Crypto ETP Volume Surges in January as Institutions Flood the Market

Data shows that the trading volumes for crypto-denominated ETPs saw a significant surge in January 2021. Institutions also appear to be cutting their losses as the crypto market braces for a more significant pullback.

All eyes are on institutional crypto investors this week again, as it appears that some have been making significant plays to begin the year. In its recent weekly report, market data and metrics provider CryptoCompare has confirmed a spike in the volume of assets under management (AUM) in crypto-denominated exchange-traded products (ETPs).

Promising Numbers Across the Board

Per the report, there has been a staggering 93.7 percent increase in the AUM for crypto ETPs across the board. In nominal terms, crypto ETPs now holds an impressive $36 billion. Aggregate daily volumes also jumped above $1.5 billion, marking healthy institutional participation to kick-off 2021.

CryptoCompare noted that Grayscale Investments makes up a significant chunk of these figures, with its various investment trusts housing $22.6 billion, 63 percent of all capital invested into crypto ETPs. The New York-based asset management firm’s products were also found to have represented 64 percent of the entire industry’s ETP volumes, pushing $972 million in daily trading volumes.

Grayscale’s dominance in the institutional investment space has been nothing short of astonishing. The company, which operates several investment trusts for large-cap cryptos, has been the go-to source for institutions looking to get their bit of the crypto pie. As a result, its AUM has been on the rise for months.

Earlier this week, Danny Scott, the CEO of crypto exchange CoinCorner, confirmed that Grayscale purchased 16,244 BTC ($607 million) in 24 hours. Even with the threat of a liquidity crunch, the company has continued to suck up Bitcoins from the open market at incredible levels.

While Grayscale dominated trading volumes, the company’s products still trailed in the spot markets, as the premiums on its shares fell by 8 percent this month.

As for exchange-traded notes (ETNs), trade volumes almost tripled in January. These were dominated by the BTCE product from ETC Group, which saw nearly $50 million in daily trades.

The second-most traded ETN was the BTCW/USD ETN from WisdomTree, which had $7million in trading volumes, while VanEck’s Bitcoin Vectors saw $5 million in daily trades.

Profit-Taking from Investors

Although the commitments into crypto ETPs have been impressive, institutions are also staying vigilant as Bitcoin’s price begins a significant pullback.

Crypto fund provider CoinShares reported that institutional crypto products had seen $85 million in outflows this past week, asserting that some investors seem to be taking profits following Bitcoin’s bull run over the past month.

CoinShares noted a similar trend in Ether-derived investment products, with $3 million exiting the past week’s market.

Despite the strong profit-taking, institutional inflows are still strong, with $359 million entering crypto investment products this week. CoinShares noted that Bitcoin remains investors’ top prize, with the leading cryptocurrency representing 99 percent of all capital inflows this week.

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Author: Jimmy Aki

Solana Launches SOLAR Bridge; Bringing Arweave’s Decentralized Storage to Its Blockchain

The Solana blockchain is taking little time to expand as it recovers from a significant downtime earlier this week. In its latest development effort, the blockchain announced a partnership with decentralized data storage protocol Arweave.

Data Storage for High-Performance Blockchains

Solana announced a partnership with decentralized data storage protocol Arweave to launch the SOLAR Bridge. The bridge signifies a major milestone for Solana, making it the first blockchain platform to transfer and store transaction history on Arweave’s dedicated network.

Solana is a high-performing blockchain that processes substantial amounts of data. The partnership with Arweave takes the burden of designing an in-house data storage infrastructure off Solana.

With the SOLAR Bridge, Solana’s node validators will validate transactions and store them on Arweave. As such, there won’t be a need to validate one transaction twice.

Solana handles one newly-produced block every 400 milliseconds, with its network already passing 50 million cumulative blocks since it started operations in March 2020.

The company added that its blockchain could handle more than twice the number of blocks produced by the Bitcoin, Ethereum, Polkadot, Cosmos, and Algorand blockchains combined.

This is not difficult to comprehend. Data storage is critical for a network that handles historical data for users. Solana’s growth as a decentralized solution hinges on how it safely and securely stores data.

The blockchain now seeks to leverage Arweave’s decentralized and immutable network to ensure permanent and reliable data storage. Solana stated,

“It’s important to note that Arweave is not expensive; it’s more costly to store data short-term — this is because when you store data on Arweave, it’s permanent. Ledger transition data and indexing from the Solana network will be entirely stored on Arweave with future development efforts to support richer indexes.”

