Bitcoin Miners Generating BTC at Fast Pace & ‘Running Down Inventory’ Just as Hard

Bitcoin started this week on a bullish note, reaching above $11,700 only to drop to nearly $11,200 level on Friday after crypto exchange OKEx announced that cryptocurrency withdrawals had been suspended.

According to the local media, two of the executives, including its founder, Star Xu, arrested by the police, have been released on bail. Star Xu has been reportedly assisting in the investigations.

The exchange maintained that the investigation is “not related in any way to anti-money-laundering or to OKEx,” and that the funds are safe and all other functions are unaffected.

OKEx actually holds 1.1% of Bitcoin’s circulating supply (200,000 BTC worth $2.3 billion), and before the suspension of withdrawals, large BTC outflows were observed from the exchange.

As per Glassnode, “a total of 10,000 BTC ($113 million) were withdrawn in two large batches in the past 48h.”

Market Unchanged

Yesterday, what made matters worse for the already jittery markets was the Deribit exchange that was temporarily out of action due to maintenance that had not only BTC price falling but also the futures curve flattening yet again.

On-chain analyst Willy Woo actually expects the last CME gap around $11,200 to get filled as he sees hidden distribution at spot exchanges, with volume sell-off not yet reflected in the price.

But in the near term and overall, he remains bullish, signaled by the growing market fundamentals.

“The on-chain fundamentals which are 3-6 weeks at the minimum timeframes are still unchanged in bullish mode, if we do get a pullback, I’d take it as a chance to deploy capital into BTC if you missed it in the 10k zone,” said Woo.

Still, Some Weakness in Near Term

While the network fundamentals, the hash rate has made an all-time high, miners are “running down inventory quite hard today.” With MRI currently above 100%, it means miners are selling more Bitcoin than they are mining.

This, according to Charlie Morris of ByteTree, is an indication of a “Healthy market to sell into.”

Interestingly, with more than ever hash power used to mine bitcoin, the standard 10 minute time to generate a bitcoin has fallen to 8 minutes 8 seconds, as per Bitinfocharts. In the second half of 2020, the block time has been kept between 12 to 8 minutes.

Overall, bulls haven’t lost yet, and they could further continue higher, especially if equity markets trade up given their correlation that continues to increase, currently above 57%.

“Recent BTC breakout was legit, but more effort needs to be coming from the bulls. Price action remains in a three-wave corrective move after bearish impulsion. Break of $11,740 & $12,500 Highs needs to commence, otherwise bears might try to force more consolidation/downside,” says one analyst.

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Author: AnTy

Wrapped Bitcoin (WBTC) Beats Aave & Curve to Become the Third Largest DeFi Project

Bitcoin on Ethereum continues to grow at warp speed, reaching above $1.6 billion, on pace with 145k BTC.

Several projects like renBTC, imBTC, HBTC, TBTC, pBTC, and sBTC are putting BTC on the second largest network. Wrapped Bitcoin (WBTC) dominates this growth by accounting for 73.6% of the BTC on Ethereum.

105,132 WBTC worth $1.2 billion has been minted so far, which has increased a whopping 9,380% since the beginning of 2020.

With this, WBTC has jumped past the likes of Yearn.Finance, Synthetix, Compound, Curve Finance, and Aave to become the third-largest DeFi project.

Uniswap, with a record of $2.73 billion in total value locked (TVL) and dominance of 24.12%, and Maker with nearly $2 billion of crypto funds locked are the only ones bigger than Wrapped Bitcoin.

wbtc
Source: DeFiPulse

WBTC is one of the fastest-growing DeFi projects, much like the overall sector, which is hitting new highs of $11.4 billion in TVL.

Interestingly, yesterday, the largest WBTC was minted in a single day by CoinList. This largest mint of 5,000 WBTC was made in two separate transactions — the first one involved 1,299.48 WBTC while the second transaction involved 3,697.5 WBTC.

This record breaks the last one made by FTX CEO Sam Bakman-Fried’s crypto trading firm Almeda Research that one-upped the previous record with 2,316.5 WBTC.

WBTC is an ERC-20 token backed by bitcoin in a 1:1 ratio, where the BTC is held in the custody of BitGo.

With this, DeFi users can participate in various applications without actually using their Bitcoin. It further brings Bitcoin’s vast liquidity, with a $210 billion market, to the $42 billion market cap Ethereum network.

