CBDC Is A “Better” Alternative to Stablecoins, Which Are Unlikely to be Regulated Money: BoE Governor

CBDC Is A “Better” Alternative to Stablecoins, Which Are Unlikely to be Regulated Money, says BoE Governor

Andrew Bailey, the Governor of Bank of England, yet again shared his criticism of stablecoins as he said that he did not believe that stablecoins are likely to evolve into safe, regulated money, which means central bank digital currencies (CBDCs) will more likely be the future for electronic payments.

“I think we have two choices broadly,” Bailey told lawmakers in the upper house of Britain’s parliament as part of an inquiry into the future of digital payments.

“Is it going to evolve to some world of (asset-) backed stablecoins which has money-like features which could be regulated? I must say … I am sceptical about that. Or … is the better contribution, particularly to financial stability, to say the better alternative to that may be a central bank currency of digital form?”

Commenting on stablecoins, Bailey said out of the $2.5 trillion crypto market cap, which is around the level of the FTSE 100, “95% of it is unbanked crypto-assets,” and the other 5% are stablecoins, “some of which are more stable than others.”

He also warned that crypto-assets do have “all the potential to be a threat to financial stability, which is why we think we do need to take action.”

This month, the BoE and Britain’s Treasury said they would hold formal consultations next year on whether to move forward with a CBDC, which, if approved, would be introduced in the second half of the decade.

On Tuesday, Bailey said he would not expect the BoE to offer digital bank accounts directly to savers.

“We do not see this as the Bank of England moving into the retail bank account business through a central bank digital currency,” he said while speaking to the Lord’s Economic Affairs Committee.

The BoE would instead provide the means of settlements to a regulated platform on which banks and even alternative digital wallets holders would operate. The central bank, Bailey said, would need power over these firms on the platform to protect privacy.

According to him, work on a CBDC was intended to solve cash and retail transactions problems and not as a tool to implement unconventional monetary policy such as a negative interest rate.

Bailey further warned that allowing the private sector to manage the shift toward digital currency could result in the bank regulating big tech firms. “The question we’re going to face is… would we try to regulate” private tech firms creating digital money, he said.

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Author: AnTy

Assets Under First US Bitcoin ETF Surpasses $1 Billion in Just Two Days

JPMorgan analysts say it is not the Futures-based ETF driving Bitcoin prices but its narrative as a “better inflation hedge than gold.”

The first Bitcoin exchange-traded fund (ETF) in the US made its debut as the second-most heavily traded fund on record.

With a turnover of almost $1 billion, ProShares Bitcoin Strategy ETF’s (BITO) debut was behind only the BlackRock carbon fund, the latter ranking higher due to pre-seed investments.

On the second day, the pent-up demand for the Bitcoin ETF drove the assets held in the investment vehicle to over $1 billion.

BITO ended Wednesday with $1.1 billion under management after volume topped $1.2 billion — the quickest ever $1 billion mark reached by an ETF.

This off-the-chart performance was also reflected in the price of Bitcoin, which made a new all-time high at $67,000 yesterday. As of writing, the $1.22 trillion asset is hovering around $65k.

“It’s a validating moment,” said Jesse Proudman, co-founder, and CEO at crypto advisory firm Makara.

“It’s no longer a question of does this asset class continue to exist — I think that’s a really meaningful mark in the history of the broader digital-asset class.”

According to JPMorgan strategists, it is inflation concerns instead of the first US Bitcoin ETF that is driving cryptocurrency to record highs. JPMorgan’s Nikolaos Panigirtzoglo wrote,

“By itself, the launch of BITO is unlikely to trigger a new phase of significantly more fresh capital entering Bitcoin.”

“Instead, we believe the perception of Bitcoin as a better inflation hedge than gold is the main reason for the current upswing, triggering a shift away from gold ETFs into Bitcoin funds since September.”

JPMorgan analysts have doubts about the ETF bringing in new money because of a “multitude” of options related to Bitcoin already available.

“CME OI futures rampup (+90% in October) combined with the massive BITO volumes tells me they are wrong. Impossible to be 100% sure ofc, and there seldom is a single driver behind the wheel. Either way, bullish,” commented trader and economist Alex Kruger.

