Bitcoin to Follow the Equities Market; One-Month Correlation Spikes to an All-Time High

Yet another week of weak price movement.

The world’s leading digital asset is trading at $9,072, in red with 24 hours ‘real’ volume of just $624 million.

Meanwhile, altcoins, especially the low cap ones, are enjoying a good uptrend. Among the top altcoins, Cardano is leading the rally with about 6% gains.

Among the top 100 cryptocurrencies, some of the top gainers include REN (17.19%), Loopring (16.95%), Nexo (11.18%), Augur (10.93), ZRX (10.76), Status (9.3%), VeChain (8.42%), Enjin Coin (7.89%), OMG Network (6.92%), and Maker (5.88%).

The market in Anemic State

With a downside move on Thursday, the price of bitcoin bounced from June 27 low, and the hourly chart with a long wick candlestick indicates “the short-selling is not sustainable.”

According to the In/Out of the Money Around Price (IOMAP) indicators by IntoTheBlock, more than 2.1 million addresses previously purchased 1.38 million BTC in the range of $9,095 and $9,365, which is “a critical resistance level as several of these addresses will attempt to break-even on their positions.”

When it comes to the support levels, over 1 million addresses previously purchased 705,000 BTC between $8,805 and $9,076. Holders in this range will “attempt to remain profitable on their positions and push prices above this level.”

As such, buyers are expected to create support near the $8,900 range and sellers to provide resistance around $9,200.

Meanwhile, for trader DonAlt, a close above $9,500, bitcoin could be expected to move over $10,500; otherwise, he’s looking for $8,500 first and then lower to $7,700.

However, the market remains “boring” and “could stay that way for a while,” he said.

Follow the Equities Market?

Due to the Independence Day holiday on July 4, the US stock market was closed today before the S&P 500 rose for the fourth straight day and closed at a 4% weekly gain. The improving job market has the hopes for economic recovery rising that has the equities market up about 7% of the record set in February after about a 34% drop.

“We’re starting to see the real economic data say, ‘Yes, the recovery is here, and it’s real,’” said Brad McMillan, chief investment officer for Commonwealth Financial Network.

The biggest risk to the markets currently is the return of panic we saw in March.

“Legacy markets, however, are rejected at breakout point resistance and “breakdown from these levels would be most logical,” said trader Crypto Yoda.

Now that the trendline is broken and retested on lower time frames, the trader is also expecting bitcoin to follow.

Bitcoin’s 1-month correlation with the S&P 500 provides support to this. The correlation hit a new high of 65.8% this month, as per Skew, which began tracking the data in April 2018. The one-year correlation has also jumped to an ATH above 37%, but reading between 30% to 50% implies a weak correlation.

This means bitcoin continues to be treated like a risk-on asset, but in the current scenario of money printing, this could be a blessing in disguise.

HODLers gonna HODL

HODLers meanwhile are busy holding the digital asset. The number of addresses that are storing bitcoin for at least a year has risen to a peak of 20.3 million in June.

Bitcoin investors believe the flagship cryptocurrency should have a higher value.

Interestingly, bitcoin miners‘ balance is also rising. 1.8 million BTC, about 10% of bitcoin supply is currently held in miner wallets.

But out of this 1.73 million BTC belong to very early miners, and are likely to be lost, as such only 70k BTC is with current mining pools, noted Glassnode.

Miners’ cumulative revenue has also reached $17.5 billion on July 2nd, as per Thermocap, a metric used as a lower bound for the capital inflow into an asset.

Since 2018, while Bitcoin’s Thermocap has been $12.6 billion, Ethereum recorded $4.9 billion, Litecoin $932 million, and Bitcoin Cash $810 million.

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Author: AnTy

Bank Of Japan (BoJ) Launches ‘Technical’ Study to Experimenting CBDCs

The race to launch a sovereign digital currency is heating up as Japan became the latest country to venture into a central bank digital currency (CBDC). In a report released by the Bank of Japan (BoJ) on Friday, July 3, 2020, the bank will start experimenting with a digital yen to check the technical feasibility of adopting a CBDC in the country.

The report, titled “Technical Hurdles for a CBDC,” will look into the launch of a digital Yen from a technical perspective with several central banks participating in the research. This marks the first time the central bank is speaking on a digital yen following in the footsteps of the People’s Bank of China (PBoC).

