The Bigger the Hit to a Country’s GDP, the Higher the Stock Market Jumps

The US economy shrank by an annual rate of 32.9% between April and June, the sharpest contraction triggered by the coronavirus pandemic since the second world war.

This economic shock in April, May, and June was over three times as sharp as the previous record of 10% in 1958 and about four times the worst quarter during the Great Recession.

“This is something we have never seen before,” said Jason Reed, assistant chair of finance at the University of Notre Dame.

“At first I felt it was like a natural disaster that had hit the entire country at the same time. Now it is evolving into something worse than that.”

The record-settling fall in the gross domestic product, the broadest measure of economic activity compared to the same time last year after for the second week in a row following a four-month decline 1.43 million Americans filed for unemployment benefits last week.

Economists expect the economy to recover sharply later this year, but the recent rise in infections across the US is clouding that outlook.

Interestingly, during this time, the S&P 500 jumped 24% thanks to all the money printing the Federal Reserve did. After the initial $3 trillion stimulus package, another trillion-dollar aid is expected soon. For now, Congress is struggling to strike a deal on the new round of financial support.

On Wednesday, the Fed said the US economy is facing significant challenges from the coronavirus pandemic and vowed to continue to take aggressive action to support the economy to recovery.

The US’s GDP report came as Germany, Europe’s largest economy, recorded a slump in economic growth, contracting by 10.1% in Q2, the most significant decline since 1970, while its stock market DAX jumped 28%.

The fall in GDP came as parts of the US economy shut down in an attempt to halt the spread of coronavirus across the country. The closures led to a historic number of layoffs that sent unemployment soaring to levels not seen since the 1930s Great Depression.

Now, as the first month of the third quarter comes to an end, the S&P 500 jumped 3.6% in July. But it was precious metals that stole the show.

Gold jumped 10.6% this month and broke the 2011 record to hit a new all-time high in Q2. This has been in part due to a 1.6% decline in the US dollar index, which further hit over two-year low with a 4% decrease in July.

Meanwhile, bitcoin the ‘digital gold’ woke from the slumber just last week and spiked 23.6% in July, after a 68% jump in Q2, now trading above $11,300.

“Gold, Silver, Bitcoin all hitting, or going, to new ATH,” said Max Keiser adding the bad news is all of this is because,

“global central banks are staging a debt-for-equity coup disenfranchising 7.6 billion people who will be left for dead unless they have some Gold, Silver, Bitcoin.”

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Author: AnTy

Litecoin Mimblewimble Testnet on Track to September Launch

While sharing the June progress, Grin developer David Burkett who is working on Mimblewimble implementation to the Litecoin network, said the testnet launch is coming by the end of Q3, which is in September 2020.

In June, Burkett wrote very minimal implementation supporting MW transactions as the existing LTC mempool logic ended up being quite a bit more complex than the developer initially thought. As such, it will be revisited after the testnet launch.

Additionally, code was written to support mining extension blocks; however, they need a lot more testing, and a few “edge cases are still left to be handled.”

Talking about his concerns on the way they were storing mimblewimble block data in a separate database, Burkett shared with the community that “It was originally designed this way to be a clean separation from the existing code, to facilitate merging future bitcoin commits.”

Separated databases, however, are a “bad idea,” he said, because then they don’t have the ability to make atomic updates. This leads to problems, some that can be exploitable by remote attackers.

As such, Burkett has decided to take more time to modify the code for serializing and deserializing MW blocks & transactions to disk. But he didn’t need to make any changes to the existing block storage format thanks to the groundwork laid down as part of the Segwit enhancement. He said,

“As a result, upgraded nodes can successfully save extension block data to disk the same place they’ve always saved blocks, without having to introduce an additional database.”

However, the side effect of the changes is that it was relatively straightforward to add support for sharing mimblewimble transactions over the p2p network — the first step toward July’s goal of handling MW data.

Still, the big plan for the summer remains the same, and Initial Block Download will be happening in July, followed by Chain reorg logic in August. This means activation logic and testnet launch is coming in September.

With the MW upgrade, the idea was to enhance the scalability and privacy of the Litecoin network, much better than the likes of Zcash and Monero, said Litecoin realtor Charlie Lee, in an interview last month.

“It does privacy and scarcity very well compared to other implementations,” he had said at that time.

The development part is making good progress, and Litecoin has also been recording an increase in wallets.

But this 7th largest cryptocurrency by market cap is not doing well price-wise.

Currently trading at $41.42, the digital asset is down 2.57% YTD, the third biggest loser among the top twenty cryptocurrencies. LTC is also down 89% from its all-time high of $373.

