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Solana (SOL) price rises as airdrops attract new users to the network

Solana (SOL) price rises as airdrops attract new users to the network

Solana price has rallied more than 50% this month as new projects conduct airdrops on SOL blockchain and high Ethereum fees push investors to seek cheaper alternatives.

Over the past six months blockchain projects that have issued token airdrops have re-emerged. Most notably, the airdrops by Uniswap (UNI) and MEME will be remembered as recipients were rewarded with gains ranging from $20,000 to $600,000 simply for holding the tokens.

One Ethereum (ETH) competitor that has seen numerous projects launch with airdrops in the past three weeks is Solana (SOL), an open-source project that focuses on utilizing blockchain technology to provide decentralized finance solutions.

While Solana isn’t explicitly making a concerted effort to launch these projects, the protocol’s main decentralized exchange Serum (SRM) was responsible for the recent COPE airdrop which distributed 2,000 tokens to users who participated in the joint DeFi hackathon held by Solana and Serum.

After the airdrop, COPE eventually listed on Serum for $0.50 on March 30 and the price of the token surged to a high of $5.43 on April 11, rewarding holders with a $10,860 reward.

SOL/USDT 4-hour chart. Source: TradingView

The success of the COPE airdrop prompted a series of token launches and airdrops with similar-sounding names including HOPE, ROPE and KOPE, whose launches on the Solana blockchain have coincided with a 55% rise in the price of SOL since the start of April.

Airdrops on the network may have played a small role in the recent price appreciation due to users needing SOL to receive airdropped tokens but this is not possible to ascertain based on the available data.

Interactions on the Solana blockchain, including the addition of new tokens to the Sollet wallet, require small amounts of SOL to complete the contract executions. Thus, users rushing to sign up for airdrops before they filled up would have needed to purchase SOL and fund their wallets in order to create new addresses for the airdropped tokens.

Analysts expect the airdrop trend to continue

For those worried that they missed out or that the 'airdrop season' is over, a recent tweet from Solana's Twitter feed suggests that the Solana ecosystem is just getting started, meaning the likelihood of future airdrops remains high.

New users are the lifeblood of successful blockchain networks, and the use of airdrops continues to be one of the most utilized methods for drawing attention to fledgling projects and sapping liquidity from one protocol to another.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.



via cointelgraph.com
Reddit reminisces defunct 'Bitcoin faucet' website that gave away 19,700 BTC for free

Reddit reminisces defunct 'Bitcoin faucet' website that gave away 19,700 BTC for free

It may sound shocking today, but in 2010 software developer Gavin Andresen was on a mission to give away free BTC in an effort to boost adoption.

Reddit’s r/Cryptocurrency community revived an interesting piece of Bitcoin (BTC) history on Sunday, with a new thread reminiscing about the time that American software developer Gavin Andresen gave away 19,700 BTC. 

A thread started by “uGroundbreakingLack78” took the Reddit community all the way back to June 2010 when Andresen first launched the so-called Bitcoin faucet website. Using the domain “freebitcoins.appspot.com,” Andresen allowed users to earn 5 BTC per day just by solving a captcha, which is a program intended to distinguish human from machine input.

User "uGroundbreakingLack78" explained:

“To fuel the first faucet, Andresen loaded it with 1,100 BTC of his own. After these were given away, the faucet was reloaded, with early bitcoin miners and whales also donating coins.”

The faucet’s creator announced his “really dumb” idea of giving away free BTC on the now infamous Bitcointalk forum in a post that appeared June 11, 2010. His motivation: “[...] I want the Bitcoin project to succeed, and I think it is more likely to be a success if people can get a handful of coins to try it out.”

Andresen played a major role in development during Bitcoin’s formative days. He was the main software developer for BTC’s reference implementation, having joined the core development team in 2012 after Satoshi Nakamoto, Bitcoin’s pseudonymous founder, announced they would be leaving the project.

Although the Bitcoin faucet website is no longer functioning, a screengrab of the domain's homepage revealed a very basic setup where users can earn BTC and set up their digital wallet. The Bitcoin faucet reportedly gave away 19,700 BTC to users just for solving a captcha. Those BTC are worth almost $1.2 billion at today’s prices.

The Bitcoin faucet website, as it appeared sometime in 2010. Image via Reddit

With Bitcoin in the midst of yet another bull market, many investors would love to get their hands on just 5 BTC. However, that's easier said than done at current values. Given the apparent shortage of BTC on major exchanges, the flagship digital currency could be poised to go higher in the short term. On-chain data reveals that Bitcoin's moonshot could still be months away, which means investors remain overwhelmingly bullish.

The Bitcoin price peaked just below $62,000 in mid-March before the rally paused and altcoins played catch-up. At current values, Bitcoin’s market capitalization exceeds $1 trillion. Major institutions and corporations have invested in the digital asset as a hedge against currency debasement, among other motivations.



via cointelgraph.com
Institutions Investing In Bitcoin Isn’t About Money — It’s About The Mindset

Institutions Investing In Bitcoin Isn’t About Money — It’s About The Mindset

With the recent influx of corporate interest in bitcoin, the cryptocurrency is poised to accelerate into the mainstream.

Bitcoin is now a $1 trillion asset. It is more valuable than Tesla and Facebook, And as of now, only six companies have higher market capitalizations than Bitcoin.

However, I am not interested in talking about Bitcoin’s “mad gains.” I want to talk about the dominating narrative behind Bitcoin in late 2020 and so far in 2021: increased institutional investment.

Before I do, here is a small primer. What exactly is Bitcoin? Well, according to Lily, a 3-year-old who is also a bitcoin HODLer, “Bitcoin is digital money.” I couldn’t have put it better myself!

Institutions Hooked On Bitcoin

As far as institutions are concerned, Bitcoin has jumped from undesirable to undeniable. A few years ago, some of the biggest names in finance were dismissing Bitcoin as a scam. Warren Buffet went so far as to label it as “rat poison squared.” JP Morgan also jumped on the Bitcoin hate train and labeled it a scam. JP Morgan has since changed its tune and is now expecting the price of Bitcoin to rise as high as $130,000, labelling it “digital gold.” They have since created a “Cryptocurrency Exposure Basket” of Bitcoin proxy stocks.

Source

Tesla and Elon Musk have been dominating the headlines because of their $1.5-billion investment in Bitcoin, and they are now accepting Bitcoin as a payment method for Tesla vehicles. Before that, MicroStrategy, the largest independent, publicly traded business intelligence company, had purchased more than 90,000 BTC.

In mid-December 2020, UK-based asset manager Ruffer announced that it had accumulated £550M worth of bitcoin in a cumulative investment since November, allocating 2.7% of the company’s portfolio to bitcoin. In addition, BlackRock, the world’s largest asset manager, also announced that it has “started to dabble” in Bitcoin.

Bitcoin is considered a potential hedge against global economic instability, but as Tyler Winklevoss said, the opportunity lies in being an early adopter.

Source

Why Are Institutions Flying In?

Institutions are currently dipping into the market because they now understand Bitcoin's credibility as a store of value. Bitcoin has come to be considered as a safe-haven asset alongside gold, and never has this been more evident than during the COVID-19 pandemic. Over the last year, Bitcoin has outperformed every other asset class significantly. At one point, it was outperforming the Nasdaq 100 by 300% and the S&P 500 by almost 1600%.

Year-to-date (YTD), bitcoin has also outperformed the top-performing tech companies from the FAANG group (Facebook, Amazon, Apple, Netflix, and Google). With 80% YTD gain, bitcoin has also handily outperformed gold (29% YTD) as the safe-haven asset of choice.

Because of the unique challenges presented by 2020, Bitcoin has been able to add credence to its status as a capital-preservation asset that can act as a hedge against financial uncertainty.