The latter central bank announced the plans to launch a CBDC back in 2017 and has quietly been developing its digital yuan. Reports to BEG late last month from the Vice-Chair of the Digital Yuan committee confirmed that the back end of the Digital Currency Electronic Payment project is complete with testing in some of the provinces already launched.

Japan aims at similar progress in its project, but the statement mentioned two significant challenges the digital yuan faces before development commences.

The first hurdle the CBDC faces is universal access, which means that everyone in Japan should be able to use the digital yuan whether you have access to a smartphone or not. The second is the resilience of the CBDC, which means that the stablecoin should be available at all times whether there’s an emergency, ‘earthquake’ – no lag should be in the system at any time too.

A question of governance?

The question that most central banks have to deal with is the overall governance of the CBDC. Both the decentralized systems and centralized systems have their pros and cons, hence the dilemma facing the Bank of Japan.

In the decentralized system, robustness in security is enhanced, and network failure minimized (eliminated) given the distributed nodes. However, these systems tend to be slower than centralized systems that have large capacities and faster transaction speeds. The report reads,

“In the case of massive transactions for retail use cases in advanced countries, it is better to adopt the centralized type. […] In the case where the amount of transaction is limited, and resilience and future possibility are prioritized, there is room to consider the decentralized type.”

Japan’s private sector is also trying its hand in the digital finance world. In June, we reported top banks in Japan including Mizuho Financial Group, Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group (MUFG) joined other industry leaders to study the prospects of developing a digital payments system. The “study group” examines and solves challenges concerning digital currencies and digital settlement infrastructure.

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Author: Lujan Odera

Techemy Capital Plans To Launch Compound (COMP) Investment Portfolio for Yield Farmers

Techemy Capital, a New Zealand based digital asset investment firm and fund management, announced the planned launch of new DeFi strategic investment products next week to provide a gateway for investors in open finance technologies.

The launch of the Compound (COMP) focused product, follows the launch of Bitcoin (BTC) and Ethereum (ETH) portfolios this week on Tuesday.

The previous investment products were hosted on the TokenSets platform with no minimum deposits or lockups, 24/7 performance reporting, free withdrawals, and data transparency on the Ethereum network.

COMP Added to Techemy Capital (TCAP)

Decentralized finance products are programmable applications built on the blockchain to remove intermediaries and connect capital principals directly, providing more yields on the investment. The craze of “yield farming” is taking over the digital asset industry, and Techemy hopes to provide a regulated platform for investors to participate in farming COMP yields.

The Techemy team in charge of the COMP trading desk will use the firm’s passively managed stablecoin portfolio consisting of c-USDC and c-DAI to earn interest and hunt for arbitrage opportunities on the Compound platform. A necessary hedging tool in the form of a purchasable cover against smart contract failure, and serviced by Nexus Mutual, are also offered to Investors.

More Developments on Techemy

Techemy Capital (TCAP) is a subsidiary of Techemy Group, an investment firm launched in 2013. The TCAP proprietary trading desk runs the ETH and BTC investment portfolios boasting a 55% return in 2019 after switching to an active management strategy. Head of Trading at TCAP, Ron Brewis said:

“DeFi allows investors to participate in trading strategies managed by professionals with a proven track record, or hold neutral positions in stable tokens which attract yields based on current APRs at the time. And all trades are public and self-auditable on the Ethereum network.”

The company recently announced a partnership with BraveNewCoin, a crypto research outlet, to introduce decentralized index-tracked products to the digital asset market.

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Author: Lujan Odera

US Congress Banking Committee Discusses The Development Of Digital Money and Payments Systems

  • The U.S Congress banking committee discusses the future of digital money and payments
  • Former U.S Commodities and Futures Trading Commission (CFTC) chairman is among the witnesses set to present to the committee.

With over 32 bills on digital currencies and payment systems introduced in the 116th U.S Congress, these new technologies got yet another day in the lawmakers’ chambers. According to a remote hearing earlier today, the U.S Senate Committee on Banking, Housing, and Urban Affairs discussed the “Digitization of Money and Payments.”

Details released on the hearing put forward three witnesses who vouched for digital payments, stablecoins and presented the advantages of developing a digital dollar. The witnesses are Former CFTC chairman and Senior Counsel at Willkie Farr & Gallagher LLP, Christopher. J. Giancarlo, Paxos co-founder and CEO, Charles Cascarilla, and Professor of Law at Duke University, Prof. Nakita Q. Cuttino.