Demand for WBTC continues to soar, as seen in its growth as this allows Bitcoin holders to take part in exciting DeFi apps like yield farming and earn income on their BTC without giving it up.

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Author: AnTy

ETH Locked on Aave & Uniswap Records a Sharp Rise

Decentralized Finance (DeFi) is back to recovering, currently at over $11 billion, reaching an all-time high of nearly $12 billion from last week, as per DeFi Pulse.

On this climb up, the amount of BTC on Ethereum is already at an all-time of 130.8k BTC. When it comes to Ether, at 8.2 million ETH, it still has some way to go before it hits a peak of 10.67 million ETH.

Interestingly, the third-largest DeFi project Aave with $1.63 billion in TVL, has added over 370 million ETH in just the last three days.

Since Friday, ETH locked in the lending protocol has jumped by more than 190% and a whopping 792% since the beginning of this month. Aave is the fifth largest ETH holder in the DeFi space.

The most amount of ETH is locked in Uniswap at 2.9 million, doubled in the past ten days. While Maker’s ETH balance stayed steady over 2 million throughout this month, both Compound and SushiSwap recorded a drastic drop.

Both are among the top five ETH holders, but the amount of Ether locked in Compound has been on a constant decline since the middle of this month, down 30%. Uniswap clone SushuSwap registered a whopping 72% fall in ETH deposit on its protocol, which is no surprise given its overall sliding value.

The price of Ether meanwhile, is also on the rise, up 3.24% trading at $364, a jump from last week’s low of $320.

These gains are in line with the rest of the crypto market, which is moving in tandem with Bitcoin, approaching $11,000. But while bitcoin’s options market is sending mixed messages, “front-end skew bid and 3-month largely flat,” Ethereum’s is much more bullish.

“This can point to hedging flow, especially given the rising trend of locking Bitcoin on the Ethereum network, as well as lend/borrow flow,” noted Dennis Vinoourov of Bequant.

At the same time, Ethereum bulls are also waiting for an update on the much-needed Proof of Stake (PoS) transition for which the Spadina testnet, dress rehearsal for the most important parts of the Eth 2.0, will go live this week.

However, the best thing happened with the Ethereum transaction fees, which have declined sharply since skyrocketing on Uniswap’s governance token UNI’s launch — another factor acting in support of the DeFi world.

The average cost of processing an Ethereum transaction has fallen to a 49-day lull, at $2.34 compared to early Sept. cost of $14.6, as per Bitinfocharts.

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Author: AnTy

Popular DEX Uniswap Beats Coinbase for the Second Time in a Row, Overthrows Other Top CEXs

The popular DeFi protocol Uniswap is reaching towards becoming the fourth largest DeFi project to hit the $1 billion mark.

Given that the fully decentralized on-chain protocol for a token exchange on Ethereum has seen a growth of 225% in the past less than five days, it won’t be long before it enters the billion-dollar category.

This decentralized exchange, which has no native token, hit $502.89 million in volume on Sunday, surpassing the volume of the popular centralized exchange Coinbase Pro, for the first time.

Now, for the second day in a row, Uniswap recorded just over $467 million volume in the past 24 hours while its liquidity has already gone above $1 billion, up from just $306 billion on August 27th.

Meanwhile, in the last 24 hours, Coinbase Pro recorded $416 million in volume, Kraken $193 million, Bitfinex $139 million, Bittrex $53 million, Poloniex $43 million, Gemini $23.1 million, and Binance.US $23 million, as per CoinGecko.

Uniswap already sees more usage than many of the popular centralized cryptocurrency exchanges, except for the likes of Binance, OKEx, and Huobi, which is managing between $2 to $4 billion in daily trading volume.

The biggest contributors to Uniswap’s volume are Wrapped Ether (ETH), USDT, USDC, DAI, YFI, SUSHI, LINK, Synth sUSD, SNX, and AMPL.

However, the issue here is the DEX Sushi, which has nearly $760 million locked in it and proposes to be an evolution to the Uniswap protocol. “For users, it’s value-destroying. Just causes liquidity fragmentation. You could still use an aggregator, but at a min, your gas costs will go up,” noted analyst Ceteris Paribus.

For now, the protocol is creating more liquidity, as seen in the 226% growth in just four days, but it also means that once the migration of Sushi from Uniswap happens, rewards will get a huge haircut, so it is a net negative, he said.

