1. Market Wrap: Bitcoin and Stocks Rise on Dovish Fed
Bitcoin returns above $48,000 as risk rally continues.
Bitcoin rose along with stocks on Friday after a weeklong consolidation below the $50,000 resistance level. The cryptocurrency was trading at around $48,000 at press time and is up about 2% over the past 24 hours.
On Friday, Federal Reserve Chairman Jerome Powell reiterated that the central bank could taper asset purchases later this year as inflation gains appear to be temporary. Powell’s comments contributed to a weaker dollar and higher bitcoin price as concerns about a more immediate taper, or a winding down of the Fed’s monthly bond purchases, were put at ease.
“Certain crypto analysts see tapering as an issue for bitcoin speculation as quantitative easing is thought to give investors the liquidity to invest in riskier assets,” Jonas Luethy, a trader at the U.K.-based digital asset broker GlobalBlock told.
“This summer’s main event for stimulus expectations is over, and risky assets are rallying after Powell delivered a dovish taper,” Edward Moya, an analyst at foreign exchange broker Oanda told.
Bitcoin (BTC): $46,386, +2.8%
Ether (ETH) $3,064, +3.8%
S&P 500: 4509.4, +0.9%
Gold: $1,818.6, +1.5%
10-year U.S. Treasury yield closed at 1.307%, versus 1.349% Thursday
Bitcoin price pattern
There has been a clear pattern of bitcoin buying toward the end of the week and profit-taking toward the middle of the week, according to research by FundStrat, a global advisory firm.
Bitcoin is recovering from a pullback this week, and appears to be tracking the weekly price pattern as shown in the chart below. The BTC price returned to above $48,000 at press time.
“While we are uncertain what the drivers behind this pattern are, we will look to see if we can once again complete our weekly smile,” FundStrat wrote in a Wednesday newsletter, referring to the concave shape of the price pattern.
2. Square’s Jack Dorsey Plans to Build Decentralized Bitcoin Exchange
The Square and Twitter CEO first announced plans to create an “open developer platform” in July.
Square and Twitter CEO Jack Dorsey, tweeted on Friday that TBD, payment giant Square’s new division focused on creating an open developer platform, is planning to build a decentralized bitcoin exchange.
“Help us build an open platform to create a decentralized exchange for #Bitcoin,” Dorsey tweeted.
Mike Brock, who was named to lead the initiative, tweeted separately that “this is the problem we’re going to solve: make it easy to fund a non-custodial wallet anywhere in the world through a platform to build on- and off-ramps into Bitcoin. You can think about this as a decentralize[d] exchange for fiat.”
“We’d love for this to be Bitcoin-native, top to bottom,” Brock wrote. He also noted that the platform would “be entirely developed in public, open-source, open-protocol,” and that any wallet would be able to use it.
Brock noted “gaps around cost and scalability,” and that TBD needed “a solve for exchange infrastructure between digital assets, like stablecoins.”
In July, Dorsey wrote in a series of tweets that Square would launch the new business to make it easier to offer non-custodial, decentralized financial services.
3. Ethereum Faces Chain Split as Node Operators Fail to Update Geth Hotfix
Geth is the most relied upon software to connect to the Ethereum blockchain.
Ethereum is experiencing a chain split due a number of network validators, also called nodes, failing to upgrade their software.
On Aug. 24, the developer team behind the popular Ethereum software client Geth released an emergency hotfix to a security vulnerability in its code that would have prevented certain users from producing blocks.
The Go Ethereum team had disclosed a vulnerability on Aug. 18, saying they would release a patch, but did not specify the exact nature of the vulnerability in an effort to prevent an attack:
“The exact attack vector will be provided at a later date to give node operators and dependent downstream projects time to update their nodes and software,” wrote Ethereum team lead Péter Szilágyi in Aug. 24 GitHub patch notes.
However, it would seem some users identified the exploit that was hotfixed by the Geth team and are currently exploiting older versions of the Geth software.
Though the Geth team emphasized that all users should upgrade their software immediately, only about 30% of users have upgraded to the latest version, according to data from ethernodes.org.
As background, Geth is the most relied-upon software to connect to the Ethereum blockchain, being run by roughly 75% of the users.
4. Cardano’s ADA Token Surges as Fresh Buyers Jump In
The coming launch of smart contracts into the network is providing a boost, one research firm said.
Cardano’s ADA token surged Friday, pushing the gains this month to 112%, as the price fast approaches its all-time high.
ADA was trading at $2.84 at press time, up 12% over the past 24 hours, according to data from Messari.
The number of wallet addresses holding the asset for fewer than 30 days has increased by 10%, compared with last month, possibly a sign that fresh buyers are coming in, according to data from crypto research firm IntoTheBlock.
“With the imminent launch of Cardano’s smart contracts, ADA is experiencing a boost in short-term interest,” IntoTheBlock wrote Friday in a tweet.
Cardano’s long-awaited smart contracts feature is set to go live on Sept. 12.
“For this upside to continue, capital needs to come from somewhere,” said Denis Vinokourov, head of research at Synergia Capital.
“What I am asking is what ecosystem will capital leave to enter Cardano? Or is it going to be ‘new capital’? Who will suffer because of Cardano’s revival?” said Vinokourov. He noted that a lot of capital has gone into solona, polygon and, more recently, avalanche.
“The likes of bitcoin cash (BCH) and EOS will likely continue to underperform,” Vinokourov said. “These two behemoths are from the same era, but Cardano has managed to continue to innovate.” The chart for long-term holders — “hodlers” in crypto-speak — shows the significant growth seen in the last two months.
5. India Could Launch CBDC Trials Later This Year, According to Central Bank Governor
Deputy Governor T. Rabi Sankar said the central bank is studying matters related to security and the broader impact a CBDC would have on monetary policy.
Trials for an Indian central bank digital currency (CBDC) could begin by December, Reserve Bank of India (RBI) Governor Shaktikanta Das said.
The central bank is studying matters related to security and the broader impact a CBDC would have on monetary policy, Das told CNBC Thursday.
“I think by the end of the year, we should be able to — we would be in a position, perhaps — to start our first trials,” he said.
Das said the RBI is exploring whether a digital rupee would harness blockchain technology or use a centralized ledger.
RBI Deputy Governor T. Rabi Sankar said in July that a digital rupee would reduce the use of cash and protect citizens from the volatility of cryptocurrency.
Among major economies, China is leading the way in the development of a CBDC. Its digital yuan, or eCNY, has been undergoing trials in various cities around the country for several months.
South Korea and Sweden appear the next most advanced in developing digital currency after China.
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August 28, 2021