Tag: cryptocurrency

Bitcoin posts record weekly outflows as gains stall, BFSI News, ET BFSI

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NEW YORK: Bitcoin hit record outflows last week, as investors diversified into cryptocurrency assets with new developments in their specific network such as ethereum, data from digital currency manager CoinShares showed on Monday.

Outflows for bitcoin products and funds totaled $98 million, or 0.2% of total assets under management. For the year, total bitcoin inflows amounted to $4.3 billion. In 2020, investors pumped $15.6 billion into bitcoin products and funds, while ethereum inflows reached nearly $2.5 billion, data showed.

Since hitting a record just under $65,000 in mid-April, bitcoin’s price has fallen 35%. Bitcoin was down 5.2% at $44,073, driven by tweets from Tesla Inc. chief Elon Musk.

“While it only represented 0.2% of AUM, last week’s largest-ever outflows from bitcoin investment products is noteworthy,” said Matt Weller, global head of market research at Forex.com.

“Bitcoin’s perceived environmental costs are becoming a bigger and bigger part of the narrative, boosting the relative appeal of ethereum and its upcoming transition to the less energy-intense proof-of-stake security model,” he added.

Ethereum, the second-largest cryptocurrency in terms of market capitalization, continued to post solid inflows of $26.5 million last week, with a total of $910 million so far this year.

The cryptocurrency has been bolstered by the surge in usage of ethereum-based decentralized finance applications, which facilitate crypto-denominated lending outside traditional banking.

Ethereum hit a record high of $4,380.64 last week but was last down 6.3% at $3,358. It has gained about 355% in 2021.

All other digital asset investment products saw inflows as well in the latest week, such as Cardano and Polkadot.

Grayscale remains the largest digital currency manager, with $47.268 billion in assets, down from $49.3 billion at the end of April.

CoinShares, the second-biggest and largest European digital asset manager, oversaw about $6 billion as of last week, up from $5.8 billion in late April.



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Have IPL ads led to a fresh clampdown on Indian crypto exchanges?, BFSI News, ET BFSI

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When dogecoin turned to be the new sensation on the crypto street, many Indian investors could just marvel at the image of the dog on the coin, but not buy it.

The reason was their purchases are not going through as some banks have directed payment gateways not to process cryptocurrency­related transactions.

Since early this month, leading banks, notably private sector lenders ICICI Bank and IndusInd Bank, have asked payment gateway partners to stop processing such transactions.

Axis Bank, Kotak Mahindra Bank, Citibank, and others are limiting their exposure to the cryptocurrency market.

Banks, the industry sources said, have stopped issuing merchant IDs to payment gateways, and have asked these intermediaries to tighten scrutiny while dealing with cryptocurrency exchanges in India.

The issue started in late February and according to experts, the recent surge in the market, dogecoin frenzy and advertisements by crypto exchanges during IPL led to a fresh clampdown on the cryptocurrency.

The aggressive marketing push by crypto exchanges on TV during the IPL, OTT channels and through social media influencers has caused the regulator to clamp down as the industry is not licensed in India.

Dogecoin trading volumes from India have more than trebled since April and platforms have witnessed record-breaking transaction volumes.

Regulator against it

According to reports, the Reserve Bank of India, is informally urging lenders to cut ties with cryptocurrency exchanges and traders as the highly speculative market booms, despite a Supreme Court ruling that banks can work with the industry.

The guidance comes as the Indian government is drafting a law to ban cryptocurrencies and penalise anyone dealing in them, which would be among the most sweeping crackdowns on the new investing fad in the world. But with the COVID-19 crisis engulfing the country, no one is sure when such a bill may be passed, adding to investors` confusion.

The Reserve Bank of India (RBI) in 2018 had forbidden banks from dealing in all transactions related to bitcoin and other such assets. That diktat was challenged by the crypto exchanges and in March 2020, India`s top court overturned the RBI ban and allowed lenders to extend banking facilities to them.

With investors continuing to rush into the hot new asset class, however, regulators appear to be gearing up for another try.

