Fidelity Report: Trillions of Dollars Could Flow into Bitcoin as a ‘Unique’ Alternative Investment

The current macro environment is the best scenario for bitcoin; it is exactly what the digital currency needs.

As Fidelity notes in its latest report on “Bitcoin Investment Thesis,” bitcoin as a unique investable asset is gaining a lot of traction, which is to increase in response to the Federal Reserve cutting their benchmark interest rate to zero or negative.

“In a world where benchmark interest rates globally are near, at, or below zero, the opportunity cost of not allocating to bitcoin is higher,” reads the report by Ria Bhutoria, the Director of Research.

What makes bitcoin an attractive alternative investment is its low correlation to traditional assets.

BTC, being uncorrelated to other assets because of its dynamic narrative, being a young asset, and favored by retail investors. As such, it makes all the sense to invest in Bitcoin.

When it comes to retail, it has more to gain as the retail investors’ channel for financial information and advice shift to Twitter, Reddit, Telegram TikTok, and YouTube, a new wave of retail investors “will undoubtedly flow to bitcoin and other digital assets.”

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As a matter of fact, the report found that “The annualized returns of portfolios with an incrementing allocation to bitcoin outperformed a portfolio with no allocation to bitcoin over all time horizons displayed here, ending in September 2020.”

Given the growing interest in alternatives amidst low yields, overvalued equities, and the potential for funds to flow from fixed income into other asset buckets, it is beneficial to have BTC as a component of the alternative bucket.

With a market cap of just $210 billion, it is a drop “in the bucket compared with markets bitcoin could disrupt,” such as a store of value, alternative investments, and settlement networks.

The alternative investment market was sized alone at $13.4 trillion in 2018, as per the CAIA Association. If BTC were to capture even 5% of it, it would equate to an incremental $670 billion growth in its market size, and a 10% growth would take it to over a trillion dollars.

Also Read: Asset Manager, Stone Ridge, Buys 10,000 ($115M) Bitcoin as its Treasury Reserve Asset

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Author: AnTy

YFI’s Andre Cronje: Greed & ‘A Whole New Ponzi’ We Came Up With is Behind DeFi’s Insane Growth

  • “The current massive influx (in DeFi) is purely because of this new greed cycle that we’ve created seemingly out of thin air,” said Andre Cronje of yEarn.
  • Decentralized Finance (DeFi) is flying with more than $9 billion of total value locked (TVL) in this sector.

There is no doubt about the ongoing DeFi mania, which is glaringly obvious, especially in the way the unaudited protocols are locking in billions of dollars in less than a week of their launches.

Not to mention the skyrocketing prices of these DeFi tokens.

So, what is exactly driving this massive growth?

Greed is a pretty simple answer that has come right from the mouth of the horse. Cronje, the founder of DeFi darling YFI, the governance token of Yearn Finance in his interview with Chainlink said,

“I mean, the reason there’s such a massive influx of money right now is because people are making money in insane amounts and the reason they’re making money in insane amounts is because we came up with a whole new Ponzi.”

And the Ponzi, Cronje is talking about here is governance tokens, “which is this wonderful way where we give away free worthless tokens that for some reason people buy.”

The next wave then buys it so that the first wave can sell it, a cycle that then just keeps on repeating, while the token continues accruing more and more value.

YFI token gained popularity and a cult-like following for its most decentralized approach — zero supply, zero value, no VC funding, and no tokens allotted to the management.

The token hit an all-time high of $38,865 on August 31st, after its launch just over a month before that.

Also, “how economics work is that money comes to money,” shared Stani Kulechoiv, the founder of another popular DeFi protocol Aave.

It is “fake exposure” with those with capital deploying it in different protocols, minting tokens, and then selling them to those with only sufficient capital to buy them.

“It’s not fair,” for sure, but this is like the financial system, and “that’s how the market works,” Kulechoiv said.

The Real Thing

While all of this is making people wealthy by insane amounts, “it’s not the sustainable part of DeFi,” said Cronje.

But underneath it, all are also the protocols that are accruing value like the Synthetix ecosystem, Aave ecosystem, Compound, and the supporting tools like Chainlink. He said,

“These are the real things accruing value because they’re the ones that are going to be here in a year from now when this greed phase is over.”

According to Kulechoiv, in Synthetix or Yearn, one is optimization yields — using technology to get rid of efficiencies — and “that’s like the real growth that is happening.”