Institutions Didn't Want To Invest In Bitcoin—They HAD To Invest In Bitcoin.

I believe that this narrative is going to remain strong during the next decade. Many Fortune 500 companies will follow Tesla's lead and convert parts of their balance sheets to bitcoin. Companies like MicroStrategy and Chamath Palihapitiya's Social Capital are already ahead of the curve with their large investments, and many others will continue playing catchup. Square CFO Kate Rooney, subsequent to the purchase of an additional $170 million worth of bitcoin, said, "Bitcoin has the potential to be the native currency of the internet, and we want to participate in it."

We may see more retail companies selling their products directly for bitcoin, which will open up further use cases. Indeed, Tesla is already accepting bitcoin for their vehicles.

Are ETFs Going To Open The Floodgates?

Earlier in February, the Ontario Securities Commission made a landmark decision to approve Purpose Investments Inc.'s application to launch a Bitcoin Exchange Traded Fund (ETF), the first legal and fully regulated Bitcoin ETF in North America. Within its first 48 hours, the ETF had already collected $421 million, crushing all estimates. Proportionally speaking, this is the equivalent of a US ETF taking in $8 billion in the first 2 days. It is on pace to become the biggest ETF in Canada in 20 days.

Previously, both Gemini Exchange and investment firm VanEck attempted to bring regulated Bitcoin ETFs to the North American market. However, they were both rejected multiple times by the US Securities and Exchange Commission (SEC). Luckily, President Joe Biden has nominated Gary Gensler, a cryptocurrency researcher and professor, as the next SEC chair, and it is highly likely that the US will finally get a Bitcoin ETF soon.

So, why is this major news?

ETFs could bring in a whole new class of institutional investors looking to diversify their portfolios while minimizing their risk exposure. In addition, ETFs provide a low-cost way of entering a new market, are tradeable 24 hours/day, and always maintain high liquidity. All of these factors make them darlings of institutional investors, and this bodes well for Bitcoin.

The Positive Implications Of Institutions Rushing In

There are both short-term and long-term implications of institutional investors rushing in and investing in Bitcoin. The most obvious short-term factor is the shock-and-awe effect of a rockstar company like Tesla buying vast chunks of bitcoin. It often acts as a “shot-in-the-arm” for the price of bitcoin and pushes it to new heights.

However, the long-term implications are what’s really interesting. Bitcoin has a maximum supply limit of 21 million coins. Of them, more than 18.5 million have already been mined. With only 2.5 million coins left to mine, and institutions showing more interest, there is a huge supply crunch incoming, which will make the price shoot up.

The Misconceptions Surrounding Bitcoin Investment

The author who came up with the concept of a “black swan event,” Nassim Nicholas Taleb, has written a slew of hate tweets about Bitcoin. Calling Bitcoin a “failure,” Taleb said:

Source

I believe that this criticism is unfair because currently, Bitcoin’s primary use case is as a store of value. The mode of regular payment” will be layers of abstraction above Bitcoin. It is a testament to Bitcoin’s versatility that it has so many potential use cases and is robust enough to build an entire ecosystem around. Bitcoin has only been around for 12—13 years, and as the network becomes more mature, we will see more sophisticated financial products.

Moral Of The Story: Despite Bitcoin’s explosive growth, don’t forget that the market is still very young and has more space to grow. Bitcoin has become a trillion-dollar asset in such a short period because it represents a proper paradigm shift.

Some economists may continue to hate Bitcoin with a passion because it is such a trailblazing asset that works differently from the traditional legacy markets. After all, technically, Bitcoin goes against conventional economics.

However, sooner rather than later, everyone will have to evolve with the times. The companies evolving with this changing fintech landscape, like Tesla, MicroStrategy, and Square, have realized that in the future, finance will run on the internet and not in the stunningly super-fancy buildings of Wall Street. For now, we need that criticism.

Concluding Thoughts

As Elon Musk put it, with the benefit of hindsight, institutional investment in bitcoin was inevitable. This sentiment has further solidified Bitcoin as a legitimate asset class and the most robust hedge against financial uncertainty. The COVID-19 pandemic has proven the latter to be completely and irrevocably true. With major companies like Oracle rumored to be investing in bitcoin next, I expect 2021 to be a watershed year when Bitcoin firmly secures its place in the mainstream.


via bitcoinmagazine.com
Romanian university plans to accept crypto payments for admission fees

Romanian university plans to accept crypto payments for admission fees

The academic institution with a student body of roughly 11,000 said the addition of crypto payments was part of a plan to support local businesses like Elrond.

A public university in the Romanian city of Sibiu in Transylvania has said it will allow students to pay for their admission fees in crypto.

According to an announcement from Lucian Blaga University of Sibiu, or LBUS, on Wednesday, the institution plans to implement crypto payment methods for its more than 11,000 students starting in July. Students will reportedly be able to pay for admission fees — tuition is roughly $1,000 per year for undergraduates — using Elrond (EGLD), which the university will then convert to Romanian leu.

"Our university has been and will continue to be a supporter of the community and local business, and the decision to develop this partnership with Elrond is part of this strategy," said university Rector Sorin Radu.

Starting as an initial exchange offering from the Binance Launchpad in 2019, Elrond has offices in the Transylvanian town of more than 400,000 people and its team contains many graduates of the local university. The project said it plans to carry out other collaborations with LBUS in the future, including research.

According to legislation implemented in July, exchange providers that monitor the purchase of crypto with fiat currency and vice versa must now be authorized if they operate in Romania. Many crypto users handling digital assets in the country are required to use exchanges that incorporate Know Your Customer requirements and comply with both domestic and foreign Anti-Money Laundering provisions.

Elrond has recently seen some significant changes, including its mainnet swap last year as the ERD token became EGLD. At the time of publication, the price of EGLD is $231, having risen more than 13% in the last 24 hours.



via cointelgraph.com
Top 5 cryptocurrencies to watch this week: BTC, XLM, MIOTA, XMR, XTZ

Top 5 cryptocurrencies to watch this week: BTC, XLM, MIOTA, XMR, XTZ

Traders appear to be waiting for a trigger to start the next leg of Bitcoin's uptrend and if that happens, XLM, MIOTA, XMR and XTZ could join the party.

Bitcoin’s (BTC) hesitation near the all-time high suggests that the bulls and the bears are waiting for a trigger to start the next trending move.

The bulls are searching for a positive catalyst to thrust the price above the overhead resistance. On the contrary, the bears may be standing by in anticipation of any signs of weakness that could confirm a short-term top.

The event that may act as a trigger is the Nasdaq listing for Coinbase's COIN stock on April 14. A successful listing is likely to be cheered by the crypto bulls because that could signal increased crypto adoption by traditional investors in the future. Conversely, a tepid reception to the Coinbase listing could embolden the bears.

Crypto market data daily view. Source: Coin360

Onchain indicator HODL waves suggests that both the long-term investors and the short-term speculators are not booking profits as they expect higher levels in the future. An increase in the number of HODLers is generally a bullish sign but could become an overhang if fresh money dries up and the market starts to reverse direction.

If that happens, the short-term speculators are likely to panic first and dump their positions. That may hit stops of the swing traders and intensify the selling, paving way for a deeper correction.

As markets wait for a trigger, let’s analyze the charts of the top-5 cryptocurrencies that could benefit from a bullish sentiment.

BTC/USDT

Bitcoin soared above the $60,000 overhead resistance on April 10 and reached $61,301.21, just short of the all-time high at $61,825.84. However, the bulls continue to find difficulty in keeping the price above $60,000, indicating stiff resistance from the bears.

BTC/USDT daily chart. Source: TradingView

The price has yet to close above $60,000 which means the inverse head and shoulders pattern is still not complete.