Improving its Current Blockchain Infrastructure

The development comes following a massive network outage that affected the blockchain recently. Over the weekend, Solana confirmed that an issue had originated on its Mainnet Beta cluster, causing it to stop producing blocks after the 53,180,900th block suddenly.

The break essentially put a hold on the blockchain’s ability to confirm transactions, with the outage lasting for about six hours. It was eventually fixed after 200 network validators forced a restart sequence. The forced restart allowed the blockchain to resume operations optimally.

With some data moving to a separate network, Solana is hoping to free up space on its blockchain and possibly prevent issues like these in the future. The SOLAR bridge is also the second development coming to the blockchain in recent months.

In October, Solana announced Wormhole, a decentralized bridge supporting ERC-20 tokens that allow users to transfer value between different blockchains quickly. Wormhole works based on the action of “guardians,” which were selected from the current Solana validators. Guardians will read data from both blockchains, verifying that the bridge operates optimally.

When two-thirds of the validators sign that a transaction is correct, both sides’ smart contracts will trigger the transfer by minting and burning the appropriate tokens.

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Author: Jimmy Aki

Thailand Excise Dept to Adopt Blockchain In 2021; Boosting Collection Efficiency

Blockchain technology sees significant increases in adoption, particularly from companies looking to leverage it and streamline their operations. Beyond companies, there has also been an increase in government blockchain applications. In Thailand, the official tax agency is hopping on the trend.

Streamlined Operations to Benefit the Bottom Line

The Thai Excise Department plans to use the blockchain to improve its revenue collection capabilities, the Bangkok Post reports.

Per the report, the move became necessary following the agency’s resolve to work on its tax collection modalities rather than increase taxes in a downturn.

Lavaron Sangsnit, the agency’s Director-General, says the agency could use the technology to assess tax liability for imported products and assess other government agencies’ revenue collection. Like other countries in Asia, Thailand is expecting a drop in income due to the impact of COVID-19.

The government projects a drop in tax revenues for 2020, with 530billion baht ($17.5 billion) expected to come in for the fiscal year. This marks a 3.3 percent reduction from the 548 billion baht ($18 billion) that it got last year. Looking to streamline operations and improve collection efficiency, the Department will now move into blockchain.

This isn’t the agency’s first foray into blockchain. Last year, the department developed a new, blockchain-based tax refund method for oil exporters. At the time, former Director-General Patchara Anuntasilpa said the system was one of the three changes that the agency planned to incorporate in the near future.

Patchara highlighted that the future tax refund system would require oil exporters to pay excise taxes and only claim refunds after they had shipped their products. With blockchain, the Excise Department would be better suited to inspect tax payments and shipping processes.

The Director-General added at the time that the Department was also working on using blockchain for the distribution of playing card licenses and annual fee payments for liquor and tobacco.

Collaborating With Other Departments

Now, with countries looking to get back on their feet following the coronavirus, Thailand is also making changes to its entire tax system. Going into the 2021 fiscal year, the Revenue and Customs departments are also expected to incorporate blockchain for their operations. The Director-General added that the technology could help thoroughly assess each government department’s revenue collection, integrating all that data into a single database.

Thailand is one of the most blockchain-friendly countries globally, with the technology seeing rapid adoption in both the private and public sectors. With banks focusing on improving cross-border payments and the government using the technology to streamline revenue collection, the Southeast Asian country is taking payment efficiency more seriously.

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Author: Jimmy Aki

“Dollar Plummets On US Stimulus Hopes; Bitcoin Hits All-time Peak” Immortalized By Slush Pool

The world’s first Bitcoin mining pool, Slush Pool, has immortalized a significant Bitcoin moment by putting it in a block.

On Thursday, the mining pool that started in 2010 shared that it has included the Reuters’ headline from an article published on Dec. 1st, 2020, in block 659678. the headline in question is.

“Dollar plummets on U.S. stimulus hopes; bitcoin hits an all-time peak.”

This is what epitomizes 2020 for the Bitcoin market. A year in which the leading digital asset started strengthening its position as an inflation hedge in the macro backdrop of money printing.

This is the year when everyone wants in on Bitcoin and cryptocurrencies. Boosted by increased demand from both institutional and retail investors, the digital assets are being seen as a safe haven and a store of value.

During the same time, the USD index is falling to multi-year lows, and according to many high profile names like BlackRock CEO Larry Fink, a digital currency “makes the need for the U.S. dollar to be less relevant.” Analyst Mati Greenspan commented,

“(Fink’s) not being quasi-bullish on bitcoin. He’s actually suggesting that bitcoin, or something like it, can potentially eliminate the need for the U.S. dollar to act as the global reserve currency.”