There’s substantial growth in things that we’re building, but then there’s the noise on top of them. It’s a dilemma in finance because the noise will always be there when people enter into financial markets with less knowledge, and they have to pay for that knowledge by actually buying things from other people, explained Kulechoiv.

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Author: AnTy

Bitcoin (BTC) Has A “Really Good Chance” Of Becoming A Global Reserve Currency, Analyst Says

Bitcoin (BTC) is increasingly gaining its fame as a favorable replacement to the current fiat backed monetary systems. One of the latest top personality to speak on the potential of BTC posing a threat to the current financial world is top selling author and financial analyst, Max Keiser.

An interview by Max Keiser on RT to CEO of e-commerce company BuildDirect, Jeff Booth, revealed the current challenges in the financial system and the importance of digital assets such as Bitcoin.

Bitcoin likely to become world reserve currency

The increasing global expansionary monetary policy led by the Federal Reserve’s $4.3 trillion monetary injections into the economy is raising tension on possible widespread inflation. Bitcoin is built to solve such challenges in the current legacy financial systems through its deflationary policy and Booth believes this may propel it into a world beating reserve currency.

“First of all, I see Bitcoin as a likely, a very likely candidate for a world reserve currency. So, I see it has a really good chance of winning over time as it works on a network effect.”

As the value of fiat currencies erodes due to governments expansionary policies, Booth said the need for a better system will emerge. He further said,

“Bitcoin seems to be that one that’s emerging as something that people trust more.”

Founder of BlockchainEDU, Jeremy Gardner, recently weighed in on the current value that Bitcoin holds against a failing financial system. Gardner tweeted,

So what are the predictions for Bitcoin?

Bitcoin (BTC) dropped below $9,000 for the first time in three weeks causing a bearish mood over the current market. The volatility of the top crypto coin has always been a factor to focus on and a number of analysts have made their predictions.

Chris Burniske, Partner at Place Holders, a decentralized applications VC firm, predicts a $1 trillion dollar market cap for Bitcoin, a sizable amount to be considered a global reserve. Reaching this level will require the price of Bitcoin to touch $50,000, or approximately a 450% increase from current market price.

While the long term prospects of Bitcoin look bullish, the price of BTC in the near term may drop to $6000 level after a fake breakout to $10,400 at the start of the month, BEG reported.

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Author: Lujan Odera

Gold Breaches $11 Trillion, Bitcoin’s Annual Issuance Rate at Parity with Gold

In the current macro backdrop, both bitcoin and gold have recorded an increase in their prices.

Earlier this month, macro investor Paul Tudor Jones said bitcoin reminds him of gold in the 1970s and that bitcoin is the best bet in the ‘The Great Monetary Inflation.’

Talking about the hedge against the inflation which he sees coming from central bank money-printing, he bets on gold and treasuries with a “growing role for Bitcoin.”

American billionaire hedge fund manager Paul Singer in his April investor also said the fair value of gold in the current macroeconomic environment is “literally multiples of its current price” and “one of the most undervalued investable assets existing today.”

Recently, gold’s market cap breached the $11 trillion mark.

In the coming years, the market size for non-sovereign stores of value is expected to expand dramatically which spells good for bitcoin as well.

Recently, Bitcoin underwent its third halving, which reduced its annual issuance rate at 1.8% to parity with gold. And this has been while the top four central banks alone printed a combined $4.1 trillion over the past three months to fight off the effects of Covid-19.

btc vs gold halving
Source: MessariCrypto

“There are few opportunities with as much asymmetric upside as Bitcoin if it were to become successful,” noted Messari in its latest report.

Bitcoin with its sovereignty, secular tailwinds, and upside is an attractive option however, it has a long way ahead as to reach gold’s current market cap, the digital currency needs to rise 63x from its current levels.

[Also Read: Professional Money Managers Loading Up on Bitcoin Post Halving]

New banks are what matters more?

In the first quarter of 2020, central banks have been printing money relentlessly and slashed the rates to zero.

The lower rates affected the banks which eat into their interest margins as such various financial stocks are sitting at near YTD lows.

If we look at the traditional old banks, the likes of Goldman Sachs ($59 bln), Citigroup ($87 bln), and Western Union ($7.5 bln) are at their 3 to 5 years low while Wells Fargo at $95 bln market cap is at its 10 year low.

Even Warren Buffet has been selling his banks’ stocks including that of Goldman Sachs, JPMorgan Chase, U.S. Bancorp, Bank of New York Mellon, Wells Fargo, and Bank of America.

Bitcoin meanwhile with a market cap of $170 bln is up 25% YTD but still down 54% from its ATH in 2017.

