DEX & OTC Brokers Adoption Growing Significantly Since 2019, More Than Centralized Exchanges

DEX and OTC Brokers Adoption Growing Significantly Since 2019, More Than Centralized Exchanges: Report

Decentralized exchanges (DEXs) and OTC brokers are gaining adoption as centralized and high-risk exchanges see their number dip slightly, according to a new report by blockchain analytics firm Chainalysis.

As cryptocurrency adoption grows and attracts institutional investors, the value moving to exchanges is trending upwards to its highest above $750 billion in May 2021.

So has grown the number of active crypto exchanges, which peaked in July 2020 at around 845. Since then, it has been going down and, as of August 2021, sits at 672.

Since the beginning of 2019, the data shows that the number of active DEXes and OTC brokers has actually been climbing significantly, with derivatives exchanges growing as well but only modestly.

DEXs popularity also coincides with the “explosive growth” of the decentralized finance (DeFi) sector, as per the report.

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Centralized exchanges and high-risk exchanges have actually seen their numbers dip slightly after initial increases.

“We see that DEX users carry out much larger transactions than centralized exchange users.”

“This is likely because DeFi is also more popular in countries with bigger, more established cryptocurrency markets, which also tend to be wealthier countries.”

While large DEXs, OTC brokers, and centralized exchanges grew their transaction volume substantially during this period, derivatives exchanges grew the most in value received at 686%.

Total value received by DEXes grew from $10 billion in July 2020 to an all-time high of $368 billion in May 2021 and sat at just under $143 billion as of September 2021. As for why larger exchanges are growing, the number of unique assets available is of significance here as more assets generally correlate with higher transaction volume.

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Author: AnTy

Michael Novogratz’s Galaxy Adds More than $3B in Assets This Year as Ether Picks Up Steam

Michael Novogratz’s Galaxy Adds More than $3 Billion in Assets This Year as Ether Picks Up Steam

Ether is going mainstream, much like Bitcoin did a year-and-a-half ago. Also, crypto is now becoming an asset class.

Crypto billionaire Michael Novogratz’s Galaxy Digital Holdings (GLXY) recorded its biggest ever cash influx as Bitcoin and Ether rallied to their all-time highs.

Currently trading just under $62,000, Bitcoin made its ATH at $67,000 on Oct. 20. Ether meanwhile hit a new peak on Wednesday at $4,675 and is currently consolidating around $4,500, up over 520% this year so far.

While Ether is inching closer to $5k, Goldman Sachs has estimated that the digital asset’s price is set to reach $8,000 by year-end because “it has tracked inflation markets particularly closely.” The lastest spike in inflation breakevens suggests more upside for the second-largest cryptocurrency.

Crypto Becoming An Asset Class

At the end of October, Galaxy had $3.2 billion in assets, an increase of 45% from the prior month, according to global asset management head Steve Kurz. At the beginning of the year, the asset manager had less than $1 billion under its management.

One of the main drivers of its growth is Ether-focused Canadian ETF. The CI Galaxy Ethereum ETF (ETHX) has amassed more than $1 billion since launching in April.

According to Kurz, this flood of cash will continue to build as Ether gains mainstream adoption.

“Crypto’s becoming an asset class, not just an asset.” “From a market infrastructure and development of the asset class perspective, Ether is picking up steam, probably the way Bitcoin did a year-and-a-half ago.”

GLXY shares have also jumped 13% in the first three days of November, following the 50% uptrend last month.

Bitcoin Facing Competition From Ethereum

The US has yet to see an Ether ETF though the first Bitcoin ETF started trading last month, but it was linked to futures contracts trading on the CME, and a spot crypto ETF is nowhere near being approved. Analysts expect Ether futures ETF to get the green light soon as well, even before the physically-backed Bitcoin fund gets approved.

Besides the potential to have its future ETF launching, CME has also announced that it is launching Micro Ethereum Futures early next month.

“It has become clear in the last six months that bitcoin faces competition as Ethereum and other Layer 1 assets become more innovative, with DeFi and NFT use cases, while bitcoin’s primary use case continues to be as a scarce, fungible digital asset,” said Chainalysis chief economist Philip Gradwell.

