0 truly comes to fruition. 

Now 11 weeks into its launch, Ethereum 2.0 is secured by over 90,000 active validators each staking 32 ETH, worth roughly $55,600 at time of writing. This represents about 2.7% of the total ETH supply locked in Ethereum’s proof-of-stake network. 

On average, Eth 2.0 validators are earning 0.007554 ETH/day or $13.08/day. In total, validator rewards only make up roughly 2.6% of the rewards that Ethereum miners earn daily. 

Validated takes

  • The evolution of Ethereum 2.0’s roadmap (HackMD post, Ben Edgington)
  • CME ether futures explained (Article, CoinDesk)
  • Coinbase opens waitlist for Ethereum 2.0 staking (Article, CoinDesk)
  • Crypto market cap breaks $1.5 trillion as buyers show up for the dip (Article, CoinDesk) 
  • Ethereum 2.0 deposit contract tops $5.5 billion in staked ether (Article, CoinDesk)
  • Tim Beiko on how Ethereum governance works and the upcoming EIP 1559 (Podcast, cryptotesters)
  • Quick update on Eth 2.0 (Blog post, Ethereum Foundation)
  • Mark Cuban on why ETH has an advantage over BTC as a store of value (Podcast, The Defiant)

Factoid of the week

Factoid of the Week Feb. 17

Open comms

Feel free to reply any time and email with your thoughts, comments or queries about today’s newsletter. Between reads, chat with us on Twitter.

Valid Points incorporates information and data directly from CoinDesk’s own Eth 2.0 validator node in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post. 

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is: 


Search for it on any Eth 2.0 block explorer site!

Finally, if you like what you read today and want more original insights about Eth 2.0 development, be sure to check out Will Foxley and I’s weekly podcast, “Mapping Out Eth 2.0.” New episodes air every Thursday. 



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Blockchain Bites: Bitcoin Volatility Hasn’t Shaken Out Institutions

Purpose Investments CEO Som Seif, speaking on CoinDesk TV, said there have been measurable improvements made to the infrastructure supporting the crypto economy. In fact, he thinks it would have been a mistake three years ago if regulators had approved a bitcoin exchange-traded fund when his firm first floated an application. 

“So much work has been done in the backend of this, the plumbing, to effectively allow something like this. I think the regulators are comfortable,” Seif said. Purpose is the first North American firm to release a regulated crypto ETF. 

1. Volatility hasn’t shaken institutional interest in bitcoin. Bitcoin whipsawed early this week, dropping $3,000 in early Monday trading and setting a new high above $50,000 on Tuesday.

2. Two of bitcoin’s most prominent backers, NYDIG and MicroStrategy, are doubling down on their crypto plays.

3. Ripple is unlikely to settle with the SEC according to the latest filing in the case. Previous settlement discussions that took place under the Trump administration have been disrupted, as the division directors involved have since left the SEC.

Regulatory wheel

The slow wheel of regulatory progress could be driving cryptocurrency investors underground. And it’s a global phenomenon.

In one such example, Hong Kong’s security regulator has proposed rules to limit cryptocurrency trading to professional investors and only on approved exchanges. This could drive the retail crowd towards unregulated peer-to-peer platforms, according to industry advocacy group Global Digital Finance (GDF). OKCoin, BitMEX and Coinbase are all GDF members.

“Restricting cryptocurrency trading to professional investors only is different to what we have seen in other jurisdictions such as Singapore, the U.K. and the U.S., where retail investors can buy and sell virtual assets,” said Malcolm Wright, chairman of GDF’s advisory council

A similar argument was put forward by Som Seif, founder and CEO of Purpose Investments, the firm responsible for the first approved bitcoin ETF product in North America.

Speaking on CoinDesk TV, Seif noted that investors are hungry for ways to gain crypto exposure. Reluctance by the SEC to approve a bitcoin ETF could drive interest in alternatives such as investing in MicroStrategy, a company so loaded with bitcoin it almost functions like an exposure to the asset.

“If you don’t regulate something [investors] will find a way to access it in any other way … which opens up much greater investor risk,” Seif said.

