1. Market Wrap: Analysts Bullish on Bitcoin as Trading Volume Rises
Historically, bitcoin produces positive returns in the fourth quarter, underpinning bullish price estimates.
Bitcoin’s price stayed roughly flat over the past 24 hours, settling at approximately $54,000 as of Thursday afternoon. The muted price action comes after bitcoin rallied an impressive 8% yesterday, driven by concentrated buying. Analysts expect trading volumes to remain elevated, supporting continued upside into Q4.
Blockchain data shows a large buy order was behind the bitcoin rally yesterday. It remains unclear why these large traders (bitcoin whales) purchased on spot exchanges instead of an over-the-counter desk, according to CoinDesk’s Muyao Shen.
However, some analysts remain cautious, pointing to activity in the bitcoin options market.
“We also continue to see bearish-type trades with the spot rally,” according to QCP Capital. “A total of 1,200x BTC end-October BTC calls were sold yesterday, followed by the buying of over 500x of 50/45k end-October put spread today. In the very short term, we might see some corrective price action in BTC.”
A call option gives the purchaser the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option gives the purchaser the right but not the obligation to sell the underlying asset at a predetermined price on or before a specific date.
Bitcoin (BTC): $53,910, -1.8%
Ether (ETH): $3,598, +0.5%
S&P 500: +0.8%
Gold: $1,755, -0.3%
10-year Treasury yield closed at 1.573%
Trading volume rise
Bitcoin’s spot trading volume rose over the past few days, which reflects a resurgence of buying activity. The past few months were relatively quiet in crypto markets, although the sell-off in September may have encouraged some buyers who had been on the sidelines.
Blockchain data shows continued BTC accumulation by both long-term and short-term holders who are starting to realize profits above their cost basis, or the original value or purchase price of an asset or investment for tax purposes. Analysts are monitoring the use of leverage, particularly in the bitcoin futures market, to determine if traders are gaining conviction behind the recent rally.
“A spot rally doesn’t mean there’s no leverage,” Delphi Digital, a crypto research firm, wrote in a blog post. “Exchanges also lend stablecoins to their customers, which are then used to purchase spot assets.”
Delphi also noted that a bitcoin rally on high spot volume would “imply that overall leverage is much lower than it would be on a futures-driven move.”
2. Pro-Crypto Senator Lummis Discloses Bitcoin Purchase Worth Up to $100K
Lummis executed her latest purchase on Aug. 16 from the brokerage firm River Financial, according to a filing on Thursday.
Sen. Cynthia Lummis (R-Wyo.) disclosed purchase of bitcoin worth $50,001-$100,000, according to a Periodic Transaction Report filed Thursday.
Lummis, who has been buying bitcoin since 2013, executed her latest purchase on Aug. 16 via the brokerage platform River Financial. CNBC first reported the news.
Under the Stop Trading on Congressional Knowledge Act of 2012 (STOCK Act) senators and senior staff with earnings above $119,554 are required to disclose certain financial transactions. Part of the requirements means they must report any purchase, sale, or exchange of any stock, bond, commodities future, and other securities on transactions above $1,000.
The senator previously served eight years as Wyoming’s state treasurer and told us last year that during her time as treasurer she had always been looking for “something that was a good store-of-value.” Her son-in-law and his friends helped educate the senator about bitcoin’s potential as a store-of-value, she said, prompting her to jump on the bandwagon when the crypto was trading for around $320.
While a bitcoin advocate, Lummis slammed stablecoins during a speech on the Senate floor last week saying they “must be 100 percent backed by cash … and this should be audited regularly” expressing her concerns that cryptos pegged 1:1 to other sovereign fiat currencies lacked transparency.
3. New Chainalysis Report Reveals Who’s Leading the World in Crypto Adoption
The blockchain data firm changed its methodology this year for ranking countries on their level of adoption, with Vietnam and India topping the list.
Blockchain analytics firm Chainalysis’ forthcoming 2021 Geography of Cryptocurrency report examines crypto adoption in countries and regions across the world, placing the focus on dynamic trends in emerging markets.
Starting last year, cryptocurrency use around the world grew dramatically, thanks to a crypto-asset price run partly fueled by large inflows of institutional investments into the space. Between Jan. 2020 and Jan. 2021, the number of crypto wallets in use worldwide increased 45% to an estimated 66 million.
In August, Chainalysis published its second-ever global cryptocurrency adoption index which reported an 880% rise in global crypto adoption, driven by P2P trading and usage in emerging markets such as Africa. The Chainalysis team tracked data across 7,000 crypto service providers and found ‘meaningful crypto activity’ in 158 countries.
