[{"title":"Cryptocurrency Adoption in the US & Worldwide: Facts and Figures","image":"https://images.ctfassets.net/4x910isj0ns2/4VsStirsKH79EjpuaddcpS/b71a05ba5ada55c9c3a9002d7a3db7fb/blockchain-3440455_1920.jpg","description":"Blockchain and digital currencies are expanding at a rapid pace, resembling the internet boom of the early 90s. While we’re still in the early stages of a major technological revolution, the trend is becoming visible. In the future, every business and individual will likely have some form of digital currency account for micropayments and other financial operations the same way each company has a website and an online presence, and each individual has a social media account.\n\nThe democratization and decentralization of the economy are irreversible processes and are now penetrating various industries. Interestingly, the US is one of the countries that lead this trend despite the fact that it probably hosts the most highly regulated financial environment.\n\n## At Least 14% of US Population Owns Cryptocurrency\n\nA recent report by Gemini, titled “[the State of Crypto](https://www.gemini.com/state-of-us-crypto),” estimated that 14% of the US population holds some form of digital currency, stressing that other studies assessed this number to be higher. According to the report, this translates into 21.2 million US adults who own cryptocurrency.\n\nThe survey involved 3,000 US adults aged between 18 and 65, with no less than $40,000 in household income. Participants were questioned between October and November 2020.\n\nInterestingly, while cryptocurrency owners are predominantly males, with 74% versus 26% female crypto holders, there are more females showing interest in cryptocurrency - 53% versus 47% crypto-curious men.\n\nThe crypto-curious audience includes those who don’t own cryptocurrency at the moment but either want to know more or plan to buy soon. It’s worth mentioning that this group is huge, comprising 63% of US adults. About 13% of respondents plan to buy cryptocurrency in the next 12 months, suggesting that the number of crypto holders would almost double by the end of this year.\n\nThe age demographics are also interesting, suggesting that an overwhelming majority of crypto holders are aged between 25 and 44. Specifically, 74% of crypto owners fall under this group, which basically suggests that Millennials are making the crypto rules today.\n\n\n\nWhile the average age of crypto owners is 38, the average age of the crypto-curious cohort is 44, suggesting that the next wave of cryptocurrency buyers will include older groups as well. Here is the distribution of crypto adoption in the US by ownership, interest, age, sex, income, and location as per Gemini’s report:\n\n\n\nIt’s important to note that there are more US residents who are interested in cryptocurrency than those who’re not, which is likely to maintain the accelerating growth rate of the industry. The growth is also fueled by the mainstream acceptance of digital currencies, with several institutional investors and major players entering the crypto space, including MicroStrategy, PayPal, Visa, and Tesla, even though the latter [stepped back](https://edition.cnn.com/2021/05/12/tech/elon-musk-tesla-bitcoin/index.html) (for a while, we’d say).\n\nIt’s no surprise that Bitcoin is by far the most popular cryptocurrency both among crypto owners and crypto-curious. The vast majority of both groups (95%) have heard of Bitcoin, but few have heard of other coins. For example, less than 6% knew about Ripple (XRP), Cardano (ADA), or Polkadot (DOT), even though these have been among the top 10 largest coins by market cap.\n\n\n\nOf those who currently own cryptocurrency, 84% held Bitcoin, 27% owned Ethereum, 16% had Bitcoin Cash, and 15% held Litecoin.\n\nIt’s worth mentioning that the survey took place before December last year, when the Bitcoin dominance index was above 65%, suggesting that its market cap accounted for two-thirds of the combined market cap of all cryptocurrencies. However, we [reported](https://www.otctrade.com/blog/bitcoin-dominance-drops-below-40-for-first-time-in-3-years) at the end of May 2021 that Bitcoin’s dominance declined below 40% for the first time in three years, and it is likely that US crypto investors have learned more about altcoins that have been surging in popularity, including ADA, LINK, and DOGE, especially given [the attention from](https://www.youtube.com/watch?v=u_U_dOOI9us) Tesla CEO Elon Musk.\n\nDespite the rapid surge of altcoins, the interest in Bitcoin among US crypto investors continues to increase, with more and more people responding that they would likely buy the cryptocurrency within the next five years.\n\n\n\n> When it comes to the purpose and investment target, the Gemini report notes that “the large majority of current crypto owners say they buy and hold crypto for its long-term investment potential. More than two-thirds (69%) buy and hold, compared to the 36% who actively buy and sell as a means to achieve profits and the 27% who actively use it to make purchases on the internet.”\n\n## US Makes Top 10 List of Countries With Highest Crypto Adoption\n\nWhile cryptocurrencies are especially popular in some developing countries facing economic instability and volatile national currencies, the US is the only developed country making the top 10 of Chainalysis’ [Global Crypto Adoption Index](https://markets.chainalysis.com/#geography), released at the end of 2020. It is positioned 6th after Ukraine, Russia, Venezuela, China, and Kenya.\n\nAccording to [the report](https://go.chainalysis.com/rs/503-FAP-074/images/2020-Geography-of-Crypto.pdf), Ukraine is the country with the highest adoption of cryptocurrencies, having a reference score of 1. Based on that reference, the rest of the countries get a score between 0 and 1, with the US having a score of 0.627, based on metrics like on-chain value received, on-chain retail value received, number of on-chain deposits, and peer-to-peer exchange trade volume.\n\n\n\nThe report, which comprises data from July 2019 to June 2020, says that the North American region, which includes only the US and Canada for this report, is the third-most active region by crypto volume moved on-chain, behind Northern & Western Europe and East Asia. Thus, the US and Canada accounted for about 15% of all crypto activity in the studied period.\n\nInterestingly, the report concluded that:\n\n> “Like East Asia, North America has an extremely active professional market, though its strategies for cryptocurrency investment appear to be much different from its East Asian counterpart. […] North America also hosts a growing class of institutional investors conducting even larger transfers of cryptocurrency than what we typically refer to as professionals. The institutional share of the market has grown over the past few years, which can be seen by many to legitimize cryptocurrency as an asset class.”\n\nIndeed, the US has the most institutional investors, and many of them likely prefer over-the-counter (OTC) crypto trading venues to perform large transactions and avoid price slippage.\n\n\n\nInterestingly, as of June 2020, 90% of cryptocurrency transfer volume came from professional-sized transfers above $10,000 worth of crypto. While retail investors can be more numerous than institutional investors, the impact of the latter group is more evident because of the large transactions they perform.\n\nMore than half of the volume of transactions performed by North American institutions is represented by transfers higher than $1 million, which again hints at the major importance of OTC trading platforms in the region.\n\n\n\nAnother interesting observation is that crypto investors in North America favor Bitcoin more than anywhere else, with 72% of crypto volume in the region being related to the largest digital currency by market cap, followed by stablecoins (17%) and altcoins (11%).\n\n\n\nThe report notes that *“North America-based professional and institutional investors tend to buy and hold cryptocurrency more so than those based in East Asia, who tend to trade at a higher frequency.”*\n\nAsked about what makes Bitcoin so attractive to professional and institutional investors in North America, Philip Bonello, Director of Research at Grayscale Investments, said that many of these investors found similarities between the cryptocurrency and gold, considering it a safe-haven asset.\n\n> “People see the Fed printing more money and putting more money into quantitative easing, and they want scarcer, uncorrelated assets. Gold has typically filled this role, and now the same conditions are pushing investors to digital gold,” he said.\n\nIndeed, in August 2020, we [reported](https://www.otctrade.com/blog/btc-gold-rallying-amid-failing-global-economy-dovish-stance) on the close correlation between Bitcoin and gold, as the metal updated its record high. However, 2021 has been different, with the crypto market demonstrating an unprecedented bullish rally, while gold corrected in the first quarter and then bounced back in the three months to June 2021.\n\nStill, no one denies the fact that Bitcoin is a great [store of value](https://www.otctrade.com/blog/bitcoin-as-store-of-value) and a hedge against [raising inflation ](https://www.ft.com/content/5d2aef18-e9c4-486a-8323-c5fc6addf5f7)caused by the US government’s massive stimulus programs and Fed’s cash injection.\nDespite the massive pullback of the crypto market, with Bitcoin collapsing from its record high at over $64,000 in mid-April to $33,000 one month later, the cryptocurrency will continue to see greater adoption, especially as inflation concerns will persist.\n\nIn a recent post, we [reported](https://www.otctrade.com/blog/more-companies-buy-bitcoin-for-treasury-operations-will-the-trend-continue-) that more companies were investing heavily in Bitcoin, including MicroStrategy, Square, Tesla, China’s Meitu, and Norway’s Aker ASA. While this is not necessarily a significant trend today, the adoption of digital currencies, especially when stablecoins act as a reliable bridge between blockchain applications and traditional finance, will likely reach every aspect of our economic life.\n\n___\n\n*Images via Gemini.com, Chainalysis.com, Statista*","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"07 Jun 2021","id":"6rWbt8kWZaHoMd1doqorsB"},{"title":"Bitcoin Dominance Drops Below 40% for First Time in 3 Years","image":"https://images.ctfassets.net/4x910isj0ns2/4WoBBa3nXvsZE1BxTZ92nR/36d70c83c232295e39886aef1ea948ff/bitcoin-3290060_1920.jpg","description":"The dominance of Bitcoin, the oldest and largest cryptocurrency by market cap, has declined to less than 40% for the first time since the summer of 2018, as several altcoins have been in the spotlight in the first half of the year.\n\nInterestingly, the BTC dominance index fell both during the cryptocurrency’s bull run as well as during its latest dramatic decline to $33,000, the lowest level since the beginning of February.\n\nOn May 19, Bitcoin dominance fell to 39.10%, as per Coinmarketcap data – a 44% decline from over 70% at the beginning of the year. The index has eventually surged to 45% on May 20, as the king of crypto is rebounding, although it is well below 60%, where it used to be in the first three months of the year.\n\nThe performance of the index throughout the years has demonstrated the birth of a huge industry in the span of a few years. For example, in 2015, Bitcoin had a share of over 90% of the market, and in 2017 its dominance surged to 87% at some point. Back then, it was all about Bitcoin. Nevertheless, things are changing really fast these days, and there are many digital currencies that have utility and are here to stay.\n\n\nsource: https://coinmarketcap.com/charts/ \n\n## Top Altcoins That Surged at the Expense of Bitcoin\n\nWhile Bitcoin fans might be slightly disappointed, several altcoins saw their price and market cap surging to all-time highs, as more investors have shown an increased interest in faster and more scalable blockchains, as well as emerging crypto sectors, such as [Decentralized Finance](https://www.otctrade.com/blog/where-is-defi-headed-in-2021-) (DeFi) and [non-fungible tokens ](https://www.otctrade.com/blog/where-is-defi-headed-in-2021-)(NFTs).\n\nHere are some of the tokens that took the lion’s share of the crypto market as a result of Bitcoin dominance decline:\n\n- __Ethereum__ – the biggest winner is Ethereum, the second-largest cryptocurrency by market cap. The network is gradually transitioning from Proof of Work (PoW) to [Proof of Stake ](https://www.otctrade.com/blog/what-is-proof-of-stake-and-what-investors-should-know-about-it-)(PoS) to become more scalable, faster, and secure.\nOne of the main reasons behind the Ethereum surge has to do with its dominance in the DeFi and NFT sectors, as most DeFi and NFT tokens are built on Ethereum. While this leads to higher gas fees and network congestion, it reflects the increasing demand for the token and the underlying blockchain. \nEthereum’s dominance in the crypto space rose in mid-May to over 20%, the highest since February 2018. Meanwhile, the price of ETH versus BTC rose to the highest level since July 2018, and it hit an all-time high in dollar terms at over $4,300, gaining over 350% YTD to its peak.\n- __Cardano__ – Cardano is an altcoin that surprised many investors with its bullish run, as it is a project that is still in development and lacks many features projected in its roadmap. The ADA token has surged by over 1,100% from the beginning of the year to its record high at over $2.3 touched in mid-May. While the community loves this coin, few market participants can explain the surge.\nNic Carter, co-founder of researcher Coin Metrics, [told](https://www.bloomberg.com/news/articles/2021-03-14/crypto-s-next-big-thing-raises-questions-while-the-price-surges) Bloomberg:\n\n> “I am not aware of a single popular application deployed on Cardano, nor have I seen any enthusiasm for the platform among developers. I am truly mystified as to why it is enjoying a resurgence in popularity.”\n\n- __Dogecoin__ – if Cardano at least has a great plan to build a scalable blockchain, Dogecoin has no such utility. In fact, it started as a meme coin. Dogecoin creators built the payment system as a joke – not bad for what became a $50 billion project. The cryptocurrency has increased by over 6,300% since the beginning of the year to its recent peak at over 70 cents, when the market cap exceeded a staggering $90 billion. Why the fuss? Mainly because of Elon Musk. He [endorsed](https://www.cnbc.com/2021/05/20/dogecoin-jumps-on-elon-musk-tweet-as-wild-cryptocurrency-trading-continues.html) DOGE on several occasions by posting favorable tweets about the coin, and his position was promoted and leveraged by Reddit users.\n- __DeFi tokens__ – if the rallies of ADA and DOGE seem surprising, the ongoing surge of DeFi tokens appears to be legit since most of the tokens have some utility in their specific ecosystems and beyond them. Blockchains like Uniswap, Chainlink, Polygon, Curve, and Aave have become popular because of the innovative concept of Automated Market Makers (AMMs), yield farming opportunities, and other financial services built on decentralized infrastructures.\n- __Stablecoins__ – stablecoins have also benefited from the rapid growth of the DeFi ecosystem, with many USD-backed tokens dominating the DeFi space. Nevertheless, stablecoins are used in centralized finance as well. Recently, Visa [selected](https://usa.visa.com/visa-everywhere/blog/bdp/2021/03/26/digital-currency-comes-1616782388876.html) USDC to be used on its settlement platform, enabling Visa card holders to pay with cryptocurrencies more conveniently. USDC has been the fastest-growing stablecoin, while USDT still dominates this niche.\nWith a total market cap of over $97 billion, stablecoins account for over 5% of the cryptocurrency market.\n\n\nSource: https://www.coingecko.com/en/stablecoins \n\n## Will Bitcoin Dominance Return to Previous Levels?\n\nAs mentioned, Bitcoin’s dominance gauge dropped during its rally as well as when it slumped to the lowest level in months on Elon Musk’s announcement that Tesla was giving up accepting the cryptocurrency as a payment option.\n\nThus, it’s difficult to anticipate what will happen in the immediate future, but we can theorize that Ethereum will stay strong due to the upgrade, while some altcoins will continue to surge in popularity thanks to more advanced blockchains. For example, Solana, Algorand, and Cardano are a few blockchains that provide more scalable and low-cost solutions to develop decentralized applications.\n\nStill, a fresh report by Stack Funds, suggests that the BTC dominance would re-establish as the ongoing uncertainty will prompt investors to go back to Bitcoin as a safe haven.\n\n> “We are expecting investors to cycle back into Bitcoin as uncertainties increases as the markets undergo another reset. Hence, a bounce in Bitcoin dominance should occur, further supporting Bitcoin’s price in the short-term,” the report [concludes](https://mcusercontent.com/45836f27729699cf7a484a367/files/365b63c5-7a2f-c817-16eb-83f3f98a34bf/Stack_Funds_Research_20_May_2021.pdf). \n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.\n","date":"21 May 2021","id":"1GbSikNWCKF0gqF9EUvDnP"},{"title":"Bitcoin Mining Difficulty Eases After Updating Record High","image":"https://images.ctfassets.net/4x910isj0ns2/4HQ17zoN47zXt2kGDtAPQN/7ef3fc06c79b99b96ef7f15c8c287aa0/bitcoin-3396338_1920.jpg","description":"When Bitcoin first came out, everyone could mine it at home on a regular CPU. Eventually, the mining difficulty has gradually increased due to the higher competition and lower reward per block.\n\nWhile the mining difficulty can fluctuate up and down on smaller timeframes, it becomes more challenging to mine Bitcoin year after year. In April 2021, the mining difficulty updated the all-time high for the fourth month in a row. Last month, the mining difficulty indicator rose by almost 8% during two upticks.\n\nOne of the reasons why it’s more difficult to mine Bitcoin is the cryptocurrency’s ascending price, which has more than quadrupled since last November and currently fluctuates relatively close to its record high near $60,000. Another reason has to do with the release of new-generation ASICs (application-specific integrated circuits). \n\nNevertheless, the mining difficulty eased at the beginning of May, experiencing the third-largest decline ever.\n\n\n\nhttps://www.blockchain.com/charts/difficulty\n\n## What Is Mining Difficulty?\n\nFor those unfamiliar, the indicator reflects the amount of computing power required to mine Bitcoin. This measurement doesn’t show short-term moves similar to price fluctuations. Instead, the blockchain automatically adjusts its difficulty level every 2,016 blocks, which happens to be about every two weeks. This feature was implemented by Satoshi Nakamoto himself (or themselves) to ensure a stable rate of block creation so that large players couldn’t eat too much hashrate, which I’m about to explain later.