That said, the past several years has been a boon for the crypto asset substructure. Seif noted the number and quality of custodians, intermediaries and data providers that have come online, all of which serves to foster confidence among regulators.

The plumbing is in place, the investors are there. Someone just needs to turn the spigot.



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State of Crypto: Will 2021 Finally Be the Year of the Bitcoin ETF?

There’s been renewed interest in bitcoin exchange-traded funds (ETFs) with the nomination of Gary Gensler to head the Securities and Exchange Commission and the approval of a true Canadian bitcoin ETF. Whether one gets approved in the U.S. is still unclear.

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When ETF?

The narrative

The big news last week was the Ontario Securities Commission approved North America’s first bitcoin ETF in Canada. An ETF, which is essentially a retail-friendly, regulated bitcoin investment vehicle that can trade in popular brokerage apps, has long been a product the industry has wanted. Numerous applications have been rejected in the U.S., but the approval of one in Canada could be an early sign that we’ll soon see something similar in the States.

Why it matters 

Basically, the idea is a bitcoin ETF would provide everyday investors with:

  1. Bitcoin exposure through existing retail trading apps, such as TD Ameritrade, BUT:
  2. These traders would not actually need to buy bitcoin.

In short, an ETFwould let people invest in bitcoin without having to set up a wallet or trust in an exchange that might go down when market volatility rises. 

There are also those who believe an ETF would help spark or continue a bull run, but considering Elon Musk can pretty much just do that on his own now I’m not so sure an ETF seems as necessary as it did in 2018.

Breaking it down

The crypto market has matured since 2017 and 2018, when the U.S. Securities and Exchange Commission (SEC) was rejecting ETF applications left and right. 

Matthew Hougan, the chief investment officer at Bitwise Asset Management (a firm that’s gone to great lengths to get a bitcoin ETF approved), told CoinDesk that the futures market tied to cryptocurrencies has grown significantly, the underlying spot markets are functioning better and the U.S. regulatory structure has evolved. But is that enough? 

The main question is whether the market has matured enough to meet the requirements listed under the Securities Exchange Act, the federal law that oversees securities trading within the U.S.

Ark Investment Management CEO Cathie Wood recently told an audience she thinks the bitcoin market might need to see $2 trillion in demand before the SEC is comfortable with an ETF. 

Hougan isn’t so sure, saying he thinks bitcoin’s futures market is comparable to hard wheat in size (hard wheat has both a futures market and ETFs, which is more than you can say for onions).

Gary Gensler

Some of the thinking about whether or not to file a bitcoin ETF application involves the new administration and the nomination of Gary Gensler as SEC chair. Gensler, a longtime crypto advocate who’s perhaps best known for his work on derivatives regulation at the Commodity Futures Trading Commission after the last financial crisis, is expected to be fairly crypto-friendly, at least to the degree of approving an ETF. Still, questions remain. 

“It’s certainly too early to say what his view will be on crypto, whether it will be a priority, what that will do to influence the market, and I think that may even be a premature conversation,” Hougan said. 

At the least, while Gensler may be interested in crypto, it’s not likely to be a priority, given many of the other issues he’ll have to address, including likely having to form a response to the market volatility seen last month with the GameStop stock pump. 

The better question is what has changed over the past two years.

According to Hougan, the factors that would support an ETF approval include:

  • Market efficiency has increased;
  • Regulatory oversight has evolved;
  • New custody solutions have entered the market; and
  • There are better audit processes.

However, the SEC has used various objections in rejecting past ETF applications. The outstanding questions include:

  • Whether the SEC’s market surveillance questions have been answered; and
  • Whether the SEC’s market manipulation questions have been answered.

“The market has gotten better and so the question you’re left with is ‘do we know enough’ and ‘has the market gotten better enough’ and we just don’t know,” Hougan said. 


One positive sign for the industry is last week’s approval of an open-ended ETF in Canada. To be clear, it’s not the first fund to trade in Canada: 3iq launched a bitcoin fund last year. However, this is the first ETF that will trade on a retail-accessible exchange – the Toronto Stock Exchange – within North America. 

