Dogecoin (Doge), Bitcoin (BTC) recover after brief early Monday, August 2nd sell off
Bitcoin and Dogecoin lost over 5% each last Sunday night after a brief sell-off in the crypto markets. Although they had regained most of the losses by Monday morning of last week, futures traders were left nursing millions of dollars in losses. BTC had lost almost $2,000 in just a few hours—when it went from $41,500 to under $39,200—briefly closing under its 34-period exponential moving average. It seemed ready for a continued downtrend, however, instead, it was bought aggressively at those levels and regained the $40,000 price level by Monday morning of last week. There were still ensuing selloffs in other large-cap cryptocurrencies. Dogecoin fell nearly six percent to $0.201, while Cardano (ADA), XRP, and Chainlink (LINK) dropped a couple of percent each. On the other hand, Ethereum and Binance Coin remained relatively stable, falling barely over a percent before being heavily bought. The ‘spot’ movements were followed by over-leveraged futures traders succumbing to the relatively tame carnage. Data from market tool Bybt showed $400 million were lost to liquidations in the past 24 hours, with Bitcoin traders losing over $178 million of that amount alone.
These downward price moves came after reports of regulation involving cryptocurrencies in the US circulated late last weekend. The reports included talk of possible taxation of crypto trades and crypto business to increase revenue, especially needed to fund the new ‘Infrastructure Deal.’ It was thought that the crypto market as a whole would fall under further scrutiny from the Internal Revenue Services. An analyst at Beacon Policy Advisors noted the week prior that, “lawmakers and regulators are taking cryptocurrency concerns seriously and seem poised to make sustained efforts on multiple fronts to bring it out of the shadows. Regulation is coming for the industry.” Also, there were unfriendly comments about crypto from US officials. The Democratic senator from Ohio, Sherrod Brown, stated, “There’s nothing ‘democratic’ or ‘transparent’ about a shady, diffuse network of online funny money. After a decade of experience with these technologies, it seems safe to say that the vast majority haven’t been good for anyone but their creators.”
US banks urged to include Bitcoin, crypto in their plans for this crucial reason
The American Bankers Association (ABA), in a new report entitled “Understanding Crypto: What banks need to know,” has urged banks across the country to partner with crypto firms.
This is due to the increased profitability of the sector and rising client interest, according to the 20 page report, which also suggested various crypto use cases for banks with revenue models and regulatory issues for each use case. The ABA provided a high-level overview of crypto with a glossary, which maps crypto business activities to bank products and services. The report went on to explore the increasing profitability of the crypto industry, and how banks have found it more lucrative to take crypto companies on as partners, and their customers as clients. Crypto companies need banks to provide access to the payments system to onboard and offload fiat deposits, the report explored.
Some of the suggested partnerships for the banks included payment systems where a blockchain-powered payment network would allow for faster and more efficient international transactions. Also suggested was how the blockchain technology could be utilized to allow for cheaper and secure lending processes. Other activities which banks would find indispensable included KYC/AML, digital identity, reporting, and banking, where a bank could offer business banking services to crypto companies. The ABA further classified crypto assets into four categories: cryptocurrencies, Stablecoins, central bank digital currencies, and non-fungible tokens. Decentralized Finance (DeFi) also got a nod. The use cases ranged from Store of Value to Custody/Wallet Provider, and Interest-Bearing Accounts. Payments, lending exchange trading, broker-dealer insurance, network utility, and asset management were other use cases cited. Part of the summary of the report: “Blockchains represent a transparent and decentralized way of recording transactions, both financial and non-financial, but their use for the creation, storage, transfer, and trading of cryptocurrencies has grown exponentially over the past few years. At the same time, the crypto industry itself, while novel to many, has reached all-time highs in terms of market size, public interest, and company valuation.”
El Salvador to officially adopt Bitcoin as legal tender on September 7th
Crypto payment gateway Triple A, summarized what El Salvador’s adoption of Bitcoin as official currency on September 7 will mean for the local economy: payment processors that facilitate the immediate transfer of crypto into fiat currency and enable acceptance of Bitcoin (BTC) payments for e-commerce, point-of-sale, invoicing and remittance will have a finger on the pulse of the everyday economics of cryptocurrency adoption. Everyday life transactions will be authorized with the option of BTC. El Salvador’s president Nayib Bukele said, “The use of Bitcoin will be optional, and nobody will receive Bitcoin if they don’t want it. If someone receives payment in Bitcoin, they can choose to automatically receive it in dollars.” He then also assured citizens that pensions and salaries will continue to be paid in US dollars. As Bitcoin becomes El Salvador’s official currency alongside the US dollar, businesses in the country can accept it for goods and services payments, while citizens will be able to opt for paying their taxes in crypto. The majority of surveyed El Salvador’s citizens are skeptical of the new official currency. International financial authorities keep adding to the global uncertainty surrounding crypto adoption, but this makes any potential relief for local economies in need of a boost getting overlooked.
El Salvador has a population of 6.5 million, and just over 2 million of those citizens are currently living abroad and sending money home. This has led to a situation where over 20% of the country’s gross domestic product (GDP) is now made up of remittances. In terms of remittances as a share of GDP, the top five countries with such experience in 2020 were smaller economies, including Tonga, Lebanon, Kyrgyz Republic, Tajikistan, and El Salvador. Adopting Bitcoin as the official currency will enable bypassing costly and slow traditional remittance firms and will also open up financial services to 70% of the country’s citizens who do not have a bank account. Bukele committed to developing the necessary infrastructure in order to boost Bitcoin adoption and facilitate financial inclusion, including creating a Bitcoin wallet called Chivo. He will offer $30 worth of crypto to citizens who download the wallet and register an account. In addition, Athena Bitcoin announced a $1 million investment for installing 1,500 crypto ATMs across the country. Both the new wallet and crypto ATMs would enable instant conversions, guaranteeing freedom of choice regarding payment options.
