Crypto Market Accumulating ‘Dry Powder’ Amidst Fresh Bout of Risk Aversion

The US Dollar Index is trading at around 100, a level last seen in 2002. After dropping just under 95 momentarily, the dollar index surged to 103 the day the stock market experienced a violent sell-off.

While the dollar index climbed to its highest in two weeks, both Japanese yen and British pound weakened along with won and ruble with little change in the euro.

Meanwhile, the US stocks had its worst day in three weeks and Treasury bonds surged as turmoil in the crude oil market triggered a fresh bout of risk aversion. The market also shrugged off a new deal for a relief package worth $484 billion to lend extra support to the US economy.

Just like the dollar, in the crypto market stablecoins are enjoying record growth. In recent days, they have grown by about $3 billion.

There’s a lot of dry powder in the market with the popular stablecoin Tether’s (USDT) market cap surging to $7 billion.

“Anecdotally I’ve heard a lot of it is for non-bank dollar-equivalents in EM for normal working capital purposes. not all dry powder for crypto,” said Nic Carter of Coin Metrics about this development.

Since the massive sell-off in mid-March, stablecoins have been acting as a shield in opposition of crypto volatility and a connection for exchanges.

Flight to Stablecoins in 2020

Currently, stablecoins are being used as a safe haven from from the volatile nature of crypto and a link for values moving amongst exchanges, noted Coinbase in its latest report “Flight to Stablecoins in 2020”. Their use in worldwide trading between businesses, conventional financial settlements, and as guaranties for DeFi since it too is moving upwards.

While the volatility of ETH and BTC prices have been historical recently, the bigger stablecoin environments have climbed to all-time highs of over the nine billion dollar market cap.

Coinbase and Circle issued USDC which is “fully backed and redeemable for the U.S. dollar on a one to one ratio,” accounting for over seven hundred million dollars of this.

As we saw last month, global investors were selling everything possible to obtain reassurances for the safety of the US dollar and these same global investors paid a steep price to exchange their own regions currencies into US dollars.

Historically, USD market has gained amid the financial crisis to a “flight to safety,” as seen in the DXY Dollar Index rises to multi-year highs.

Now, USD-pegged stablecoins are seen as “innovative mechanisms for global investors seeking U.S. dollar exposure.”

Gaining Traction

Talking of their own stablecoin, Coinbase reported that since the beginning of March, USDC’s market cap has soared from over four hundred million to an ATH of over seven million. Its on-chain value transfers also reached all-time-highs of nearly four hundred million per day. Since its creation, USDC has also transferred over twenty six billion for on-chain.

Overall, in March stablecoin reached about 40% of daily value transferred compared to BTC and ETH.

When it comes to daily active addresses, USDT leads with 50k with Sai, USDC, Dai, and PAX hovering around 3k per day.

As for stablecoins use in global commerce, the US-based exchange reports that Coinbase Commerce completed over two hundred million dollars in transactions. And because of the “fundamental advantages over traditional payment systems, stablecoins may become increasingly viable for global commerce.”

Also, crypto wallets are easier to access and the set of up than setting up a bank account and may even prove valuable for “banking the unbanked” of the world, argued Coinbase.

New financial services such as DeFi are gaining ground and allows stablecoins to”be programmatically borrowed, lent, and used as collateral. Smart contract lending protocols like Compound, dYdX, Nuo, and Aave currently offer an APY range of 0.44–2.36% for USDC.” since the beginning of April 2020.

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Author: AnTy

Bitcoin is a Safe Haven Asset by Being Uncorrelated & Censorship Resistant: Arcane Research

  • As Bitcoin price drops, so does the Fear and Greed Index. Trading Volume on CME drops to a new 2020 low
  • Bitcoin is a great tool for asset diversification in an investment portfolio, with no uncertainty on its other underlying assets

Bitcoin’s (BTC) price wiped out gains made in February. The digital asset started the month at around $9,400, and ended at just above $8,600, losing 8.5% of its value in the process.

This has the Fear and Greed Index falling to 39, a level not seen for nearly two months. Additionally, the volume on the regulated platform CME dropped to a new 2020 low, just after hitting the highest trading volume.