Eric Balchunas, a senior ETF analyst at Bloomberg, said on Twitter the “U.S. usually follows shortly after” Canadian regulators in approving such products, calling the approval a “good sign” for American applicants. 

His guess: Late September is when we’ll see the approval, and it could see $50 billion in inflows over its first year. 

Here’s what needs to happen:

  • A company has to file for an ETF by filing a Form 19b-4. Two companies have filed for an ETF recently: VanEck and Valkyrie. However, neither has filed a 19b-4 form, which would kick off the SEC review process.
  • Once someone does file the 19b-4 form, however, the SEC has to acknowledge it’s reviewing it. This kicks off a 45-day review period. 
  • The SEC can say it needs more time and/or provide feedback. The agency can extend the review period up to 240 days (240 days from today would be Oct. 14). 
  • The SEC staff would decide whether or not to approve the application, and then the five commissioners would agree (or disagree, as the case may be).

At some point, the SEC would have to approve or reject the application. 

  • If the application is approved, congratulations to the issuer and to the next big thing that everyone will get excited about.
  • If the application is denied, a Commissioner (or applicant) could request a review of the decision. This happened to nine ETF applications that were rejected simultaneously in 2018. I still have no idea what the resolution was.
  • Come to think of it, the SEC also reviewed a Bitwise application that was rejected. The company later withdrew that particular application.

So, in short, while there are positive signs for an ETF approval in 2021, nothing is guaranteed.

SEC lawsuits

In other, unrelated news, last week Acting SEC Chair Allison Herren Lee published a statement ending the contingent settlement offers that could lead to the faster resolution of SEC cases. This means that cases could drag on longer for crypto companies that get caught in the SEC crosshairs. (Here’s looking at you: Ripple.)

The statement said the agency’s Division of Enforcement will no longer recommend settlements that are contingent on whether or not a company receives a waiver to act as a Well-Known Seasoned Issuer (WKSI). 

These waivers had perks. In the past, they could be used as part of a settlement offer if the SEC was suing a company on securities law violations. 

In other words, if the SEC Division of Enforcement is suing a company, say a hypothetical cryptocurrency-related firm, for alleged violations of the law, a settlement could have been contingent on the firm receiving WKSI status. This condition helped companies know what their penalties would be in a settlement, and what they could do post-litigation. 

Lee said this leads to a potential conflict between the SEC’s different divisions. 

This new policy would appear to lessen the chances of such settlements occuring in future. 

Commissioners Hester Peirce and Elad Roisman pushed back against the move in a dissenting statement, writing that the previous policy didn’t lead to any structural conflicts. 

Companies may be less willing to pursue settlements if they don’t know whether they’ll receive waivers to continue operating, they wrote, warning that this could lead to more time (and therefore, resources) spent pursuing cases.

It remains to be seen what incoming chair Gary Gensler will do. By the way – I’ll be talking about this case during a virtual panel hosted by the New York Financial Writers’ Association next Tuesday at 7:00 p.m. ET. Come check it out.

Biden’s rule

Honestly, not a whole lot has happened in the past week. No new nominations, no confirmation hearings scheduled yet. However, the U.S. Senate’s impeachment trial of former President Donald Trump has wrapped up, which should give the body more time to consider nominations.

Changing of the guard

Key: (nom.) = nominee, (rum.) = rumored, (act.) = acting, (inc.) = incumbent (no replacement anticipated)


Outside crypto:

  • Tesla Bitcoin Bet Exposes Limits of Crypto Accounting Rules: Okay, so within crypto, but outside CoinDesk. Anyways, it turns out that because taxes are weird,  Tesla has to report any potential loss in the value of the $1.5 billion in crypto it bought last month, even if it hasn’t actually sold the bitcoin, should the holdings’ value decline before its next earnings report, according to Bloomberg. However, should the bitcoin’s value increase, Tesla cannot report that. This is because U.S. tax standards-setters (the Financial Accounting Standards Board) haven’t created any specific guidance around digital currencies. Probably wouldn’t hurt if they did, though Bloomberg Tax reports that’s not likely to happen anytime soon.
  • Canadian Woman Cited in Online Attacks Is Arrested in Toronto: A few weeks ago I flagged a New York Times report about how a single individual may have published false information about a number of people over the course of decades. She’s now been arrested by Canadian police on harassment and libel charges.