In his pre-written statement to the committee, Giancarlo urges that the development of new financial systems to push America into the 21st century. He focuses on the long settlement and bank transfer times, land titles issuance, and recent delays in distribution of the $2 trillion stimulus checks – some taking a month to reflect in citizen’s accounts.

To bring new technological solutions, Giancarlo, who launched the Digital Dollar Project, a non-profit organization aiming to digitize the greenback, will be explaining the need to have a digital USD. He further wrote:

“The United States must take a leadership role in this next wave of digital innovation or be prepared to accept that the innovation will incorporate the values of America’s global competitors.”

Cascarilla looks to focus on stablecoins, and the possible creation of a Fed-controlled digital token, a CBDC. Given the current challenges in the banking system, Charles believes the integration of stablecoins is critical to the U.S’ financial infrastructure and maintaining its position in global economics.

He concluded his statement:

“Supporting growth and innovation with a US CBDC would facilitate the necessary upgrades to our financial infrastructure, reduce systemic risk, increase inclusion for all Americans and reinforce our values and the long-term position of the US dollar.”

According to Nikita’s statement, the development of digitized payment and money systems needs to focus on “the time and access frictions facing low-income Americans.” While digital payments streamline traditional banking, there are challenges still that obscure the countrywide adoption of these new technologies.

“Congress must critically review innovations like CBDCs and stablecoins to ensure novel forms do not belie true functions. In terms of financial inclusion, this means ensuring that promises of open access are achievable and ultimately achieved.”

[Also Read: ‌Bank of Canada: Zero-Knowledge Proof Are Insufficient for National Scale CBDC Integration]

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Author: Lujan Odera

Signature Bank Uses Fireblocks to Launch Blockchain-Based Payment Platform, Signet

Signature, a New-York based commercial bank, has launched its blockchain-based digital payment platform, called Signet, on Fireblocks network. This integration also makes Signature the first bank to debut its digital payment platform on the Fireblock network.

Fireblocks is an enterprise-grade blockchain platform known for facilitating the storage, moving, and issuance of digital assets and helping traditional institutions like banks, exchanges, and custodians to scale their digital asset infrastructures. However, Signature is the first bank to integrate with the blockchain scaling platform.

Michael Shaulov, Chief Executive Officer of Fireblocks, commented on their recent association with Signature bank and said:

“Fireblocks and Signature Bank share the same core philosophy when it comes to ensuring the accessibility and security of customer assets 24/7/365. Naturally, Signature Bank is a vital partner for us as we continue to grow the Fireblocks Network.”

Signet is a tokenized representation of the US Dollar made to facilitate instant settlements. The commercial bank also released an Application Program Interface (API) for Signet, which can be easily integrated by its clients and banks in their respective systems and access full transactional capabilities.

The API also helps the bank clients to settle the transaction in real-time and low cost. Signature Bank clients and Signet users can now use Fireblocks to initiate their transactions using the API.

President and Chief Executive Officer Joseph DePaolo, of Signature Bank, commented on their Fireblocks integration:

“The integration with Fireblocks will offer an enhanced service for our clients. With this latest banking technology innovation, Signature Bank remains at the forefront as we advance our Signet product and its capabilities.

As the digital needs of our clients continue to evolve and the broader adoption of asset tokenization increases, Signet APIs are yet another example of how we continuously strive to help our clients deliver better business performance and improve their operations,”

Signet was launched back in January 2019 and was the only platform of its kind to be approved by the New York State Department of Financial Services.

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Author: Rebecca Asseh

Former PBoC Vice-Chair Says the Backend Infrastructure for China’s Digital Yuan is Complete

China’s much anticipated Digital Yuan backend development is complete, according to Wang Zhongmin, the former Vice-Chair of the PBoC National Council for Social Security Fund. Wang made this announcement during the virtual 2020 FinTech Forum that was held by Beijing’s Fintech 50 Forum in collaboration with Tencent FinTech Research Institute.

The initiative, which began around five years ago, is in its sunrise phase following a pilot in 4 Chinese cities. Going forward, PBoC is optimistic about replacing the fiat renminbi (RMB) in circulation with a digital yuan.

It, therefore, follows that Wang’s sentiments could signal an earlier integration with China’s monetary system. Notably, China fast-tracked the development of its PBoC backed digital currency after Facebook announced Libra last year.

