Big Uptick in 1k BTC Addresses Shows Institutions Bought the Dip

Big Uptick in 1k BTC Addresses Shows Institutions Bought the Dip; Goldman Sachs says Still Just 1% of Institutional Money

Despite the healthy pullback, more correction cannot be ruled out yet but $30k will be protected because many institutional investors bought around this level.

Bitcoin is taking a breather and hovering around $35,000 after the deep pullback earlier this week. This profit-taking at an ATH of $42,000 was expected after Bitcoin rallied more than 1,000% from the March 2020 lows.

“There’s signs that retail investors are taking profit,” said Ryan Rabaglia, OSL’s global head of trading. “Heightened volatility is often correlated with an uptick in retail participation.”

The market is particularly focusing on the US Dollar Index right now, which has been gaining strength, currently hovering around 90.

“We think a pullback is healthy,” said David Grider, the digital strategist at Fundstrat Global Advisors. According to him, the recent price action doesn’t indicate that Bitcoin has topped out.

However, further losses can’t be ruled out either, with miners continuing their selling while no significant stablecoin inflows in the picture. No outflows are seen from Coinbase either; as a matter of fact, BTC is flowing into exchanges.

On the basis of this, “We might have second dumping,” said Ki Young Ju, CEO of data provider CryptoQuant.

Still, $30k will be protected, and in the event of a dip, we might not go down below $28k because “there are many institutional investors who bought BTC at the 30-32k level,” Young Ju added.

These institutions were actually into buying the dips that came on Sunday and Monday. The large amounts of BTC holders that can be seen as a proxy for institutional adoption “increased significantly” since the start of 2021. This jump in address with at least 1,000 BTC shows that this institutional adoption is here to stay.

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However, according to Goldman Sachs’ Jeff Currie, the level of institutional investment in the market is still very small though “the market is beginning to become more mature.”

“The key to creating some type of stability in the market is to see an increase in the participation of institutional investors, and right now they’re small,” said the investment bank’s head of commodities research on CNBC., adding that the investment in BTC is, “roughly 1% of it is institutional money.”

While for institutions, Bitcoin is a hedge against fiat debasement and risk of inflation, as it emerges as a store of value, for some, it is a way to fix economic injustice as well.

“For the first time in history, we have a Plan B option to the current financial system which has seen years of redlining, racial discrimination and other egregious acts by retail banks to the Black community,” said Isaiah Jackson, author of “Bitcoin & Black America.”

According to him, Bitcoin gives Black people an opportunity to not only shift their money but also their mindset because the world’s leading digital currency is unconfiscatable and has no barrier to entry.

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Author: AnTy

Fed Reserve of Philadelphia Research: Account-Based CBDCs May Replace Commercial Banks

A research paper published on June 1, 2020, by the Federal Reserve of Philadelphia shows account-based central bank digital currency (CBDC) could potentially replace the role of commercial banks if panic runs are managed and commercial banks are given a level playing field in the money market. This however poses a huge risk, the paper says.

The research titled, “Central Bank Digital Currency: Central Banking for All?” shows that a set of allocations in the private financial intermediation (commercial banks) could easily be replaced by a CBDC. The paper however claims that competition between the account-based CBDCs and commercial banks should be allowed and depositor runs minimized.

The paper is a collaboration of the research wing of the Fed Reserve of Philadelphia, the University of Chicago, University of Pennsylvania and Ecole Polytechnique. It looks deeper on the consequences of introducing a CBDC and its effects on the current financial system.

The paper looked into the introduction of an account-based CBDC system, whereby citizens will have a direct account with the central bank, and the implications of a CBDC on financial intermediation – the role current commercial banks play in the system.

Central banks stability during bank runs

Commercial banks are the major facilitators of maturity transformation – a process that sees short term liabilities converted to long term liabilities. For example, banks take in deposits (short term loans) and transform them into longer term instruments such as mortgages and commercial bonds.

However, banks are liable to bank runs whereby customers rush to withdraw their money all at once leaving the bank strained. Sometimes the deposits cash flow also dries up leaving the bank with no money to lend.

Possible risk in central bank’s CBDC implementation

Introduction of an account-based CBDC will offer central banks similar ability to current commercial intermediaries but will have to rely on the “expert knowledge of investment banks” to successfully transform deposits to long term side assets, the paper says.