“Maybe banks make the old economy worse, and FinTech (including digital assets) makes it better?” said Jeff Dorman, CIO at Arca.

But not just bitcoin, new finance companies like Paypal, Stripe, Square, and even stablecoins are making new highs or are near their peaks. As analyst and investor Howard Lindzon said,

“People say markets can’t move higher without the financials (banks) but maybe the new ‘banks’ are what matter more.”

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Author: AnTy

Steem Freezes $5 Million of 64 Hive Users Funds in Coordinated Hard Fork Today

  • Steem Blockchain’s hard fork on May 20th has been lauded by current Witness Group Triple A as essential to ensure network stability. However, some of the users are opined that these are punitive measures to those that did resist the Sun’s takeover bid.

The Steem project has been thrust into the spotlight yet again. This is as an oncoming hard fork on May 20th will see some users accounts frozen and lose up to 23.6 million STEEM valued to be well over $5 million.

The Tron CEO, Justin Sun acquired the SteemIt blogging site towards the end of the last year. Then was involved in a hostile takeover for the Steem Blockchain despite widespread criticism from the Steem Community.

Hostile Takeover

The Delegated Proof of Stake (DPoS) protocol allowed the takeover as the SteemIt Blog owned about a fifth of the total STEEM tokens. This combined with key support from Binance, Huobi and Poloniex was enough to rally their weight (about 45.6 Million STEEM) behind new witnesses in a bid to get rid of ‘rogue actors’. This was seen as an attempt to quell the soft fork within the Steem Blockchain and resulted to some staunch Steem users retreated to their new Blockchain namely the Hive.

The witness group, Triple A recently highlighted that the imminent update will only target those that are deemed a direct threat to the Blockchain. They cited that this would be crucial in ensuring the Network was stable and improve the Steem Ecosystem.

“Publicly attacking users, collecting personal information, threatening murder… spreading fake news, and damaging network stability.”

Punitive Measures to Hive Defectors

However, some share the sentiment that these are just some of the punitive measures Sun is rolling out for those who opposed his takeover bid. This and the fact that majority of Hive’s users weren’t allocated any free token according ‘TheMarkyMark’ who was a witness prior to Sun’s takeover. A screenshot from a Steem employee stirred speculation that some user accounts would be victimized by the new update. The code that was released on May 19th confirmed this as it was seen to contain names of the supposed ‘rogue actors’.

The targeted users have not taken the issue lightly and have threatened all those supporting the hard fork with civil suits. Targeted users such as ‘They Call Me Dan’ and ‘pharesim2’ are set to lose $600,000 and around 80,000€ respectively if the hard fork is to go through.

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Author: Lujan Odera

Republican House Candidate Praises Bitcoin’s SOV And The Speed of XRP, DGB & NANO

  • Amid the current crisis that has affected the stock market greatly, U.S congressional candidate David Gokhshtein recently revealed to his Twitter followers that he will be hodling his Bitcoin.

David Gokhshtein has taken to his twitter account to discuss cryptocurrencies including Bitcoin (BTC), Ripple (XRP), NANO, and Digibyte (DGB) with much emphasis on Bitcoin. Despite the recent improvement in the stock market situation, he was stern on his decision of not planning to sell his Bitcoin and gave his followers reasons why.

David Gokhshtein once compared Bitcoin to gold. He explained that we might not incorporate it into our daily lives for carrying out our ordinary day-to-day activities. However, he added that we will probably see it attaining the same status as gold today which is a store-of-value (SOV).

Means of quick payment

In the thread, he mentioned Ripple (XRP), NANO, and Digibyte (DGB). He went ahead to praise XRP which is currently the third-largest cryptocurrency all over the world. He said that in his view XRP was faster than NANO. This wasn’t received well on the NANO end and he said that the NANO community was well mad at him after that.

He, however, clarified himself on that point saying that he didn’t label NANO as not good but only meant that XRP is faster. His followers related to XRP praised his positive comments over the currency. He also suggested that LTC and DGB be used as a means of quick payment.

Nothing is for certain yet

Crypto enthusiast and CEO of Galaxy Digital Michael Novogratz during a recent interview by CNBC showed his discontent on Bitcoin. He stated that he might as well give up on Bitcoin unless it hits $20,000 this year. The future of Bitcoin seems to be uncertain despite all the praises coming from people after the recent increase in price. From the most recent statistics, it has been recorded that Bitcoin has hit a three months low volume.

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Author: Lujan Odera

Another Horrific Day: Bitcoin Crashes to $8,630, What’s the Next Stop?

