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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Author: AnTy

Billionaire Novogratz Invests in Virtual Real Estate Developer, Which Bought $900k In Virtual Land

Billionaire Novogratz Invests in Virtual Real Estate Developer, Which Bought $900k In Virtual Land

Billionaire Mike Novogratz’s Galaxy Digital’s venture capital division Galaxy Interactive is investing $10 million in virtual estate developer Republic Realm, which also buys cryptos and NFTs.

Republic Realm is part of a private investment platform called Republic, backed by investors, including Binance and investment firm Prosus.

Republic had a Series A funding round in March in which it raised $36 million from investors, including Galaxy Digital and Prosus. The latest $10 million funding is a separate one.

Founded in March 2021, Republic Realm has made over 1,500 investments and earlier this month bought a plot of virtual land in Decetralzand for $900k — the most expensive NFT land to date.

In Decentraland, ownership of virtual land is bought and sold in NFT form. This virtual land was made up of 259 units of land; the plot of virtual real estate represents 66,304 virtual square meters making it the biggest Decentraland land purchase in terms of virtual size.

The digital real estate firm aims to turn it into a virtual shopping district. The virtual shopping district in it is called Metajuku, modeled after Harajuku, a district in Tokyo known, which sells digital wearables.

It has also been adding buildings, including a virtual mall, and has rented out virtual shops to tenants as well. Janine Yorio, managing director at Republic Realm, in an interview, said,

“The same way that every consumer products company has a website today, they will all have virtual stores in 3D immersive environments in the future, and those stores will be in the metaverse.”

In another blockchain-based virtual world, The Sandbox sold a patch of virtual real estate for $650,000 earlier last month.

The Sandbox is a subsidiary of 2014 founded Animoca Brands, which is an early investor in Dapper Labs, the maker of CryptoKitties and NBA Top Shot.

Hong Kong-based blockchain game and NFT creator Animoca Brands raised $50 million this week as part of its latest funding round, which will be used to fund product development, strategic investments and acquisitions, and licenses for popular intellectual property.

The new tranche puts its most recent funding round to about $139 million, conducted at a pre-money valuation of $1 billion, with participation from Coinbase Ventures, Samsung Venture Investment Corp., Blue Pool Capital, and Liberty City Ventures.

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Author: AnTy

Tech Giants ‘Invading the Currency Area’ Are The Real Threat, Not Crypto: Denmark’s Central Bank Governor

Tech Giants ‘Invading the Currency Area’ Are The Real Threat, Not Crypto: Denmark’s Central Bank Governor

While Lars Rohde doesn’t see Bitcoin as more than a speculative fad, neighboring Sweden’s Riksbank First Deputy Governor, though “observant,” is not concerned about cryptos.

Bitcoin and cryptocurrencies are little more than a speculative fad, said Lars Rohde, Denmark’s central bank governor.

Rohde said he’s “tempted to ignore” Bitcoin and other crypto-assets. “It’s a very speculative asset at best. There is no stability and no guarantee from any side about the value of cryptocurrencies.”

According to him, central bankers can probably ignore cryptocurrencies as there are much more serious threats coming from big tech.

In an interview with Bloomberg, he said, if the tech giants start “invading the currency area” and the means of transaction, then “that could be very interesting and maybe also a real threat to the autonomy and independence of central banks.”

Similar warnings about the dominance of digital payments upending the age-old framework within which monetary policy has operated were given by Bank of England Deputy Governor Jon Cunliffe earlier this month. Pointing to the “financial stability implications” of such a development, he said governments and policymakers need to ensure they don’t get overtaken by private providers of payment services.

In response to such risks, central banks are working on their own digital currencies, with China in the lead and the US Federal Reserve looking to publish a paper on CBDC this summer. While Denmark isn’t among the frontrunners, neighboring Sweden may have a digital central bank currency within five years, per Riksbank Governor Stefan Ingves.

Meanwhile, Riksbank First Deputy Governor Cecilia Skingsley is “observant but not concerned” about financial market novelties like cryptocurrencies.

“Everyone can choose to invest in cryptocurrencies, but you should be aware that it’s very different from traditional financial assets,” said Skingsley while speaking at an online seminar on Thursday, adding she hasn’t seen “any crypto assets with an underlying real value.”

In Denmark, the main policy rate has been negative since mid-2012, longer than anywhere else in the world, which makes the main role of the central bank defending the krone’s peg to the euro.

