1. Market Wrap: Bitcoin Recovering Faster Than Equities as Buyers Remain Active
By contrast, the S&P 500 is down about 4% from an all-time high in September.
Bitcoin returned above $56,000 on Wednesday after trading in a tight range over the past few days. The cryptocurrency’s price is up about 3% over the past 24 hours compared to a 1% rise in ether over the same period.
The recovery in cryptocurrencies over the past week has decoupled from equity markets, with bitcoin squarely in the lead with a near 18% price rise for the month to date. Meanwhile, the S&P 500 is down about 4% from an all-time high in September, albeit with less or a roller coaster in price volatility than cryptocurrencies.
For now, analysts are monitoring blockchain data, which points to continued upside for bitcoin. “Despite China’s crypto ban, it seems miners, including those who were in China, are holding BTC in mining wallets,” Ki Young Ju, CEO of CryptoQuant, wrote in a blogpost, referring to the decline in miner outflows, which tends to be a bullish price indicator.
Bitcoin (BTC): $57,387, +3.9%
Ether (ETH): $3,528, +1.5%
S&P 500: +0.3%
Gold: $1,791, +1.8%
10-year Treasury yield closed at 1.544%
Closing in on the high
Bitcoin is currently about 10% away from an all-time price high around $63,000, marking a sharp recovery from a near 50% drawdown (percentage decline from peak to trough) two months ago. The speed of bitcoin’s price recovery is far greater than the S&P 500, which produced negative returns over the past three months compared to a near 70% rise in BTC over the same period.
However, over the long term, the chart below shows bitcoin’s drawdowns tend to be more severe than for equities. This is mainly due to the cryptocurrency’s higher volatility, which can accelerate price moves.
2. With $8.5M in Funding, Can Strips Finance Make DeFi Derivatives Click?
The funding round for the Arbitrum-based platform included Sequoia Capital India and Multicoin Capital.
A new derivatives platform announced raising $8.5 million on Wednesday, part of an effort to overcome the ecosystem-wide reluctance in decentralized finance (DeFi) to embrace more complex financial instruments.
Strips Finance, a fixed-income platform, raised the funds via a token sale with participation from Multicoin Capital, Sequoia Capital India, Fabric Ventures and Morningstar Capital.
Strips is planning to launch in November with initial functionality that will enable interest rate swaps (IRSs) via automated market makers (AMMs), the decentralized exchanges over which much of DeFi is transacted.
In an interview, Strips founder Ming Wu referred to IRSs as a “great instrument for both speculators and hedgers,” allowing users to switch between more volatile floating rates and safer, but lower-upside fixed rates on deposits on protocols such as Nerve.Finance.
“This is something we haven’t found available in DeFi so far, however, it is a huge market in traditional finance — we’re talking about over $6.5 trillion being traded in interest rate markets in a single day,” said Wu of IRSs.
The product will be launching natively on Arbitrum. Wu said that an Arbitrum-native release made more sense than the Ethereum base layer after the team studied various scaling solutions, coming to the conclusion that optimistic rollups would be the long-term solution to scalability.
The team is also planning a deployment to Binance Smart Chain, which is effectively serving as a “backup” in case Arbitrum runs into technical snags during their rollout.
3. Ethereum’s Latest Progress Toward Proof-of-Stake
Here are some things that will (and won’t) change after the Merge.
An under-the-radar rendezvous of core Ethereum developers took place in Greece last week, with major progress being made toward the Merge.
According to ConsenSys’ Ben Edgington, a Beacon Chain developer, the teams accomplished the transition of a multi-client devnet from proof-of-work to proof-of-stake. Eth1 execution clients and Eth2 consensus clients successfully merged to create a network capable of processing transactions.
This news comes shortly after the announcement of Altair’s coming upgrade on Oct. 27. The Altair upgrade is a significant step in the transition to proof-of-stake, giving developers a “low stakes warm-up” and further functionality on the Beacon Chain. While the puzzle that is the Merge seemingly moved slowly at first, it is beginning to fall into place all at once.
As we approach the eventual transition to proof-of-stake, it is important to note what the upgrade will change and what will stay the same.
Immediate impacts on users and the overall network:
Proof-of-stake allows validators to propose and validate blocks without using the energy currently required to mine these blocks. Proof-of-work miners are required to “compete” for blocks, incentivizing them to invest in advanced hardware and more energy usage than their mining peers. Proof-of-stake consensus randomly distributes block proposal opportunities to validators on the network, alleviating some of the competition that is so prominent in proof-of-work.
4. Stripe Is Hiring a Crypto Team 3 Years After Ending Bitcoin Support
“Crypto is a brand new team at Stripe,” one job post says.
Payments company Stripe has begun assembling a crypto engineering team to chart its future in digital assets.
The team — described in LinkedIn posts and job listings — will be run by Guillaume Poncin, Stripe’s former head of engineering for banking and financial products. He is looking to hire at least four staffers to help plot Stripe’s crypto strategy.
Those engineers “will design and build the core components that we need to support crypto use cases,” the job posts said. “Crypto is a brand new team at Stripe.”
Stripe’s relatively modest hiring push (it has 4,000 employees) comes amid a surge in crypto payments integrations across online retailers and even social media platforms. Strike, the crypto startup behind Twitter’s new bitcoin tipping feature, is preparing to release its payments API in an aggressive bid for mass crypto adoption.
The team may be new but Stripe’s interest in crypto stretches back years. A payments giant whose API supports millions of digital storefronts, it made headlines in 2014 when it supported bitcoin — an industry first. Stripe abandoned that service four years later.
But a source told that Stripe never left crypto. The company continued to watch the digital assets space develop, weighing if and how to participate again. In recent months it has shown increasing interest in non-fungible tokens (NFTs), the source said.
5. NFTs Are Coming to Fox TV Show ‘Masked Singer’
The media giant is using its Blockchain Creative Labs subsidiary to release NFT packs on the cheekily titled “Maskverse.”
Fox Entertainment is launching a non-fungible token (NFT) marketplace for its hit show “The Masked Singer,” the company announced Wednesday.
The media giant is using its Blockchain Creative Labs subsidiary to release NFT packs on the cheekily titled “Maskverse.” The marketplace will run on the obscure Eluvio blockchain.
Fans of the show — where celebrities face off in a singing competition while their identities are hidden behind elaborate costumes — will be able to purchase the collectibles via credit cards or cryptocurrencies after registering for an Eluvio digital wallet.
Fox made an investment in Eluvio’s proof-of-stake technology in August citing its potential for low environmental impact, the company said in a press release.
“We’re not a merchandising arm of Fox,” Blockchain Creative Labs CEO Scott Greenberg told us. “We’re more interested in creating a tokenized economy around the brand. We want to create shows owned by the fans and we think Web 3 can be a big part of that.”
Blockchain Creative Labs plans on releasing an additional NFT marketplace for its new show “Krapopolis,” made by “Rick and Morty” creator Dan Harmon, which premieres on Jan. 1.
While the company’s current model is to create separate marketplaces for its respective shows, the long-term vision is for its collectibles to live on one network, Greenberg told us.
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October 14, 2021