With a clear and “rigid” partnership with investment banks, central bank may turn a monopolistic as more depositors open accounts with them from the commercial banks.

However, the paper notes a possible risk involved in the implementation of a CBDC. It reads,

“If the competition from commercial banks is impaired (for example, through some fiscal subsidization of central bank deposits), the central bank has to be careful in its choices to avoid creating havoc with maturity transformation.”

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Author: Lujan Odera

Gartner Blockchain Report: Smart Contracts To Boost Data Quality by 50% In 3 Years

  • Research shows that blockchain technology will increase overall data quality by over 50% in the next three years.
  • However, the overall data availability to organizations in various sectors of the economy will dip by 30% or more by 2023.

In a new report, “Predicts 2020: Data and Analytics Strategies — Invest, Influence and Impact” by Gartner Inc., a global research and advisory firm, the overall data accuracy and quality is set to boost by 50% in the next three years due to blockchain technology adoption. Companies that adopt blockchain smart contracts will however have to do with less data as the middle men (third party data collectors) get annihilated from the P2P system.

According to the pay-walled article, companies that adopt blockchain technology and transact using smart contracts are set to improve their data quality by 50% by 2023. Lydia Clougherty, senior researcher at the firm sees the adoption of blockchain as a key differentiating factor in all businesses and organizations as she wrote in a recent blog,

“When an organization adopts blockchain smart contracts, whether externally imposed or voluntarily adopted, they benefit from the associated increase in data quality.”

A (net positive) tradeoff?

The report however warns on the reduced availability of data as the companies that acted as middlemen to collect and sell the data are cut off by peer to peer blockchain systems. In the next three years over 30% of the data available to companies will be cut off according to the report as these companies are cut off. Is this a healthy tradeoff?

Well, according to the report, the net effect is positive for data analysts and researchers who despite losing the ease of data collection will see their return on investment rise steadily as adoption rises. However, the smart contract technology is still way behind in adoption as the report states and a lot is yet to be done to increase global adoption.

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Author: Lujan Odera

Bitcoin’s Hash Rate Hits A fresh All Time High Signifying A Strong Network Before Halving

Bitcoin hash rate has hit a fresh all-time high (ATH) which shows that the king crypto has continued to gain on its technical ability.

Fresh data from BitInforCharts shows that the total hashes have jumped to 126Eh/s. This shows that the Bitcoin network has been in a meteoric rise in the last two years as the rate was only 13Eh/s when Bitcoin hit its all-time high price in Dec. 2017. The new figure indicates 126 quintillion tried solutions for every second.

The high hash rate illustrates that Bitcoin is currently the strongest and most secure computing network in the blockchain and crypto industry. Currently, it is impossible to perform a 51% attack on BTC as anyone trying wouldn’t be able to withstand such a level of hash power.

The high hash rate shows that there is high miner confidence as there are more miners within the network than ever before. It also shows that miners are more cautious of the incoming BTC halving that will occur in May.

Hash rate can be described as the total amount of processing power that is required for validation in a network. A high hash rate means that it is now more difficult to mine Bitcoin than before. This means that only the miners with superb mining devices and can access chap electricity can afford to remain profitable. Since the start of this year, mining difficulty within the Bitcoin network has increased by 13%.

With the impending halving that will take place in May where miners will get half the reward for finishing a block (6.25 BTC), the ideal expectation is that there will be a mass exodus of miners to other cryptos. However, the recent trend of higher hash rates shows that there are more miners coming to the Bitcoin network.

The miners are expecting that the halving will lead to a price surge and could be the reason they are trooping to the network for a share of the pie post-halving. The high hash rates are good for the pre-halving period.

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Author: Joseph Kibe

Bitwise “Committed” to Bitcoin ETF, Sends a Letter to SEC about Significant Retail Demand for BTC

  • A Bitcoin ETF to provide investors exposure to BTC in a regulated manner
  • Charles Schwab’s study shows millennials growing interest in BTC
  • Most popular crypto app has 30 million accounts, more than Charles Schwab, TD Ameritrade, and E*Trade’s combined
  • But these Bitcoin access avenues have high fees, limited disclosures, & security risk

in response to their decision to disapprove the proposed rule change to list and trade shares of the Bitwise Bitcoin ETF Trust under NYSE Arca Rule.

Though the company is disappointed with the Staff’s decision, it is not giving up and aims to provide additional context to review Staff’s decision.

