Bitcoin ETF Makes More Sense than Oil ETF in the Current Weakening Macro Backdrop

This week, the world saw oil prices falling into negative territory for the first time ever. As we reported, the deep decline in the price of oil was due to oversupply while the demand had a sharp fall as a result of coronavirus pandemic-induced economic shutdowns.

The United States Oil Fund however, was guaranteed to be a losing bet over time because the price of long-term oil contracts was higher than the spot price.

But still, investors piled into the exchange-traded fund, especially the traders on Robinhood and SoFI invest. These investors rushed to buy the USO ETF which has lost about 80% of its value this year while seeing a 300% increase in ownership month-over-month.

It is possible retail investors believed it was a bet on the spot price of oil. While the market is displaying a V-shaped recovery, the economy is not. Gabor Gurbacs, a digital asset strategist at VanEck said,

“Most 3X leveraged ETFs have been liquidated! Crude oil is trading in negative price territory! And some say Bitcoin is too volatile for a Bitcoin ETF.”

As a matter of fact, the deep loss in the USO Oil ETF resulted in its volatility to surpass that of Bitcoin. Gurbacs said,

“Maybe it’s time for some self-reflection for those that say Bitcoin is too volatile compared to other assets.”

The oil market that has acted as a traditional safe haven asset “can no longer be considered a reliable store of value,” tweeted Cameron Winklevoss, co-founder of crypto exchange Gemini.

And as Joe Weisenthal of Bloomberg pointed out, from an investor protection standpoint, “a bitcoin ETF is much more likely to reflect the price of what people think they’re getting better than what USO buyers think they’re buying.”

No legal or investment reason to not allow a Bitcoin ETF

A Bitcoin exchange-traded fund in the current environment compares favorably with oil ETFs. The leading digital asset lost about 50% of its value in the March crash but since then has recovered its losses and now trades above $7,500.

Over the years, the bitcoin market has matured and during the recent market turmoil, stock markets saw much higher volatility than the cryptocurrency. According to Bloomberg’s latest report, the ‘first-born’ crypto is in the process of transitioning to digital gold.

As Gurbacs shared, there are many benefits such as daily proof of reserves (NAV), transparent holdings and prices, high liquidity, proper tax documents, and investor protections that an ETF structure may bring to Bitcoin. He said,

“The public deserves a liquid, investable and physical Bitcoin investment vehicle. The ETF structure is perhaps the most suitable vehicle.”

Also, VanEck’s recent report found that just a small addition of bitcoin to a 60-40 (equity-bond) portfolio significantly reduced the volatility during the recent COVID-19 sell-off.

There is empirical evidence that bitcoin and commodities markets are similarly well-functioning capital markets, noted Gurbacs.

“There is no legal or investment reason to not allow a product like that,” said Jan Van Eck, CEO of VanEck in a recent interview. VanEck has been trying to get its own Bitcoin ETF approved for several years now.

During his interview with Bloomberg, he noted that bitcoin is not the only one with high volatility and an ETF “would just add to the ecosystem.”

In the macro backdrop where central banks are “going nuts,” he said, “the appetite for gold and bitcoin goes up.” The correlation between bitcoin and gold has already gone from zero before this year to 0.5 which is “super interesting.”

The signs of how volatile the oil market can be might now undercut some of the reasons for Bitcoin ETF approval delays. Although, “both have been independent overall markets,” so far, investor appetite in the traditional world is not as big for bitcoin as people might imagine, said Van Eck.

Overall, these past few weeks showed us that traditional markets have much worse massive dislocation. Meanwhile, retail and institutional interest in Bitcoin continues to rise, with some paying as much as 30% premium to get exposure to the digital asset.

Even SEC Commissioner, Hester Peirce has been a vocal supporter of ETF who said permitting regulated exchanges and institutional exchanges to enter the market would only lead to more “robust protections for retail investors” and “more effective surveillance for market manipulation and other fraudulent activity.”

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Author: AnTy

Bitcoin HODLers Showing Conviction That Hasn’t Been Seen Since November 2015

Bitcoin has ended the quarter first of 2020 on a red note with negative 10% returns, and currently, the world’s leading digital currency is trading just above $6,350, down 1.48% in the past 24 hours.

