Stablecoin Demand Is Going Through the Roof; Exchange Reserves Hit an ATH

Stablecoin Demand Is Going Through the Roof; Exchange Reserves Hit an ATH

Stablecoins dominated 2020 and now they are ready to take over 2021 as well.

Last year, the market capitalization of fiat-pegged stablecoins went from just under $5 million to $27 billion. As of writing, the stablecoin market cap has surpassed $30 bln, as per CoinGecko.

While Tether (USDT) remains the king of the stablecoins with a $22.75 billion market cap and $20.60 billion trading volume, as per Messari, Coinbase and Circle’s USDC is catching up fast. With a market cap of $4.21 billion, USDC is managing $693 million in volume.

USDC actually printed nearly 1 billion in December compared to USDT’s just 2 billion.

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Back in Dec. 2019, USDC’s market cap was $500 million which surged to $1 billion in July 2020.

“The growth of USDC in 2020 was in large part fueled by the growth of Decentralized Finance (DeFi), where USDC remains the number one fiat-backed stablecoin of choice by both users and developers,” said Pete Kim who helped build USDC 2.0 and Coinbase Wallet. “USDC acts as a medium of exchange between different protocols,” he added.

Recently, Coinbase announced the latest version of USDC, which according to Kim was “long overdue for an upgrade.”

Stablecoins have been boosting liquidity in the cryptocurrency market and enabling trading to be faster and cheaper.

An interesting trend has been seen in the market regarding these fiat-based crypto assets. While the digital assets like BTC and ETH have been moving off the exchanges for HODLing, the stablecoin reserves of these cryptocurrency trading platforms have hit an ATH at 3.137 bln, up from 1.3 bln in August, as per data source Crypto Quant.

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Binance’s stablecoin BUSD’s exchange reserves also hit an ATH as 327 million BUSD flew into exchanges in the past three weeks.

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Author: AnTy

Miami Mayor ‘Definitely Open’ to Allocate 1% of City’s Treasury Reserves into Bitcoin

Miami Mayor ‘Definitely Open’ to Allocate 1% of City’s Treasury Reserves into Bitcoin

Meanwhile, Francis Suarez is working on accepting Bitcoin as a means to pay for services/bills in 2021.

Mayor Francis Suarez declared his Bitcoin friendliness on Twitter Tuesday when BTC proponent Anthony Pompliano urged him to allocate Miami’s reserves into the world’s largest cryptocurrency.

“Definitely open to exploring it,” said Suarez who is working on bringing tech talent to the city.

With COVID-19 bringing in more remote-working opportunities, many tech entrepreneurs are contemplating or have already moved out of the San Francisco Bay Area. Some are considering Miami as an option thanks to Suarez actively endorsing the city on Twitter.

The Mayor’s Bitcoin positive response has been to Morgan Creek Digital co-founder Pomp’s tweet, “Retweet this if you would move to Miami if Mayor Francis Suarez put 1% of the city’s treasury reserves in Bitcoin.”

The tweet received much love — 1.3k retweets and 5.3k hearts. The Bitcoin community is already on board with this idea which has already seen adoption from public listed companies.

MicroStrategy was the one to herald it which was then taken further by Jack Dorsey’s Square. Now, in small and big enterprises, everyone is slowly replacing cash with Bitcoin as a reserve asset in their balance sheet.

“Would be the first US city to do it. If Bitcoin works out, it would bring significant resources to the city. If it doesn’t work out, it would be best spent economic development dollars because of how many people would move,” said Pomp of such a move.

While Bitcoin in Miami’s treasury reserves may take time, the city could soon accept Bitcoin and crypto as a means to pay for services and bills.

“We are definitely going to be working on that in 2021…” is what Suarez said of this.

Charlie Shrem, host of Podcast UntoldStories also chimed in and called out the state of Florida to be the flag bearer of Bitcoin friendliness.

However, Jimmy Patronis, Florida’s Chief Financial Officer & State Fire Marshal isn’t keen on the idea as he said, “Got to keep public money safe. It’s not the future, it’s now. I love that the Mayor is fired up about expanding the global financial sector in Florida!”