The bears will try to capitalize on the small window of opportunity and pull the price down to the 20-day exponential moving average ($57,513). A strong bounce off this support will increase the possibility of a break above $61,825.84.

If that happens, the BTC/USDT pair could start the next leg of the uptrend that could push the price to $69,540 and then $79,566.

On the other hand, if the bears sink the price below the 20-day EMA, the pair could challenge the critical support at the 50-day simple moving average ($54,723). A break below this support will be the first indication of a possible change in trend.

BTC/USDT 4-hour chart. Source: TradingView

The 4-hour chart shows the bears are active above $60,000. However, the positive sign is that the bulls have not allowed the price to sustain below the 20-EMA. This means the bulls are buying on every minor dip.

If the bulls can once again push the price above $60,000, the pair may challenge the all-time high. On the contrary, if the bears sink the price below the 20-EMA, a drop to $57,600 is possible. If this support cracks, the next stop could be $55,600.

XLM/USDT

Stellar Lumens (XLM) broke above the $0.60 resistance today and rose to a new 52-week high at $0.65. Whenever an asset hits a new 52-week high, it is a sign of strength because it shows that traders are in a hurry to buy as they expect the price to rise further.

XLM/USDT daily chart. Source: TradingView

The upsloping 20-day EMA ($0.46) and the relative strength index (RSI) in the overbought territory suggest the bulls have the upper hand. If the bulls can propel the price above $0.65, the XLM/USDT pair could start the next leg of the uptrend that could reach $0.72 and then $0.85.

However, the long wick on today’s candlestick suggests that the bears have other plans. They are trying to trap the aggressive bulls and pull the price back below $0.60. If the bulls do not allow the price to dip below $0.55, it will suggest accumulation on dips. That will keep the sentiment positive.

Contrary to this assumption, if the bears sink the price below $0.55, a drop to the 20-day EMA is possible. A break below this support will indicate that the bulls have lost their grip.

XLM/USDT 4-hour chart. Source: TradingView

The 4-hour chart shows the pair closed above $0.60 but the bulls could not build upon this strength. The bears pounced on the opportunity and have pulled the price back below the breakout level at $0.60.

However, if the bears fail to sink the price to the 20-EMA, it will suggest the bulls are accumulating on dips. That will increase the possibility of the resumption of the up-move. Conversely, a break below the 20-day EMA may tilt the advantage in favor of the bears.

MIOTA/USDT

IOTA (MIOTA) is in an uptrend. The bulls pushed the price above the psychologically important level at $2 on April 10. If bulls can sustain the breakout, the up-move could reach the next target objective at $2.35 and then $2.60.

MIOTA/USDT daily chart. Source: TradingView

The upsloping 20-day EMA ($1.66) and the RSI near the overbought zone suggest the bulls have the upper hand.

However, if the bulls fail to sustain the price above $2, the bears may try to pull the price down to the 20-day EMA. The bulls have successfully defended this support since the start of the current leg of the rally in March.

Hence, if the price again rebounds off the 20-day EMA, it will suggest the sentiment remains positive and the bulls are buying on dips. Alternatively, a break below the 20-day EMA will suggest that the bears are making a comeback.

MIOTA/USDT 4-hour chart. Source: TradingView

The 4-hour chart shows profit-booking above $2. The MIOTA/USDT pair could now drop to the 20-EMA, which is sloping up. If the price rebounds off this level, it will enhance the prospects of the resumption of the uptrend.

On the contrary, if the bears sink the price below the 20-EMA, the pair could extend its decline to the 50-SMA. Such a deep correction could delay the start of the next leg of the up-move.

XMR/USDT

Monero (XMR) broke above the $268.60 resistance on April 10, indicating the possible resumption of the uptrend. If the bulls can sustain the breakout, the altcoin could rally to the next target objective at $334 and then $384.

XMR/USDT daily chart. Source: TradingView

The rising 20-day EMA ($258) and the RSI above 75 suggest the path of least resistance is to the upside.

However, if the bulls fail to sustain the price above $288.60, the XMR/USDT pair could drop to the 20-day EMA. A strong bounce off this support will suggest the sentiment remains positive and the bulls are buying on dips. The bulls will then make one more attempt to resume the uptrend.

On the other hand, if the bears sink the price below the 20-day EMA, it will suggest a possible change in sentiment. That could result in a drop to the 50-day SMA ($232).

XMR/USDT 4-hour chart. Source: TradingView

The 4-hour chart shows the bears attempted to stall the rally near the psychological resistance at $300 but the bulls did not give up much ground. They purchased the dip to the 20-EMA and pushed the price above $300.

The rising moving averages and the RSI near the overbought zone suggest the bulls are in control.

This positive view will invalidate if the price turns down and breaks below the moving averages. Such a move will indicate the demand has dried up and traders are booking profits. That could pull the price down to $250.

XTZ/USDT

Tezos (XTZ) is in a strong uptrend. It broke above the stiff overhead resistance at $5.64 on April 5 and completed a successful retest of the breakout level on April 7 and 8. The altcoin resumed its uptrend and made a new all-time high at $7.21 on April 10.

XTZ/USDT daily chart. Source: TradingView

The 20-day EMA ($5.42) is sloping up and the RSI is near the overbought territory, indicating advantage to the bulls. In a strong uptrend, corrections usually last between one to three days as traders buy every minor dip aggressively.

The long tail on today’s candlestick suggests traders are buying at lower levels. If they can drive the price above $7.21, the XTZ/USDT pair could rally to the next target objective at $8.14.

The major support on the downside is the 20-day EMA. If the price rebounds off this support, it will suggest the sentiment remains bullish. The buyers will then again try to push the price above $7.21. Conversely, a break below the 20-day EMA will suggest the bullish momentum has weakened.

XTZ/USDT 4-hour chart. Source: TradingView

The 4-hour chart shows the bulls are trying to arrest the pullback at the 20-EMA. If they can push the price above $6.85, a retest of $7.21 is possible. A breakout of this resistance will start the next leg of the up-move.

Contrary to this assumption, if the pair breaks and sustains below the 20-EMA, it may drop to the 50-SMA. The bulls are likely to defend this support aggressively because the price has not dipped below the 50-SMA since March 29.

However, if the bulls fail to arrest the decline at the 50-SMA, the slide could extend to $5.40 and then to $4.60.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.



via cointelgraph.com
BTC December futures reach $73,500 — Is everyone flipping ultra bullish?

BTC December futures reach $73,500 — Is everyone flipping ultra bullish?

Bitcoin’s three-month futures premium reached a record-high of 50%, signaling market inefficiencies.

Bitcoin (BTC) has been struggling to break the $60,000 resistance for almost a month. But despite the impasse, BTC futures markets have never been so bullish. While regular spot exchanges are trading near $59,600, the BTC contracts maturing in June are trading above $65,000.

Futures contracts tend to trade at a premium, mainly on neutral-to-bullish markets, and this happens on every asset, including commodities, equities, indexes, and currencies. However, a 50% annualized premium (basis) for contracts expiring in three months is highly uncommon.

BTC futures curve, in USD. Source: bitcoinfuturesinfo.com

Unlike the perpetual contract — or inverse swap, these fixed-calendar futures do not have a funding rate. Thus, their price will vastly differ from regular spot exchanges. Fixed-calendar futures eliminates eventual funding rates' spikes from the buyers' perspective, which can reach up to 43% per month.

On the other hand, the seller benefits from a predictable premium, usually locking longer-term arbitrage strategies. By simultaneously buying the spot (regular) BTC and selling the futures contracts, one gains a zero-risk exposure with a predetermined gain. Thus, the futures contracts seller demands higher profits (premium) whenever markets lean bullish.

The three-month futures usually trade with a 10% to 20% versus regular spot exchanges to justify locking the funds instead of immediately cashing out.