He pointed out how an additional 4 million ETH have flooded into DeFi in the last six months, bringing the total to 17.6 million Ethereum — 15% of Ether’s total supply.

“These are all very positive developments for crypto, and I think its potential is now clearer than ever,” said Gradwell.

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Author: AnTy

Direxion Withdraws ETF to Short BTC, Ether Futures ETF Expected to be Approved Next as ETH Hits ATH

Ether price has hit a new ATH at $4,645, up more than 530% YTD, as the supply shocks become real, making ETH scarcer amid rising demand.

Direxion has filed a request with the US Securities and Exchange Commission (SEC) to withdraw the Bitcoin Strategy Bear ETF.

The exchange-traded fund issuer first made the ETF application on October 26. The SEC staff asked for the filing to be withdrawn on the day it was filed.

The Direxion Bitcoin Strategy Bear ETF would have offered short exposure to Bitcoin futures contracts listed on CME, which means betting that the cryptocurrency’s price would fall.

“While it does seem a bit inconsistent given their acceptance of the Bitcoin futures markets, it isn’t surprising and is likely part of a ‘baby steps’ regulatory mindset,” said Eric Balchunas, an analyst with Bloomberg Intelligence, about the SEC’s request. “I bet we will see one someday, but only when they feel ready.”

The day Direxion filed for its Bear ETF, Valkyrie also filed for a leveraged fund, XBTO Levered BTC Futures ETF, which would have delivered 1.25x the reference price of Bitcoin. Much like Direxion’s ETF, SEC staff asked Valkyrie to withdraw its leveraged Bitcoin ETF, which it did last week.

At the time, the WSJ reported that the SEC has signaled that it wants to limit new bitcoin-related products to those that provide unleveraged exposure to bitcoin futures contracts.

The first US bitcoin futures-based, ProShares Bitcoin Strategy ETF, was approved a couple of weeks back, amassing $1.1 billion in assets.

As we reported this week, the SEC also postponed its decision on asset manager Valkyrie’s proposed spot bitcoin ETF until early next year, January 7. Valkyrie was also the second company to see its bitcoin-futures ETF launch last month.

Benefit From The Same Regulatory Comfort

According to ETF experts, it is likely that an Ethereum futures ETF would get a green light before a fund that holds physical bitcoin does.

“Most market participants agree that a spot Bitcoin ETF would be superior to existing futures ETFs, yet SEC approval of the former may be delayed until late 2022 or beyond,” wrote James Seyffart, a Bloomberg analyst, in a note.

He estimated that an Ethereum futures ETF could be approved as soon as the first quarter of next year.

Given that Ether futures ETFs are also traded at CME, it follows the same path that had SEC comfortable with Bitcoin futures ETF, so “they’re likely to benefit from the same regulatory comfort,” said Carlo di Florio, a former SEC official.

This week, CME Group also announced that it is launching Micro Ether Futures, which will be 1/10 the size of one Ether. Amidst all this, the price of Ether hit a new all-time high at $4,645, up more than 530% YTD.

Ether’s supply percentage on exchanges has also been trending down since August last year, going from ~27% to ~12%. In contrast, the % supply of ETH deposited in smart contracts has been making new highs during this period, climbing from ~10% in June 2020 to now ~21%.

“We are witnessing a structural shift in which more digital assets are shifting from centralized custodians & service providers to decentralized counterparts. The biggest tailwind that’s driving this phenomenon is hot money searching for higher yields on Ethereum,” noted Delphi Digital.

The growing activity on Ethereum also has the median gas prices climbing beyond levels seen during the August-September NFT frenzy. While NFT activity is dropping, the increased volatility in the market means arbitrage opportunities.

Rising gas fees also means an increasing amount of ETH getting burned. While since the implementation of EIP-1559, OpenSea was leading the way as the number one contributor to ETH burning, now Uniswap v2, USDT, and ETH transfers stepped up to fill the void with NFT activity cooling down.