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Author: AnTy

Bridgewater Associates CEO Ray Dalio Owns Bitcoin, But Cautions its ‘Greatest Risk is its Success’

We’re in the part of the cycle where gold, bitcoin, real estate, everything is going up, but with the US dollar on the verge of devaluation and inflation looming, future expected returns go down after a point, meaning there’s “no longer the incentive to buy those things.”

“I have some bitcoin,” revealed Ray Dalio, the founder, and CEO of the world’s largest hedge fund Bridgewater Associates.

Dalio revealed this during the Consensus event held by CoinDesk that was recorded on May 6, joining the herd of institutional investors warming up to cryptocurrencies.

This is because he would rather “have bitcoin than a bond” in an inflationary scenario, he said.

This makes sense given that since March 2020, the price of Bitcoin has gone from $3,800 to $65,000, and even after the recent 54% sell-off, it is trading around $37,500. Meanwhile, the yield on benchmark notes, US 10-year Treasury bonds, has only managed to move from 1.473% to 1.62%.

The yield on treasury bonds has been falling for decades, which was at 15.82% back in late 1981. Bitcoin, on the other hand, has been hitting a new ATH every cycle.

Dalio was previously skeptical about Bitcoin and later said he is learning about it and then wrote about it having the capacity to be an alternative store of value. Now, he has finally come around and invested in cryptocurrency. Recently, as we reported, Bridgewater’s chief financial officer, John Dalby, left the firm to join bitcoin custodian NYDIG.

Bitcoin looks appealing in the current environment where the US dollar is on the verge of devaluation, last seen in 1971, said Dalio. China is threatening USD’s role as the world’s reserve currency.

Here, Bitcoin with its gold-like properties is looking increasingly attractive as a savings vehicle, he said.

However, for him, the biggest concern remains regulatory crackdown. Dalio said,

“Bitcoin’s greatest risk is its success.”

Losing Control

During his interview, Dalio talked about how the greenback is in the mid of the first cycle, “debt and credit create buying power,” of the rise and fall of the global reserve currencies.

The second cycle is an “internal cohesiveness clash cycle” as both the wealth gap and political groups grow and then the rise of another great power that challenges the existing top currency.

The first cycle started as the government created buying power, a “stimulant” in the short term, but eventually, they have to pay back their debts, becoming long-term “depressants.”

So, if they need more money, they have to keep printing, and then taxes go up, leading to capital controls as happened in 1971 when President Richard Nixon took the U.S. off the gold standard, making dollar “fiat” currency, and stocks went up.

“It causes… gold, bitcoin, real estate, everything to go up because it’s really going down in dollars. And that’s the part of the cycle we’re in.”

Inflation is of importance here, especially monetary inflation that happens due to a devaluation of the currency, rather than the other one caused by supply and demand.

While pushing the prices of real estate, stocks, and cryptocurrencies up, their future expected returns would go down after a point. Once they come down to the interest rate level, “then there’s no longer the incentive to buy those things.”

However, a neutral cryptocurrency such as Bitcoin can act as gold, but the government has the capacity to control anything. And as more people start preferring Bitcoin than bonds, like him, the more savings go into BTC than into credit, “then [governments] lose control of that,” he said.

And such a situation, he said, can lead those governments to crack down on bitcoin holders, he said. Overall, it’s about technology and whoever wins this race wins it all, Dalio said.

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Author: AnTy

JPMorgan Chooses ‘Fintech Over Bitcoin’ As the Real Financial Game Changer during Global Pandemic

JPMorgan Chooses ‘Fintech Over Bitcoin’ As the Real Financial Game Changer during Global Pandemic

Fintech is the long-term story for COVID-19 related financial developments, not Bitcoin, JP Morgan analysts.

In a story first covered by CNBC, analysts from the top U.S. bank dismissed the recent superficial growth in Bitcoin’s price as an “economic sideshow” during the current global COVID-19 pandemic. According to the report, fintech development and digital payment systems will be the major story arising from the financial field in current pandemic times.

The price of Bitcoin has soared past $58,000 to set new all-time highs in 2021 as institutional investment soars from firms such as MicroStrategy, Tesla and MasterCard entered the Bitcoin market, a note from JP Morgan reads. However, it is the fintech innovations that will get the credit in the long term, it further states.

“Fintech innovation and increased demand for digital services are the real Covid-19 story with the rise of online start-ups and expansion of digital platforms into credit and payments.”

Over the past year, there have been increased efforts by non-financial firms such as Google and Apple to get into the fintech space. As financial firms invest heavily in technology, these Big Tech companies are moving rapidly to capture the digital payments market. With an advantage in digital spaces by owning a huge amount of consumer data, big tech firms rapidly narrow the gap to financial institutions and banks.

