“Fear” in The Crypto Market And Bitcoin’s Correlation With S&P 500 Climbs to Highest Level of 2021

Crypto assets are not really having a good time, with Bitcoin stuck around $56,500 and Ether below $4,300.

But crypto assets are not alone in that as speculative stocks aren’t any different as losses picked up in very-high-priced technology names as the bond market started to price in higher odds of rate hikes next year following President Joe Biden picking Jerome Powell for a second term as the Federal Reserve chairman.

“The big-cap tech names have become synonymous with the risk-on/risk-off trade. When the big-cap tech names move in a significant way, other risk assets move in tandem,” said Matt Maley, chief market strategist for Miller Tabak + Co.

This has the 100-day correlation coefficient of Bitcoin and the S&P 500 climbing to 0.33, which is among the highest readings of the year.

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A coefficient of 1 shows a strong correlation, while minus-1 would show they’re moving in opposite directions. The current figure means when stocks move up, Bitcoin is likely to do the same, and vice versa.

“The recent drawdown in Bitcoin and the rest of the cryptocurrency ecosystem has been tied to the selloff in the more risky growth names,” Art Hogan, chief market strategist at National Securities. “So you’re seeing cryptocurrencies come off, and you’re seeing the high-flying growth names come down.”

The lack of bullishness in the crypto market, except for particular crypto-assets, has the market sentiments turning to “fear,” as per Crypto Fear & Greed Index.

While some may feel this might be the end of the crypto market, others believe this could be a sign of an extended cycle.

“It’s very possible “extended cycle” could partially play out. Bitcoin could top early January or whatever. ETH a bit later on. Alts in April and maybe DeFi even separately from other alts. Not everything must converge on one top point in time,” said popular crypto investor @bitcoinpanda69.

Currently, there are a few potential factors that are playing a part in the market weakness, including a shifting macro outlook and crypto market conditions.

Within crypto, as price drops, open interest for BTC and ETH, which is a proxy for leverage, has “started to decrease as pressure is placed on existing long positions,” as per Coin Metrics.

As for Bitcoin miners, who are natural BTC sellers, their selling pressure has been minimal and is trending lower. Moreover, they use OTC desks to minimize their impact on the price. Recently, miners have started to HODL their BTC mining rewards.

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On a macro front, with the US bond yields, especially with shorter-duration maturities, on a sharp rise over the last few weeks, capital might be reshuffling from riskier crypto assets to a “risk-free” rate of return.

Amidst all this, JPMorgan Chase CEO Jamie Dimon couldn’t help but poke at cryptocurrencies. “It is not really a currency,” Dimon said at the Boston College series of CEO interviews.

These “crypto tokens” have no intrinsic value and have rallied on speculation fueled by government stimulus payments, he said, adding, “It is hysteria.”

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Author: AnTy

Tether Puts the Past Behind Them by Paying $41M to CFTC for Not Having All of Its Reserves in Cash

Tether Puts the Past Behind Them by Paying $41M to CFTC for Not Having All of Its Reserves in Cash

The US Commodity Futures Trading Commission (CFTC) announced that it has settled charges against Tether for “making untrue or misleading statements and omissions of material fact in connection with the U.S. dollar tether token (USDT) stablecoin.”

Tether will pay a $41 million penalty for what the company says is “putting the past behind us so we can move forward and focus on the future.”

CFTC said, while Tether claimed USDT is fully backed by fiat assets, it found that the company failed to disclose that the reserves backing also included unsecured receivables and non-fiat assets in its reserves between June 1, 2016, to February 25, 2019.

“There is no finding that tether tokens were not fully backed at all times — simply that the reserves were not all in cash and all in a bank account titled in Tether’s name, at all times,” said Tether in a statement, noting that not only it always maintained adequate reserves but it also has never failed to satisfy a redemption request.

The agency also settled charges against the cryptocurrency exchange Bitfinex for being engaged in illegal retail commodity transactions in crypto assets with US persons and operating as a futures commission merchant (FCM) without registering as required.