However, that’s just the beginning, as Bitcoin futures ETFs from VanEck and Valkyrie are also potentially coming to market this month.

Valkyrie has won the approval of the U.S. Securities and Exchange Commission (SEC) and will start trading on Friday. It will trade on Nasdaq under the BTF ticker. VanEck’s Bitcoin futures ETF is also slated to start trading early next week.

This is already leading to a race to cut costs, with VanEck’s ETF (XBTF) carrying a management fee of 0.65%, lower than BITO’s 0.95% expense ratio.

“The decades-long fee war has a new battle with Bitcoin ETFs,” Todd Rosenbluth, head of ETF and mutual fund research at CFRA.

“When an ETF comes to market second or third with a nearly identical product, it can be at a disadvantage unless it can stand out with a lower fee.”

Meanwhile, the BITO ETF, according to Vanda Research, was likely ignored by retail traders.

Retail investors bought $7.68 million in BITO shares on Tuesday, well below the $57 million shares of Coinbase in April, it said in a note.

Instead of retail, it was likely a combination of funds, investment advisors, and private banking clients shorting the ETF to gain from contango — the prices for future contracts being higher than the spot price.

“[Most] pundits interpreted the massive trading volumes as a roaring success for BITO. From retail investors’ perspective, it wasn’t as much of a blockbuster,” wrote Vanda analyst Giacomo Pierantoni and senior strategist Ben Onatibia.

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Author: AnTy

Olives Are A Better Inflation Hedge Than Bitcoin, says “Black Swan” Author

Olives Are A Better Inflation Hedge Than Bitcoin, says “Black Swan” Author

Olives are a shitty monetary asset, contrary to what bitter nocoiners may claim, counters Saifedean Ammous, author of The Bitcoin Standard.

Once a Bitcoin enthusiast, “Black Swan” author Nassim Nicholas Taleb has become a critic, calling it a “gimmick” and “Ponzi” now.

In an interview with CNBC on Friday, Taleb said the trillion-dollar cryptocurrency is also too volatile to be an effective hedge against inflation.

“Basically, there’s no connection between inflation and bitcoin. None. I mean, you can have hyperinflation and bitcoin going to zero. There’s no link between them.”

“It’s a beautifully set up cryptographic system. It’s well made, but there’s absolutely no reason it should be linked to anything economic.”

To fight this inflation, investors would be far off purchasing property than buying bitcoin. Even olives would be better, he said, “You’ll have olive oil. If the price collapses, you’ll have something.”

In counter-argument, Saifedean Ammous, author of The Bitcoin Standard, said,

“Olive oil isn’t just glorified lubricant, it’s also a shitty monetary asset, contrary to what bitter nocoiners inflamed from the lack of proper Mediterranean meat nutrition may claim.”

“Not only is olive oil a terrible money, it is also very difficult to verify, unlike bitcoin. It doesn’t have full nodes, and even sophisticated scientific testing isn’t enough to determine if it’s been mixed with rapeseed & canola industrial waste.”

A Game of “Pure Speculation”

To Taleb, bitcoin has characteristics of a Ponzi scheme that’s right out in the open.

His initial support to the cryptocurrency, apparently, Taleb was “fooled by it” because he thought it could develop into a currency.

“Something that moves 5% a day, 20% in a month — up or down — cannot be a currency. It’s something else,” said Taleb. But as legendary value investor Bill Miller said, “volatility is the price you pay for performance.”

Currently trading just under $50k, down from last week ATH of $65k, BTC price is still up over 1,215% from March low.

“I bought into it … not willing to have capital appreciation, so much as wanting to have an alternative to the fiat currency issued by central banks: A currency without a government.”

“I realized it was not a currency without a government. It was just pure speculation. It’s just like a game … I mean, you can create another game and call it a currency.”

Nassim Nicholas Taleb “Black Swan” Author

Given that Bitcoin is the best performing asset of 2021 and was also of the last decade, in spite of the fact that Tesla and other companies accept it as a form of payment, it makes complete sense people are more interested in it as a store of value than spending it on a daily basis.

In the light of growing demand and designed supply cap, the price target for Bitcoin is anywhere between $100k to $1 million in the future.

But for Taleb, that doesn’t matter, as “bitcoin could go to $1 million,” and it wouldn’t change his argument.