OKEx BTC 3-month futures annualized premium (basis). Source: Skew.com

The above chart shows that even during the 250% rally between March and June 2019, the futures' basis held below 25%. It was only recently in February 2021 that such phenomena reemerged. Bitcoin surged by 135% in 60 days before the 3-month futures premium surpassed the 25% annualized level on Feb. 8, 2021.

While professional traders tend to prefer the fixed-month calendar futures, retail dominates perpetual contracts, avoiding the expiries' hassle. Moreover, retail traders consider it expensive to pay 10% or larger nominal premiums, even though perpetual contracts (inverse swaps) are more costly when considering the funding rate.

BTC coin-based perpetual futures funding rate. Source: Bybt.com

While the recent 0.20% funding rate per 8-hour is extraordinary, it is definitely not unusual for BTC markets. Such a fee is equivalent to 19.7% per month but seldom lasts more than a couple of days.

A high funding rate causes arbitrage desks to intervene, buying fixed-calendar contracts and selling the perpetual futures. Thus, excessive retail long leverage usually drives the futures' basis up, not the other way around.

As crypto-derivatives markets remain largely unregulated, inefficiencies shall continue to prevail. Thus, while a 50% basis premium seems out of the norm, one must remember that retail traders have no other means to leverage their positions. In turn, this causes temporary distortions, although not necessarily worrisome from a trading perspective.

While exorbitant funding rate fees remain, leverage longs will be forced to close their positions due to its growing cost. Thus, December's $73,500 contract does not necessarily reflect investors' expectations, and such a premium should recede.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.



via cointelgraph.com
Bitcoin mining company follows Tesla by setting up shop in Austin

Bitcoin mining company follows Tesla by setting up shop in Austin

Tech companies like Oracle, Tesla, Hewlett Packard, and now Blockcap are moving to Austin, causing many to call the state capital the Silicon Hills.

North America-based crypto mining company Blockcap announced over the weekend it would be establishing new offices in Austin, Texas.

In an announcement from Blockcap on Friday, the mining company claimed once its new facilities are operational in the Lone Star State’s capital, its hashing power will be roughly 3.5 exahash per second from a total of 42,000 rigs, reportedly doubling its capabilities. According to blockchain data, this would represent more than 2% of the hashrate for the entire Bitcoin (BTC) network, roughly 167 million terahash per second at the time of publication. However, Blockcap claims its total fleet will account for only 1% of the network's hashing power.

“Austin is our home base from which we will pursue our mission and bring this great city closer to the center of the United States’ blockchain technology ecosystem,” said Blockcap chair and founder Darin Feinstein. “We also see the city as an ideal location from which to continue expanding our operations as we grow at both national and international levels.”

Blockcap cited electric car manufacturer Tesla setting up one of its "Gigafactories" in Austin in announcing the move. Tesla CEO and billionaire Elon Musk recently purchased a home in the Texas state capital for more than $3 million on Lake Austin west of the downtown area, while the firm is breaking ground on the Gigafactory on the east side closer to the Austin-Bergstrom International Airport.

The mining company did not immediately respond to questions regarding where it plans to establish its offices in the Austin area or how many jobs would be created as a result, though Feinstein said it would be "hiring locally." Musk said in a tweet last month that the new Giga Texas location would bring in more than 10,000 jobs, effectively increasing the number of employees at the electric car manufacturing company by more than 14%.

Though some tech companies like Oracle and Hewlett Packard are moving to Austin — causing many to dub the city the "Silicon Hills," in reference to Silicon Valley — the state capital has in many ways become a microcosm of the U.S. housing market. Many employees of these firms may be seeing all-cash buyers purchasing homes, making them unavailable to those with only the financial means of saving for a 20% down payment. Musk highlighted the dearth of Austin housing in an April 4 tweet, seemingly in reference to Tesla employees relocating there.

However, the addition of Blockcap and other blockchain firms to the Lone Star State has the support of former Texas governor Rick Perry, the Republican politician who once famously forgot the name of the Department of Energy as a federal agency he would eliminate if elected president. Perry claimed Texas had “become the premier location for forward-looking industries like blockchain” and that Blockcap would likely lead to job creation and economic growth in the state.

Founded in 2020 by a group of blockchain veterans, Blockcap now controls roughly 12,000 mining rigs generating more than 7 BTC daily, or $416,550 at the time of publication. The company raised more than $75 million in two funding rounds led by Off The Chain Capital and Foundry Digital. According to Blockcap, the firm recently acquired more than $500 million worth of Bitcoin mining machines.



via cointelgraph.com
Binance Coin (BNB) market cap passes Santander and UBS — What’s next?

Binance Coin (BNB) market cap passes Santander and UBS — What’s next?

To date, Binance Coin has rallied 900%, which makes the token’s $64 billion market cap larger than Santander, the Bank of Montreal and UBS.

2021 has been an impressive year for Binance Coin (BNB), which so far has rallied by more than 900%. 

One of the primary drivers of BNB's growth was continued congestion on the Ethereum network. As this struggle carried on, Binance Smart Chain (BSC) emerged as an alternative, meeting the rapidly growing decentralized finance (DeFi) sector's demands.

As BNB reached a $64 billion market capitalization, it has surpassed traditional banks, including Santander, the Bank of Montreal, and UBS. Meanwhile, some analysts point to the estimated value and impact of Coinbase's upcoming direct listing ($100-billion valuation) as a catalyst for the BNB price hike.

A common narrative spun up over the past few weeks is that the direct listing of COIN is also adding value to centralized exchange tokens. Analysts are also speculating that other U.S.-based regulated exchanges like Kraken and Gemini will likely follow Coinbase's path and attempt to raise funds through a stock offering.

To understand BNB's potential, one must first understand the differences between equities (stocks). After this is cleared up, it will be possible to analyze the possible drivers of BNB's appreciation.

BNB does not represent shares of Binance

BNB token provides holders with a discount on trading fees, and it is required for those wishing to participate in Binance Launchpad token sales. As BNB gained liquidity, it also became a base pair for other cryptocurrencies at Binance exchange.

Over time, other uses emerged as the Binance Smart Chain gained traction. For example, BNB can cover network fees and as serve as a utility token in the ecosystem, which includes decentralized apps (dApps) and games.

Periodically Binance burns (destroys) some of the non-circulating BNB tokens based on the exchange's overall trading volume. This strategy's efficacy vanished over time as investors understood that these destroyed tokens never entered the circulating supply.

The Binance Smart Chain network uses a Proof of Stake Authority which eliminates the need for miners or expensive transaction fees. The platform kept its compatibility with the Ethereum Virtual Machine (EVM) and has a similar token and smart contract structure.

Many tokenized (or pegged) cryptocurrencies have gained relevance in Binance's networks, allowing users to bypass miner fees. Another benefit provided by Binance Smart Chain's BEP-20 model is staking and farming capabilities in its vast network of decentralized applications, including the PancakeSwap DEX and Venus lending platform.

Decentralized Finance Total Value Locked ranking. Source: DeBank

As shown above, Binance Smart Chain has been gaining ground on other DeFi protocols in terms of total value locked. Thus, new use cases for the BNB token emerged to take center stage as farming, liquidity pools, and base pairs utilized the token throughout the network.

Banks are reliable dividend providers, but DeFi could overtake the system

Equity shareholders are entitled to a piece of a listed companies' net earnings. This amount will vary between each quarter, as the board of directors may opt to repay debt or incorporate some of that money into reserves. However, banks are known cash cows and thus usually a reliable source of dividends payouts.

Santander (SAN) dividends paid over the last 12 months divided by the current stock price yield a 3.7% gain, and Bank of Montreal (BMO) shareholders received a similar yield. Switzerland-based UBS yields went down in 2020, but historically it has averaged 5%.

