Tag: bitcoin rate

Bitcoin swings as China regulators punish company over crypto, BFSI News, ET BFSI

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By Joanna Ossinger

Bitcoin fluctuated Tuesday after China’s central bank and a regulator in the capital city took action against a company that was allegedly providing cryptocurrency-related services.

The largest cryptocurrency had risen as much as 3.7% to $35,094 before dropping back after the People’s Bank of China and Beijing’s local financial regulator ordered a company in the city to cancel its business registration. As of 7:55 a.m. in New York it was trading 1% higher at $34,194.

Financial and payments institutions should not directly or indirectly provide virtual currency-related services, the PBOC and the Beijing regulator said in a statement. It named marketing, promotion and display, and location-setting among prohibited activities.

”Whilst not directly affecting crypto, China clampdown on tech firms is another example of it flexing its regulatory muscles against an industry whose oversight has been lacking,” said Antoni Trenchev, co-founder of crypto lender Nexo in London. “Bitcoin too is caught in China’s regulatory crossfire as it’s seen as a threat to the digital yuan.”

China has increased its focus on the cryptocurrency industry, adding restrictions on mining, trading and other services, as well as issuing cautions to entities like banks that might facilitate such transactions. Many miners have shut down or are trying to move out of the country, and mining metrics have showed the decreased activity.

The move came after some chart watchers had been eyeing the 50-day moving average above $36,000 as a potential zone to see a bullish breakout. However, Bitcoin has been stuck in a range of about $30,000 to $40,000 for weeks after dropping from its record near $65,000 reached in mid-April.

“Bitcoin has been trending sideways between $30,000 and $40,000 for the best part of seven weeks now,” Trenchev said. “I expect Bitcoin to remain stuck in this trend for the forseeable future, before grinding higher again.”



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China deepens crypto crackdown with central bank warning, BFSI News, ET BFSI

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BEIJING: China’s central bank warned companies on Tuesday against assisting cryptocurrency-related businesses as it shut down a software firm over suspected involvement in digital currency transactions.

Beijing has turned a sharp eye on cryptocurrency in recent months as it widens its regulatory crackdown on the tech sector.

Cryptocurrency trading is banned in China, and authorities have recently closed mines and warned banks to halt related transactions.

On Tuesday, a Beijing office of the central bank ordered the closure of software company Beijing Qudao Cultural Development, alleging it had been involved in providing software services for cryptocurrency transactions.

The move was necessary “to prevent and control the risk of speculation in virtual currency transactions, and protect the safety of the public’s assets”, it said in a statement.

The bank also warned organisations not to “provide premises, commercial display, advertising… and other services for cryptocurrency-related business activities”.

Financial and payment institutions are instructed not to provide cryptocurrency-related services to customers.

The announcement comes shortly after provinces including Sichuan, Inner Mongolia and Qinghai shut down crypto mines — causing miners to look abroad — and follows an earlier warning for banks and a payment giant to halt crypto-related transactions.

Last month, bitcoin tumbled after China’s mining ban in southwestern Sichuan.

China is in the middle of a wide-ranging regulatory crackdown on its fintech sector, whose biggest players — including Alibaba and Tencent — have been hit with big fines after being accused of monopolistic practices.



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Bitcoin’s year so far, BFSI News, ET BFSI

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LONDON: If you’re a bitcoin investor, your nerves may have taken quite a pounding in 2021.

The cryptocurrency‘s journey towards the investment and commercial mainstream has gathered pace, with major financial firms and companies embracing the emerging asset.

Such interest helped push it to a record high just shy of $65,000 in April. Yet in typically capricious fashion, it has since slumped by almost half.

At the halfway point of the year, the original and biggest cryptocurrency is up around 20% year-to-date. Here are some charts that tell the story of bitcoin’s year so far.

1/STILL VOLATILE
Wild price swings have been a defining feature of bitcoin throughout its near 13-year life. The first half of 2021 has been no different, despite hopes that greater liquidity in markets and stronger infrastructure would dampen swings.