“These gimmicks, you have bitcoin today. You may have another one tomorrow. They come and go, and there’s no systematic link between them and the claims they make.”

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Author: AnTy

House Republican Leader Urges Govt. to ‘Better Start Understanding’ Bitcoin

House Republican Leader Urges Govt. to ‘Better Start Understanding’ Bitcoin

“I do not want America to fall behind. I want the next century to be ours,” said Congressman Kevin McCarthy. A former CIA acting director also came in support, saying, “most illicit activity still takes place in the traditional banking system and not cryptocurrency.”

House Minority Leader Kevin McCarthy says regulators can’t ignore Bitcoin anymore. The day the price of Bitcoin surges as high as $63,775 on Coinbase, the Congressman appeared on CNBC to talk about the largest cryptocurrency. McCarthy said,

“Those who regulate, those who are in government that make policy better start understanding what it means for the future because other countries are moving forward, especially China.”

“I do not want America to fall behind. I want the next century to be ours.”

Recently, venture capitalist Peter Thiel also talked in the same regard when he said,

“I do wonder whether bitcoin should be thought of as a Chinese financial weapon against the U.S. It threatens fiat money, but it especially threatens the U.S. dollar.”

Commenting on Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell calling Bitcoin “speculative” and taking a cautious approach to it, the California Republican said regulators tried to ignore crypto and make it go away, but they can’t anymore now that it has grown so much.

Back in 2019, he had said that he liked the decentralized nature of BTC and had also previously advised the government to research how blockchain can improve their tasks.

This week, a former acting director of the Central Intelligence Agency, Michael Morell, also came in support of crypto through his paper “An Analysis of Bitcoin’s Use in Illicit Finance.”

Here, Morell says that Bitcoin isn’t rife with illicit activity, in fact, “most illicit activity still takes place in the traditional banking system,” and that blockchain analysis is actually highly effective in fighting these threats.

Morell said alarmist statements and articles about the threat Bitcoin pose that are circulating are to make headlines and because it is a new technology that is complicated to comprehend, which typically makes people fearful as such, he urges for “more fact-based discussion” on the issue. He wrote on Twitter,

“I hope this study will help advance a transparent and fact-based dialogue between innovators and policymakers to help ensure that we maintain national security without hindering the adoption of potentially revolutionary technologies.”

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Author: AnTy

VanEck Files for a Bitcoin ETF Again; This Time It Will Physically Hold BTC

The $49 billion investment firm says the Bitcoin market has matured, pointing to better infrastructure, regulated exchanges, and support from OCC.

So, it has started!

After no new proposal in 2020 following the rejection of all the Bitcoin ETF proposals by the US Securities and Exchange Commission (SEC) in the past couple of years, the market is back to try again.

Now that institutions are pouring in amidst the strong bull market, VanEck is yet again making an attempt at a Bitcoin exchange-traded fund (ETF). The market feels that this time, we could finally get approval.

The big difference in VanEck’s proposal is that unlike the last time when they filed for a Bitcoin futures ETF, this one would physically hold the world’s largest digital asset.

The $49 billion investment firm has already successfully launched a Bitcoin ETN in Europe and is now ready to bring in another herd. Gabor Gurbacs, digital asset strategist at VanEck tweeted,

“Bringing to market a physical Bitcoin ETF in the U.S. is a top priority for @vaneck_us. We are committed to support bitcoin-focused innovation & continue to work with regulators & market participants to achieve that goal.”

In its SEC filing, VanEck argues that the Bitcoin market has matured and is “operating at a level of efficiency and scale similar in material respects to established global equity, fixed income and commodity markets.”

Here, it points to the launch of BTC futures contracts on major and regulated exchanges, growth of trading volume, arrival of major, established market makers, development of a robust bitcoin lending market, and expansion in the availability of institutional-quality custody services.

Moreover, the Office of the Comptroller of the Currency has confirmed that national banks may provide custody services for bitcoin and other virtual currencies, it said.

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Author: AnTy

Germany Banning Derivatives Trading with its New Tax Law Starting 2021

Germany Banning Derivatives Trading with its New Tax Law Starting 2021

You better make only profitable trades; losses are severely publishable by law.