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Thanks to the increased on-chain activity and high gas prices, Ethereum had its first-ever deflationary week since its inception. Additionally, with more liquidity leaving exchanges and being locked up in smart contracts, a sustained deflationary scenario will contribute to a supply shock as ETH becomes scarcer amid rising demand.

Moreover, after the Beacon Chain Altair update late last month, the network is moving closer to Etherum 2.0 merge.

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Author: AnTy

Stablecoins Support “Faster and More Inclusive” Payments Options, says the Biden Administration

Stablecoins Support “Faster and More Inclusive” Payments Options, says the Biden Administration’s Report

PWG also called for “urgent” Congressional action to regulate stablecoins to address the prudential risks posed by stablecoins. But nothing big is happening “any time soon.”

The President’s Working Group on Financial Markets (PWG), along with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), has published its report on stablecoins.

According to this report from the Biden administration, stablecoins can transform the way payments are done.

When regulated, stablecoins could “support faster, more efficient, and more inclusive payments options,” said the report. “Moreover, the transition to broader use of stablecoins as a means of payment could occur rapidly due to network effects or relationships between stablecoins and existing user bases or platforms.”

According to Jake Chervinsky, Strategic Advisor to crypto fund Variant and previously a general counsel at Compound Finance, “prompt action from this Congress on *anything* is unlikely, let alone on something like stablecoins.”

The report acknowledges that federal agencies lack the authority necessary to implement its recommendations as it tells FSOC to “consider steps available to it” in the absence of Congressional action, he noted.

“It sounds like nothing big will (or can) happen any time soon,” concluded Chervinsky, saying the authorities first need to take time to sort through what makes sense and what doesn’t.

To crypto trader and economist Alex Kruger, this report on stablecoins is “a short-term hurdle out of the way.”

Due to the “rapid growth of stablecoins,” the report has said it “increases the urgency” to regulate them.

In a statement, SEC Chairman Gary Gensler noted that the $130 billion stablecoin industry has grown 20-fold in the last 20 months. Despite representing about 5% of all crypto assets, they account for more than 75% of all crypto trading.

The working group also talks of “prudential” risks of stablecoins, including market concentration, a run on stablecoins, or issuers’ inability to honor redemption requests.

PWG and Biden’s economic advisors called for regulatory oversight and a formal market structure for stablecoins as soon as possible to protect issuers, investors, and exchanges. They specifically recommended Congress pass legislation that limits stablecoin issuance to insured banks.

By classifying stablecoin issuers as banks would give government agencies greater jurisdiction over their operations and allow regulators to impose capital and liquidity standards the same as financial institutions and banks.

The report acknowledged that some stablecoin issuers may also seek for these stablecoins to be used for payments in the future which, combined with the usage of these fiat-pegged coins with crypto trading and lending platforms, “raises emerging financial stability concerns,” said Gensler.

The SEC boss noted the agency, along with the CFTC, will deploy the full protections of the federal securities laws where applicable.

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Author: AnTy

Crypto is “More Of An Asset Class,” No Crypto-linked Card Coming “Any Time Soon,” says Amex CEO

Crypto is “More Of An Asset Class” As Such, No Crypto-linked Card Coming “Any Time Soon,” says American Express CEO

Financial services company American Express chief executive Stephen Squeri said they are not planning to offer a cryptocurrency linked card “any time soon.”

“When I look at cryptocurrencies, it’s really more of an asset class,” akin to gold, Squeri said at Yahoo Finance’s All Markets Summit.

He further said that given that the American Express card is not used to buy gold or stocks, “we’re not using the card” for crypto as an asset class either.

“I don’t see it as really something that’s going to make inroads from a credit-card perspective, or even a debit-card perspective, in terms of payment.”

He added that this is because of “tremendous fluctuations” in their prices and because you don’t have the service and dispute rights with it.

While not crypto assets like Bitcoin and Ether, Amex is indeed involved with using the card for stablecoins and is watching central bank digital currency (CBDC) “very, very carefully.”