Bitcoin more than doubled from the start of the year to its all-time high of $64,895 hit in mid-April, before slumping by over half in just five weeks as regulators across the world – especially China – cracked down on cryptocurrencies.

In May alone bitcoin lost 35%, in its worst month since 2018. Last week it fell under $30,000 for the first time since January, briefly wiping out its year-to-date gains.

Many larger investors also left the bitcoin market after prices spiked in the first quarter, with some shifting to gold, according to JP Morgan analyst Nikolaos Panigirtzoglou.

“What we found out in the second quarter was that actually demand for bitcoin is price sensitive,” he said. “Some institutional investors started getting out of bitcoin in April … they thought bitcoin prices were too high relative to gold.”

2/BITCOINS OR ALTCOINS?
Bitcoin has attracted the lion’s share of the headlines so far this year. Yet many of its smaller digital currency rivals – known as the altcoins – have posted bigger gains.

Ether, the second-largest cryptocurrency, has nearly trebled so far this year, bolstered by a surge in the so-called decentralised finance sector. “DeFi” often uses its underlying blockchain technology to offer financial services without traditional middlemen such as banks.

Signs that the ethereum blockchain is gaining traction with mainstream financial firms has also fuelled gains.

XRP, the seventh-largest coin, has gained a similar amount. Other once-obscure coins such as dogecoin, started in 2013 as a joke, have also far outpaced bitcoin, with investors drawn to the prospect of quick gains. Dogecoin is up over 5,000% so far this year.

3/OUTPACED BY MEME STOCKS
Retail investors have embraced bitcoin this year, attracted by narratives that it can act as a hedge against inflation and as a future payment method.

Also driving gains has been a perception that it is a vehicle for quick gains – a perceived quality shared by another 2021 financial market phenomenon: “meme” stocks, whose value is propelled by social-media buzz.

GameStop Corp and AMC Entertainment Holdings , two of the leading meme stocks, soared in the first quarter along with bitcoin, fuelled by retail investors with spare cash and free time because of coronavirus stimulus lockdowns.

Yet the assets have since decoupled, with bitcoin’s gains for the year so far outpaced by GameStop – up more than 1,000% – and AMC Entertainment, which has surged over 2,500%.

“It’s just an extension of free money just going crazy and so I think that has somewhat you can see that rippling over into cryptocurrencies,” said Joel Kruger, a strategist at crypto exchange LMAX Digital.



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President, BFSI News, ET BFSI

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SAN SALVADOR: Facing resistance from the World Bank, IMF and opposition parties to his move to make bitcoin legal tender in El Salvador, President Nayib Bukele has promised $30 for each citizen who adopts the cryptocurrency.

Initiated by Bukele, El Salvador’s parliament approved a law this month to allow the crypto money to be accepted as tender for all goods and services in the small Central American nation, along with the US dollar, its national currency.

The crypto money will become legal tender in September.

Bukele said that in a bid to boost its wide adoption, each citizen who opens an electronic bitcoin “wallet” named Chivo will have the equivalent of $30 uploaded to their account.

“It will be a gift,” Bukele told national television late Thursday. “Just download and register and you will receive the bitcoin equivalent of $30 to use.”

Bukele did not specify where the money would come from.

He said more than 50,000 people in the country of 6.5 million were already using bitcoin.

On Twitter, the president also accused the opposition of trying to “sow fear” among Salvadorans about the bitcoin law.

He gave an assurance that use of the cryptocurrency will be optional, and wages and pensions in the country will continue to be paid in US dollars.

Bukele has touted the move as a way to make it cheaper and easier for Salvadorans abroad — some 1.5 million, mainly in the United States — to send money back home in the form of remittances, which represent almost a quarter of the country’s GDP.

According to World Bank data, El Salvador received more than $5.9 billion in 2020 from nationals living abroad.