\n\nThe mining difficulty figure is relative and considers the difficulty level at the launch of Bitcoin as the main reference. At the time, the Bitcoin chain had the lowest mining difficulty ever, which is displayed as 1 by the indicator. As of today, the cryptocurrency’s mining difficulty is over 20 trillion, and it was over 23 trillion at the end of April. That means it is 20 trillion times more difficult to mine Bitcoin than at the launch – can you imagine that?\n\nIt’s worth mentioning that this gauge makes sense for Proof of Work (PoW) blockchains only.\n\nBitcoin’s protocol rules stipulate that miners have to check all transactions from the memory pool (mempool) and gather them into new blocks that are generated every 10 minutes. There is only one miner that wins the right to add the block during this period. To win the competition every 10 minutes, the candidates are solving a complex cryptographic puzzle and receive the reward in the form of newly minted Bitcoin (currently, the reward per block is 6.25 BTC). Thus, the more miners compete for the next block, the more challenging it is to crack the hash.\n\nThe goal of the puzzle is to find out the hash value of the previous block, as it’s hidden and has to be referenced in the next block. There is no way to hack, crack or guess a block’s hash value, so miners spend computing power to try one hash number after another until finding the needed value. The more computer power – which is referred to as hash power – a miner is able to spend, the higher his chance to get to the needed hash value before everyone else.\n\nThus, Bitcoin’s mining difficulty is directly related to the chain’s total hashrate, which represents the total computing power used by all miners. You can check the relationship in the chart below: \n\n\n\nhttps://bitinfocharts.com/comparison/difficulty-hashrate-btc.html#1y\n\n## Why Did Mining Difficulty Surge to Record Highs?\n\nThe April uptick was probably driven by the release of tens of thousands of new mining machines planned for this quarter.\n\nWhit Gibbs, CEO of Bitcoin mining firm Compass Mining, told Coindesk last month that a large amount of hashrate was about to come online in 2022. He [said](https://www.coindesk.com/bitcoin-mining-difficulty-adjustment-down-largest-year):\n\n> “*Today’s moderately large difficulty increase is not surprising, and I expect it’s only a taste of what will come later in this year and into 2022, as delayed machine shipments start arriving and being deployed. The pending flood of hashrate about to enter the market will only continue pushing bitcoin’s mining difficulty higher, which should track with bitcoin’s price*.”\n\nRemember that the first Bitcoin miners used CPUs of their computers. At some point, they realized that (GPUs) could do a better job, though they consumed more electricity. Still, as the competition became fiercer, miners started to use ASICs, which are mining equipment units developed specifically for this activity. Today, the difficulty level is so high that miners gather in pools to combine their ASIC-powered hashrates.\n\n## Why Did Mining Difficulty Decline All of a Sudden?\n\nAt the beginning of May, the difficulty gauge tumbled by 12.6%, which is the third-largest drop ever. The difficulty figure has reached January levels.\n\nAs I mentioned above, the mining difficulty is closely related to the hashrate (the total computing power dedicated to mining). Recently, several coal mining accidents occurred in China, with the latest one [taking place in Xinjiang](https://www.reuters.com/world/china/21-miners-trapped-after-xinjiang-coal-mine-accident-china-daily-2021-04-11/) last month when 21 people got trapped. As Xinjiang lost its main source of electricity because of the accident and subsequent inspections, Bitcoin miners operating from this region went offline, and the hashrate dropped by about 25% (you can check the decline on the chart above). It fell from 157 exahashes per second (EH/s) on April 15 to 98 EH/s three days later. An exahash is one quintillion hashes per second.\n\nThomas Heller, chief business officer at Compass Mining, [told](https://www.coindesk.com/bitcoin-mining-difficulty-adjustment-down-largest-year) CoinDesk:\n\n> *“The drop is primarily caused by the inspections and associated power outages in Xinjiang. Although the majority of mining farms in the regions have recommenced mining, the network hashrate has not quite reached all-time high again.”*\n\nBitcoin’s protocol adjusts the mining difficulty depending on the hashrate, so the decline in difficulty was obvious several days before the deadline due to the fresh drop in the hashrate. \n\nThe accident in Xinjiang shows how centralized Bitcoin mining really is. An important share of hashrate production still takes place in China. That means seasonal and government changes may impact hashrate levels and thus affect mining economics.\n\nNevertheless, the hashrate is recovering – it actually updated the ATH on Tuesday, May 4, at 163 EH/s. Thus, the mining difficulty is expected to grow further by the end of 2021, as more powerful ASICs are being released this quarter.\n\n## Bitcoin Mining Revenue Continues to Increase\n\nThe bull run has boded well for Bitcoin miners, as they hauled the largest amount of mining revenue in March and April. Last month, miners generated $1.7 billion in revenue on aggregate, slightly down from March’s $1.75 billion.\n\nData shows that 14.5% of the April revenue relates to transaction fees, which is the highest fee-to-revenue ratio in more than three years.\n\nBesides the surging price, one of the reasons behind the strong revenue figures is the crash in the hashrate that took place in mid-April. The low hashrate slowed the pace at which blocks were mined, resulting in increasingly competitive and expensive transaction fees, hence the surging fee-to-revenue ratio.\n\nOn April 15, when Bitcoin’s price reached the record high above $64,000, the daily mining revenue hit $80 million, which is the highest figure on record.\n\n\n\nhttps://www.blockchain.com/charts/miners-revenue\n\nWhile the mining difficulty will likely continue to surge in the following months, the revenue will depend very much on the cryptocurrency’s price.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.\n","date":"11 May 2021","id":"3Kk2v10VCZLAMWUs2ZGa5V"},{"title":"Where Is DeFi Headed in 2021? ","image":"https://images.ctfassets.net/4x910isj0ns2/2N9CEtGtTsfI2QAP2rV6hD/320345c613ecb5317c53cea03f3995b0/AdobeStock_425913745.jpeg","description":"Non-fungible tokens (NFTs) have been in the spotlight in 2021, outperforming most Decentralized Finance (DeFi) tokens. However, the NFT trend is slowing down a bit, while DeFi is maturing and gradually expanding at the expense of traditional finance.\n\nLast year, we [explained](https://www.otctrade.com/blog/whats-the-fuss-about-decentralized-finance-defi-) the main principles and ambitions of the DeFi trend, anticipating that more financial services would rely on decentralized infrastructures. Today, DeFi has established as an independent sector within the cryptocurrency market. In fact, thanks to DeFi, this is probably the first time ever when the crypto industry has multiple assets that show relatively low correlation. Finally, institutional investors can build a well-diversified portfolio made up of digital assets only.\n\nBut DeFi is not only about investment opportunities, even though there is no shortage of them at all. The new crypto trend pledges to challenge the status quo of today’s financial world by replacing old infrastructures with blockchain-based systems and community-driven institutions.\n\nRecently, Bank of America concluded that DeFi was potentially more disruptive than Bitcoin, whose market cap has consolidated well above $1 trillion. The new trend is a radical challenge to modern finance, the bank [said](https://www.businessinsider.com/defi-decentralized-finance-disruptive-bitcoin-benefits-challenges-bofa-crypto-finance-2021-3) in a research report.\n\nBank of America analyst Francisco Blanch explained that traditional finance relies on trusted entities acting as central points for offering products and services. In turn, these institutions are regulated to ensure consumer protection. DeFi aims to remove these intermediaries and leverage blockchain to enable traditional and innovative financial use cases managed by communities.\n\n## DeFi Continues to Grow in 2021\n\nThe crypto industry has been expanding at an impressive rate during the last few months, with Bitcoin almost doubling since the beginning of the year. DeFi is no exception – the new trend has kept the pace with the largest cryptocurrency, with most major DeFi tokens outperforming it.\n\nThe total value locked (TVL) in DeFi projects – one of the most popular metrics to assess the growth rate of the sector – [has increased ](https://defipulse.com/)from over $18 billion at the beginning of the year to almost $63 billion at the time of writing, which is an all-time high. In April 2020, there was less than $1 billion locked in DeFi projects.\n\nSpeaking about the performance of DeFi tokens, all of the ten largest ones, including UNI, LINK, LUNA, CAKE, AAVE, MKR, AVAX, COMP, RUNE, and SNX, have outperformed Bitcoin (blue) in the first four months of the year:\n\n\n\nThe bull run encourages more investors to join the DeFi trend by trading on decentralized exchanges (DEXes), lend and borrow, stake, and implement yield farming strategies.\n\nHere is the performance of DeFi’s main sub-sectors defined by their use cases:\n\n### Decentralized Exchanges (DEXes)\n\nThe volumes on DEXes have surged in the first quarter, with Uniswap leading the trend. For those unfamiliar, DEXes are one of the most significant use cases of DeFi. They are crypto exchanges built on blockchain infrastructures meant for peer-to-peer crypto transactions or token swaps. DEXes have no intermediaries and usually employ Automated Market Makers (AMMs) and liquidity pools to ensure liquidity and price discovery.\n\nAccording to data from crypto research firm [Messari](https://messari.io/article/q1-2021-defi-review-defi-booms-as-bull-market-heats-up), DEX volumes surged by over 8,000% in the first quarter of this year compared to the same period in 2020.\n\n\n\nFebruary was a record month for DEXes, with Uniswap maintaining as a leader. However, Pancakeswap (orange) was the big winner among DEXes in the first quarter.\n\n\n\nIt’s worth mentioning that Pancakeswap is a controversial project and the crypto community is still debating whether the platform is fully decentralized and a DEX at all. Pancakeswap is a Uniswap fork built on Binance Smart Chain (BSC), a public blockchain ecosystem with Ethereum-like functionalities. The surging volumes on Pancakeswap can be explained by the exodus from Uniswap and other Ethereum-based DEXes due to the high gas fees.\n\nEven though BSC-based projects have become quite successful, the blockchain’s scalability and low costs are achieved at the expense of compromised decentralization. BSC has 21 active validators that are determined every day by Binance Chain – a separate blockchain managed by just 11 validators.\n\n### Stablecoins\n\nAnother major use case of DeFi is stablecoins, especially USD-backed tokens. However, they don’t get the deserved attention. Active crypto traders and yield farmers are constantly checking the price of tokens, but stablecoins have a fixed price, don’t generate returns, and thus are not interesting from an investment perspective.\n\nNevertheless, their functionality and design make them indispensable despite having a stable price. In fact, without stablecoins, DeFi would never experience an expansion at such a rapid pace. Stablecoins are the lifeblood of most DeFi projects because they address one of the most significant issues of digital assets: volatility.\n\nIf you operate with highly volatile assets, how can you facilitate fair collateralization or lending services? Thanks to stablecoins, many investors have contributed with liquidity to support DeFi services and decentralized applications (dApps).\n\nUSD-backed tokens have become the bridge between traditional finance and DeFi. They are imperative to making the complex DeFi ecosystems more attractive for traders and developers.\n\nIn the first quarter of 2021, the total market cap of stablecoins has surged from about $25 billion to over $65 billion.\n\n\n\nWhile USDT continues to dominate the stablecoin market, USDC – a USD-backed token launched in 2018 by Circle and Coinbase – has been the fastest-growing stablecoin during the last few months. USDC is also the most popular stablecoin in DeFi. As of today, USDT is the fifth-largest cryptocurrency by market cap, while USDC is the 16th largest one.\n\nDuring the first three months, stablecoins facilitated an impressive $1+ trillion in transaction volume - more than the entire year in 2020.\n\n\n\n### Lending\n\nDeFi’s lending market also went parabolic during the first three months. Lending deposits across the three most popular platforms hit $25 billion according to Messari, which is a new record.\n\n\n\nThe number of outstanding loans also rose to a fresh ATH of about $10 billion across Compound, Aave, and MakerDAO. Compound continues to lead the market with a 53% share.\n\nNevertheless, in terms of price performance, MKR has been the best performer of the three in the January-April period, surging over 630%. On the other side, AAVE remains the largest token by market cap (25) of the three.\n\n\n\n### Derivatives\n\nToday, volumes transacted on centralized derivative markets are way above the volume transacted on spot exchanges like Coinbase, Kraken, and Binance’s spot platform, which is why many DeFi projects are focusing their attention on decentralized derivatives platforms that revolve around futures, options, and tokenized assets.\n\nSome of the biggest gainers in this group that launched recently are Perpetual Protocol and Mirror Chain.\n\nPerpetual Protocol facilitates the trading of tokenized perpetual contracts, which are futures without settlement and expiration dates. The perpetual swaps take place fully on-chain, just like on Uniswap. The leverage of the on-chain perpetual contract is 20x on both long and short positions. Perpetual Protocol ensures price discovery and liquidity through so-called virtual Automated Market Makers (AMMs). The protocol can support derivatives tracking all types of tokens, as well as fiat pairs, gold, and other traditional assets.\n\nAt the end of last year, Terra launched the Mirror Protocol, which lets users create synthetic assets representing any kind of asset, be it company share or cryptocurrency. The newly issued synthetic assets are called mAssets, which behave like contracts for difference (CFDs), mimicking the price of underlying assets.\n\nElsewhere, Hegic is another recent project that is expanding rapidly. It represents a decentralized options trading platform that focuses on user experience.\n\nThe well-established protocols for creating synthetic assets, such as Synthetix and Universal Market Access (UMA) have performed well since the beginning of the year, though Mirror Protocol has been the big winner, surging over 500%.\n\n\n\n### Asset Management\n\nMany DeFi tokens power asset management platforms have also demonstrated three-digit gains. These platforms help users secure returns through various DeFi activities, including yield farming, staking, and lending, among others.\n\nYearn.finance continues to dominate the asset management sub-sector, even though it had some issues with funding its [core contributors](https://andrecronje.medium.com/building-in-defi-sucks-b8fdfda0ef58). Nevertheless, the problems have been addressed as the community came up with two proposals to solve the incentive misalignment. Yearn also launched V2 yVaults, which provide better DeFi asset management strategies. After the launch, Yearn.finance’s total assets under management (AUM) surged from about $1 billion at the beginning of March to over $3 billion as of the end of April.\n\n\n\nhttps://yearn.science/\n\nDespite the recent success, the YFI token has been the worst-performing DeFi token among the asset management sub-sector, gaining about 60% year-to-date (YTD).\n\n\n\n## Traditional Institutions Keep an Eye on DeFi\n\nWith the DeFi space expanding rapidly and pledging to challenge the dominance of traditional finance in the longer-term future, many institutions are closely watching the market, and some of them are already joining the trend.\n\nIn mid-April, New York-based blockchain software company ConsenSys, a major proponent of Ethereum and [DeFi](https://consensys.net/blockchain-use-cases/decentralized-finance/), [secured](https://consensys.net/blog/press-release/consensys-raises-65-million-to-accelerate-convergence-of-traditional-and-decentralized-finance/) $65 million in a funding round. Investors included JPMorgan, MasterCard, and UBS, as well as blockchain entities Maker Foundations, Protocol Labs, and Fenbushi.\n\nConsenSys is betting all on Ethereum, which is gradually upgrading to Ethereum 2.0, a Proof of Stake solution built around scalability and poised to dominate the DeFi market for the years to come.\n\nElsewhere, Thailand’s fourth-largest bank by assets, Kasikorn (KBank), is [consolidating its exploration](https://www.bangkokpost.com/business/2098591/) of a project that aims to remove financial intermediaries via DeFi. The project, known as Kubix, was developed by KBank and is operated in collaboration with the Stock Exchange of Thailand. It acts as an initial coin offering (ICO) portal for blockchain-based tokens.\n\nRuangroj Poonpol, chairman of Kasikorn Business Technology Group (KBTG), the tech division of KBank, said:\n\n> “Providing innovative financial services under DeFi should improve the country's financial exclusion and allow Thais better access to financial services. With this asset-backed form, DeFi could also create economic value for Thailand.”\n\n## DeFi Challenges\n\nDespite its whopping growth, DeFi has several major challenges and risks that have to be addressed:\n- Lack of regulation and consumer protection – the crypto community loves DeFi because it has no intermediaries and doesn’t require you to pass through KYC (know your customer) verifications. Nevertheless, the lack of regulation will put serious limitations to DeFi’s wider adoption, as governments and financial watchdogs are not going to just stand aside.\n- Hacking attacks – even though DeFi is all about decentralized infrastructures, which translates into a high degree of security, hackers and scammers are still finding loopholes. Last week, DeFi protocol EasyFi [reported](https://medium.com/easify-network/easyfi-security-incident-pre-post-mortem-33f2942016e9) that it had been hacked and had lost $80 million. The hacker transferred out about $75 million worth of EASY tokens and removed another $6 million from liquidity pools, including in USD, DAI, and USDT. It is reported that the private keys of the admin’s MetaMask account had been compromised rather than the protocol’s smart contracts. Now the team is thinking about a hard fork.\nLast year, hackers [stole](https://www.theblockcrypto.com/linked/89830/hackers-stole-120-million-via-15-defi-hacks-in-2020) over $120 million by compromising 15 DeFi projects.