A Shift in Players

Amidst the increasing adoption, a shift in the market has been seen. While the Bitcoin market has been typically dominated by East Asian investors from countries like China, South Korea, and Japan, it is becoming a playground for North American investors.

In 2020, the weekly net inflows of BTC to platforms serving the North American users have jumped more than 7,000 times to over 216,000 BTC in mid-Nov., as per researcher Chainalysis.

As we reported, the BTC price moves have been dominated by the US investors in the 4Q20 rally as institutions continue to pour in. Ciara Sun of Seychelles-based Huobi Global Markets said,

“The sudden influx of institutional interest from the North American region is driving a shift in bitcoin trading, which is rebalancing asset allocations across different exchanges and platforms.”

Among the biggest BTC hubs, East Asia, North America, and Western Europe, the first two account for about half of all transfers. Volumes at four North American exchanges have also doubled in 2020 to 1.6 million BTC per week at the end of November compared to trading at 14 major east Asian exchanges seeing only a 16% jump to 1.4 million.

However, it is still too early to call it a fundamental shift.

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Author: AnTy

OKEx Record Outflow of 29,300 BTC Since Resuming Withdrawals, Following a Five-Week-Long Suspension

Cryptocurrency exchange OKEx recorded a significant bitcoin outflow right after the full range of five-week-long withdrawal suspension was lifted on Thursday at 08:00 UTC.

About 2,822 BTC was moved from the Asian exchange in block number 658,728 mined at 08:12 UTC — this was the most significant single-block outflow since May 2019.

In total, 24,631 BTC were moved out of OKEx yesterday, which is an 8-month high since March 13 this year, according to blockchain analytics firm CryptoQuant. The same day, Binance saw an inflow of 28.2k BTC.

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Combining today’s outflows, so far, with yesterday’s results in 29,300 BTC, which have been cleaned out of OKEx. During the same time period, 21,600 BTC has also been deposited.

This has reduced OKExs balance to ~212k BTC, as per crypto data provider Glassnode.

Meanwhile, the price of Bitcoin continues to oscillate between $16k and $17k following the big crash the night before Thanksgiving when the price was trading at the highs of $19,600.

This price drop started as soon as BTC whales began depositing their crypto assets to exchanges. As per IntoTheBlock, more than 93,000 Bitcoin were deposited into centralized exchanges.

If these whales continue to do so, the flagship cryptocurrency price is likely to go either sideways or drop.

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Author: AnTy

Bakkt’s Physically-Settled Bitcoin Futures in Focus; Hitting A New Record of 15,955 ($200M)

Whenever bitcoin makes a significant move after a period of slow or no movement, the ICE-backed Bakkt records increased activity.

And this time has been no different.

On Tuesday, the price of bitcoin went as high as $10,940, a level not seen in over ten days, since the digital took a drop from $12,000 right at the beginning of this month.

Bitcoin is still keeping these gains as it trades over $10,920, at the time of writing, while managing $1.7 billion in real trading volume.

Meanwhile, the physically delivered bitcoin futures platform that was launched last September celebrated another record day.

Yesterday, 15,955 physically delivered bitcoin futures were traded on Bakkt, representing a volume of over $200 million, which is an increase of 36% from the previous all-time high when the platform saw 11,706 futures, worth over $125 million.

The last record was made at the end of July, for two consecutive days, and since that spike, Bakkt saw a shift in its trend.

The last ten days of July saw BTC going from $9,100 to about $11,400, which led the price to hit over a year high only to dump right back to $10,500 level.

In the past month, the volume on Bakkt has been keeping up; on Sept. 15, a total of $183 million worth of bitcoin futures (physically settled + cash-settled) were traded per data source Skew.

Just like volume, open interest also recovered, which nearly halved during bitcoin’s move from about $11,940 to $12,480 and back to $11,900. From the low of $9.5 million on August 25th, OI on Bakkt has spiked to $13 million.

Unlike Bakkt, CME had a lackluster past few days. Since hitting $1.1 billion on Sept. 2nd, on Tuesday, it registered only $262 million in volume.

However, OI recovered from $415 million just over a week ago to above $500 million.

Unlike the futures, Bakkt’s bitcoin options, launched in December, remain deserted for months now. No one is interested in trading its bitcoin options, but CME managed to see volume between $4.3 million to $24 million this month.

