Dollar Sends Warning Signs for Risky Assets including Bitcoin and Crypto

The US dollar has hit a new all-time high today at 96.6, last seen in mid-July 2020. In mid-March last year, USD went as high as 103, and after bottoming out in late May and early June, it has been mostly trending up ever since.

The latest uptrend in USD came as Federal Reserve Chair Jerome Powell was reappointed for a second term, encouraging bets on higher US interest rates.

With the Fed already announcing the paring of its bond purchases, the growing expectation for tighter monetary policy and an acceleration in economic data has the dollar well-positioned against other major currencies.

As we have been noting, the slowdown or removal of liquidity from the market is not good for the prices of risky assets, which could negatively impact crypto prices.

“A stronger greenback would have you believe the same tailwinds that propelled global asset prices—including BTC and crypto—over the last 18 months are starting to reverse course,” commented Delphi Digital.

Already, this week, crypto-asset prices tumbled, with Bitcoin going to $55,600 and Ether to $4,020.

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As a result, funding rates are resetting and even briefly turning negative since last week as after hitting ATH at $69,000 two weeks back, the market has been struggling to be bullish.

On most exchanges, funding rates are hovering in neutral territory, the highest on OKEx at 0.0257%, indicating bullish demand is muted. At $23.36 bln, Bitcoin’s open interest meanwhile remains significantly higher than September lows of $13.11 bln but down from $28.85 bln ATH on Nov. 10.

This USD is also rallying to a 16-month high amidst renewed lockdown fears in Europe after last week investors sought a safe haven on inflation worries. Surging US inflation and the prospect of a sooner than expected rate hike by the Fed has helped DXY run higher, putting pressure on riskier assets and emerging market currencies.

Emerging markets are already struggling with rising inflation and especially as the dollar strengthened. The Turkish lira (TRY) actually hit record lows against the USD.

This devaluation of lira since September (-35%) has been mirrored by strong growth in BTC-TRY trade volumes, noted digital asset data provider, Kaiko. The increase comes despite Turkey banning the use of crypto for payments back in April.

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According to Chainalysis, currency devaluation has been among the main drivers of crypto adoption in the country, accounting for a large percentage of crypto use in the Middle East.

Meanwhile, the Turkish central bank has cut its policy rate by 100bsp, further contributing to the lira’s historic meltdown. “This could favor crypto assets which are seen as a more stable investment alternative,” said Kaiko.

The post Dollar Sends Warning Signs for Risky Assets including Bitcoin and Crypto first appeared on BitcoinExchangeGuide.

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Author: AnTy

USD Longs Climb to Highest Level Since March 2020, Greenback’s Downturn Coincides with BTC Rally

USD Longs Climb to Highest Level Since March 2020, Greenback’s Downturn Coincides with BTC Rally

The net long dollar position has grown to $2.99 billion this week, up from just $399.69 million in the previous week. Meanwhile, bitcoin net shorts are rising as the BTC price surges to $42,500, last seen in May.

The USD Index has been going down for the past ten days, sliding from nearly 93.2 to 91.79 on Friday — a level last seen over a month back.

This downturn comes after the greenback enjoyed an uptrend for about three months between late May and July. In 2021, the first quarter for USD was an uptrend which followed a downtrend for just under two months.

This is unlike 2020 when the USD Index rallied strongly past 103 in March while every other asset got annihilated. And just as Bitcoin, crypto, stocks, gold, and oil started recovering, USD went down hard to a multi-year low of 89.2 in the first week of January this year.

Interestingly, after 16 long months of net shorts, US dollar positioning finally flipped to net long last week.

Now US dollar net longs have reached their highest level since early March last year, according to CFTC data. The net long dollar position has risen to $2.99 billion this week, from a mere $399.69 million in the previous week.

In contrast, in the cryptocurrency market, bitcoin net shorts rose to 1,572 contracts from net shorts of 1,192 the previous week. This could be because CME traders are hedging their longs.

USD’s downturn coincides with Bitcoin’s uptrend to the point when it bottomed out on July 20, and the day USD had its local top.

Late on Friday or early Saturday, the Bitcoin price surged as high as $42,500, a level that was last seen in May after registering ten green candles in a row.

Since May, the dollar has been poised for its worst weekly performance as the US Federal Reserve made dovish remarks combined with underwhelming economic data.

The downtrend in greenback began as Fed Chair Jerome Powell said after a policy meeting that rate increases were “a ways away” and the job market still had “some ground to cover.”