\n\nOther problems that DeFi should solve refer to the potential price bubbles, pump-and-dump schemes, centralized protocols that pretend to be decentralized, and the dominance of Ethereum, which may hinder wider adoption due to the high gas fees.\n\nDespite the significant challenges, the crypto community will increase its bet on DeFi, as the market is here to stay and no one wants to miss the trend.\n\nEarlier this year, crypto research firm Xangle surveyed 379 US accredited investors and [found out](https://s3.ap-northeast-2.amazonaws.com/upload.xangle.io/files/xangle_research/Xangle_Crypto_Investing_in_2021_(2).pdf) that 67% knew about DeFi, and 90% of those who knew would likely invest in the sector.\n\n\n\nTo conclude, DeFi has great potential to grow in 2021 and it’s very unlikely that it will fail as the ICO trend did after the 2017 boom. Nevertheless, don’t be surprised if the market experiences a major correction at some point – Bitcoin has also had several difficult times.\n\n___\n\n*Images via [Messari](https://messari.io/article/q1-2021-defi-review-defi-booms-as-bull-market-heats-up), Yearn.science, Xangle, TradingView*\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"30 Apr 2021","id":"3erXOZQwK61BZUeX67P5yf"},{"title":"Q1 Crypto Market Review: Digital Assets Go Mainstream","image":"https://images.ctfassets.net/4x910isj0ns2/2IkrpZ6yao6F1pjU2UvPwq/180eea9ace3e40dea8dd315996d95ccd/bitcoin-2007769_1920.jpg","description":"It was an incredible quarter for Bitcoin, with the largest cryptocurrency by market cap showing the best Q1 performance in eight years. The surge comes as a continuation of the rally that started during the last quarter of 2020, when the oldest cryptocurrency finally broke above the 2017 peak and updated the all-time high.\n\nThe first three months of 2021 were quite eventful for the crypto market in general, with many traditional companies, including Tesla, PayPal, and Visa, embracing digital assets. Elsewhere, [non-fungible tokens](https://www.otctrade.com/blog/crypto-market-goes-crazy-for-nfts-are-they-worth-the-hype-) (NFTs) made the headlines as everyone suddenly realized their potential after years of dormancy, while the [Decentralized Finance](https://www.otctrade.com/blog/whats-the-fuss-about-decentralized-finance-defi-) (DeFi) trend consolidated further.\n\n## It Was a Great Quarter for Bitcoin, but Altcoins Outperformed It\n\nInterestingly, even if Bitcoin broke above $60,000 and consolidated above $1 trillion in market cap, its dominance actually declined to the lowest since the summer of 2019. At the beginning of this year, Bitcoin accounted for over 72% of the total crypto market capitalization, which was the highest since the first half of 2017. That might have to do with Bitcoin detaching as a result of a rally driven by institutional investors.\n\nNevertheless, altcoins followed on Bitcoin’s bullishness, with Ethereum and many other coins outperforming it until the end of the quarter. The dominance of Bitcoin dropped from 72% to 59% at the end of March and to 55% at the beginning of April.\n\n\n\nThe share of cryptocurrencies out of the top 10 group has increased from about 10% to over 18%.\n\nIn the first three months, Bitcoin’s price (blue) doubled, but the rest of the coins in the top 10 group performed even better, except for Litecoin, which gained only 55%.\n\n\n\nhttps://www.tradingview.com/x/a8v3oYxv/\n\n## Institutional Investors Are More Active\n\nAt the beginning of April, crypto manager Coinshares [data showed](https://coinshares.com/research/digital-asset-fund-flows) that inflows into cryptocurrency funds and investment products surged to a record $4.5 billion in the first three months, which demonstrates an increased interest from institutional investors. In the previous quarter, crypto inflows hit $3.9 billion. Obviously, Bitcoin had the most inflows in Q1, with $3.5 billion, followed by Ethereum with $765 million.\n\n\n\nDigital assets under management also jumped to a record of $59 billion, CoinShares said. In 2020, assets under management hit $37.6 billion. Grayscale is by far the largest crypto manager, with over $46 billion in assets, followed by CoinShares itself.\n\n\n\nBesides crypto-oriented institutions, more traditional investors have finally realized that they’re missing a huge trend if they don’t bet on Bitcoin and digital assets.\n\nIn February, Rick Rieder, BlackRock’s CIO of global fixed income, [told](https://www.cnbc.com/2021/02/17/blackrock-has-started-to-dabble-in-bitcoin-says-rick-rieder.html) CNBC that the world’s largest asset manager had ‘started to dabble’ in Bitcoin. Securities and Exchange Commission (SEC) filings showed in January that BlackRock had added BTC futures as a potential investment for two of its funds.\n\nDawn Fitzpatrick of Soros Fund Management, founded by billionaire George Soros, [said](https://twitter.com/crypto/status/1375288902026547210) two weeks ago that the fund had already invested in Bitcoin and that the cryptocurrency was at an inflection point.\n\nIn the first three months of 2021, several major US banks and financial institutions revealed the development of products to help the US accredited investors get direct or indirect exposure to Bitcoin and altcoins. Here are some examples:\n\n- According to an [SEC filing](https://www.sec.gov/Archives/edgar/data/0001665650/000121390021014247/s131027_424b2.htm), JPMorgan plans to launch a debt instrument titled Cryptocurrency Exposure Basket, which tracks 11 companies heavily invested in Bitcoin, including [MicroStrategy](https://www.otctrade.com/blog/microstrategy-becomes-first-public-company-to-buy-bitcoin-for-capital-allocation-invests-250m), Square, Riot Blockchain, NVIDIA, and AMD.\n- Last month, Morgan Stanley [became](https://www.cnbc.com/2021/03/17/bitcoin-morgan-stanley-is-the-first-big-us-bank-to-offer-wealthy-clients-access-to-bitcoin-funds.html?__source=sharebar%7Ctwitter&par=sharebar) the first major US bank to provide its clients with access to Bitcoin funds.\n- At the end of March, CNBC [reported](https://www.cnbc.com/2021/03/31/bitcoin-goldman-is-close-to-offering-bitcoin-to-its-richest-clients.html) that Goldman Sachs was about to offer Bitcoin and crypto investment vehicles to its wealth management clients. Mary Rich, head of digital assets for the bank’s private wealth management division, said that the new products would launch in the second quarter. Rich said:\n*“There’s a contingent of clients who are looking to this asset as a hedge against inflation, and the macro backdrop over the past year has certainly played into that. There are also a large contingent of clients who feel like we’re sitting at the dawn of a new Internet in some ways and are looking for ways to participate in this space.”*\n- In February, Bank of New York Mellon, America’s oldest bank and currently the world’s largest custodian, [said](https://www.cnbc.com/2021/02/11/bny-mellon-to-offer-bitcoin-services-a-validation-of-crypto-from-a-key-bank-in-the-financial-system.html) that it would start financing Bitcoin and other cryptocurrencies. The bank will enable cryptocurrencies to pass through the same financial infrastructure it now uses for US Treasury bonds and equities.\nRoman Regelman, head of digital at BNY Mellon, commented:\n*“Growing client demand for digital assets, maturity of advanced solutions, and improving regulatory clarity present a tremendous opportunity for us to extend our current service offerings to this emerging field.”*\n- Elsewhere, Citi released an extensive report dedicated to Bitcoin, discussing the cryptocurrency’s advantages for various use cases. Meanwhile, Fidelity [is seeking](https://www.sec.gov/Archives/edgar/data/1852317/000119312521092598/d133565ds1.htm) SEC’s approval for a Bitcoin exchange-traded fund (ETF).\n\n## Non-Financial Giants Buying Crypto for Corporate Treasury Corporations\n\nBesides traditional financial companies, many non-financial businesses have joined the crypto trend and are using Bitcoin for corporate treasury operations.\n\nFor instance, Tesla surprised everyone when it [invested](https://www.wsj.com/articles/tesla-buys-1-5-billion-in-bitcoin-11612791688) $1.5 billion in Bitcoin and allowed US citizens to buy their electric vehicles by paying with the cryptocurrency.\n\nBusiness intelligence firm MicroStrategy increased its stake to more than 91,000 Bitcoin (about $5 billion).\n\nMore companies [are expected](https://www.otctrade.com/blog/more-companies-buy-bitcoin-for-treasury-operations-will-the-trend-continue-) to use the cryptocurrency for their treasury operations thanks to its ability to hedge against inflation and act as a store of value (SOV) asset. \n\n## Retail Investors Ahead of Institutions in Q1\n\nDespite the increased activity from institutions, the contribution from retail investors was more significant, with crypto exchanges and other trading services experiencing huge revenues.\n\nJPMorgan strategist Nikolaos Panigirtzoglou and his team [noted](https://www.bloomberg.com/news/articles/2021-03-15/retail-bitcoin-traders-rival-wall-street-buyers-as-mania-builds) that retail investors were more determined in the first quarter. Using data from Square and Paypal, JPMorgan said that retail investors had bought more than 187,000 Bitcoin in Q1, compared to about 205,000 BTC in the previous quarter. Elsewhere, institutions have purchased roughly 173,000 Bitcoin in Q1, according to data related to Bitcoin futures, fund flows, and company announcements. This is actually a decline, as companies bought about 307,000 in the last quarter of 2020.\n\n\n\nhttps://www.coindesk.com/bitcoin-retail-flows-jpmorgan \n\nIt’s worth noting that overall, we can observe a divergence between JPMorgan data, which reflects a decline in crypto activity in Q1 2021 compared to Q4 2020, and the crypto inflow figures provided by CoinShare, which claim vice versa.\n\nNevertheless, retail investors are definitely very determined in 2021. Centralized crypto exchanges and other venues that provide crypto trading services, including Coinbase, Kraken, and Robinhood, reported record volumes in the first three months of the year.\n\nAhead of its initial public offering (IPO), Coinbase [reported](https://techcrunch.com/2021/04/06/coinbases-monster-q1-in-context/?guccounter=1) an impressive 117% q/q increase in active users. The figure rose from 2.8 million users in Q4 2020 to 6.1 million as of March. Trading volumes in the first three months jumped to over $335 billion. For comparison, for all of 2020, trading volume was below $195 billion. The company’s revenue saw a nine-fold surge to $1.8 billion in Q1.\n\nOnline brokerage firm Robinhood [announced](https://robinhood.engineering/how-crypto-fits-into-robinhoods-mission-d93c9081a598?gi=31f8f53bcceb) that 9.5 million users traded crypto on its platform during the first three months, which is a six-fold increase from the previous quarter.\n\nKraken also [reported](https://www.cnbc.com/2021/04/08/bitcoin-coinbase-rival-kraken-may-go-public-via-direct-listing.html) record figures in Q1, which prompted it to follow in the footsteps of Coinbase and go public through a direct listing next year.\n\nBesides crypto exchanges, individuals will be able to benefit from digital assets for payments, trading, and transfers conducted on global infrastructures built by the biggest fintech companies, given that in the first quarter, PayPal, Visa, and MasterCard embraced cryptocurrencies.\n\nThus, PayPal will enable US clients [to pay with Bitcoin](https://investor.pypl.com/news-and-events/news-details/2020/PayPal-Launches-New-Service-Enabling-Users-to-Buy-Hold-and-Sell-Cryptocurrency/default.aspx), Ethereum, and Litecoin directly from their accounts, thanks to the “Checkout with Crypto” feature.\n\nElsewhere, Visa is about to [settle transactions in USDC](https://usa.visa.com/visa-everywhere/blog/bdp/2021/03/26/digital-currency-comes-1616782388876.html), the stablecoin developed by Circle and Coinbase. That means users can pay with any cryptocurrency from their Visa-backed crypto card with lower fees and higher speed. MasterCard [announced](https://www.cnbc.com/2021/02/10/mastercard-to-open-up-network-to-select-cryptocurrencies.html) in February that it would add support for cryptocurrency.\n\n## Crypto Startups Rule in Q1\n\nBlockchain and cryptocurrency startups are securing even more funds from venture capital firms and other investors, both traditional and crypto-oriented.\n\nData from CB Insights [showed](https://www.bloomberg.com/news/articles/2021-04-01/crypto-firms-got-more-funding-last-quarter-than-in-all-of-2020) that 129 blockchain-oriented startups raised about $2.6 billion during the first quarter of this year. The figure has already surpassed $2.3 billion raised in 341 deals reported in the whole of 2020.\n\n\n\nFor example, Canadian Dapper Labs, which created NFT game CryptoKitties and marketplace NBA Top Shot, raised $305 million in a funding round that valued it at $2.6 billion. Elsewhere, wallet provider Blockchain.com said last month that it had secured $300 million in its Series C funding round, being valued at $5.2 billion.\n\n## The Final Note\n\nThe crypto market is confidently getting more traction in 2021, with major cryptocurrencies outperforming stocks, gold, and other traditional assets. More investors realize the potential of digital currencies to hedge against inflation and store value during the pandemic-related uncertainty.\n\nMeanwhile, it’s time for digital assets to go global and become a viable alternative to traditional finance. Bitcoin is still accounting for only 0.90% of the total market capitalization of all fiat currencies, and there is much room for growth.\n\nJudging by the performance during the first three months, 2021 will be a year of fresh records for the crypto space.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"14 Apr 2021","metaDescription":"It was an incredible quarter for Bitcoin, with the largest cryptocurrency by market cap showing the best Q1 performance in eight years. ","id":"58khNLbR3Dte5zSFwpeBj9"},{"title":"Crypto Market Goes Crazy for NFTs; Are They Worth the Hype?","image":"https://images.ctfassets.net/4x910isj0ns2/19pn9ZKYZRtt9V6pnKpP5H/7d08bc86d6465469fe8e3c24b37dd079/background-2462431_1280.jpg","description":"Non-fungible tokens (NFTs) are the biggest internet craze right now, with many artists, influencers, athletes, and other celebrities trying to leverage the hype. On the other side, some investors are rushing to benefit from jumping on the trend as early as possible, while others are scratching their heads over the whole situation.\n\nSo what are these NFTs, and why is everyone talking about them today?\n\n## What Are NFTs?\n\nNFTs represent a category of blockchain-based digital assets in which every such token constitutes something unique and rare. What sets NFTs apart is that they are technically not mutually interchangeable, unlike traditional cryptocurrencies or fiat money. For example, we wouldn’t care if any Ether or Bitcoin unit from our wallet is replaced with another Ether or Bitcoin unit, respectively, as all Ethereum tokens and all Bitcoin have the same value (while the fungibility of Bitcoin [is still debated](https://medium.com/@maitrehub/the-debate-on-the-fungibility-of-bitcoin-bbcd101581c9), the largest cryptocurrency by market cap is fungible for the average person, so it doesn’t constitute a topic for the present article and we can use it as an example). \n\nThus, every NFT, including those residing on the same blockchain and issued by the same entity, is unique, indivisible, and represents something scarce. They require a different token standard to be created, and there are several blockchains supporting NFT development, such as Ethereum and Algorand.\n\nWhile NFTs are technically not mutually interchangeable and replicable, one can mint multiple NFTs to represent the same underlying object. In that case, the NFTs can have the same value. However, the point is that these tokens have the ability to have a unique value. Every NFT has a unique signature that allows for ownership to be traced and verified at any time.\n\nNFTs can represent digital properties, such as art, video clips, trading cards, music, etc. They can also be pegged to physical items, such as real estate, jerseys, luxury watches, etc.\n\nEven though the NFT craze started only recently, these tokens have been around at least since 2017, when a digital collectible game known as CryptoKitties made some waves online. The game allowed players to collect, buy, sell, and donate (well…and breed) virtual cats, each represented by an NFT. Today, NFTs are not associated with CryptoKitties anymore – they are becoming a huge industry, as entire markets can be tokenized.\n\n## The Current World of NFTs – What Are They Used For?\n\nThe use cases of NFTs have no limits, but there are some niches that dominate this emerging market right now. We’ll briefly discuss crypto art, sports and other collectibles and memorabilia, as well as entertainment in general.\n\n### Crypto Art\n\nCrypto art is one of the most popular NFT use cases, as more digital artists sell their artwork through blockchain. NFTs can be used for tokenizing both physical art and digital works, though the latter is trendier right now.\n\nThink about this – the crypto art market has surged from almost $90 million in mid-February to more than $400 million as of mid-March.\n\n\n\nhttps://cryptoart.io/data \n\nBeeple is currently the most well-known artist selling digital art through NFTs. Last month, he held the record for the most expensive NFT art sale when he secured $777,777 for a collection of 20 artworks. A few days ago, he updated the record for the most expensive art, selling his “Everydays: the first 500 days” work for…[almost $70 million](https://onlineonly.christies.com/s/first-open-beeple/beeple-b-1981-1/112924) worth of Ethereum.\n\nBeeple’s real name is Mike Winkelmann, and he is a professional video content and visuals creator, working with celebrities like Nicki Minaj and Eminem.\n\nCrypto art is now so popular that even Sotheby’s – the most reputable auction house – is getting into it. Charles Stweart, CEO of Sotheby’s, [told](https://twitter.com/SquawkCNBC/status/1371787580329635842) CNBC that the auction venue would hold a sale of a NFT artwork from the anonymous artist known as Pak. Stewart revealed that his company had been monitoring NFTs for some time. He said:\n\n> “There's a lot here that's really exciting and, we think, has staying power.”\n\nMusicians can also benefit from NFTs. Nadya Ivanova, COO of L’Atelier – a research firm backed by BNP Paribas, [told](https://www.cnbc.com/2021/02/25/nfts-why-digital-art-and-sports-collectibles-are-suddenly-so-popular.html) CNBC that NFT collectibles could be considered a better alternative to MP3 files. She said that artists are integrating NFTs to prove ownership of their tracks and monetize their work. She explained:\n\n“It’s allowing content creators to actually own the property rights for what they create, which allows them to profit from it in different ways which they can’t do with physical art.”\n\n### Sports, Gaming, and Memorabilia\n\nNFTs are increasingly popular in gaming, sports, and memorabilia. Users can tokenize physical objects, like jerseys, or digital content, such as video clips. For example, NBA Top Shot, an online platform created by Dapper Labs in collaboration with the basketball league, attracted over $220 million in sales in the last 30 days, according to CryptoSlam. NBA Top Shot enables users to buy and sell short video clips of basketball match highlights.