Crypto Daily News from ZBG Exchange
1. Market Wrap: Bitcoin Rises as Central Banks Maintain Low Rates
The cryptocurrency is rising along with stocks, although some analysts expect the rally could fade next year.
Bitcoin continued to rise toward its all-time price high of nearly $66,000 on Monday. The cryptocurrency was up about 5% over the past 24 hours, indicating a rise in bullish sentiment.
Equities and cryptocurrencies are rising as central banks in Europe and the U.S. appear to be in no rush to raise interest rates. Despite plans to ease monetary stimulus, market participants generally view low interest rates as supportive for assets deemed to be risky.
Still, once seasonal strength for cryptos and equities fade, next year could be difficult for risk assets.
“The Federal Reserve has started gently reining in its bond purchase program, and could well tighten more sharply in the months to come, potentially triggering a mini sell-off,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, a British financial services company told.
“What is particularly worrying is that many investors get caught up in the fear of missing out on rapid price gains and have borrowed money to invest in highly risky strategies,” Streeter wrote.
Bitcoin (BTC): $66,091.48, +5.33%
Ether (ETH): $4,764.83, +2.9%
S&P 500: 4,701.70, +0.1%
Gold: 1,824.30, +0.44%
10-year Treasury yield closed at 1.498%
For now, charts suggest further upside in bitcoin if a breakout above $66,000 is confirmed this week. “Bitcoin has ample room to rise on the technical analysis side, as the bulls have built-up strength during the first cryptocurrency’s month-long consolidation,” Alex Kuptsikevich, a market analyst at FxPro told.
Ether option volumes rise
Despite lower trading volume in the spot market, ether’s option volumes have risen to their highest level since May. Increased trading activity in the option market has coincided with a breakout in ETH to an all-time high of around $4,700.
“Option volumes generally increase when markets turn volatile and traders take directional bets as buyers of options have a potential to earn high gains while keeping their losses limited (due to a non-linear option payoff),” crypto research firm Kaiko wrote in a blog post.
“However, despite low levels of volatility, option volumes recently hit their highest level since May,” Kaiko wrote.
2. Coinbase’s Q3 Crypto Trading Volumes to Be Key for Investors, Analysts Say
The largest U.S. cryptocurrency exchange has said investors should expect lower trading volume in the third quarter, given the decline in crypto prices during that period.
Coinbase Global Inc.’s (COIN) trading volumes and revenue will likely be the focus of investor attention as the cryptocurrency exchange gets set to report third quarter financial results Tuesday after the market close.
“Coinbase’s platform trading volumes are a key metric given the majority of company revenue comes from retail and institutional trading fees,” John Todaro, a research analyst at New York-based Needham & Co. who has a buy recommendation on the stock, told clients in a note.
Coinbase posted trading volume of $462 billion in the second quarter, its second ever as a public company, up from $335 billion in the first quarter. Mizuho Securities expects that figure to fall to about $315 billion in the third quarter.
Coinbase warned in last quarter’s earnings report that monthly transacting users and trading volume would be lower in the third quarter compared to the second quarter, citing lower volume levels stemming from a drop in crypto asset prices in the quarter. “August month-to-date, retail [monthly transacting users] and trading volume levels have slightly improved compared to July levels but remain lower than earlier in the year,” Coinbase wrote. The company also slightly lowered its yearly forecast range for monthly active users to 5.5 million to 8 million from the previous range of 5.5 million to 9 million.
3. Discord CEO Hints at Ethereum Compatibility
The CEO posted a screenshot that shows Discord connecting to Ethereum, saying “probably nothing.”
Social network Discord is considering linking to Ethereum, Discord CEO and founder Jason Citron hinted in a tweet early on Tuesday.
Citron posted a screenshot of what appears to be Discord settings that allow users to connect to Ethereum, saying “probably nothing.” The screenshot also shows the option to connect using Ethereum wallet MetaMask or chain-agnostic wallet connector WalletConnect.
