Janet Yellen Torches Bitcoin Again, Calls it ‘Extremely Inefficient’ As A Payment Option

Janet Yellen Torches Bitcoin Again, Calls it ‘Extremely Inefficient’ As A Payment Option

U.S. Treasury Secretary is rooting for a digital dollar, but remains unconvinced about Bitcoin, which she describes as an inefficient asset.

U.S. Treasury Secretary Janet Yellen is not backing down with her criticism of Bitcoin. Yellen has gone on to describe the leading cryptocurrency as an “extremely inefficient” and “highly speculative asset.”

Bitcoin is Dangerous

Yellen commented at the New York Times’ “DealBook” conference, where she spoke on the country’s road to recovery post-covid-19.

Yellen had previously served as Federal Reserve chair under the Obama administration, having been appointed to replace Ben Bernanke from 2014 to 2018. She makes history as the first woman to be appointed as Treasury Secretary.

Her comments come as Bitcoin witnessed a sharp decline in prices, shedding off around $11,000 to $47K on Bitstamp. Bitcoin bounced back some moments later, regaining support and climbing back up to $51,500.

For Yellen, Bitcoin’s issues trump its benefits. While she acknowledges the role cryptocurrencies play in the financial system by creating quicker payment methods, she believes they have numerous problems. She raised concerns around its legitimacy and stability as an asset, bashing Bitcoin for its illicit financing links.

“People should beware it can be extremely volatile, and I do worry about potential losses that investors could suffer…I fear it’s often for illicit finance. It’s an extremely inefficient way to conduct transactions.”

Yellen also hinted at the possibility of the Federal Reserve hopping on the central bank digital currency (CBDC) bandwagon. While countries like China and Russia are making headway with their CBDCs, the U.S. has remained indecisive and is still unsure of what it plans to do.

Crypto’s Criminal Links

For Treasury Secretary Yellen, there’s one awful smell that hangs around cryptocurrencies—criminality. The crypto market should have gotten used to Yellen’s negative crypto comments by now. It has become a recurring theme with the high-ranking official. Earlier this month, she raised the alarm on how bitcoin was being abused for illicit purposes at a financial sector innovation roundtable. Yellen explained at the event,

“I see the promise of these new technologies, but I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”

While cryptos like Bitcoin and Ether are attractive to criminals due to their pseudonymous nature, recent studies from researchers show the tides are changing. Research from famed blockchain analysis firm Chainalysis revealed a decline in crypto-related crimes in 2020. The share of criminal activity was roughly $21.4 billion in 2019 of all crypto transaction volume, according to Chainalysis. That figure fell to 0.34$ or $10 billion in total transaction volume. Chainalysis believes the identification of criminal wallet addresses was a major catalyst for the drop in numbers.

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Author: Jimmy Aki

Strong Demand for Yearn Finance’s yETH Vault, Capitalizing on Ether, MakerDAO, & Curve

Since the launch of the much-awaited yETH vault on Wednesday, which is heralded as extremely bullish for Ether, it has already locked in 378,000 ETH (worth about $152 million).

“The new @iearnfinance yETH vault absorbed 378k ETH since launching 2 days ago. It also just successfully managed risk during a 25% crash. 3 Rebalances were called in the past hour leading to 2.7M DAI paid back to its CDP,” noted crypto investor Andrew Kang. “Cool validation for the product.”

Yesterday, Yearn Finance paused deposits to yETH after 70 million DAI were minted, stating, “for now this is a high enough cap to balance between best profits and best risk adjustment.”

This catalyst for Ether, which reduces the supply of the digital asset, creates value by providing ETH to Maker to mint stablecoin DAI, which is then provided to yDAI, the DAI vault. The latter vault provides DAI as LP for curve.fi/y and then curve.fi/y LP tokens are locked in the gauge to receive CRV.

“This is no different than a lender/borrower utilization ratio,” said yEarn founder Andre Cronje who explained, “as DAI in the pool becomes low, arbitragers sell DAI for (USDC, USDT, or TUSD). This adds DAI to the pool. So as DAI is removed, this makes it more valuable to trade in DAI. This is the same mechanism as explained for lenders and borrowers utilization ratios.”

