1. Market Wrap: DeFi Token Yearn.Finance Pops 76% as Bitcoin, Ether Make Double-Digit Gains
Opportunities in the crypto market this month have led to gains on decentralized and centralized exchanges.
Cryptocurrencies opened the week jumping big, a reversal from a weekend market dive.
Yearn.Finance (YFI) trading around $50,951 as of 21:00 UTC (4 p.m. ET). Jumping 76% over the previous 24 hours.
Ether (ETH) trading around $2,668 as of 21:00 UTC (4 p.m. ET). In the green 34% over the previous 24 hours.
Ether’s 24-hour range: $1,970-$2,668
Bitcoin (BTC) trading around $39,801 as of 21:00 UTC (4 p.m. ET). Gaining 19% over the previous 24 hours.
Bitcoin’s 24-hour range: $33,141-$39,801
The decentralized finance, or DeFi, sector of the cryptocurrency market is making major performance jumps Monday. The token of lending protocol Yearn.Finance is up over 76% as of press time. In addition, UNI, the token of the leading decentralized exchange by volume, Uniswap, has climbed 54% as of press time.
According to charting software TradingView, so far in 2021 both yearn and uniswap have made triple digit percentage gains, but volatility in the market has actually sapped some of their juicy returns. For example, in early May Uniswap was up over 700% before a precipitous fall, then rebounded with Monday’s bull crypto market.
“DeFi tokens, like most altcoins, are lower market capitalized, possess lower liquidity and thus have higher volatility,” said Brian Mosoff, chief executive officer of investment firm Ether Capital. “This past week saw a sharp decline, with these types of assets being hit harder than blue-chip crypto, such as bitcoin and ether. But as things seem to be rebounding the lower liquidity leads to a faster bid up on price.”
The trading volume numbers for Ethereum-based decentralized exchanges are hitting record highs in May, with the total trading tally well over $100 billion, according to data aggregator Dune Analytics. Leading the way is bellwether Uniswap with a whopping $61 billion in volume this month.
2. Bitcoin Rises to Near $40K After Musk Tweets About BTC Mining’s ‘Promising’ Renewable Usage
Elon Musk continues to tweet about bitcoin.
The price for bitcoin (BTC, +12.3%), already up on the day, received an extra boost from a new tweet by Tesla CEO Elon Musk on bitcoin mining’s “promising” renewable usage, as it’s near a key resistance level at $40,000 during U.S. trading hours on Monday.
The news takes on added significance as it was Musk’s comments on May 13 regarding bitcoin’s environmental impact that started a dramatic sell-off in the crypto market that gathered force last week and continued through this past weekend with bitcoin dropping to just above $31,000 Sunday.
Monday’s quick recovery came as demand from wealthy investors appears to have brought relief to the battered cryptocurrencies, as reported earlier.
Adding support to bitcoin’s price Monday was Bridgewater Associates founder Ray Dalio, who said he owns some bitcoin. He mentioned that during an interview recorded on May 6 and broadcast during the first day of CoinDesk’s Consensus 2021 conference.
The oldest cryptocurrency by market value extended its gains Monday afternoon after Musk tweeted about bitcoin mining’s “promising” renewable usage.
“Spoke with North American Bitcoin miner,” Musk wrote in a tweet. “They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising.”
Michael Saylor, the founder and CEO of MicroStrategy, appeared to have joined the meeting with Musk along with several bitcoin miners in North America, as Saylor implied in a follow-up tweet from Musk’s post.
“The miners have agreed to form the Bitcoin Mining Council to promote energy usage transparency & accelerate sustainability initiatives worldwide,” Saylor wrote.
During last week’s market crash, Saylor announced that his business intelligence firm has purchased another 229 BTC for $10 million in cash.
According to Saylor, executives from Argo Blockchain, Galaxy Digital, Blockcap, Hive Blockchain, and a few other mining companies based in North America, were at the meeting.
Several factors led to the market crash last week including China’s latest news about tightening crypto regulations.
3. 5 Big Takeaways From Day 1 at Consensus
From Ray Dalio on bitcoin to a Federal Reserve chair indicating the need for CBDC research. Here’s what you need to know from Consensus Day 1.
The first day at Consensus 2021 was packed with news and insight, from Ray Dalio speaking freely on the coming debt crisis to a Federal Reserve chair indicating that the central bank “wants a seat at the table” in the development of cross-border solutions. Here are the five need-to-know takeaways from Monday’s events.
1. Competition is driving CBDC research
Federal Reserve Governor Lael Brainard didn’t exactly give a forward projection for the agency’s policy this morning, but she did say the Fed is more interested in central bank digital currencies (CBDCs) than previously known. Brainard said it’s important to follow the rise of private money and CBDC pilots in antagonistic nations like China closely. “The issuance of a CBDC in one jurisdiction … does potentially have significant effects across the globe,” she said. To that end, the Boston Federal Reserve and MIT Digital Currency Initiative plan to publish a U.S. digital dollar white paper this summer.
