1. Market Wrap: Bitcoin Enters September Slowdown; Cardano’s ADA at New High
Analysts expect bitcoin to weaken this month, as it has in the past, before the next leg up.
Bitcoin pulled back from the $50,000 resistance level on Thursday as overbought signals appeared on intraday charts. BTC was trading around $49,200 at press time and is up about 2% over the past 24 hours, compared to a 4% rise in Cardano’s ADA, which reached an all-time high of $3.09 before falling below $3.
Analysts expect limited upside for bitcoin as it enters a seasonally weak period. On average, bitcoin returns are typically negative in September. Returns in November, however, tend to be relatively high.
“Bitcoin is still above the 50-day and 200-day moving averages, indicating the positive trend is still in place, but the movement is slow,” Lukas Enzersdorfer-Konrad, chief product officer at Bitpanda told.
Instead, traders have shifted attention to alternative coins, which have outperformed bitcoin over the past month. However, some technical measures suggest the relative performance of these altcoins could weaken later this month.
Bitcoin (BTC), $49,295, +2.2%
Ether (ETH), $3,782, +1.4%
S&P 500: +0.3%
Gold: $1,810, -0.2%
10-year Treasury yield closed at 1.287%
Historically weak September
“There is no love lost between bitcoin investors and the ninth month of the year,” FundStrat, a global investment advisory firm, wrote in a Thursday newsletter.
September appears to be the only month in which BTC has experienced a negative average return. “Based on the chart below, we can also see that the patterns in monthly returns roughly match the seasonality we experienced the past 12 months, with price increases in late-fall to early-winter followed by an all-time high in April,” FundStrat wrote.
Additionally, BTC drawdowns in September, or the percentage decline from peak to trough, has extended a four-year streak.
On a brighter note, bitcoin returns are typically strong after September, especially in November. “Even if bitcoin continues to mirror its historical seasonality, October through December could present an opportunity for outperformance,” FundStrat wrote.
2. What Apple’s Settling App Store Lawsuit Means for Crypto’s NFTs
Apple has agreed to loosen App Store restrictions on small developers in a move that could impact the NFT market.
When news broke last week that Apple would be settling a class-action lawsuit brought by developers in 2019, Crypto Twitter fell silent.
But those who understood the momentous event realized the potential ramifications of the U.S. tech giant loosening its grip for various sectors across the blockchain industry, particularly as it relates to non-fungible tokens (NFTs).
NFTs are unique assets that grant gamers and collectors full ownership over their digital items. Readers may recall the time when artist Beeple sold a piece of digital artwork for a mind-blowing $69.3 million at auction earlier this year. The sector has since caught fire, with everyone from celebrities to charities and news organizations attempting to tap into the craze.
And while cryptocurrencies are still being worked out as a means of efficient and acceptable forms of payment in the mainstream, NFTs continue to forge new ground.
“Regardless of whether cryptocurrencies become a common form of payment in the “real world”, they’re increasingly being used in gaming via NFTs and blockchain-based studios,” venture capitalist Mathew Ball wrote in a blog post in June.
Ball argues the main reason most crypto games and NFT platforms are solely browser-based and not packaged in iOS apps is because of Apple’s restrictions posed on small developers.
3. Japan’s SBI Holdings to Launch Crypto Fund
The fund could reach several hundred million dollars and include bitcoin, ether and other cryptocurrencies.
Japanese financial services group, SBI Holdings, intends to launch a cryptocurrency fund before the end of November, according to a Bloomberg article.
Bloomberg cited Tomoya Asakura, president of SBI affiliate Morningstar Japan K.K., who said that the fund could total several hundred million dollars in bitcoin, ether, XRP, bitcoin cash, litecoin and other cryptocurrencies.
The fund could require an approximately $9,00 to $27,000 minimum investment and target investors who understand cryptocurrency’s volatility and other risks.
“I want people to hold it together with other assets and experience firsthand how useful it can be for diversifying portfolios,” Asakura told Bloomberg, adding that if the fund succeeded, the company would “move quickly” to launch a second one.