But because with yETH like yaLINK, there is debt involved, one needs to have enough available funds, and yEarn maintains a ~200% ratio; as such, there is a ~50% buffer in case of lender/liquidity shortages.

yETH vault, capped at 60 million, has a buffer around $16 million.

Generally, in DeFi, a fast-growing sector where yield farming has taken the crypto world by storm, the two to four-figure yield comes from lending, trading, and liquidity.

To clarify the misinformation going around about DeFi, Cronje explained that yield is earned by lending out assets via Aave, Compound, and dYdX lenders where the closer the pool is to empty (the maximum amount borrowed out), the higher the interest paid for it.

Assets are also provided on Uniswap, Curve, and Balancer, where they earn trading fees, and these protocols also provide liquidity incentives.

But of course, the higher the gains, the higher the risk in terms of bugs and exploits in smart contracts, lack of trading activity, which reduces the fees, and price fluctuations causing unstable APY in liquidity incentives.

Also Read: DeFi Growth is Out of Control, Pushing the Centralized Crypto World Behind

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Author: AnTy

Bitcoin Fork Successfully Prevents a 51% Attack that Could Have Resulted in a $75k Loss

On July 10, the Bitcoin Gold team saw an extremely long attack chain of over 1300 blocks, which have been mined since July 1, 2020, against the BTG network.

As per the announcement, the team has prevented the attack after detecting it early on and alerting the exchanges and mining pools about the potential attack.

The team released a new updated version of the Bitcoin Gold network at block 640,650, the most “honest” block mined by MiningPoolHub before the attack. This update, which wasn’t public knowledge, rejected the attacker’s chain when it was released on Friday.

For the attack, the perpetrator rented hash power on July 1 from NiceHash, a mining service provider, to secretly mine an alternative chain. The chain was mined for ten days and was 1,300 blocks long. On July 10, the secret chain was released by the attacker in an attempt to steal 8,000 BTG worth over $75k.

Now, everyone is required to upgrade their nodes to make sure they are on the honest chain.

“51% attack on BTG defeated by a user-activated soft fork providing a checkpoint and hence explicitly banning the attack chain. Excellent news,” commented Ethereum co-founder Vitalik Buterin. “In PoS, in such cases, the attacker would lose many millions of dollars to slashings/inactivity leak,” he added.

Bitcoin Gold might have successfully stopped a block reorganization attack, but it’s not the first time such a thing happened. The network has a history of reorg attacks, it faced a $70k attack earlier this year and then back in May 2018 lost $18.6 million in a double spent attack.

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Author: AnTy

CME Open Interest Makes a New ATH while BitMEX Gets Rekt, What’s Next for Bitcoin?

Bitcoin’s price has reiterated a bit to $9,500 but is still looking extremely strong, recording eight weeks of price gains in a row not seen since early 2017.

It needs to be seen if the price can push above the resistance level around $10,500 with halving next week.

The futures market is steadily back in contango but there are structural differences from the last time BTC price was at this level in February.

For starters, although the funding rate has turned positive just now, it is still close to zero. In Feb. it was highly positive, as longs paid shorts. Additionally, the premium rates on futures contracts are still low, the annualized premium rates for June contacts are one-third of February’s rates.

But this also means lower risk for large price dumps from liquidations as longs are less leveraged. Both short liquidations and futures markets have the possibility for further growth as they haven’t turned bullish yet.

This also points toward a spot driven rally and that the futures market has yet to be turned completely bullish.

Bitcoin investors turn to CME

The futures market has started to see the shift as the open interest on CME bitcoin futures made a new all-time high at $489 million.

The regulated bitcoin futures market grew faster than any other bitcoin futures market over the past month. Tim McCourt, Head of Equity Index and Alternative Investment Products at CME said,

“The recent growth of open interest in our bitcoin futures contract demonstrates market participants are increasingly turning to CME Group to express views and manage their risk amid ongoing global uncertainty.”

This growth actually coincided with the news that prominent macro investor Paul Tudo Jones started buying bitcoin futures.

