Stocks & Gold Getting Hammered But Bitcoin Fundamentals Do Not Support A Crash to $7k

In another red day of the week, Bitcoin dropped to about $10,150 level. Just like the weak price performance, with BTC currently trading around $10,415, volume remains extremely low too, at just above a billion dollars.

During the red market, the market saw popular stablecoin USDT having two separate all-time high outflows from exchanges. “In both cases for these historic spikes, it appears that they foreshadowed large market-wide dumps a few days after they occurred,” observed data provider Santiment.

Moreover, September has also been the highest cumulative month of funds moving to exchanges since March as the market continues to get a beating.

The rest of the crypto market is currently in a mix of reds and greens.

Among the top cryptos, ETH was hit the hardest, which fell under $320. This makes sense, given that DeFi tokens continue to lose.

Notable DeFi losers include Hakka (-25%), PERP (-18.50%), CREAM (-14%), CRV (-10%), SWRV (-7%), and YFI (-5%). A handful of them, however, are still recording gains such as YFL (+37%), UNI (+21%), SUSHI (+12%), DOT (+3%), and SNX (+2%).

However, losses might not be over yet as trader Qiao Wang expects this DeFi winter to be an extended one, bearish for 3-6 months over a two-year bull market.

He also noted, “Bulls like to blame negative external factors for killing the bull market. That’s the wrong way to look at it. When the market is depressed, no negative catalyst can crash it even more. When the market is overheated, the tiniest negative catalyst can spook it.”

Following the Macro

According to on-chain analyst Willy Woo, who says fundamentals don’t support bitcoin going down to $7k with a liquidity gap present in 10.8k-11k, this pullback wasn’t the result of the “usual movement of coins on-chain.” Rather the sell-off was fueled by coins on exchanges.

“Without large volumes of coins moving from wallets, I cannot see sufficient sell-side supply to push prices down with much gusto,” he said.

Woo attributed BTC’s downwards move to stocks looking weak and USD gaining strength over the past weekend.

Compared to other asset classes, Bitcoin is actually holding up quite well.

Bitcoin wasn’t the only one that had a bad day; stock markets dumped just as hard. As trader and economist Alex Kruger noted, “Two catchy phrases for today: Risk happens fast (and) Macro matters.”

The market had recovered from last week’s losses when the S&P 500 fell 2.5%, and Dow Jones slid 2.3% on Wednesday.

But it was Nasdaq that was hit the hardest by nearly 3% after data showed domestic business activity slowed down in September. Twitter stocks, however, were the exception.

Gold got hammered as well, down 3.7% since yesterday, falling to $1,850 level. “The support that it’s worked so hard to build at $1,900 is toast, as we see a rather well-defined downside breakout,” noted analyst Mati Greenspan who says the precious metal can reach as far as the 200 DMA, currently at $1,721, if the greenback continues its climb.

The US dollar is testing fresh highs and continues to “gradually reassert its dominance.”

As such, “If traditional markets shit the bed, BTC will likely do so as well. If traditional markets start bouncing, BTC will likely outperform,” said analyst DonAlt.

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Author: AnTy

US Household Net Worth Rises to a Record $119 Trillion Level in Q2

The net worth of American households and non-profit organizations surged in the second quarter to the highest level ever, thanks to the rebound in stocks and fiscal stimulus following a record drop in the previous quarter.

Household net worth increased by 6.8%, or $7.6 trillion, to a record $118.96 trillion, according to a Federal Reserve report. This was the largest quarterly gain since 1952. This is also about $380 billion more than the net worth at the end of 2019.

This increase came despite a record drop of $7 trillion in the previous three months, quarter first, caused by an economic shock from the COVID-19 pandemic.

During the same period, the level of federal government borrowing also soared as lawmakers responded with massive fiscal relief. Additionally, the value of equities increased $5.7 trillion from the prior quarter, while real estate advanced about $458 billion.

In the first quarter, the pandemic and the subsequent shutdowns sent the economy into a recession, which was the deepest since the 1940s. This resulted in a record decline in the household net worth in the first quarter of 2020.

