Tether’s Supply on Exchanges Declining Rapidly, Total Stablecoins’ Market Cap at $22.7 bln

Bitcoin is taking a breather around $18,500 after rallying 72.5% In this quarter. Analyst PlanB said,

“Current Bitcoin price action is nice, but we are waiting for a real jump (like the red arrows early 2013 and 2017).”

“IMO that will be the start of the real bull market, and indeed phase5. January 2021?”

Just yesterday, BTC took a pullback to about $17,640, and today, it is back around $18,500.

Amidst this, the percentage of Tether supply on cryptocurrency exchanges is rapidly declining, reaching 13.06% after being at a 2020 high of 44.84% in mid-march following Black Thursday.

The last time, Tether supply was decreasing at such a pace was on July 20th. During that time, the price of Bitcoin rose by 28.2%.

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The market cap of the popular stablecoin has climbed to nearly $17 billion, having increased more than 300% since April this year.

Not just USDT but other fiat-pegged cryptos have also seen explosive growth in 2020. The total market cap of stablecoins has jumped to $22.5 billion, up from $6 billion in early March.

USDC is the second-largest stablecoin that has been growing like crazy, even faster than the dominant USDT. With a market cap of $2.8 billion, Coinbase and Circle’s stablecoin had seen an increase of 500% since March when the prices of digital assets tanked hard along with other assets in the traditional world.

Other notable mentions include $683 million BUSD, $400 million Pax, and $255 million HUSD.

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Author: AnTy

China’s State Media on BTC’s ‘Institutional-Driven’ Bull Run; Improved Dramatically Compared to 2017

Bitcoin has enjoyed gains of 31% in November while being up more than 67% this quarter, making it the 18th largest asset in the world by market capitalization.

After breaking $16k, $17k, and $18k this week, today, we are keeping around the $18,000 level on the back of a $6 billion trading volume.

However, with these gains came the issues with crypto exchanges as they continue to go down whenever BTC makes higher than usual moves.

Coinbase has been one of them, whose CEO Brian Armstrong said they are working on adding additional capacity, in terms of servers and customer support “to deal with increased traffic.”

While Armstrong said, “Bull runs can be exciting and stressful,” the crypto community isn’t really satisfied as the exchanges had three years of bear and slow market to deal with the issues.

Now that the bull market is here, the situation will only get wilder and wilder — the market capitalization of BTC has already hit a new high. Unchained Capital stated,

“The bitcoin market cap is at a new all-time high, but the current state of coins held for the long-term is nearly identical to when the price was about $700 in 2016 before it went on its historic run to $20k in 2017.”

Already we are at price levels not seen since the euphoric December 2017, and the positive momentum continues to come for the leading digital asset as the BTC percentage supply on exchanges continues to decrease while the overall exchange flow balance remains dormant.

“This is good news for bulls, with little funding moving from offline wallets with the intent of making major trades,” noted Santiment.

Gradually as we continue to go higher, mainstream media is taking note as well. The latest has been from CCTV.

China’s official TV channel reporting on Bitcoin’s uptrend, which it said is driven by institutional funds. The ecosystem is far better than the last time during the current bull run.

“The Bitcoin ecosystem ranging from infrastructure and development to investment, has improved dramatically compared to 2017.”

However, at the same time, we have been seeing the Chinese government cracking down on the exchange of cryptocurrencies. According to the local media, about 74% of the “Chinese miners are facing a major problem in paying electricity bills.”

This could also be why funding has been flat in this bull run, with open interest in USD increasing only marginally. Economist and crypto trader Alex Kruger shared his theory behind this,

“Chinese miners selling heavily reduced due to fiat onramp complications. They are instead shorting derivatives. Their selling pressure is equal in measure to buying pressure from levered longs. Hence why funding has remained flat in this bull run.”

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Author: AnTy

Genesis Reports Largest Ever Quarter, Q3 Driven by ETH, Stablecoins, & DeFi

Digital currency prime broker Genesis reported a record quarter third of 2020 with $4.5 billion in spot volume — up 285% from the same quarter in 2019, $1 billion in bilateral derivatives volume — which was driven by the BTC spot becoming more tightly coupled to risk assets in the broader macro and the embedded optionality in DeFi, and $5.2 billion in new loan originations.