Earlier this year, RBI Governor Shaktikanta Das said that they have “major concerns (around crypto) from the financial stability angle.”.

Growing frenzy

Thousands of new users are piling into the system every day at a time when the prices of major digital currencies have been on the rise. There are over 10 million crypto investors in India with total holdings of over Rs 10,000 crore, according to industry estimates. No official data is available.

Crypto platforms, for their part, are in the process of sending a communication to all major banks about the Supreme Court ruling of February 2020 that revoked the banking ban and declared that the central bank cannot issue any formal guidelines or directly regulate these exchanges.



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Second-biggest cryptocurrency ethereum breaks $4,000 to hit record high, BFSI News, ET BFSI

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LONDON/SINGAPORE: Cryptocurrency ethereum broke $4,000 for the first time on Monday, climbing to a new peak for a third day in a row on bets it may find new uses, although some analysts said it was overvalued at current levels.

Ethereum, the second-largest coin by market capitalisation, jumped more than 6% to just below $4,175, and was last up around 2%.

It has soared this year, fuelled by expectations of wider use, based in part on its role in decentralised finance – “DeFi” – platforms that facilitate crypto-denominated lending outside traditional banking.

An upcoming technical change to its software seen as reducing its supply has also provided a boost, while new institutional investors in the crypto sector have warmed to it amid a tepid quarter so far for bitcoin.

“(Crypto has) got a lot more institutional involvement than people who haven’t followed the market believe,” said Chris Weston, head of research at brokerage Pepperstone.

“And everyone’s been in ethereum. It’s not a meme joke coin, it actually has some application use,” he added, referring to its role in DeFi.

But some analysts said ethereum’s increasing valuation was not underpinned by data of how widely it is used.

“The continued divergence of its price relative to network activity raise questions about its valuation,” J.P. Morgan analysts wrote in a report to clients dated May 7.

Factors such as the number of active digital addresses in its network would be more consistent with a price of around $1,000, the US bank said.

In the crypto world, the terms “ethereum” and “ether” have become synonymous. Technically, ethereum is the blockchain network in which applications are embedded, while ether is the token or currency that enables or drives the use of these applications.

Altcoins

Bitcoin, the largest cryptocurrency, rose to a three-week high above $59,600 on Monday. Dogecoin, a recent outperformer, stabilised after losses on Sunday after comments by Tesla Inc chief Elon Musk on the Saturday Night Live TV show, where he said it was a “hustle”.

Smaller cryptocurrencies, like Dogecoin, known as “altcoins,” have been in demand in the past few weeks, pushing bitcoin’s share of the overall $2.5 trillion digital currency market to its lowest in around two years.

Dogecoin, which began as a social media joke in 2013, is up more than 700% in the last month.

It was last trading at $0.51, after tumbling 38% in the last 24 hours on Musk’s comments. It later steadied after Musk’s commercial rocket company SpaceX said it would accept the meme-inspired cryptocurrency dogecoin as payment.

The meme-based coin has become the fourth-largest digital currency, with a market capitalisation of $69 billion, according to CoinMarketCap. It hit a record high on Thursday above $0.73.



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Cryptocurrency ethereum is flourishing but risks linger, BFSI News, ET BFSI

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NEW YORK: Ethereum has outperformed major digital currency rivals this year, bolstered by the surge in decentralized finance (DeFi) and the anticipation of a technical adjustment this summer, but it faces hurdles that could stall its rise.

With a jump of more than 350% in its price this year, ethereum has the second-largest market capitalization after bitcoin, but not as much cache and perhaps more operational challenges that could prevent it from eclipsing its major rival.

In the crypto world, the terms “ethereum” and “ether” have become synonymous. Technically, ethereum is the blockchain network in which decentralized applications are embedded, while ether is the token or currency that enables or drives the use of these applications.

Ethereum’s market cap on Friday was $410 billion, second to bitcoin’s at more than $1 trillion, according to data tracker CoinGecko.com. It hit a record high of $3,610.04 on Thursday and was last up 1% at $3,524.