Bitfinex will be paying $1.5 million in penalty and is required by the agency to implement and maintain additional systems reasonably designed to prevent unlawful retail commodity transactions.

Tether said the CFTC’s Order makes no finding of a violation after December 2018.

Acting Director of Enforcement Vincent McGonagle said in a statement that the CFTC will continue to use its anti-fraud enforcement authority over digital assets, when necessary. Additionally, it will act to ensure that margined and leveraged digital asset trading offered to retail US customers must occur on properly registered and regulated exchanges, he added.

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Author: AnTy

US Treasury Discussing Launching A Formal Review into Stablecoins’ Impact on the Financial System

US officials are currently having closed-door discussions regarding launching a formal review into whether stablecoins threaten financial stability.

After weeks of consideration, the Treasury Department and other deferral agencies are nearing a decision, reported Bloomberg citing people familiar with the matter.

The department is examining “potential benefits and risks of stablecoins for users, markets, or the financial system,” said Treasury spokesman John Rizzo in a statement. “As this work continues, the Treasury Department is meeting with a broad range of stakeholders, including consumer advocates, members of Congress, and market participants,” he added.

The total market cap of stablecoins is now ready to surpass $124 billion, up from just over $29 billion at the beginning of this year.

This, however, doesn’t come as a surprise given that the US Securities and Exchange Commission (SEC) Chair Gary Gensler has said many times that stablecoins are one of the two areas they are focused on. The other being crypto exchanges and lending platforms, where “stablecoins are embedded.”

Over the past couple of months, Gensler has been noting that the majority of trading on all crypto trading platforms is occurring between a stablecoin and some other token.

“The use of stablecoins on these platforms may facilitate those seeking to sidestep a host of public policy goals connected to our traditional banking and financial system: anti-money laundering, tax compliance, sanctions, and the like. This affects our national security, too,” said Gensler adding, these fiat-based coins may also be securities and investment companies.

Just last week, Coinbase disclosed that SEC is threatening to sue if it launches its Coinbase Lend product, allowing customers to earn a 4% yield on their USDC stablecoin.

Duke University finance professor Campbell Harvey, who is also the co-author of a book called “DeFi and the Future of Finance,” told Bloomberg in an interview that the US regulators face a tough balancing act when it comes to addressing “yield farming” — allowing investors to lend their crypto in exchange for interest rates — without pushing the financial innovation offshore.

Additionally, the President’s Working Group on Financial Markets, led by Treasury Secretary Janet Yellen, has also been focused on stablecoins. In a private meeting held in July, US officials likened the situation to an unregulated money-market mutual fund that could be susceptible to chaotic investor runs.

Around the same time, a paper from the Federal reserve proposed to “tax private stablecoins out of existence” as one of the options to “Taming Wildcat Stablecoins.”

At the time, Yellen urged regulators to “act quickly” in drafting stablecoin rules. The group, composed of Yellen, Gensler, and Fed Chair Jerome Powell, expects to issue stablecoin recommendations by December.

The Financial Stability Oversight Council (FSOC) process includes a detailed study, an assessment of which agencies should respond and how, and then directing them to intervene in the market.

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Author: AnTy

Gold Reverses the Trend as Funds Record Biggest Two Weeks of Inflows since October

Bitcoin, meanwhile, has been having its record outflows amidst the recent correction. Gold price is also on an uptrend above $1,900 while BTC is struggling for a strong move.

Gold has been performing well since March as it continues to climb towards its all-time high of $2,075 per ounce from August 2020.

Last year, in mid-March, the precious metal prices crashed along with the rest of the asset classes, falling to $1,450. And in less than five months, gold prices surged by over 43%.

But even since this ATH, gold has been going down, falling to about $1,675 in March this year. Now, yet again, following the 19.3% drawdown, gold prices are back on track to the upside.