Pantera boss: upcoming Ethereum catalyst could cause eth to outperform Bitcoin
During a recent interview with Reuters, Dan Morehead, the Chief Executive Officer of Pantera Capital, which is an American hedge fund focusing on crypto investments, said that Ethereum could outperform Bitcoin in the near future. He made this disclosure while stating he believed that Ethereum holds enormous potential because the number of applications that run on its blockchain, coupled with its lower environmental impact, will eventually help it flip its more renowned counterpart. The Pantera CEO was firm of the belief that the Ethereum Improvement Proposal (EIP) 1559 upgrade that is scheduled to go live on Wednesday will help the second largest crypto asset by market cap to become a tradable “fixed asset.” He went on to discuss that people looking to use cryptocurrencies as a store of value would begin to see Ethereum as a more viable option than Bitcoin. In his words, “You’ll see a transition of people who want to store wealth, doing it in ETH rather than just Bitcoin.” EIP 1559 is an Ethereum upgrade which will help reduce the huge transaction fees that ETH’s blockchain tends to charge. It is also intended to move the network to a Proof of Stake (PoS) network, which would drastically reduce the level of energy usage during mining of the asset.
However, Morehead added that he sees Bitcoin finishing the year strongly, as well, and predicted that the leading digital asset could finish the year between $80,000 and $90,000. He noted that the coin’s value could rise above $120,000 a year from now and hinted that with an expected increase in institutional adoption, BTC’s price could go as high as $700,000 within the next 10 years. Morehead addressed the level of institutional adoption Bitcoin has seen recently, and noted that, despite the drop in the asset’s value since April and its inability to regain its previous heights, his firm, Pantera Capital, has had great success in drawing in more institutional investors who see the current price decline as an opportunity to buy into the space. Regarding the increased regulatory scrutiny which the industry is currently facing, he says it is because we are in a “transition period.”
Senator Elizabeth Warren says crypto might need a ‘bailout’ if things go wrong
In her recent interview with Bloomberg, Senator Elizabeth Warren warned about major risks surrounding the ongoing expansion of crypto and, of course, she called for stricter market regulation. While admitting that crypto’s biggest upside might come from the democratization of access to the financial system, she warned that cryptocurrencies pose a systemic threat which could lead to another financial crash if they are left unregulated. “So long as it’s an unregulated system, you may be pulling more people in so that they can get cheated and that’s not what we want,” she stated, urging regulators to start policing the market. The Senator said one of her concerns was the pressing consumer protection issues, and from there, she transitioned into the surrounding risk that is threatening the broader financial structure. According to Warren, one possible benefit of crypto was that tens of millions of unbanked and underbanked US citizens would be the ones to benefit the most from expanding to a digital currency system.
She also reflected on pump-and-dump schemes, which are illegal for stocks but often go unpunished for tokens due to the “lack of basic rules” surrounding crypto. “Right now, we don’t have any cops on the beat to speak of,” Warren told Bloomberg. She thought that regulators need to “step up and take hold of the piece that’s within their jurisdiction.” Comparing a possible crypto scenario to money markets ahead of the 2008 financial crash, she stated that unregulated crypto market presents a systemic risk. “The bigger it gets and the more it stays outside the financial system – something goes wrong, there’s a run on crypto, there’s a problem elsewhere in the economy, I don’t want the US taxpayer to be the one that gets called on to back this up,” she said. This all came on the back of Securities and Exchange Commission (SEC) Chair Gary Gensler’s pledge to introduce more enforceable actions to the space.
Ethereum (ETH) breaks above $3,000 as Bitcoin (BTC) breaks above $44,000
What a weekend it has been! It has been a hell of a weekend for the crypto market as most major digital assets are seeing extensive gains. Over the past few days, a lot of crypto investors have been glued to Ethereum’s (ETH) price movements, since the blockchain underwent a massive network upgrade called London on Thursday. Among other improvements, this upgrade introduced a deflationary token burn mechanism, and many were hoping that due to this, the price of ETH to go up—well, guess what? It did. By early Monday morning, August 9th, ETH had been trading at around $3161, up 9.7% during the last 24 hours, according to the crypto metrics platform CoinGecko. More than 10,000 ETH have already been burned since the London upgrade—worth over $31,000 million at current prices. Meantime, Bitcoin reached a 24-hour high of about $44,700, up 4% on the day. Among the top-10 crypto by market capitalization, however, only Dogecoin managed to post two-digit growth. The price of canine-themed meme coins gained 34.2% on the day and reached $0.276 at press time. Other top cryptos showed somewhat less enthusiastic results in the last 24 hours. Binance Coin (roughly $356, +4%), Cardano ($1.48, +5.2%), Ripple’s XRP ($0.833, +11.6%), and Uniswap ($28.49 +8.2%) remained in the green zone. During the same time period, Decentralized finance (DeFi) also followed the upward trend as the sector grew by 6.75% as a whole.
According to CryptoSlate’s DeFi sector data, besides Uniswap, the most popular tokens such as Chainlink ($24.69, +3.5%), AAVE ($386.84, +5.2%), Maker ($3,413, +4.9%), and Compound ($507.83, +8.7%) were leading the charge in terms of daily gains.