With crypto assets on the rise, China is looking to emerge as a leader in this space, hoping to replace the U.S dollar as the world’s reserve currency.

According to Wang, the digital yuan would not only serve as a digital base currency but also a payment ecosystem that accommodates other crypto-assets and sovereign currencies. Its integration is, therefore, expected to spur greater cooperation and competition in the digital currency space while maintaining oversight.

Also, the move towards a digital yuan is in line with measures against the spread of COVID-19. Wang was keen to note that both governments and private entities have since taken into consideration digital payment tech.

Other notable jurisdictions that have moved to support a CBDC include Italy; the country’s banking association (ABI) recently said that they are ready to take part in the piloting of a digital Euro.

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Author: Edwin Munyui

Cambodia’s Central Bank Rolls Out Blockchain Payment System Whitepaper; It’s Not A CBDC

After three years of development, the Cambodian national digital currency may be out later this month, according to a recently released whitepaper.

The permissioned blockchain-based payments system differs from the central bank digital currencies, also known as CBDCs, being offered by several states, including China and Russia, the paper states.

Cambodia Launches “Project Bakong” Blockchain

The Kingdom has taken massive steps in introducing blockchain systems into its economy since the National Bank of Cambodia (NBC) set up a commission to look into distributed ledger technologies (DLTs) in the latter half of 2016. Project Bakong is permissioned, based on the Hyperledger Iroha, a business-oriented DLT platform.

A year later, the commission drafted a solution in different sectors of the economy that a quasi-digital currency may be useful under the auspice of “Project Bakong.”

According to the white paper, the project allows the country to transition from a heavily dollarized financial system to a real-time funds transfer system across the population, offering interbank transfers too.

“The implementation of Bakong would connect all financial institutions and payment service providers under a single payment platform which will allow for fund transfers to be processed on a real-time basis without the need of a centralized clearinghouse.”

Notwithstanding, the platform will also offer Cambodians a P2P platform that allows retail transfers and payment options as quickly as sending an email. The system is mobile-based to ensure reach and accessibility to open up the digital finance ecosystem to Cambodians, lifting them from extreme poverty levels.

‘Not a CBDC’

Despite NBC’s blockchain payment system being compared to CBDCs developed by China, Sweden, and the U.S., Cambodia’s system is quite different. While the CBDCs are developed and issued by the central bank, the quasi-digital currency will need to be “exchanged” for Khmer Riel, the official currency of Cambodia.

The paper describes the development of a blockchain payments system as a detour from the long-running use of the dollar. Given the relatively young population, the turn to digital payment systems may well be the key turning point, with over 5 million citizens already having e-wallets to transact digitally.

The paper states the platform was set to launch in early 2020 but is yet to. NBC announced in the fall of 2019 that the payment system could also take on international payments in the future.

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Author: Lujan Odera

Italian Banking Association Wants A Digital Euro; Ready to Participate in Pilot Program

Italian Banks are ready to participate in the launch of a digital Euro according to an announcement last week by the country’s banking association (ABI). This body made up of over 700 banks said in a statement that it would be willing to speed up the roll-out of an ECB backed digital currency. Talks in the CBDC space have recently made headlines in crypto as advanced economies like France take into consideration these digital assets.

Notably, ABI was previously involved in the digital currency industry has launched a research group to look further into the assets last year. Also, an inter-bank settlement DLT initiative dubbed ‘Spunta‘ is already running in a bid to increase efficiency amongst ABI members. The ABI quoted this milestone as one of the consideration factors in their contribution towards a digital Euro.

Following the progress, Italian banks are of the view that digital currencies propose a significant value addition to the existing market infrastructure. The announcement says,

“A programmable digital currency represents an innovation in the financial field, capable of profoundly revolutionizing money and exchange. This is a transformation capable of bringing significant potential added value, particularly in terms of the efficiency of the operating and management processes.”

EU Regulations Should Be the Standard

While the ABI acknowledges an underlying value n digital assets, the association was keen to highlight that the EU’s monetary policy framework should take the forefront in any decision attributed to this space.

“Monetary stability and full compliance with the European regulatory framework must be preserved as a matter of priority.”

According to the ABI, such an approach ensures that the regulator and banking entities can maintain public trust.

Apart from Italy, the digital Euro has support from France and the Netherlands. Germany has also signaled that a programmable digital Euro would be a good idea despite FUD sentiments by the president of the Deutsche Bundesbank, Jens Weidmann, back in 2019.