Bank shareholders effectively have voting rights in shareholders meetings, and minority groups could block measures that would hurt them financially. On the other hand, these equity holders are 100% dependent on the bank's net income and growth.

BNB, on the other hand, could survive without the direct influence of Binance exchange. In the future, if Binance Smart Chain achieves independent developers and validators, its ecosystem might continue to thrive. In theory, if token loses its dependency as the ecosystem grows, becoming less centralized.

If done correctly, BNB's market capitalization could surpass that of the entire traditional banking system, but before this can happen these networks and decentralized applications need to gain adoption and prove that they can stand up to the needs of mainstream investors and banking clients.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.



via cointelgraph.com
Why is XRP seeing a monster rally when Ripple is worth just $3B on the secondary market?

Why is XRP seeing a monster rally when Ripple is worth just $3B on the secondary market?

Ripple is reportedly trading at a $2 to $3 billion valuation but its XRP holdings are worth around $70 billion.

The equity of Ripple, the company that builds the infrastructure around XRP — the digital asset used by networks like RippleNet to process cross-border payments — is reportedly trading at $2 to $3 billion in the secondary market.

Yet, the XRP holdings of Ripple, are reportedly worth $70 billion, which is many times higher than the valuation of the firm's equity.

Michael Novogratz, the billionaire cryptocurrency investor and the CEO of Galaxy Digital, said:

"Ripple equity is ‘trading’ in secondary market at $2-3bn valuation. The $XRP on their balance sheet is worth approx $70bn. One price seems wrong. If $XRP price is saying settlement coming, the equity is crazy cheap. If not, the token seems expensive. Thoughts?:

So is XRP undervalued? Not exactly

According to Leonidas Hadjiloizou, a long-time cryptocurrency researcher, XRP that is locked in Ripple's balance sheet are in escrow are likely not priced into Ripple's equity.

As such, these holdings are not accessible until they start unlocking, which might not be priced in the value of the firm's equity.

He said:

"Well, $62 bn of the XRP in Ripple's balance sheet is locked in escrow. At the same time, Ripple's XRP sales are the ones under attack from the SEC so the market probably hasn't priced in Ripple's XRP holdings since they are in limbo right now."

In December 2017, the Ripple team explained that the XRP holdings in Ripple's escrow unlock by one billion XRP per month for 55 subsequent months.

The team said at the time:

"The escrow consists of independent on ledger escrows that release a total of one billion XRP each month over the next 55 months. This provides an upper limit on the amount of new XRP that can be brought into circulation. The amount of XRP actually released into circulation will likely be much less than this."

Theoretically, the value of Ripple's equity would be considered undervalued if the amount of XRP on the firm's balance sheet unlocks and the price of XRP does not drop.

The question on the discrepancy between the value of Ripple's equity and the amount of its XRP holdings started to emerge as the price of XRP started to rally above $1, despite an ongoing lawsuit with U.S. Securities and Exchange Commission (SEC).

XRP/USD 1-day price chart (Bitstamp). Source: TradingView.com

Since April 1, the price of XRP rallied from $0.57 to as high as $1.49, by around 160%.

What is behind the XRP rally?

Throughout the past two weeks, the main catalysts for the 160% rally came from victories in the company's legal battle. Ripple lawyers were granted access to internal SEC discussion history regarding cryptocurrencies, and a court denied the SEC the ability to disclose the financial records of two Ripple execs, including CEO Brad Garlinghouse.  

Another reason may be the convergence trade between Bitcoin (BTC) and altcoins, particularly as BTC sees sideways price action, allowing alternative cryptocurrencies to rally and catch up. 

Kelvin Koh, the managing partner at Spartan Group, one of the largest DeFi-focused funds in Asia, said that large quant funds try to trade the convergence between Bitcoin and major altcoins.

Hence, the trend of capital moving into altcoins and back into Bitcoin occurs periodically. Koh wrote:

"The reason this happens periodically is because there are a bunch of quant funds out there that play the convergence trade between $BTC and a handful of liquid alts. Whenever there alts look cheap relative to $BTC, they pile in. When they look expensive, they rotate back to $BTC. No fundamentals involved so don’t try too hard to rationalize the moves. This strategy has proven effective over time and there are enough managers playing this that it becomes self-fulfilling and keep recurring."


via cointelgraph.com
How Halvings Will Bring The Bitcoin Price To $400,000

How Halvings Will Bring The Bitcoin Price To $400,000

The programmatic reduction in block reward creates a self-fulfilling prophecy of extremely bullish price action.

When bitcoin was first introduced, it had little to no value. Early adopters traded thousands of bitcoin for just a few dollars, until the infamous “Pizza Day” incident when Laszlo Hanyecz paid 10,000 BTC for two large pizzas, setting in motion a chain of events that lead to bitcoin’s value growing from a few cents to nearly $60,000 in just over a decade.

Bitcoin has come a long way since then, with large corporate institutions spending years denying its value as an investable asset, only to turn around and start investing in it themselves. Recently, PayPal introduced bitcoin as a payment method with millions of merchants that use its platform, celebrities like Paris Hilton joined the community and it seems that bitcoin is poised for even more growth.

By analyzing bitcoin’s past performance, it’s not impossible to get an idea of where its value is set to go next. Although many analysts and influencers alike have made bold predictions — like bitcoin growing to as much as $1 million — I thought it would be best to take a look for ourselves by analyzing each halving epoch, that is bitcoin’s performance between each halving event.

The chart below explores bitcoin’s value over the last 11 years, in four separate sections called the halving epochs:

The chart was inspired by a similar one I recently came across, which lacked any projections that I felt necessary to predict where bitcoin is heading next. As mentioned on the chart, each epoch is 20 times larger than the previous one and covers the times between each halving event. When analyzing and comparing each epoch, a clear trend emerges.

Epoch 1: Genesis Block (2009-01-03) to First Halving (2012-11-28)

In the first epoch, bitcoin found its footing after first being released by Satoshi Nakamoto in 2009. It took several months to see early adopters come on board and a dollar-based value be established, with Laszlo Hanyecz’s 10,000 BTC pizzas cementing its price. During this time, bitcoin saw its value rise from $0,00 to as high as $29.02, with early use limited to trading over forums and early, limited exchanges.

Epoch 2: First Halving (2012-11-28) to Second Halving (2016-07-09)

In the second epoch, bitcoin started to see further adoption. Although the infamous Mt. Gox exchange was founded in 2010 already, and had seen some controversy in 2011 with several hacks, by 2013 and early 2014, it was handling as much as 70 percent of all bitcoin transactions before the infamous hack that saw it shut down, and bitcoin seeing a large drop in value as thousands of bitcoins were stolen. Then there was the infamous Silk Road and Silk Road 2.0 platforms, which led the media to associate bitcoin with illegal activities. During the second epoch, bitcoin’s value traded for as low as $12.33 to a high of $1,134.93.

Epoch 3: Third Halving (2016-07-09) to Fourth Halving (2020-05-11)

By the third epoch, bitcoin had seen its adoption grow to new highs. The world’s largest investors and institutions were finally taking notice, with many changing their opinions on bitcoin as a decent asset and good store of value. Bitcoin’s run from a low of $526.98 to its famous peak of $19,640.51 in late 2017 was widely reported, as was the subsequent plunge in value. Although it became clear that bitcoin trading was volatile, asset managers and the average Joe alike took notice of bitcoin as an asset.

Epoch 4: Fourth Halving (2020-05-11) to Fifth Halving (Second Half of 2024)

We currently find ourselves in the fourth epoch. Public companies such as MicroStrategy and Tesla have added bitcoin to their balance sheets, new highs are being reached almost monthly and reputable investors suggest it could go as high as $1 million sometime in the near future. If bitcoin follows the same trajectory as the last epoch, I predict that it may very well reach a high of over $400,000 before, once again, seeing an almost sudden plunge in value as investors try to reap as high a profit as possible. If bitcoin does indeed follow this trajectory, I believe we may see a massive new high before the end of 2021.