“While the Fed continued to say it was moving towards winding back its money-printing program, the Fed’s move towards this shift looks likely to be slower than previously anticipated,” said Steven Dooley, currency strategist at Western Union Business Solutions.

US gross domestic product number (GDP) provided little support as the economy of America expanded at a 6.5% annualized rate in the second quarter boosted by massive government aid. Still, even this growth was just slightly better than Q1 and fell short of the expected 8.5% acceleration.

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Author: AnTy

Cryptocurrency Ransomware Attacks Surged Over 300% in 2020: Chainalysis’ Crime Report

Cryptocurrency Ransomware Attacks Surged Over 300% in 2020: Chainalysis’ Crime Report

Revenue from crypto-related crime was reduced by 53% last year. Illicit funds, scams, and proceeds of crime through crypto also dropped. However, The value of ransomware attacks tripled, generating over $350 million.

Chainalysis’ “Crypto Crime Report 2021” shows a significant decrease in cryptocurrency-related crime across 2020, revenue from these illicit activities dropping by $5 billion, or 53%, from the previous year. The total illicit activity compared to the total transactional volume also dipped to only 0.34% in 2020, or $10 billion – a sharp dip from the 2.1% ($21.4 billion) recorded in 2019.

Overall, cryptocurrency-related scams and illegal activities are falling. Only a small portion of illicit activity is left in the crypto ecosystem. The overall illicit value from crypto is falling compared to illicit funds in traditional finance, the Chainalysis report reads.

As was the case in 2019, scams made up the biggest chunk of crypto-related crime – reporting $2.7 billion, a sharp 71% drop from $9 billion the previous year. Interestingly, the number of individual scams made to scam wallets rose by 48% across 2020 to 7.3 million individual scams. The sharp drop in value in 2020 mainly arises from the fact that no scam is close enough to the magnanimous PlusToken Ponzi scam in 2019.

Across 2020, the total crime value from scams and other illicit acts raised nearly $10 billion, dropping from $20 billion in revenue collected by bad actors in 2019.

Despite the celebrations, the value from ransomware attacks tripled in the past year, representing 7% of all the illicit crypto-based transactions. At $350 million in value across 2020, crypto-ransomware attacks grew over 311% in a year – the largest growth amongst the report’s illicit categories. The spike is attributed to the global Covid-19 pandemic, which prompted the “work from home” culture, presenting new vulnerable opportunities.

Darknet markets and stolen funds witness a less dramatic increase than ransomware – a 29% increase and a 4% increase from 2019’s values, respectively.

Earlier in the year, Chainalysis reported that the total number of cryptocurrency crimes had fallen over 83% in 2020, as regulation and exchange compliance came alive during the year.

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Author: Lujan Odera

UNI Enjoying A Breakout Year; Uniswap Protocol Shares 2021 Roadmap

2020 was an exciting year for the entire cryptocurrency market as we set the stage for a bullish 2021.

The decentralized finance (DeFi) market also had a wild year as the total value locked (TVL) in the sector grew 20 fold to surpass $14 billion.

In the DeFi space, DEX Uniswap Protocol made waves by becoming the first project to exceed $3 billion in TVL. For now, it has fallen to $1.7 billion.

UNI token is also enjoying an uptrend, trading at $5 following a 43% rally over the past week. Currently, UNI is the 22nd largest cryptocurrency with a market cap of $1.34 billion.

Following the “breakout year,” Uniswap is now working on V3 to improve automated market-making (AMM). In its 2021 roadmap, the team shared that they will be exploring scaling solutions for faster and cheaper transactions, with an emphasis on governance.

“V3’s design is driven by a desire to drastically improve the AMM experience for both swappers and LPs, increasing capital efficiency and flexibility while introducing superior execution,” noted the team.

The team also shared a review of 2020, a year in which the Uniswap V2 was launched bringing in support for arbitrary ERC20/ERC20 pairs and flash swaps that has generated $4.8 bln in volume since then, producing $14.4 mln in LP fees.

In the entire last year, the decentralized exchange recorded $58 bln in volume, up 15,000% from 2019’s $390 mln. Uniswap even passed Coinbase on weekly volume albeit briefly.

Over 68,000 unique addresses are currently providing $2bn in liquidity across 27,000 unique trading pairs on the platform.

Just last month, the Uniswap team launched Sybil that uses third-party authentication platforms to make delegating of governance UNI tokens easy.