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Author: AnTy

Shyft’s Veriscope Governance Task Force for AML Adds Bitfinex, Huobi, Tether, & Others

Shyft Network, a blockchain-oriented firm focused on KYC and AML solutions has added significant liquidity players in the crypto space, including Bitfinex, Unocoin, Tokocrypto, Haskey, and Tether to its Veriscope Governance Task Force. They join the likes of Bitfury and Binance, who had already been onboarded to the Veriscope decentralized compliance framework and smart contract ecosystem.

According to the announcement on August 8, this development will further increase Shyft Network’s favorability in providing a self-regulatory solution to the FATF Travel Rule. This regulation, which came into effect early this year, requires Virtual Asset Service Providers (VASPs) to share the underlying KYC details of both originators and fund beneficiaries for amounts above $1,000.

Despite a preference towards privacy and anonymity, the crypto community led by market giants have reacted positively towards the FATF Travel Rule initiative. Shyft Network’s Veriscope is among the solutions that have since been floated to ease the burden of sharing information or reporting the same to oversight bodies.

Notably, the company tapped some of the FATF top leadership to lead Veriscope which launched as recent as July. They include Rick McDonell who served as the FATF’s executive secretary and former head of Canada’s FATF delegation, Josee Nadeau. The two will serve as Veriscope’s chairs in collaboration with VASPs that have been onboarded in the governance task force.

Veriscope’s Value Proposition in Travel Rule Compliance

As the FATF compliance deadline approaches in 2021, viable and cost-efficient solutions to sharing KYC information are in the pipeline. Some players like BitGo have already gone ahead to leverage API integration to assist their clients in seamless data appending, as per the Travel Rule guidelines. Now that Veriscope, a public blockchain built network, has also made a debut; the vision to FATF compliance in crypto just made a significant milestone.

Shyft Network Co-founder, Joseph Weinberg, noted that Veriscope’s governance task force will work collaboratively to develop sustainable and growth accommodating policies,

“In a time where we are seeing global coordination challenges and incoming guidance requirements that make significant alterations to our ecosystem, it is critical that the rest of the world has strong liquidity representation and directives from our largest operators who in turn aggregate network effects for the smaller VASPs in our space.”

It is also quite noteworthy that the Veriscope underlying model will allow the VASPs within its network to choose who they want to share information with, hence maintaining operational sovereignty while complying with the FATF Travel Rule.

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Author: Edwin Munyui

Anheuser-Busch InBev, ING Bank, & Rolls Royce Join Mousebelt’s Blockchain Education Alliance

Blockchain Education Alliance, an initiative by Mousebelt, has gained four new significant members according to an announcement by the blockchain accelerator on August 17. They include margin crypto trading platform Multi.io, Rolls Royce, Belgium brewing firm Anheuser-Busch InBev and Dutch-based ING bank.

The project whose fundamental goal is to accelerate blockchain education and research now has 26 members following this addition. Having launched in October 2019, pioneer members included ETC Labs, Nem, LTO Network, Harmony One, Wanchain, ICON, Tron, and the Stellar Development Foundation. It was not long before the initiative attracted the likes of Binance, Mastercard, KuCoin crypto exchange, and Constellation Labs onboard as well.

With such players already approving the Blockchain Education Alliance strategy, some of its milestones include a 72-hour live blockchain education event that was held in May. This virtual conference was dubbed ‘REIMAGINE 2020’ and featured networking events, panel and debates, and a continuous livestream of the keynotes.

Given the prevailing lockdowns at the height of the COVID-19 pandemic, REIMAGINE 2020 attracted students from various universities, giving them exposure to cutting edge tech like blockchain as well as an opportunity to meet with the industry veterans. Mousebelt’s head of Education, Ashlie Meredith, further pointed out that they are looking to nature skills given the looming uncertainty in the global economy,

“In a time when many students will not be returning to campus, increasing opportunities for educational experiences, jobs and internships is of utmost importance.”

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Author: Edwin Munyui

Bitcoin Mixers See Rapid Growth From the Darknet Markets: BitFury Crystal Blockchain Report

The latest crypto activity report, published by Crystal blockchain, suggests a significant surge in the use of bitcoin mixers on the darknet between the last quarter of 2019 and the first quarter of 2020. The rise is a whopping 294% which suggests the rapid adoption and use of mixing tools by these darknet entities.