\n\nLast month, a pool of users paid more than $200,000 for a clip with LeBron James.\n\nEarlier in March, Super Bowl champion Rob Gronkowski put [his first NFT card collection](https://twitter.com/RobGronkowski/status/1369309790057472001) up for sale. He has already generated about $1.8 million in primary sales on OpenSea, a marketplace for NFTs. The collection includes [five tokenized cards](https://gronknft.com/) that show Gronkowski’s shots during championship-winning games. Four of the cards are minted in multiple copies, and all of them are auctioned.\n\n### Entertainment\n\nBesides music and sports, NFTs can be used in any form of entertainment, as they help celebrities, producers or teams to better interact with their fans or increase awareness.\n\nEarlier in March, Twitter CEO Jack Dorsey sold the tokenized version of his first-ever tweet (it says “just setting up my twttr”) for $2.5 million via an auction. He converted the amount to Bitcoin and donated it to charity. The highest bidder was Sina Estavi, CEO of Bridge – a blockchain oracle network built on Tron. Estavi also offered to pay [over $1 million](https://v.cent.co/tweet/1371549960030842893) for Elon Musk’s first NFT, which represents a techno song with the lyrics: “NFT for your vanity. Computers never sleep. It’s verified. It’s guaranteed.”\n\nNevertheless, the Tesla CEO eventually [turned down](https://twitter.com/elonmusk/status/1371969967176957956) the offer, saying: “Actually doesn’t feel quite right selling this. Will pass.”\n\nFormer “Arrow” star Katie Cassidy is also[ making her NFT debut](https://etcanada.com/news/760251/katie-cassidy-auctioning-nude-photos-as-nfts-starting-at-18000/). She sells some pictures of her where she poses nude on a canvas as “a new genre of art.”\n\n## How Big is the NFT Market?\n\nIt’s difficult to assess how big the NFT market is due to the nature of the tokens, but some suggest that it has reached $1 billion as of today. Nikil Viswanathan, co-founder of blockchain startup Alchemy, [estimated](https://www.bloomberg.com/news/articles/2021-03-21/nfts-mushroom-into-billion-dollar-market-with-help-from-alchemy) that the market was worth $1 billion, based on public and private data.\n\n[Nonfungible.com](https://nonfungible.com/market/history), which acts as the Coinmarketcap for NFTs, estimated the total NFT sales at about $523 million. However, the figure takes into account the exchange rate at the time of purchase. Thus, considering that Ethereum and other cryptocurrencies used for NFT trade have surged, that figure is around $1 billion.\n\n\n\nhttps://nonfungible.com/market/history \n\nInvestors usually buy NFTs directly from issuers or via marketplaces like OpenSea, Nifty Gateway, SuperRare, and Valuables. They might be motivated by the potential price increase of individual NFTs. Besides this, the idea of owning something unique is attractive, and many high-net worth individuals invest in this experience of uniqueness.\n\n## NFT Issues\n\nDespite the enthusiasm surrounding NFTs, there are some issues potential investors should consider. Here are some of them:\n\n- __Security__ – while blockchain is known to be the most secure technology out there, hackers have managed to steal NFTs from marketplaces. Last week, some users of Nifty Gateway [revealed](https://www.theverge.com/2021/3/15/22331818/nifty-gateway-hack-steal-nfts-credit-card) that hackers had stolen digital artwork worth thousands of US dollars from their accounts. Some of the victims noted that their credit cards had been used to purchase additional NFTs, also worth thousands of US dollars.\n- __Relevance of NFTs__ – one of the main problems of NFTs is that they give holders ownership rights, but their underlying object can often be replicated infinite times. For example, you may wonder why someone would pay $2.5 million for Dorsey’s tweet when everyone can see it, download it, make a screenshot, or whatever. NFT supporters would say that it’s all about ownership – we can also put a copy of Mona Lisa on our wall, but that doesn’t mean we own it. Still, NFTs are useful for licenses, certificates, or tokenizing physical objects.\nBesides the relevant issue, while NFTs may be good for artists, they can also [encourage art theft](https://twitter.com/Zerochan/status/1369158160825659393). There are scam artists that simply copy artworks online, tokenize as NFTs and sell them as theirs, with the original artists having no idea.\n- __Bubble__ – NFT non-believers have a déjà vu – they often compare the current trend with the initial coin offering (ICO) bubble from 2017.\nWhale Shark, a pseudonymous NFT collector, told CNBC:\n*“I think that 99% of the projects that are in the space today might not exist two or three years later, very similar to the ICO boom.”*\nStill, supports are confident that NFTs are here to stay, as their benefits are obvious.\n- __Environmental cost__ – some crypto market participants are pointing the finger at NFTs, arguing that their carbon footprint is huge, considering that most of them are built on Ethereum, a blockchain network that still uses a Proof of Work (PoW) algorithm until it fully upgrades to Proof of Stake (PoS). Even the World Economic Forum (WEF) mentioned this issue in a [post](https://www.weforum.org/agenda/2021/03/nfts-and-the-environmental-cost-of-owning-digital-art/) released last week.\n\nTo conclude, NFTs have many benefits, as they enable artists and other players to monetize their work and engage with fans in a more direct way. The market is certainly here to stay, but several things have to change. Once Ethereum fully upgrades to PoS, NFTs will be more environmentally friendly.\n\nFrom an investment perspective, NFTs are still risky, but if they are sold by celebrities or talented artists with great perspective, their value can maintain or even increase with time.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/6HC9qN9KlhDdCLEJUlfKhu/f4f12832fb4d62c62643ad5f01684e42/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"29 Mar 2021","id":"20lES76FF2Hi51CMAuNgJj"},{"title":"More Companies Buy Bitcoin for Treasury Operations, Will the Trend Continue?","image":"https://images.ctfassets.net/4x910isj0ns2/2yQDHPSEwxcEkqA6rVStpZ/7bd101e6e866245707a22f19a2e2fa75/bitcoin-2947949_1280.jpg","description":"In August 2020, we [reported](https://otctrade.com/blog/microstrategy-becomes-first-public-company-to-buy-bitcoin-for-capital-allocation-invests-250m) that MicroStrategy had become the first public company to invest in Bitcoin as part of its capital allocation strategy. It purchased 21,454 Bitcoins, which were worth $250 million at the time, and that value has surged to over $1 billion as of mid-March 2021.\n\nThat was the beginning of a new trend that is getting traction in 2021 and is going global, but will it continue at the same pace? Today, there are several public and private companies that are keen to invest in Bitcoin and some altcoins to hedge against inflation and leverage a potentially high-yielding opportunity. Let’s see if it converts into a more general trend. \n\nBesides MicroStrategy, which has increased its stake to 91,326 Bitcoin (over $5 billion) since then, large caps like Square and Tesla have also jumped into crypto. Tesla made the headlines last month when it [bought](https://www.cnbc.com/2021/02/08/tesla-buys-1point5-billion-in-bitcoin.html) $1.5 billion worth of Bitcoin, which added fuel to the cryptocurrency’s rally. Besides this, Tesla said that it would accept Bitcoin payments for its electric vehicles.\n\nThe largest cryptocurrency by market cap is likely to be used more often for corporate treasury operations at some point. Ethereum is also joining the league of blockchain-based reserve assets, but it can’t replace Bitcoin. The latter is regarded as a [store of value (SOV)](https://otctrade.com/blog/bitcoin-as-store-of-value) and a hedge against the inflation prompted by the massive stimulus measures and quantitative easing (QE) programmes implemented by governments and central banks worldwide.\n\n## Corporate Buying of Bitcoin Is Going Global\n\nWhile this trend started in the US, companies from other parts of the world are also purchasing cryptocurrency for their reserves.\n\nAt the beginning of March, Chinese Meitu, which operates a photo editing app, bought almost $18 million worth of Bitcoin and $22.1 million worth of Ether. The app maker raised investors’ eyebrows as it was the first major public company to buy Ethereum. The move makes sense, considering that Meitu plans to launch blockchain-based apps, and Ethereum is the go-to platform for creating decentralized applications (dApps).\n\nMeitu [praised](https://www.cnbc.com/2021/03/08/crypto-chinese-app-meitu-buys-millions-worth-of-bitcoin-and-ethereum.html) the technology:\n\n> “Blockchain technology has the potential to disrupt both existing financial and technology industries, similar to the manner in which mobile internet has disrupted the PC internet and many other offline industries.”\n\nWhile the company admits cryptocurrencies are highly volatile, it stressed that the Board believed digital assets had “ample room for appreciation in value.” Allocating part of the company’s treasury in cryptocurrencies is a diversification alternative to holding fiat, which, as Meitu puts it, is subject to depreciation pressure due to the cash injections by central banks worldwide.\n\nOn a side note, the Chinese company is listed on the Hong Kong Stock Exchange and has a market cap of over $12 billion.\n\nA few days after Meitu’s move, Norwegian Aker ASA, an energy-oriented holding based in Oslo and traded on the Oslo Stock Exchange, [announced that](https://www.akerasa.com/en/news/stock-exchange-releases/article/36900-aker-asa-launches-seetee-to-invest-in-bitcoin-and-blockchain-technology) it had established a Bitcoin unit called Seetee.\n\nAker said that Seetee would initially have a capital of 500 million Norwegian crowns (about $59 million). It plans to keep its liquid investable assets exclusively in Bitcoin.\n\nAker, which generates most of its revenue from the oil and gas industry, is controlled by Norwegian billionaire investor Kjell Inge Roekke. In a letter to shareholders, the CEO [stated](https://www.coindesk.com/norway-listed-aker-to-put-100-bitcoin-in-treasury-reserves-of-new-investment-unit):\n\n> “First, we will use bitcoin as our treasury asset and join the community. In Bitcoin-speak, we will be hodlers.”\n\nRoekke admitted that Bitcoin might still go to zero, but it could also become the key element of a new monetary system.\n\n> “If so, one Bitcoin may be worth millions of dollars,” he said.\n\nSeetee has already partnered with Canadian Blockstream to collaborate on Bitcoin mining operations and sidechain projects.\n\nThus, there are several public companies holding Bitcoin in their reserves, and MicroStrategy seems to be the big winner, as it bought the cryptocurrency before the impressive rally that propelled the price well above the 2017 peak.\n\n\n\nhttps://theweeklyupdate.substack.com/p/bitcoin-as-treasury-reserve-asset\n\n## Why Do Companies Buy Bitcoin?\n\nThere are several reasons why businesses may consider Bitcoin for treasury operations. As we already mentioned, the cryptocurrency’s capabilities as an SOV and a hedge against inflation are the most important arguments.\n\nGovernments and central bankers have reacted quickly to the economic crisis triggered by the COVID-19 pandemic. However, the monetary and fiscal response is unprecedented and causes the devaluation of national currencies. In the US alone, the Federal Reserve launched its unlimited government debt buying, and for the first time ever, the central bank buys billions of dollars in corporate bonds. The Fed’s balance sheet surged from about $4 trillion at the beginning of 2020 to over $7 trillion as of today.\n\nThe cash itself has become unproductive due to the close-to-zero interest rates, which makes assets with asymmetric upside potential, such as Bitcoin, the first choice to diversify corporate reserves.\n\nAnother reason is that the company’s founders or key shareholders are big believers in cryptocurrency and blockchain. For example, Square CEO Jack Dorsey has [previously praised](https://www.cnbc.com/2018/03/21/jack-dorsey-expects-bitcoin-to-become-the-worlds-single-currency-in-about-10-years.html) Bitcoin on many occasions, and his fascination for digital assets has likely sped Square’s adoption. The same may be true about Meitu, whose chairman Cai Wensheng has promoted the use of blockchain. Even though China banned initial coin offerings (ICOs) and crypto exchanges, Cai himself [bought 10,000 Bitcoin](https://www.coindesk.com/chinese-angel-investor-amassed-10000-bitcoins-amid-q1-price-slump) in 2018. \n\nLast but not least, some companies might get into cryptocurrencies in an effort to prepare for accepting them as payment. Also, the regulatory clarity is improving, and governments seem to accept that digital assets are the future or at least are here to stay.\n\n## Will the Trend Gain Traction in 2021?\n\nThere is no clear answer to that. The chances are that many companies would like to use Bitcoin as a hedge against everything else, but the cryptocurrency’s price surge might hinder this emerging trend. Bitcoin peaked at over $60,000 as of March 13, and that might not be the best price for companies looking to buy it for their reserves.\n\nStill, you shouldn’t be surprised if other big names join the trend this year. Some companies are ready to buy Bitcoin even at this high price. For example, MicroStrategy increased its stake at the end of February, when it purchased 19,452 Bitcoin worth about $1.03 billion. In mid-March, the company spent [another $15 million](https://www.marketwatch.com/story/microstrategy-spent-15-million-to-buy-another-262-bitcoin-2021-03-12) to buy 262 Bitcoin. But these examples are isolated and do not represent an emerging trend this year. \n\nBesides the high price, a major reason why many companies are hesitant to rely on Bitcoin has to do with the cryptocurrency’s high volatility.\n\nAccording to a survey conducted by Gartner in February, only 5% of financial executives said that they planned to hold Bitcoin as a corporate asset in 2021. 84% of the 77 respondents, which included 50 CFOs, said that they didn’t plan to ever hold the cryptocurrency for treasury operations, citing the high volatility.\n\n\n\nhttps://www.gartner.com/en/newsroom/press-releases/2020-02-16-gartner-survey-suggests-most-finance-executives-not-planning-to-hold-bitcoin-as-a-corporate-asset\n\n71% of the financial executives would prefer a wait-and-see approach, as they’d like to know what others are actually doing with Bitcoin. 68% want to hear more from regulators and better understand the risks.\n\nAt the beginning of March, Reuters also [reported](https://www.reuters.com/article/us-crypto-currency-bitcoin-treasury-insi/rush-to-bitcoin-not-so-fast-say-keepers-of-corporate-coffers-idINKBN2B00FY) that the majority of finance executives and accountants would not rush to rely on the cryptocurrency for their companies’ balance sheets.\n\nGraham Robinson, a partner in international tax and treasury at PwC and adviser to the UK’s Association for Corporate Treasurers, said:\n\n> “When I did my treasury exams, the thing we were told as number one objective is to guarantee security and liquidity of the balance sheet. That is the fundamental problem with bitcoin, if those are the objectives for treasurers, then breaking them could get them in trouble.”\n\nWhile it might be too early for treasurers to put their neck on the line for Bitcoin, the fact that big companies have already done this is already a major step for the cryptocurrency market. Remember that a few years ago, many finance executives [didn’t even know](https://cointelegraph.com/news/gartner-survey-77-of-cios-have-no-plans-for-blockchain) about blockchain at all.\n\nBitcoin might eventually become an important asset for corporate treasuries, but it needs some time. \n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"18 Mar 2021","id":"4MYbW2D1fk9LzNAXuVVSLZ"},{"title":"Will WallStreetBets-Like Pump-and-Dumpers Spoil the Crypto Party?","image":"https://images.ctfassets.net/4x910isj0ns2/60WGvbB6wcHqg3Ke4n3IIY/12e2532fa07ac8b1ac41e073eb3b244b/AdobeStock_409204516_Editorial_Use_Only.jpg","description":"The cryptocurrency market has experienced many pump-and-dump schemes in its 10+ years of existence, but most of them could be avoided by knowledgeable investors in the sense that they touched upon small crypto projects with visible red flags. Today, some claim that there is a risk that such schemes can impact bigger projects, and what’s interesting is that this new trend wasn’t triggered by crypto investors at all. \n\nFor those unfamiliar, pump-and-dump schemes are fraudulent operations in which groups of investors pick a small-cap stock or lesser-known digital coin and buy it aggressively to create a false impression of bullishness surrounding that asset. They can also spread misleading information on social media about the potential success of the asset or the project behind it in a coordinated manner. Eventually, investors that are not connected with the scheme are joining the trend by buying the asset, driven by the fear of missing out. The resulting rally benefits insiders, who at one point exit the market and let the price dump, causing losses to unconnected investors.\n\nSuch schemes were popular in the stock market more than two decades ago, but they were successfully implemented in the crypto space as well, especially during the ICO (initial coin offering) craze in 2017-18.\n\nIn 2018, the Wall Street Journal reported that pump-and-dumps [accounted for](https://www.investopedia.com/news/how-cryptocurrency-pumpanddump-scams-work/) $825 million in trading activity over a period of six months from January to the end of July of that year, resulting in “hundreds of millions of dollars in losses.” The investigators identified 125 pump-and-dump operations that involved 121 different coins. The schemes proliferated on social networking channels like Telegram, Discord, and Twitter.\n\nMost of the coins represented small projects that came out during the ICO hype. Here are the visualized market cap figures of most pumped coins on four large crypto exchanges up until the end of 2018:\n\n\n\nNevertheless, the crypto market has matured, and retail investors became more prepared against such schemes. In 2019 and 2020, we could see fewer reports discussing crypto pump-and-dumps, as they have become less popular. The overall ICO trend was fading as the crypto community focused on other surging sectors, such as decentralized finance (DeFi).\n\nHowever, the scheme is a hot topic again in 2021, and here is why:\n\n## GameStop: How Day Traders on Reddit Scared Hedge Funds\n\nThe GameStop incident is unprecedented and might be the start of a new trend with unpredictable consequences. If you think that the story of David and Goliath can’t be reproduced in today’s financial markets, especially if hedge funds are involved, you are wrong.