But opposition parties have said the plan is “unworkable” and experts and regulators have highlighted concerns about the currency’s notorious volatility and the lack of protections for its users.

On Tuesday, the cryptocurrency fell beneath $30,000 for the first time in five months. At its highest, bitcoin was worth more than $63,000 in April.

Last week, the World Bank rejected a request from El Salvador for assistance in its bid to adopt bitcoin as a currency, citing “environmental and transparency shortcomings”.

The IMF has also flagged concerns, with spokesman Gerry Rice telling reporters El Salvador’s move “raises a number of macroeconomic, financial and legal issues that require careful analysis.”

The Central American Bank for Economic Integration (CABEI) has said it will provide technical assistance for El Salvador to regulate the use of bitcoin.

On Thursday, the first bitcoin teller machine was opened in the capital San Salvador, where people can deposit dollars in cash into their bitcoin wallet.

The country’s only other bitcoin machine is in the coastal town of El Zonte, where hundreds of businesses and individuals use the cryptocurrency for everything from paying utilities bills to haircuts or buying a can of soda.



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Once an admirer, Nassim Taleb now says Bitcoin is worth zero, BFSI News, ET BFSI

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MUMBAI: Naseem Taleb, renowned author of highly-regarded books such as Black Swan and Skin in the Game, believes that the true value of a Bitcoin is no higher than a zero.

In a paper titled ‘Bitcoin, Currencies and Bubbles’, Taleb said: “In its current version, in spite of the hype, Bitcoin failed to satisfy the notion of ‘currency without government’ (it proved to not even be a currency at all).

The noted author said that Bitcoin can neither be a short-term or long-term store of value, cannot operate as a reliable hedge against inflation, and “worst of all does not constitute, not even remotely, a tail protection vehicle for catastrophic episodes”.

The former admirer of the cryptocurrency asserted that the true value of a Bitcoin is no higher than zero. “Gold and other precious metals are largely maintenance free, do not degrade over a historical horizon, and do not require maintenance to refresh their physical properties over time. Cryptocurrencies require a sustained amount of interest in them,” Taleb wrote in his paper.

After a trailblazing run for much of 2020 and better part of 2021 so far, Bitcoin has undergone a sharp fall over the past two months triggered by China’s crackdown on cryptocurrency miners and backlash from famous enthusiast Tesla Founder Elon Musk.

After hitting a record high of $62,741 in April, Bitcoin has given up more than 50 per cent over the past two months and is now vulnerable to falling closer to its high hit during the 2017-18 bull market of around $19,000.

The surge in the price of the cryptocurrency over the past 14 months had largely been driven by new interest institutional investors such as hedge funds and certain corporations like Tesla and MicroStrategy.

Much of the interest in the coin from institutional investors rested on the notion that Bitcoin can act as a true hedge against inflation, better even then gold in some opinions. Taleb believes that for a currency to be a hedge against inflation it should have minimum variance against a basket of goods and services, a quality Bitcoin lacks.

Taleb’s paper is likely to further ignite debate in the global investment world on the true role of Bitcoin and other cryptocurrencies. In India, cryto enthusiasts often call Bitcoin an asset, not a currency. If that is the case, Taleb’s paper may give them a headache.



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Bitcoin hits nearly 2-week low in wake of China crackdown, BFSI News, ET BFSI

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LONDON/TOKYO: Bitcoin tumbled as much as 9% on Monday as recent volatility in the cryptocurrency market showed no signs of dampening down, with market players citing thin liquidity and China’s expanding crackdown on bitcoin mining.

Bitcoin fell as low as $32,288, its lowest in 12 days, and was last down 7.5%. If sustained, the drop would be its biggest in around a month.

Authorities in the southwest province of Sichuan on Friday ordered cryptocurrency mining projects to close. The State Council, China’s cabinet, last month vowed to clamp down on bitcoin mining and trading as part of a series of measures to control financial risks.