Bitcoin, meanwhile, has risen a more modest 97% this year. Since hitting an all-time high of just under $65,000 in mid-April, bitcoin has actually fallen roughly 18%.

A rise in institutional interest has increased ethereum demand, but supply has been limited. The token’s supply in exchanges in April hit its lowest in nearly 2-1/2 years, according to Kraken Intelligence, a research blog from cryptocurrency exchange Kraken.

“It’s more than just a coin. It’s a whole ecosystem that allows other applications to be built,” said Bradley Kam, chief executive officer of blockchain domain provider, Unstoppable Domains.

At the heart of ethereum’s ascendancy is DeFi, which refers to peer-to-peer cryptocurrency platforms that facilitate lending outside traditional banking institutions. Many sites run on the ethereum network, using an open-source code with algorithms that set rates in real time based on supply and demand. The value locked – the total number of loans on DeFi platforms – was $79 billion as of Friday, DeFi Pulse data showed, up nearly 600% from $11 billion in October.

DeFi, however, has its problems. Dune Analytics research showed 2%-5% of transactions on ethereum-based decentralized exchanges failed due to complications such as slippage or insufficient “gas” prices, which are the fees required to successfully conduct a transaction on the ethereum blockchain.

Between April 15 and April 21, for instance, roughly 1.1 million transactions were made on Uniswap, a DeFi protocol used for exchanging cryptocurrencies. Of those, 241,262 failed, representing the largest number of transaction failures across the entire ethereum network, data from analytics platform Etherscan and Dune Analytics showed.

“DeFi is destined for meteoric growth, but that growth inherently comes with risk,” said Alex Wearn, chief executive officer at crypto exchange IDEX.

“Issues such as failed transactions and front-running are not subtle, costing users millions of dollars every day,” he said, referring to the practice of getting a transaction first in line in the execution queue right before a known future contract. “These major … problems limit the appeal of these products for a wider audience and ultimately hinder the ecosystem’s growth.”

Wearn estimates that more than $285 million were lost in DeFi hacks so far this year.

Proponents say DeFi sites represent the future of financial services, providing a cheaper, more efficient and accessible way for people and companies to access and offer credit.

TECHNOLOGY BUMPS
Ethereum has also been plagued by the network’s inability to scale to meet demand without incurring high transaction fees as well as slow execution of transactions, market participants said.

The first phase of an upgrade called Ethereum 2.0 launched last year is aimed at addressing the network’s tech issues on speed, efficiency, and scalability.

However, John Wu, president of AVA Labs, an open-source platform for financial applications, pointed out that the planned migration to Ethereum 2.0 has been in the works for years.

“The timelines have consistently been delayed, so it’s hard to feel comfortable with that unknown,” he said.

Ethereum also faces stiff competition from networks such as AVA Labs’ Avalanche and Binance Smart Chain, which are also compatible with ethereum’s assets and applications.

Data from AVA Labs showed users have transferred more than $170 million to Avalanche from ethereum since February.

ANOTHER TECHNICAL ENHANCEMENT
Still, hopes of a technical adjustment called EIP (ethereum improvement proposal) 1559, which is expected to go live in July and is seen reducing the supply of ethereum, has provided a lift for the digital currency.

EIP-1559 aims to reduce the volatility of ethereum’s fees by introducing a mechanism to burn some of those transaction fees, which should slow the token’s issuance, analysts said.

The impact on ethereum’s price could be similar to a bitcoin halving event, in which an adjustment cut bitcoin’s supply and propelled its price to record highs, analysts said.

“There’s a lot of numbers going around the market about the potential impact that has like a halving-type magnitude with bitcoin,” said Richard Galvin, co-founder and chief executive officer of crypto fund Digital Asset Capital Management.

“They’re all pretty positive drivers that have, I guess, seen a pretty strong revaluing.”



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IndiaTech.org whitepaper proposes defining cryptos as digital assets

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Industry association IndiaTech.org has proposed defining cryptos as digital assets and not currencies similar to other assets such as gold, stocks, or marketable securities.