\n\nGameStop, a US-based video game and electronics retailer, was downgraded by several high-profile hedge funds and institutional investors because of its weak fundamentals. The company was expected to be unprofitable in 2021, as most people download video games from their consoles or PCs rather than go to the store. However, a group of day traders who got together on Reddit decided otherwise.\n\nPosters on the subreddit called WallStreetBets have been promoting the company aggressively, causing an unexpected rally in the GameStop stock. This led to what investors call a short squeeze in the stock, forcing the short-selling hedge funds to buy the shares to limit their losses. While this is a classical pump operation, it’s very different, as the involved retail traders apparently were not interested in the profits alone but rather going against the hedge funds, which they consider to have too much power that can be detrimental to many businesses, including GameStop. This is the battle between amateur day traders and Wall Street institutions, and so far, the “Robinhoods” won to a certain extent.\n\nTo understand the magnitude of the operation, think about the fact that the GameStop shares traded at about $40 in mid-January, and hedge funds like Melvin Capital and Citron expected a sharp decline in the stock. However, GameStop surged to a peak of $347 on January 27. Both Melvin Capital and Citron [closed their short positions ](https://www.bloomberg.com/news/articles/2021-01-27/melvin-capital-closes-out-its-gamestop-position-cnbc-reports)in GameStop, incurring huge losses.\n\nData from S3 Partners [showed that](https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddit-board-melvin-capital-closed-out-of-gamestop-short-position-tuesday.html) the rally caused short sellers to lose over $5 billion in January in the stock on aggregate.\n\nThe frenzy was so stark that popular trading app Robinhood suspended trading in the stock, citing high volatility. \n\nStill, we have to admit that the bubble eventually burst, and GameStop fell to below $50. Still, pumpers have probably got involved again, as the share price surged to over $250 as of mid-March.\n\n\n\nhttps://www.tradingview.com/x/TOLIfA35/ \n\nGameStop is the most representative example, but WallStreetBets investors also pumped other stocks shorted by hedge funds, including BlackBerry, AMC, and Macy’s.\n\n## So What Does It Have to Do with Cryptocurrencies?\n\nThe GameStop incident is unprecedented, but it doesn’t take a rocket scientist to realize that this kind of practice will continue, as day traders feel they found the Achilles heel of Wall Street institutions. Moreover, the scheme has already spilled into the cryptocurrency market.\n\nDuring the ICO craze, pump-and-dumpers knew they were doing something wrong and operated from hidden channels, but the GameStop incident encouraged them to act in plain sight so-to-speak.\n\nUS equities are under the direct supervision of the Securities and Exchange Commission (SEC), but the cryptocurrency space still has more freedom. Bloomberg [reported](https://www.bloomberg.com/news/articles/2021-01-26/reddit-fueled-rallies-like-gamestop-s-defy-easy-crackdown-by-sec?sref=M8H6LjUF) recently that the SEC was investigating whether misinformation on social media was used to drive the share price of GameStop and AMC. No matter what approach the SEC will consider, the watchdog will find a way to keep the market under control, which can’t be said about cryptocurrencies.\n\nAt the end of January 2021, Cointelegraph [reported](https://cointelegraph.com/news/xrp-price-gains-86-after-wall-street-bets-crypto-wing-says-pump-it) that XRP, the digital currency issued by Ripple, was pumped by the crypto division of r/Wallstreetbets, which is called r/Satoshistreetbets. So now there is a crypto-oriented Reddit group that can influence the price of cryptocurrencies.\n\nData from Coinmarketcap shows that XRP surged from under $0.29 on January 29 to a peak of $0.74 on February 1. The price then corrected and is now trading at $0.44 as of March 1. The digital coin is under pressure because of the lawsuit filed against Ripple by the SEC. The regulator claims that the company is carrying out an ongoing securities offering illegally, as Ripple is selling XRP tokens periodically.\n\n\n\nTraders from r/Satoshistreetbets were also behind the recent spike in [Dogecoin](https://www.forbes.com/sites/roberthart/2021/01/28/its-doge-time-dogecoin-surges-as-reddit-traders-push-to-make-it-the-crypto-gamestop/?sh=649a3d6c217e) (DOGE) and Stellar Lumens (XLM).\n\nAt the beginning of March, crypto-oriented media [reported](https://cryptobriefing.com/wallstreetbets-launching-chain-investment-pool/) that a group of moderators from the WallStreetBets subreddit had the intention to launch WallSteetBets 2.0 on a blockchain. The decentralized pool of investors would bet on company shares using smart contracts.\n\nEventually, a similar group can move on a blockchain to bet on cryptocurrencies and perhaps join DeFi, which has surged about three times since the beginning of the year.\n\nAll in all, both institutional and retail investors should keep an eye on social media groups gathering together to collectively bet on digital assets. This is especially true if you consider investing in the DeFi sector, which proposes many new projects whose tokens can still be prone to wild fluctuations.\n\nHowever, even when active, there is no chance that pump-and-dumpers could damage the crypto market in a meaningful way. The market is driven by some major trends, such as DeFi, non-fungible tokens (NFTs), privacy coins, stablecoins, and an increasing interest from public and private companies. \n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"15 Mar 2021","id":"zHt4jYzJMIkGUOCzYxZJa"},{"title":"Bitcoin Price Predictions for 2021","image":"https://images.ctfassets.net/4x910isj0ns2/3d19ojieTVfycsFfqWRcBw/724504ef53ab9a0de40dd51505298287/bitcoin-3290060_1920.jpg","description":"In our previous [Bitcoin prediction article](https://otctrade.com/blog/bitcoin-price-predictions-for-2020), I stressed that forecasting the price of the cryptocurrency is really difficult and might not always work no matter how much experience and research data you have. Nevertheless, the supporters of the stock-to-flow (S2F) model would say that their measure is working perfectly well, and you know what? They’re right so far. But we’ll get to that a bit later.\n\nBitcoin has surprised everyone when it not only updated the record high but also surged over 100% on top of that. It updated the record in mid-December 2020 and peaked at over $41,000 on January 9, as per Coinmarketcap data.\n\nThe demand for the cryptocurrency has surged as institutional investors are looking for reliable store of value (SOV) assets during the COVID pandemic that hit most economic sectors and global trade. Meanwhile, central banks continue to inject cash while governments implement massive stimulus packages, which further devalue the purchasing power of fiat currencies. Google searches for Bitcoin jumped to the highest level since December 2017, demonstrating that more people are interested in the cryptocurrency and the fear of missing out (FOMO) might push prices even higher.\n\nThat being said, here is where you may see Bitcoin at the end of 2021, which will definitely be another interesting year for investors:\n\n## The Bear Case - Bitcoin Is Facing Bubble\n\nWe’ll start with the bearish scenario, leaving the best for last. Basically, bears claim that Bitcoin, whose market capitalization hovers around $700 billion, is currently in a bubble. They might be right because what the chart shows is really incredible:\n\n\n\nA fresh survey conducted by Deutsche Bank found out that more investors believe that Bitcoin would most likely halve than double by the end of the year, given that the cryptocurrency is perceived as a price bubble, along with tech stocks. An overwhelming 89% of respondents said that stock markets and Bitcoin are facing bubbles, but the cryptocurrency and US tech are the closest ones to “extreme bubble.”\n\n\n\nhttps://www.marketwatch.com/story/investors-think-theres-more-chance-tesla-and-bitcoin-will-halve-than-double-warns-deutsche-bank-11611058312\n\nInvestor David Rosenberg, who has been a long-time bear, said that Bitcoin was the biggest market bubble at the moment. He [told](https://www.cnbc.com/2021/01/03/stocks-and-bitcoin-are-massive-bubbles-david-rosenberg-warns.html) CNBC that he would avoid the cryptocurrency, explaining:\n\n> “The parabolic move in bitcoin in such a short time period, I would say for any security, is highly abnormal.”\n\nMichael Hartnett, chief investment strategist at Bank of America Securities, [said](https://edition.cnn.com/2021/01/08/investing/bitcoin-bubble/index.html) that the cryptocurrency was “the mother of all bubbles.” According to him, the impressive surge was driven by the inflationary price action in global markets.\n\nWhen Bitcoin consolidated above $20,000, famous economist Nouriel Roubini [said](https://finance.yahoo.com/news/nouriel-roubini-says-bitcoin-bubble-will-go-bust-144807645.html) that the price of the cryptocurrency “is totally manipulated by a bunch of people, by a bunch of whales. It doesn’t have any fundamental value.”\n\nHe went even further, saying that Bitcoin was not a currency but a unit of account. As per Roubini, it is neither a means of payment nor an SOV or even an asset.\n\nStill, even those who say that Bitcoin is a bubble admit that it’s very different from the previous ones. The cryptocurrency has experienced three peak-to-through nosedives of over 80% in less than a decade. No previous bubble achieved something like this.\n\n\n\nhttps://www.bloomberg.com/news/articles/2021-01-13/bitcoin-is-unlike-any-other-bubble-we-ve-seen-so-far\n\nMan Group, the biggest publicly traded hedge fund company in the world, concluded in mid-January:\n\n> “Every time a Bitcoin bubble bursts, another grows back to replace it. This very frequency makes the Bitcoin narrative somewhat atypical relative to the great bubbles of the past.”\n\n## The Bull Case - Bitcoin to Hit $100K\n\nEven though the largest cryptocurrency by market cap skyrocketed well above the previous all-time high, many crypto investors believe that there is still more room for growth.\n\nThere are bullish voices even among those who consider Bitcoin to be in a bubble. For example, billionaire Mark Cuban [tweeted](https://twitter.com/mcuban/status/1348663730712834056) that the cryptocurrency resembled the dot com bubble from the 2000s. Even if the internet bubble eventually burst, companies like Amazon and eBay not only survived but later became the most attractive stocks. Cuban [said](https://www.cnbc.com/2021/01/11/mark-cuban-cryptos-trade-is-like-the-internet-stock-bubble-but-thinks-bitcoin-can-survive.html):\n\n> “I think [bitcoin], [ether], a few others will be analogous to [companies] that were built during the dot-com era, which survived the bubble bursting and thrived.”\n\nNow let’s step back from the bubble narrative and focus on fundamentals. Analysts at JPMorgan, the largest US bank by assets, [concluded](https://www.reuters.com/article/us-crypto-currencies-jpm/bitcoin-emergence-as-digital-gold-could-lift-price-to-146000-says-jpm-idUSKBN29A1IF) that Bitcoin had emerged as a direct competitor to gold. The bank expects the cryptocurrency to surge to $146,000 in the long-term. JPMorgan’s strategists pointed to the $7 billion outflows in gold and over $3 billion of inflows to Grayscale Bitcoin Trust, saying: *“Bitcoin’s competition with gold has already started in our mind.”*\n\nThe cryptocurrency might even eclipse gold as there are more millennials in the investment market. The group would favor the digital gold over the metal.\n\nTom Lee, CEO of equities research firm Funstrat, [said](https://markets.businessinsider.com/currencies/news/bitcoin-price-quadruple-in-2021-sees-rally-similar-2017-fundstrat-2020-12-1029928974) at the end of December that the price of Bitcoin would quadruple in 2021. The coin was trading at about $30,000 at the time. Thus, Lee sees the cryptocurrency reaching a six-digit quotation by the end of the current year. Still, he stressed that the outlook might deteriorate if the stock market corrects.\n\nFundstrat's digital asset strategist David Grider is also bullish on Bitcoin. He said:\n\n> “Institutional and corporate buying, regulatory de-risking and retail stimulus demand are factors that have led to an increase in positive momentum, which we believe can continue.”\n\nBesides the mentioned fundamentals, many Bitcoin bulls point to the stock to flow model, which we repeatedly discussed in our [previous articles](https://otctrade.com/blog/4-trends-in-crypto-otc-trading-in-2020). The S2F ratio shows the scarcity or abundance of a commodity based on its production rate. The model was [first used for Bitcoin](https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25) by an analyst who is active online under pseudonym Plan B. To calculate the S2F ratio in the case of cryptocurrencies, you have to divide the current supply by the number of coins produced in a given period, i.e. a day, week or month. The higher the ratio, the scarcer is the asset. Given that we can easily anticipate the production rate of Bitcoin for the years to come based on the scheduled halving events, we can foresee the ratio for many years ahead. Plan B claims that there is a strong relationship in the ratio and the price.\n\nThe analyst has been a big believer in his model and reiterated at the end of last year that it really worked. The model is contentious given that it predicts that the coin will hit $1 million in about five years, but so far it has been incredibly accurate. Here is the [chart](https://digitalik.net/btc/) showing the relationship between the ratio and the price:\n\n\n\nAt the beginning of November 2020, when Bitcoin was trading above $15,000, Plan B predicted that the price would hit $100,000 in 2021. At the end of the same month, he [tweeted](https://twitter.com/100trillionUSD/status/1330469160980242432):\n\n> “Current #bitcoin price action is nice, but we are waiting for a real jump (like the red arrows early 2013 and 2017). IMO that will be the start of the real bull market, and indeed phase 5. January 2021?”\n\nIndeed, the price exploded in January to over $41,000, and despite the correction, Bitcoin behaves as if it can really do it.\n\nPantera Capital founder and CEO Dan Morehead gives credit to the S2F model, predicting that the BTC price would touch $115,000 by August 2021.\n\nBut the most interesting forecast came from Citibank. According to a [leaked internal report](https://twitter.com/classicmacro/status/1327381449000034307), a senior analyst said in November that Bitcoin could hit $318,000 by the end of 2021. Tom Fitzpatrick, global head of CitiFX Technicals, called BTC “21st century gold.”\n\nOne year ago, many were skeptical that the king of crypto could update the record high by the end of 2020, but it did it. Today, a six-figure price looks intriguing, but Bitcoin has already proved that everything is possible. \n\n___ \n*Disclaimer: This communication is for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. It is not intended to provide any financial advice. Any reference to past performance, track record or experience is purely for illustrative purposes and is not indicative of future performance. Future performance is not guaranteed. All market prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. Comments or statements made herein do not necessarily reflect those of OTCTrade.com. This article may contain information that is privileged, confidential, legally privileged, and/or exempt from disclosure under applicable law. You are hereby notified that any disclosure, copying, distribution, or use of the information contained herein (including any reliance thereon) is STRICTLY PROHIBITED. Thank you.*\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"19 Jan 2021","metaTitle":"Bitcoin Price Predictions for 2021","metaDescription":"here is where you may see Bitcoin at the end of 2021, which will definitely be another interesting year for investors","metaKeywords":"Bitcoin, BTC, Bitcoin predictions","id":"sTAMVxGyBGYGW4AiTiwMg"},{"title":"Impact of US Election on Cryptocurrency Market","image":"https://images.ctfassets.net/4x910isj0ns2/1Z7yhT3Btt6kdUcqEPjGJB/e5f44e873495c41213e91c6da662f3c4/flag-1291945_1920.jpg","description":"The US election has been one of the main events driving the stock market in the second half of 2020. But it has also indirectly influenced the cryptocurrency market because, no matter how different crypto assets are from traditional finance, they tend to overlap here and there, especially given that institutional investors are involved. \n\nOn November 3, US citizens casted their votes and Democrat candidate Joe Biden secured the victory with 306 Electoral College votes, while incumbent President Donald Trump obtained 232 electoral votes.\n\nEven though Biden is a clear winner, investors didn’t expect such a narrow gap during the first days of counting. Trump doesn’t recognize the results to this day, though he green-lighted Biden’s transitioning to the White House.\n\n\n\nIn the first days after the election, Bitcoin surged along with the US stock market. It is not the first time when the cryptocurrency shows strong correlation to Wall Street indexes. Temporary analogue behaviors started with the emergence of the COVID-19 pandemic, which caused both equities and digital assets to tumble to multi-year lows. A similar pattern of moving in tandem could be observed after November 3, when both Bitcoin and US equities rallied.\n\nIn the first five trading sessions after Election Day, the benchmark S&P 500 index jumped more than 5%, which was by far the best performance during a similar period compared to previous elections. The momentum strengthened during the last days of the monitored period after Pfizer announced that its experimental COVID vaccine was more than 90% effective based on its late-stage trial. Here is how the 5-day post-election stock rally compares to previous similar periods [as per data](https://www.reuters.com/article/us-usa-election-stock-performance/how-the-u-s-stock-market-has-treated-new-presidents-idUKKBN27R2O1) from Refinitiv:\n\n\n\n## The Driving Factors Behind Stock Rally\n\nGiven the high correlation between Bitcoin and the stock indices, you might be interested in knowing why equities jumped after the election. In fact, stocks were boosted not just because of Biden’s win, but because his victory was not as emphatic as expected.\n\nMarkets surged because investors were satisfied with the political gridlock that was showing up as the vote counting was going on. Previously, economists anticipated a so-called “blue wave,” a scenario in which Democrats would have taken control of both the White House and the Congress. However, the results showed that Democrats’ dominance is less likely as they failed to secure a resounding win. Republicans will have a say in the Senate, which won’t allow Biden to implement some of the major projects that he planned, and that bodes well for corporate America.