Coin360
Source: Coin360

However, the market has started to see a shift.

For starters, the HODL Waves are giving a positive sign as today 15% (2.74 million) of available Bitcoin has been sitting idle for 2-3 years with the price of around $6,300.

The last time this HODL Wave age band represented 15% (2.25 million) of available BTC was in November 2015, when the price of bitcoin was $345, as per Unchained Capital.

Source: Bitcoin UTXO Age Distribution

This development according to Adamant Capital’s Tuur Demeester is “bullish” because bitcoin “hodlers are showing conviction, just like in 2015.”

A potent shift in sentiment can be seen as the Bitcoin network also grew at a positive rate last week, jumping 45.11% in comparison to the previous week.

As per Glassnode, on an average, a total of 379.69k new addresses versus 318.4k addresses went to zero were recorded last week. Also, total network growth over the past 7 days has been 428.95k addresses.

Crypto data provider Glassnode also noted, “In the weeks after BTC’s price drop, most (of the On–chain metrics) have bounced out of or sit in zones that have historically signalled bottoms and good entry points.”

Source: @Glassnode

Also, the average size of Bitcoin exchange deposits increased “dramatically.” However, the NetFlow of BTC into exchange remains extremely low compared to historic levels. Bitcoin balance on exchanges has declined by 7%.

While the network is making a recovery, Bitcoin’s price has fallen 1.45% in the past 24 hours trading around $6,350.

However, according to Mike Novogratz CEO of Galaxy Digital, this is a buy the dip opportunity because in 2020 with the Federal Reserve printing the money by restarting the QE program, money is growing on trees.

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Author: AnTy

Is A Fed-Controlled Digital Dollar A ‘Win’ For the Public; Will it Pave Way For Faster Payments?

  • A digital dollar means Fed will be “free to impose negative nominal interest rates on all dollar-holders,” and privacy concerns – Lawrence H. White, a professor of economics
  • Fed-issued digital currency would need to be carefully designed, implemented, and regulated for faster, cheaper and more secure payments – Neha Narula, the director of the Digital Currency Initiative at MIT

Central banks around the world are assessing the benefits of issuing a state-controlled digital currency after China announced that it is close to launching its digital yuan and Facebook launching Libra. Just last week, there have been reports that Riksbank has started testing e-krona.

Even the Federal Reserve chairman Jerome Powell came forward to share that Facebook’s so-called cryptocurrency has been a wakeup call for them to start researching the concept of a digital dollar.

However, there has been much debate about Fed-controlled digital currency where proponents say it would facilitate faster and cheaper payments while protecting the Fed’s ability to conduct monetary policy, opponents say it would be costly and less efficient and could harm the government’s privacy.

Digital Dollar a “No Win” for the Public

The US government issuing a digital currency may not be a no-brainer but “it won’t be a “win” for the public,” said Lawrence H. White, a professor of economics at George Mason University.

According to the Wall Street Journal, White argues that most proponents of central bank digital currency are envisioning a currency that would give the government the

“ability to track all payments and eliminating the anonymity provided by physical cash today.”

And the claims of the national digital currency making retail payments costless, secure, and almost instantaneous are “dubious”. A central bank retail-system he said would require the Fed to match the level of services provided by commercial banks today which means investing in ATMs, branch offices, phone apps, tellers, and much more. Also, the payments system needs to be continually improved through innovation. White said,

“Given the government’s poor record on efficiency, the likely outcome would be a system that falls short on customer service or loses money at taxpayers’ expense — or both.”

This would also mean, the Fed will be “free to impose negative nominal interest rates on all dollar-holders,” and further raising serious concerns about privacy because the government will be able to track every single dollar spent.

Fed’s Involvement would make Payments Easier

On the other hand, Neha Narula, the director of the Digital Currency Initiative at the Massachusetts Institute of Technology’s Media Lab, makes the case for digitizing the U.S. dollar which she said would make payments easier.

The current cashless payments systems rely on financial intermediaries and aren’t much different from paper checks that means their fees are higher, slow settlement, and micropayments are almost impossible.

“The U.S. could help pave the way for faster, cheaper and more secure payments by allowing consumers to hold central-bank-issued digital currency outside of commercial banks.”