Bitcoin, on its part, saw a boost in demand, reaching the $1 trillion market cap, as investors looked for “diversification assets” during the pandemic. Comparisons with gold as a store of value is also increased over the year. JP Morgan previously stated the digital coin could rally as high as $146,000 as it competes with gold as a hedge against inflation during the COVID-19 pandemic.

Despite the optimistic price targets (which could take years to achieve), JP Morgan analysts warn cryptocurrencies are still the “poorest hedge” against stock prices and still hold a questionable amount of risk.

As previously reported, JP Morgan Chase Co-President, Daniel Pinto stated the bank could invest in Bitcoin if there’s a demand for the crypto. However, strategists at the bank revealed a report stating BTC’s price is “unsustainable” at $52,000 claiming volatility will kill the current hype cycle in the market.

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Author: Lujan Odera

Concentration of Power is the ‘Only Real Issue’ with DOGE says Tesla’s Elon Musk

Concentration of Power is the ‘Only Real Issue’ with DOGE says Tesla’s Elon Musk

While Dogecoin’s original creator, Billy Markus, can’t comprehend the insanity going around the meme cryptocurrency’s prices, Tesla CEO will “literally pay” actual dollars to get its major holders to sell their coins.

During this week’s sell-off, the popular Dogecoin has taken the hardest beating among the top cryptocurrencies.

The meme cryptocurrency went down to $0.0473, about halving its value from last week’s high above $0.088. As of writing, DOGE/USD has found its way above $0.062, much like the rest of the crypto market, which recovered fast after the dip which has been propelled by the highly leveraged traders.

The cryptocurrency is still a long way from $1 that many degens have been targeting for this token, which its original creator Billy Markus, not Tesla CEO Elon Musk, just can’t comprehend. He doesn’t have any DOGE except what has been tipped to him recently, shared Markus in his Reddit post last week.

While Markus has nothing to do with the coin now, having left around 2015, Musk has shared his concern about the concentration of power among DOGE holders. Musk tweeted,

“If major Dogecoin holders sell most of their coins, it will get my full support. Too much concentration is the only real issue IMO,”

“I will literally pay actual $ if they just void their accounts.”

According to Bitinfocharts, 28.7% of DOGE’s supply is held by just one address, which owns more than 36.8 billion DOGE worth over $2 billion.

A mere 11 addresses hold 19.85% of coins, a total of 25 billion DOGE worth nearly $1.4 billion, while another 91 addresses have a total of 25.2 billion DOGE that is worth almost $1.38 billion.

The largest number of holders, over 1 million addresses, own between 1-10 DOGE. As per this, 87.68% of addresses hold 0% of the DOGE supply.

Dogecoin rich list

Source: bitinfocharts – Dogecoin Distribution

There are only 58 addresses that are richer than $10 million and 393 addresses that are richer than $1 million.

These numbers clearly show the ownership of DOGE is highly skewed, with very few having nearly all the DOGE coins.

And the answer to this, as one DOGE enthusiast recommended and Musk agreed with, “Whales will have to consider Elon’s ultimatum here. If they comply, Dogecoin becomes the currency of the internet. If they don’t, or “cheat” by distributing their coins across multiple wallets, then it loses Elon’s endorsement. Easy decision for the whales. Do the right thing.”

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Author: AnTy

Billionaire Mark Cuban Endorses DeFi as the Real RobinHood

Billionaire Mark Cuban Endorses DeFi as the Real RobinHood

Billionaire Mark Cuban has taken a liking to decentralized finance (DeFi). Not only is he actively involved in owning some of these DeFi tokens and testing out the products, like leading lending platform AAVE but he is also continuously endorsing them on Twitter.

On Friday, the Maverick Dallas owner took to Twitter to share that a part of the trading that retail investors are doing on retail broker Robinhood goes to the zero-commission platform itself.

“This is one more way that Wall St takes advantage of the little guy,” said Cuban, one of the investors on Shark Tank.

While in traditional finance the platforms like Robinhood are the ones taking a cut of the retail’s money, the same percentage of APR is paid to the user itself in the world of DeFi. He wrote,

“Imagine if you pooled your crypto and the platform was getting 30% APY and didn’t pay all but fees to you? What would happen?”

For starters, in traditional finance, no one will allow the retail user to “hold the shares and lend them in YOUR name, so you get the Yield (Yield Farming in stocks!).”

If someone does provide this feature, “one trick that I have been on both sides of is to lend out stock to shorts at a high APY and then call back my shares, which forces the short to cover. Now if WSB did this en masse, it would be the mother of all short squeezes,” said Cuban.

