Treasury Yields Flip Negative as Crypto Lending Takes Off: Kaiko Report

Real yields that recently hit their lowest levels since 2003 are going down as consumer prices increase at their slowest pace in six months, making fixed-assets in classic portfolios underperform.

The crypto market has been recovering from the July 21 low of just under $1.3 trillion, having reached $2.47 trillion when earlier last week, the market experienced a small hiccup yet again.

In the past week, the market has been trying to make its way back up again but is currently struggling to break out strongly above.

Still, Bitcoin is currently trading around $46,800 and Ether at about $3,400, while the total crypto market cap is now past $2.2 trillion.

Amidst this, as we reported, lending in the cryptocurrency sector has been taking off, with DeFi stablecoins’ interest rates continuing to increase. Stablecoins’ total market cap has also grown to $123.68 billion, from less than $6 billion in March 2020.

“Treasury yields flip negative as crypto lending takes off,” noted crypto data provider Kaiko in its latest report.

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US Treasury yields went down on Tuesday after data showed that consumer prices increased at their slowest pace in six months. The consumer price index, a key inflation report, showed a 5.3% year-over-year increase for August, and Core CPI, which excludes volatile food and energy prices, rose 0.1% month over month – both slightly less than the expectations.

In reaction to this, the yield on the benchmark 10-year Treasury note fell to 1.285%, and the yield on the 30-year Treasury bond slid to 1.867%. Yields move inversely to prices.

Nonfarm payrolls, however, grew by just 235,000 in August, well below expectations of 720,000 new positions.

The Federal Reserve is currently monitoring the inflation, which it wants to see hit its 2% target and looking for strong employment results to start paring the monthly bond purchases.

Kaiko noted in its report that the Fed’s emergency monetary accommodation is what has put significant downward pressure on long-term bond returns over the past year.

“As global inflation increased and growth expectations worsened, real yields turned negative hitting their lowest levels since 2003 this past August.”

While fixed-income assets have been offering steady income flows, low volatility, and protection against falling equity valuations in a diversified portfolio over the past years, now that yields are drifting lower, the fixed-income allocation in the classic 60/40 portfolio is likely to underperform.

This combination of the ongoing low yield environment and the rising demand for liquidity in crypto markets is making the nascent crypto lending industry popular among market participants, it said.

In comparison to 0.7% per year paid by a typical savings account, even the centralized options in the crypto offer sizable returns ranging from 3% to 12%, which can get astronomical for big risk-takers.

In DeFi, the popular lending protocols Compound Finance and Aave have already launched their services specifically for institutions.

“Crypto lending allows users to supply cryptocurrencies in exchange for earning an annualized return, even in the absence of price appreciation.”

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Author: AnTy

SLP Farming Is Turning Out to Be Very Lucrative, While Axie Infinity (AXS) Has the Lowest P/E Ratio

SLP Farming Is Turning Out to Be Very Lucrative, While Axie Infinity (AXS) Has the Lowest P/E Ratio

As we reported about 10 days back, Axie Infinity has been one of the very few projects generating positive revenue amidst the ongoing sideways boring market.

And, the adoption of play-to-earn games is only soaring.

The most popular NFT project right now is Axie Infinity, seeing record growth across the board. Interest for the search term “Axie Infinity” on Google Trend is also at its peak, while for “NFT,” it’s on a downtrend after topping out in March.

One of the top gas guzzlers on the Ethereum blockchain, Axie Infinity is actually the highest revenue earner in the past 30-days at $49.1 million, with no one coming even close as PancakeSwap, the second-highest one is earning $12.5 million, according to Token Terminal.

As for if this is sustainable, as ​​Spartan Black for crypto fund The Spartan Group noted, “none of the mainstream gamers even know about Axie….”

The project’s revenue is growing thanks to it amassing close to 500,000 daily active users (DAU).

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And this growth is reflected in the token AXS, which is up a whopping 3,425% YTD. AXS price is enjoying the gains and leading in almost every time frame so far this year.

Every other day, AXS is surging to a new all-time high; the latest one hit today at just above $21. This month alone, the crypto asset is up 275% as the platform continues to gain traction.

If we look at the Price to Earnings ratio, Axie has the lowest among the most popular Dapps.

The token AXS was actually launched by Axie’s parent company Sky Mavis, a Vietnamese studio that raised $7.5 million in May for the game with backers including billionaire investor and Dallas Mavericks owner Mark Cuban, to bootstrap the growth of the company.