\n\nPreviously, Biden promised to increase corporate taxes and introduce new regulations to weaken monopolies. He targeted Big Tech in the first place. Now that a “blue wave” hasn’t materialized, equities surged, with Apple, Amazon, and Alphabet adding over 4% on the following day. Facebook jumped over 8% as investors welcomed the reduced antitrust risk amid a divided Congress.\n\nAnother major factor that pushed equities higher after the election was related to investors’ expectations of the next fiscal stimulus. The relief package had been under debate for weeks before Election Day, with Democrats backing a $2.4 trillion stimulus plan, while Trump’s Republicans aimed for a modest package of about $1.8 trillion. Now investors expect that the political gridlock resulting from the election would fuel the same uncertainty, which would cause the Federal Reserve to intervene and inject more cash, which would consequently lead to higher stock prices.\n\n## What Does It Mean for Bitcoin?\n\nBitcoin was already uptrending up until the election and the rally turned steeper after that. The fact that the Fed would likely maintain a loose monetary policy gave a boost to Bitcoin as well, which has been attracting investors betting against a devaluing US dollar.\n\nAlso, the general bullishness of equities on the back of a divided Congress simulated institutional investors with exposure to tech and other stocks, and that benefited Bitcoin as well. The cryptocurrency has experienced a spike in interest from institutions.\n\nAnother factor that pushed Bitcoin higher had to do with Trump’s refusal to admit the loss, citing fraudulent voting. The cryptocurrency has leveraged its safe-haven status amid these weeks of uncertainty.\n\nAll in all, it so happened that the optimism surrounding the COVID vaccines developed by Pfizer, Moderna, and AstraZeneca pushed equities higher, with the S&P updating the all-time high again and experiencing the best November on record so far. Elsewhere, Bitcoin almost touched its all-time high as well, though it retreated at the time of writing.\n\n\n\nThe cryptocurrency will continue to attract more investment particularly from institutions, which are hedging against the devaluing fiat currencies.\n\nFor example, Coinbase [said](https://news.bitcoin.com/coinbase-20-billion-cryptocurrency-custody-institutional-investors/) that it had seen “an explosion of incoming capital.” The largest crypto exchange in the US has about $20 billion worth of crypto under custody, $14 billion of which has been stored since April. The company confirmed a wave of institutional adoption.\n\nA recent report by Chainalysis [also suggested](https://blog.chainalysis.com/reports/bitcoin-price-surge-explained-2020) that institutional investors are the main drivers behind the current Bitcoin rally that propelled it above $19,000.\n\nThe pandemic will fade sooner or later, and the risk appetite will come back even stronger, with many institutions and retail investors counting on cryptocurrency for its ability to be independent and immutable. \n\n___\n\n*Disclaimer: This communication is for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. It is not intended to provide any financial advice. Any reference to past performance, track record or experience is purely for illustrative purposes and is not indicative of future performance. Future performance is not guaranteed. All market prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. Comments or statements made herein do not necessarily reflect those of OTCTrade.com. This article may contain information that is privileged, confidential, legally privileged, and/or exempt from disclosure under applicable law. You are hereby notified that any disclosure, copying, distribution, or use of the information contained herein (including any reliance thereon) is STRICTLY PROHIBITED. Thank you.*","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"10 Dec 2020","metaTitle":"Impact of the Election on Cryptocurrency Market - Crypto News","metaDescription":"How will US politics change cryptocurrency? Here we explore the impact on the US election on the cryptocurrency market.","id":"7rrh9LBxI6JlTXDfqjx3BJ"},{"title":"5 Best Tokens to Stake in 2020","image":"https://images.ctfassets.net/4x910isj0ns2/5JPXlkXyZ3lnd9DLVBEIlZ/8efda266c1cd24ec7354187f36e8e05b/businessman-3300907_1920.jpg","description":"In a previous article, we [discussed](https://www.otctrade.com/blog/what-is-proof-of-stake-and-what-investors-should-know-about-it) the Proof of Stake (PoS) algorithm and introduced newcomers to staking, which is a passive income opportunity aimed at block validators in PoS blockchains. In the following lines, we’ll briefly describe ten tokens that are regarded as the best ones for staking. But before that, we’d like to share some insights from a survey carried out by our Chief Marketing Officer Al Leong, in collaboration with Shogo Ishida.\n\nAccording to the poll carried out earlier this year, more than half of respondents knew what staking is, and 76% of those who owned cryptocurrency knew. Thus, staking remains an underexplored territory, which can be regarded as an opportunity for those who want to make their first steps into this yield-generating activity.\n\nWe found it relevant that 40% of crypto owners would like to see their employers provide staking services for their clients. We at OTCTrade.com took into account the high demand for staking services and are planning to provide this option in the future as we roll out our OTC trading platform.\n\nThat being said, here are the five tokens that are the most popular for staking:\n\n## Cardano \n\nCardano is an open-source blockchain that is focused on providing financial applications to be used by individual consumers, businesses, and government. While it has similar features and capabilities to Ethereum, Cardano is promoting itself as a more advanced solution. It relies on a layered architecture that so far includes two layers: the settlement and the computational layer. The former enables the transfer of value through the native ADA tokens. The second layer is currently under development. It will allow users to initiate smart contracts. Also, the computational layer will enable developers and engineers to maintain and upgrade the network through soft forks.\n\nOn a side note, Cardano was co-developed by Ethereum co-founder Charles Hoskinson. He [said](https://twitter.com/IOHK_Charles/status/1289981387789832194) that the platform would start supporting smart contracts by the end of 2020. \n\nThe platform went live after a $60 million initial coin offering (ICO) and is backed by three nonprofits that are making the system run smoothly. They are the Cardano Foundation, IOHK, and Emurgo. \n\nCardano relies on a consensus mechanism called Ouroboros, which has been developed in-house based on a lot of research. It is a variation of PoS. \n\nThe annual yield for staking ADA ranges from 6 to 7%. \n\n\n\n## Tezos\n\nTezos is a Swiss-based blockchain project that provides a multi-purpose digital ledger technology with smart contract capabilities. Tezos’ initial coin offering (ICO) held in 2017 was the largest at the time, with the project managing to raise $232 million. The blockchain network was designed by Arthur and Kathleen Breitman, who had previously worked for Morgan Stanley and Accenture. One of the unique aspects of Tezos is that it has a self-amending protocol based on its governance model, which allows it to change its own rules causing no disruptions to the network. The same model prevents Tezos from passing through hard forks.\n\nTezos uses a DPoS-like consensus mechanism similar to EOS, though it’s a bit different and is called Liquid Proof of Stake. It incentivizes network users who contribute to the development of Tezos.\n\nThe annual yield for staking the eponymous token with the ticker XTZ is between 5% and 7%.\n\n\n\n## Cosmos (Atom)\n\nCosmos is one of the largest general-purpose blockchain networks that can be used by developers who seek to build decentralized applications (dApps). Nevertheless, the project offers more perks since it provides an ecosystem of parallel blockchains that have the ability to interoperate with each other within a distributed network. \n\nThe independent blockchains within Cosmos’ ecosystem are called ‘Zones’, and they are connected to a central blockchain called ‘Hub’. The Zones can interact between themselves via Hub using Inter Blockchain Communication (IBC). The consensus mechanism used on Cosmos is called Tendermint BFT, which is a PoS-like algorithm that merges more layers.\n\n\n\nhttps://www.slideshare.net/SunnyAggarwal2/tendermintcosmos-many-chains-many-tokens-one-ecosystem\n\nATOM, Cosmos’ native token, is currently the 24th largest cryptocurrency by market cap, as per Coinmarketcap data. The annual yield for staking ATOM ranges between 6% and 9%.\n\n\n\n## Ontology\n\nOntology is another blockchain project that aims to improve scalability while maintaining a high degree of security and decentralization. It uses a unique consensus protocol called VBFT, which merges PoS, Byzantine Fault Tolerance (BFT) and Variable Room Functions (VRF). The algorithm enables a transaction speed of over 3,000 transactions per second.\n\nThe main selling point of Ontology is the easy integration into existing business infrastructures. The system enables companies with limited knowledge of blockchain to benefit from this innovative technology.\n\nThe Ontology platform hosts two coins – the Ontology coin called ONT and the Ontology Gas token with the ticker ONG. The latter acts as a compensation for those who contribute to the system, though users can stake ONT only.\n\nOntology is the closest partner of NEO, another Ethereum-like blockchain that relies on PoS and allows staking. It’s because both projects were developed by the same team known as Onchain.\n\nThe annual yield of staked ONT ranges between 3% and 5%.\n\n\n\n## Qtum \n\nQtum (Quantum) is an Ethereum-like blockchain that runs on a PoS blockchain. It has Bitcoin-related elements, as it uses Bitcoin core code that relies on UTXO (Unspent Transaction Output) model, which is more difficult to explain in a few words but it adds to the security of the network. Besides this, Qtum supports smart contracts thanks to an abstraction layer called Account Abstraction Layer (AAL). This allows the Ethereum Virtual Machine (EVM) to reside on top of Qtum’s UTXO blockchain. Thus, Qtum combines elements from the two most trusted blockchains out there. Thanks to this, Qtum’s smart contracts are interoperable with both Bitcoin and Ethereum.\n\nQtum relies on a PoS-related consensus known as Mutualized Proof of Stake (MPoS). Those who want to become validators have to stake QTUM. In exchange for their effort, validators receive reward in the form of newly minted QTUM tokens plus the transaction fees.\n\nStaking QTUM can generate from 6% to 8% per year, which makes it one of the most preferred tokens among stakers.\n\n\n\nBesides the five tokens described above, here are other staking tokens with generous rewards:\n\n## Harmony\n\nHarmony is a blockchain for dapps that is promoted as a faster solution than other networks. The project has addressed the scalability issue by supporting state sharding, which splits the network into multiple parts that are handled simultaneously by independent groups of validators. Harmony’s consensus mechanism is called Effective Proof-of-Stake (EPoS).\n\nThose who choose to stake ONE, Harmony’s native token, should expect an annual yield from 5% to 11%.\n\n## Lisk\n\nLisk is a blockchain network that enables developers to create dapps based on Javascript, which is a widely used programming language. Thus, developers can create smart contracts using a more familiar language than Ethereum’s Solidity. Lisk allows users to create custom dapps via sidechains, which are private blockchains connected to Lisk’s mainnet.\n\nThe estimated annual yield for staking LSK is up to 2%.\n\n## IRISnet\n\nIRISnet is a blockchain project that was launched in 2019. It acts as a communication relayer for other blockchains and their dapps. IRIS was built on Cosmos SDK. It uses a DPoS-like consensus algorithm called Bonded Proof of Stake (BPoS). The estimated annual yield for staking IRIS reaches 10%.\n\n## Upcoming Ethereum 2.0\n\nEthereum, the second-largest blockchain network out there, is currently transitioning from Proof of Work (PoS) to PoS. Besides becoming a more scalable and flexible network, the new version will allow staking.\n\nThe testnet of ETH 2.0, called Medalla, has been already launched. The transition is carried out in three phases, and it will require a year or two until the infrastructure is fully upgraded. However, staking will become available for everyone earlier than that.\n\nIn order to become eligible to stake ETH, you’ll have to hold at least 32 ETH, which is worth $11,000 based on today’s prices. You will also be required to run a validator node, which can be done on a laptop or regular PC. Besides the high threshold, validators will have to be online regularly or face minor penalties.\n\n## The Final Note\n\nAs Ethereum moves to PoS, the interest in this consensus mechanism will increase. Before that happens, there are many tokens that you can stake right now.\n\nYou can stake multiple tokens through staking pools, wallets that allow staking, or crypto exchanges that offer this service.\n\nWe at OTCTrade.com plan to introduce staking services to our customers next year, though we will provide more details about it as we launch our platform.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"12 Nov 2020","metaTitle":"5 Best Tokens to Stake 2020 - OTC Crypto Trade - Crypto News","metaDescription":"The 5 best tokens to stake in 2020: New research has shown us more about crypto traders understanding of staking. Here we rank the top 5 best tokens. ","id":"1csy35RsWIQnN035yAkXQz"},{"title":"Bitcoin Breaks Above $16k For First Time in 3 Years, Institutions Driving the Rally","image":"https://images.ctfassets.net/4x910isj0ns2/2uhWR7GLNFsUeFulxa8TjD/5759a494a17aa559b88b38394cba0355/bitcoin-2643188_1920_1_.jpg","description":"Bitcoin is at it again. The largest cryptocurrency by market cap has broken above $16,000 for the first time in three years, continuing a long-term rally that started in October at less than $11,000. On Thursday, November 12, Bitcoin peaked at $16,166 as per Coinmarketcap data. This is the highest level since January 2018. The coin has surged over 123% year-to-date and about 50% in the current quarter alone. \n\n\nSource: Coinmarketcap.com\n\nWhile it’s hard to accurately explain today’s bullish move, the coin started to rally weeks ago amid intensifying uncertainty triggered by the US election, the second wave of the COVID-19 pandemic, and the stimulus package debate in the US Congress.\n\nThus, institutional investors, who are most likely responsible for driving the price these weeks, regard Bitcoin a good refuge and hedge against inflation, considering that the US might deploy another huge stimulus package now that Democrat candidate Joe Biden won the election. Still, Democrats don’t have the required majority in the Senate, which leaves them with tied hands. Before the election, Democrats [proposed](https://www.cnbc.com/2020/09/24/coronavirus-stimulus-democrats-prepare-new-relief-bill.html) a $2.4 trillion stimulus package, which wasn’t approved by the Trump administration. The White House favored a $1.8 trillion bill.\n\nAfter the victory of Joe Biden, investors expect Democrats to have an influence on the fiscal policy and endorse more inflation in the medium-term to address the economic damage caused by the pandemic. \n\nAnother scenario is that the Fed will be forced to deploy a more aggressive quantitative easing (QE) considering that the next batch of stimulus might come slower due to a divided Congress.\n\nEither way, more cash will likely be injected into the economy sooner or later, and equities along with safe-havens, including Bitcoin, will be pushed further. This is the first time in three years when Bitcoin has a realistic chance to update the all-time high that was touched in December 2017.\n\nAt the end of October, the cryptocurrency broke above $13,000 for the first time since July last year. The move had to do with PayPal’s introduction of crypto services for US customers, on which OTCTrade.com [reported](https://www.otctrade.com/blog/bitcoin-updates-ytd-peak-as-paypal-introduces-cryptocurrency-services) at the time.\n\n## Institutional Investors Buy Bitcoin En Masse\n\nWhile the interest from retail investors is continually growing, especially when more Millenials are forced to stay home and explore new ways to invest, it is institutional investors who are driving the market.\n\nThe so-called whales, large investors who are buying crypto in bulk generally through over-the-counter (OTC) platforms, have been more active in recent weeks, setting the support level at around $15,000. That level has become the new whale support area according to the chart provided by Whalemap:\n\n\n\nSource: whalemap.io\n\nThe whale clusters on the chart show up when high-net-worth individuals (HNWIs) buy BTC and hold it. The price at which those purchases get together is then regarded as a reliable support level.\n\nAs you can see on the chart, most of the large purchases have been conducted in the past few weeks, which demonstrates that the rally has strong momentum and can indeed lead to a new record high soon.\n\nOn November 5, JPMorgan’s Global Markets Strategy released a [report concluding](https://news.bitcoin.com/jpmorgan-gold-etfs-bitcoin/) that more institutional investors were picking Bitcoin over gold exchange-traded funds (ETFs). The analysts said:\n\n> “In our opinion, the ascend of Grayscale Bitcoin Trust suggests that bitcoin demand is not only driven by the younger cohorts of retail investors, i.e. millennials, but also institutional investors such as family offices and asset managers.”\n\n## Prominent Investors Bullish on Bitcoin\n\nEven legendary investors who have managed to make a fortune in traditional markets are now observing the benefits of the cryptocurrency as a store of value.\n\nWall Street investor Bill Miller, founder of investment manager Miller Value Partners, [told](https://www.cnbc.com/video/2020/11/06/i-think-the-markets-telling-you-the-bull-market-continues-legendary-investor-bill-miller.html) CNBC earlier this week that he strongly recommends Bitcoin even at current prices. He called the cryptocurrency the “single best performing asset class” in the current year and the last five and ten years. He said:\n\n> \"Bitcoin has been very volatile, but I think right now it's staying power gets better every day. I think the risks of Bitcoin going to zero are much, much lower than they've ever been before.”\n\nMiller, along with other investors, believes that Bitcoin has consolidated its reputation as “digital gold” amid unprecedented cash injection from central banks and coronavirus spending from governments.\n\nThe legendary investor noted that the inflation was coming back, adding:\n\n> “I think every major bank, every major investment bank, every major high net worth firm is going to eventually have some exposure to Bitcoin or what's like it, which is gold or some kind of commodities.”