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Author: AnTy

USDC Circulating Supply Increases by 3.14B; Stablecoin ‘Way Ahead of the Pack’ in Regulatory Compliance

USDC Circulating Supply Increases by 3.14B in 2020; CEO Says Stablecoin Is ‘Way Ahead of the Pack’ in Regulatory Compliance

USDC’s supply has surged 687% in less than ten months. Circle CEO Jeremy Allaire says the latest regulations “pave the way for stablecoins to become a major part of the payments and settlement infrastructure of the financial system.”

Stablecoin USD Coin, created by Center Consortium, a collaboration of Coinbase and Circle has surpassed 3.6 billion in circulation.

“USDC crossed 3.5B in circulation, newly 500m new in circulation in past couple of weeks,” tweeted Jeremy Allaire, co-founder, and CEO of Circle.

A few hours later the same day, Allaire took to Twitter again to state that the coins in circulation had crossed $3.6 billion.

In mid-March, the market cap of USDC was just around $457 million, representing an increase of 687% in less than ten months.

2020 has been a year of stablecoins as the combined supply of these coins surpassed 20 billion recently.

Another interesting metric is the on-chain volumes of these stablecoins which have crossed the $1 trillion mark, this year, for the first time ever, analyzed The Block. Last year, the volume was a mere $248 billion.

The dominant stablecoin in the market, Tether (USDT) remains the king here as well by accounting for 76% of all the stablecoin on-chain volume followed by USDC at 15% and then DAI at just 7% share of the market.

As for the blockchain, Ethereum is the obvious leader with 83.5% of stablecoin on-chain volume share followed by Tron and Omni at 14.5% and 2.1% respectively.

Regulators onto Stablecoins

This increased popularity and usage of fiat-backed cryptos have brought regulatory scrutiny on the stablecoins.

Just this week, President Trump’s Working Group on Financial Markets published a statement where it says stablecoins must meet the same regulatory standards as other financial systems. It requires the issuers to obtain and verify the information of the parties involved in the transaction of stablecoins across unhosted wallets.

“Nearly everything that is being proposed is highly aligned with how Centre operates and USDC is issued today. Broadly, this is a very significant development in terms of acknowledging USDC as emerging significant payment infrastructure in the US,” commented Allaire on these new proposed rules.

He further went on to say that all the regulators are asking for are already the “hallmarks” of the company and they are “way ahead of the pack.”

These regulations “pave the way for stablecoins to become a major part of the payments and settlement infrastructure of the financial system,” said Allaire.

However, the rules on transaction reporting for unhosted wallets, which cross-references the midnight rule-making by Treasury Secretary Steven Mnuchin, “will be vigorously fought.”

“We are looking forward to picking this conversation up with the Biden Administration, and the many many leaders and civil servants across the US Treasury, SEC, CFTC and others as we usher in the next major phase of the global financial system.”

Jeremy Allaire Co-founder and CEO of Circle

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Author: AnTy

Bitcoin’s Rising Popularity Not an ‘Existential Threat’ to Gold’s Last Resort Status

Amidst the wild bull rally of 2020, several mainstream firms have commented on Bitcoin’s ability to outdo gold in the long term. In its recent report, JPMorgan also said that if Bitcoin continues to see the institutional adoption it is seeing, which has just “begun,” gold can “suffer” over the coming years.

However, according to Goldman Sachs Group, Bitcoin and gold can coexist despite the largest digital currency pinching some demand from the traditional safe haven asset. The bank said in a note,

“Gold’s recent underperformance versus real rates and the dollar has left some investors concerned that Bitcoin is replacing gold as the inflation hedge of choice.”

While the banking giant noted that there’d been some substitution, “we do not see Bitcoin’s rising popularity as an existential threat to gold’s status as the currency of last resort,” it added.

As we reported, Bitcoin flows have been increasing massively thanks to the cryptocurrency’s more than 210% rally this year. Meanwhile, the world’s largest gold ETF recorded the most significant outflow last month has not recorded any inflows. Goldman said,

“We do not see evidence that Bitcoin’s rally is cannibalizing gold’s bull market and believe the two can coexist.”

Dan Tapiero, co-founder-10T Holdings, a supporter of both Bitcoin and gold, agrees with Goldman Sachs and that there are not enough stores of value available for investors. He said,

“Non-financial market people do not understand that we have an overall SHORTAGE of stores of value available in the markets.”

“GOLD not losing its SOV premium any time soon, unlikely in my LIFETIME.”