  • Support at current levels and price could go even lower to $8,200 but it is still a “normal bull market retracement level”
  • After the S&P 500 lost nearly $1.737 trillion in the past two days, it rebounds while gold seeing flight into the safe haven
  • Bitcoin and gold correlation over the past 30 days is negative indicating BTC has characteristics of both risk-off and safe-haven assets

The bears are holding strongly to the market as the prices took a hit yet again. Today, in yet another crash, Bitcoin price fell to $8,630 level briefly on Bitstamp and is currently teetering on the edge of $8,800, having broken through $9k.

The market is in deep red. Yesterday’s daily candle was closed below the monthly opening and now we have gone back to late-January levels.

“Heavier bids at 8.8k. I can stay solvent longer than the market can remain bearish. If it 8.8k caves, even heavier bids at 8.4-8.5k,” said trader CryptoGainz.

Altcoins to crash harder but expect to be completely wrong about Bitcoin

As bitcoin takes a fall, altcoins tanked. According to trader Cantering Clark, the “hard cold truth” is the altcoins that have been enjoying the rally until recently will “go on to make new lows, and repeat this pattern again.”

“As for BTC, always be prepared to be completely wrong. A lot of trading in general is about preparation. When Bitcoin drops there is much more reflexivity in price because no one really agrees on a fair value. Price is what determines value, overthrow is then tremendous,” said Clark.

Meanwhile, trader Nik Patel sees BTC dipping into the 200MA at $8,900 and reverse or further drop to the 360MA and take out the stops at about $8,200.

Support is looking weak at current level and though price could go even lower, is still a “normal bull market retracement level,” says analyst Bob Loukas.

Amidst this bearish scenario, analyst Mati Greenspan gave a dash of hope to bitcoiners as he states, “the retracement off the February peak actually looks like a bullish flag from this angle.”

Risky assets struggling during a flight into safe havens

In the stock market, the S&P 500 has lost about $1.737 trillion in value in the past two days, according to S&P Dow Jones Indices’ Senior Index Analyst Howard Silverblatt.

After a four-day losing streak, stocks opened higher across the board Wednesday with 10-year Treasury yield also retreating from its record lows.

Risk assets are struggling as coronavirus cases continue to climb steadily outside the epicenter in China.

“The ultimate impact remains entirely unknown at this stage,” said Eleanor Creagh, a Sydney-based strategist at Saxo Capital Markets. “And uncertainty is the enemy of conviction.”

Gold also rebounded on Wednesday after it hosted its biggest one-day decline in about four months. However, it has been expected that the safe-haven hasn’t reached its peak yet, with the possibility for another Fed rate cut by 25 basis points becoming certain.

“It is a typical flight into safe havens after the coronavirus has spread not only to the Asian countries but also to Italy and Middle East,” said Peter Fertig, an analyst at Quantitative Commodity Research.

Bitcoin both risk-off and safe-haven asset

Bitcoin is doing badly in the current environment, meanwhile, it has the arguments that the digital currency is a safe haven during turmoil has been shattered.

Coin Metrics also found that the correlation between Bitcoin and gold over the past 30 days has been negative, “adding evidence to the thesis that BTC only reacts to certain types of events and not others.”

One explanation to this could be that it COVID-19 is more of a macroeconomic shock than an uncertain geopolitical situation, meaning, “perhaps BTC has characteristics of both risk-off and safe haven assets with a truly unique reaction function.”

“Bitcoin just picks the status as an alternative asset when other things look crowded,” said Mark McCormick, global head of currency strategy at TD Securities.

Meanwhile, crypto data provider Glassnode says, as per MVR Z-score, there’s still much room for bitcoin to rise to. The MVRV Z-Score is used to assess when Bitcoin is over or undervalued relative to its fair value and at current value, it says there’s much room to grow for BTC.

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Author: Bitcoin Exchange Guide News Team

New Zealand Aims To Abolish Cryptocurrency Sales Tax While Income Tax Would Remain

Quick Read:

  • The New Zealand Inland Revenue Department is calling for a revision of current Goods and Services Tax laws that are unfavorable to the crypto sector.
  • Issues of whether to treat different crypto assets differently have arisen as they all have different features.

The New Zealand government has held discussions in a bid to revise the Goods and Service Taxes applied to cryptocurrency. This would mean that cryptocurrencies exchanging ownership would be liable to a 15% GST and end up double taxing as they would still be keen on applying the income tax.