The Pattern and What the Future Holds

It is evident that each time a halving occurs, in due time, bitcoin sees a dramatic surge to a new all-time high, beyond many expectations. As soon as this peak arrives, many start to sell their investments to reap the profits, with bitcoin then seeing a plunge as dramatic as the surge that came before it. Bitcoin’s value sees regular pumps, followed by regular dumps until it eventually stabilizes with a new bottom. For some months, it trades relatively sideways until a second surge begins. It isn’t, however, as dramatic as the one before, but it does push bitcoin’s value high enough to see it reach at least half its previous all-time high before the next halving.

It is likely many of the large institutions and investors that have bought millions worth of bitcoin over the last few years will sell off their holdings once bitcoin reaches a high enough value. The same can be said about miners, who have started accumulating their newly mined coins instead of selling them. In this case, bitcoin should peak somewhere between $350,000 and $450,000, if we follow the same trend during this epoch as the last. It could take months, maybe even a year, before bitcoin sees this new high, but I believe we’re heading there sometime later this year.

One concern that is quite evident is that more and more publicly traded companies are adding bitcoin to their balance sheet. This is great in terms of adoption and legitimizing bitcoin as an asset. However, these companies have shareholders, and it is very likely that a company like MicroStrategy that holds billions of dollars worth of bitcoin will see an activist shareholder or two jump on board and push it to sell off its holdings should it reach a massive new high, as predicted above.

Let’s continue to look at MicroStrategy as an example. They hold over 90,000 bitcoin, currently worth north of $5 billion, with the company’s market cap being just over $6.75 billion. Should bitcoin reach a high of $400,000, it would value their bitcoin holdings over $36 billion and with BlackRock, Morgan Stanley and Vanguard owning over 30 percent of the company’s shares, they are likely to push them to sell as soon as possible and return value to shareholders. That’s over 90,000 bitcoin that could flood the market, the same could happen at many other public companies and threatens not just bitcoin’s price, but trust in it as a storage of value.

What remains clear, looking at the chart above, is that bitcoin has proved time and time again that it is a trustworthy asset and store of value. It sees surges, and plunges, and it is likely to happen for several years to come. Bitcoin is by no means near its peak and even though it may take a few years, bitcoin is poised for tremendous growth and will continue to see large-scale adoption as it becomes clearer to the global audience.

This is a guest post by Dion Guillaume. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.


via bitcoinmagazine.com
Anchoring the worlds with flexible and high-performance on-chain governance

Anchoring the worlds with flexible and high-performance on-chain governance

To fully merge the real and digital worlds, designing governance systems with flexibility at their core is key.

With adoption accelerating, blockchain’s potential to transform life in every way — from how business is conducted to labor division, operating systems and methods of collaboration — comes closer to fruition every day. If blockchain is the foundation to a truly digital model, then governance is the key to linking together the on and off-chain worlds. Governance itself encompasses and dictates the functionality of blockchain, from its organization structure to workflow execution, voting and incentives. 

Conceptually, governance can be understood as on and off-chain; the former being divided into protocol and contract levels. With the blockchain space rapidly diversifying, governance is also rapidly evolving to drive new and novel forms of collaboration, interaction, profit distribution and risk structure, based on each chain’s unique profit value.

Today’s on- and off-chain governance paradigms

Moving forward, I believe there are several premises that must be accounted for when building governance frameworks.

First, the digital world cannot be separated from reality. Like the off-chain world, on-chain governance also includes a two-tier structure, under which governing units serve as capital for users to engage in various democratic processes. Moreover, external on-chain governance components such as, server clusters, nodes and other infrastructures, dictate how capital rights and interests are addressed. On-chain governance dictates the usage of external funds, energy and human resources. It is also constructing new identities, ways of participating and power relations. In short, on-chain governance is both a reflection of today’s paradigm and a looking glass into the future.

Secondly, the on and off-chain worlds are merging as the boundaries between social and corporate governance become increasingly blurred. While blockchain started off as more focused on economic governance, this focus has shifted in recent years with institutions and enterprises experimenting with blockchain to achieve more efficient social governance. As the line between corporate and economic governance thins out, each chain’s future will slowly but surely hinge on the interests and will of their user base, thus significantly bolstering the pressing need for next generation governance at the protocol level.

Thirdly, the market is currently dominated by stake-weighted voting, which gravitates towards greater centralization, dynamic adjustments and third-party proxy agents. Given blockchain’s fundamentally decentralized nature, on-chain governance depends heavily upon a network’s consensus mechanism of choice — which can be understood as the negotiation method by which the interests and rights of community developers, miners and token holders. Within the context of proof-of-work, or PoW, consensus, the emphasis is on workload. It would require a high level of centralized authority and responsibility to validate parties’ work, rather than relying on the code to autonomously validate miners’ work. In that way, PoW is essentially the same as traditional decision-making.

However, under proof-of-stake voting, the following scenarios will enable greater democracy and decentralization:

  • One person, one vote based on identity.
  • Secondary voting based on identity.
  • Hashing power voting.
  • Voting for transaction fees at the account level.
  • Voting of transaction fees at the contract layer.
  • Election Committee.
  • Relative majority voting method.
  • Other pledge-related indicators, including long-term node maintenance, long-term binding validators, long-term coin holders, oracles and clients.
  • Any combination of the above modes.

Fourth, there are still various design issues related to on-chain governance. Under today’s governance systems, power tends to be concentrated in the hands of a few. Moreover, low-voting rates also negatively impact the effectiveness of governance and network security. Thus, future innovations in governance must also address the aforementioned concerns from a design level by offering voting stronger incentives for stakeholders, while also introducing loosely coupled voting to ensure more representative governance.

Overall, the current paradigm illustrates that on-chain governance represents the transformation of the digital world’s economic and social organization. With the advent of the digital age, people’s identities have been increasingly split between various governance entities, rather than resting in the hands of a single one. By introducing new organizational structures and concepts, we can pioneer a completely new incentive mechanism to optimize on- and off-chain governance, beyond what simple corporate structuring can achieve.

Based on these premises, sustainable and effective governance must satisfy the following requirements:

  • A two-way mechanism to interact with the real world.
  • Comprehensive social governance.
  • Movement towards achieving the community’s vision.
  • Effective incentives and punishments through comprehensive mechanisms.
  • Clearly delineated responsibilities and powers for on-chain governance.

Structuring on-chain governance to drive sustainability and adoption

If we understand governance as a key driver for blockchain adoption, networks must approach decisions, such as consensus mechanisms, various participants’ roles — and more — with great care and deliberation. Moreover, to bring together the on and off-chain worlds, on-chain governance must evolve to enable the following:

  • The mapping of real-world legal units or jurisdictions to the chain.
  • A comprehensive identity system which ties network participants’ identity to their social identity.
  • Participation in governance via greater rights with the caveat that such rights can be revoked in.

By leveraging code, on-chain governance enables the elimination of uncertainties to create binding agreements, ensuring that any approved network changes will be implemented. Moreover, on-chain governance also incentivizes greater responsibility, due to blockchain’s inherently transparent nature, thus ensuring a decision-making trail. On top of bolstering community trust and fairness, this transparency also empowers users to make informed choices regarding which platforms they join.

However, as previously mentioned, today’s governance systems still face design issues — namely low turnout rates and the manipulation of voters by powerful token holders. Regarding the latter, there is still the concern that governance systems favor powerful token holders. This results in greater emphasis on profit generation, rather than achieving a public blockchain’s vision.