He goes on, the power is in numbers, and what is happening right now in the battle between the retail traders (WallStreetBets) and Wall Street is that the latter “is learning an expensive lesson.” He said,

“Buy and Trade Together can be a whole lot more powerful than old-school buy and hold.”

So, here he suggests small individual traders work together, share information, educate each other, and “use their combined strength to focus on good companies, with strong prospects, the power shifts from wall street to main street.”

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Author: AnTy

Cryptocurrency Market Sees $1 Billion USD of Real Capital Flowing Out of Altcoins

Cryptocurrency Market Sees $1 Billion USD of Real Capital Flowing Out of Altcoins

For most of the altcoins, the deep losses have already been reverted in this week of Pump-Dump-Pump.

XRP has taken the entire crypto market down with it.

The cryptocurrency carnage that occurred on late Wednesday night wiped out about $62 billion from the market.

XRP has lost 63.5% of its value since Monday when Ripple CEO Brad Garlinghouse tweeted that SEC is going to sue them for selling unregistered securities in 2013.

XRP/USD went as low as $0.212 before recovering to the $0.263 level.

Still, shorting XRP won’t be as fun here as “Funding rate is absolutely insane. Similar to the funding rate for BTC during the March capitulation. This can short squeeze so hard,” noted trader CryptoSqueeze.

While the world’s largest cryptocurrency, Bitcoin barely felt the effect, as it only dropped to $22,600 and is already back above $23,000, the second-largest cryptocurrency wasn’t this lucky.

ETH went down hard, losing nearly 12% of its value as it crashed to $550, currently working on getting back to the $600 level.

When it comes to the DeFi market, the total value locked (TVL) in the space hasn’t seen much change from last weekend’s ATH of $14 billion, currently standing at $13.3 billion.

As for tokens, SUSHI nuked only to get back to the previous level soon after. Much like SUSHI, several altcoins fell hard. LINK is another example of losing easily 30% of their value only to move back halfway up.

Over the past week, the notable losers include HAKKA (51%), SWRV (35%), CRV (31%), bzrx (28%), COVER (26%), COMP (25%), YFI (18%), AAVE (9%), and UNI (8.40%).

This week, SNX was the outlier as it diverged from the rest of the DeFi world. SNX surged more than 42% in the first three days of the week only to feel the pressure and losing 24% of its value since then.

This altcoin carnage resulted in their collective market capitalization down approximately $31 billion. This amounts to about “$1b USD of real capital flows out of alt-coins using FundStrat estimations of crypto cap change per dollar invested,” noted on-chain analyst Willy Woo.

Altcoins’ loss has been Bitcoin’s gain as its dominance surpassed 70%, to reach a one-year high.

Overall, markets remain in the red going into the weekend ahead of the Christmas celebration.

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Author: AnTy

Bitcoin SV Multisig Wallet, ElectrumSV, Exploited; Putting Real Users’ BSV In Jeopardy

  • Bitcoin SV has a critical bug in its multisig wallets, putting “zillions of funds” in jeopardy.
  • No real funds have been lost, a statement on Reddit reads.
  • Users are warned against sending BSV tokens to the ElectrumSV multisig contract.

A Reddit post by former Blockstream developer and co-founder Gregory Maxwell states that Bitcoin SV’s multisig contracts no longer provide any security to the users, causing a loss of all BSV tokens. However, no real user funds have been affected by the critical bug; the statement reads.

In a quest to offer users a faster and less costly payment system, Bitcoin SV had to make some changes to Bitcoin Cash’s consensus rules during the hard fork in November 2018. One of the key changes was to rip out P2SH, or pay-to-script-hash, which allows a user to send a transaction to a “script” rather than a public key address. This was important for users signing into multisig addresses, which are wallet addresses that require several private keys to sign the transaction.

BSV abandoned the P2SH with a homebred solution in “Electrumsv (and presumably elsewhere)” called accumulator multisig, which is a script that looks like a P2PKH, or pay-to-public key hash, buts adds up “the number of passes and compares them to a threshold.” The problem arises on the threshold figure whereby instead of accepting X signatures or more, the developers instead coded accepting X signatures or less.

Electrumsv released a statement on Monday asking users not to send any funds to the accumulator multisig wallet to avoid losing their funds.

According to Maxwell, the developers did not test the multisig solution well enough, only checking if too many signatures would raise a problem but leaving out the consequences of fewer signatures to the multisig wallets. He writes,

“The result is that these scripts had no security at all and could just be spent by a scriptsig that pushes a couple of zeros.”