Its competitor Bakkt that launched physically-settled bitcoin futures in Sept. 2019 only has a 5% share of the US bitcoin futures market and recently appointed its third CEO. The open interest on Bakkt bitcoin futures is just $13 million, still down from over $18 million in mid April. Compared to BitMEX’s 40% decline in traffic, Coinbase only had a 7% drop and Binance 2%. Meanwhile, OKEx saw the biggest uptick of over 238% (up from 1.73 million to 5.85 million)

Also, while other exchanges like Binance and Huobi saw about 10% positive change in their BTC supply, BitMEX had declined 16% since Black Thursday.

Binance actually overtook BitMEX and was the only exchange to see derivatives growth in April, as per CryptoCompare report.

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Author: AnTy

Blood on the Streets: Bitcoin Miners Hurting and Operating at a Loss

  • BTC price remains above $7,000 but trading volume is extremely low at below $200 million
  • Miner price and electricity cost puts Bitcoin production cost at $8,941
  • Bitcoin miners are struggling at present with most operating at a loss
  • Bitcoin production price will double at halving, putting it at $17,800

We are almost in the middle of December and Bitcoin continues to trade above $7,000 level. We haven’t dropped below this level, not even once but it’s to be seen what will happen to BTC price once this accumulation phase is over.

At the time of writing, BTC/USD has been trading at $7,270 with 24 hours gains of 1.04%, as per Coincodex while managing the daily trading volume of just $193 million.

Just like the price which is trading sideways, the hash rate is behaving the same way. Ever since hitting the all-time high at 110 Th/s on October 23, the Bitcoin hash rate has been oscillating between 80 to 100 Th/s.

Recently, a report found that the majority (66%) of Bitcoin mining is still dominated in China. However, the mining is predominantly hydro-electric powered, so that’s good.

“Mining is highly encouraged in China now. They hope to control bitcoin by having all the miners in the country (ie, under their control),” said Binance founder and CEO Changpeng Zhao.

Bitcoin Miners Taking Short-Term Losses

According to Bitinfocharts, Bitcoin mining difficulty has been declining since June when Bitcoin hit 2019 high at $13,900. Currently, at 0.133, the profitability is close to hitting a new low of 2019 at 0.118 reached on Oct. 24.

Charles Edwards of Capriole Investments says,

“Bitcoin miners are hurting. The last 12 months has been the least profitable in all of the prior 5 years to be a Bitcoin miner. There’s blood on the streets.”

In the blog post, the company points out that Bitcoin’s production cost and miner prices together suggest that Bitcoin miners are struggling and potentially taking short-term losses.

The current Bitcoin production cost in terms of the miner price is at $7,399 and electricity cost is at $5,365. This puts the total cost at $8,941.

Price dropped below the Bitcoin Production Cost, however, tends to be short-lived as high-cost miners go out of business, the hash rate plateaus and then falls, and miners are less inclined to sell at a loss.

Over shorter periods, bitcoin miners can operate at a loss. Bitcoin price however never quite reaches the electricity cost to produce a Bitcoin, despite coming close in November in 2018.

Historically, the electricity to produce a Bitcoin represents a price floor.

This suggests Bitcoin miners are struggling at present with most operating at a loss. In 2019, miners had average daily profitability of 10%. The year has been actually the least profitable for Bitcoin mining in all of the last 5 years, notes the firm.

However, because several of miner costs are sunk, meaning already paid for such as hardware and locked in such as rent, they can operate at a loss over short periods.

With Bitcoin reward halving less than five months away, estimated to occur in May 2020, the Bitcoin Production Cost will double. On this basis, if the hash rate and mining hardware efficiency were to remain unchanged, the Bitcoin production price at halving would be at $17,800.

But with halving, the inflation rate will drop from 3.7% to 1.8%, as such miner influence on supply and demand is dropping.

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Author: AnTy

All Roads Lead To Bitcoin (BTC) Price Dropping Back Down

  • Analyst Magic is extremely bearish, predicting a 60% drop in April 2020

After the first week of trading sideways, Bitcoin has started slowly making its way downwards. From $7,500 on Dec. 9, today, we dropped to $7,072.

As Bitcoin turns red, altcoins follow the world’s leading cryptocurrency and register loses.

All Roads Lead to a Drop

Crypto trader Josh Rager is seeing all the roads leading us back down below weekly support at $6,902 because “HTF frames remain bearish trend and it’s looked weak in this range.”