If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at or find me on Twitter @nikhileshde. 

You can also join the group conversation on Telegram. 

See ya’ll next week!



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First Mover: Bitcoin Tops $50K and Crypto’s Nouveau Riche Move In

Price Point

Bitcoin (BTC) shot past $50,000 for the first time Tuesday to a new all-time high price.

The gain took the year-to-date return to about 70%, and traders immediately began to discuss what comes next. 

  • “We’re still in the midst of a violent bull run that will soon be more violent,” Ari Paul, chief investment officer of BlockTower Capital, tweeted Sunday. 
  • “We’re concerned about the pace of these market moves and would therefore recommend proceeding with caution over the short term,” Joel Kruger, cryptocurrency strategist at LMAX Digital, said in an email. NOTE: A price correction on Monday led to more than $520 million of futures-positions liquidations.
  • Bank of America, in a monthly investor survey of the “most crowded trades,” said that “long bitcoin” – bets on further price gains – slipped to second place behind “long tech.” Bets against the U.S. dollar (“short dollar”) ranked third.   

In traditional markets, U.S. stock futures pointed toward a higher open. “The reflation trade is powering assets tied to economic growth and price pressure, including commodities and cyclical stocks,” Bloomberg News reported. “At the same time, investors are riding a wave of speculative euphoria from penny stocks to bitcoin amid abundant policy support.”

The News

CRYPTO CRUSH: Signs continued to mount of greater mainstream acceptance of bitcoin and other cryptocurrencies.

  • Michael Saylor’s MicroStrategy plans a new sale of $600 million of convertible notes and will use the net proceeds to buy more bitcoin. 
  • Deutsche Bank, Germany’s biggest lender, is exploring cryptocurrency custody, with aspirations to offer high-touch services to hedge funds that invest in the asset class, CoinDesk’s Ian Allison reported Friday. 
  • Morgan Stanley’s $150 billion Counterpoint Global investment unit is considering placing a bet on bitcoin, according to a report by Bloomberg, which cited people familiar with the matter.
  • The city of Miami, following the lead of Mayor Francis Suarez, voted late last week to study the use of cryptocurrencies to pay for services or worker salaries while launching educational campaigns in English, Spanish and Creole.

VERGE SNAFU: Verge, a small cryptocurrency serving as a payments option on Pornhub, suffered a massive 560,000-block reorganization Monday, according to researchers at Coin Metrics.

  • The past 200 days of Verge transaction history “just vanished,” wrote Coin Metrics network data analyst Lucas Nuzzi. He described the event as “likely the deepest reorg that has ever taken place in a ‘top 100’ cryptocurrency.” 
  • Verge’s official Twitter account said the “dev team has released a fix,” and everything should be “business as usual” in “13 hours,” CoinDesk’s Zack Voell reported. 
  • The cryptocurrency previously known as DogecoinDark is no stranger to network attacks. It suffered similar but less severe exploits in April 2018 and May 2018.

Market Moves

Nouveau riche emerge as crypto market cap tops $1.5 trillion

This ranking of the top 10 cryptocurrencies by market value shows how the leaders from prior years, like XRP and litecoin, have been elbowed out recently by fast-growing blockchain projects like Cardano and Polkadot.

Source: Messari

The market value of all cryptocurrencies has topped $1.5 trillion for the first time, and it’s interesting to note just how much of that growth has been fueled by speculation over which projects might be the most promising – rather than just the pumping of also-ran tokens that dominated the industry’s top ranks in recent years. 

Sure, the industry leaders bitcoin and Etherum’s ether still dominate the charts, representing roughly $1.1 trillion of the total. But the top 10 tokens now include cardano (ADA), polkadot (DOT), Binance coin (BNB) and chainlink (LINK) – all associated with projects perceived as having at least some claim on helping to create the future of finance.

They’re crypto’s nouveau riche, climbing in the industry hierarchy at the expense of XRP (XRP), litecoin (LTC) and bitcoin cash (BCH), which held sway until recently but apparently have failed to inspire traders to the same degree. 