Since then, the economy has been seeing a gradual recovery. Not to mention, the S&P 500’s quick recovery to pre-pandemic levels in mid-August and fresh highs this month. While the Dow Jones Industrial Average remained about 1.5% away from its February peak, Nasdaq jumped 23% higher than the previous ATH.

However, not every American benefited from this growth, as about 45% of the US population doesn’t own equities, according to a June 2020 survey from Gallup.

In the second quarter, in comparison, Bitcoin recorded over 42% returns.

The housing sector also experienced a V-shaped recovery as pent-up demand and record-low mortgage rates boosted sales, but again, one-third of households don’t own a home.

Consumer credit excluding mortgage debt decreased $69 billion during the pandemic, for the first time in four years.

Low-interest rates that the Fed has announced to keep near-zero through 2023, meanwhile bolstered corporate borrowing during this period. While firms’ debt increased at an annualized rate of 14%, federal debt outstanding swelled at a rate of 58.9%.

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Author: AnTy

Ethereum’s Gain is Also Its Loss Amidst the Continued Institutionalization

Yesterday, the largest digital asset took a hit and went down to about $11,110 level. Naturally, this then translated into losses for altcoins.

Altcoins went down hard with Cardano (ADA) being the biggest loser among the top cryptocurrencies while Aave (LEND) remaining the biggest gainer hitting yet another all-time rushing for $1 — up 67% in the past five days.

While bitcoin continues to record losses in the short-term, Ethereum continued to underperform and dropped by almost 10% below $400 to as low as almost $370.

At the time of writing, ETH/USD has been trading at $388.60, now in the green by over 2.2% but in the gains by 196% YTD.

Thanks to these gains, Ether now accounts for more than 30% of the total cryptocurrency market cap excluding Bitcoin, for the first time since September 2018.

However, while the exchange balance of BTC has gone down 9.6% in 2020 so far, Ether’s balance YTD change has been net positive of 10.4%.

It has been these profits that have the ETH balance on crypto exchanges growing as investors look to take off profits. Even the ETHUSD longs in Bitfinex have seen a slight drop but that could be temporary just like in early August that led to the longs hitting new highs.

The Institutionalization

While Ether is in losses with the market looking to finish off the monthly lower, ConsenSys is making acquisitions and gaining investment.

As we reported, the institutionalization trend is continuing with the NY-based Ethereum venture studio founded by Ether co-founder Joseph Lubin which acquired Quorum, the Ethereum-based enterprise blockchain platform developed by mega-bank JPMorgan.

“We’ll be working together with JP Morgan to merge the technical roadmaps of our own hyperledger basic client which is an Ethereum mainnet compatible client with the Quorum technical roadmap and under a commercial agreement we will be supporting JPMorgan’s Interbank Information Network, the IIM, and JPM Coin network,” explained Lubin in an interview with CNN.

JPMorgan has also made a strategic investment in the company but the size of the investment hasn’t been confirmed by either of the parties.

“So we will be bringing a much more comprehensive enterprise Ethereum solution to not just JP Morgan and the hundreds of financial institutions on their networks but the additional hundreds of institutions around the world that make use of enterprise Ethereum and that are increasingly starting to make use of public mainnet Ethereum,” Lubin added.

Vulnerable to Attack

Amidst all this came a research that says more than $1 billion worth of tokens on the Ethereum blockchain is suffering from a software vulnerability — a fake deposit exploit.

This missing software standard is found to be in 7,772 issuers of ETC20 tokens which can be manipulated to hack the funds at about no cost.

“If the fake deposit attack is carried out, it is for sure a great disaster for the token,” said one of the researchers, Haoyu Wang, an associate professor of computer science at Beijing University of Posts and Telecommunications. “Worst case, the token has to be reissued.”

The possible fix is upon crypto exchanges which can blacklist malicious token contracts because smart contracts are permanent and can’t be reversed.

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Author: AnTy

Tech is Ruling Again, The Broad Market Working in Bitcoin’s Favor

  • Technology is back to ruling the markets.

Bitcoin rallied on Monday to its highest level since early July 2019. The largest digital asset regained its mojo back towards the end of July and now stands strong as one of the best promising assets with 70% returns YTD.

BTC’s gains came amidst a wider risk-on rally in equity markets. The Nasdaq surged to a record high on Monday while S&P 500 briefly crossed above its record closing level set in February, both lifted by technology stocks.