Meanwhile, the same day, Mastercard said it is making it easier for banks to offer crypto rewards on their debit and credit card. Mastercard partnered with Bakkt to make it easier for consumers to spend the crypto rewards they earn at millions of merchants on the firm’s network.

Earlier this year, the payments giant said it would start allowing cardholders to transact in specific cryptos on its network. Then in July, it said it would work with startups focused on digital assets to enable its customers to buy, spend, and hold cryptos.

“Together with Bakkt and grounded by our principled approach to innovation, we’ll not only empower our partners to offer a dynamic mix of digital assets options but also deliver differentiated and relevant consumer experiences,” said Sherri Haymond, executive vice president of digital partnerships at Mastercard.

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Author: AnTy

Grayscale Kickstarts SEC Review of its Spot Bitcoin ETF (‘BTC’) Application

Grayscale Bitcoin Trust (GBTC) has more than $40 billion assets under management and is currently trading at a steep 16.56% discount.

The day the first Bitcoin ETF launched in the US, the largest digital asset manager Grayscale Investments announced that it had filed to convert the world’s biggest Bitcoin fund into a spot ETF.

The Grayscale Bitcoin Trust will trade under the ticker symbol ‘BTC.’

Unlike the ProShares Bitcoin Strategy ETF (BITO), whose debut was the second most traded ETF with more than $1 billion worth changing hands, Grayscale’s ETF will be backed by actual units of the leading cryptocurrency.

The filing by Grayscale along with the NYSE Arca has kickstarted a window for the Securities and Exchange Commission (SEC) to reject or delay the GBTC conversion application. The SEC has 75 days to review the application.

While the SEC has allowed the derivatives-based product to launch, Chair Gary Gensler has emphasized that it offered more investor protection. Physically-backed Bitcoin ETF was first filed by Winklevoss twins in 2013, and in the past eight years, the agency has rejected every single one of them.

Launched in 2013, Grayscale Bitcoin Trust has $41.7 billion assets under management and is currently trading at a steep 16.56% discount. GBTC holds roughly 3.44% of all Bitcoin in circulation. Michael Sonnenshein, chief executive officer, said,

“As we file to convert GBTC into an ETF, the natural next step in the product’s evolution, we recognize this as an important moment for our investors, our industry partners, and all those who realize the potential of digital currencies to transform our future.”

Sonnenshein shared on Twitter that GBTC is owned by investors in all 50 states, representing over 700K retail and institutional accounts. GBTC shares are locked up for six months; this means the holders are unable to trade in reaction to market movements.

Grayscale is committed to converting not only GBTC but also other 14 investment products into ETFs, he added.

Dave LaValle, Global Head of ETFs at Grayscale Investments, said,

“At Grayscale, we believe that if regulators are comfortable with ETFs that hold futures of a given asset, they should also be comfortable with ETFs that offer exposure to the spot price of that same asset.”

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Author: AnTy

Circle’s Stablecoin USDC Launches on Hedera Hashgraph’s Network

Fulfilling its promise to expand to more blockchain protocols in the coming months, USDT close rival USDC has recently launched on the Hedera network.

The announcement by popular stablecoin issuer Circle on Monday, October 18, makes the asset the first stablecoin to launch on the network.

According to the press statement, USDC users can now deposit, withdraw, and transfer USDC based on the Hedera network within their Circle accounts. Users can tap Hedera for various USDC payments and settlements.

Cryptocurrency enthusiasts, with the launch of the USDC on the Hedera network, will have access to opportunities tied to this stablecoin, Jeremy Allaire, CEO and co-founder of Circle, said while commenting on the launch adding that,

“With Hedera, enterprises and financial institutions can access deep liquidity across countries and platforms, making USDC in Hedera an optimal asset for cross-border transactions and trades of all kinds.’’

Circle further said its integration with Hedera (HBAR) is in line with the main goals and objectives of the HBAR Foundation — a body created to support up-and-coming decentralized finance (DeFi) and non-fungible tokens (NFTs) projects that will be launched on the Hedera Hashgraph.