This week, it went to $1,912 and is currently trading around $1,890, back at early January levels.

Interestingly, the upside in gold prices coincides with the downside in Bitcoin prices which has been falling throughout this month. Last month, BTC made its ATH at nearly $65k and then dumped about 54% to $30k low last week too late January levels.

Bitcoin price is being choppy right now, trading between $32k and $42k.

As we reported, towards the end of last year, gold started recording huge outflows. In the six months to April, over $20 billion left bullion-backed ETFs. Meanwhile, bitcoin started seeing tons of inflows helping the cryptocurrency break into new highs.

But, since late April, bitcoin has been seeing record outflows, though mere 0.2% of total assets under management (AUM). This is the exact opposite of what the bullion has been experiencing.

ETF Gold Assets Falling

Gold funds have had their biggest two weeks of inflows since October as traditional hedge gets back in the limelight partly at the expense of Bitcoin. While Bitcoin is struggling with weak price actions as it takes rest following its 1,610% uptrend from March 2020 to April 2021, gold is seeing its revival amidst weaker dollar and falling inflation-adjusted yields.

“There is still so much confusion between Bitcoin and gold,” wrote Charlie Morris, founder of ByteTree, in a note.

“They coexist, and they both thrive in an inflationary environment.”

According to Morris, fund flows have an unusually large impact in boosting the gold price, and Bitcoin’s outgoing flows are depressing prices.

Investors pulled almost $14 billion from the SPDR Gold Shares ETF through to the start of May; during this period, ETFs tracking gold sold almost 12 million troy ounces. Now, some $1.6 billion has flowed back into the fund to put May on course for the best month since July.

SPDR AUM, which had fallen $56.15 billion on March 30 from last August’s $84.24 billion high, is now back at $63.75 billion, as per Ycharts.

However, enthusiasm for Bitcoin hasn’t gone away, and Bloomberg Intelligence strategist Mike McGlone, who has a price target of $100,000 per BTC, says there’s still a chance crypto can become a digital reserve asset, and that makes it worth the risk.

“Gold may be losing its significance, so it may be simply prudent to diversify,” wrote McGlone.

“The human nature of acknowledging a new asset class is what we see as a primary Bitcoin support.”

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Author: AnTy

Almost 90% Respondents Interested in their Insurance Products Having Links with BTC: Survey

Almost 90% Respondents Interested in their Insurance Products Having Links with BTC: Survey

About 46 million Americans now own Bitcoin, representing about 17% of the population over the age of 18, according to an NYDIG survey.

Still, the majority, 53%, don’t own crypto assets, but 55% said that they would consider adding digital assets to their investment portfolio.

Another survey of 1,000 Americans by MagnifyMoney, a LendingTree division, found that 62% of crypto investors believe they’ll get rich.

The total cryptocurrency market cap has grown from $125 billion in March 2020 to more than $2.5 trillion.

A similar survey by Stone Ridge’s subsidiary New York Digital Investment Group from January stated that 80% of Bitcoin holders want to move their BTC to the bank. 71% are willing to switch their primary bank to the one that offers them Bitcoin-related products.

Conducted by Survey Monkey on March 22, a national sample of 1,050 US consumers with an annual income of at least $50k revealed that some of these crypto investors are looking to integrate the cryptocurrency into their personal financial plans, first reported Newsweek.

The survey findings say that respondents wanted to learn more about Bitcoin annuities and life insurance.

About half of the respondents said they want to receive some or all of their insurance benefits in BTC, while nearly 90% said they had some interest in annuity or insurance products with indirect links to BTC.

Furthermore, while 43% find it acceptable that their insurance carrier invested less than 2% of cash in Bitcoin, 42% also said they might be okay with it, with only 15% saying they didn’t like the idea.

“The finance industry is taking crypto mainstream by building Bitcoin into their insurance, banking, & investment products,” noted Michael Saylor, CEO of MicroStrategy.