Germany has made changes to its law that no longer allows the losses from income from forward transactions, crypto derivatives trading to be deductible.

In 2020, regulators around the world tightened their noose on cryptocurrencies, and Europe is making a move against derivatives trading.

The new regulation within the framework of the annual tax law has been approved. Under this new law, the limit of losses from forward transactions that can be offset against profits has been increased to up to EUR 20,000, from the previous EUR 10,000, reported a German publication site.

“If the trader realizes option transactions with a total profit of 1,000,000 euros and transactions with a total loss of 800,000 euros in one year, he will not only have to pay withholding tax on the profit of 200,000 euros but also on 990,000 euros from 2021,” explained the tax advisors.

This is because only 10,000 euros can be offset from the total losses of 800k euros, and 790k euros are carried forward to the following years.

God forbid if someone made more in losses because then it gets even worse. Not only did you lost assets in a trade, but you will also suffer from a significant tax burden. Independent researcher Hasu, noted,

“At the bottom line, this law effectively bans all derivatives trading starting 2021. But it’s even worse than that because people are still allowed to trade and generate tax debt far in excess of their profit. I’m in shock about the malice behind this.”

The regulators have already announced that warrants and certificates are not classified as futures and CFDs are forward transactions.

The new regulation that is to be applied from January 1st, 2021, will increase the tax burden of private investors significantly, but the good thing is “the courts have to clarify to what extent this provision is constitutional.”

“As others have pointed out, this law is likely unconstitutional, and it’s a huge surprise to see it ratified. Expect a wave of lawsuits against German gov + good chance it will be overturned. But this can take months to years, so be careful in the meantime.”

Hasu Researcher

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Author: AnTy

CBDC’s Offer Better Privacy Propositions Than Big Tech Digital Currencies: New York Fed

  • Fed research concludes that government-issued digital currencies offer better user data privacy than private companies’ digital assets.
  • However, CBDCs are not the answer to all problems relating to the privacy of payment data.

The research paper titled, “Monetizing Privacy,” by Rodney Garratt Professor of Economics at the University of California, Santa Barbara (UCSB) and Michael Lee, an economist at Federal Reserve Banks – Federal Reserve Bank of New York, states that central bank digital currency (CBDCs) will outperform the private company-based stablecoins such as Libra in protecting the privacy of user payment transaction data.

According to the research, the big tech firms are susceptible to selling users’ payment data to firms searching for an extra buck to boost their profits. It further states that a digital currency offered by these big tech firms such as Libra, led by Facebook and VISA’s digital currency, could lead to troubling cases of data privacy.

A follow-up post on the NY Fed blog by Lee and Garratt states some of these companies could become monopolies as more users join their platform and give them their data. Transactions using digital currencies will enable big tech firms with a competitive advantage to stack up on transaction data, further killing competition across the market. The post reads,

“This gap in product quality enables the [monopoly] firm to set discriminatory prices between payment types, taking into account the profit-maximizing quantity of data it would like to extract from consumers.”

“As a consequence, consumers obtain only a small share of the surplus generated from their data.”

The paper further states that public digital cash such as Bitcoin (BTC) could mitigate data monopoly by big tech firms. However, volatility in prices, fluctuating blockchain fees, and the rising costs of energy by BTC mining raise adoption issues.

A case for central bank digital currencies

The financial payment system is turning digital as the world battles with social distancing due to the global Corona Virus pandemic. With private big tech–owned digital currencies failing in offering users privacy on their transaction data, the research paper focused on government-issued CBDCs as the solution to privacy concerns.

The paper further states that a CBDC could also function as a measure against big tech data monopolies. CBDCs, however, not only offer increased privacy to users but also reduces the overall cost of fees and are environmentally friendly. The post reads,

“Nevertheless, the possibility that a privacy-preserving digital payment method may improve consumer welfare represents a relevant consideration for central banks to take into account.”

Regulators and authorities are urged to create policies around the privacy-enabled digital cash to ensure users are protected. Moreover, Garratt and Lee further claim that the privacy digital currency’s design should ensure that “the ability for consumers to purchase products without revealing their private data to vendors” is factored during development.

‘CBDCs not the answer to all privacy problems’

Despite the benefits CBDCs offer over big tech-built digital currencies, the paper notes that they also pose their own challenges in transactions. A “reliable and robust system” must be built to ensure that the privacy-preserving platform is secure at all times.