“Crackdown on Chinese miners might mean that they are offloading coin into a thin market and taking us lower,” said Ben Sebley of London-based crypto firm BCB Group.

Production of bitcoin in China accounts for more than half of global bitcoin production. Sichuan is China’s second-biggest bitcoin mining province, according to data compiled by the University of Cambridge. Some miners shift production there in the rainy summer to take advantage of its rich hydropower resources.

Companies that mine bitcoin typically hold large inventories of the cryptocurrency, with any moves to sell large amounts depressing prices.

Bitcoin has dropped by over a fifth in the last six days, and is down by half from its April peak of just shy of $65,000. Still, it has gained over 10% this year.

Smaller rival ether, the second-biggest cryptocurrency by market capitalisation that tends to move in tandem with bitcoin, dropped as much as 12%, falling below $2,000 for the first time in almost a month. It was last down 10% at $2025.31.



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World Bank rejects El Salvador request for help on Bitcoin implementation, BFSI News, ET BFSI

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The World Bank said on Wednesday it could not assist El Salvador‘s bitcoin implementation given environmental and transparency drawbacks.

“We are committed to helping El Salvador in numerous ways including for currency transparency and regulatory processes,” said a World Bank spokesperson via email.

“While the government did approach us for assistance on bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings.”

Earlier on Wednesday, Salvadoran Finance Minister Alejandro Zelaya said the Central America country had sought technical assistance from the Bank as it seeks to use bitcoin as a parallel legal tender alongside the U.S. dollar.

El Salvador’s government did not immediately respond to a request from Reuters regarding the World Bank’s decision.

The minister also said ongoing negotiations with the International Monetary Fund had been successful, although the IMF said last week it saw “macroeconomic, financial and legal issues” with the country’s adoption of bitcoin.

Zelaya said on Wednesday the IMF was “not against” the bitcoin implementation. The IMF did not respond to a request for comment.

Investors have recently demanded higher premiums to hold Salvadoran debt, on growing concerns over the completion of the IMF deal, key to patching budget gaps through 2023.

On Wednesday, bonds sold off across the curve, with the 2032 issue down more than 2 cents at 96.25 cents on the dollar. The spread of Salvadoran debt to U.S. Treasuries dipped to 705 basis points after hitting on Tuesday a four-month high of 725 bps.

“There is no fast track for a solution on an IMF program and even uncertainty on whether the bitcoin proposal is compatible with diplomatic U.S. (or) multilateral relations,” said Siobhan Morden, head of Latin America fixed-income strategy at Amherst Pierpont Securities in New York.

El Salvador this month became the first country to adopt bitcoin as legal tender, with President Nayib Bukele touting the cryptocurrency’s potential as a remittance currency for Salvadorans overseas.

This month, Bukele also pulled out of an anticorruption accord with the Organization of American States, which dismayed the U.S. government, as Washington looks to stem corruption in Central America as part of its immigration policy.

“The recognition of a ‘Bukele’ risk premium has probably done some permanent damage to investor sentiment,” Morden said in her client note.

The market may be focusing too much on the news headlines, however, and not enough on the possibility of a deal with the IMF, said Shamaila Khan, head of EM debt strategies at AllianceBernstein in New York.

“It is important for El Salvador to get the IMF program done. If it was lost on them, they wouldn’t have the conversations,” she said.

“Our view is too much risk is priced in at these levels.”



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Goldman offers new Bitcoin derivatives to Wall Street investors, BFSI News, ET BFSI

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By Matthew Leising

Goldman Sachs Group Inc. is wading deeper into the $1 trillion Bitcoin market, offering Wall Street investors a way to place big bets.

The investment bank has opened up trading with non-deliverable forwards, a derivative tied to Bitcoin’s price that pays out in cash. The firm then protects itself from the digital currency’s famous volatility by buying and selling Bitcoin futures in block trades on CME Group Inc., using Cumberland DRW as its trading partner. Goldman, which still isn’t active in the Bitcoin spot market, introduced the wagers to clients last month without an announcement.