Tech is apparently the only trade right now

“It is likely for the rest of this year we will see a continued push into technology and technology related areas of the market,” said Daniel Gerard, senior multi-asset strategist at Singapore-based State Street Global Markets.

But the lack of a stimulus package is causing some concern.

“The markets are in ‘show me the money’ mode, perhaps erring on the side of caution, not holding their breath for an imminent deal in Congress,” said Stephen Innes of AxiCorp.

“Sadly, this leaves the U.S. real economy waddling and many businesses and millions of consumers getting the short shrift.”

Although the S&P 500 is called to be overbought by analysts, any consolidation is expected to be an accumulation.

In the current environment of ultra-low rates, Bitcoin is acting as an inflation hedge. Most recent yields have gone higher, which suggests increased expectations for inflation, which can pull buyers away from risky assets. US elections are also close, and no one wants to disrupt the markets.

Adding to bitcoin’s gains is the weakening US dollar, which softened against most currencies.

Moreover, there is speculation that the Fed will adopt an average inflation target, seeking to push inflation above 2%. Seamus Donoghue, vice president of sales and business development at METACO said,

“Inflation is currently low, but real yields are across the board negative — negative real yields and the monetary stimulus/spending has driven investors to seek out inflation hedges such as gold.”

“Given its limited supply and growing institutional acceptance, Bitcoin will also likely benefit from the market seeking inflation hedges.”

Wall Street veterans like Paul Tudor Jones and George Ball have also been recommending investing in Bitcoin.

Just this month, publicly-traded $1.39 billion company MicroStrategy put $250 million in Bitcoin, and as a result, its stocks closed 15% higher.

Bitcoin not only acted as a reserve asset but also pushed the companies’ prices higher as happened with Jack Dorsey’s Square, which gained over 300% since it started BTC purchases in November 2019.

As Anthony Pomliano said, “It pays to embrace Bitcoin.”

“The best analogue for today is perhaps the Great Depression,” said Nicholas Pelecanos, head of trading at NEM.

“From the conclusion of this crisis to the years that followed, the price of gold more than doubled, rising with inflation, and it is this macroeconomic backdrop that makes Bitcoin so appealing to investors.”

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Author: AnTy

This Bitcoin Trend Happened Only Twice & Indicates We are Still in the Early Phase of a Bull Market

  • Bitcoin is back at near $12,000 level as we trade around $11,700.

The largest cryptocurrency took a drop under $11,300 yesterday only to make its way back to $11,850, which has been attributed to Dave Portnoy of Barstool Sports, educating his 1.7 million Twitter followers about Bitcoin in which he is already in seven figures deep.

Trader DonAlt, however, is not “positioned for huge upside,” and emphasizes on “sub $11k for any significant bearishness.” He said,

“Support held & made the price bounce back to the last resistance again. Going to watch how this Portnoy action into that resistance plays out, bulls are looking for a close above in the next few days.”

For Bitcoin, maximum pain appears to be around $11,500 as the digital asset continues to hover around this level ever since BTC broke above $11,000 in the last week of July.

The good thing for bitcoin meanwhile is the BTC balance on cryptocurrency exchanges, which continues to slide down. Ever since the March sell-off, the price of the crypto asset has been going up while exchanges’ BTC balance has been “declining extensively,” a trend last seen in 2016.

This means while investors are holding instead of taking profits, they are ready to buy any dips with the rapidly rising stablecoin supply.

“Historically, this happened twice & it’s an indication that we’re still in the early phase of a bull market,” said trader Crypto squeeze. “The big players aren’t ready to unload at this price.”

Dollar’s Loss is Bitcoin’s Gain

While bitcoin has been uptrending, all this time, the US dollar has been declining. It was in March during the market-wide correction that the USD gained strength — DXY went from 95 to 102, last seen in late 2016.

However, since then, the significant trend has been towards the south. Just recently, the US dollar index hit over a two-year low. Currently, it is slightly better at around 93 amidst the impasse in Congress about the additional stimulus to cope with the coronavirus pandemic.

“The dollar being weaker is a sign of positive risk sentiment,” said Klarity’s Sahota. “The market is moving to places that would give them a better return.”