As for the Fed-issued digital currency, it could coexist with physical cash or Fed could provide accounts directly to consumers and businesses, said Narula. She went on to say,

“A Fed-issued digital currency would need to be carefully designed, implemented and regulated to reduce the risk of fraud, protect privacy and ensure that commercial banks aren’t drained of the funds they need to make loans.”

According to her, if the US does not embrace this opportunity someone else will. There is already exciting experimentation happening with cryptocurrencies, leaving innovation to private companies could mean a small number of large companies dominate and control payments, stifle competitors, and “undermine the Fed’s ability to set monetary policy and regulate financial flows.”

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Author: AnTy

Nouriel Roubini Gets Behind the Anti-Ethereum Lashings

  • Nouriel Roubini’s negative stance on irrational economic movement has led him to be referred to as “Dr. Doom.”
  • Ethereum has gained just under 0.5% in the last 24 hours.

Nouriel Roubini is better known by his persona of Dr. Doom, and he’s known for his constant negativity towards irrational bubbles in the economy. He finds cryptocurrency assets unnecessary, stating that they don’t have any value, but his recent comments have seemed to target Ethereum specifically. As Dr. Roubini sees it, Ethereum lacks intrinsic value.

This is one of the few instances that Roubini has chosen to shift his attention away from Bitcoin specifically, though an older tweet includes remarks that Bitcoin is still down significantly from its all-time high. (Bitcoin, at the time of writing, is priced at $7,758.07, rising by over 1% in the last 24 hours.) He also mentioned that altcoins are nothing more than a disaster, and some crypto community members happen to agree.

Ethereum has gotten a lot of criticism for quite a while. Many of the opponents are frustrated with the lack of scaling, as well as how complex it is to use the low-capacity network.

Even with all of the naysaying, the cryptocurrency market appears to be in better shape than it normally is. After the massive rally recorded at the end of 2017, the hashrate of Bitcoin reached about 20 times higher than it had ever been. Trading volumes are starting to increase again, and the altcoins ranking at the top of the market are seemingly turning out more liquidity.

There’s been many failed projects to reach the market, and there’s even assets that have lost nearly 99% of their value multiple times, valued at almost nothing now. Even in the earliest days of being able to trade cryptocurrency, failed coins have managed to accrued.

Despite many setbacks, the market has seen more volume collectively recently. New products and derivatives markets are boosted by liquid coins and tokens. The significance of Ethereum has been rising again as well, after being chosen to run Tether with an ERC-20 version of the token.

The cryptocurrency market has been dealt many blows in its short lifetime, but the current market is more resilient and less likely to break from negative news. Even losses from big exchanges, like the losses faced by Upbit and IDAX, were taken without much attention, and the gloomy statements over the market don’t seem to stick to the optimism at all.

There are extreme predictions of where Bitcoin is going now, and some analysts are proposing levels as low as $1,000, using long-term chart patterns to come to that conclusion. However, Bitcoin seems to be bouncing right now, and there are many traders around to push it to better price levels.

As the thief from Upbit attempts to cash out some of the stolen cryptocurrency from the hack, there’s some fear surrounding the price beating that Ethereum might take during the sale. However, the coin is maintaining some consistency in its stability, as more ETH is moved into collateralized lending and DeFi schemes.

At the time of writing, Ethereum was worth $154.58, increasing by just under half a percent in the last 24 hours.

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Author: Krystle M

60% Of German Banks’ Charge Negative Interest Rates, ECB Says It Could Give Rise To ‘Bigger Risks’

Nearly 60% of German banks are charging negative interest rates from corporate clients on deposits while 23% are doing the same for retail customers, revealed a survey by the German central bank.

Two weeks after the European Central Bank cut interest rates deeper into negative territory, from minus 0.4% to minus 0.5% in mid-September, the Bundesbank surveyed 220 lenders.

These practices are proving to be controversial in Germany where ECB has been attacked for penalizing savers. ECB President Mario Draghi is being depicted as the “Count Dracula” a vampire sucking the savings dry in Germany’s tabloids.

Everyone Boarding the Negative Interest Rate Train

Last month, James von Moltke, Deutsche Bank’s CFO said Germany’s largest lender will start changing its client’s deposits.