Giving its reasons for choosing Hedera as the supported network for USDC, Circle said the decision was due to the network’s interesting features, such as the ability to process a minimum of 10,000 transactions per second and the provision of real-time settlement, lower fees, and low bandwidth consumption.

Another top reason has been Hedera’s pivot towards a carbon-neutral network. The Byzantine Fault Tolerant (BFT) consensus protocol has since signed a partnership with Terapass to purchase carbon offsets quarterly thereby reducing the environmental impact of its operations.

This carbon-neutral status has seen the Hedera Hashgraph protocol attract several platforms with over 410,000 accounts currently running and over $1.6 billion worth of transactions processed on the blockchain platform.

The Rise of Stablecoins

Recently, there has been increased interest in stablecoins, mainly due to their ability to cushion against the effects of volatility. Stablecoins are a kind of digital assets whose values are tied to fiat currencies like the U.S. Dollar and Euro. USDC is present in over 85 countries, and it’s witnessing widespread adoption. Stablecoins are also being used to facilitate international trades.

In July, Circle partnered with MasterCard to enable individuals and businesses to utilize USD Coin (USDC) for transactions. Circle and Mastercard plan to use USDC to facilitate crypto-to-fiat conversions in a pilot program as part of the partnership.

“The engagement between Circle and Mastercard reinforces how USDC is growing its role in payments and commerce on the internet while building a vital bridge between digital currency payment systems and large, established payment networks,” Circle co-founder and CEO Jeremy Allaire had said at the time.

USDC Gradually Becoming a Trailblazer

Circle has made significant moves after launching its token USDC in 2018 in a bid to make its version of the digital dollar the standard means of value transfer across the internet.

Besides Hedera, USDC is now supported across several blockchains, including Ethereum, Algorand, Solana, Stellar, and TRON. There are also plans for the digital asset to launch on networks like Celo, Tezos, Polkadot, Flow, Kava, Nervos, and Stacks in the future.

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Author: Jimmy Aki

Crypto Adoption More Pronounced In Struggling Economies: Chainalysis Report

Cryptocurrency Adoption More Pronounced In Struggling Economies: Chainalysis Report

Grassroot crypto adoption is spiking, and more economically vulnerable countries are becoming engaged in the crypto space.

This is according to a recent report by the popular blockchain analytics firm Chainalysis.

Vietnam Tops The List

Chainalysis has been at the forefront of crypto data gathering, and the blockchain firm is a reputable leader in the industry. The New York-based company disclosed in its recent cryptocurrency index report that crypto was gaining mainstream adoption.

According to the report, Asian nations Vietnam, India, and Pakistan took first, second and third positions, respectively. Additionally, six out of the top 20 countries were from the African continent and attesting to the widespread adoption of virtual currencies in these countries.

Commenting on the unusual candidates, head of research Kim Grauer noted that the blockchain company decided to opt for a more targeted approach in its roundup. He said the decision was to quantify the extent of grassroots adoption of digital assets.

It also pointed out a few interesting trends in the nascent industry. According to the report, the African continent constitutes the smallest crypto market globally, with 3% of the total market size.

However, peer-to-peer (P2P) trading, remittance, and saving needs have powered the adoption of cryptocurrencies across the continent. Also, the retail crypto trading market is at an all-time high in the region. Africans account for 7% of the total crypto market, which is in conjunction with a whopping 96% of P2P (peer-to-peer) transaction volume originating from Africa.

Purchasing Power Parity (PPP)

Chainalysis turned to three metrics when ranking countries in its adoption index for 2021. This includes the total value of crypto received by a government, crypto used by newbie crypto investors (transactions less than $10,000), and P2P exchange-traded volume.

However, all three metrics were categorized under the purchasing power parity (PPP) per capita, which measures the purchasing ability of a given individual in a country.

Making a note of this, the Chainalysis blog post noted:

“The higher the ratio of on-chain value received to PPP per capita, the higher the ranking, meaning that if two countries had equal cryptocurrency value received, the country with the lower PPP per capital would rank ahead.”