According to Goldman, wealthy and institutional investors avoid digital assets due to “transparency issues,” and “speculative retail investment causes Bitcoin to act as an excessively risky asset.”

According to Jeff Currie, head of commodities research at Goldman Sachs, “Bitcoin is the retail inflation hedge.”

In an interview with Bloomberg, Currie said it is the copper chart that looks “similar” to Bitcoin, and what they have in common is they both are “risk-on growth proxies.”

He further added that gold remains a “defensive asset” and “there’s really no evidence” that Bitcoin hasn’t stolen demand from the precious metal.

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Author: AnTy

SNX to Surge Past $2,000 & Reach 3x Ethereum’s Current Market Cap: Report

DeFi bluechip Synthetix (SNX) is one of the biggest gainers of 2020, with more than 863% YTD.

With a $707 million market cap, SNX is the 40th largest cryptocurrency trading at $6.32.

However, according to the latest report, the DeFi token has a potential to go 364x from here that would take the digital asset’s market cap to a whopping $242 billion, more than 3x of the second-largest cryptocurrency Ethereum’s current market cap at $73 billion.

These lofty predictions come from the “confidential” report by Teeka Tiwari’s Palm Beach Research Group, claims an unconfirmed report.

The report, which calls these numbers “conservative,” compares Synthetix with Tesla, Amazon, and General Motors, stating “disruptive tech projects tend to be worth more through their innovations and cutting of overhead costs.”

The decentralized platform on the Ethereum network trades everything from cryptocurrencies, commodities, forex, indexes and will soon add stocks to its list, too, by creating synthetic assets on the blockchain.

As per the report, since the beginning of 2020, Synthetix has grown its user base nearly 4x, and the assets held on its platform have also increased 4.4x to over $750 million. Since February, the platform has also generated over $1 billion in trading volume but “has massive potential to eat more market share from traditional exchanges.”

“Conservatively, we think Synthetic could come to command a premium five times higher than traditional exchanges,” further reads the report. This is because the decentralized protocol eliminates middlemen and expensive overhead costs needed to run an exchange.

With an estimated $130 trillion trading in equities every year alone, even capturing a tiny portion of the market would see the volume on the platform, trading fee, profits, price, and the market cap of the digital asset ballooning, argues the report.

With the bull market in focus, everyone is back to making wilder predictions. However, given that Synthetix is one of the hottest DeFi projects in the market, it can achieve a higher value, but it’s to be seen just how high they will go.

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Author: AnTy

Chinese State Media: BTC Bull Market Can Cause Long-Term Downward Pressure on Gold

In 2020, China has repeatedly been pointing out the bull run the largest digital asset is enjoying, and yet again, before the year is over, it went at it again, but this time, it took one step further.

Over the weekend, CCTV, China’s state media’s Bitcoin coverage, involved its bull market, causing downward pressure on the precious metal.

Bitcoin getting airtime on the state media is significant in itself, but it is more so when compared with the traditional safe-haven asset, which has high demand in the country.

Interestingly, when it comes to global gold demand that includes jewelry, technology, bars, coins, and ETF, China, along with India, accounts for the highest, 24% each.

“It’s truly incredible if you think about it. A decade ago, we started printing a digital ledger, which today is still less than 1 terabyte that’s sucking the life out of an element on the fucking periodic table that has existed since the dawn of universe…” noted analyst Qiao Wang.

The CCTV report quoted JPMorgan’s report predicting a major shift in crypto and gold markets as digital assets become increasingly popular as an investment asset class.

“The adoption of bitcoin by institutional investors has only begun, while for gold, its adoption by institutional investors is very advanced,” wrote JPMorgan strategists earlier this month while noting that money poured into the Bitcoin fund since October year while moving out of gold.

According to the strategists, the trend that started this year is only going to continue in the long run as more institutional investors jump on the Bitcoin bandwagon.

“If this medium to longer-term thesis proves right, the price of gold would suffer from a structural flow headwind over the coming years,” wrote JPMorgan’s strategists at the time.

In its latest report, the banking giant said Bitcoin adoption by institutional investors achieved another milestone with MassMutual’s $100 million BTC purchase that could see an additional $600 billion in Bitcoin demand.

Back in Sept., CCTV also reported that cryptocurrency is the best-performing asset of the year has surpassed other investment classes like gold and US stocks.

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Author: AnTy

Gold Investor Forecasts Continued Bullish Rally for Bitcoin and Ether in 2021

While 2020 has already proven to be a stellar year for several large-cap cryptos, some analysts are already predicting what 2021 might look like.