One user, Aaron67, claims he lost 600 BSV (~$94,800) due to the exploit code when he sent his tokens to the multisig wallet – losing every single token. He explains that he thought it was safe to send funds to the wallet as it was featured by CoinGeek, a website run by Calvin Ayre, a close friend to nChain’s and Bitcoin SV founder, Craig Wright. According to the ElectrumSV team, the harmful bugs came from the developers at nChain.

A failed code change on Bitcoin SV

According to Maxwell, the current BSV bug is not clear if it was an honest mistake or a scam from developers. However, he warns users from sending large amounts using scripts that are culpable of being a scam or built by developers that are easily deceived.

Even if the critical bug is accidental, Maxwell claims the error could be avoided if the developers took the time to check and test the homebred multisig wallet. Moreover, the issue could be completely avoided if the BSV developers did not gut “the competent, time tested, and highly peer-reviewed mechanisms” used on Bitcoin multisig wallet in favor of the less tested BSV homebred accumulator multisig solution.

In his closing remarks, Maxwell states that the presence of such a simple code error shows that there may be other issues on the BSV code.

“Kinda makes you wonder what amazing bugs are lurking in their node software or wallets,” he states. “I can say for sure: I’m not going to run any of it and risk finding out.”

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Author: Lujan Odera

Bitcoin Recording Third Best Quarterly Close; Strong Q2, But Q3 Paints A ‘Challenging’ Picture

Bitcoin is currently trading above $9,100 in green with just $1.1 billion in ‘real’ trading volume. The leading digital currency has recovered 140% since the March crash but is up only 27% YTD.

Despite the minimal yearly gains and ending the first quarter of 2020 on a red note of 10.58%, the second quarter has turned out to be surprisingly good despite the coronavirus pandemic triggering a sell-off in the global markets.

Today, on the last day of June and the second quarter, we are close to ending this month and quarter at about $9,150.

This makes the third-best quarterly close for bitcoin in its young history. The best quarter close was Q4 of 2017 at 13,660, followed by 2019’s quarter 2nd when bitcoin ended it at $10,590.

After Q2 of 2020, comes Q4 of 2019 when bitcoin was at $7,180.

Around the current price level, bitcoin would mark a gain of more than 42%, which also makes it the fourth-best second quarter since 2014.

After 157.5% gains in 2019, 125.3% in 2017, and 61.8% in 2016, 2020’s 42.2% gains is the best second quarter.

Interestingly, the second user has been a green quarter for bitcoin for the majority of the past seven years except for the 2018 bear market. And bitcoin continued this historical trend this year.

However, this positive development means bad news might be ahead. In contrast with Q2, Q3 heavily tilts towards losses, much like Q1. And we did end up in red in Q1 of 2020. Now, it needs to be seen if Bitcoin will continue ranging, or we will encounter a drop in price.

“Excluding the exceptional 2017 vintage, Q3 has been historically more challenging,” noted Skew Markets.

As we reported, analyst Rekt Capital has said it is nothing out of the ordinary because, after the reward halving of 2016, bitcoin recorded losses before going on a bull rally.

What about USDT?

Stablecoins have been seeing strong growth throughout the coronavirus pandemic only to slow down in the past few weeks. Amidst bitcoin’s lackluster performance, popular stablecoin (USDT) has surpassed $10 billion market cap, as per Messari. This has many expecting a run-up in BTC.

But this demand for USDT is not reflected in Bitcoin price.

This is because “Tether has historically printed USDT in large batches in anticipation of future demand and distributions,” said Coin Metrics in its latest report.

According to the report, on-chain supply doesn’t mean new supply in public markets, and USDT held by the Tether Treasury, which is currently at $9.79 billion, is a more accurate indicator of the supply in public markets.

The correlation between free float USDT and Bitcoin’s price was clearer in early 2019 when BTC rose from $4,000 to $12,000.

A bullish picture meanwhile was painted by Bitcoin hodlers as those holding BTC for a year or more made a new all-time high of 62%.

Pointing to this, Alistair Milne noted, “Similar levels of HODL last seen during a 3-month consolidation at around $400 before starting a two-year bull run,” and guesses the cycle peak to be around 70%.

Also, from the mining perspective, Matt D’Souza, CEO of Blockware Mining, says just like the bitcoin mining market bottomed in late Q4, 2018/early 2019, “we are in a similar environment today.”

They also believe the “Bitcoin spot market is starting a bull market,” which “will pull the mining market out of this winter.”

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Author: AnTy