The proposal is part of a whitepaper released by the association, which includes five key points aimed at providing regulatory clarity to crypto assets and exchanges in the country.

“Several countries such as the US, Australia have taken a very similar approach and have defined crypto assets as property,” the whitepaper has recommended.

It has also proposed introducing a system for registering Indian registered or founded cryptocurrency exchanges in the country.

The association has recommended permitting innovative uses of crypto by businesses and creating specific safeguards to protect retail investors from token issuance.

Taxation proposals

It has also called for a clear framework for taxing cryptos in the country.

“Enable taxation (direct and indirect) to treat crypto assets just as other current assets (but not cash), permit disclosures and regulate import which would result in additional revenue generation,” said the whitepaper.

It has also proposed putting in place checks and balances through well-defined reporting mechanisms, accounting standards and mechanisms to counter suspicious activities and transactions.

Regulatory system

Further, IndiaTech.org has suggested self-regulation for the industry based on a code of conduct that is framed in line with the government’s aim of safeguarding consumers as well as ensuring financial stability.

“The foremost need today is for this sector to be granted the much-needed regulatory clarity that it has been seeking. We are hopeful that the government will work with the industry to regulate the sector and that a progressive approach is adopted while doing so,” said Rameesh Kailasam, CEO, IndiaTech.org.

The whitepaper comes at a time when the government has been looking at banning cryptocurrencies in the country.

“More than being a replacement to fiat currencies, crypto by nature is a strong digital asset, a store of value,” said Sumit Gupta, Co-Founder and CEO, CoinDCX.

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Central bank-issued digital coins seen co-existing with Bitcoin, BFSI News, ET BFSI

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By Matthew Leising

Cryptocurrencies like Bitcoin and Ether will co-exist “for a while” with more-restrictive digital coins such as the one issued by China’s central bank, according to Changpeng Zhao, chief executive officer of Binance.

Zhao, who runs the world’s largest Bitcoin exchange, said digital assets issued by central banks will be different than public coins in many ways. They won’t offer the same freedom of use and won’t have a supply cap in place, Zhao, who’s also known as CZ, said Monday in a Bloomberg TV interview.

“Most central-bank digital currencies are going to have a lot of control attached to them,” Zhao said. Differences between the two types of coins could make the central-bank version unattractive to people drawn to the crypto world. “At the end of the day, those are core properties that users care about,” he said.

Bitcoin and Ether have hit all-time highs this year as institutional investors and corporations buy cryptocurrencies to add to their balance sheets. Ether hit a record $3,339 Monday. While Bitcoin is used only for transferring digital value, Ether supports the Ethereum blockchain on which more types of transactions are possible.

User demand for Ether to buy assets such as non-fungible tokens also could be driving prices higher, Zhao said.

“All of these use cases are moving right now and people need the other coins to do this type of new transaction,” he said. “Ethereum is one of those clear examples. That’s probably why Ether is going up.”

About 70% of Binance users are retail customers with the rest being institutional investors, he said. He has no plans to take the company public and follow in the footsteps of Coinbase Global Inc., which listed shares directly on Nasdaq last month.

Binance is making money on its own and doesn’t need to raise more, he said.



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Ethereum breaks past $3,000 to quadruple in value in 2021, BFSI News, ET BFSI

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Cryptocurrency ether broke past $3,000 on Monday to set a new record high in a dazzling rally that has outshone the bigger bitcoin, as investors bet that ether will be of ever greater use in a decentralised future financial system.

Ether, the token transacted on the ethereum blockchain, rose 3% on the Bitstamp exchange to $3,051.99 by lunchtime in Asia. It is up more than 300% for the year so far, easily outpacing a 95% rise in the more popular bitcoin.

In part, the big rally is a catch-up to late 2020 gains in bitcoin, said James Quinn, managing director at Q9 Capital, a Hong Kong cryptocurrency private wealth manager.