Thus, I propose the key components for effective governance, namely:

Coordination mechanisms: To ensure sustainability, transaction costs and user usage must be coordinated to minimize conflicts between users and stakeholders. As transaction fees heavily influence a user’s ability to participate in a network, maintaining low and stable costs incentivize their participation, which is key for representative governance and network security. In short, the aforementioned mechanism would allow users — the true holders of the network — to be able to participate.

Coordination between currency holders and governance participants: To realize effective governance and ensure that the chain’s interests are represented, there must be significant overlap. Such measures like economic incentives and elections, or the decoupling of governance rights from tokens, are necessary to create more overlap between these groups.

Coordination of candidates and selected candidates: To ensure network efficiency, elections must also implement screening mechanisms to secure the right number of candidates to meet platform needs. Moreover, platforms must provide a proper balance of economic incentives, powers and responsibilities for long-term and stable governance.

Incentive measures: To reward participation, the following incentives should be provided:

  • User: Ability to use DApp; low-cost network service.
  • Token Holders: GAS or token issuance via voting.
  • Nodes: Receive transaction fees for packaged transactions or network fees for winning elections.

Consequences:

  • Token Holders: Opportunity costs.
  • Nodes: Fines for misbehavior.

Overall, effective governance must fulfill the following conditions — first, decision-making that is based on complete and symmetrical information. Second, there is a cost associated with making and changing choices. Finally, governance must be flexible enough to drive forward organization interest while accounting for individual choice.

Driving flexible, dynamic and sustainable governance to win the future

Based on the aforementioned points, I believe that “elastic manageability”, defined as “an ability to adapt to various social jurisdictions,” is the governance solution for both now and the future. Through elastic manageability, we can coordinate the interests of various parties, balance decentralization and centralization, and establish an effective incentives and consequences system. Through an on-chain identity system and node verification, we can connect the on-chain and off-chain world for true integration.

Under this system, I believe the two key mechanisms are as follows:

  • Coordination mechanisms.
  • Dual-track election mechanisms.

Token holders can vote on the direction for a community-based organization, which is entrusted to act in the platform's best interests. To incentivize participation and ensure representational change, direct incentives, such as tokens, should be issued based on the token holders’ degree of participation. From my perspective, enabling users to vote for representational institutions and consensus nodes enables a platform to dynamically adjust based on changing community and industry needs.

Moreover, an on-chain identity system is also crucial. As previously noted, the on-chain world cannot be disconnected from the off-chain world. Rather, the sovereign states and legal jurisdictions of the real world must be mapped onto the chain. Governance mechanisms should reflect this through an on-chain social identity system, which reflects users’ on-chain address and transaction records, decentralized identifier documents, and registration jurisdiction. Based on these aspects, users’ off-chain regulations will provide soft guidance for on-chain activity by jurisdiction.

The types of services provided on the public chain could be affected by local regulations. This real world identity mapping, along with dynamic elections, means that token holders are empowered to make decisions and adjust accordingly for future transactions. When processing transactions, different nodes will react differently to different types of transactions, which will affect the types of services processed on the public blockchain to varying degrees.

For example, for a certain type of specific transaction, consensus nodes that exceed the fault tolerance rate cannot pass this type of transaction, due to the influence of the local judicial system. At this time, the judicial influence on this type of specific transaction is reflected in the public chain. Under the framework of dynamic elections, token holders will then make a decision whether to continue to vote for the affected nodes in the next term. Node candidates can also make adjustments according to the voter's strategy.

Added value through dynamic elections

Through this flexible and dynamic management system, I believe we can fully understand decentralized on-chain business management, node operation management and on-chain voting governance. Local regulations affect the voters’ strategic choices and indirectly affect the behavior of network participants.

Through repeated governance cycles, blockchains eventually move towards developing a balance, which incorporates the interest of all — including real world concerns. This opens up the path for sustainable and responsible growth both in the on- and off-chain world.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Da Hongfei is best known for co-founding the blockchain-based “Smart Economy” network Neo with Erick Zhang in 2014. Da received his education at the South China University of Technology, receiving degrees in technology and English. He worked at a consulting firm until 2013, after which he learned how to code before founding Neo. Along with Zhang, Da also founded OnChain — a commercial blockchain firm that provides services to private companies.


via cointelgraph.com
Bitcoin on-chain data suggests no bull market top at $60K, selling activity declining

Bitcoin on-chain data suggests no bull market top at $60K, selling activity declining

Bitcoin on-chain data reveals that speculators and long-term holders have become increasingly confident of higher prices as their selling activity has slowed down significantly.

For the very first time in a Bitcoin (BTC) bull market, not only long-term investors but also short-term speculators who usually add to the daily sell pressure toward the end of a market cycle have become increasingly confident of higher prices as they hold on to their Bitcoin.

This only adds to the already existing supply shock. If demand remains strong, this is a recipe for another leg up for the BTC price.

Bitcoin selling activity is declining again

Every Bitcoin bull market usually coincided with an increasing number of short-term speculators coming into the market hoping to turn a quick profit, while long-term speculators start to add sell pressure toward the second half of the market cycle to realize their profits.

One of the best on-chain indicators to see this trend unfold in each cycle is called HODL waves. Hereby, the length at which each BTC address holds Bitcoin before they are sold into the market is clustered into term buckets that are then visualized in different color bands.

Bitcoin: HODL Waves. Source: Glassnode

For example, someone who held on to their Bitcoin for five months would fall into the 3m-6m bucket, the light orange color band. If that person decides to sell, it falls out of that bucket and would show up in the 24h-term bucket, the dark red color band.

This means, the redder the colors are in the HODL waves chart on a respective date, the more short-term turnover of Bitcoins happens. This activity is almost at its lowest during a bear market, and at its highest during a bull market, while the short-term activity tends to peak around a bull market top.

Reflecting realized value in HODL waves is critical

Since the Bitcoin price fluctuates significantly during the market cycles, and HODL waves only account for the absolute number of Bitcoins moved, this chart does not account for the total value realized on a respective day by a Bitcoin seller.

As it becomes increasingly lucrative for hodlers to take profit the higher the price rises, the HODL waves can be weighted by the realized price, which is the price at which each Bitcoin on average was last bought /sold.

This adjustment allows for visualizing the value-driven profit-taking on a daily basis through the value-adjusted colored, term buckets.

Bitcoin cycle tops tend to form around the short-term activity peak

Once HODL waves are weighted by the realized price, the Realized Cap HODL Waves are derived, a concept that was first introduced by on-chain analyst Typerbole. This adjustment reveals that the 1w-1m bucket tops coincide with every single bull market top so far.

Bitcoin: Realized Cap HODL Waves. Source: Glassnode

This indicator does not only suggest that the current selling activity is not at a typical bull market peak yet, it even reveals that for the first time in Bitcoin's bull market history this trend is declining while the price continues to rise.

Bitcoin: Realized Cap HODL Waves 1d-1m. Source: Glassnode

This is a very unusual trend in a bull market. Assuming that the price peak has not been reached yet, this suggests that profit-seekers, whether they are short- or long-term focused, are starting to hold on to their Bitcoin again, expecting higher prices to come and by that adding to the Bitcoin supply squeeze on exchanges.

Bitcoin selling activity relative to the holding period is quite low

Rafael Schultze-Kraft, Glassnode CTO, takes a similar view by looking at long-term hodlers through Coin Days Destroyed, an indicator that shows the total holding days "destroyed" by holders selling their Bitcoin.

Based on a 3-months moving average of this indicator, the destruction has retraced to a level last seen in the summer of 2019 at times where the price peak was already reached.

If the price was close to a bull market peak, a much higher indicator value would be expected as long-term holders would be taking profit in material size, which is currently not the case.