The better-than-expected US jobless claims data, claims for state unemployment benefits were 963,000 for the week ended August 8, isn’t helping the dollar either. But the dollar’s loss is undoubtedly bitcoin’s gain.

Not only the losing faith in fiat currency aids in the adoption of the digital asset, which is in limited supply and is censorship-resistant, but it also means BTC price moves up. Trader and economist Alex Kruger said,

“The dollar is green like a leaf. Leaves grow old, fall, and die. Bitcoin is weightless and immortal. Dollar falls, Bitcoin remains. That is why BTC/USD goes up. Simple logic.”

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Author: AnTy

Institutional Investors Gobbling Up More Bitcoin Than Being Mined This Month

Even since Bitcoin entered August, the price has taken to test the $12,000 level after successfully breaching the key levels, $10,000 and $10,500 last month.

But so far, the digital asset hasn’t been able to sustain above $12k despite breaking above it twice, resulting in a crash afterward. We are now back to trading around $11,500.

While the price has taken a breather here, people are not passing this opportunity to buy the dips.

In the past two weeks, Grayscale Investments added 14,422 BTC to its bitcoin product Grayscale Bitcoin Trust (GBTC). Although the real BTC purchased might not be this high given that these figures are based on the outstanding shares created by Grayscale’s institutional clients which involve “in-kind” purchases as well, there is some level of activity going on, for sure.

Interestingly, Grayscale Bitcoin Trust saw its value increasing by $1.6 billion in the first half of 2020. The number of BTC held in the GBTC fund grew from 261,192 to 386,723.

In total, Grayscale has $5.6 billion in assets under management.

The Big Names

Besides Grayscale, the first publicly listed billion-dollar company MicroStrategy dived in Bitcoin. As we reported, within a fortnight of announcing in its Q2 2020 earnings call, the company bought 21,454 BTC, to replace cash in its balance sheet as a reserve asset. Arcane Research noted,

“To put that into context: MicroStrategy just bought the next 23.8 days of new bitcoin supply.”

The company shared in its official announcement that they see bitcoin as digital gold and a superior asset class with the potential for incremental returns. The decision to invest in bitcoin was taken in the light of ongoing currency debasement because of the unprecedented money printing, quantitative easing, and the lack of yield.

Going with Bitcoin for treasury management purposes resulted in the company’s market cap increasing by 11% “relative to the straight fiat cash exposure.”

Interestingly, the largest asset manager in the world, BlackRock, and largest mutual funds provider Vanguard together own 25% of MicroStrategy.

More Demand than Supply

This demand actually outstrips the supply of Bitcoin which has been 900 BTC per day since the halving.

In these past two days, while Grayscale and MicroStrategy combined bought 35,876 BTC, only 12,594 BTC were mined during this period, showcasing the growing demand for this “alternative” class as an inflation hedge.

Institutional interest in Bitcoin is strong as we have been seeing throughout 2020. As of June, about 90% of North America’s cryptocurrency transfer volume came from professional-sized transfers, those above $10,000 worth of digital assets, as per Chainalysis. The report states,

“Over the last two years in North America, we’re seeing the impact of a growing class of institutional investors whose transfers account for the growing dominance of professionals in the North American market since December 2019.”

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Author: AnTy

Ethereum Gas Price Hasn’t Been This High Since its Launch

The price of Ether is back to making its way to $400 level as it hovers around $391 in the green with just $840 million trading in the past 24 hours.

The second-largest digital asset is up 200% YTD and about 290% since March sell-off. Santiment noted,

“ETH holders have been euphoric for good reason… Ethereum is at +2.78 deviations above its neutral resting position when it comes to weighted social sentiment, which is easily an all-time high.”

But what’s not good for Ethereum is the extremely high transaction fees that have been rising throughout 2020.

Ethereum’s average transaction fee has spiked more than 3,636% since the beginning of this year, as per Ycharts.

According to Etherscan, on August 10th, a record of 9,332 ETH in transaction fees was paid, except for on two occasions on June 10 and 11 due to a couple of transactions that paid million dollars in fees.