First, Grayscale announced its biggest quarter ever, the third time in a row, and now Genesis is reporting “tremendous growth in its lending business.”

According to its Q3 2020 Digital Asset Market Report, the company’s active loan outstanding grew 50% QoQ to $2.1 billion, adding $5.2 billion in new originations in just Q3, “marking its largest quarter ever by a landslide.”

Q1 Reading: New Loans Issuance Hits $2B In Q1 For Its Largest Quarter Ever

Q2 Reading: Hunt for Yield Drives a Record Q2 for Genesis Lending

Active Loans Outstanding
Source: Genesis Report

Its Cumulative originations increased 61.5% from the prior quarter, seeing the tenth consecutive quarter of strong growth and bringing total originations to $13.6 billion since launching the lending business in March 2018.

“Our loan portfolio substantially increased in value through increased cash and altcoin loan issuance, along with a modest increase in the notional value of crypto loans outstanding.”

The report also noted a growing “appetite for yield” on digital assets as it recorded 165 unique institutional lenders, up from 47.3% from the previous quarter and 275% from last year.

But it hasn’t been Bitcoin that was driving this growth as BTC as a percentage of loans outstanding fell sharply QoQ from 51.2% to 40.8%. It was actually ETH, USD, and equivalents, and “other” altcoins drove the increase in book size in Q3.

“The main driver of this portfolio shift came from the impact of liquidity mining on DeFi protocols,” leading to the active borrowing of ETH and stablecoins.

The report further noted “ample cash on the balance sheets of top tier trading firms,” which indicates that there has been a significant increase in credit distributed by banks to prime brokerage lines across hedge funds, trading firms, and high net worth individuals.

This was also seen in the vastly increased institutional participation in the CME that became the second biggest futures market in OI this month.

And Genesis expects these trends to persist for at least another quarter because Federal Reserve balance sheet expansion may continue in Q4. This means CME growth can continue into 2021.

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Author: AnTy

Apple Can Buy 145k Bitcoin With Just 1% Of Its $191 Billion of Dollars Held in Cash

Apple has a total of $191.83 billion cash on hand, down from quarter third of 2020, when it was $193.8 billion. Apple is known for having one of the largest cash piles among the companies.

At Bitcoin’s current price of $13,300, if the tech giant Apple, hypothetically, decides to buy as much BTC as it can with the cash on hand, it can gobble up 14,423,308 BTC.

Currently, 18,529,856 BTC is circulating in the cryptocurrency market.

This represents 88.24% of Bitcoin’s total 21 million supply but doesn’t include millions of coins lost forever.

Apple is the biggest asset by market cap of $1.9 trillion, while Bitcoin is just 13% of this with a $246 billion market cap at 21st place.

Follow in the footsteps of MicroStrategy

When it comes to other tech giants, Microsoft had $137.98 billion at the end of its fiscal first-quarter. In comparison, Google and Amazon had $121.08 billion and $71.77 billion, respectively, at the end of the second quarter.

With so much money sitting in cash and short-term investments at these big companies, it has captured the crypto community’s attention, especially following publicly listed MicroStrategy and Square replacing a portion of that with Bitcoin.

“Apple’s cash is decreasing in value. Perhaps they should follow in the footsteps of MicroStrategy and test the waters with even 1% percent in BTC,” wrote one trader.

Even with just 1% of its investment, Apple can buy 144,233 BTC.

MicroStrategy was the first one, and since then, others have come forward to announce Bitcoin as a reserve asset as a hedge against the debasing US dollar. MicroStrategy CEO Micahel Saylor actually revealed this week that he personally owns 17,732 BTC and has been running a full node of Bitcoin Core version 0.20.1 for over a month now.

Bitcoin is at the early stages still, and in 2020 it sees increasing adoption with PayPal, JPMorgan, and billionaire investor Paul Tudor Jones all feeling its effect.

Compared to gold’s trillion market cap, this digital gold is just starting and has a long way to go.