Similarly, the total volume of the world’s top ten exchanges, the amount of bitcoin exchanging hands went from over a billion in 2020 so far, down to just 275 million yesterday.

The crash came during the Coronavirus (Covid-19) scare that has the stock market experiencing its biggest weekly drop since 2008 while gold surges to 7-year highs.

Because Bitcoin has been falling with the stocks lately, its position as a safe haven asset came under fire. According to Arcane Research, Bitcoin

“is not a safe haven because it goes up when there is global instability.”

This has been because two of Bitcoin’s unique properties; first being that it’s uncorrelated with all other asset classes while also being censorship-resistant as a second.

Bitcoin: Great for Diversifying Your Portfolio?

Talking about Bitcoin’s uncorrelation, the authors Torbjørn Bull Jenssen & Bendik Norheim Schei argued that the negative correlation isn’t of any value in itself because it doesn’t create any additional value:

“With the financial tools and products available in the market, negative correlation can easily be created by short-selling assets. One can even decide the level of negative correlation with leveraged positions.”

A correlated asset is also unique, which also makes bitcoin an “interesting” and suitable safe-haven asset.

“A safe haven that is neutral to every asset class, has its own distinct value drivers and reacts to news and changes around the world differently than other assets. Bitcoin doesn’t follow gold, stocks, bonds or any other asset. This leads to an asset that is great as a tool for the diversification of an investment portfolio,” states Arcane Research.

Being correlated means the asset can fluctuate randomly over time, much like we saw this year. Earlier in 2020, Bitcoin went up while stocks remained relatively flat. This week, by contrast, Bitcoin fell with the stock market.

Because most assets are correlated, “this might drive demand for uncorrelated assets in turbulent times.” Additionally, this could potentially lead to a negative correlation between safe havens and the rest of the financial markets.

There’s No Uncertainty on What the Asset’s Underlying is

For an asset to be a truly global safe-haven asset: liquidity, censorship resistance, and low credit risk are “paramount” attributes.

“Bitcoin allows one to buy an asset that always represents the same value as the market price, with no uncertainty on what the asset’s underlying is.”

And while this sounds similar to physical gold, Bitcoin outperforms gold’s properties — It’s easy to store and transfer around internationally, no reliance on third parties, and protection from confiscation and censorship.

The main issue with Bitcoin is limited liquidity which has rapidly become a non-issue as it trades all over the world, 24 hours a day and 365 days a year.

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Author: AnTy

Euphoria Kicks-in, Stock Market Hits Fresh Records But ‘Greatest Predictor’ Gives A Stark Warning

US Stock index futures have made fresh records as world markets rally on the back of easing tensions in the Middle East. Dow Futures along with futures on the S&P and Nasdaq are climbing higher.

As tensions eased between the US and Iran, US equities hit record highs with tech shares outperforming. Apple jumped after Chinese data shows that iPhone sales rose by 18% in Dec. in the country.

As for the US-China trade deal, President Donald Trump said he might wait until after the 2020 presidential election to reach the second part of the trade deal. After being at odds over commerce for two years now, both the counties are set to meet next week at the White House to sign the first phase of the agreement.

As such, Shep Perkins, CIO at Putnam Investments has called for S&P 500 to reach 5,000, faster than you might have imagined. Historically low long-term bond yields combined with price-to-earnings multiples that are in line with their average and could further expand are the reason behind this forecast.

S&P 500 might have closed Thursday at a record 3,274.70, but 5,000 could be seen as soon as three years, even if a recession hits, it could take five years.

But Everything isn’t All Shiny

However, it doesn’t mean the market isn’t vulnerable. Wharton School professor Jeremy Siegel is “worried that this is becoming a momentum-driven market at this point.”

The 2019 rally had S&P 500 gaining about 29% in its best performance since 2013 but Siegel is worried that “if it continues much longer that something will puncture it and people will get off the train.”

Also, according to the popular measure of price-to-earnings (P/E), the S&P 500 index is trading 18.6 times forward earnings. Based on the median price to earnings ratio, it is overvalued by about 30%.