SBI needed four years to reach this point, largely because of Japan’s tightening restrictions over cryptocurrency investing.
4. Cryptocurrencies ‘Concern’ Argentina’s Central Bank President
Miguel Pesce said that Argentina’s central bank is monitoring cryptocurrencies to ensure they’re not being used to avoid exchange controls.
The Central Bank of Argentina (BCRA) is watching the development of cryptocurrencies with “concern,” said its president, Miguel Pesce.
At an event organized by the Argentine Fintech Chamber on Tuesday, Pesce said that “the name cryptocurrency is not appropriate” because the blockchain-based units of account are precisely the opposite of what a currency should be, adding that crypto “refers to something hidden, opaque,” Argentinian newspaper Clarín reported.
Pesce also discussed an official document the BCRA published with Argentina’s Securities Commission (CNV), in which the central bank expressed that cryptocurrencies are not legal tender, have high volatility, are exposed to operational disruptions and cyberattacks, and have no safeguards, among other negative characteristics.
“We believe that we have to do [the] work of education, explaining to the population what these instruments are about to avoid generating situations in which, due to misinformation, someone makes an investment over which he has no control,” Pesce said.
Cryptocurrencies were created as a payment mechanism and not as an investment instrument, said Pesce, who added that their scarcity has made these instruments to become financial and raise their prices. That scenario, he commented, gives cryptocurrencies “a very high degree of volatility,” the very characteristic a currency should not have.
“For a currency, stability is something fundamental,” said Pesce, under whose central bank management the Argentinian peso dropped in value from $0.017 to $0.010, though it trades at $0.005 in the black market.
Because of a provision issued by the BCRA in 2019, Argentines are only permitted to buy up to $200 a month in dollars through official channels, with an additional tax of 65% over the official quote. Given this scenario, stablecoin purchases on cryptocurrency exchanges have increased sixfold during 2020.
In 2019, BCRA also forced service exporters to convert their income from dollars to Argentine pesos through an exchange channel authorized by the Argentine Central Bank. To avoid the switch to Argentine pesos, many exporters receive their payments in cryptocurrencies.
Pesce said on Tuesday that even if exporters get paid in cryptocurrencies, these have to be considered as dollarized payments that need to be converted into Argentine pesos.
“This is so, it is a rule of the Central Bank,” he said. “One can receive payment in the instrument or in the goods one wants: in the same way that one can receive a payment in species, one can receive a payment in cryptocurrencies.”
Pesce added that the BCRA is controlling the use of cryptocurrencies as a way to avoid exchange regulations. “The Central Bank is going to be careful that this type of instrument is not used to circumvent exchange regulations,” he said.
The BCRA is closely monitoring crypto movements in Argentina. In June it started investigating nine fintech companies for allegedly offering unauthorized financial intermediation through cryptoassets.
5. UXD Raises $3M to Bring Algorithmic Stablecoins to Solana
The team behind the interest-generating UXD is backed by Multicoin Capital, Alameda Research and the Solana Foundation.
UXD Protocol, an algorithmic stablecoin that automatically generates interest and is minted on the Solana blockchain, has raised $3 million in seed funding led by Multicoin Capital.
UXD, which announced Thursday that it’s launching into testnet phase, is also backed by Alameda Research, Defiance Capital, CMS Holdings, Solana Foundation, Mercurial Finance, Solana founders Anatoly Yakovenko and Raj Gokal and Saber founder Dylan Macalinao.
The $120 billion stablecoin market is beset by opaque asset backing, a reliance on centralized banking and capital inefficient methods, making the quest for a fully decentralized and highly scalable “algocoin” something of a Holy Grail.
Of the current algorithmic stablecoin crop, UXD claims to be the first to be backed by delta-neutral positions, a hedging strategy from portfolio management that uses multiple positions with balancing positive and negative deltas — the degree to which an option is exposed to shifts in the price of the underlying asset.
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September 3, 2021