The report also saw a similar trend for the US Dollar which increased from $3m in Q1 2019 to $67m in Q1 2020. The report read:

“The amount of bitcoin sent to mixers by darknet entities rose significantly this year — from 790 total bitcoin in Q1 2019 to 7,946 bitcoin in Q1 2020. The same growth was also observed in USD — an increase from $3m in Q1 2019 to $67m in Q1 2020. This indicates a rapid adoption of crypto mixing services by darknet entities.”

Some of the key findings of the report include:

BitFury Crystal Blockchain
Source: BitFury Crystal Blockchain

The amount of bitcoin (measured in BTC) transferred between darknet entities and other entity types declined in Q1 2020 compared to the same period one year ago; however, the value of the amount of bitcoin transferred (measured in USD) grew by 65%.

This is not just due to the increase in the USD value of bitcoin from 2019 to 2020. The amount of money being transferred by darknet entities is still growing, and they are continuing to use bitcoin as a medium of transport. The mass adoption of bitcoin, as well as its ease of use and popularity, is a contributing factor as well.

In Q1 2020, there was a rapid growth in the amount of Bitcoin sent from darknet entities to mixers. During that same period, the amount sent in Bitcoin to exchanges that required verification was reduced — indicating a reduction in the use of cryptocurrency exchanges for criminal and darknet activities in favor of more anonymous services like mixers.

The share of bitcoin sent from one darknet entity to another also grew in Q1 2020. It is possible that darknet users are trying to hide their bitcoin flow inside of the darknet, avoiding the detection of their activities. This also encourages darknet services to cooperate and grow their revenue internally.

The report concluded that even though the amount of bitcoin sent to darknet has decreased since 2017, the value of bitcoin in USD has increased significantly. Also, the amount of bitcoin being sent among darknet members have also seen a rise. While the use of privacy tools by these darknet entities was no secret, now with the help of many analytical tools and service providers, it is easier to track even the masked transactions.

Also Read: Twitter Hacker Managed to Scam Only 12 Bitcoin After Duping Major Accounts

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Author: James W

As Decentralized Finance Continues to Evolve, Big Four Audit Firms Will Play a Major Role in DeFi

Big four audit firms are set to be a significant part of the Decentralized Finance (DeFi) ecosystem according to the latest blockchain industry report by German-based non-profit, dGen.

The DeFi space, which has seen tremendous capital gains in TVL, will grow even more prominent in the coming decade as per dGen insights on its report. Jake Stott, the co-founder of dGen, noted that support from other financial market stakeholders would be inevitable going forward. Tom Howard, Chief Strategy Officer at Mosendo, said;

‘Over time, traditional financial institutions will have no choice but to interact with  decentralized finance tools, slowly disinter-mediating the industry from the inside out.’

Functions like verifying the authenticity of an invoice, tracking payment settlements, and insurance claims could occur faster with the help of a blockchain. Their role will be to act as an intermediary between DeFi and traditional finance.

Dubbed the ‘Decentralised Finance: Usecases & Risks for Mass Adoptionreport, dGen paid particular attention to the DeFi space. Currently, over $2.5 billion in funds is locked within DeFi based products. It is an area that has been hailed as the future of markets given almost all traditional assets are finding their way onto Ethereum based protocols. Though still at its infancy stages, dGen acknowledged this underlying potential in DeFi stating that it,

“could leapfrog the current FinTech industry, providing a new structure of financial services.”

Consequently, this optimistic narrative has gained massive support from across financial services, tech, and the academia elite. DGen’s researchers are bullish that the market could grow past the trillion-dollar mark by 2030. The report highlights that DeFi will: “Provide income for thousands of gamers, streamers, and influencers”

It will also be adopted by European financial institutions who will switch to offering “DeFi-enabled savings and pension accounts.”

A recent Q2 report by industry giant, ConsenSys, concurs on the possibility of a DeFi future given historical growth rates in the past three months. It goes on to detail that Bitcoin tokenization protocols and Yield farming frenzy are the fundamental factors behind this growth as per now.

While the DeFi space has emerged as an avenue to make better interest compared to zero percent in some jurisdictions, it continues to face security threats arising from the core infrastructures.

“Knowledge and security risks will continue to reduce, on top of a growing number of securities in the event of a hack. It appears the solutions the industry needs to scale will come from within the industry itself.”

The team is, however, optimistic the underlying issues might be resolved in as little as one year. Kain Warwick, Founder of Synthetix told dGen,

‘Insurance on DeFi is still extremely limited[…] DeFi still has significant tail risk, so insurance is likely to remain very costly in the short term, but as protocols mature, costs should come down[…] allowing for simpler and more useful insurance to emerge’.

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Author: Edwin Munyui