NYDIG, which recently tapped the CFO of the world’s largest hedge fund Bridgewater Associates as its chief financial officer, has raised millions of dollars from insurance giants like New York Life and MassMutual.

Return-hungry insurance companies have actually been buying bitcoin for their general accounts through the firm with interest rates hovering near zero and a depreciating dollar making bitcoin appear more attractive, said Ross Stevens, the founder and executive chairman of NYDIG, in December.

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Author: AnTy

Coinbase Is Still Reporting Stellar (XLM) Having ‘Degraded Performance’

Coinbase Is Still Reporting Stellar (XLM) Having ‘Degraded Performance’

The issue has been several validator nodes on the Stellar blockchain not validating transactions which SDF says is now online while they investigate the root cause for the same.

Cryptocurrency exchange Coinbase reported delays in Stellar (XLM) deposits and withdrawals earlier this week, which continues today. The network status Stellar reads

“Degraded Performance.”

As of April 8, 02:22 PDT, the exchange said, “We’ve been working with the Stellar team to fix the delays of deposits and withdrawals.”

Coinbase is reportedly also planning to roll out a crypto rewards debit card in the U.S. that will pay back 4% in Stellar lumens (XLM), as per The WSJ.

However, it wasn’t just Coinbase that was having issues; many other exchanges like Binance, Bitstamp, and Bitfinex have been dealing with XLM withdrawal issues as well.

The issue turned out to be several validators on the Stellar blockchain were disconnected from the network, causing the transaction issues.

Stellar Development Foundation (SDF) released an official report on the matter, saying, “both the SDF nodes and the public-access Horizon are now back online.”

According to Stellarbeat, which keeps track of the network’s node count, a few nodes are still down.

XLM deposits and withdrawals were paused on centralized crypto exchanges “out of an abundance of caution,” and now SDF is in communication with them, reads the announcement.

Reporting on the incident, SDF said it was early Tuesday morning that the validator nodes temporarily stopped validating transactions. While the SDF node was experiencing downtime, for reportedly at least 10 hours, the network itself remained online, which it said: “is just the way a decentralized network is intended to work.”

Due to sufficient validator redundancy, the network continued to function as normal despite the temporary unavailability of SDF’s infrastructure.

As for what caused this, the team is still investigating what the root problem was and, so far, has narrowed the trigger down to a single ledger and single operation in that ledger.

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Author: AnTy

Grayscale Recording Inflows “Unlike Ever Before;” Meanwhile Largest Gold ETF Yet to See Any

Bitcoin is enjoying a wild rally, having surged more than 20% since yesterday this too, while average BTC fees being just above $4.

Trading above $23,000 with $11.27 billion in ‘real’ volume, the market is euphoric with greens.

Bitcoin’s market cap has reached above $430 billion today, adding more than $70 billion since yesterday.

This is all the result of the factors at play in this bull market that we haven’t ever seen before in terms of “investment banks writing research highlighting bitcoin superiority to gold,” said Michael Sonnenshein, Managing Director of the largest crypto asset manager Grayscale Investments.

We also saw prominent investors like Paul Tudor Jones, Stanley Druckenmiller, BlackRock CIO, and many others coming out supporting this asset class and corporations like Square and MicroStrategy adding bitcoin to their balance sheet as a reserve asset.

As Sonnenshein shared in his interview with CNBC, Grayscale is currently seeing flows that “are now probably up 6x what they were last year.”

Elaborating on the type of investors that are buying GBTC at over 34% premium to Bitcoin price and ETHE at nearly 210% premium to Ether, Sonnenshein said these “investors that are putting capital to work are unlike any of the investors we’re seeing ever before.” He said,

“It’s some of the world’s largest investors and the allocations that they’re making are bigger than we’ve ever seen before and their time horizon for this is generally something over the medium to longer-term.”