The blockchain-based game uses non-fungible tokens (NFT) to reward players financially in the form of Small Love Potions (SIPs), which can then be converted into fiat currency on cryptocurrency exchanges.

In the Philippines, the game has become extremely popular, as the company shared in its short documentary called “Play-to-earn: NFT Gaming in the Philippines,” which came out in May.

According to Dapp Radar, these decentralized play-to-earn games led by Axie Infinity that are reaching the masses could be the missing piece towards the mass adoption of blockchain technology.

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Author: AnTy

Galaxy Leading the Ether ETF Race with Lowest Fees; Purpose Amasses Nearly 11k ETH

Galaxy Leading the Ether ETF Race with Lowest Fees; Purpose Amasses Nearly 11k ETH

All three of the Ethereum exchange-traded funds made their debut on the Toronto Stock exchange on Tuesday.

While the US has yet to approve a single Bitcoin exchange-traded fund, Canada has launched several and has now moved to Ethereum.

Not one but three Ether ETFs made their debut trading on the Toronto Stock exchange on Tuesday.

Purpose Investments, CI Global Asset Management, and Evolve Funds Group are the Canada-based asset managers who received approval from the Ontario Securities Commission last week.

These three firms also launched the Bitcoin ETFs, with the Purpose Bitcoin ETF (BTCC) being the first one in North America, which has amassed 18,525 BTC in just over two months.

The Purpose Ether ETF, the CI Galaxy Ethereum ETF, and the Evolve Ether ETF all three provide exposure to the price of the second-largest crypto ETH without owning the crypto asset itself.

Purpose charges a 1% management fee, and its product ETHH has accumulated 10,902 ETH already, worth CAD 33.33 million ($26.65 million).

“While bitcoin tends to get a lot of attention as it was the first major cryptocurrency, what ether and the Ethereum ecosystem represent is one of the most exciting new technology visions today in society,” Som Seif, founder and CEO of Purpose Investments said in a statement.

Evolve and CI have waived off their management fees until May 31 and June 15, respectively. The former charges 0.75%, and the latter charges 0.40% of the net asset value, NAV.

Evolve’s ETF (ETHR) has gathered about $2.769 million in assets under management (AUM).

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Author: AnTy

BTC Enters a “Historically Attractive Price Zone” as MVRV Drops Below 1 for the 4th Time Ever

  • Bitcoin SOPR drops to 0.843, lowest since February 2012
  • Short-term holders panicked and sold their BTC while long-term holders unfazed of the severed downturn
  • For the fourth time in Bitcoin’s history, the market value of the crypto asset to realize value has dropped below

The price of bitcoin is currently keeping above $5,000 while the trading volume remains around $2 billion after having one of the largest one-day price drops in bitcoin’s history amidst the growing concern over the Coronavirus (Covid-19) pandemic.

The network-wide indicator of profit/loss is at its lowest since February 2012. On March 12th, BTC SOPR dropped to 0.843, below 1 signal that investors are selling at a loss.

Source: @Coinmetrics

According to Coin Metrics, it was because short-term and relatively new holders sold their BTC during the recent price crash.

On tracking how many old coins came back into circulation after being untouched for a period of time, it was found that on March 11th, about 281 BTC that had been touched for at least 30 days were revived.

In comparison, only 4,131 BTC that had been untouched for at least a year were revived, signaling that a vast majority on March 11th and March 12th involved BTC that were held for less than a year.

March 11th was actually the “fourth-largest spike in BTC thirty day revived supply over the last eight years.”

While short-term holders panicked and sold their digital assets during the bloodbath, long-term holders were unfazed of the severed downturn. The one-year revived supply wasn’t unusually large on March 11.

Source: @Coinmetrics

This was further emphasized by the coin value days destroyed, which multiplied transfer value by the amount of days that the coins transferred were last moved on-chain.

Giving old coins higher weight, this metric didn’t see any significant spike on March 11 or March 12, indicating that “there was not a relatively high amount of long-held coins moved prior to the recent price action.”

After such an intense and loss driven week, it is reassuring that HODLers are holding onto their BTC tight as most of the sell-off was driven by short-term holders.

Markets are still volatile, but bitcoin has now “entered a historically attractive price zone,” as MVRV goes below one which means holders have a higher market valuation than current speculators.

Source: @Coinmetrics

It has been only the fourth time in Bitcoin’s history that the market value of the crypto asset to realized value has dropped below.