The revenue authority Inland Revenue Department (IRD) has come to acknowledge that the tax rules in place cannot be applied to cryptocurrencies. This is because they don’t fall into the same framework that was designed for currency, shares, debt and equity securities.

“Because of their innovative nature, they will often also have different features to these other investment products.”

Should different tokens have different GST terms?

They are, however, in a bit of a crunch, as they have yet to decide on whether or not they will have different GST treatment for the different types of crypto-assets. With current laws being a bit unfavorable to the sector. This is because of the nature of various tokens, it makes it even harder to classify. The list includes payment tokens, utility token, security token, asset token, and hybrid token are all very different in nature.

They are however confident that simplifying the laws could make it attractive to crypto investors who would open job opportunities and further technological developments in New Zealand.

There is also the question of how to treat situations where the exchange of ownership in crypto assets has occurred with an individual that is not living in New Zealand.

“The supply of a crypto-asset could be an exempt financial service, subject to 15% GST, or a zero-rated supply to a non-resident.”

The authority reckons that there’s a need for change, as the current GST framework in regards to crypto assets is vague, making the sector less attractive for the investors. There’s an April 9thdeadline for anyone with varying opinions.

Notably, New Zealand is following the footsteps of their neighbor Australia who revised their GST laws in October 2017.

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Author: Lujan Odera

Crypto Needs Central Banks’ Pegged Fiat Currency to be Stable: Former ECB Benoit Coeure

Benoit Coeure, current head of Innovation Hub at the Bank of International Settlements (BIS), has today said in an interview with CNBC he is confident central banks partly hold the future of cryptocurrencies. The French Economist and a former executive board member at ECB was keen to highlight a that practical approach by regulators would define where to place the digital currencies.

Benoit further expressed the reasoning behind this point of view during the interview. Notably was an advocacy for central banks being the binding factor of a stable economy given tools under fiscal and monetary policies. According to Benoit, it follows that a stable crypto ecosystem would have to be Central Bank pegged;

“It will be part of the backstop because that’s what’s needed for the stability of the system.”

Benoits take on Crypto Regulation

When asked whether digital assets like BTC need to evolve for them to be adopted; Benoit had an interesting answer for CNBC’s reporter. The veteran Economist said if crypto coins are presented as investment assets then it would only be prudent to regulate them under similar laws with mutual funds, ETF’s or collective schemes. On the hand, they can be regulated as payments if they tend to lean more towards this function.

Benoit also commented on tokenization of fiat currencies to serve as a back-end for crypto ecosystems. In his opinion, Central Banks are mainly concerned with economic stability hence the support for systems like RTGS. Crypto assets are therefore likely to face a similar fate as central banks will remain at the core of monetary operations;

“It might have to evolve to be part of the backstop. It might have to be tokenized, it might have to take different forms but it will remain at the core of the system.”

These sentiments were aired on the same day BIS announced two new appointees under its innovation hub. Benoit welcomed Morten Bech and Andrew McCormack to the team noting that their skills would be valuable in the BIS goal of bridging the gap between FinTech and central banks.

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Author: Edwin Munyui

Ripple Records Largest Daily Active Address Creation for the First Time Ever

In Ripple’s six years plus history, this is the first time, it is seeing the current level of single day daily active creation. Crypto data provider Santiment noted,

Upswings in the daily active address created has been seen in July last year when the XRP price was declining. In December, the price bottomed out and started surging in 2020 and soon after addresses started picking up as well.

This month two such spikes have been seen, each one making a new record. XRP community and investors are surely getting ready for a bull market.

This past week, XRP price has surged nearly 16% while so far in 2020 it is up 70% trading at $0.325. The performance of the third largest digital asset was “only overshadowed” due to the rise in ETH price which is up a whopping 109% on a year-to-date basis.

Going forward, experts are still bullish on this cryptocurrency with trader Crypto Michaël expecting another over a 100% move.

Having broken the two year-old-downtrend and a retest, “Breaking above 3000 satoshis and likely continuation towards 3700 / 4400 and maybe even 6700 satoshis,” said the trader.

Meanwhile, trader Scott Melker has just two words for XRP, “Blast off.”

XRP bull Magic Poop Cannon made his appearance on Crypto Twitter after a long time, and only to share that “this could be the real deal.”

The XRP price chart, the analyst said looks identical to that of 2017, a bull rally of which XRP was the top performer, before the “massive rally.” Moreover, the resistance has also been “thoroughly destroyed” by the asset.

Now, it’s to be seen what will be the local top of this rally and wait for a new all-time high.

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Author: AnTy