1. Market Wrap: Bitcoin Falls for Second Straight Day After Tesla Action; Ether Follows
“What saddens me is the way the weak hands and recent buyers see Elon Musk as a prophet, powerhouse and decisive figure in bitcoin,” said one trader.
It’s Elon Musk’s crypto world. A bearish tweet from the entrepreneur on bitcoin and Tesla reneging on using it as a payment method sent crypto markets dropping.
Bitcoin (BTC) trading around $48,769 as of 21:00 UTC (4 p.m. ET). Losing 10% over the previous 24 hours.
Bitcoin’s 24-hour range: $47,720-$54,781
Ether (ETH) trading around $3,651 as of 21:00 UTC (4 p.m. ET). Dropping 10% over the previous 24 hours.
Ether’s 24-hour range: $3,595-$4,243
Bitcoin was down 10% Thursday as of press time and going as low as $47,720 around 01:00 UTC (9 p.m. ET). The world’s largest cryptocurrency by market capitalization was below the 10-hour moving average and the 50-day, a bearish signal for market technicians.
One fundamental reason for bitcoin’s drop: Tesla. Bitcoin’s price has been in a very defined range over the past two weeks but the electric car maker’s announcement Wednesday that it would stop accepting BTC because of environmental issues related to bitcoin mining led to immediate selling that spilled into the next day.
2. Dogecoin Jumps 22% as Elon Musk Hints at Improving Network’s Transaction Efficiency
Musk said he was working with developers to improve Doge’s “network transaction efficiency.”
Dogecoin (DOGE (+8.8%)) is once again running with the wolves after Tesla’s Elon Musk tweeted “potentially promising” news for the network.
According to a Twitter brag by Musk on Thursday evening, Tesla and its CEO are “working with Doge” developers to “improve system transaction efficiency.”
Prices across major exchanges including Binance, Bitfinex, FTX, Gemini and Poloniex are posting around 22% gains over a 24-hour period for the Shibu Inu-inspired meme coin. The cryptocurrency is currently changing hands for around $0.48. The increase came even as other major cryptocurrencies’ prices sank.
Meanwhile, U.S. cryptocurrency exchange Coinbase announced it would be adding Doge to its suite of crypto offerings, possibly due to client demand as has been the case with other major exchanges.
The world’s second richest man has played a large role in Doge’s astronomical 9,400% rise in value since it was just a pup trading at around $0.005 on Jan. 1.
Musk’s handiwork has previously affected Doge’s price. Last month, Tesla’s CEO hinted the Shibu Inu-inspired crypto would feature on Saturday Night Live with Musk calling himself the “Dogefather.” Prices immediately spiked on the tip, jumping 24% from $0.25 to $0.31.
3. Coinbase Boosts Year Active Users Forecast Range, Reports Q1 Results Inline With Preview
The crypto exchange boosted its year forecast range for MTUs to 5.5 million to 9 million, up from its prior view of 4 million to 7 million.
Coinbase, issuing its first quarterly earnings report as a public company, reported Q1 results largely in line with its preliminary announcement made early last month. The U.S.’ largest cryptocurrency exchange boosted its year forecast range for active users, a key metric.
For the Q1, Coinbase reported:
Net income $771.5 million, preliminary $730 million to $800 million.
Adjusted EBITDA $1.12 billion, preliminary $1.1 billion.
Revenue $1.8 billion with $1.54 billion from transaction revenue and $56.4 million from Subscriptions and Services revenue, preliminary $1.8 billion.
Transaction revenue from institutions increased eightfold from $10 million in Q1 2020 to $85 million in Q1 2021.
Growth in custodial fee, earn campaign, and staking revenues. Custodial fee revenue was $23.5 million or 41.6% of what the firm made in subscriptions and services. Staking followed with $10.3 million, and $4 million of staking revenue came from the Bison Trails acquisition.
Total operating expenses were $813 million in the quarter. The exchange spent the most on transaction expenses, which cost $234.1 million.
Coinbase had 1,717 employees at the end of the quarter, a 96% increase from the same period last year.
Monthly Transaction Users (MTUs) 6.1 million, matching preliminary figure.
Trading volume $335 billion; $120 billion from retail trading and $215 billion from institutional trading.
The company boosted its year forecast range for MTUs to 5.5 million to 9 million, up from its earlier predicted range of 4 million to 7 million.
Average net revenue per user has been $34 to $45 during the past two years, the company said. The low part of that range occurred in 2019.
For the Q2, Coinbase said it expects all of its business metrics to meet or exceed the results recorded in Q1. Q2 trading volume will “slightly” exceed Q1 trading volume if it persists at the same pace, the company said.
Coinbase expects $35 million in one-time expenses related to its direct listing. It also expects between $1.3 billion to $1.6 billion costs from its technology and its development expenses general and administrative expenses in the full year 2021.
4. Tether’s First Reserve Breakdown Shows Token 49% Backed by Unspecified Commercial Paper
The new composition report is part of Tether’s efforts to stay in compliance with a settlement with the New York Attorney General.
Tether revealed the breakdown of its reserves for the first time, casting another sliver of light on the backing of USDT (-0.07%), the largest cryptocurrency pegged to the U.S. dollar.
Much remains murky, however, in part because the pie charts provided by Tether on Thursday make no mention of any independent review by an accounting firm. Moore Cayman, an audit firm in the Caribbean with five employees, has published two reports this year attesting that USDT is fully backed. But the auditor (part of the Moore Global confederation of accounting and consulting firms) did not detail what exactly is backing the token.
To be fair, other stablecoin issuers like Circle and Gemini don’t typically produce breakdowns of their reserve compositions at all. Gemini’s accountant, for example, states in its attestations that the client’s reserves are held in either FDIC-insured accounts at State Street Bank or a Goldman Sachs Asset Management money market fund that invests solely in U.S. Treasury securities. The percentage of each is not provided — but then again, both are considered highly liquid and creditworthy assets (“money-good,” in Wall Street parlance). The same cannot be said of all the assets on Tether’s balance sheet.
The new composition report is part of Tether’s efforts to stay in compliance with a settlement agreed to with the New York Attorney General’s office (NYAG) after the prosecutor investigated it and its sister crypto exchange Bitfinex over the cover-up of some $800 million in losses.
5. Coinbase to Speed Up Process for Approving New Coins, Add DOGE: CEO
CEO Brian Armstrong said on the company’s Q1 earnings call that it would list coins on the first day that they trade.
Coinbase, known for being particularly choosy in the cryptocurrencies it allows to list, has decided to be a lot more inclusive, potentially bringing in a flood of new revenue as a result.
As part of the new policy, the leading U.S. exchange will be listing meme-based cryptocurrency dogecoin (DOGE, +4.45%) (DOGE) in the next six to eight weeks. Coinbase sat on the sidelines this year as competing exchanges raked in untold millions of fees as trading in dogecoin, a cryptocurrency that was started as a joke, exploded in popularity.
Speaking on the company’s Q1 earnings call, CEO Brian Armstrong said Coinbase is also changing its process for listing coins to include digital assets that have just been minted. In the future the company will start listing what are called “debut” coins or cryptocurrencies that have just been minted and are seeing their first day of trading volume.
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May 14, 2021