This enabled countries like Vietnam and Kenya to rank top of the list due to their higher on-chain crypto activity.

Making a case for this approach, Grauer said that if the PPP metric were not used, mega economies like the US and China would likely rank top of the index due to their larger populations and higher purchasing power.

Aside from the PPP, the report also considered the relative correlation between widespread crypto adoption and hyperinflation in these regions.

South American nations like Venezuela, which has seen the value of their local currency hit rock bottom, have since turned to cryptocurrencies. According to a CoinDesk report, P2P trading surged in the aftermath of the pandemic as Venezuelans sought out means to hedge against inflation.

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Author: AnTy

AXS Renews Pumping as Staking Goes Live, More than 10 Million Axie Infinity Tokens Staked Already

AXS Renews Pumping as Staking Goes Live, More than 10 Million Axie Infinity Tokens Staked Already

In a matter of two days, $1.17 billion worth of AXS tokens has been staked at 227% APR. The team plans to introduce voting rights to AXS stakers and have a say over the use of the Community Treasury, holding over two billion dollars worth of tokens.

With a pump of 70% in the past 24 hours, the AXS token has surpassed $100 to hit a new all-time high of $121. The $6.9 billion cryptocurrency is up 191x year-to-date.

Interestingly, back in November 2020, when the price of AXS was less than $0.50, Axie Infinity struggled to get investors. At the time, the project reported selling 4% of its total supply token to raise $864,000 in a private sale of 10,800,000 AXS to strategic investors in the middle of 2020.

The investors, including the likes of Arca, Three Arrows Capital (3AC), DeFiance Capita, DeFi Capital, and others, along with angel investors including Alex Svanevik of Nansen, purchased AXS at a 20% discount.

“Craziest thing is at the time of the round, it was so undersubbed that many people invested just to support ecosystem without any expectation of returns,” noted Su Zhu, co-founder, and CEO of 3AC. “World is unbound growth.”

AXS first gained traction this year between July and August, during which the price went from $6 to $79. After experiencing the woes in September, where it dropped to $50, AXS has started October or, as the crypto community calls it, “Uptober” with a bang.

This latest uptrend coincides with staking going live on the protocol on Sept. 30. So far, 10.36 million AXS worth $1.17 billion have been staked at an estimated reward of 227% APR.

According to the team, “Staking is a way for us to reward our community members for having a long-term mindset and locking up their AXS tokens.” The team also plans to introduce voting rights to those who stake their AXS and have a say over the use of the Community Treasury, which now holds over two billion dollars worth of tokens.

Staking the AXS tokens allows the users to earn the token rewards. Currently, 64,516 AXS are being distributed as rewards daily.

AXS tokens are distributed to the founding community member based on the snapshot taken on October 26th, 2020.

The NFT blockchain game is already the second-largest revenue generator in the last three months at $783 million after Ethereum, according to Token Terminal. Overall, it stands at 3rd spot, having earned $805 million so far after Ethereum’s $1.3 billion and $1.5 billion by Filecoin.

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Author: AnTy

China’s Leading Crypto Exchange, Huobi, Custodies More than $1 Billion in Assets

China’s Leading Crypto Exchange, Huobi, Custodies More than $1 Billion in Assets

Huobi Technology Holdings Limited holds more than $1 billion worth of crypto assets in custody.

The largest cryptocurrency exchange in China noted on Thursday that at the end of August, the assets under Huobi Trust Hong Kong’s custody exceeded $1 billion.

Huobi Trust Hong Kong is a licensed trust company registered in Hong Kong which provides virtual asset custody services. In April, it successfully registered as a trust company in Hong Kong and is now fully licensed under the Hong Kong Trust and Company Service Provider (TCSP) license.

The company said it had been actively developing its trust and custodian business provided by this Hong Kong entity along with Huobi Trust US.

“Since the beginning of the year, virtual assets represented by Bitcoin have set off a wave of enthusiasm to investors.”

Among its clients include hedge funds, market makers, digital banks, virtual asset exchanges, and licensed lenders.

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Author: AnTy