Notwithstanding, looking at “the commitment to privacy, regulators and lawmakers would have to rethink how to adapt current anti-money laundering practices.” Finally, a privacy-enabled CBDC could also affect the banking industry and financial systems, the report noted.

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Author: Lujan Odera

SEC Charges Rapper T.I. & Four Others for Promoting Fraudulent ICO, FLiK

The US Securities and Exchange Commission has charged Atlanta-based rapper Clifford Harris, Jr., better known as T.I., and four others for promoting an unregistered and fraudulent initial coin offerings (ICO).

T.I. promoted FLiK tokens in 2017 to his social media followers, falsely stating that he was a co-owner of the project boasted as “Netflix on the blockchain.” The platform was advertised as a streaming media platform with products that can be purchased with digital tokens, the SEC said in a statement on Friday.

The 39-year old rapper has agreed to pay the penalty of $75,000.

As per SEC’s order, he is not allowed to participate in offerings or sales of digital-asset securities for at least five years.

The company’s founder, a film producer, named Ryan Felton, who started FLiK and CoinSpark, is meanwhile facing claims that he misappropriated the raised funds to buy Ferrari, a million-dollar home, and other luxury goods.

“Felton victimized investors through material misrepresentations, misappropriation of their funds, and manipulative trading,” said Carolyn M. Welshhans, Associate Director in the Division of Enforcement.

The complaint alleges that Felton secretly transferred FLiK tokens to himself and gained an additional $2.2 million in profits by selling them into the market.

Previously, boxer Floyd Mayweather and music producer DJ Khaled have also been sued by the regulators for hyping the ICOs.

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Author: AnTy

Crypto Rating Council Adds IOTA, BAT and USDC, While Ripple Gets Ignored

The Crypto Rating Council (CRC) is a consortium of United States-based crypto firms who advocates for better regulatory clarity in the crypto space and is backed by the likes of Coinbase, Kraken, Bittrex, and others.

Given the growing debate over whether cryptocurrencies fall under the security category apart from Bitcoin (BTC) and Ethereum (ETH) (they are considered as assets, given the level of decentralization and transparency), they analyzed a number of digital assets to determine whether they possess traits of Security.

In a blog post dated 2nd April, CRC revealed that they have inducted three new cryptocurrencies in its list with different ratings which include Basic Attention Token (BAT), USDCoin (USDC), and Iota (IOTA). The blog post also revealed that the recent analysis was based on reviewing their previous ratings along with new developments and available information in the public domain. CRC also updated the scores for Maker and Polymath tokens.

How Do CRC Ratings Work?

CRC rates each token on a scale of 1-5, the higher the rating, the higher its chances of showing traits of security. Security ratings are important since it ensures that these are not sold unregulated. Every country has different security laws and they must adhere by them and have a regulatory clearance before making it into the market. However, it is also important to note that CRC is not affiliated to any government body and its ratings are not endorsed by any developers, regulators or third-parties.

The CRC rating gave IOTA an overall score of 2.00 which makes it unlikely for it to be considered as a form of security. IOTA has always claimed to be among the decentralized projects and belive the current rating by CRC would really help it expand its credibility in the US market. The firm responded to their rating of 2.0 saying,

“With our Crypto Ratings Council rating, we believe the US market and CRC’s partner organizations will feel more comfortable and confident engaging with the IOTA token and protocol.”

Apart from IOTA, even BAT scored a 2.00 rating on CRC while USDC scored the lowest of 1.00 suggesting it inhabits the least qualities of security. USDC which is a US Dollar backed stablecoin, even DAI, the decentralized stablecoin scored 1.00 on CRC ratings suggesting stablecoins shows the least traits of security.

Ripple Shows High Traits of Security

Ripple backed XRP token when evaluated by the CRC back in 2019 scored 4.00 rating that suggest it shows high traits of Security. While CRC ratings are not taken into consideration by any government-affiliated agency or security regulators and probably won’t change any of their opinions, but Ripple is facing a lawsuit for being security in the United States. XRP still maintains a rating of 4.00 on CRC.