While Florida might not be ready for that now, the crypto community already has Wyoming which has been leading with its digital assets favorable regulations. And of course, the state has already elected the first Bitcoin owner, Cynthia Lummis to the US Senate.

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Author: AnTy

Fidelity Digital Assets Dives Into Why Institutions Are Adding Bitcoin to Treasury Reserves

Over the year, several companies have chosen to add Bitcoin to their Treasury reserves, including MicroStrategy, Square Inc., and Tudor Investment Corporation. The latest two, Canada-based BIGG Digital Assets and MassMutual, a 169-year old insurance firm, also added $3.6 million and $100 million in BTC to their reserves in 2020, respectively.

As one of the first institutional investment-focused firms on Bitcoin, Fidelity Digital Assets released a synthesis report on the growing number of institutions adding BTC as a treasury reserve asset – and crucially, why more companies will consider adding Bitcoin-backed treasuries in the future.

From August through October, a billion-dollar publicly traded firm, MicroStrategy, added over 40,000 Bitcoin for $475 million into its Treasury coffers. Less than three months later, Michael Saylor, MicroStrategy’s CEO, announced a doubled down bet on BTC selling $635 million of senior convertible notes to purchase the ‘digital gold.’

The huge bet paid off wonderfully across Q4 2020 for MicroStrategy’s stock (MSTR), which reached a 20-year high after the firm recorded over 50% profit on its BTC Treasury reserves. Despite CITI Bank downgrading its stock from “neutral” to “sell” in their latest report (due to “disproportionate focus on BTC), the firm looks to add even more, Saylor confirmed.

Additionally, Square Inc., founded by Twitter CEO and Bitcoin enthusiast Jack Dorsey, introduced BTC buying and selling through Cash App earlier in the year. The payments firm purchased $50 million worth of bitcoin (or 4,709 bitcoins) in October 2020, representing 1% of their Treasury reserve.

Other institutions such as Stone Ridge, Mode Global Holdings PLC, and Tudor Investment Corporation have also announced Bitcoin allocations this year.

So what is causing a sudden increase in corporations adopting Bitcoin-backed Treasury reserves?

Damaged financials, cash flows, and profitability

According to the report, three main issues affect a corporation’s decision to hold BTC in its reserves. First, the global COVID-19 pandemic “damaged corporate balance sheets, cash flows, and profitability,” which put most corporations in a precarious position. The sudden reduction in cash flows raises the importance for these institutions to put away excess cash in uncorrelated investments to fight off the recession.

Bitcoin is well-diversified from the demand shocks that health and economic crises cause on stocks, bonds, and traditional finance markets. The report further states,

“Companies may also benefit from bitcoin’s diversification benefits, potential outperformance, and liquidity profile when the core business and other potential investments are disadvantaged by the state of the economy”.

Moreover, BTC offers companies the potential of a longer-term investment profile while also offering liquidity to shorter-term investors. This will help companies maintain their liquidity while diversifying their investments, providing a buffer in difficult times.

Ultra-low interest rates across the world

Secondly, interest rates across the world reached yearly lows as the pandemic struck to stimulate borrowing. However, while corporations may rejoice in having a cheaper leeway for acquiring debt or refinancing existing debt at lower rates, companies with excess cash reserves may suffer as they cannot find attractive rates, the report explains.

While safe-haven assets like gold and Bitcoin generally do not generate interest yields, having these assets in your portfolio prevents cash-filed companies from avoiding negative or ultra-low interest rates, the report also states.

Inflation strikes

Finally, there has been an increase in monetary and fiscal policies globally, with money printing reaching “unprecedented levels.” McKinsey’s report showed that the top 54 economies contributing to 93% of global GDP made over $10 trillion in stimulus payments in two months – over three times more than the 2008 financial crisis. This unchecked and unbalanced economic stimulus could cause a sudden hike in asset and consumer price inflation leading to corporations having less purchasing power with cash.

Bitcoin offers a verifiable and inelastic monetary supply, which differs from the expansive monetary and fiscal currently being broadcast globally. Some companies view BTC as a wealth preserving asset that could prevent inflation risk and store value.