The average gas price has also skyrocketed surging to 118.33 Gwei, recording an increase of 915% since earlier this year. Trader and economist Alex Kruger noted,

“High demand is driving Ethereum gas prices up. The 30-day average gas price has recently reached levels only seen in the summer of 2015, right after Ethereum launched.”

Ethereum network is working at full capacity, with the daily gas used continuing to surge to new highs in 2020.

From 37.2 billion on January 1st, gas usage has reached 77.8 billion on August 10th. Since late June, it has been keeping above 70 billion.

This growth has been the result of ever-increasing stablecoin supply and the exploding DeFi space.

This past week, however, Ethereum saw a temporary slowdown in its growth with ETH active addresses about even for the week while transactions grew by just 0.9% week-over-week. According to Coin Metrics, transfers on the network declined by 1.4%.

But this week, the market is yet again active as Glassnode noted, 1.2 billion USDT, an all-time high, was transferred on Ethereum within a single hour, yesterday. In this quarter, the supply of stablecoins has been further gaining momentum, already surpassing $12 billion.

As for the DeFi sector, another record of $4.74 million has been locked in this space with an all-time high 4.51 million ETH also locked.

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Author: AnTy

Crypto Market is ‘Extremely Greedy’ for the First Time in 2020

Before bitcoin started up-trending last week, its volatility fell below 25%, a level rarely seen in BTC’s history, which had the market expecting a big move. Coin Metrics notes,

“Prolonged periods of low levels of volatility encourage market participants to take on greater position sizes, engage in increased leverage, set tighter stops, and reduce the thresholds upon which they will respond to new information.”

In the crypto market, this phenomenon is even stronger due to the amount of leverage present.

Digital assets started showing signs of life as bitcoin burst over the weekend, breaking through the psychologically important $10,000 level.

The erratic price action of bitcoin, however, resulted in the futures curve steepening aggressively, “encouraging further leverage flow and stablecoin carry trade-related flow.”

During this price action, bitcoin futures on Bakkt registered record trading volume while the open interest on CME hit an all-time high of $724 million.

Similarly, the options market indicates, market participants are turning more bullish, leading to a degree of position scrambling and short positions getting squeezed. Denis Vinokourov of Bequant said,

“The downside to this parabolic rise is the so-called liquidity vacuum and “gaps” in price discovery (…) this temporary liquidity drainage in the small and mid-cap sector creates an opportunity to pick up bargains.”

The real test, according to him would be if bitcoin can hold on to the key $10,500 and $10,000 levels once this rally runs out of steam, with worrying signs of elevated funding rates in perpetual contracts.

All the Bullishness

The gains this week has people turning extremely greedy for the first time in 2020, “showing signs of an exuberant market sentiment.” The last time the Fear & Greed index was at these levels was during the peak of euphoria in July 2019 when BTC hit the yearly high of $13,900.

Interestingly, these gains came amidst a decline in the US dollar and gold, making a new all-time high, which reinforces its safe-haven properties.

In the current world of low minimal interest rates for the foreseeable future on top of inflation expectation, non-yielding assets like bitcoin and gold become increasingly attractive.

However, it is “Unfortunate for BTC longs to see precious metals print a major top at the same time BTC starts being driven by the same factors and price just starts to take off,” said trader and economist Alex Kruger.

Bitcoin and gold’s 30-day correlation is returning to all-time highs, set in March when all risk assets sold off.

The monetary and fiscal response to the coronavirus pandemic has only increased the uncertainty of the future path of inflation and monetary policy, which is supportive of BTC prices. Today, the Fed extended its lending program until the end of the year.

Also, Goldman Sachs analysts said there are “real concerns around the longevity of the US dollar as a reserve currency have started to emerge.”

Other bullish facets this time involve a record percentage of bitcoin supply, 62% amounting to 11.4 million BTC, not moved in at least a year.

Moreover, during this ongoing rally, peer-to-peer volume in many countries has hit an ATH this week. Both Nigeria at $10.3 million and India at $3.8 million made new peaks breaking the ones made just a week before that.

Kenya ($2.5M), South Africa ($2.2M), Ghana ($1.9M), and the Philippines ($1.1M) also made new highs.

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Author: AnTy

Bitcoin Breaking Out is the Last Catalyst, Altcoins Setting for a Massive Bull Run

The leading cryptocurrency is enjoying the greens this week, trading around $9,900, a level was last seen in early June when it ran up to $10,000.