Though BTC price could have a short term bounce, he is expecting another move down at least one more time. The time, according to him is to “accumulate.”

However, analyst Magic Poop Cannon who has been bearish on the flagship cryptocurrency is predicting a 60% drop in price. According to him, a new low will be coming at $3,000 level.

The call for a severe drop might not be seeing much mentions in the market as many like analyst Willy Woo and data analytics platform Glassnode are saying Bitcoin is close, but some like Magic and even veteran trader Peter Brandt has been calling for more pain ahead.

However, while Brandt has been projecting $5,400 as the bottom in June next year, Magic is predicting a 60% fall in April 2020. Majic said,

“Over the next six months or more, I think BTC (and the rest of crypto) is going to destroy a lot of hodlers. BTC looks very bearish, and I’m not only talking about short term price action. It looks long-term bearish.”

A warning call has also been made by trader CL who notes that the time-weighted average price of 2019 is at $7,100-7,200s.

And if we are in a bull market, bitcoin should not be below this level for “for a prolonged period.”

Meanwhile…

Crypto exchange OKEx also states in its blog update,

“Candlestick patterns and technical indicators have suggested that BTC volatility could increase in the short-term, with a bias slightly towards the downside.”

Retail Investors are on the Sidelines

With the majority of the crypto twitter turning bearish, it won’t be surprising if Bitcoin decides to make a move in another direction. Moreover, with volumes extremely low, a big transaction has the ability to move the market as well.

Matt D’Souza, Co-founder of Blockchain Opportunity Fund meanwhile shares a bullish picture saying, “We believe we are in the first 1/3 of a bull market.”

He points out how CME volume outpaced Coinbase and Bitfinex in Q1-Q3 of 2019 which indicates crypto was led by institutional money, signaling a market cycle turning point.

Institutions meanwhile won’t invest in ICOs that are surrounded by regulatory uncertainty and have liquidity issues. As such, now that altcoins are experiencing zero to negative returns, it means retail investors are on the sidelines.

“Once the last retail is in there are no more buyers left. All buying is exhausted and we experience a top. We are presently in the opposite environment where the institutions are accumulating, while the retail shows zero interest.”

No matter the next move Bitcoin will make, the best step, for a HODLer at east, is to accumulate – stack those sats.

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Author: AnTy

Latest Numbers Show Bitcoin Derivatives Preferred by Institutional Investors

The Crypto Fear and Greed Index (CFGI) shows that retails investors are extremely fearful of the massive downturn the crypto market has taken over the past week, with Mark Dow, the former economist for the US Treasury and International Monetary Fund saying on Twitter that the Bitcoin is dying during the period of the sell-off. However, the incoming data speaks otherwise.

US Regulated BTC Futures Markets Had their Volumes Increasing

While the Bitcoin was going under $8,000, US regulated BTC futures markets were witnessing their volumes going through the roof. The high demand for crypto derivatives is indicating more and more institutional investors are interested in such projects, even if the market volatility is at high levels.

The market value of Bitcoin took a big hit over the past 2 weeks, with the coin going from the high $9,100 trade value on November 11 to the low $6,600 on November 25. While this happened, long and short positions valued at almost $1 billion were liquidated on BitMEX, the crypto trading platform for derivatives based in Seychelles. In spite of the huge number of retail investors that got wrecked on BitMEX, many institutional investors didn’t.

Bakkt and CME Saw Their Trading Volume Increasing Too

On November 22, the Bitcoin futures exchange Bakkt has also seen its trading volume reaching an all-time high. According to the International Exchange (ICE), there were 2,728 monthly BTC futures contracts traded, at the value of $20.3 million. This raise in volume is 66% of the increase in the before 24-hour time period and 30% higher than Bakkt’s all-time high from November 9, which was 1,756 BTC.

The same thing happened with the Chicago Mercantile Exchange (CME), that reported a $424 million aggregate trading volume on Friday and registered $400 million on Monday, recording its highest trading volume since September.

While Institutional Investors Pour, Retail Ones Are Fleeing

Institutional investors seem to enjoy the action around the Bitcoin price. As a matter of fact, Grayscale Investment’s Bitcoin Trust is showing that more capital is flowing into the coin. As the most trusted authority to provide data on digital currencies and crypto asset management, Grayscale has presented in its quarterly report that the institutional capital of $171.7 has flown into the Bitcoin Trust, making this quarter the heaviest in the product’s history of 6 years.