As of writing, GBTC holds just above 569k BTC, worth more than $12 billion, representing just over 3% of Bitcoins’ circulating supply, while their Ether stash represents 2.58% supply at 2.94 million ETH worth $1.84 billion.

Unlike all the flows that Bitcoin sees currently, gold has yet to recover from all the outflows it started recording last month. Kevin Rooke noted,

“The world’s largest gold ETF sold 8.3% of its gold so far in Q4 (100+ tons), and hasn’t seen any inflows in 17 trading days. November 19th was the last day the NAV of GLD actually went up, almost a month ago.”

However, the price of gold did manage to uptrend some on the back of declining USD, and Federal Reserve Chairman Jerome Powell vowing that they will keep up with its massive monetary stimulus.

Climbing to $1,890, the bullion still recorded 22.32% returns in 2020 compared to Bitcoin’s 223%.

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Author: AnTy

Bitcoin’s Moon Predictions Make a Comeback, Targeting $25,000 to $500,000

Bitcoin’s price has been on a tear lately, having risen to a new all-time high of almost $19,000 last week, last seen during the peak of the 2017 bull market.

As BTC works on beating an all-time high, the sky-high predictions have made their return.

With Fidelity Investments, JPMorgan Chase, PayPal, and BlackRock embracing the digital asset, the FOMO continues to push the cryptocurrency price higher.

“You suddenly have this nearly perfect backdrop that is not only lending validity to the asset class, but is also really demonstrating its staying power,” said Michael Sonnenshein, managing director at Grayscale Investments. According to him, Bitcoin is,

“once again showing investors no matter how many times it gets challenged, that it has a way of emerging almost stronger or demonstrating its ability to be really, really resilient.”

History doesn’t repeat, but it rhymes

Amidst this bull run, David Grider, the head of digital asset strategy at Fundstrat Global Advisors, has increased his price target to $25,000 by the end of 2021 from $16,500.

Fundstrat co-founder Tom Lee made a had started year-end price target of $25,000 in 2018 only to abandon it after BTC hit its bottom in the bear market at $3,200 in December.

For Grider, “History doesn’t repeat, but it rhymes,” and now “the audience is bigger, the market is bigger, it’s a little more institutionalized — you have different fields of capital coming in.”

Crypto’s resident bull, Mike Novogratz, the founder of Galaxy Digital, known for making some wild predictions just last week, said that BTC would reach $65,000 as Novogratz sees “tons of new buyers” amid “little supply.”

As we reported recently, Tom Fitzpatrick, a strategist at Citigroup Inc., said the flagship cryptocurrency could reach $318,000.

Institutional Momentum Mania

Up 170% YTD and 35% month to date, If all institutions were to assign 1% to 5% allocation to Bitcoin, it could rise “to somewhere in the $400,000 to $500,000 range,” said Catherine Wood, CEO of ARK Investment Management during the Virtual Investing in Tech series of Barron’s.

According to her, this time is different for one big reason – the involvement of institutional investors. A noted booster of disruptive technologies such as Tesla and Bitcoin said the digital asset is “equivalent to the dollar in the fiat currency system. That’s a pretty exalted role.”

However, according to Edward Moya, a senior market analyst at Oanda, “Today’s outlandish calls seem primarily based on momentum mania,” adding, “I doubt institutional traders will allow Bitcoin to only go in one direction.”

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Author: AnTy

Crypto Custodian Anchorage Hits Milestone; Receives a SOC 1 Type 1 Attestation Report

Anchorage, the U.S domiciled crypto custodian, announced that it had obtained a SOC 1 Type 1 report having completed an assessment. This audit was done by Ernest & Young (EY), one of the big four auditors in the world. According to Anchorage’s announcement on Nov 10, the milestone will be a big boost to its value proposition as a digital asset custodian that deals with other institutions, including financial service providers.