Germany’s second-largest listed lender Commerzbank has also started approaching wealthy retail customers holdings deposits of more than €1m. Last month, Berliner Volksbank, the country’s biggest co-operative lender said it would start applying minus 0.5% on any deposits over €100,000.

State-owned German development bank KfW is also preparing to pass on negative interest rates to its borrowers.

According to a german price comparison website, Biallo.de, 140 lenders are already charging negative interest rates.

Now to give banks some relief from the negative rates, the ECB is introducing a “tiering” system that will exempt their part of the deposits with the central bank from charges.

ECB Warning About their Own Policy Measure

The eurozone economy has been struggling in the aftermath of the debt crisis in 2011.

To boost the flagging economy, negative interest rates were first introduced in the eurozone in 2014. But its knock-on effects have put a dent in the weakening earnings of Europe’s banks.

ECB vice-president, Luis de Guindos in a speech on Monday said the profitability of European banks had been “persistently low” and their aggregate return has dropped below 6%.

“This low interest rate environment also affects the investment strategy of the asset managers and in this respect, this part of the financial system could give rise to bigger risks,” Guindos told CNBC on Wednesday.

So, the ECB is warning that their own policy measures could cause systemic risk. This Mati Greenspan, a senior analyst at eToro says is “great” because,

“The ECB is finally admitting that they’re policy of excessive stimulus and artificially low interest is actually incentivising investors to take way too much risk.”

As we reported, this challenging time for the financial industry is good for Bitcoin. Negative interest rates give an investor less incentive to save but with Bitcoin, a cryptocurrency that has established itself as an “institutional store-of-value asset class” and has registered more than 100% gains in 2019 alone, they have the incentive to hodl.

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Author: AnTy

17 Trillion Reasons to Own Bitcoin, Starting with the Elephant in the Finance Market

According to the Bank for International Settlements report, the growing acceptance of negative interest rates has reached “vaguely troubling” levels.

Investors have been now paying for the privilege of lending, support for which came from the top central banks including the US Federal Reserve, the ECB, and China’s PBOC that has the amount of bonds trading at negative rates reaching a record $17 trillion.

The central bankers’ bank, BIS noted this, equivalent to 20% of the world’s GDP, wouldn’t have been possible even at the depth of the financial crisis.

While yield is sub-zero in the Netherlands and Germany for up to 25 years and recently in Italy as well, most government debts in Japan and Switzerland have dived into negative territory.

“There is something vaguely troubling when the unthinkable becomes routine,”

said the head of the BIS’s Monetary and Economic Department, Claudio Borio.

As such, BIS wants policymakers to use their remaining ammunition with caution as “should a downturn materialize,” they would need a helping hand.

These negative interest rates, however, could be behind the 15% upturn the stock market saw this year, according to Wall Street’s “bond king.”

Bill Gross, the co-founder of bond market behemoth Pimco said,

“Prepare for slow economic growth globally and an end to double-digit market price gains of months and years past.”

In their attempt to ease policy across the world, central banks pushed as much as $17 trillion in bond yields to below zero. This, in turn, boosted stock prices as lower yields on government bonds tend to pump riskier assets’ valuations.

The 10-year Treasury yield has declined from 2.60% at the beginning of this year to 1.696% while S&P 500 is up over 18% this year.

Another risky asset, Bitcoin is meanwhile, up more than 150% in 2019 YTD.

Another factor that would contribute to Bitcoin’s success which is spooking the markets this year is the inversion of the US and other bond yield curves, that historically preceded recessions.

Currently, the leading cryptocurrency is trading at $8,085 with 24 hours gains of 1.35%, as per Coincodex.

BTC bottomed at $3,200 in December 2018 after losing 84% of its value. However, moving in 2019, it went as high as $13,900 before correcting to $8,000.

Currently, the flagship cryptocurrency is getting ready for its upcoming mining reward halving event that historically has been bullish for its price. Even prior to six months to the event, BTC jumped 2.3x in 2012 and 1.7x in 2016, which means before the third halving, we could climb to at least $12,000.

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Author: AnTy

Tron Network Grows And Company Experiences Series Of Positive News

Over the last few months, Tron has suffered from a series of negative news, and this has affected the network’s performance. There has been some controversy surrounding Tron’s founder, Justin Sun, and this fueled rumors that the project as a whole may be in trouble. However, this negative news around Tron seems to have come to an end.