Some companies in the growing arena of decentralized finance, a subsector of the crypto industry where entrepreneurs are using blockchain technology to design automated versions of lenders and trading platforms, are raising money through token sales the way a Silicon Valley startup might sell an equity interest to a venture-capital fund.

In fact, Synthetix, a decentralized trading project, has just raised $12 million from investors Coinbase Ventures, Paradigm and IOSG – apparently through a sale of the project’s associated SNX tokens. “The raise looks to be a rare occurrence of VCs investing through the purchase of a platform’s native token directly from its treasury rather than wiring funds to its founders,” CoinDesk’s Daniel Kuhn wrote Sunday. The SNX tokens have tripled in price this year to a market value of about $2.9 billion. 

“Individually, none of these may make sense, and no one can really predict who actually will win,” John Wu, president of Ava Labs, said in an interview. His company backs the Avalanche blockchain, whose native AVAX cryptocurrency is up roughly 10-fold this year to a market value of $3 billion. And that’s after the revelation of a programming bug last week triggered a quick price correction.

“This is very similar to tech investing where people are paying for the future,” Wu said. 

Token Watch

Ether (ETH):

  • Staked ether in “2.0” deposit contract tops $5.5 billion.
  • Price hit new all-time high of $1,872.52 on Feb. 12.
  • Simon Peters, cryptoasset analyst for the trading platform eToro, wrote in an email: “Supply is constrained by investors depositing coins off the network, and buying from institutional investors continues to climb.” 
  • Denis Vinokourov, head of research for crypto prime broker Bequant: “The amount of bitcoin locked on Ethereum remains on a relentless trend higher (174k as of this morning), underpinning the ‘hunt for yield’ trade, which, combined with the surge higher by BTC resulted in the total value locked on DeFi platforms surging to over $40 billion. However, the well documented double-edged sword of a ‘hyperactive’ Ethereum network with erratic gas fees continues to wreak havoc and cause hour-long delays in transaction validations, yet again squeezing out the smaller market participants. The time for platforms to put more focus on layer-2 solutions is here, and doing so will prove beneficial for the broader ecosystem because it will likely drive many users towards decentralized exchanges.”

Dogecoin (DOGE): 

  • Price has fallen in five of the past eight days to about 5.8 cents. 
  • Slide accelerated after Tesla CEO Elon Musk tweeted on Sunday: “If major dogecoin holders sell most of their coins, it will get my full support. Too much concentration is the only real issue imo.”
  • One dogecoin address holds 27% of meme token’s supply, according to Decrypt.

Avalanche (AVAX):

  • An unusually high volume of transactions highlighted a code bug that severely crippled the Avalanche blockchain last week, but funds were never at risk,  an engineer Ava Labs, the development company behind the network, wrote in a Medium post on Sunday.
  • The episode represented an embarrassment for the because the “Ethereum killer” blockchain has touted its ability to handle high throughput.
  • AVAX tokens have tumbled in price since the incident, though they’re still up 11-fold so far in 2021.

Opinions and Observations

STIMULUS BITCOIN WINNINGS: Americans who bought bitcoin with first $1,200 U.S. government stimulus check are up 639%.

BLOCKCHAIN POWER USAGE BETWEEN ROMANIA’S AND POLAND’S: Bitcoin and six other proof-of-work blockchains use between 55.1 terawatt-hours of electricity per year (roughly the energy footprint of Romania) and 180.1 terawatt-hours (Poland or Thailand), argues Tim Swanson, founder of Post Oak Labs and head of market intelligence at Clearmatics, in paper published Sunday. 

MOHAMED EL-ERIAN SEES GROWING “OFFICIAL” RISK: “The private sector is embracing more and more bitcoins as both a form of payment and as away to invest,” the Allianz chief economist told CNN’s Julia Chatterley in an interview. “The official sector is warning more about bitcoin. The real accident here is that the official sector says, enough is enough.”

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Crypto Long & Short: What Does Dogecoin Have to Do With Government Bans?

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.


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.


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


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, 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.



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