According to analyst Mati Greenspan, “the slow and dangerous decline resembles a slippery slope.”

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Author: AnTy

Financial Conduct Authority (FCA) Calls For Crypto Businesses to Be Registered by June 30th

The U.K. Financial Watchdog, FCA, has reminded crypto-oriented businesses to register with them by June 30, 2020, so that the applications can be processed within the next six months.

According to the FCA, entities that haven’t registered by then, will not be legally recognized come the Jan 2021 deadline.

The FCA does not register “any businesses that started carrying on business in the UK immediately before 10 January 2020 and are not registered by the FCA by the 10 January 2021 deadline will have to cease carrying on business.,” reads the FCA statement.

Following a spike in crypto-related crime, the FCA was tasked in regulating this space as the Fifth Anti-Money Laundering Directive (5AMLD) came into action at the beginning of the year. This move is expected to reduce financial crime such as money laundering and terror financing, which appear to have found new avenues in crypto ecosystems. The call for registration is, therefore, no surprise to crypto firms operating within the U.K.

Notably, firms that previously operated in the FinTech space under U.K.’s Financial Services and Market Acts 2000, but have now scaled to crypto services, will be required to undertake a new registration. According to the U.K. regulator, this approach will help them in proactive supervision of crypto businesses:

“The FCA will proactively supervise firms” compliance with the new regulations, and will take swift action where firms fall short of desired standards.”

The 5AMLD & FATF Oversight Frameworks

To effectively regulate the crypto space, FCA will rely on the 5AMLD and FATF’s ‘travel rule‘ as underlying regulatory frameworks. With both in play, crypto entities will be required to provide information such as future projections, governance, employees, customers, and business objectives, amongst others.

Also, the FATF travel rule provides that crypto exchanges should share client information upon request when executing B2B transactions. This initiative affects around 39 countries, including China, which are expected to have complied upon a revisit by the FATF.

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Author: Edwin Munyui

XRP Ledger Feature ‘Checks’ Goes Live; Works Similar to a Traditional Paper Check

XRP Ledger has introduced the traditional finance feature of checks starting from June 18th after getting the approval of the validators. The firm claimed that the feature was introduced with ripple v0.90.0. However, it failed to get the required support of node validators to be active at that time.

However, Wietse Wind, a popular XRP contributor, claimed that this amendment was implemented without getting the approval from Ripple-associated validators.

For this amendment to be passed and remain active, at least 80% of the node validators must approve it, and as long as this amendment enjoys majority support, it would be available on the XRP ledger.

What Would be the Use of Checks on XRP Ledger?

The ‘checks‘ feature on XRP Ledger would function quite similar to that of traditional tests where anyone can use them to transfer a certain amount of XRP to a particular person. The holder of the check can then cash the mentioned amount.

The developer also explained that the real transfer of value only occurs once the check is cashed out, so in case the sender of the check does not have the specified XRP in their wallet, then the check would “bounce.”

Until the recipient cashes out, the XRP remains in the sender’s wallet. The official announcement made by the XRP also mentioned that the XRP community does not require to download any update to avail the new Check feature as the minimum requirement for the XRP ledger to support this function as it is already synced with the network.

XRP, as a cryptocurrency token, hasn’t seen any progress in terms of price, failing to get past the psychological barrier of $0.30 ever since the bear market of 2018 and recently also lost its third-position in crypto rankings by CoinMarketCap to Tether’s Stablecoin. However, it has continued to support Ripple’s remittance technology and offers liquidity for the RippleNet.

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Author: James W

DeFi Project Bancor Hacks Own Protocol to Save Funds at Risk from Security Vulnerability

  • Yet another DeFi project faces security risk.
  • On June 17, around 12:00 am GMT, the on-chain liquidity protocol Bancor Network was vulnerable to fund loss.

San Francisco-based Hex Capital reported that “User funds being drained due to unauthenticated safeTransferFrom() function on their new BancorNetwork contract.” Bancor then tried to “white-hat” drain user funds but were too late.

However, as per Bancor’s official response on the security incident all funds are safe as they were successful in the white-hat attack and migrated $455,349 of funds at risk to a safe wallet.

The team discovered the vulnerability in the new version of BancorNetwork v0.6 contract, which was deployed the day before the attack.

The contracts mistakenly made a safeTransferFrom function in the Bancor Network contract public, which use allowance to interact with user wallets, a common practice used by most Dapps.