Negative News Around Tron

In early July, a video of Beijing police forces raiding Tron’s headquarters surfaced. It was reported that the police were raiding the offices on the suspicion that the company is running a crypto-related scam. This video sent shockwaves across the crypto community and the price of Tron’s token, TRX, fell on the markets.

It was later clarified that the reports that police were there to investigate a scam were false. Instead, Tron reported that the police were present at the company’s headquarters to protect Tron’s staff from protestors who were present outside its building. Sun described the story accompanying the video as fake news.

During the same period, Tron’s CEO was due to host a lunch with Warren Buffett and some blockchain industry leaders. The lunch was supposed to be an educational and fundraising initiative to bring more wealthy investors into the blockchain and crypto industry. Sun went as far as inviting President Donald Trump to the lunch to educate the American president about cryptocurrency.

The lunch was canceled at the last minute, and rumor had it that it was because Sun was under police custody at the time and hence, he could not make it. This further fueled the rumors that the crypto firm was in trouble with the law and again, the price of TRX suffered.

Positive News Around Tron

The Tron community will be happy that there is now some positive news around the network, which could influence a turnaround of fortunes. It has been announced that the lunch with Warren Buffet is back on track, and Tron’s CEO will sit down with the business mogul and other leading industry players.

The number of dApps on Tron’s network has continued to increase over the last month as more applications and users take an interest in the network. There is a total of 569 dApps on Tron’s network to date, and there are more scheduled to be launched in the next few weeks.

Accompanying the increased number of dApps on the network, there has been a growth in the number of transactions executed on Tron. Tron has launched successive projects which have boosted the network’s overall growth. Some of the projects include BitTorrent Live, Sun Network, BTFS, and BitTorrent Speed. Sun’s company has launched these projects in a bid to slow down the fall of TRX’s price.

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Author: Ali Raza

As Negative-Yielding Debt Hits Record $17 Trillion, Bitcoin’s Need Only Increases

The negative Yielding Debt continues to increase and analysts say that this is good news for the adoption of Bitcoin.

The escalating U.S.-China trade war, political tensions in Italy, Hong Kong and Argentina and disappointing economic data from China to Germany have fueled demand for haven securities this month. Strategists are increasingly speculating Treasury yields could join the below-zero club, something former Federal Reserve Chairman Alan Greenspan said wouldn’t be that big of a deal.

Government debt around the globe has rallied in sympathy with bets on U.S. rate cuts. German bund yields dropped to a new low in the build-up to the Fed announcement, while Japanese peers rose before the Bank of Japan released its monthly debt-purchase plan.

Popular crypto analyst Rhythm tweeted on the matter:

Buying into the near $17 trillion heap of global bonds with negative yields might sound like a losing proposition. But for some investors those who predicted correctly that bond prices this year would climb amid worries about sluggish global growth, negative yields actually have been a cash cow.

Whitney George, president of a precious metals hedge fund told:

“We’re now going from trade wars almost into currency wars. Gold is a currency, but it’s nobody’s obligation, so it will stand tallest when everyone else is trying to debase their currency to be competitive globally.”

Raoul Pal, the former head of Goldman Sachs’s hedge funds sales business put cryptos in the same conversation as Gold and says:

“So what the hell does a millennial do to save for your future, when almost all assets have negative imputed returns for the next 20 years, 10 years? And the answer is well, you take the optionality of cryptocurrency and Bitcoin.”

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Author: Sritanshu Sinha

Closed Polish Crypto Exchange Bitmarket Sees Co-Owner Shot Dead, Body Buried

Closed-Polish-Crypto-Exchange-Bitmarket-Sees-Co-Owner-Shot-Dead-Body-Buried

Crypto ecosystem generally attracts negative stories of hacks and scams. However, there are times, albeit not too often, when the crimes are as serious as kidnapping and murder. This was the case for the unfortunate Tobias Niemiro who was found dead with a bullet in his head in a forest near his house.

Exchange Shut Down

The exchange that Tobias owned, Bit Market – Poland’s second-largest cryptocurrency exchange was shut down permanently earlier this month. Marcin Aszkiełowicza, a Director working for Bitmarket revealed that hackers were able to steal over 600 bitcoins from the firm a couple of years ago.