Another bearish picture is shown by the bullish nature of the “Greatest Predictor” of the US stock market’s future. The Greatest Predictor is the average portfolio allocation of households to stocks. A contrarian indicator, high allocations results in poor subsequent returns and vice versa.

Not to forget that the World Bank has highlighted the risk of a fresh global debt after warning about the biggest buildup in borrowing in the past 50 years.

“Low global interest rates provide only a precarious protection against financial crises,” said Ayhan Kose, a World Bank official.

“The history of past waves of debt accumulation shows that these waves tend to have unhappy endings. In a fragile global environment, policy improvements are critical to minimize the risks associated with the current debt wave.”

An Alternative Solution Is Already Leading ‘em all

While stock market enjoying the longest bull run, Bitcoin emerged as the winner of the decade with a mind-boggling 9,000,000% gains.

What’s exciting is the world’s leading cryptocurrency is getting prepped up for its next bull run with a highly anticipated halving event coming up this year. According to some commentators, one BTC would be reaching a million dollar worth in the coming years.

While Fed cutting interest rates are pushing pressure on banks and robbing people from their savings, it would end up driving them into the asset class which will provide them with better returns.

The digital gold, a peer-to-peer digital currency system that has a fixed value and is censorship-resistant, has also started to show signs of becoming a safe haven in times of macroeconomic and political crisis.

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Author: AnTy

SEBA Launches New Crypto Index After Receiving FINMA License

A Switzerland-based cryptocurrency bank known as SEBA Crypto AG has recently announced the launch of a new index that will be used for digital assets. The index, which will be called SEBA Crypto Asset Select Index (SEBAX), will be optimized for risk and will offer exposure to the broad crypto market to institutional investors.

In order to launch the new index, SEBA cooperated with MX Index Solutions, a prominent European index administrator who helped it to devise the product.

SEBA was recently able to receive a license from FINMA, an important market regulator in Switzerland. With this new license, the company can legally offer investments based on digital assets to its clients now.

The crypto bank also launched its banking services recently, which cater to other banks, pension funds, large firms, and professional private investors, as well as asset managers. Blockchain companies can also use the services provided by SEBA, but they will have to face some restrictions, which were not revealed at the time.

Daniel Kuehne, the head of asset management at SEBA Bank, affirmed that the goal of the bank is to offer solutions that will help their clients to strengthen the confidence that they have in the crypto market and to achieve profit. With the firm’s help, the clients will be able to thrive in the industry and help it to grow more.

“With our investment solutions we want to offer investors the highest possible security and strengthen their confidence in the new, complex market environment of crypto currencies. With our product and investment expertise, we enable our clients to tap the new potential of digital asset classes with familiar rules from the existing financial world”

In related news, Sygnum, a company based in Singapore, has recently received a license to act in Switzerland as well. The firm is set to provide solutions for digital investments in Switzerland soon.

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Author: Gabriel Machado

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

Bitcoin and Gold Feeling the Pressure while Stock Market Makes a Fresh Record

Today, the market has hit yet new highs.

The benchmark S&P 500 Index, up 22.7% so far this year, is on track to rise for a fifth week in a row while Nasdaq is eyeing its sixth straight week of gains. The Dow Jones Average that spiked 150 points yearly has its 2019 gains climbing to 18%.

These gains came on the back of the comments from senior officials in Beijing, suggesting that the US and China will cancel planned tariffs on each other’s billions worth of goods in stages, as part of the first trade pact between the world’s two biggest economies that is due to be signed in the next few weeks.

“In the past two weeks, the lead negotiators from both sides have had serious and constructive discussions on resolving various core concerns appropriately,”

Ministry of Commerce spokesman Gao Feng told reporters in Beijing.

“Both sides have agreed to cancel additional tariffs in different phases, as both sides make progress in their negotiations,”

added Gao.

However, strategists are concerned that the market is placing too much emphasis on the “Phase One’ of the trade deal coming to fruition.

Meanwhile, as global stocks extended multi-year and multi-month highs, US equity spiked on the comments as well.