On March 12th, it saw its largest one-day drop since December 2013, after the price fell by over 30%. In the past, where MVRV dropped below one has been the “best time to accumulate BTC at a relatively discounted price.”

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Author: AnTy

Bitcoin Longs Making an All-Time High, What’s Incoming $5,000 or $10,000?

  • BTC/USD shorts meanwhile nearing lowest levels
  • BitMEX funding rate for Dec on track for the lowest high since March
  • Open interest on CME Bitcoin futures registers an uptick but it’s “negative for potential realized volatility”
  • Bitcoin can go to either $6,000 or test 10,000 level on a 3-month time horizon

Bitcoin is the best performing asset of not only 2019 but of the decade. If you would have invested $1 in Bitcoin in 2010, that would have been worth $100,000 today.

As such it makes sense that Bitcoin must be part of everyone’s portfolio as pointed by Weiss Crypto Ratings,

“Many Wall Street veterans are in agreement. The returns from stocks and bonds will be sluggish over the next decade. Time to add crypto to your savings plans.”

However, this is just starting. BTC/USD is currently trading at $7,069 on extremely low trading volume of just $150 million and is down 65% from its all-time high of $20,000.

And this is why traders are long on the world’s leading cryptocurrency. BTC/USD longs has actually climbed to its all-time high on Bitfinex.

BTCUSD Longs, Source: TradingView

However, crypto trader Josh Rager says people are over-focusing on this chart and giving it way more credit than it actually needs.

Because Bitfinex allows users to trade up to 3.3x leverage, this means BTC price would have to move down to mid to low 5ks minimal in order to liquidate these longs.

But Rager says it is “highly unlikely” that price will nose dive straight to $5k right now. On its way down, there would be several bounces in between.

To get an understanding of the sentiment and interest in the Bitcoin market, we need to pay attention to the BitMEX funding rate and open interest which he says are better indicators.

The Bitcoin funding rate on BitMEX for December is on track for the lowest high since March and in the tightest range since February.

In stark contrast to Bitfinex’s longs, the BTC funding rate on BitMEX is pinned at 0.03%. The number of times the rate has been pinned at 0.03% on a daily basis continues to rise still and in Q4 of 2019 it represented about 40.5% of observed periods, notes analyst Rptr45.

BTC/USD shorts, on the other hand, have reached almost to its lowest level. The has the Bitfinex L/S ratio also at an ATH but as Rptr45 points out without an obvious funding justification which was the case in previous break-outs as well.

BTCUSD Shorts, Source: TradingView

Meanwhile, there has been an uptick in open interest from the last few weeks on CME Bitcoin futures.

As per the Commitment of Traders (CT) report, the OI as of Dec. 12th has been only 116 million and on the lower end of the spectrum.

Digital asset advisory firm BitOoda views this as “negative for potential realized volatility in the short term.”

“Assuming the COT as OI for institutional investors and BitMex OI for retail and high net worth individuals, we could potentially see a set up to buy vol in the new year if the CME/Bakkt OI grows.”

This could help the futures market and further lead the way for realized volatility just like it has in the past. With the retail market already having a lot of exposure, the firm expects Bitcoin to either go back to $6,000 or test the 10,000 level on a 3-month time horizon.

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Author: AnTy

Investors Hoarding Cash in Anticipation of a Significant Drop in Stocks Next year But Bitcoin still the Best Option

  • Dow Jones and S&P 500 making new records
  • China injects $25.68 billion in the monetary system and lowest rate for the first time since 2015
  • Wealthy investors bracing for a recession by stockpiling cash, But UBS says cash might not be the best strategy
  • Bitcoin meanwhile outperforming every other asset class for the last 10 years

For the first time ever, the Dow Jones Industrial Average closed above 28,000 while the S&P 500 index hit its fourth consecutive record.

These bullish sentiments some market commentators believe are here to stay. JC O’Hara, Chief market technician at MKM Partners said,

“The melt-up continues. While the market has entered ‘overbought’ territory, we are not seeing any intensity from bears at this moment. While an overbought pullback is always a possibility, we continue to like the intermediate-term prospects for equities.”

On Monday, for the first time since Oct. 2015, China’s central bank lowered the interest rate on the regular reverse purchase open market operations to boost market confidence and prop up the slowing growth. PBOC also injected 180 billion yuan into the monetary system.

According to state media agency Xinhua, the US and China had “constructive talks” on trade while the Trump administration is expected to grant a 90-day license extension to allow US companies to continue doing business with Huawei.