“We’ve talked about $5T of cash sitting in public company corporate treasuries. What hasn’t been talked about is the $8.5T sitting in sovereign wealth funds, i.e., ‘the wealth of nations’ Their exposure to bitcoin is zero, their optimal portfolio will require it,” said on-chain analyst Willy Woo adding to the hopium.

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Author: AnTy

Silvergate Bank Q3 Earnings Call Upholds Bullish Trajectory; Net Income Shot Up 29% to $7.1M

Silvergate, a Fintech and crypto-focused bank, has reported another bullish quarter according to its latest earnings call. The Q3 Silvergate Bank stats show that they have been gaining on most fronts, especially with increased activity in the Silvergate Exchange Network (SEN). As earlier reported by BEG, this platform recently crossed the $100 billion mark in transfer volumes.

Notably, $36 billion of the total transfer volumes were done in the last quarter, according to the Silvergate Q3 report. The company’s CEO, Alan Lane, attributed this growth to increased activity and strong digital asset prices during the past quarter,

“During the third quarter, bitcoin and other digital currencies saw strong price appreciation and an active trading environment, which we believe contributed to the increase in the number of transactions occurring on the SEN.”

Silvergate’s Q3 Earnings Call Break Down

The California-based bank’s growth has been quite exponential, most of which can be pegged to a burgeoning crypto industry in 2020. On that note, Silvergate reported a 29% increase in net income to $7.1 million compared to the previous $5.5 million in Q2. The figure also jumped year-over-year compared to 2019’s third quarter, where the reported net income stood at $6.7 million.

As for the market growth, Silvergate’s clients are now over 900, with a larger part being institutions. Lane has also pointed out that there around 200 prospective clients who might soon be onboarded as well. With such growth, he is confident that the debut of heavyweights like JP Morgan is not a threat to Silvergate’s sustainability and market expansion. In fact, Lane believed that exchanges are better off with more banking options,

“Those exchanges really want to have multiple banking partners and multiple sources of liquidity … And when volumes increase across the ecosystem and volumes are increasing from other customers, we’re seeing the same type of volume increases from those customers that JP Morgan is reportedly banking.”

Silvergate also reported a spike in its clients’ deposits; the amount went up by $586 million, marking its second-highest quarterly increase after the 2017 bull-run. Consequently, the firm’s fee income increased to $3.3 million in Q3; this is a 40% gain compared to the Q2 $2.4 million fee income.

Another highlight is Silvergate’s lending service ‘SEN Leverage,’ which recorded a $13 million increase, bringing the total amount of credit approvals to $35.5 million. Lane is quite optimistic about this specific product, although there are no plans to scale past Bitcoin anytime soon,

“We anticipate a long growth trajectory for SEN Leverage and will judiciously expand credit availability to our customers over time.”

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Author: Edwin Munyui

Grayscale’s Record-Breaking Hat-trick, Q3 Inflows Rakes in Over $1 Billion in Investment

Q3 was the best quarter ever for Grayscale Investments, which serves institutional investors, family officers, and private investors.

The largest digital asset manager took in more than $1 billion in new investment in its largest-ever quarterly inflows, marking it the third-straight quarter when the asset manager broke its own record for inflows.

As per the firm’s report on Wednesday, Grayscale now has $5.9 billion in assets under management (AUM).

This growth came despite the global economy taking a nosedive in 2020, and the price of Bitcoin recording gains of only 18%.

Like every time, the leading digital asset remained the most popular cryptocurrency. Grayscale Bitcoin Trust (GBTC), the company’s largest product, saw $719.3 million in new inflows in Q3.

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The persistent demand for GBTC has the company becoming one of the fastest-growing investment products in the world. It is further increasing the appetite for Grayscale’s other products.

Ethereum saw a record growth with 17% of the investment in Grayscale Ethereum Trust (ETH) from new institutional investors.

This week, Grayscale announced that ETHE is now an SEC reporting company that helped in its price surge.

“We believe in a future where multiple digital assets coexist,” said Michael Sonnenshein, managing director at Grayscale Investments. “We believe that there is a future state where bitcoin, Ethereum, and other digital currencies coexist as part of the digital currency cohort” and are “used for different things,” he said.