\n\nAnother reputable investor, billionaire Stanley Druckenmiller, revealed he owned some Bitcoin. He praised the cryptocurrency for its store of value attributes. Druckenmiller [told](https://www.forbes.com/sites/billybambrough/2020/11/12/a-legendary-hedge-fund-billionaire-just-flipped-to-bitcoin-calling-it-better-than-gold/?sh=281a7eeb222f) CNBC last Monday:\n\n> “Bitcoin could be an asset class that has a lot of attraction as a store of value to both millennials and the new West Coast money and, as you know, they got a lot of it.”\n\nThe billionaire also pointed to the upcoming inflation induced by the Fed. He owns a large gold position but said:\n\n> “Frankly, if the gold bet works the bitcoin bet will probably work better because it’s thinner, more illiquid and has a lot more beta to it.”\n\nDruckenmiller and Miller are not isolated voices among traditional investors who are endorsing the cryptocurrency. Wall Street as a whole is finally treating Bitcoin more seriously.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"12 Nov 2020","id":"1dq6zpjNhxabxAMsJBHH4r"},{"title":"Bitcoin Escrow Exec Allegedly Defrauded 2 Firms of $7M, How OTCTrade.com Protects Your Funds","image":"https://images.ctfassets.net/4x910isj0ns2/261oKXR1lv5wwPkctGSN8o/683c6abe07a442cfa1a886432e092953/hacking-2964100_1920.jpg","description":"The head of a Bitcoin escrow service was charged with defrauding two companies out of more than $7 million by pledging to conduct Bitcoin purchases on behalf of the firms. Jon Barry Thompson, an Easton man who acts as the principal of crypto escrow firm Volantis Escrow Platform LLC and Volantis Market Making LCC, was charged by a [grand jury](https://www.justice.gov/usao-sdny/pr/principal-cryptocurrency-escrow-company-indicted-7-million-fraudulent-scheme) in the Southern District of New York and by the [US Commodities Futures Trading Commission ](https://www.cftc.gov/PressRoom/PressReleases/8023-19)(CFTC).\n\nThompson has been accused of stealing about $7 million that was paid by two companies willing to purchase Bitcoin. Volantis received the funds in advance in order to buy Bitcoin on behalf of the two clients. The fraudulent schemes took place in 2018 when the cryptocurrency was priced at about $8,000 per coin.\n\nThe Pennsylvanian made false claims, telling companies that “cash is with me, coin is with me,” and saying that “there is no risk of default” since Volantis controlled “both sides of the transaction.” In reality, Thompson sent the funds to a third-party escrow service that never bought the pledged Bitcoin or returned the funds. Thompson used sophisticated terms to confuse clients, and falsely claimed that the Bitcoin transactions would be settled via an “atomic swap process.” In both instances, he lied to the firms for several days regarding the status of their cash and Bitcoin, neither of which was returned.\n\nManhattan US Attorney Geoffrey S. Berman commented: \n\n> “As alleged, Jon Barry Thompson repeatedly lied to investors in cryptocurrencies about the safety of their investments made through his companies. As a result of Thompson’s lies, investors lost millions of dollars.”\n\nAccording to the Justice Department, Thompson is charged with two counts of commodities fraud, each of which implies a maximum sentence of 10 years in prison, and two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison. He [pled](https://cointelegraph.com/news/exec-who-bamboozled-clients-with-crypto-jargon-pleads-guilty-to-3-25m-fraud) guilty to one count of commodities fraud and will face sentencing on January 7 next year.\n\nCFTC Director of Enforcement James McDonald noted that:\n\n> “Fraudulent schemes, like that alleged in this case, undermine the integrity of new and innovative markets and cheat innocent people out of their hard-earned money.”\n\nThe CFTC took action because Bitcoin was determined to be commodities under the CommodityExchange Act (CEA). Thus it falls under the supervision of the CFTC in the case the cryptocurrency is used in derivatives trading or fraud and manipulation.\n\nThe CFTC seeks restitution of all funds, civil monetary penalties, permanent trading and registration bans, and “a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations.”\n\n## How Does OTCTrade.com Safeguard Your Funds?\n\nAs McDonald noted, frauds like this do not bode well for the nascent cryptocurrency space. We at OTCTrade.com provide a safe environment to carry out medium and large cryptocurrency trades. Our trading desks, as well as all customers, are verified before onboarding the platform. On top of that, we have [partnered with](https://cointelegraph.com/press-releases/otctradecom-launches-otc-crypto-trading-platform-with-5-mm-insurance) PrimeTrust, a reputable custodian that enables us to provide clients with $5 million insurance per each account to cover unpleasant situations like theft and hacking attacks.\n\nOTCTrade.com offers instant settlement, so clients don’t need to wait for hours or days worrying about their funds.\n\nBefore trusting their millions, institutional investors and large traders must conduct due diligence because the crypto space is still targeted by scammers and fraudsters. It would be best if you worked with regulated and reputable services.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/6HC9qN9KlhDdCLEJUlfKhu/f4f12832fb4d62c62643ad5f01684e42/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"04 Nov 2020","metaTitle":"Bitcoin Exec Defrauds Firms - See How OTCTrade Protects You - Crypto News","metaDescription":"The head of a Bitcoin escrow service was recently charged with defrauding 2 firms of $7 million. See how the OTCTrade.com platform protects your crypto assets.","id":"3AsWLG2VAsKoCpcKTNbaZU"},{"title":"SEC Green-Lights Streamlined Process for Digital Asset Settlement","image":"https://images.ctfassets.net/4x910isj0ns2/S814xonp83fb1N2tkiQSe/11bcc8c9eafb1221285dac51d3544aeb/right-4926156_1920.jpg","description":"The US Securities and Exchange Commission (SEC) issued a [no-action letter ](https://www.sec.gov/divisions/marketreg/mr-noaction/2020/finra-ats-role-in-settlement-of-digital-asset-security-trades-09252020.pdf)to the Financial Industry Regulatory Authority (FINRA), bringing more clarity on how alternative trading systems (ATSs) should settle digital asset security trades. The move is expected to simplify and speed up the settlement of digital asset securities by cutting the previous four-step process to three, which would reduce the operational risk for regulated broker-dealers.\n\nThe SEC’s Division of Trading and Markets said in the letter issued on September 25, 2020, that broker-dealers are allowed to stick to a three-step settlement for digital asset securities stored in a third-party’s custody if certain conditions are met.\n\nPreviously, broker-dealers operating ATSs had to follow a [four-step ](https://www.sec.gov/news/public-statement/joint-staff-statement-broker-dealer-custody-digital-asset-securities)settlement process as described below:\n\n- Step 1 – buyers and sellers send their orders to the ATS;\n- Step 2 – the ATS matches the orders;\n- Step 3 – the ATS notifies the buyer and seller of the matched trade;\n- Step 4 – the buyer and seller settle the transaction bilaterally, either directly with each other or by requiring their respective custodians to settle the transaction on their behalf.\n\nAccording to the SEC, many ATSs would like to follow a more straightforward process in cases where there is no custody. They proposed a three-step model as follows:\n\n- Step 1 – The buyer and seller send their respective orders to the ATS, notify their respective custodians of their respective orders submitted to the ATS, and instruct their respective custodians to settle transactions in accordance with the terms of their orders when the ATS notifies the custodians of a match on the ATS;\n- Step 2 – The ATS matches the orders; and\n- Step 3 – The ATS notifies the buyer and seller and their respective custodians of the matched trade and the custodians carry out the conditional instructions.\n\nConsequently, the custodians would then settle the digital securities trades on behalf of buyers and sellers based on the instructions received as part of Step 1.\n\nThe SEC approved the three-step model and told FINRA that it wouldn’t impose enforcement action under the SEC’s Rule 15c3-3 (the customer protection rule) if broker-dealers operating ATSs abide by the following four conditions:\n\n- The broker-dealer operator maintains a minimum of $250,000 in net capital;\n- The agreements between the broker-dealer operator and its customers clearly state that the broker-dealer operator does not guarantee or otherwise have responsibility for settling the trades;\n- The broker-dealer operator has established and maintains reasonably designed procedures to assess whether a digital asset security was offered and sold initially pursuant to an effective registration statement or an available exemption from registration, and whether any secondary transactions of the digital asset security on or through the ATS are made pursuant to an effective registration statement or an available exemption from registration; and\n- The transactions in digital asset securities otherwise comply with the federal securities laws.\n\nWhile the current three-step settlement process is a significant improvement, the SEC noted that the no-action letter *“solely addresses an ATS trading digital asset securities under the circumstances set forth in this letter and does not otherwise address broker-dealer custody or control of digital asset securities.”*\n\nATSs are SEC-regulated electronic trading systems that match orders for buyers and sellers of securities, including digital ones. An ATS may seek the SEC’s nod to become a national securities exchange. All existing ATSs operate like dark pools, meaning that their trading systems enable users to place orders without publicly showing the price and size of their orders to the rest of the participants in the market.\n\nFINRA is a private corporation that acts as a self-regulatory entity that cooperates with the SEC, supervising broker-dealers.\n\nThe SEC has intensified its efforts to regulate blockchain-based securities, while the Commodity Futures Trading Commission (CFTC) is focusing on Bitcoin. However, the US still doesn’t have a comprehensive regulatory framework aimed at cryptocurrencies. Elsewhere, the European Union [may become](https://www.otctrade.com/blog/european-commission-proposes-extensive-regulatory-framework-for-crypto-assets) the first major jurisdiction to have an extensive regulation for all crypto processes.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"04 Nov 2020","metaTitle":"SEC Green-Lights Digital Asset Settlement - OTC Trade Crypto News","metaDescription":"As the US SEC issued a no-action letter with the potential to reduce OTC trade risk and make the process simpler and faster. Read more at OTCtrade.com.","id":"6RIaQWdybRn2o34kMhnysq"},{"title":"Bitcoin Updates YTD Peak as PayPal Introduces Cryptocurrency Services","image":"https://images.ctfassets.net/4x910isj0ns2/2cYaOHWlKUPxA6Ldds8zp0/c949e3f90f92f923030b94e9b364c988/bitcoin-3890350_1920.jpg","description":"Bitcoin updated the year-to-date high as of mid-October and is about to break above $13,000 for the first time since July 2019. If it manages to add a few more hundred, the largest cryptocurrency by market cap will hit the highest since January 2018.\n\nWhile the bullish move started earlier this week, the rally intensified on Wednesday, October 21, after PayPal [announced](https://newsroom.paypal-corp.com/2020-10-21-PayPal-Launches-New-Service-Enabling-Users-to-Buy-Hold-and-Sell-Cryptocurrency) that its US customers would be able to buy, sell, and hold Bitcoin and other cryptocurrencies through its online wallets. Besides this, PayPal users will be able to use digital currencies to shop at the 26 million merchants on its network starting from next year.\n\nBitcoin critics have constantly pointed to its lack of utility, which hinders the cryptocurrency’s wider adoption. The move from the payment giant will allow it to go mainstream. PayPal noted that the interest in cryptocurrencies has increased amid the COVID pandemic.\n\nDan Schulman, president and CEO of PayPal, commented:\n\n> “The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly.”\n\nSchulman went further by expressing the company’s readiness to collaborate with central banks and regulators worldwide to provide its support and contribution to “shaping the role that digital currencies will play in the future of global finance and commerce.”\n\nThat means PayPal will improve its infrastructure to allow new digital currencies that may be created by central banks and corporations.\n\nIn a [previous opinion article](https://www.otctrade.com/blog/cryptocurrencies-will-put-an-end-to-fiat-money-here-is-how-it-will-happen) that discusses the end of fiat currencies and their replacement with digital coins, we mentioned that one of the main conditions for crypto adoption is that virtual coins like Bitcoin reach the payment market. PayPal’s move is speeding up this process. The company has almost 350 million active accounts worldwide and processed over $220 billion in payments in the second quarter of 2020. \n\nPayPal said that crypto payments would be settled via fiat currencies, like the US dollar, suggesting that merchants will not receive payments in Bitcoin.\n\nThe payment service is introducing the crypto feature in partnership with Paxos Trust Company, which operates a crypto exchange and stablecoin. Initially, PayPal accepts operations with Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.\n\n## PayPal Move Boosts Bitcoin Price\n\nAt the time of writing on October 21, Bitcoin is trading at over $12,800, gaining over 7.1% for the day. It has already updated the YTD peak at over $12,850 and is close to breaking above $13,000, which could send prices to the highest since January 2018.\n\nIt’s worth mentioning that Bitcoin has been already bullish when the PayPal announcement came out. The cryptocurrency broke above $12,000 on Tuesday. It gained about 13% on the week.\n\nThe $12,000 mark should be a resilient support level under the bulls’ domination.\n\nBesides the PayPal-induced frenzy, the cryptocurrency might leverage its safe-haven status amid increasing political and economic uncertainty, as the number of COVID infections continues to increase, forcing many countries to reimpose lockdown measures. Also, the US election might turn out chaotic, as current President Donald Trump said he wouldn’t give up power peacefully in the case he loses. Nevertheless, the polls show that he might lose indeed, as Democrat candidate Joe Biden is leading with a margin.\n\nAs of mid-October, Bitcoin is decoupling from macro assets like stocks, gold, and fiat currencies. Here is how the cryptocurrency performance since March nosedive compares to the S&P 500, Nasdaq, and gold:\n\n\n\nIt remains to be seen if the current bullishness remains for a longer period, but the fact that Bitcoin and other major digital coins will have some real use cases would definitely play a role in shaping future price trends.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"21 Oct 2020","metaTitle":"Bitcoin Sees YTD Peak with PayPal Cryptocurrency Services","metaDescription":"Bitcoin updated the year-to-date high as of mid-October, poised to break above $13,000 after the introduction of PayPal Cryptocurrency Services.","id":"CYdGqsK9R5OQKU1UmlnPQ"},{"title":"Russia Getting Tough on Cryptocurrency, Holders Might Have to Report Transactions & Addresses","image":"https://images.ctfassets.net/4x910isj0ns2/35NZxDNCEpEnoi3On92rc/561203f176e8a3fe15882e33614352dc/the-flagpole-2877540_1920.jpg","description":"Russia’s Ministry of Finance proposed amendments to the current draft bill regulating cryptocurrencies that would require citizens to report crypto transactions and wallet addresses to tax authorities if the wallet turnover exceeds 100,000 rubles (about $1,300) per year, [according to ](https://www.rbc.ru/crypto/news/5f6c49079a79474d36bc852b?from=main)local media RBK. If they fail to abide by requirements in the case the amendments take effect, cryptocurrency holders may pay 30% of their holdings in fines or even face up to three years in prison in the case the wallet’s annual turnover exceeds 1 million rubles ($13,000). Using cryptocurrency for financial crimes could lead to more severe punishments.\n\nAlso, the proposal requires over-the-counter (OTC) cryptocurrency dealers and crypto exchanges to report all transactions that involve the ruble – the local fiat currency – and Russian IP addresses to tax authorities.\n\nWhile the latest proposals are obviously harsh, they look mild compared to the previous draft bill that sought up to seven years in prison for those who facilitate cryptocurrency transactions. In fact, the previous bill banned crypto operations at all. That draft failed to become law after strong resistance from the crypto community, along with support from the Ministry of Justice and Ministry of Economic Development. Critics of the previous draft said that it could have put an end to the blockchain development in Russia.\n\nThe Minister of Finance’s latest amendments to the Law of Digital Financial Assets concern changes to the Criminal and Criminal Procedure Codes, the Code of Administrative Offenses, the Tax Code and the Law on Combating Legalization (Laundering) of Incomes.\n\nThe new draft recommends cryptocurrencies to be considered property in order to be taxed. The Finance Ministry noted that digital currencies are often used for tax evasion, money laundering and illegal activities.\n\nThe Law of Digital Financial Assets was signed by President Vladimir Putin at the end of July 2020 and comes into force in January 2021. If the new amendments get the nod of parliament, they will also take effect in January. So far, the current bill approved by the State Duma (the lower house of the parliament) permits crypto transactions but doesn’t allow buying and selling goods and services with it on the Russian territory.\n\n## Sell Crypto Now If You Can’t Explain Its Origin, Expert Recommends\n\nMoscow Digital School expert Efim Kazantsev told RBK that those who decide to keep the existing cryptocurrency and report it to the tax authorities when the law takes effect will have to answer questions about its origin and whether all taxes had been paid from it. He said:\n\n> “There is, of course, the likelihood that this overly tough initiative of the Ministry of Finance will not be supported, but there are not many chances for this. Most likely, in one form or another, the obligation to declare cryptocurrency will be consolidated. This means that everyone who does not plan to tell tax authorities about the sources of their cryptocurrency’s origin and the reasons for non-payment of taxes should think about converting it into something else.”