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Author: James W

February Cryptocurrency Trading Roundup – Bitcoin, Ethereum, and XRP Price Analysis

  • Although not quite living up to safe haven standards, Bitcoin fares better than stocks, bonds, and commodities in a widespread economic climate
  • BTC/USD consolidates above 21 weekly MA. A strong close above 200 MA could spur a recovery
  • ETH/BTC breaks above long-term resistance. XRP/BTC resurgence proves all too fleeting

After a jaunty start to the year, it was to be expected that Bitcoin would stumble upon a corrective phase sooner or later.

In a harrowingly bearish month for global markets across the board, Bitcoin wasn’t entirely immune to the circumstances, the cryptocurrency didn’t suffer to the same extent as heavily fiat-correlated assets.

The Dow Jones Industrial Average (DJI) suffered its worst monthly loss ever, sliding 2847 points, with 10-Year Bond Yields sinking to new all-time lows of 1.08% in February. In that context, Bitcoin’s 8% drop can be chalked up as a healthy correction.

Bitcoin (BTC/USD) Roundup

Bitcoin (BTC/USD) closed in February at $8,528 which, while close to the bottom of the monthly range, ensured that the pair avoided a bearish dark cloud cover pattern.

The drop towards the end of the month did, however, breach the 200 SMA, currently at $8,735, which now acts as the short-term resistance as the pair consolidates around the .5 Fibonacci retracement level.

After taking a nosedive below the zero line, the daily MACD is shaping to converge on both the zero, and signal lines.

Daily RSI is likewise shaping to regain ground above bull-cycle low of 40 after closing below the level for the first time this year. A strong daily close above the 200 SMA can instigate a move towards $9,200.

Looking at the weekly chart, 21 weekly MA at $8,450 is likely to be a key support level. Bulls will be hoping that a weekly close below this level is averted. While evincing some bearish convergence for the first time in twelve weeks, weekly MACD remains above both signal line and zero line.

Looking at some on-chain metrics for Bitcoin (BTC), although both the number and volume of large transactions dropped significantly in February. The network’s hash rate bucked the trend this month; rising by 18% from 116 quintillion hashes per second to set a new record of 137 quintillion hashes per second.

Altcoins had somewhat mixed fortunes in February as the risk-off environment understandably affected less liquid crypto markets than it did Bitcoin.

Ethereum (ETH/BTC) Roundup

This didn’t stop Ethereum (ETH/BTC) from piercing through long-term resistance levels to record its best monthly close since January 2018. The pair gained 33% toward the close of February at 0.0256 BTC.

After breaking above the 200 MA in the first week of February, the pair parlayed the momentum of a golden cross in the second week to break resistance at 0.022 BTC and soar as high as 0.027 BTC, before correction found support at .236 Fibonacci retracement level.

A bearish DI cross cannot be construed as particularly valid as ADX indicates the correction could be running out of momentum. The pair must avert a close below 0.025 BTC before reasserting bullish momentum.

Ripple (XRP/BTC) Roundup

Ripple (XRP/BTC) was following a similar trajectory during the first two weeks of February, aspiring to recover ground on Bitcoin, before tracing back to surrender all those gains.

The pair broke above both the 50 MA and 200 MA in successive weeks but failed to retain the key support levels at 2900 satoshis and 2750 satoshis, breaking down on the first retest for support.

The 50 MA has now flipped to form the new resistance level. A bearish RSI divergence indicates that short-term prospects of breaking above this level may be bleak.

Ripple CEO Brad Garlinghouse admitting recently that the company, which seeks to actively distinguish and distance itself from the cryptocurrency, “would not be profitable or cash flow positive without selling XRP,” effectively operating as a central bank for XRP through its supply manipulation, certainly did not help matters for XRP holders.

On March 1, Ripple unlocked 1 billion XRP from its escrow wallet, further diminishing prospects of its price recovery, as a sell-off could be afoot.

Elsewhere among leading altcoins, Tezos (XTZ/BTC) was by far the best performer, gaining 67% against Bitcoin from 18k satoshis to 31k satoshis.

Despite showing promise earlier in the month, other altcoins ultimately slid significantly against Bitcoin. However, thanks to Ethereum redivivus, Bitcoin shed some market dominance, which dropped from 66% to 64%.

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Author: Lamps T