Grayscale’s Bitcoin Cash, Litecoin, and Digital Large Cap products also saw over 10x growth in inflows quarter-over-quarter.

Interestingly, for the first time, Grayscale found that a majority of its investors, more than half at 57%, were investing at least two of its crypto investment products, up from 44% a year ago and 37% when the company was first launched in 2012.

More institutions are surely coming, which are not only the primary source of investment capital at 81% in Grayscale, but they also increased their average allocation to $2.9 million from the previous quarter’s $2.2 million.

What is more interesting than this “consistent and significant growth” is what has been behind it.

Besides the digital assets outperforming major indices YTD, investors are interested in them because of the ongoing stimulus concern. With more significant fiscal stimulus expected in Q4, “more investors may look to digital assets for yield in this paradigm of monetary inflation,” it says.

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Author: AnTy

Biggest Challenges Ahead for Crypto as Regulators Declare War on Privacy & Self-Custody

The start of the new quarter saw a slew of regulatory moves targeting the cryptocurrency space – “we’ve made the world stage,” which Fundstrat Global Advisors LLC believes is good for the overall crypto market because it’s just regulators “clearing up bad actors.”

While the “prevailing bull market trend is intact,” the ideological war over self-custody & privacy means “our biggest challenges still lie ahead,” said Jake Chervinsky, general counsel at Compound Finance.

As the crypto market continues to grow, the change is now coming.

Policymakers have taken a stern approach to KYC and AML on a global scale intended to prevent criminals from abusing the financial system.

With the goal that “crime doesn’t pay,” AML regulations deputize the “gatekeepers” financial institutions to act as government agents such as identify customers, surveil transactions, and file reports with the government.

Although AML regulations break down in the context of cash, which govt. are trying to get rid of it, it has its limitations because cash works only in-person and isn’t easy to move in large amounts over long distances.

As such, regulators are much more concerned about digital transfers.

Pursuing Crypto Aggressively

Up until now, they weren’t concerned much because, in their belief, crypto’s main utility comes from conversion into fiat, they can track crypto transfers via blockchain fairly easy, and there isn’t much criminal activity in crypto.

But, over the last year, as bitcoin gained geopolitical significance & fiat-pegged stablecoin volume exploded upwards, governments are now concerned about both illicit activity & the threat to their monetary sovereignty, noted Chervinsky.

Now, they’re enforcing AML regulations more aggressively.

As we saw in the case of BitMEX, which not only got tagged by CFTC for unregistered derivatives trading as expected, but DOJ also turned the case criminal, which “doesn’t happen often.”

The key takeaways from this action are that not only law enforcement and the regulators are paying attention to what you do, but those non-U.S. entities may also be subject to U.S. laws and willful ignorance or violation of US AML laws is serious, said Phil Liu, chief legal officer at Arca.

The Main Challenge

Last week, DOJ released a framework to cryptos where it described anonymous transactions as “a high-risk activity…indicative of possible criminal conduct” and an ominous warning in the form of “anonymity enhanced cryptocurrencies” for exchanges.

This war over privacy and restricting access to crypto is global as the international standard-setting body for AML regulation FATF said in June that the “lack of explicit coverage of peer-to-peer transactions…was a source of concern.”

“Swiss Rule” is already prohibiting self-custody “in the guise of verifying the owner of a private key.” And just last week, BIS said in its report on CBDCs that “full anonymity is not plausible.”

With FATF red-flagging hardware wallets, Europol prioritizing privacy wallets, and UK’s FCA banning crypto derivatives, the situation is serious.

“I fear we’re heading for a world where withdrawing crypto from exchanges to self-custody is restricted as a means of attacking privacy,” said Chervinksy, which according to him, is the main challenge for the crypto market for years to come.

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Author: AnTy

An Erosion of Centralized Power: DEX’s Steal Trading Volume & Web Traffic from CEX’s

While Bitcoin ended the quarter 3 of 2020 with positive 18% gains, it was the quarter of decentralized finance (DeFi).