The Louder the Denials, the Greater the Odds

However, Charles Hugh Smith, the author of the popular blog “OfTwoMinds.com” isn’t buying it. He said,

“The financial media is loudly declaring the current blowoff top in stocks is not a blowoff top.”

“The delicious irony here is these denials are reliable markers of blowoff tops: the louder the denials, the greater the odds that this is, in fact, the blowoff top that many pundits have been expecting for some time, but always in the future.”

While referring to the US Federal Reserve injecting $60 million per month to manage the repo mass that Fed Chair Jerome Powell said “in no sense” is QE Smith said, “Calling QE not-QE doesn’t make it different than QE.”

Wealthy Investors Bracing for a Recession by Stockpiling Cash

Despite the new heights reached by the market, investors are preparing for a turbulent period ahead that can result in a “significant drop” in the equity benchmark.

According to a recent survey by UBS Wealth Management, 55% of wealthy investors are bracing for a drop in the market before 2020 ends.

In the backdrop of concerns about the US-China trade war and economic slowdown, cash is emerging as the king. As can be seen in the portfolio of high net worth investors, it is ruled by cash.

These wealthy investors are holding 25% of their portfolios in cash, which is much higher than the UBS recommended by 5%.

As a matter of fact, cash holdings have been growing since the financial crisis.

Hoarding Cash, not the Best Strategy, Bitcoin Boat still here

Last week, Axios reported that firms are trying to protect themselves from recession but the pullback in spending by these major companies can actually help in causing recession or intensify the downturn in the economy.

But in a note from September, UBS said stockpiling cash might not be the best strategy. “Cash is an inefficient way of managing portfolio downside risk over the long term,” wrote UBS.

“Cash reduces the portfolio’s return during bull markets, while also providing very little ’crisis alpha’ during market drawdowns,” added the UBS strategists.

Like Ron Paul, former Congressman from Texas concluded in his poll, the majority of the people prefer to hodl Bitcoin than gold, bonds or Fed notes for the next 10 years.

Also, as we reported, Bitcoin has been outperforming every other asset class, US stocks bonds, gold, real estate, emerging currencies, and oil, for its entire 10-year history. According to analyst Willy Woo,” it’s as performant today as it was in 2009, you haven’t missed the boat.”

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Author: AnTy

What’s the Deal Behind Coinbase Making This Sudden & Drastic Move?

A few months back, Coinbase hiked its fees for its lowest volume tier by 150% and now again in a sudden and drastic step, Coinbase has increased its trading fees for the lowest volume traders by a whopping 233% while subsidizing 60% lower fees for the highest volume traders.

Looks like, Coinbase doesn’t care if you are trading only up to $10,000.

You better be a big trader!

While the cryptocurrency market is raising the fees dramatically, the discount brokers in traditional markets are moving towards zero trading fees, noted economist and trader Alex Kruger.

“The “rent-seeking middleman” business model that so many in crypto despise will come full circle to exchanges that are doing just that – collecting your rent for facilitating trade,”

said analyst Joe McCann.

While sharing a thread on this topic, McCann says just like with traditional markets, the fees will go down to zero in crypto space. But while it took 20 years for online brokers to do that, given the fact that crypto is a fast-growing market in comparison to traditional markets,

“this is going to happen sooner than 20 years.”

But why the spike?

In 2017, the year of the bull market, Coinbase booked revenue of $1 billion while in 2018, the year of a bear market, the exchange only brought $520 million in revenue which was less than the projected 60%.

Coinbase’s bread and butter business, McCann says has always been

“transaction fees from trading crypto on its exchange.”

And the business model in crypto currently is tightly coupled with bull or bear markets. So, in order to smooth the revenue and forecasting going forward, Coinbase needs to create

“ancillary businesses that generate revenue more consistently and predictably.”

Coinbase Custody is that business that has exploded assets under custody (AUC) to more than $7 billion as of August 15, 2019, in only 13 months, observes McCann.

The second option is to “rapidly accelerate” the listings of new assets to increase the trading volume. As we are seeing, the exchange has added 26, and counting, new assets.

Another option is increasing the fees when trading drops.

After hitting $13,900 in late June, the trading volume has plunged, as such Coinbase is raising fees to offset the low trading volume.

Now, McCann says three scenarios are likely to follow, the first one exchanges like Binance and OKEx drop fees to $0 to buy the flow. Other options include an extremely well-funded tier-1 VC-backed startup launch their exchange in direct competition to Coinbase with no trading fees or Coinbase itself do this.