The entry of MicroStrategy, Home Ridge, Square Inc., and Tudor Investment Corporation signals a start of the institutional investment wave in Bitcoin – and who can predict how far it can go?

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Author: Lujan Odera

$127 Billion of Gold Discovery Brings Elation in Bitcoin Community

A huge amount of gold reserves has been discovered in Russia that has elated the bitcoin community.

The largest gold producer of Russia, Polyus PJSC, said its untapped Sukhoi Log deposit in Siberia holds the world’s biggest reserves — 40 million ounces of proven reserves with an average gold content of 2.3 grams per ton.

“The estimate of the reserves is an important milestone in development of the field,” said Chief Executive Officer Pavel Grachev in an interview in Moscow. The field may allow the company to boost its annual output by at least 70%, reportedly.

The audit showed that a deposit of 67 million ounces of total resources is up from the previously estimated 63 million. The main investment in the project, however, won’t start until 2023.

“We want to show that a project of this quality and scale can and should be carried out, taking into account the best environmental standards, despite the hard-to-reach location,” Grachev said.

With Gold’s supply to increase, bitcoiners took this opportunity to point out how there will only ever be a limited 21 million BTC.

“$127 billion of gold randomly discovered. Friendly reminder that there are, and forever will be, 21 million bitcoin,” tweeted Lolli, a BTC rewards site.

Bitcoin proponent Anthony Pompliano also pointed out how “No one knows how much gold exists in the world & it is unlikely to be nearly as scarce as people previously thought.”

But according to Dan Tapiero, both gold and bitcoin should be part of investment portfolios. While Bitcoin price rallied 82% this year, gold also recorded returns of +25% YTD, making a new ATH in August as central governments pumped a vast amount of stimulus into economies to mitigate the damage from the coronavirus pandemic.

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Tapiero says people can front-run central banks and institutions by buying not only bitcoin but also gold, whose institutions’ allocation is still small.

“The funniest thing about bitcoiners is that they don’t realize that no one in the traditional money mgmt world gives a shyt about GOLD. Institutions have about a 1% allocation. It’s very early days for gold. It’s even earlier days for BTC,” he said.

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Author: AnTy

The Herd is Coming: Software Startup Snappa Converts its Cash Reserves into Bitcoin

It has started!

MicroStrategy invested $250 million, and then Tahini’s converted all of their cash reserves into Bitcoin. Now, the graphic software startup, Snappa, is replacing 40% of its cash reserves with the largest digital asset.

In the official company blog, the co-founder of Snappa, Christopher Gimmer, who is a finance major with a minor in economics, shared that they decided to diversify in bitcoin because of the fear of inflation.

The massive amounts of quantitative easing along with fiscal stimulus, that he expects the governments to keep doing more of, will result in currency debasement and a loss of purchasing power.

As such, “in order to hedge this risk, we’ve chosen to adopt Bitcoin as a primary reserve asset on our balance sheet.”

Like a true Bitcoiner, Gimmer emphasizes the scarcity of the digital asset, which, unlike fiat, will get more scarce over time. He also sees BTC hitting $100k by the end of 2021 as “fairly realistic,” thanks to its fundamentals and the state of the macro-economy.

As the Canadain-based startup continues to scale and generate free cash flow, they had to choose the option to put the money in, and obviously, they went with the “good money.”

Also, with only 1.7% of gold’s market cap, he is “confident” that bitcoin will continue to outperform the precious metal as well in the coming years and decades.

“After falling down the rabbit hole and spending hundreds of hours studying the underlying protocol and all the game theory behind it, we began steadily accumulating bitcoin beginning in March of this year,” said Gimmer.

“This position now makes up a significant percentage of our company’s overall cash reserves.”

So, the small-scale companies have already started taking the bitcoin route just like the countries facing problems with their fiat currency; Venezuela, Argentina, Zimbabwe, Nigeria, Kenya, and Turkey, have been the first ones to adopt BTC.

As Marty Bent said, “The herd is coming.”

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Author: AnTy