However, the DeFi ecosystem continues to grow, having locked in $7.7 billion in the sector, and not all the projects are included yet.

Volume on DEX, overall, has been growing, unperturbed by the high Ethereum gas price, which, although recently trended down, saw a spike this weekend.

August has actually been yet another record-breaking month for DEX volumes that reached $10.42 billion, compared to just $4.3 billion in July as per Dune Analytics. And Uniswap and Curve have been leading this growth, accounting for more than 65% and 18% of overall volumes. Uniswap also accounts for 57% of all DeFi users.

It looks like the next flippening will be of DEX vs. CEX tokens.

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Author: AnTy

Chinese Bitcoin Mining Farms Hit Hard by Floods, Hash Rate Crashes Across Mining Pools

  • Bitcoin hash rate is reaching new all-time highs as the price surges above $12,000 to a 13-month high.

The hash rate of the largest network had a rocky start to 2020, seeing a huge drop following the March price crash and then due to May 11th halving. But now it has fully recovered and even eclipsed the previous levels.

This means the fundamentals are bullish, and network security is stronger than ever.

Bitcoin miner revenue, which has become more dependent on trading fees following the halving, has also been growing. Thanks to the average trading fee rising from $0.81 to $2.31 post halving, miner revenue surged 7% in July.

Starting at nearly $16 million, bitcoin miner revenue rose to $19.8 million in mid-February, as per Blockchain.com. But a month later, this revenue crashed to $6.9 million due to the price crash. But before the halving, it climbed to over $20 million only for the reward halving to push it back around $7 million.

Now, in August, so far, miner revenue is keeping in the range of $13.7 million and $10.39 million, the lowest point of this month hit today.

Source: Blockchain.com

But with the price of Bitcoin back on an uptrend, things might get better for miners.

Soaring BTC prices and cheap electricity has been what is leading the hash rate to new all-time highs currently.

The 14-day mining hash rate has already climbed to a new all-time high of 127 Eh/s. This means the next difficulty adjustment, estimated to be positive 8%, within a week’s time could set a new record as well.

However, what has been pushing the electricity cost down is now leading to the drop of hash rate among major Chinese bitcoin mining pools.

The monsoon season in China brings abundant rain leading to cheap electricity prices. In the Sichuan province, which is estimated to account for more than 50% of Bitcoin’s total computational power, heavy rainfall is now affecting the operations. Molly, the head of marketing at HashKey Hub noted,

“The heavy rainfall in Sichuan is continually getting worse, caused internet blackout in multiple places in Sichuan, might cause bitcoin hashrate drop temporarily since over 70% of mining farms in Sichuan.”

And the hash rate has dropped significantly as per data from BTC.com, between 10% to 20% as bitcoin mining farms in the region are forced to unplug.

Bitcoin Block Explorer - BTC com
Source: BTC.com

One of the largest bitcoin mining pools, Poolin, shared several videos of the mining farm located in the Sichuan region being hit hard by the floods.

The three-day hash rate has already dropped 3% to about 123 Rh/s, and the one-day average fell 10% to 110 Eh/s.

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Author: AnTy

Defunct QuadrigaCX Exchange Victims Are Being Contacted By The FBI

The Federal Bureau of Investigation is now reaching out to QuadrigaCX victims via email in what appears to be confirmation that the federal agency has started carrying out investigations to try and establish what could have led to the collapse of the Canadian cryptocurrency exchange platform.

Valerie Gauthier, a victim specialist has been emailing multiple people who had engaged in dealings with the platform. According to multiple exchanges that she has engaged with the victims, she is looking to alert them about a news portal that contains information and details about the case against the crypto platform. In some of the exchanges that have been shared with CoinDesk, Valerie notes that:

“A criminal investigation can be a lengthy undertaking, and, for several reasons, we cannot tell you about its progress at its time,” she went on to add that the victims could get in touch with the federal agency by writing an email to [email protected]

She was, however, quick to state that:

“inquiries about the status of the case will not be addressed.”

It appears that the agency has been conducting its own investigations into the collapse of the platform since early 2019. The FBI had released a statement in June last year stating that it was interested in speaking with people who had worked with the cryptocurrency exchange.

Public Questionnaire

The agency had at the time sent out a public questionnaire it wanted the public to fill and submit to them. Multiple people who spoke to CoinDesk noted that they had filled the questionnaire and sent it back to the agency.