Since it has received many requests from accredited investors, Grayscale has decided to file a Form 10 registration statement with the US Securities and Exchange Commission (SEC), for its Bitcoin Trust project. If it gets approval, Grayscale becomes a SEC-reporting company and the first crypto investment entity to achieve this. At the same time, retail investors seem to be fleeing.

In October, addresses with balances equal or greater than 0.1BTC have significantly dropped in numbers, which means average people aren’t too interested in the crypto world. However, the institutional interest is proving the industry is maturing, not to mention more countries are developing regulations for financial institutions to be able to trade using cryptocurrencies.

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Author: Oana Ularu

“This is a Bear Market,” says Economist Warning “High odds halving won’t be bullish”

  • Extremely bearish analyst predicts “an epic meltdown into halving that nobody expects”
  • Though bearish, the majority of CT does not expect $3,000. Trader sees $14k once this correction completes
  • More pain ahead if hash rate growth continues unabated as many miners will capitulate

The cryptocurrency market is slowly turning green after seeing the bloodbath for the last two days. As Bitcoin hovers above $7,000, a few altcoins have started rising. Maker is leading the pack with over 19% gains followed by Matic (18%), Tezos (10.20%), BAT (8%), Augur (7.40%), Stellar (4.32%), Cardano (3.60%), and IOTA (2.79%).

Bitcoin holding the ground at $7,000

Bitcoin holding the ground at $7,000

Bitcoin holding the ground at $7,000

Source: Coin360

After losing 21% of its value and crashing to the six-month low this week, Bitcoin is currently trading at $7,200 thought it turned out to be good for Bakkt which made another ATH at 2728 BTC.

$6,400 is the Level to Watch

This crash in BTC price has turned some analysts extremely bearish who are now calling for a drop to $3,000. Analyst Magic might be projecting “an epic meltdown into halving that nobody expects,” but the majority of the Crypto Twitter (CT) is not expecting such a big drop despite turning bearish.

Trader Credible Crypto says while we are still going down, it won’t be as low as $3,000. Once Bitcoin completes this correction, which will happen before $3k, the next stop would be $14,000.

$6,400 is actually the level analyst and traders are expecting Bitcoin to reach. Market analyst Benjamin Blunt says, “evidently max pain was straight down,” but we can still move to another leg lower. Though we can still make a new low, it all depends on the $6,400 level that needs to be watched.

More pain ahead if hash rate “growth continues unabated”

The world’s leading cryptocurrency might be down more than 48% from its 2019 high of $13,900 but we are still up 90% YTD.

However, earlier this month prominent analyst Willy Woo shared that Bitcoin is in a “blow-off phase” — a prolonged consolidation inside a macro bull market. The BTC rocket ship, he said will take time to take off.

The second phase of the bull market, he had said will start when Bitcoin takes over 2019 high that won’t be happening until 2020. In the short term, meanwhile, Bitcoin is “bearish.”

This sentiment is shared by economist and trader Alex Kruger who says the price action states, “this is a bear market” but as he mentions, “a bull/bear market is like a breakout”

Yesterday, the price set a local bottom at $6,785 but more pain could be on the way as Kruger says “many miners will capitulate if hash growth continues unabated.”

The hash rate of the Bitcoin network is currently down about 25.5% at 85 Th/s from the all-time high at 114.3 Th/s set on Oct. 23. However, prominent analyst shared on Twitter on Nov 23 that the hash rate is back above 100E.

https://twitter.com/100trillionUSD/status/1198161702367498240

https://twitter.com/100trillionUSD/status/1198161702367498240

https://twitter.com/100trillionUSD/status/1198161702367498240

This bearish momentum has the economist not expecting much from the halving as well. From the supply perspective, Bitcoin reward halving is a bullish event but it can have a “very negative short term impact” on the BTC price as this may increase the miner flows.

Also, “Massively high expectations around it makes it thus bearish,” and Woo has already warned not to expect the price to repeat past halvenings.

“High odds halving won’t be bullish,” Kruger said.

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Author: AnTy