“Bitwise is committed to creating a bitcoin ETF that provides all investors with the ability to

access bitcoin in a regulated and familiar fund format with the transparent and robust disclosures required by the federal securities laws.”

Such an ETF, it said would provide protection for the current millions of US investors using other avenues to access BTC market.

Meeting SEC’s Requirements for an ETF

Bitwise in its letter dated Dec. 18, reiterates that two requirements found by the Staff in terms of the bitcoin market being resistant to market manipulation and fraudulent activity and that the listing exchange has entered into a surveillance sharing agreement with a regulated market of significant size are satisfied by BTC market.

Because the BTC price is set in the open market, Bitwise argues it is resistant to the kind of market manipulation scandals that occurred in markets that rely on coordinated fix pricing. Bitcoin’s inherent fungibility and the market’s distributed nature allows for effective arbitrage that it said helped insulate bitcoin from attempts to manipulate individual markets.

As for the market to be need to be resistant to a comprehensive set of market manipulation vectors to qualify, “This is a standard that, historically, even the most well-regulated, arbitraged, and liquid markets, such as the U.S. equity index options market, have not met.”

Bitwise’s research also pointed out that CME bitcoin futures — the largest US bitcoin market by notional volume — is a regulated market of significant size.

Why Does A Bitcoin even ETF Matter?

But why exactly the market needs a Bitcoin ETF? Bitwise notes that a large number of US investors are investing in Bitcoin but they need to do so in a safe and efficient manner.

The company illustrated Charles Schwab’s recent study that showed Grayscale Bitcoin Trust is the fifth largest holding in millennial retirement accounts, ahead of companies like Berkshire Hathaway, Walt Disney, and Microsoft.

GBTC it said is the only tool that retail investors can access Bitcoin through a traditional brokerage account. However, it’s ability to offer high-fidelity exposure to BTC is limited. Also, it is traded on the secondary market at a premium to its net asset value (NAV) as high as 140%.

Another primary means for retail investors for accessing bitcoin is via crypto apps. Coinbase is once such incredibly popular one that has 30 million accounts, more than the number of active brokerage accounts at Charles Schwab, TD Ameritrade, and E*Trade combined. But they have their own challenges in terms of high fees, limited disclosures, and security risk.

“Our goal is to demonstrate that there is significant retail demand for bitcoin exposure, and to note that this demand is currently forced into products that forgo the protections and disclosure requirements that would be required of an ETF.”

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Author: AnTy

Research by Bitmex Reveals That Bitcoin Decentralization Is Due to Scalability Improvement

A recent study by BitMex shows that software improvements have made it easy for Bitcoin node synchronization. The study calculated Bitcoin Core’s Initial Block Download times of software released between 2012 and 2019. These are the number of times required to download and verify the blockchain. The comprehensive report on the study was published on November 29.

According to the report, it was impossible to synchronize using the older Bitcoin Core software version. The improvements in the newest version of the software have made it easy to operationalize the network.

Bitcoin Core software versions before 0.8.6 could not synchronize in the period between 2015 and 2016. When the research team tried to run older versions of the software in significantly powerful hardware, they were not operational. They run Bitcoin Core 0.7.0 in a new machine with 8 intel i9 processor and a 64GB RAM, but the node still could not synchronize past the year 2016.

“Were it not for the software enhancement, Bitcoin would be dead by now due to the inability of older versions to synchronize and the significant reduction in IBD times,” the team reported.

The major improvement was on speed after developers of version 0.12.0 employed a signature verification library for Bitcoin instead of using the standard one. However, this version could not support Segregated witness (SegWit) and therefore failed to validate signatures for such transactions, further leading to a cut on sync times.

When Bitcoin Core version o.14.0 was launched, speed and sync times significantly increased due to the scalability improvements. It was after this particular node version that Bitcoin network popularity began to grow faster than scalability updates made to the software. This imbalance resulted in longer synchronization times. The research team came to the conclusion that the blockchain is growing faster than the technological innovations can keep up with and that there is a possibility of IBD times increasing.

Bitcoin developers are focused on decentralization and keeping requisite hardware specifications necessary to run Bitcoin Core software seamlessly. They have maintained a block weigh limit of 4MB with SegWit and a block time of 10 min in order to lower requirements and check the blockchain’s growth.