The European market also rallied, with Stoxx 600 benchmark is hitting a four-year high. Global oil prices went up amidst the broad market rally.

While the stock market is surging gold is in the red hitting new daily lows.

Bitcoin has been outperforming gold for the past nine years but today the digital gold is falling the same as gold.

The leading cryptocurrency is trading at $9,199 with 24 hours loss of 1.13%, as per Coincodex while managing the daily trading volume of just about $200 million.

Bitcoin might not be seeing the greens currently but as we reported the market is giving the signs that we are getting ready for an “explosive” move. The low volume, tight range, CME gap being filled and BTC entering the overbought levels are pointing towards this move.

Another positive factor for BTC is the open interest on Bakkt that has doubled to $2 million, as reported by Skew Markets. As Bitcoin Exchange Guide shared, these increasing numbers suggest that new money might be coming into the market.

This current phase, according to prominent analyst Willy Woo is just a “prolonged consolidation inside a macro bull market.”

Many have already called out the bottom of the market and being in the “blow-off” phase, the question remains whether we are taking a detour around $8k first or going straight to a new 2019 high.

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Author: AnTy

FTX Derivatives Exchange Rolls Out Futures On Index of 8 Popular Chinese Cryptos

Derivatives exchange FTX has announced the launching of an index of 8 common Chinese-based cryptos, CoinDesk reports.

The announcement was made by the company’s CEO Sam Bankman-Fried on Tuesday through a tweet. The Dragon Perpetual Futures Index (DRGN-PERP) will track some of the most popular coins comprising of BTM, IOST, NEO, NULS, ONT, QTUM, TRX, and VET and will be on the basis of their weighted average of their market prices.

The company is also exposing traders to the coins based on the index for perpetual futures contracts. According to the CEO traders will be offered a chance to leverage such contracts more than times.

The Antigua and Barbuda based exchange, is known for offering less familiar indices after they launched the Shitcoin Perpetual Futures Index a few months ago. The offering covers about 58 low market cap coins.

Amazingly, the timing of the launching of DRGN-PERP somes just days after the Chinese President Xi Jinping told his country to take advantage of the blockchain technology and use it in various sectors within the economy.

Xi’s comments led to a sudden surge in tech stocks and blockchain in China, resulting in the government authorities to caution investors against speculative behaviors.

Bankman-Fried also explained that the support of the blockchain industry had led to prices of various cryptos developed in the country to surge and enhancing massive user interest in Chinese based crypto projects.

In the past, Chinese officials have been cracking down on cryptocurrency based projects going to an extent of banning different exchanges from operating in the country. The crackdown has led to different crypto exchanges fleeing the country to more crypto-friendly nations and consequently reducing user interest in cryptos.

However, the Chinese government seems to have softened its harsh stand on cryptos after reports were released on central bank’s development of a digital currency.

Although its still early to predict whether Xi’s comments will have any major impact in the Chinese crypto industry, such bold moves like the DRGN-PERP, suggest there could be some positives to write home about.

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Author: Joseph Kibe

Nasdaq Adds CIX100 Index For Top 100 Cryptos; Using AI To Eliminate Fake Volumes Coins

Nasdaq, the second-largest stock exchange in the world, has unveiled a new index related to the crypto world. The AI-powered crypto index is called CIX100 and was created by Cryptoindex.

According to the official press release, this is a new crypto market benchmark that uses algorithms to analyze the data from the top cryptos. With its neutral network algorithms, the program is able to take into account over 200 factors.

One of the highlights of the tool is to completely “human-free” and to detect fake volumes, which helps to avoid using them. All the data is taken from the largest crypto exchanges in the market and only tokens that are able to remain in the top 200 for at least three months consecutively are counted.

The CIX100 index is also set to be listed at other sites such as Reuters, TradingView and Bloomberg and its AI-based predictions have an accuracy of 82%, which can be considered a good number.

Indexes are certainly gaining space in the market. Nasdaq recently teamed up with CryptoCompare, for instance, to release a new aggregate index dataset that would help institutional customers. CryptoCompare also partnered with other platforms such as BitMEX to provide information about the crypto derivatives market.