The group also left a cryptic message in which they stated that following the attack, the trading platform would be shut down completely. This was primarily because of lack of liquidity.

Aszkiełowicza went on to say:

“The persons actually managing the stock exchange at the time, being aware of this immensely difficult situation, left me alone with the problem of a huge deficit. For the last 2 years, I have been doing everything with the whole team to bring the company out of this stalemate.”

The interesting part in this story is that Niemiro had released a separte statement for the shut down of the exchange. He had earlier said:

“ I lost everything because somebody caused the collapse of the exchange. Now, I’m losing face and my good name for which I’ve worked all my life. I am one of the victims.”

Suspicious Circumstances Around The Death

Tobias Niemiro lived in the small town of Olsztyn, located about 3-hours from the Polish capital of Warsaw. The first reports of the death show that it was a suicide, although police haven’t ruled out foul play yet.

Adam Socha who is a friend of the deceased says that he got an-email just 3-hours before his supposed death. He explains:

“The email was long. It seemed like he had found himself in an environment of shady businessmen. He gave names. I will not disclose its content because of the investigation. I forwarded the email to the prosecutor’s office. He also wrote that he would provide certain materials, but he didn’t have time.”

This event sends an immediate flashback to the events following the death of QuadrigaCX founder. Gerald Cotten mysteriously passed away while working in India due to complications from Chron’s disease and the exchange ended up losing 100s of millions of dollars.

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Author: Sritanshu Sinha

At 0%, Bitcoin Yield is Greater than the ‘Safest Bonds’ of Many Countries

At-0-Bitcoin-Yield-is-Greater-than-the-Safest-Bonds-of-Many-Countries
  • France issues first 10-year bonds at a negative interest rate
  • Germany’s 10-yr bonds drop below ECB’s deposit rate for the first time
  • The negative yield on “safest bonds” to drop even further

France Issues First 10-year Bonds At A Negative Interest Rate

France has issued its first-ever 10-year bond at a negative borrowing rate, later this week. These negative yield banks mean instead of receiving, investors will pay interest for owning French sovereign debt.

State debt management agency, AFT said in a statement on Thursday that it has issued 9.996 billion euros ($11.3 billion) in long term bonds. About half of these, 4.972 billion euros are issued in the form of 10-year bonds at a rate of -0.13 percent.

This is the first time, the second-biggest economy of the eurozone, France has issued sovereign debt at a negative rate. Meanwhile, other countries in the eurozone including Germany, Netherlands, and Austria are already charging the investors to buy their bonds.

Germany’s 10-yr Bonds Drop Below ECB’s Deposit Rate For The First Time

For the first time, the yields on Europe’s safest bonds have fallen below the ECB’s deposit rate as investors bet on policy easing.

This is spurring investors to turn to riskier assets such as Greek and Italian notes. Governments are cashing in with both France and Spain auctioning debt at record-low borrowing costs.

Germany has joined the US, Canada, Japan, and the UK in having benchmark bond yields below the key interest rate, putting pressure on central banks to push more money into the economy.

“There’s too much cash looking for a safe haven home. Bonds are in for a rough ride,” said Marc Ostwald, a global strategist at ADM.

The Negative Yield On “Safest Bonds” To Drop Even Further

Since 2014, the official rates in the 19-country eurozone overall have been negative when the European Central Bank (ECB) reduced its key deposit rate to -0.10 percent.

Since then, ECB has cut down the deposit rates even further to -0.40 percent.

And this is not the end of it all!

More quantitative easing is coming eurozone’s way as ECB chief Mario Draghi has hinted as much just last month. Analysts are also predicting the yields to fall further on the conviction that Christine Lagarde, who is to succeed Draghi’s ECB president will increase stimulus either through QE or rate cuts.

The investor’s return or the yields on the safest bonds of Europe continues to fall.

EU members, Denmark and Sweden also have negative interest rates. This move to more negatively yields supports that Europe might be having trouble just like Japan in reviving low inflation and growth.

Even at current levels, investors find bonds attractive as they offer positive returns after hedging for currency swings.

While at even 0%, Bitcoin has higher yield than government bonds. The top performing asset of 2019 is currently up 207% this year.

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Author: AnTy