The DeFi explosion also saw Wrapped Bitcoin (WBTC) growing substantially with nearly $1 billion flowing in, representing a 1766% growth.

As per the latest CoinGecko report, more than $9 billion flowed into the crypto space in Q3 alone, with Tether (USDT) accounting for about two-thirds of this total inflow. However, the overall growth of the stablecoin market has slowed down in this quarter.

Capital inflow accelerated as yield farming gained steam
Capital inflow accelerated as yield farming gained steam

As the DeFi hype and yield farming frenzy took over, so did the volume, making it a vibrant quarter for cryptocurrency exchanges.

The total trading volume in the quarter surged 88%, a $155 billion increase, thanks to the month of August when the DeFi mania was at its peak, and many decentralized exchanges (DEX) like Serum and SushiSwap got into the picture.

Towards the end of Q3, the capital flow also appears to be slowing down as yield farming returns got reduced, but it is likely to continue to outperform traditional markets.

The Shift

Centralized exchanges are still very much the ones with the bulk of the trading volume, recording $171 billion in July, followed by $314 billion in August.

However, in the month of September, CEXs volume dropped to $300 billion, while DEXs recorded $30.46 billion, a 700% increase from the previous month. Compared to CEX’s 35% growth, the monthly average DEX trading volume grew by 197% in Q3.

While CEX’s decline was dragged by Coinbase and OKEx, both contributing 60% of the decline in the DeFi space, Uniswap is the leader that contributed 60% to the growth and, combined with Curve, account for 80% of the market share.

This obvious erosion of market share by DEXs could also be seen in web traffic.

In the last month of the quarter, September, the traffic on centralized exchanges took a hit while Uniswap’s almost doubled to become the world’s sixth-largest exchange.

Crypto-Exchange-Web-Traffic
Source: SimilarWeb.com

“This is likely fueled by investor’s appetite to trade on newly created coins, yield farming coins, as well as the subsequent flight towards stablecoins during September’s market dip,” notes the report.

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Author: AnTy

Ethereum Miner Fees Beats August Record with a 47% Increase in September

The final quarter of 2020 is here after seeing the tectonic shifts over the last few months, such as the rise of the DeFi and capital flow from the crypto sector to this burgeoning one, specifically into DEX venues and yield farming offerings.

And of course, Ethereum is at the center of it all.

The second-largest cryptocurrency network ended the quarter at 60% returns, much higher than Bitcoin’s mere 18%. However, September wasn’t good for the crypto market, which saw Ether also declining by 18%.

At the time of writing, ETH has been trading around $365, up 2.25%, and over half a billion dollars in ‘real’ trading volume.

But what has been more interesting was the effect of DeFi’s capital flow on Ethereum’s fees.

According to the data published by Glassnode, Ethereum miners made a total of $166 million from transaction fees in last month — a new all-time high.

September’s miner fees have been an increase of 47% from the previous high in August.

Compared to Bitcoin, whose miners made $26 million from fees, Ethereum’s has been over 6x of it.

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While the revenue from fees has been filling the pocket of Ethereum miners, it has made it all a big players’ game, shutting out the smaller ones.

However, it did put the layer 2 solutions in the limelight that is being actively used by popular DeFi projects. Ethereum co-founder Vitalik Buterin, an advocate for these solutions, recently said they make the main network a good choice for payments.

The bullish thesis for Ethereum also involves the recent launch of “Spadina,” the final testnet ahead of the blockchain upgraded ETH 2.0 mainnet release. This testnet is to run for three days as a “dress rehearsal” after the Medalla testnet went live last month. Spadina is to run alongside Medalla and test deposits and genesis block.

Scheduled to go live on Sept. 30, Spadina ran into problems yesterday. It suffered from “a lack of finality at launch,” as per Prysm Labs, which has been because of very few Prysm nodes participating, leading to community confusion. Other issues included users sending invalid deposits and “overall loss of confidence in becoming an eth2 validator.”

But this could be all fixed easily with a release, and everyone has to try again. ETH 2.0 testnet is now scheduled for another dress rehearsal called Zinken, next week.

For this to be successful, the developer Danny Ryan said everyone needs to take the genesis seriously.

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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