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Author: Edwin Munyui

Bank of Thailand (BoT) to Develop A Prototype Payments System For Business Using CBDC

Thailand’s Central Bank (BoT) has announced that it will roll out a prototype for digital currency payments within the country’s business ecosystems.

The initiative will be based on an ongoing CBDC project dubbed ‘Inthanon, ‘ which kicked off two years ago in collaboration with Thai’s leading financial institutions. This development comes amid a CBDC frenzy that has seen markets like China roll out a pilot for its digital yuan.

Thai’s Proposed CBDC Prototype

The announcement by BoT noted that works on the CBDC prototype are set to commence in July with possible completion dates in early 2021.

According to the Thai financial watchdog, this step marks a significant milestone towards the adoption of CBDC’s hence expected to boost financial innovation significantly. The press release highlights:

“The prototype is expected to serve as a financial innovation that enables higher payment efficiency for businesses such as increasing flexibility for fund transfers, or delivering faster and more agile payments between suppliers,”

Notably, Thai’s CBDC prototype will first be integrated with the country’s oldest cement firm, Siam Limited. This will also include Siam’s suppliers to create a complete ecosystem to test run CBDC payments in Thailand.

While this will be the initial pilot of a Thai CBDC, the country had already begun exploring the niche in a partnership with Hong Kong’s Central Bank. The two have already completed the creation of a cross-border prototype meant to boost trade between them.

The CBDC Frenzy

CBDC’s had become a hot topic in crypto within the past months and peaked when China rolled out a digital yuan. This pilot was launched in 4 cities and is expected to be scaled to other regions with a possible massive use once proven successful.

France is also running a test of a digital Euro in a bid to keep up with developments. Interestingly, the U.S appears quite laid back and is yet to signal the possibility of a digital dollar despite suggestions by some stakeholders in the markets and administration to create one.

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Author: Edwin Munyui

Japan’s Multi-Billion Asset Bank, Nomura, Launches Crypto Custody with Coinshares, Ledger

One of Japan’s oldest financial institutions, Nomura bank, announced the launch of Komainu, a digital assets custodial service aimed at financial institutions, in partnership with cryptocurrency fund manager, Coinshares and hardware wallet manufacturer, Ledger.

The service aims at offering a KYC/AML compliant and secure platform for institutions to store their crypto assets.

Nomura, with over $230 billion in assets under management (AUM), represents the largest bank yet to become a custodial service provider. Big banks are finally getting their hands dirty in the digital asset space, competing with nascent companies such as Coinbase and Gemini.

The Komainu Custody Service

The Komainu project, licensed by the Jersey Financial Service Commission, will be led by the CEO and co-founder of Coinshares, Jean-Marie Mognetti. The executive board comprises different experts in the financial field, including former fund manager at Credit Suisse Group AG, Kenton Farmer, as head of operations.

The former head of cyber defense at Banco Santander, Andrew Morfill, will be chief information officer and Susan Patterson, formerly at UBS and Credit Suisse will head the regulatory and compliance department.

Mognetti believes the Komainu platform will open up the field for more industrial partners to join the crypto field by harnessing the expertise of all the three partners. He further said:

“Komainu bridges the gap by bringing financial expertise and capabilities for institutional clients to feel confident their assets are in safe hands.”

Focus on KYC/AML Compliance

Institutional investment heavily ties digital assets custodial services choice to its ability to secure the capital raised and regulations observed, CEO of Ledger, Pascal Gauthier, said in a statement. He further added that failure meeting any of these requirements would “weaponize the digital assets against them.”

The competitive advantages that Komainu brings to institutions – KYC/AML compliance and secure cold storage services – aims to bridge this gap between traditional finance and digital assets. Jezri Mohideen, Global Chief Digital Officer at Nomura, aims at building the custodial service “as a regulated and secure digital asset custody solution” for its clients.

Further Efforts in Blockchain Development

Nomura Bank’s investment into the Komainu project signals a growing interest in the digital assets space by the largest financial institutions in the world. Previously Intercontinental Exchange’s, Bakkt, and Fidelity Investments were the highest-ranking regulated banks offering digital assets custody.

However, Nomura’s interest in blockchain technology has not started recently. For example, the Komainu project was first launched in May 2018, with the bank forming a Japanese Blockchain Alliance in early 2019.

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Author: Lujan Odera