The last option, however, he said is

“highly unlikely.”

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Author: AnTy

Bitcoin Is Stronger Than Ever, But is Investor Interest Falling? A Look at Google Trends

Bitcoin has hit its lowest point in four months now. Before you panic, though, let’s be clear: we’re not talking about price. While the prices of the token are still stable and are above $10,200 USD at the time of this report, the lows are linked to Google searches for the asset.

Data extracted from Google Trends shows that the interest in Bitcoin is going downhill. On a scale that goes from 1 to 100, Bitcoin peaked during the week that comprised June 23 to 29, reaching 100 points. This week, it has only 33 points. The last time that the asset scored so low was when it had 24 points on March 24 to 30.

The peak coincided with prices reaching $13,800 USD, but as they did not grow any higher than that, speculators and casual investors seem to be losing interest in the asset.

It has been proven that interest follows price. Whenever the price is quickly going up or when it goes down very fast, searches go up. What the token needs right now in order to get some more popular interest again is to breach the $10,000 barrier once more. Despite dipping below the value quite a few times recently, the asset has been struggling to go over it.

If more parabolic upward movement happens, it is certain that the interest would pick up. Now, if we are to believe Bitcoin analysts, we just have to wait until the next bull run is upon us.

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Author: Hank Klinger

With Record Lowest Interest Rates Coming, Market Bullish on Gold & Stocks, Cryptocurrencies will “Gain in Favor” too

  • “Japanification scenario,” the Fed has to cut rates below zero,
  • The 2020s will begin with the lowest interest rates in 5000 years
  • In the long run, negative rates ruin the financial system – UBS CEO
  • Falling interest rates would lead to irrational capital allocation and an eventual crash

The Federal Reserve is cutting interest rates to stimulate activity as the trade war between the US and China casts a pall over the economy.

However, there isn’t much room with the current rate set in the range of 2% to 2.25%. And it won’t be long before the mark hits zero and then turn negative.

According to the report from analysts at Bank of America, the second-largest US lender, the Fed has to cut rates below zero, a path many countries like Denmark, Japan, and others have already taken.

Although low, investors are now assigning increasing odds that the Fed will need to take rates potentially negative, describing the setup as a “Japanification scenario.”

“We believe negative rates in the U.S. are a possibility,” the analysts wrote.

“The 2020s will begin with the lowest interest rates in 5000 years.”

BofA’s periodic report stated that there has been a total of 731 global interest rate cuts since the Lehman in an attempt to renormalize the monetary policy.

“The 2020s will begin with the lowest interest rates in 5000 years.”

The value of negatively-yielding bonds has reached $17 trillion, equivalent to 30% of the total outstanding debt securities market value. $1 trillion is the value of negatively-yielding corporate bonds.

Global debt is also near an all-time high level of global GDP at 310%.

Moreover, S&P 500 is not only in its longest bull market but the biggest of all-time, while $5.4 trillion are being spent on stock buyback since 2009 by US corporate.

BofA is bullish on stocks and commodities and bearish on bonds, cash, and the US dollar.

“Negative rates ruin the financial system”

The top banking executives of Europe meanwhile have ramped up their criticism of negative rates, warning of severe consequences to asset prices and the broader economy.

UBS CEO Sergio Ermotti said negative rates are hurting savings rates and social systems while Deutsche Bank AG Chief Executive Officer Christian Sewing warned that more monetary easing by the ECB will have “grave side effects” on Europe, a region that is already living with them for half a decade.

“In the long run, negative rates ruin the financial system,” Sewing said.

The ECB will decide on Sept. 12, if it would cut its interest rate even further as economic indicators showed a decelerating economy.

These negative rates are also hurting the bank’s interest margins by putting pressure on them.

Gold is the Best Safe Haven Asset But Cryptos will Gain as well

The falling interest rates, Mark Mobius, the founder of Mobius Capital Partners recently said would lead to “irrational capital allocation and an eventual crash.”

As such, Mobius advises investors to allocate 10% of their assets in physical gold and believes cryptocurrencies would gain as well.

Due to the fact that gold maintains its status as a currency — that stood the test of time — it is the best safe haven option, according to him.

As for cryptocurrencies,

“Given the increasing credibility and faith in cryptocurrencies, they will gain in favor as a currency,” he said.

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Author: AnTy

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

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