1. Market Wrap: Bitcoin and Ether Cross Milestones as Rally Continues
Bitcoin hit $50K and ether approached $4K as risk appetite heats up.
Bitcoin is holding above $50,000 at press time and is up about 2% over the past week. Higher price moves in cryptocurrencies have coincided with a rally in global stocks this week, signaling greater appetite for risk among investors.
Ether, the second-largest cryptocurrency by market capitalization, reached $4,000 on Friday for the first time since May. ETH is up about 20% over the past week, extending its outperformance versus bitcoin.
“BTC wants to join the party, too,” Martha Reyes-Hulme, head of research at digital asset prime brokerage and exchange Bequant told. “Bitcoin dominance has been falling towards 40% and may gradually weaken as investors branch out to other areas of the market, focusing more on use cases than purely store of value,” Reyes-Hulme wrote. Bitcoin’s dominance ratio represents its market capitalization as a percentage of the overall $2.28 trillion crypto market.
If bitcoin fails to break above $50,000 resistance, a reversal could “take the price down to the low $40K levels and might as well indicate a dead cat bounce,” Ulrik Lykke, executive director at digital asset hedge fund ARK36 told.
Bitcoin (BTC): $50,507, +2.4%
Ether (ETH): $3,944, +4.3%
S&P 500: -0.0%
Gold: $1,830, +1.1%
10-year Treasury yield closed at 1.324%
Risk rally continues
Bitcoin is up about 70% year to date compared to a roughly 20% rise in the S&P 500 over the same period. Gold and bonds have produced negative returns so far this year as investor appetite for risk continues following the coronavirus pandemic shock in March 2020.
Both equities and cryptocurrencies experienced relatively low volatility over the past few months, partly driven by the market’s expectation of continued monetary policy easing.
On Friday, the U.S. added 235,000 jobs, falling well short of the 725,000 projection. The jobs miss reinforced expectations that the Federal Reserve’s stimulus program, known as quantitative easing (QE) could persist longer than expected and therefore boost asset prices. Bitcoin and stocks moved higher shortly after the jobs report.
2. Ether Passes $4K for First Time Since May, Nearing All-Time High
Ether is outperforming bitcoin on its way to an all-time high set in May.
Ether, the world’s second-largest cryptocurrency by market value, reached the $4,000 level and is up about 20% over the past week, compared with a 2% rise in bitcoin over the same period. Technical charts suggest ETH is poised to continue higher towards the all-time high around $4,300, set on May 12 before a nearly 60% sell-off.
In August, the Ethereum blockchain underwent a hotly anticipated upgrade dubbed the London hard fork. The upgrade contributed to a price breakout above $2,900, which also coincided with a rise in the ETH/BTC ratio above 0.07.
The resurgence in non-fungible token (NFT) activity and interest in yield-generating decentralized finance (DeFi) tokens have also contributed to ETH’s price rally.
“The quantity of ETH tokens being locked into DeFi is rising. This is placing added pressure on the supply of the cryptoasset as more tokens become essentially unavailable to the market for trading,” Simon Peters, cryptoasset analyst at multi-asset investment platform eToro told.
“ETH staking is growing. Currently, around 7.2 million ETH are staked, which equates to around 6% of ETH tokens, again limiting supply,” Peters wrote.
The ether price has increased more than fivefold this year, pushing ether’s market capitalization to $471 billion.
3. DeFi Projects Cover, Ruler Are Shutting Down After Development Team Exits
The price of both protocols’ tokens plunged on the news.
Decentralized finance (DeFi) insurance provider Cover, together with its smaller lending sibling Ruler, are shutting down after the development team that serviced them both abandoned the projects.
The price of both protocols’ tokens dove on the news, with COVER falling from $268 to $228 while RULER crashed from $10.68 to $1.37, according to CoinMarketCap.
Though the announcement by the community manager known as DeFi Ted didn’t say why the development team had left, the protocols have been plagued with issues, particularly the much larger Cover. Last December, the protocol was victim of a so-called White Hat attack and then in March, Yearn Finance ended its plans to merge with Cover.
DeFi Ted warned users to withdraw any funds from the protocols as soon as possible.
4. As More Consumers Bank With Crypto, Washington Sounds the Alarm
The NYT says officials in D.C. are trying to figure out how to curb what they see as crypto’s potential dangers.
The U.S. Federal Reserve, along with other government entities and officials, is struggling to deal with the financial disruption brought on by cryptocurrency’s move into banking and other financial services, according to an article in the New York Times.
Without any mention of pro-crypto regulators and lawmakers, the article says officials are trying to figure out how to curb what they see as the potential dangers from an industry “whose short history has been marked as much by high-stakes speculation as by technological advances.”
The Times story notes efforts by the U.S. Securities and Exchange Commission (SEC) to staff up with experts to help it deal with the exploding industry. Observing that as it could take at least a year to write rules or get Congress to act, regulators could issue guidance in the interim.
The article notes the recent $600 million hack of PolyNetwork and singles out crypto lender BlockFi, noting that company’s explosive growth and recent legal troubles, as well as decentralized finance (DeFi) platform Compound, which the article says “operates completely outside the regulatory system.”
The article compares BlockFi’s offers of up to 8% annual interest rates on cryptocurrency deposits with U.S. banks’ average rate 0.06% for savings deposits but makes no mention of the macro factors behind the latter, such as the Fed’s unprecedented monetary expansion policy.
“Crypto is the new shadow bank,” the article quotes U.S. Sen. Elizabeth Warren (D-Mass.), a vocal crypto critic as saying. “It provides many of the same services, but without the consumer protections or financial stability that back up the traditional system.”
5. Argentina’s IOL Invertironline Plans to Add Crypto Trading
The so-called E*Trade of Argentina said in its most recent earnings call it will add crypto trading powered by a third party.
IOL invertironline, an Argentina-based trading platform, plans to offer crypto exposure to its 213,000 users.
Julio Patricio Supervielle, CEO of IOL parent Grupo Supervielle, said in the company’s second-quarter earnings call the trading app is working to allow customers to buy and sell cryptocurrencies, “concentrating stock and crypto-asset investments in the same platform,” he said.
Earlier this year, the fintech started highlighting bitcoin-related stocks, a proxy for investors who want exposure to the crypto sector without holding the coins themselves. PayPal unleashed a flood of fintechs after its October 2020 announcement that it would offer crypto buying and selling in partnership with custodian Paxos.
The IOL offering will be powered by a third party and extended to customers in Argentina at an unspecified date.
When reached by CoinDesk, IOL invertironline confirmed the details shared on the earnings call.
IOL plans to gradually expand to several Latin American countries — excluding Brazil — offering U.S.-based investment products, Supervielle said. As a first step, the company has requested authorizations to operate as an online broker in Uruguay.
The company, founded in 2000, was acquired by Grupo Supervielle in 2018 for $38.5 million.
Grupo Supervielle already has a presence in the crypto segment. In July, the group participated in a $16 million Series A funding round of Lemon, an Argentina-based crypto exchange.
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September 6, 2021