Major gold bug Frank Holmes has given his prediction on Bitcoin and Ether. He believes both digital assets could do much better in the new year as they capitalize on 2020’s performance.

Increased Investor Interest and a DeFi Boom

Holmes is the chief executive of U.S. Global Advisors, a Texas-based asset management firm. Speaking with Kitco News, Holmes explained that he expects digital assets to notch improved performances in 2021 along with gold. He argued that the leading cryptocurrencies had seen growth in their underlying value drivers, leading to higher adoption and price gains.

Speaking on Bitcoin, Holmes explained that the asset is seeing greater adoption. He noted the increase in the number of new wallets, maintaining what seems to be a three-year trend. However, while many have pointed to an influx of institutional investment as to why Bitcoin is surging, the gold bug attributes the rally to the halving event.

As he pointed out, a comparable halving event in the gold market could see the asset rise to $10,000 an ounce. He added that the halving had affected the supply of the asset. Joined by the quick adoption by institutions (which have a penchant for absorbing Bitcoin in large numbers), Bitcoin’s demand has grown significantly, leading to a jump in value.

Moving to Ether, Holmes highlighted that the asset had enjoyed most of its 2020 rally from the decentralized finance (DeFi) boom. DeFi Pulse shows that the total value locked in DeFi projects is at an all-time high of $14 billion. Since much of DeFi activity is done on the Ethereum blockchain, the network is seeing new usage. That will undoubtedly increase Ether’s value in the future.

Holmes further predicted that continued growth in the DeFi market would help Ether going into 2021. The investor predicted a “two-standard deviation” to occur to the asset in the next few months on gold. Estimating the occurrence’s effects, he claimed that gold could hit $2,600 an ounce before 2021 draws to a close.

Not Drawing Comparisons

Holmes refrained from speaking on Bitcoin’s potential to displace gold as the global reserve currency that many believe could happen in the next decade.

A recent Bloomberg piece explained that several Wall Street stalwarts had begun debating Bitcoin’s potential to usurp gold as the global reserve currency. Bitcoin had gotten support from names like Paul Tudor Jones and Stanley Druckenmiller. Several large investment firms are even considering moving large chunks of their portfolios into BTC.

Bitcoin’s market cap is still a paltry $346 billion compared to gold’s $2.6 trillion. However, continued growth in the asset’s investor base should force a considerable change.

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Author: Jimmy Aki

Stablecoins Printed About $5 Billion During Bitcoin’s 80% Run-Up In Q4

After the March sell-off, Bitcoin has been slowly making its way up and it has been in Q4 of 2020 that it fully rocketed.

In early October, BTC was trading around $10,500 when it went on a tear, climbing to $19,965 on Tuesday, a level that was only seen on a few cryptocurrency exchanges during the top of the 2017 bull market.

At that time, the market cap of fiat-backed cryptos was a mere $1.5 billion which today reached nearly $25 billion, an increase of 1,560% in three years.

This growth actually started during the March sell-off which saw not only Bitcoin but the broad asset class; stocks, gold, oil, and everything else except for USD crashing due to coronavirus.

The total stablecoins market cap was under $6 billion in early March while the most popular stablecoin Tether’s (USDT) market cap was under $5 billion.

Today, Tether’s market cap is close to hitting $20 billion, a growth of more than 310% in nine months.

During Bitcoin’s euphoric rally of about 80% since October, USDT’s market cap actually increased by 25%, from $16 billion to nearly $20 billion.

While Tether has somewhat slowed down, but no doubt remains the dominant force by a wide margin, other stablecoins have started to capture a bit more of the market share.

PAX supply has increased by about 100 million since October 21st when PayPal announced that it would be supporting cryptocurrencies. Paxos, the company behind PAX, is used by PayPal as their infrastructure provider.

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Another stablecoin leading the market is USDC, which is being used as a tool of US foreign policy. On Nov. 20th, Circle announced a partnership with the government of Venezuela to distribute aid to their front-line medical workers.

While Venezuela’s currency is suffering from hyperinflation due to money printing, stablecoins offer an attractive option. As a result, USDC’s daily active addresses hit an all-time high of 43.21k, just four days after the announcement, as per Coin Metrics.

The market cap of USDC, developed by Circle and Coinbase’s consortium Centre, actually exploded in August, going from $1 billion to the current $3 billion. Binance’s stablecoin BUSD saw a jump of 270% (nearly $500 million) in the last three months.

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Author: AnTy