In this particular case, a private function was made public when it should have been restricted to the contract alone, allowing anyone to transfer tokens which were approved only for the contract to transfer, explained the team.

After the successful white-hat attack, Bancor pushed a new network contract and removed the infinite approval.

However, two arbitrage bots detected the income transactions and made a profit of $135, 229 by front-running the transactions. Bancor is currently in contact with the bots’ owners to “return the amounts to the rightful owners in exchange for a bug bounty.”

Bancor also awarded a bug bounty to DEX Aggregator 1inch team for helping with the situation.

Trading is now back to normal on the system.

The incident however pushed Bancor (BNT) token prices down by 6.64% to $0.778 while other DeFI tokens are enjoying substantial greens. BNT is still up 227% YTD.

Security research manager Tal Be’ery, co-founder or ZenGo said he warned about the risks of the approval exploit three months ago.

This is not the first time a DeFi project has been at security risk. In 2020, there have been several cases where millions have been lost calling for the projects in the DeFi space to better their security standards.

Meanwhile, Melody He, co-founder of The Spartan Group, a crypto hedge fund which is an active investor in Defi maintains,

“Defi will become source of new revenue and inspiration. Whoever understands the power of Defi, will have a higher chance of keeping their competitive edge.”

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Author: AnTy

Bitcoin Fair Value Less than $7,000 as per “Dire” On-Chain Stats

The first half of June hasn’t been a good one for bitcoin. Opening the month around $9,500 to see a pump and dump of more than a thousand dollars, the world’s leading cryptocurrency has been slowly making its way downwards that had it falling below $9,000.

Currently, BTC/USD is trading around $9,100, down 3.08% while managing $1.6 billion in real volume. Popular stablecoin USDT meanwhile is recording over $2.1 billion in volume in the past 24 hours.

These losses came despite the Federal Reserve supporting prolonged quantitative easing and keeping the interest rates unchanged at 0% to at least 2022.

“The USD is sitting on a major support line and will likely start a big move down given the recent Fed statement supporting prolonged QE. This is confirmed by strength in commodities and commodity-related assets. BTC setting up for a breakout is another confirmation,” tweeted Koyfin.

However, the US stock market is recording losses which could be because of the coronavirus cases surpassing 2.1 million in the country and 117,858 people losing their lives to it. Also, the Fed has warned of an ‘extraordinarily uncertain’ path to recovery.

Following stocks, bitcoin is also on the downslide. “I think it’s definitely part of the broader sell-off that we also saw in equities last week,” said Vijay Ayyar, head of business development with crypto exchange Luno.

“We tapped liquidity at the $10,000 level and are now coming back down. I expect $8,500 to hold, but if not we’re looking at $7,700 and then $7,100.”

A larger correction potentially at hand

Bitcoin exchange inflows are also increasing amidst this drop in price. This could mean people are looking to sell their BTC at higher prices in anticipation of a drop in price, although in the long term, exchange wallets are decreasing.

With price breaking down, it needs to be seen if miners will hold onto their inventory which they have already been selling more than they have been mining, as per MRI.

“Corn is hanging onto support by a bees dick here, my stop below the wick, if it loses that, it might get ugly and will have to go flat and re-evaluate,” said market analyst Benjamin Blunts.

Trader Altcoin Psycho sees the flagship cryptocurrency going even lower. We might even get to see $8,000 yet again.

Bitcoin has first support present at $9,200 and second level of support at just above $8,800. If the both are lost, trader Credible Crypto says, “a larger correction potentially at hand.”

On top of this, on-chain stats are not looking good either. According to Charlie Morris, founder of ByteTree, the fair value of Bitcoin currently is less than $7,000. He said,

“Bitcoin on chain stats are dire. 1 week network velocity down to 454%, 5wk 556%. Tx value down, av tx size down, fees down, MRI shot to pieces. Why the lack of interest? Can’t see price holding up. Fair value <$7k.”

Whales Accumulating

But, with BitMEX co-founder and CEO Arthur Hayes taken to tweet, “Spoos and bitcoin tanking at the same time. What a shame, take that JPOW wampum and put it to good use,” Crypto Twitter believes it to be a “temporary bottom signal.”

Moreover, bitcoin whales are seeing this as an opportunity to buy the dip. In the past year, the number of bitcoin whales holding at least 1,000 BTC has increased by nearly 9%. Bitcoin whales started accumulating in 2020, with a prominent spike in this recorded after the March sell-off.

Over 3 million bitcoin addresses are now holding more than 950 BTC.

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Author: AnTy

Markets Flip from Bulls to Bears, Even a 40% Drop isn’t Unlikely

After keeping steady for weeks, bitcoin volatility is back.