Another similar project comes from Sina Finance, a major financial site owned by Sina Corp, a technology company in China. This crypto index has been included in the mobile app of the company a few months ago.

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Author: Gabriel Machado

CF Benchmarks Awarded FCA Licence To Become The First Crypto Index Provider In Europe

The firm that provides Bitcoin index services to Chicago Mercantile Exchange (CME) CF Benchmarks has been awarded a crypto index provider license by U.K.’s Financial Conduct Authority (FCA). This makes CF Benchmarks the first firm to be authorized as a benchmark administrator in line with the European Benchmarks Regulation (EU BMR).

On Friday the UK’s FCA granted CF Benchmarks to be an administrator which means that financial companies can commence utilizing CF’s indices for any financial product being offered across the European market once the BMR comes into effect in 2020.

CF Benchmark’s CEO Sui Chung expressed gratitude after receiving the license, saying it was a major victory for crypto companies based in the EU zone. He explained that the use and provision of indices are highly regulated in EU and firms using such benchmark must ensure it originates from a regulated benchmark provider.

Chung stated that the regulatory scope for benchmarks within the EU zone for financial-based companies is very broad saying that banks, as well as asset managers, utilize the indices on various aspects. For instance, a fund manager wishing to give an exchange-traded fund (ETF) which tracks an index is required to track a licensed index.

Chung explained that the financial industry can now have access to regulated benchmarks from a highly competent team that will help in enhancing innovation as well as the adoption of virtual assets across the European Union. Speaking to Finance Magnates, Chung also stated that reliable, as well as trusted indices, are important for the development of the crypto market since they will help in bringing in more investors, both individuals, and institutions, to the market.

According to CoinDesk as the crypto industry becomes more popular, crypto indices are also becoming more important, especially from the traditional financial houses and other indices providers are likely to get the nod in the EU zone in the near future.

CF Benchmark was previously referred to as Crypto Facilities and is the current index provider of CME CF Bitcoin Reference rate. The firm was purchased at an undisclosed figure by a major US crypto exchange firm Kraken at the start of the year.

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Author: Joseph Kibe

Bitcoin-Led Crypto Markets Could Be Negatively Affecting the US Dollar Claims ING Bank

  • The DXY Index registered the lowest point since March 2019
  • Cryptocurrencies and strong commodity prices could have affected the US dollar

According to a recent report released by ING on June 24, strong commodity and cryptocurrency prices plus sharply falling US dollar hedging costs should negatively affect the US dollar. The report conducted by ING’s global head of strategy Chris Turner was released as his latest foreign exchange analysis and just after Bitcoin (BTC) surged above $11,100 last days.

Cryptocurrencies Affect The US Dollar

During the last few days, the US dollar has been falling compared to other currencies around the world, including the EUR, GBP, Bitcoin and even against gold. In addition to it, the price of the DXY Index that measures the performance of the US dollar against a basket of other currencies around the world has been dropping since June 18, the lowest point since March this year.

In this report released by the bank, Mr. Turner commented:

“Strong commodity (and cryptocurrency) prices, plus sharply falling US dollar hedging costs should keep the dollar on the soft side this week.”

Moreover, the U.S. is also expected to update the personal consumption expenditure (PCE) deflater as soon as on Friday. If there is another low, the Fed could eventually become worried about this issue.

There are some geopolitical and economic issues as well that can be related to the weakness of the U.S. dollar. The U.S. President Donald Trump is expected to meet his Chinese counterpart on Friday and Saturday at the G20 summit in Japan.

At the time of writing this article, Bitcoin remains the strongest cryptocurrency in the market with a price increase of 1.35% in the last 24 hours, the largest gain among the top 17 cryptos. At the same time, it has a market capitalization of $195 billion.

All of Today’s Bitcoin Price Analysis, Chart Forecasts and Industry News

[Author Alert] The author’s opinions above are solely based on their own self-conducted research. Assume any and all authors are using, holding, trading and/or buying cryptoassets mentioned as a portion of his or her financial portfolio. Use information at your own risk, do you own research, never invest more than you are willing to lose.

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Author: Carl T