This uptrend came after weeks of price consolidation, during which altcoins rallied strongly, post halving just like bitcoin behaved in the past after halvings.

“History is repeating itself.”

The fundamentals have already recovered in two months — last week network difficulty hit a new all-time high and hash rate is also surging to new peaks.

Amidst this, while trading volume on the spot market is still catching up, the derivatives market is back in the game. As we reported, open interest on BitMEX has climbed back above $1 billion and that total OI across platforms has exceeded $4 billion.

On CME Group, the bitcoin futures OI has ticked up to 900 contracts towards all-time highs this week, with only Leveraged Funds Net Short, which could further fuel an upwards move in bitcoin.

Amidst the ongoing bullishness, Bitcoin has also found a new supporter in the form of chess grandmaster Gary Kasparov who believes a “steady rise in popularity” of bitcoin and other cryptos is “inevitable” because “it’s a response to the shift of power from individuals to states or other institutions that may act on our privacy without our consent.”

To him, the good thing about bitcoin is the “magic number of 21 million” and that people understand the formula behind that, unlike the fiat money which is in Fed’s control and “you never know how many trillions of dollars will appear on the market tomorrow that will damage your savings.”

Bitcoin Pushes Altcoins Higher

As bitcoin recorded gains, top cryptos started seeing some action as well. Ethereum is leading among the top cryptos which rose 28% this week.

“BTC breaking out is kind of the last catalyst. While a lot of stuff will pull back in a btc rip, it’s hardly a bearish scenario,” said analyst Cetris Paribus. The bearish scenario according to him would be if at this point BTC and ETH stay flat for a few months and money just shuffles around the rest of the market.

For now, altcoins are enjoying bitcoin’s upwards movement. Even Litecoin broke out which analyst rekt capital says is a sign that “altcoins are setting themselves for a massive bull run.”

Among the top crypto’s, Cardano (17.25%), Litecoin (14.02%), and Bitcoin Cash (10.47%) are recording good gains over the last 7 days.

This past week, the biggest gains have been recorded by YFI and Swipe which jumped about 114%, other best performers include Band (58%), TOMO (56%), VTHO (50%), ATT (38%), RUNE (28.7%), Balancer (28%), Augur (26%), DigiBute (22%), Ethereum (21%), ADA (13%), IOTA (12.68%), and Litecoin (11.67%).

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Author: AnTy

Spain to Implement EU’s 5AMLD For Crypto Firms With Recent Amendment Proposal

Spain’s lawmakers have proposed an amendment to level up the country’s compliance with Europe’s Fifth Anti-Money Laundering Directive (5AMLD).

This set of regulations came into action earlier this year, pushing EU member states to take charge of crypto oversight within their jurisdictions. With Spain behind the EU’s schedule, its lawmakers will be ready to vote on the amendments within 2020.

The 5AMLD was implemented as a first step towards a comprehensive regulatory framework for digital assets. This first step comes after the crypto ecosystem became a new hub for illegal activity, such as terror financing and money laundering. Spain’s government website has since reiterated that its newly tabled draft law is in line with the 5AMLD objectives:

“The Draft Law advances in the reinforcement of the money laundering and terrorist financing control system, incorporating the new community provisions and including additional improvements in the current regulation to increase the effectiveness of prevention mechanisms.”

Once approved, the law will require crypto firms operating in Spain to register with the country’s financial watchdog. These include businesses such as crypto exchanges, custodial service providers, and digital wallet providers.

Apart from registration, entities in this industry will be required to prove compliance over their life span. Spain’s financial regulator will be able to monitor their activity through due diligence provisions.

Crypto Regulation on the Rise?

Spain’s action towards crypto-assets comes at a time when regulators across the globe are looking into crypto oversight. While it has been an uphill task to keep with these innovations, countries such as Japan and Singapore are quite ahead in implementing crypto regulations.

This first-mover advantage has placed Asia on the map as a leader in the digital asset ecosystem. China, which, previously banned crypto activity, has piloted its own CBDC, could this be another ‘regulatory’ perspective? It depends on which side of the table one sits on when it comes to decentralization.

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Author: Edwin Munyui