On June 10th, Bitcoin had a fake breakout only to drop to $9,000 yesterday. The digital asset moved downwards in line with the US stocks that posted losses of at least 5.3%, the biggest one-day losses since mid-March.

The heavy losses came despite the Federal Reserve’s dovish tone while the same day coronavirus cases surpassed 2 million in the US.

Even the traditional safe haven asset gold failed to hold onto its gains. According to trader and economist, Alex Kruger, the correction could be driven by FOMO or the increase in new COVID-19 cases but the fact is “market was experiencing peak euphoria and was due for a pullback.”

“Given the magnitude of the rally, it would shock me if we had a one day sell-off and that’s it,” said Morgan Stanley Investment Management’s Andrew Slimmon.

Today, US stock futures are bouncing and bitcoin is also moving towards $9,500 on a ‘real’ volume of $2.75 billion.

This means, the two markets might take time to decouple from one another. But the good thing is, Bitcoin, the risky asset reacting at all to the Fed, is a clear sign that “either institutional money is playing a much larger role in the market these days, or retail traders are getting more savvy and reacting more to their surroundings,” wrote analyst Mati Greenspan.

“Retraces are short and vicious”

Currently, BTC/USD is trading at $9,465, with a loss of 3.25%. Following the leading digital currency, altcoins crashed even harder.

Despite the correction, the price is not really looking good. Those who feel bitcoin going down to support is unlikely because that would be too big of a drop, “that’s not how Bitcoin works. Retraces are short and vicious. Crashes even more so,” said trader DonAlt.

Even a 40% drop isn’t unlikely “it’s happened before, it’ll happen again,” he said.

During the bull run of 2017, while making its way to the all-time high of $20,000, the flagship cryptocurrency recorded several pullbacks between 36% to 47%.

In the bear market of 2018, bitcoin registered a correction of 45% to 50%. In 2020 itself, we had a 67% drawdown.

“Highest probability long play buy pullback 9370 to 9580-9600. Highest probability shorts 9580- 9700…H1 under both 50 and 200 ema so bears in control on lower time frames. Expect a lot of range and fakeouts before price decides a clear trend one way,” said Trader Arjun.

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Author: AnTy

Ripple-Partner, MoneyGram, Sees 107% Growth in Customer Transactions YoY: Q1 2020 Report

MoneyGram International Inc. (MASDAQ:MIG) peaked at $4.03 on June 10, 2020, representing a sharp 20% increase since the markets opened on Monday. The rise comes in light of the recent release of positive reports on the company’s financial health and customer growth in Q1 2020.

MoneyGram registers 100% YoY growth in customer transactions

In a press release, MoneyGram reports a year-over-year (YoY) growth of over 100 percent in customer transactions on its platforms in Q1 2020. At the end of last year, the international remittance money processor received a $20 million funding from the Ripple Inc. to boost its payment solutions. The funding completes its $50 million offerings for a 15% stake in MoneyGram to run its pilot program for testing the digital token XRP.

In Q1 2020, the company registered expansionary customer transaction growth rates of 57% despite the challenging COVID-10 global pandemic. Ripple Inc. denies any part in MoneyGram’s exploding numbers but remains heavily invested in the company. In February 2020, Ripple disbursed an $11.3 million funding (in XRP) in “money development fees” calling it an incentive program. Alex Holmes MoneyGram Chairman and CEO said,

“I’m excited to report that our strong digital growth continued to accelerate in May, highlighting yet again the incredible progress we’ve made as an organization to focus on our strategy to lead the industry in digitizing the movement of money.”

“May was a good month”

MoneyGram’s online platform was the best performing platform, registering a 107% YoY growth rate as of May 2020. This was mainly driven by the launch of their mobile device application –contributing to over 80% of the online transactions. Kamila Chytil, Chief Operating Officer at MoneyGram said,

“We’ve built a modern, mobile, API-driven company that is resonating with millions of consumers across the globe.”

The account deposit and mobile wallet transactions also experience an 80 percent YoY growth but the past month was more impressive registering a monthly growth rate of 156%.

The growth of MoneyGram’s transaction also stems from the deep roots of the company in 200 countries (70 countries enjoying the digital services). MoneyGram recently announced a partnership with Federal Bank in India to facilitate instant transactions in the country. There was also speculation that MoneyGram may be acquired by Western Union, but there hasn’t been an official word from either company.