“Institutional demand continues to grow significantly in this space, and being able to work with partners like Cumberland will help us expand our capabilities,” said Max Minton, Goldman’s Asia-Pacific head of digital assets. The new offering is “paving the way for us to evolve our nascent cash-settled crypto-currency capabilities.”

Goldman Sachs, which restarted a trading desk this year to help clients deal in publicly traded futures tied to Bitcoin, said in March it was also close to offering private wealth clients additional vehicles to bet on crypto prices. But the push into forwards dramatically increases its capacity to help big investors take positions. The partnership with Cumberland underscores the bank’s willingness to work with outside firms to help it do so, according to people familiar with the matter, speaking on the condition they not be identified.

For years after its creation in 2009, Bitcoin was shunned by Wall Street banks, with JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon once threatening to fire any of his traders caught buying and selling the digital currency. While Dimon later softened his tone, the banking world has long seen Bitcoin as a plaything for criminals, drug dealers and money launderers.

But client interest and Bitcoin’s astronomical price gains — reaching a high of almost $65,000 in April — have turned many bankers around, with Morgan Stanley making a Bitcoin trust product available to its customers and JPMorgan working on a similar offering.

“Goldman Sachs serves as a bellwether of how sophisticated, institutional investors approach shifts in the market,” said Justin Chow, global head of business development for Cumberland DRW. “We’ve seen rapid adoption and interest in crypto from more traditional financial firms this year, and Goldman’s entrance into the space is yet another sign of how it’s maturing.”

Banks are still wary of the regulatory challenges of holding Bitcoin outright. As derivatives settled with cash, the products Goldman Sachs is offering don’t require dealing with physical Bitcoin. In a similar way, the Morgan Stanley and JPMorgan trusts give customers access to vehicles tracking Bitcoin’s price while using a third party to buy and hold the underlying digital asset.

Goldman Sachs may next offer hedge fund clients exchange-traded notes based on Bitcoin or access to the Grayscale Bitcoin Trust, one of the people said.

“The crypto ecosystem is developing rapidly,” Chow said. “There is progress being made in offering ETFs, new custody providers coming online and optimism that regulatory efforts are coming into focus. It’s a great time to be in the space.”



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Bitcoin is facing a make-or-break moment, technicals show, BFSI News, ET BFSI

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By Vildana Hajric and Lu Wang

Bitcoin is facing a make-or-break moment following a recent bout of selling, according to technical analysis.
Though the cryptocurrency has rebounded above its average price over the past 100 days, it’s still trading below its 50-day moving average. Such a dynamic typically indicates an asset is nearing an inflection point.

If Bitcoin can’t overtake its 50-day mean — which currently sits at about $57,000 — then it might be in for a period of volatility as the gap between the two trend lines converges. Technical indicators suggest breaking out might not be an easy feat — Bitcoin failed to do so on several occasions last week.

Trading in the world’s largest digital asset has been choppy in recent days after it hit a record high in mid-April above $64,000. It’s down more than 15% since then, though it rebounded earlier this week amid positive news, including comments from Tesla Inc.’s chief financial officer that reiterated the company’s commitment to the cryptocurrency.

Bitcoin is facing a make-or-break moment, technicals show
“The drastic — relative to what we’ve seen of late — pullback certainly was a point of eyebrows being raised, but at the end of the day, I think the fact that things were able to rebound and stabilize is a good thing,” said David Tawil, president of ProChain Capital. “It shows real power to the token, the staying power to the asset class.”

The coin fell 1.4% on Wednesday following an announcement by the Securities and Exchange Commission that it will delay a decision on a Bitcoin exchange-traded fund. It was at about $54,586 as of 9:43 a.m. in Hong Kong Thursday.

Sam Stovall, chief investment strategist at CFRA Research, says that if the stock market continues its advance, he expected Bitcoin to follow.