The blockchain currently has a size of 293.37GB, with 1MB as the average block size. According to Bitnodes, a monitoring resource, Bitcoin Blockchain has more than 9.5 thousand nodes around the world.

Bitcoin Core version 0.19.0.1 is the latest software update, and it supports Segregated Witness transactions using Bech32, further improving on scalability.

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Author: Denis Miriti

Latest Numbers Show Bitcoin Derivatives Preferred by Institutional Investors

The Crypto Fear and Greed Index (CFGI) shows that retails investors are extremely fearful of the massive downturn the crypto market has taken over the past week, with Mark Dow, the former economist for the US Treasury and International Monetary Fund saying on Twitter that the Bitcoin is dying during the period of the sell-off. However, the incoming data speaks otherwise.

US Regulated BTC Futures Markets Had their Volumes Increasing

While the Bitcoin was going under $8,000, US regulated BTC futures markets were witnessing their volumes going through the roof. The high demand for crypto derivatives is indicating more and more institutional investors are interested in such projects, even if the market volatility is at high levels.

The market value of Bitcoin took a big hit over the past 2 weeks, with the coin going from the high $9,100 trade value on November 11 to the low $6,600 on November 25. While this happened, long and short positions valued at almost $1 billion were liquidated on BitMEX, the crypto trading platform for derivatives based in Seychelles. In spite of the huge number of retail investors that got wrecked on BitMEX, many institutional investors didn’t.

Bakkt and CME Saw Their Trading Volume Increasing Too

On November 22, the Bitcoin futures exchange Bakkt has also seen its trading volume reaching an all-time high. According to the International Exchange (ICE), there were 2,728 monthly BTC futures contracts traded, at the value of $20.3 million. This raise in volume is 66% of the increase in the before 24-hour time period and 30% higher than Bakkt’s all-time high from November 9, which was 1,756 BTC.

The same thing happened with the Chicago Mercantile Exchange (CME), that reported a $424 million aggregate trading volume on Friday and registered $400 million on Monday, recording its highest trading volume since September.

While Institutional Investors Pour, Retail Ones Are Fleeing

Institutional investors seem to enjoy the action around the Bitcoin price. As a matter of fact, Grayscale Investment’s Bitcoin Trust is showing that more capital is flowing into the coin. As the most trusted authority to provide data on digital currencies and crypto asset management, Grayscale has presented in its quarterly report that the institutional capital of $171.7 has flown into the Bitcoin Trust, making this quarter the heaviest in the product’s history of 6 years.

Since it has received many requests from accredited investors, Grayscale has decided to file a Form 10 registration statement with the US Securities and Exchange Commission (SEC), for its Bitcoin Trust project. If it gets approval, Grayscale becomes a SEC-reporting company and the first crypto investment entity to achieve this. At the same time, retail investors seem to be fleeing.

In October, addresses with balances equal or greater than 0.1BTC have significantly dropped in numbers, which means average people aren’t too interested in the crypto world. However, the institutional interest is proving the industry is maturing, not to mention more countries are developing regulations for financial institutions to be able to trade using cryptocurrencies.

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Author: Oana Ularu

Ethereum’s Istanbul Hard Fork Gears Up As Geth And Pantheon Merge All Improvement Protocols

Ethereum is still the second-biggest crypto by market cap and is the top chain for smart contracts which shows why there are expectations there is for Istanbul. There has been developed as developers decided that there will be two important EIPs – ProgPow and EC Arithmetic.

As part of the discussion for the Istanbul hard fork, the Ethereum Improvement Proposals (EIPs) were also mentioned. The developers are apparently still assessing the different EIPs that were put forward for Istanbul.

The project is tailored in a way that allows for two different launches, with the first part (Istanbul 1) being launched on Wednesday, October 16 and the other (Istanbul 2), in the first quarter of 2020. The reason simply being that more time is needed to make the necessary updates. 6 accepted EIPs are:

  • EIP-1108: Reduce alt_bn128 precompile gas costs
  • EIP-1344: ChainID opcode
  • EIP-1884: Repricing the trie-size-dependent opcodes
  • EIP-2028: Calldata gas cost reduction
  • EIP-152: Blake2 compression function F precompile
  • EIP-2200: Rebalance net-metered SSTORE gas cost

Product Manager at PegaSys Protocol Engineering, Tim Beiko said:

“[…] @PegaSysEng’s Pantheon, which has implemented all EIPs […] Geth also has everything implemented. They also implemented the Istanbul configs so people can play around with it. They’ve also merged in ReTestEth support, as well as an option to run the Istanbul EVM and a protective flag in case Istanbul needs to be postponed.”