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Author: Lujan Odera

Bison Trails Launches Validator Support For Smart Contract Platform, NEAR Protocol

In an announcement released on June 9, 2020, Bison Trails, an infrastructure as a service platform, announced the addition of NEAR Protocol validator support. As a member of the NEAR Protocol Advisory board, Bison Trails aims at easing the transition of NEAR protocol nodes through the integration of its Proof of Authority (PoA) consensus mechanism and the “Restricted Mainnet” scheduled to launch next quarter.

CEO at Bison Trails, Joe Lallouz, statement on the NEAR Protocol integration acquired by BEG reads,

“We are excited to support the NEAR team as they launch the protocol. I’ve been following the team at NEAR for some time now and am blown away by their focus on the developer experience.

NEAR’s incredible technical team understands building a strong developer ecosystem will help drive success.”

Bison Trails Supports NEAR Protocol Validators

The NEAR Protocol is a proof of stake (PoS) decentralized app that enables the management of high-value assets to give the power of open finance and open web to the user. The system employs a PoA consensus mechanism that delegates the power to approve and verify transactions to validators.

Anyone can become a validator on NEAR Protocol but for those who do not wish to be one, Bison Trails offers its platform to run the node on the users’ behalf.

According to the statement, any participant who runs their nodes on the Restricted Mainnet will be awarded a stipend while the validators “warded special voting rights.” It reads,

“The voting power of these validators will be magnified in the community stage by having the additional delegated tokens on the validator.”

NEAR Protocol also adopts dynamic sharding, which means the number of shards changes in response to usage demands, scaling up and down, in a bid to increase scalability on the platform. The system is yet to be built on to the platform but Bison Trails stated they will be supporting the NEAR’s sharding – as it also helps in Bison’s scalability.

Future of NEAR Protocol

Bison Trails and NEAR Protocol have worked together since March 2019, when the latter become the first company to launch NEAR’s testnet. The co-founder of NEAR Protocol, Illia Polosukhin, believes Bison Trails will provide mentoring and further development on their validator program in the future. On the partnership between the two blockchain firms, Illia said,

“Bison Trails has been at the forefront of what is now considered the professional validator industry, making participation in blockchain networks more accessible and helping to provide more high-quality operators to the network.”

NEAR Foundation, the development lead on the platform, in May announced a $21.8 Million funding led by VC firm, a16z, in its plan to launch the mainnet. Illia said the company will be moving into layers 1, 2, and 3 in the summer of 2020 in preparation for the Restricted mainnet.

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Author: Lujan Odera

Fed Reserve of Philadelphia Research: Account-Based CBDCs May Replace Commercial Banks

A research paper published on June 1, 2020, by the Federal Reserve of Philadelphia shows account-based central bank digital currency (CBDC) could potentially replace the role of commercial banks if panic runs are managed and commercial banks are given a level playing field in the money market. This however poses a huge risk, the paper says.

The research titled, “Central Bank Digital Currency: Central Banking for All?” shows that a set of allocations in the private financial intermediation (commercial banks) could easily be replaced by a CBDC. The paper however claims that competition between the account-based CBDCs and commercial banks should be allowed and depositor runs minimized.

The paper is a collaboration of the research wing of the Fed Reserve of Philadelphia, the University of Chicago, University of Pennsylvania and Ecole Polytechnique. It looks deeper on the consequences of introducing a CBDC and its effects on the current financial system.

The paper looked into the introduction of an account-based CBDC system, whereby citizens will have a direct account with the central bank, and the implications of a CBDC on financial intermediation – the role current commercial banks play in the system.

Central banks stability during bank runs

Commercial banks are the major facilitators of maturity transformation – a process that sees short term liabilities converted to long term liabilities. For example, banks take in deposits (short term loans) and transform them into longer term instruments such as mortgages and commercial bonds.

However, banks are liable to bank runs whereby customers rush to withdraw their money all at once leaving the bank strained. Sometimes the deposits cash flow also dries up leaving the bank with no money to lend.

Possible risk in central bank’s CBDC implementation

Introduction of an account-based CBDC will offer central banks similar ability to current commercial intermediaries but will have to rely on the “expert knowledge of investment banks” to successfully transform deposits to long term side assets, the paper says.

With a clear and “rigid” partnership with investment banks, central bank may turn a monopolistic as more depositors open accounts with them from the commercial banks.

However, the paper notes a possible risk involved in the implementation of a CBDC. It reads,

“If the competition from commercial banks is impaired (for example, through some fiscal subsidization of central bank deposits), the central bank has to be careful in its choices to avoid creating havoc with maturity transformation.”

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Author: Lujan Odera