It also reflects improvements to the ethereum blockchain, he said, and a growing shift towards “DeFi”, or decentralised finance, which refers to transactions outside traditional banking for which the ethereum blockchain is a crucial platform.

“At first, the rally was really led by bitcoin because as a lot of the institutional investors came into the space, that would be their natural first port of call,” Quinn said.

“But as the rally has matured over the last six months, you have DeFi and a lot of DeFi is built on ethereum.”

The launch of ether exchange-traded funds in Canada and surging demand for ether wallets to transact non-fungible tokens such as digital art have also pushed up the price.

The ether/bitcoin cross rate has soared more than 100% this year and hit a 2.5-year high on Sunday, pointing to a degree of rotation into the second-biggest cryptocurrency as investors diversify their exposure.

“Surging DeFi volumes continue to push ethereum prices higher as investors gain confidence in crypto and see ethereum as a safe second-place asset,” said Jehan Chu, managing partner at Hong Kong blockchain venture capital firm Kenetic Capital.

Illustrating the momentum for such new transactions, Bloomberg reported last week that the European Investment Bank plans on issuing a digital bond over the Ethereum blockchain, while JP Morgan plans a managed bitcoin fund.

Bitcoin, the world’s biggest crypto asset with more than $1 trillion in market capitalisation, regained the $50,000 mark last week and hovered around $58,000 on Monday, up about 3% but well below its record high at $64,895.22.

The U.S. dollar was broadly steady. [FRX/]

(Reporting by Tom Westbrook and Vidya Ranganathan; Editing by Himani Sarkar & Shri Navaratnam)



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Australians can now receive wages in Bitcoins as crypto acceptance grows, BFSI News, ET BFSI

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Bitcoin‘s dramatic surge from $22,000 in December 2020 to about $60,000 now is prompting many employed by cryptocurrency firms to take part or entire salaries in bitcoins.

After Miami City Council pledged to pay part of wages in Bitcoins, Australians can now receive a portion of their employment wages in Bitcoin using a new service from Living Room of Satoshi, a leading Australian Bitcoin payments company.

The “Wages” service allows a user to nominate a percentage of their regular pay to be converted to Bitcoin and instantly sent to their Wallet of Satoshi Bitcoin Lightning wallet. Wallet of Satoshi is a free application for iOS and Android, also created by the founders of Living Room of Satoshi, that boasts tens of thousands of active users worldwide.

Living Room of Satoshi

Living Room of Satoshi is an Australian company that enables payment of any bill, or transfers to any bank account, using Bitcoin and other crypto-currencies. Established in 2014, Living Room of Satoshi have facilitated hundreds of millions of dollars in payments and are fully regulated, operating under their own Australian Financial Services Licence.

The company is named in honour of Satoshi Nakamoto, the pseudonymous and mysterious creator of the original Bitcoin software.

Its CEO said with the astronomical rise in prices in the last six months, to provide an option for regular folks in Australia to also join this burgeoning ecosystem. The simplest and most pain-free way is to have a small percentage of your wage converted and sent to you when you get paid, he said.

In India

While there is no major trend of payment in Bitcoins in India, engineers and developers at crypto firms in India are being paid in kind.

Many young engineers and freelancers are accepting payments in cryptocurrency due to the ease of transferring it across borders, lower transaction costs.

With the dramatic surge of bitcoin value, those who accept the pay in such unit have reaped a huge windfall.

The risks

There have been times when thousands of dollars in value have been wiped overnight, and there is no guarantee the price will not continue to fluctuate in the future.

After a huge surge post Coin Base listing, bitcoin is down over 14% from record highs.

Still, there are signs that cryptocurrency has arrived on Main Street.

Growing popularity

Recently Mastercard said it expected to directly support some forms of cryptocurrency on its network in 2021, with one executive claiming that “digital assets are becoming a more important part of the payments world”.

Earlier this year, the City Commission of Miami has pledged its support to a proposal that would allow workers in the city to accept cryptocurrency as part of their salaries in the future.

the city’s mayor, Francis Suarez, said on Twitter that after his resolution was supported by local officials, a suitable vendor will be “procured” to “be able to offer our employees to get a percentage of their salary in Bitcoin (BTC).”

