1. Crypto Long & Short: Peter Thiel Defines Bitcoin’s Accidental Role in Global Politics
Thiel’s comments about China “weaponizing” bitcoin to hurt the U.S. are a warning about the cost of inaction.
The battle over bitcoin’s evolving role just became a piece in a complex game of political strategy.
Peter Thiel’s talk earlier this week at a Richard Nixon Foundation event thrust the cryptocurrency even further out onto the geopolitical stage and highlighted two important macro narratives that investors should keep an eye on, not just for their potential impact on crypto returns.
Here’s one extract from his comments:
“I do wonder whether bitcoin should be thought of as a Chinese financial weapon against the U.S. It threatens fiat money, but it especially threatens the U.S. dollar.”
As with most things in life, context is key, and this statement is crying out for it.
On the surface, it seems as if he is asking U.S. regulators to prevent bitcoin from becoming more of a threat to the U.S. dollar. This is the wrong interpretation. The underlying intention is both more meaningful and more supportive of bitcoin and, ultimately, the U.S. than it may at first appear.
Others have pointed out that Thiel is probably playing 4d chess here, and I agree with that. But I believe his underlying message is about more than bitcoin and about more than trying to get the U.S. to sit up and take notice.
2. Traders Opting for Cash and Carry Strategy as Bitcoin’s ‘Contango’ Widens
Cash and carry traders seek to profit from the spread between bitcoin’s price in futures and spot markets.
Savvy traders are locking returns of over 40% in the wake of bitcoin (BTC, +1.17%)’s widening contango — the spread between prices in futures and spot markets, also known as futures basis/premium.
“With the premium on bitcoin futures expanding to as high as 40% per annum for the June expiry, there is a lot of interest from cash and carry traders to arbitrage the premium and lock-in risk-free gains,” Pankaj Balani, co-founder and CEO of the Singapore-based Delta Exchange.
Cash and carry arbitrage is a market-neutral strategy aimed to profit from price discrepancies in one or more markets.
It involves buying an asset in the spot market against a short position in the futures market when the futures draw a significant premium relative to the spot price. That way, traders pocket a fixed return, as the premium decays over time and converges with the spot price on the expiry date.
According to data source Skew, bitcoin’s June expiry futures listed on major exchanges such as Binance, Huobi, OKEx, BitMEX, and Deribit are currently drawing an annualized premium of 44% to 48%. Meanwhile, those listed on the Delta Exchange are trading at a premium of 30%.
3. Biden Administration Concerned Over Long-Term Effects of Digital Yuan
Officials at multiple government departments are increasing efforts to better understand any possible threat posed to the U.S. dollar by China’s digital yuan.
President Joe Biden’s administration is reportedly troubled by the long-term effects a digital yuan may have on the dollar’s status as the world’s reserve currency.
According to a Sunday report by Bloomberg citing unnamed sources, officials at multiple government departments are increasing efforts to better understand possible threats posed by China’s initiative.
Officials at the U.S. Treasury, State Department, Pentagon and National Security Council are reportedly unfazed by the short-term impacts a digital yuan, or China’s digital currency electronic payment (DCEP) system, may have on the dollar.
4. XRP Doubles in 7 Days, Heads for Biggest Weekly Gain Since December 2017
The token used in Ripple Labs’ payment network has climbed six-fold this year as some traders look through the SEC case and analysts see bullish patterns in price charts.
XRP, the digital token used in Ripple Labs’ payment network, headed for its best weekly performance in more than three years, after doubling in the past seven days.
Prices for XRP (XRP) are up 118% in the seven days through April 11, according to TradingView, using pricing from the Bitstamp exchange. That’s the biggest weekly gain since December 2017, when the token jumped 215% in a seven-day period.
XRP struggled toward the end of 2020 as Ripple faced allegations from the U.S. Securities and Exchange Commission that executives raised more than $1.3 billion through an unregistered, ongoing digital-asset securities offering.
5. Bitcoin Price Shoots Past $60K, Ether Hits New All-Time High in Early Saturday Trading
The price action comes just ahead of a highly anticipated Nasdaq listing for leading U.S. crypto exchange Coinbase.
Bitcoin’s price neared its all-time high of $61,712 early Saturday while ether (ETH, +2.12%) set a new all-time high at $2,190.
According to CoinDesk’s Bitcoin price page, the leading cryptocurrency traded above $60,000 for the first time in nearly a month after spending weeks vacillating between $52,000 and the upper $50,000s. Bitcoin pulled back marginally after peaking around $60,900, though it remains above the psychological marker as of press time.
Bitcoin last hit an all-time high in mid-March, according to CoinGecko.
Meanwhile ether, the second-largest cryptocurrency by market cap, came close to $2,200, just days after breaching $2,100 for the first time.
While it’s unclear if there’s a causation, the price action comes just days before leading U.S. exchange Coinbase begins trading on Nasdaq in one of the crypto industry’s most anticipated events. A sign of the maturing market, the listing will likely give Wall Street traders their most accessible bet yet on growth in the space.
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April 12, 2021