Despite its recent turbulence, Bitcoin is still up 511% over the past year. Inflation and central bank policies have been its biggest drivers during the past 12 months, according to Quant Insight, a London-based analytics research firm that studies the relationship between assets and macro factors.

Bitcoin is facing a make-or-break moment, technicals show
While some dispute the idea that Bitcoin can act as an inflation hedge, the argument has been a key tenet for its bullish thesis and rings true for a lot of crypto fans. Proponents have seized on the money-printing narrative to promote the notion that Bitcoin is a store of wealth, an explanation that’s gained traction in recent months with economists expecting price pressures to pick up.

“No question about it — what drives a big chunk of the interest in Bitcoin has been just the tremendous amount of money that has been printed and will be printed and really the fundamental thought that you cannot have that much money in the system and not have it be inflationary,” said Chuck Cumello, president and chief executive officer of Essex Financial Services.



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Days after a record high, bitcoin plunges in biggest intraday drop since February, BFSI News, ET BFSI

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Bitcoin plunged the most in more than seven weeks, just days after reaching a record.

The biggest crypto coin fell 10.1% to $54,743.57 as of 7:30 a.m. in New York on Sunday, after declining as much as 15.1% to $51,707.51 in the Asian day. Ether, the second-largest token, dropped almost 18% before paring losses.

Several online reports attributed the plunge to speculation the U.S. Treasury may crack down on money laundering that’s carried out through digital assets.

Bitcoin hit a record high of $64,869.78 last week ahead of the debut trade for the cryptocurrency exchange Coinbase Global Inc. on the Nasdaq exchange Wednesday. Coinbase ended its first trading week on a high note after bullish reviews from Wall Street analysts.

Dogecoin, a token created as a joke and which has been boosted by the likes of Elon Musk and Mark Cuban, rallied more than 110% Friday before dropping the next day. Demand was so brisk for the token that investors trying to trade it on Robinhood crashed the site, the online exchange said in a blog post Friday.

“The crypto world is waking up with a bit of a sore head today,” said Antoni Trenchev, co-founder of crypto lender Nexo. “Dogecoin’s 100% Friday rally was ‘peak party,’ after the Bitcoin record and Coinbase listing earlier in the week. Euphoria was in the air. And usually in the crypto world, there’s a price to pay when that happens.”

Besides the “unsubstantiated” report of a U.S. Treasury crackdown, Trenchev said factors for the declines may have included “excess leverage, Coinbase insiders dumping equity after the direct listing and a mass outage in China’s Xinjiang province hitting Bitcoin miners.”

Growing mainstream acceptance of cryptocurrencies has spurred Bitcoin’s rally, as well as lifted other tokens to record highs. Interest in crypto went on the rise again after companies from PayPal to Square started enabling transactions in Bitcoin on their systems, and Wall Street firms like Morgan Stanley began providing access to the tokens to some of the wealthiest clients. That’s despite lingering concerns over their volatility and usefulness as a method of payment.

Governments are inspecting risks around the sector more closely as the investor base widens.

Federal Reserve Chairman Jerome Powell last week said Bitcoin “is a little bit like gold” in that it’s more a vehicle for speculation than making payments. European Central Bank President Christine Lagarde in January took aim at Bitcoin’s role in facilitating criminal activity, saying the cryptocurrency has been enabling “funny business.”

Turkey’s central bank banned the use of cryptocurrencies as a form of payment from April 30, saying the level of anonymity behind the digital tokens brings the risk of “non-recoverable” losses. India will propose a law that bans cryptocurrencies and fines anyone trading or holding such assets, Reuters reported in March, citing an unidentified senior government official with direct knowledge of the plan.

Crypto firms are beefing up their top ranks to shape the emerging regulatory environment and tackle lingering skepticism about digital tokens. Bitcoin’s most ardent proponents see it as a modern-day store of value and inflation hedge, while others fear a speculative bubble is building.



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