Despite the big moves made by institutional investors such as MicroStrategy and Twitter founder Jack Dorsey’s Square in the U.S., Vietnam topped the Chainalysis adoption index, followed by India and Pakistan. Six out of the top 20 countries in the index are African nations.
According to Kim Grauer, head of research at Chainalysis, the research firm took a more targeted approach this year to quantifying the extent of grassroots adoption of cryptocurrencies. Chainalysis introduced new methodology and metrics to capture this activity.
“There are a lot of extremely large institutional size transfers that really bias our data upward. And so really, all the things that we did in terms of weights and metrics introduced, were to try to capture that day-to-day grassroots activity among your everyday shop owner, or your everyday person who’s accepting a remittance payment rather than capturing those really large transfers,” Grauer said during an explanatory webinar on Thursday.
The report looks to provide more insight into crypto usage in particular regions, noting some interesting trends. For instance, the report shows that Africa is the smallest crypto market in the world, accounting for only 3% of the total market size across regions, but peer-to-peer trading, remittances and savings needs are powering Africa’s grassroots cryptocurrency adoption.
Between June 2020 and July 2021, incoming transfers originating outside Africa accounted for 96% of the total crypto transaction volume in the continent, the report said. It also shows that Africa has the largest proportion of peer-to-peer (P2P) transaction volume (as a percentage of the total regional crypto transaction volume), ahead of other emerging crypto markets such as Latin America and Central and Southern Asia. Africa also has the largest retail crypto trading market, accounting for 7% of its total market, the report reveals.
Grauer said the estimates provided in the report are probably the best in terms of country-specific cryptocurrency data, but they come with a number of caveats.
“It’s really important to understand the limitations to this methodology,” Grauer said.
4. Sri Lanka Government Forms Panel to Study Digital Banking, Blockchain for Attracting Investment
Anti-money laundering, terrorism financing and Know-Your-Customer processes will also fall under the committee’s study mandate.
Sri Lanka’s Cabinet approved the formation of committee that will study the rules and regulations governing digital banking, blockchain, and crypto mining in other nations, as well as methods to prevent money laundering, terrorism financing and other criminal activities related to those technologies. The body will also study Know-Your-Customer processes.
The five-member committee will study the regulatory frameworks and approaches to crypto-related industries in countries such as Dubai, Malaysia, the Philippines, Singapore, and the E.U.
The committee was proposed by Namal Rajapaksa, a cabinet member whose roles include Minister of Development Coordination and Monitoring; Minister for Sports and Youth Portfolio; and State Minister of Digital Technology and Enterprise Development of Sri Lanka.
According to a press release Thursday from the Department of Government Information, the development is an attempt to attract foreign investment in the areas of these technologies as Srl Lanka moves to modernize its economy under the national policy framework “Vistas of Prosperity and Splendour.”
“The necessity of developing an integrated system of digital banking, blockchain, and cryptocurrency mining has been identified to pace on par with the global partners in the region while expanding trade to the international markets,” the department said in the release.
5. Designer Eric Hu on Generative Butterflies and the Politics of NFTs
Hu’s new NFT collection, Monarchs, pulled in around $2.5 million in a pre-sale Wednesday afternoon.
Eric Hu’s design practice has taken many forms. Before pivoting to full-time independent work in 2019, Hu worked at Nike, as the brand’s global design director for sportswear. Before that, he was head of design for SSENSE, a Canadian fashion retailer known for its au courant selections and imposing print magazine. Across album covers, magazine spreads and top-to-bottom brand identities, Hu’s work is elegant and composed — even at its most experimental, it’s always grounded in a sense of clarity.
That’s the principle he’s brought to Monarchs, a new collection of visual artworks attached to NFTs, or non-fungible tokens. Each piece is a twinkling, pointillist interpretation of a butterfly with a randomized set of visual traits.
As with popular NFT projects like Bored Ape Yacht Club or Lazy Lions, minting a Monarch NFT is a little like rolling the dice: you won’t know what you’re getting until you buy in, and the exact combination of traits is different every time. Some wing shapes and body types are rarer than others, and potentially more valuable. It’s what’s known as a “generative” project: the code determines which pieces are assigned which attributes.
Hu priced his NFTs at .8 ETH ($2,800) each, and limited initial purchases to one per person. When the full supply of 888 Monarchs sold out yesterday afternoon, Hu and his collaborators came away with around $2.5 million.
“I think yesterday was definitely the most emotional day that I can remember in a long time,” he told us on Thursday. There were hiccups — the problem of exclusivity, and a so-called “gas war” that jacked up fees on the Ethereum blockchain — but on the whole, Hu said, the launch exceeded his wildest expectations.
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October 8, 2021