The original date for launching for Istanbul’s testnet activation was 14 August, but an official said that the target needed to be pushed back two weeks in order to give developers time to finalize the list of EIPs going into Istanbul Part 1.

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Author: Sritanshu Sinha

XRP Continues To Expand Despite Negativity Over the Ripple Coin Price

XRP Continues To Expand Despite Negativity Over the Ripple Coin Price
  • XRP shows its strength being the best performing crypto among the top 13
  • Ripple continues to expand with new partnerships around the world

During July, XRP ahs outperform both Ethereum (ETH) and Bitcoin (BTC) in terms of the numbers of transactions processed by the network. According to data provided by BitInfoCharts, the XRP Ledger registered more than 1.1 million transactions on July 20.

Ethereum processed 584,000 transactions, followed by Bitcoin with 322,000 and Litecoin (LTC) with 28,000.

XRP Expands In The Market

There have been several critics to XRP regarding its price. Many investors and analysts say that the digital currency has been close to its support level of $0.3 that resisted very well during the last year. However, the Ripple network continues to expand with a large number of on-chain transactions.

As previously mentioned, XRP registered the largest number of transactions among the top 4 digital assets in the market throughout July.

The digital currency is also being traded around $0.325 and it has a market capitalization of $13.92 billion, according to CoinMarketCap. Although it’s price fell 1.72% in 24 hours, it has been the best performing virtual currency among the top 13.

During the same period of time, Bitcoin fell over 2%, Ethereum 3.25% and Litecoin 3%. This shows that the levels close to $0.3 are very important for the digital asset and it has helped it maintain its price over time.

Ripple has also been expanding with different partnerships. For example, MoneyGram, a firm that works with Ripple, has signed a new agreement with Sentbe, one of the largest companies for money transfer services in South Korea. At the same time, Sentbe showed they were working with Ripple.

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Author: Carl T

Bitcoin (BTC) Interest Remains Far From Its 2017 Highs According to Google Trends

Bitcoin Interest Remains Far From Its Highs According to Google Trends
  • Google Trends shows that interest for Bitcoin remains far from its peak in 2017
  • Bitcoin has surpassed $11,100 a few hours ago

According to data from Google Trends, interest in Bitcoin search term has doubled this year. However, it remains far from its all-time high registered in 2017 when the virtual currency surged to $20,000. This shows that although the interest for Bitcoin spiked, retail investors and their interest in Bitcoin remains far from its highs.

Interest in Bitcoin Remains Far From Its Highs

Bitcoin has been in a bull trend during the last few months. The virtual currency surged from $3,200 to over $11,100 a few hours ago and crypto enthusiasts remain very positive about the future of the digital currency.

According to Google Trends, on a scale from 1 to 100, Bitcoin’s popularity is close to 12, 88 percent down from the peak in 2017. This is despite the fact that Bitcoin more than doubled in price since it bottomed at around $3,200 in December 2018.

Back in 2017 when Bitcoin was reaching $20,000 mainstream media covered why the virtual currency was reaching such high prices. At that time, retail investors were the ones who helped the virtual currency have a price close to $20,000.

Last months, many believe that there are institutions that are going to be triggering the next bull run in the market rather than retail investors.

Grayscale’s Q1 report, reads as follows:

“Institutional investors comprised the highest percentage of total demand for Grayscale products in the first quarter (73%). This was also consistent with their share of inflows over the trailing twelve months (73%).”

According to the company, institutions may view the current drawdown as an attractive moment to enter the crypto market and add new funds to their current positions. Analysts consider that if institutions are getting involved in the market, that means that a long bull market could be just starting.

There are several analysts such as Thomas Lee, that consider that Bitcoin will surpass its previous all-time high just this year. He believes that the digital currency will be traded above $40,000 in the next six months.

Furthermore, Peter Brandt believes that the virtual currency is entering a new parabolic phase in which Bitcoin could eventually reach $100,000 in 2020.

At the time of writing this article, Bitcoin is being traded around $10,650 and it has a market capitalization of $189.39 billion.

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Author: Carl T