Basically, the SOC 1 Type 1 report entails assessing a company’s support ecosystems to ensure robust financial reporting mechanisms and internal operating systems. In the case of Anchorage, E&Y also looked into the control of private keys; an area where Anchorage’s Head of Compliance Jennifer Lee, expressed confidence on,

“What sets the Anchorage report apart is a heavy emphasis on our ability to prove exclusive control, confidentiality, and availability of private keys.”

The SOC 1 Type 1 report is not a walk in the park; this approval is only granted after the attestation of a qualified third party such as E&Y. With Anchorage receiving this report, the crypto custodian has further increased its mark of excellence as a financial services provider. Per the announcement blog, they were confident of this position but are now better placed with a formal confirmation by E&Y,

“Completing this examination and being granted the SOC 1 Type 1 report more formally signifies something we have long known: the controls and processes Anchorage has developed are world-class and meet a truly rigorous standard.”

In the future, the firm plans to complete SOC 1 Type 2 assessment, which is more rigorous and done over time than a one-time review. Anchorage also indicated that it would retain E&Y to be its third-party auditor in the type 2 evaluation, as it strives to increase standards in compliance reporting and support for internal systems. Cryptocurrency exchanges Gemini and Coinbase have also completed these assessments.

Notably, this crypto custodian has quite a bullish fundamental year, expanding into the burgeoning Decentralized Finance (Defi) niche. The firm’s collateral management services have also grown significantly through a major partnership with Silvergate bank to provide crypto-pegged loans to institutional clients. With a SOC 1 Type 1 report, Anchorage is optimistic about creating a more trustable crypto custodial ecosystem.

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Author: Edwin Munyui

Bitcoin Rally Makes Winklevoss Twins Billionaires Again, But ‘Real Euphoria’ Isn’t Here Yet

Bitcoin is had a great week, having seen an increase of more than 20% in its price.

Up 115.23% YTD, not only the digital asset, climbed to the level (almost $16,000) not seen since early January 2018, but it has now also run up above $10,000 for over 100 days.

With the leading digital currency back in the game, bitcoin holders, investors, and traders are having a great time.

These gains have made the Winklevoss twins billionaires yet again. Tyler and Cameron Winklevoss, the founders of crypto exchange Gemini, bought $11 million worth of BTC in 2013, who briefly became billionaires when BTC soared to its peak of $20,000 in December 2017.

According to the Bloomberg Billionaires Index, each of the brothers, who also own other cryptos including Ethereum, is now worth about $1 billion.

“The price of Bitcoin is being driven by all of the money printing and uncertainty in the world right now,” said Tyler Winklevoss, the CEO of Gemini, the exchange that recently got its application for an electronic-money license approved from the Financial Conduct Authority, to expand into the UK market.

Back in August, the twins predicted that the Bitcoin price would reach $500,000 because “inflation is coming,” and while money stored in banks will get run over, money stored in bitcoin “will run the fastest, overtaking gold.”

There’s lifetime wealth to be created.

The crypto market has started to show signs of a crypto bubble with altcoins also flying as Bitcoin takes a breather after breaking important price levels these past few days.

Amidst this, Robert Leshner, co-founder of Compound Finance, advised those that haven’t experienced one yet to make a plan to take money off the table and stick to it, “regardless of regret you’ll temporarily feel.”

He further ticked off the dos and don’ts, including not taking on debt and always paying off that has been taken, using a hardware wallet to protect funds, and saving for taxes.

Leshner also advised not to shill or get friends or family to buy crypto or let people on the internet convince you to buy assets. And if something seems too good to be true, then it probably is, so just go get fresh air and remember that the tide turns quickly.

But despite these gains, we are nowhere near the top. Bitcoin has a long way to go, not to mention that we haven’t even broken the previous high.

As Ari Paul, co-founder of crypto investment firm BlockTower Capital, said, “We haven’t seen even a hint of real euphoria in crypto yet. That happens when lifetime wealth is created. For the vast majority of crypto investors, they’re just cheerleading to recover old highs (which remain pretty far away for almost everything but BTC).”

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Author: AnTy