The options were not available on Discord’s browser-based app early on Tuesday when CoinDesk checked. The screenshot could be a private development environment not yet released to the public.
The CEO was responding to another tweet from Packy McCormick. The writer had posted a link to an issue of his Not Boring newsletter in which he wrote about Discord’s potential as a “Web 3 sleeper” and the social network’s deep connections with crypto.
4. Biden Administration Sanctions Crypto Exchange Chatex Over Ransomware Allegations
The Treasury Department sanctioned OTC exchange Suex in September.
The U.S. Treasury Department sanctioned crypto exchange Chatex for its alleged involvement in ransomware operations, the federal agency said in a Monday press release.
It is the second time that the U.S. Treasury Department has sanctioned a crypto exchange. Chatex “has facilitated transactions for multiple ransomware variants” and has provided “material support” to crypto over-the-counter exchange Suex, which is also associated with ransomware, the press release said.
In September, Suex was sanctioned by the Treasury Department over ransomware activities.
The Biden administration has launched a crackdown on ransomware and is trying to convince other governments to follow its lead. Crypto intelligence firm Chainalysis estimates that North American crypto addresses sent $131 million to ransomware-linked addresses between July 2020 and June 2021, more than double what Western Europe, the second hardest-hit region, sent.
The Treasury’s Office of Foreign Asset Control (OFAC) added Chatex to its Specially Designated Nationals And Blocked Persons List (SDN). Another three entities associated with Chatex were also added to the blacklist; Izibits OU, Chatextech SIA, and Hightrade Finance Ltd.
The list covers individuals working for governments involved in terrorism or drug trafficking, according to the Treasury Department. Being on the list means these individuals’ assets are blocked and U.S. citizens are barred from doing business with them.
Suex and Chatex share a co-founder, Egor Petukhovsky, and at one point, a holding company, Estonia-based Izibits OU, according to TRM Labs.
A separate Treasury Department announcement mentioned about 30 sanctioned crypto wallet addresses associated with Chatex.
Chatex operates a crypto exchange and wallet through a Telegram messaging bot.
5. Crypto Mining Stocks Rally After Bitcoin Surges Near Record, Ether Hits All-Time High
Monday’s gain in bitcoin and ether prices spurred crypto mining stocks such as Marathon Digital and Riot Blockchain to rise sharply.
The stocks of crypto mining companies, which are heavily exposed to the prices of the crypto currencies they mine, surged on Monday after the price of bitcoin approached record highs and ether, the native token for Ethereum, hit an all-time high.
Among the crypto miners, Marathon Digital led the surge on Monday, with the stock soaring almost 20%, while peer Riot Blockchain climbed 17%.
Other miners such as Bit Digital, Bitfarms, Hive Blockchain, Hut 8, Cleanspark, Sphere 3D and Greenidge Generation each rose more than 10%. Meanwhile, Stronghold, Argo and Cipher’s shares were each up more than 5%.
The share prices of miners are most leveraged to the price of cryptocurrencies, since their main source of revenue comes from mining the coins and holding them on their balance sheets.
With bitcoin prices climbing above $60,000, miners big and small continue to make profits, leading to a surge in capital flowing into the sector and more companies delving into mining.
“With current BTC mining margins north of 90%, capital is aggressively flowing into the sector, which we expect to make BTC mining more institutionalized,” said BTIG analyst Gregory Lewis in a research note.
Moreover, Lewis highlighted that the breakeven cost, in terms of electricity, for miners can range from anywhere between $5,000 to $14,000 per bitcoin, implying a heightened profit margin level for miners minting coins at current bitcoin prices.
To put the profitability margin in context, one of the largest bitcoin miners, Marathon Digital, said in a September presentation that its mining cost is about $5,612 per bitcoin, with margin of about 85%, when all of their mining rigs get deployed.
Another crypto-linked stock, MicroStrategy Inc., which is often seen as a proxy for bitcoin, climbed about 9%, while crypto exchange Coinbase Global gained 7% and Robinhood Markets, where many users trade crypto, was mostly flat on Monday.
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November 9, 2021