2. Inflation will wane over time: Federal Reserve
Asked about inflation, Brainard cited April’s Consumer Price Index (CPI) report, showing a 4.2% increase in prices year-over-year. This is a worrying figure in-and-out of the cryptocurrency industry because it shows a real impact on everyday shoppers. Brainard poured cool water on the heated talking point when saying a rise in inflation was to be expected as the U.S. economy continues to reopen. This is a continuation of what Fed Chair Jerome Powell has been saying for months, including that the central bank will let the economy run hot. Brainard added these inflationary forces will “subside over time.”
3. Dalio prefers BTC to bonds
Ray Dalio, the founder of the world’s largest hedge fund, predicts that the U.S. dollar is on the verge of devaluation and could lose its position as the global reserve currency. Fearing rising inflation and the preponderance of debt in the economy, Dalio expects the Federal Reserve to resort to the new usual: more money printing to pay down debts. Under this inflationary scenario, the Bridgewater founder said he’d “rather have bitcoin (BTC, +11.96%) than a bond,” if looking for an attractive hedge. What’s more, Dalio admitted for the first time he’s already a holder. In a bit of a Catch-22, Dalio also said “bitcoin’s greatest risk is its success.” Though it may be bitcoin’s time to shine (over gold) during a coming inflation rout, if it cuts into the government’s ability to raise funds through bonds, a swift ban might be expected.
4. Dalio isn’t the only hodler
Wyoming Governor Mark Gordon revealed he owns cryptocurrencies while discussing the early successes of his state’s efforts to attract cryptocurrency companies and projects. “People often look to New York or Miami or Delaware before they look at Wyoming. But a lot of the pioneering work has been done here,” Gordon said. Indeed, Wyoming has set out some of the nation’s most favorable crypto laws, most recently a bill that would recognize decentralized autonomous organizations (DAOs, or, bits of code) as legal entities. Does it pay to be early? Gordon listed off some of the big names that opened branches in the Cowboy State: Kraken, Ripple Labs and IOHK, the company behind Cardano. A $60 billion broadband expansion program also didn’t hurt in attracting these digital natives.
5. Holding bitcoin is a “fiduciary” duty
Inflation was one of the common themes throughout the day’s panels. Nowhere was that more on display than during a roundtable featuring MicroStrategy CFO Phong Le, whose company has become synonymous with the buy and hold mentality. Since August, MicroStrategy has purchased $2.3 billion worth of BTC, in an attempt to get cash — a depreciating asset — off its balance sheets. Today, Le gave a little more insight. “I’m not saying you should put all of your corporate treasury in bitcoin,” he said. “But if you’re not putting any of it into bitcoin, I don’t think you’re doing your fiduciary responsibility, which is maximizing shareholder value.”
4. DeFi Is Rising in Chicago
In the wake of regulatory issues elsewhere, Chicago’s crypto industry has been thriving, particularly in DeFi.
Chicago’s DeFi scene is thriving, and it has New York to thank.
That was the message from Colleen Sullivan, co-founder and CEO of Chicago-based venture capital firm CMT Digital, when she spoke on a panel exploring the state of the crypto industry in the Windy City as part of Consensus 2021, CoinDesk’s annual conference that brings together influencers and experts in crypto, finance and more.
She puts it down to New York’s BitLicense, the state’s regulatory framework that debuted in 2015 and requires startups to obtain a license for cryptocurrency activities. It got 22 applications in its first round, while 15 companies closed down. Between 2015 and 2020, only 25 firms were approved. New York’s loss was Chicago’s gain and the result has turned the city into a hotbed of crypto collaboration.
The DeFi Alliance is a prime example, Sullivan said. Based in Chicago, it provides a six-week accelerator program for DeFi startups, with backing from digital asset venture capital firms also headquartered there, including Jump Capital, Volt Capital and CMT. By connecting established crypto investors with startups, it means entrepreneurs can access liquidity and seed funding, in addition to networking and mentoring.
5. Hedge Fund Billionaire Ray Dalio Has Officially Bought Bitcoin
A big shift from one of finance’s biggest names, plus a recap on the latest China-Bitcoin intrigue.
This episode is sponsored by Nexo.io and Bitstamp.
Today’s episode of “The Breakdown” is split into two parts. In part one, NLW recaps the latest out of China, including:
Interpretations of Friday’s surprise targeting in a speech by the Vice Premier
A weekend market crash, the second of the week
Miner selling and the motivations behind it
What to watch for in the coming days
In part two, he puts in context the news that Bridgewater’s Ray Dalio owns bitcoin, looking at the larger institutional pattern that has driven the bitcoin bull and Dalio’s specific concerns about currency devaluation.
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May 25, 2021