“This allows our residents to pay for fees in Bitcoin, and would also allow the city manager to cooperate with Miami county for taxes to be paid in Bitcoin,” Suarez announced. “This allows our residents to pay for fees in Bitcoin, and would also allow the city manager to cooperate with Miami county for taxes to be paid in Bitcoin,” the city’s mayor, Francis Suarez, the city’s mayor was quoted as saying.

The proposal has also been put forward to the state legislature for allowing BTC to be considered “an acceptable currency for us to potentially invest in, in the future.”



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Coinshares data, BFSI News, ET BFSI

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NEW YORK: Inflows into cryptocurrency funds and products hit $4.9 billion as of April 16, with the pace of increase slowing a bit in the first two weeks of the month after hitting record levels in the first quarter, data from digital currency manager Coinshares showed on Tuesday.

Inflows in the first two weeks of April hit about $400 million to $4.9 billion, or about 9% higher than an all-time high of $4.5 billion in the first three months of the year.

The pace of inflows had already moderated in the first quarter, after a 240% surge in the fourth.

That said, inflows in the second week of April totaled $233 million, the largest since early March, Coinshares said.

Bitcoin’s rise also slowed in the first two weeks of the month, growing just 5.7%, although it hit a record just under $65,000 during that period. After touching that all-time peak last week, bitcoin has plunged nearly 18% in six days. Bitcoin last traded up 0.8% at $56,161.

“There were … signs of excessive exuberance in the market, and a correction looked imminent,” said Pankaj Balani, chief executive officer of Delta Exchange, a crypto derivatives trading platform.

Inflows last week were more spread out to include other digital assets outside of bitcoin and ethereum.

Bitcoin still saw the largest inflows of $108 million, with ethereum snagging $65 million. But investors poured money into other digital tokens, including bitcoin cash, Polkadot, Binance, and Tezos, Coinshares data showed.

Crypto assets under management (AUM) have also surged to a peak of $64.2 billion, the data showed. In the first quarter, the sector’s AUM was $59 billion. Last year, assets under management for the sector hit $37.6 billion.

Grayscale is still the largest digital currency manager, with $49.5 billion in assets as of the second week of April, while CoinShares, the second biggest and the largest European digital asset manager, oversees about $5.7 billion in assets.

XRP has been the most popular digital asset in recent weeks with weekly inflows of $33 million, nearly doubling its assets under management to $83 million.



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A 400% rally makes Dogecoin bigger than even Ford and Kraft, BFSI News, ET BFSI

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For a cryptocurrency created as a joke, Dogecoin now has some serious company.

After a 400% rally in the past week, the total value of all circulating Dogecoins in the world is about $50 billion, according to data provider CoinMarketCap.com.

That makes it bigger than the market cap of Ford Motor Co. and Kraft Heinz Co. — and nearly equal to Twitter Inc., the platform where Elon Musk and Mark Cuban have promoted the Shiba Inu-themed meme coin.

No one thinks these blue-chip stocks are all that comparable to Dogecoin, a fringe asset with no real purpose beyond being a joke on social media. But the similarity of their market values underscores the boom in cryptocurrencies that’s taken Wall Street by storm.

It’s all part of the dizzying trajectory for Dogecoin, which has delighted followers of so-called alt coins, but dismayed some crypto enthusiasts who worry that it’s only adding to volatility and detracting from its more useful endeavors, like decentralized finance.

Dogecoin prices climbing once again, with fans rallying behind the #DogeDay hashtag to celebrate April 20, or 4/20, known in cannabis culture as a day for smoking marijuana. Prices were trading just below 40 cents, according to CoinGecko.com.

Meanwhile, other cryptocurrencies have been mired in a slump as euphoria from Coinbase Global Inc.’s listing wears off. Bitcoin, the world’s largest token, has fallen for five straight days, back to $55,000.



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