So far, the federal agency is among four other national agencies that are interested in looking into the operations of the crypto company. The Canadian Royal Mounted Police has also been undertaking its own investigations.

Payment Processor

On other news, Roger Knox, on Monday went before a judge in Boston and pled guilty to engaging in securities fraud. You should note that Roger is the operator and founder of Wintercap, the Swiss-based asset management company.

He is accused of being a part of numerous schemes aimed at manipulating the market, including taking part in microcap securities pump and dump operations.

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Author: Daniel W

A 10% Bitcoin Allocation Investment Portfolio “considerably outperforms” a Typical one

  • Portfolio with BTC outperformed the other over one year period, reaching its 2019 high over the summer
  • Both portfolios had nearly similar Sortino Ratio
  • It also maintained greater risk-adjusted return with a Sharpie of 0.66
  • How does having just 10% Bitcoin in your investment portfolio fares in comparison to a typical non-Bitcoin one?

TradeBlock, an institutional digital currency trading tools provider answered that in its recent blog where it found that the portfolio with a 10% Bitcoin allocation along with 55% equities and 35% bonds “considerably outperformed” the one without Bitcoin but included 60% equities and 40% bonds.

The year-over-year performance between the two portfolios started with an investment of $1,000, with the assumption of yearly rebalancing at the previously mentioned percentage allocations.

Portfolio two with BTC outperformed Portfolio one over the one year period and then the former reached its 2019 high over the summer.

Portfolio comparison year-over-year

When it comes to risk, Portfolio 2 with a 10% bitcoin allocation outperformed the alternative portfolio but maintained a modestly higher risk profile because of the flagship cryptocurrency’s heightened volatility.

Both portfolios, however, had nearly similar Sortino Ratio, the risk-adjusted return of an investment asset, at 1.51 and 1.41. Earlier this year, Bitcoin had higher risk-adjusted returns at 1.97 than the 0.25 of S&P 500 and 1.06 of gold.

When it comes out more popular Sharpe Ratio to measure risk-adjusted returns, Portfolio one with BTC maintained greater risk-adjusted return with a Sharpie of 0.66 versus Portfolio 2 which had a Shape of 0.46.

The Best Investment of the Decade

It makes sense the portfolio with Bitcoin outperformed the alternate one as the world’s leading cryptocurrency hasn’t been only the best performance crypto asset of 2019 but of the decade.

A recent report by Bank of America Securities shared that if you have invested just $1 in Bitcoin at the start of the decade, it would have been now worth close to a million (more than $90,000).

During the same period, $1 in American stocks would have been up only 250% at $3.46, in gold, it would have been $1.34, 74 cents in crude oil, and $2.08 in 30-year US Treasury while you would have lost your investment by investing $1 in Burmese kyat, now worth $0.004.

Over this past decade S&P 500 and Dow Jones Industrial Average, however, made significant gains of 140% and 130% respectively, but still way less than BTC.

As trader Josh Rager points out,

“As amazing as these stock returns are, there is a potential opportunity to have similar gains with Bitcoin even at its current price: $7000’s.

Potential 1000+% returns, not only over the coming decade, but in the next few years if we see BTC hit between $75k to $100k+.”

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Author: AnTy

Mysterious Crash Arises on the Bitcoin Network as the Hash Rate Drops Down 40%

The Bitcoin network hash rate, which was reaching all-time highs a few weeks ago, has recently dropped around 40% yesterday. The news comes as a shock for the network as the numbers were pretty good so far. According to information from Coin.dance, the hash rate plummeted from 98 million to 57,7 million TH/s.

Just five days ago, Bitcoin reached an all-time high speed, so it was considered very weird that such a low hash rate was discovered yesterday. Several traders and analysts are still trying to understand the flash crash.

A hash rate, in case you have been wondering, is the rate that shows how much power the network is using to mine tokens. The more miners there are out there, the higher the hash rate will tend to be. Such large drops can mean several different issues, so it is hard to explain why this happened.

Many mining rigs could have been shut down for some reason or maybe another smaller event made the network to be considerably slower than it normally is. In any case, a high hash rate is important because it means that there is more protection against 51% attacks that could disrupt the network.

A high hash rate also means that the prices of Bitcoin will tend to go up. The Bitcoin maximalist Max Keiser has recently affirmed that price always follows the hash rate so if the hash rate continues to go down, this could mean that prices would be affected in a negative way.

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Author: Hank Klinger