Bitcoin spending behavior relative to the market cap is low

When taking this concept of Coin Days Destroyed further and looking at it with respect to average value destroyed in perspective to the market capitalization, one arrives at the so-called dormancy flow. This is a concept invented by analyst and trader David Puell.

Bitcoin: Entity-Adjusted Dormancy Flow. Source: Glassnode

The dormancy flow describes the yearly moving average of Bitcoin holders’ spending behavior. It is based on the held value that gets destroyed in perspective to the overall accrued value in the market.

This indicator suggests, the 365-day average spending behavior of Bitcoin measured in USD is very healthy and far below prior bull market spending.

This is Bitcoin rocket fuel

Bitcoin selling activity whether it is from speculators or long-term holders is declining while also the annual spending behavior relative to the market capitalization is surprisingly low. All these on-chain data points suggest that the market is inching to an even deeper supply squeeze. This is one of the best rocket fuels to send the Bitcoin price higher.

However, this is not a guarantee as it requires continuous demand for the price to appreciate in this environment. Therefore, a close eye on high-net-worth individuals and institutions' demand should be kept, as they have recently been the main driver on the buyer side.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Nothing here should be considered investment or trading advice. Every investment and trading move involves risk. The author owns Bitcoin. You should conduct your own research when making a decision and/or consult with a financial advisor.



via cointelgraph.com
VC funds bullish on crypto, increase investment in blockchain startups

VC funds bullish on crypto, increase investment in blockchain startups

Funding for crypto and blockchain startups is not slowing in 2021 as VC funds appear keen to enjoy the exponential growth potential.

Venture capital funding for crypto and blockchain startups looks set to break records in 2021. As previously reported by Cointelegraph, crypto firms received more funding in the first quarter of 2021 than the whole of 2020.

Indeed, three companies in the market attracted $1.1 billion from backers in Q1 202 — a third of the total funding for crypto and blockchain firms reported in 2018. With the current bullish enthusiasm in the crypto space, VC funding appetite for blockchain startups might continue throughout the year.

This early-stage funding frenzy also appears to be spreading to the retail side with initial decentralized exchange offerings regularly becoming oversubscribed. As such, the native tokens of IDO launchpads are now some of the best-performing in the cryptocurrency space.

Blockchain private equity funding by the numbers

In Q1 2021, 129 crypto and blockchain startups received about $2.6 billion in funding, according to a Bloomberg report culled from data by business analytics firm CB Insights. This figure is already $300 million more than the total funding for such companies in the whole of 2020.

Crypto wallet provider Blockchain.com, lending outfit BlockFi and blockchain game studio Dapper Labs accounted for almost half of the $2.6 billion funding received by startups in the industry in Q1 2021. At the end of March, Dapper Labs announced a $305-million investment from sports stars and other celebrities amid growth in the sale of NBA Top Shot nonfungible tokens.

VC funding for crypto and blockchain startups in the United States has eclipsed the numbers recorded in other regions since the emergence of the crypto space, according to the recently published “Blockchain Venture Capital Report” by Cointelegraph Research. This trend is despite the lack of regularity clarity for the market in the country.

According to Jehan Chu, founder of Hong Kong-based VC investment firm Kenetic, the regulatory climate in the U.S. has done little to dissuade private equity funding for blockchain startups, telling Cointelegraph:

“Nothing is more compelling than peer pressure from the likes of Michael Saylor, Elon Musk and the stampede of institutional money charging into the market. VCs must have a position or a view on crypto, or risk missing the biggest market opportunity in a generation.”

The potential for outsized returns continues to be a driving force behind increased equity investments in crypto startups both for blockchain and mainstream VC funds. In its recently published “Blockchain Venture Capital Report,” Cointelegraph Research revealed that blockchain private equity has outperformed traditional private equity across one-, three- and five-year horizons.

Indeed, blockchain private equity performance has proven itself to be largely uncorrelated with the mainstream asset class. This trend offers some form of assurance for VC funds looking to diversify their early-stage investment portfolios.

Commenting on the basic investment thesis for VC funds in the blockchain space, Xinshu Dong, a partner at VC firm IOSG Ventures, told Cointelegraph: “Crypto is a very attractive direction with not just unparalleled growth potential but also quite promising validation, especially in the past few months from the buy-in from U.S. institutions.”

Given the marked increase in funding for crypto startups in Q1 2021, the proportion of blockchain-focused VC funding to the overall market might be set for a trend reversal. After almost peaking at 2% during the 2017 bull run, blockchain private equity fell to less than 1% of the global VC market as of the end of 2020.

This decrease can be attributed in part to the trends that emerged post-2018 bear market and the ongoing coronavirus pandemic. According to data from Cointelegraph Research, blockchain-focused VC funding dropped by 13% between 2019 and 2020, while traditional equity funding increased by 18% during the same period.

Driving force behind increased crypto funding in 2021

Since its emergence, the crypto landscape has been likened to the early days of the internet market in the 1990s and early 2000s. Where the internet boom led to the initiation and subsequent rise of sectors like e-commerce and social media, the blockchain space has been touted to drive innovations such as decentralized finance and the decentralized web.

Legacy brands that were dismissive of the promise of the then young internet space saw the rise of e-commerce and online merchants challenge the primacy of these brick-and-mortar firms in the retail arena. Social media also grew to arguably eclipse the reach of print and broadcast media as web-based services disrupted several industries.

With blockchain touted as having similar global business process disruption capabilities, several notable participants in the mainstream arena appear keen to interact with the emerging technology. This appetite for backing players in the novel arena appears even more apparent among VC firms with Dong telling Cointelegraph: “It’s an opportunity of a generation that VCs can hardly miss.”

The token economy associated with blockchain startups also offers early backers the opportunity to acquire cryptocurrencies that could appreciate in value within a short period. Even with vesting schedules that mandate a significant lock-up of these tokens for VC funds, the gains often outsize their initial equity investment.

DeFi interest and early-stage investments

Decentralized finance’s rise to prominence has offered significant expansions to the crypto market through activities like staking and protocol governance. According to Baek Kim, director of investments at VC fund Hashed: “The most important part of the crypto VC investments is that this is also an entry ticket to participate in crypto networks as a shareholder.” He added further:

“Crypto portfolios allow for investors to participate and contribute to the ecosystem in a much more engaging way than the traditional equity investments — through staking, node operations, governance proposals, liquidity bootstrapping and many more. VC participation in crypto and blockchain projects means you can be part of this paradigm shift not just as an investor but as a participant.”

This growing appetite for blockchain startups is not restricted to established players in the still-nascent crypto space. New projects, especially those in the DeFi space, are also enjoying significant interest from private equity firms looking to be early backers of the next DeFi bluechip.

In a conversation with Cointelegraph, Rob Weir, chief operating officer of upcoming DeFi platform Jigstack, attracting investments from VC funds was the easiest part of the private equity funding process. According to Weir, new blockchain projects need to consider issues such as vesting schedules and implications of token-represented equity on future price action for their native “coins.”

Weir said that balancing these key issues is essential for new projects in determining how to allocate tokens to private and public funding, adding: “VCs require a significant amount of token represented equity and consolidate a large portion of what would become selling pressure. If they deliver on their promises then they are well worth the upfront sacrifice.” He further added that “community-oriented raises leave you resource shy and carry other inherent risks.”

Early-stage backing by retail investors is also another growing trend in 2021, especially amid the gains enjoyed by projects bootstrapped on IDO launchpads. Launchpad platforms often utilize a tiered subscription package that allows holders of their native coins to gain access to project token allocations before the public listing.

According to data from cryptocurrency aggregator CryptoDiffer, the top 10 launchpad platforms in the market have recorded average returns on investment ranging between 11.3% and 68.2% thus far in 2021.



via cointelgraph.com