\n\n## Deputy Would Rather Block Cryptocurrency Than Regulate It\n\nWhat’s even worse for the crypto community, some influential politicians still seek to block cryptocurrency operations at all. Anatoly Aksakov, Chairman of State Duma Committee on Financial Market, who contributed to the creation of the draft of the Law on Digital Financial Assets, [told](https://www.rbc.ru/crypto/news/5f6df25e9a794788b30121ac) RBK that cryptocurrencies should not be legalized at all. He argues that crypto assets are mainly used by those who seek to hide their operations from government oversight, whether they buy narcotics, bribe officials or legalize capital obtained through criminal activities. Aksakov said:\n\n> “Do we need to legalize this form of exchange of fiat currencies to cryptocurrencies if they are mainly used for dubious transactions? Not always, of course. In my opinion, the overwhelming majority of them are used to finance something illegal.”\n\nHe added that digital currencies like Bitcoin are used as a [store of value ](https://www.otctrade.com/blog/bitcoin-as-store-of-value)or for speculative purposes only by a small proportion of non-professional investors. According to the deputy, cryptocurrency carries significant risks and has uncertain prospects, so it is not attractive as an investment.\n\n> “Nothing convinces me yet that cryptocurrency is a means of accumulating capital,” Aksakov noted, adding that cryptocurrencies, in principle, cannot be regulated.\n\nThe deputy admits that once the Law on Digital Financial Assets comes into effect, it will permit the use of cryptocurrencies, stablecoins, and smart contracts. However, he is now seeking to limit everything related to cryptocurrencies, which is weird, considering that he participated in the creation of the bill in the first place. He stressed:\n\n> “We do not want to legalize this because we do not want to stimulate the flow of money to carry out illegal operations.”\n\nInterestingly, Russia’s Federal Service for Supervision of Communications, Information Technology and Mass Media (Roskomnadzor) [blacklisted](https://www.rbc.ru/crypto/news/5f6d92799a794754dd63bbc1) the website of Binance, one of the largest crypto exchanges. The telecom regulator claims that the site contains information prohibited for distribution in Russia, making reference to the possibility of buying Bitcoin and other digital assets. Still, Russian residents can use the exchange freely.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/6HC9qN9KlhDdCLEJUlfKhu/f4f12832fb4d62c62643ad5f01684e42/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"14 Oct 2020","metaTitle":"Russia Tightens Cryptocurrency Regulations, New Reports and Taxes - Crypto News","metaDescription":"Russia announced new cryptocurrency regulations requiring reports of crypto trades, wallets, and potential taxes on OTC crypto trade.","id":"1kA8t3vK2y1vxNEHWRRtHG"},{"title":"China’s PBOC Blacklists OTC Dealers, Imposes 5-Year Banking Restrictions","image":"https://images.ctfassets.net/4x910isj0ns2/2Q9qsUKyqgGjq2ej64aKk6/ec0b1fe0fc4c85f2050b8bc4188f550f/ancient-1866754_1920.jpg","description":"The People’s Bank of China (PBoC) is blacklisting over-the-counter (OTC) trading desks and individual traders suspected of money laundering and other illicit activities, according to [local media](https://mp.weixin.qq.com/s?__biz=MzI0ODgzMDE5MA==&mid=2247486552&idx=1&sn=e9f0cf4f5c075bc1fa92396415252a85&chksm=e99b8dd9deec04cf0597e1b00874df7fca55dee80acce272d1c8eb61a3b95c269a4df0e4f378&token=856874707&lang=zh_CN#rd). The blacklisted entities will see their banking accounts suspended for five years. Also, they will not be able to use debit and credit cards issued by any bank for a period of three years.\n\nMany crypto OTC dealers are already halting activities as they fear repercussions. Still, industry insiders claim that normal cryptocurrency sales are not causing any suspicions. Crypto exchange Huobi, which provides an OTC desk, seems not to be deranged by the new rules. The company said: \n\n> “Normal cryptocurrency transactions are not illegal, and only those involving black money and illicit assets will be frozen.”\n\nAs for OTC dealers that operate larger traders, they can most likely end up in the blacklist. The process goes like this: when a bank’s risk system detects a suspicious account, it flags it and restricts transactions. Then it reports the account to the central bank. Finally, the PBoC is sharing all blacklisted accounts across banks in all regions, thus making sure that OTC dealers cannot open new accounts in other Chinese provinces.\n\nOn September 18, the Guangxi Public Security Bureau and the Nanning Central Branch of the PBoC announced the first batch of 1091 individuals who are eligible for the punishment. Authorities from other locations, including Quanzhou, Putian, Wenzhou, and Laibin, have also released lists of suspected entities.\n\nGuangxi, an autonomous region bordered by Vietnam, is the home of multiple money laundering cases. In May, a crypto OTC merchant operating in the region’s capital city of Nanning [was suspected](https://mp.weixin.qq.com/s?__biz=MzI0ODgzMDE5MA==&mid=2247485030&idx=1&sn=6c3b900a2953755319351fd6147fa779&chksm=e99b87e7deec0ef1b4e8c28edbe846a7201c663b517c060e5bd9fa84b284f7ac6f8411fc40f1&scene=21#wechat_redirect) of helping money laundering conducted by criminals involved in telecommunications and online frauds.\n\nAlthough Huobi and other crypto businesses might indirectly hint that it’s not that difficult to distinguish the wrong transactions from the permitted ones, the truth is that there is a lack of clear rules across Chinese banks. This means that any OTC business can end up in the blacklist no matter how hard it tries to act according to the law. Moreover, China has no clear rules on cryptocurrencies either, even though it is gradually deploying its own digital Yuan issued by the PBoC itself.\n\nChina going hard on the crypto industry is not a novelty. In 2017, Beijing [banned](https://www.forbes.com/sites/kenrapoza/2017/11/02/cryptocurrency-exchanges-officially-dead-in-china/#620ed3df2a83) initial coin offerings (ICO) and local crypto exchanges. Despite the crackdown, the Beijing Arbitration Commission [explained](https://www.bjac.org.cn/news/view?id=3769) a few months ago that the government hadn’t ban Bitcoin as a digital commodity.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"09 Oct 2020","metaTitle":"China Blacklists OTC Dealers - OTC Trade - Crypto News ","metaDescription":"The People's Bank of China blacklists OTC dealers, including over-the-counter trading desks under suspicion of money laundering.","metaKeywords":"OTC dealers","id":"5RopABo6McLJa1wp7195ZN"},{"title":"European Commission Proposes Extensive Regulatory Framework for Crypto Assets","image":"https://images.ctfassets.net/4x910isj0ns2/28RcpzK7iUV8mbFLMLShtt/5f620fc73bd01eb27e021f774f699397/belgium-3595351_1920.jpg","description":"While Russia and China are tightening regulations on cryptocurrency-related operations, the European Union becomes the first major jurisdiction to provide a comprehensive framework that is supportive and is aimed at the development of the cryptocurrency industry. At the end of September 2020, the European Commission [released](https://ec.europa.eu/finance/docs/law/200924-crypto-assets-proposal_en.pdf) the most extensive document discussing the supervision of the emerging cryptocurrency sector.\n\nThe so-called Regulation on Markets in Crypto Assets (MiCA) touches upon all cryptocurrencies and tokens, including stablecoins. Many articles of the 167-page document import financial terms and principles from the traditional financial services and apply them to the crypto space. The draft regulation is part of the [Digital Finance package](https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1684), which includes a set of measures designed to support the potential of digital finance to foster innovation and regulate competition. \n\nThe proposal lists four main objectives as follows:\n\n- __Provide legal certainty__ – the Commission concluded that in order for crypto-asset markets to develop within the European bloc, they need a sound legal framework that would define the regulatory treatment of all crypto assets.\n- __Support innovation__ – the EU aims to promote the development of crypto-assets and the wider use of blockchain by establishing a safe and well-balanced framework to support innovation and fair competition.\n- __Provide consumer and investor protection__ – cryptocurrencies are not covered by existing financial services regulations, which hinders the wider adoption among consumers.\n- __Ensure financial stability__ – the European Commission highlighted the potential use of stablecoins, which can become widely accepted and systemic. Accordingly, the proposal comprises safeguards to address potential risks to financial stability that relate to the emergence of stablecoins.\n\nIt’s worth mentioning that unlike directives, such as the recent [Payment Services Directive PSD2](https://ec.europa.eu/info/law/payment-services-psd-2-directive-eu-2015-2366_en), the current proposal is a regulation, suggesting that it is not for interpretation in the individual EU countries but must be implemented in all EU countries the way the European Parliament adopts it. Still, there is a long way until MiCA becomes law and the Commission hopes the framework will be implemented by 2024. The EU Commission will release the final version of the MiCA proposal in a few weeks.\n\nValdis Dombrovskis, executive VP of the EU Commission, said in a statement:\n\n> “We must proactively embrace digital transformation, while mitigating any potential risks. A digital and innovative single market for finance will benefit Europeans and be key to Europe's economic recovery by delivering better financial products for consumers and opening up new financing channels for businesses.”\n\n## MiCA Provides Legal Definitions and Highlights Stablecoins\n\nThe MiCA document starts with the definitions of what is a crypto asset and what are other token subcategories. It also establishes rules for cryptocurrency custody and capital requirements as well as the relationship between token issuers and holders.\n\nA great emphasis is placed on stablecoins, as many EU leaders had previously expressed concerns on Facebook’s Libra. At the beginning of September, Reuters [reported](https://www.reuters.com/article/us-eu-economy-cryptoassets/big-european-states-call-for-cryptocurrency-curbs-to-protect-consumers-idUSKBN26219G) that Germany, France, Italy, Spain and the Netherlands urged the EU Commission to come up with strict regulation for asset-backed digital assets such as stablecoins in order to protect consumers and defend state sovereignty in monetary policy. After an informal meeting between the states, German Finance Minister Olaf Scholz told media:\n\n> “We all agree that it’s our task to keep financial market stable and to ensure that what is a task for states remains a task for states.”\n\nThe finance ministers of the five countries said that stablecoins should not be permitted to operate on EU territory until a clear framework is established.\n\nThe ministers want all entities involved in a stablecoin project to be registered in the EU. If this becomes law, it can impact Facebook’s Libra since the upcoming token will be governed by the Geneva-based Libra Association.\n\nAlso, the five major countries propose that all stablecoins be pegged at a ratio of 1:1 with fiat currency, including the euro or other currencies of European states. The fiat reserves should be deposited in an institution approved by the EU.\n\n## What Does MiCA Define and Stipulate?\n\nThe EU Commission defines a crypto asset as “a digital representation of value or rights, which may be transferred and stored electronically, using distributed ledger or similar technology.” The document also defines stablecoins subcategories such as electronic money token (e-money token) and asset-referenced token along with the utility token.\n\nThe proposal then dives into the activities of custodian services and cryptocurrency exchanges along with other crypto service providers.\n\nSpecial attention is given to cryptocurrency and token issuers, which have to come up with a whitepaper in the first place. Many articles of MiCA are dedicated to the scope and attributes of a whitepaper. The document also discusses the marketing approaches and other rules related to the promotion of a newly issued digital asset. The goal is to protect consumers and ensure fair competition.\n\nCryptocurrency service providers, such as custodians and exchanges, including over-the-counter (OTC) trading desks, should also consider a wide list of rules before operating in the EU, providing that the proposal becomes law. Services providers will have to cooperate and report to the European Supervisory Market Authority (ESMA) and the European Banking Authority (EBA). They will have to get a license and become part of a supervisory regime that is similar to MiFID II, which regulates the traditional financial markets.\n\nAll in all, there are a lot of rules to follow, but the framework doesn’t intend to hinder the expansion of the crypto space. Also, it’s worth noting that the EU Commission’s proposal doesn’t touch upon digital currencies issued by central banks.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"09 Oct 2020","metaTitle":"European Commission Proposes Extensive Regulatory Framework for Crypto Assets - Crypto News","metaDescription":"As other countries tighten regulations on crypto assets, the European Commission built a framework to support cryptocurrencies.","metaKeywords":"crypto assets\neuropean commission","id":"6pdRhDlD73DCg4fl0NtoF9"},{"title":"Bitcoin as Store of Value","image":"https://images.ctfassets.net/4x910isj0ns2/1IcLzinmlOMj2uMoOA0ZUZ/bdbcd127c780c806d6424303ff403b5f/image_6_.jpg","description":"Bitcoin’s safe haven capabilities have been discussed a lot this year given the economic crisis caused by the COVID-19 pandemic. However, is the cryptocurrency really that good at storing value in the long-term? Let’s find out!\n\n## COVID Crisis Highlights Bitcoin’s Safe-Haven Potential\n\nIn a [previous article](https://www.otctrade.com/blog/btc,-gold-rallying-amid-failing-global-economy,-dovish-stance), we discussed that Bitcoin and gold had been both rallying in July, driven by investors’ fears that fiat money was gradually devaluing due to the huge stimulus packages implemented by governments and central bankers.\n\nIn the first half of the year, investors overreacted to the news about the coronavirus outbreak, with the CBOE Volatility Index (VIX) hitting the second-highest level on record as of mid-March. The volatility of all assets, including Bitcoin, surged as bears were focusing on the shocking economic crisis caused by the pandemic, while bulls were trying to price in the upcoming recovery.\n\nIndeed, the pandemic caused an unprecedented crisis in almost all countries. The US gross domestic product (GDP) tumbled in the second quarter of 2020 at an annualized rate of 32.9%, the deepest drop since records started in 1947. The economy fell almost 10% year-on-year in the three months to June. There were 30.2 million US citizens receiving unemployment benefits in the week ending July 11, with the unemployment rate jumping from 3.7% to over 10%.\n\n\n\nSource: https://www.bea.gov/system/files/gdp2q20_adv_chart.png \n\nMost countries are experiencing or are on the brink of recession, which occurs when the GDP is contracting for two consecutive quarters.\n\n\n\nSource: https://www.bbc.com/news/business-51706225 \n\nObviously, such a gloomy picture is putting most governments in an awkward position. Central bankers have no choice than to reduce interest rates close to zero and inject as much cash as possible. The [Fed’s balance sheet](https://fred.stlouisfed.org/series/WALCL), which was below $1 trillion up until the financial crisis in 2008, gradually rose to over $4 trillion as of January 2020 and jumped to over $7 trillion as of mid-June. The US central bank’s dynamic of the balance sheet indirectly shows how much dollar bills are printed.\n\nCentral bankers are injecting free cash to support the failing economies. While this might have the desired effect, at least in the short-term, investors are concerned about the devaluation of fiat money. Their focus turned to assets that can store value in the long-term, and Bitcoin might be one of the best options.\n\nGiven that the Fed has been among the most active central banks at printing money, the US dollar is losing its purchasing power, with the [USD index](https://www.bloomberg.com/quote/DXY:CUR), which tracks the greenback against six other major currencies, falling to the lowest in two years. Investors also fear that the US dollar would eventually lose its world reserve currency status, which has been around since the Bretton-Woods agreement in 1944.\n\n## More People Are Investing in BTC\n\nThe economic conditions and the aggressive stimulus packages have prompted a rush to safe havens. Bitcoin is also benefiting from its safe haven status.\n\nAs per UsefulTulips, which merges data from LocalBitcoin and Paxful – two largest cryptocurrency peer-to-peer (P2P) exchanges aimed at retail traders – Bitcoin trading volume hit a record high in North America as of mid-July.\n\n\n\nhttps://www.usefultulips.org/combined_North%20America_Page.html\n\nA similar trend could be observed in countries like India, Vietnam, Mexico, Chile, Bolivia, Nigeria, South Africa, Ghana, and Kenya, among others. This demonstrates that regular people indeed are betting on Bitcoin as they are looking for reliable assets to hedge against inflation.\n\nBoth retail and institutional investors are considering the cryptocurrency as it is playing the safe-haven card.\n\n## Why Is Bitcoin a Good Store of Value?\n\nBitcoin is often called digital gold – and for very good reason. The scarcity of the oldest cryptocurrency out there, thanks to its deflationary model, is making it a good candidate among assets that act as a store of value (SOV).\n\nIn July, investment behemoth Fidelity released [a report](https://www.fidelitydigitalassets.com/bin-public/060_www_fidelity_com/documents/FDAS/bitinvthessisstoreofvalue.pdf), claiming that Bitcoin was an “aspirational store of value” and an “insurance policy” in moments of crisis.\n\nAs per Fidelity Digital Assets, Bitcoin hasn’t reached the level of acceptance as an SOV yet, but it has all the prerequisites. The report reads:\n\n> “Many investors consider bitcoin to be an aspirational store of value in that it has the properties of a store of value but has yet to be widely accepted as such.”\n\nHistorically, the four key elements that described a good SOV have been scarcity, portability, durability and divisibility, and Bitcoin has all of them. According to Fidelity, one of the essential characteristics that make Bitcoin a good SOV is its digital scarcity. As you might know, the cryptocurrency’s maximum supply is capped by the protocol at 21 million. Currently, the circulating supply is almost 18.5 million, according to [Coinmarketcap](https://coinmarketcap.com) data. It means that 2.5 million more coins have to be mined and there will be no more generation of new Bitcoin. Since the mining difficulty increases over time, the circulating supply is expanding at a much slower pace compared to the first years.\n\n\n\nFidelity cited the popular stock-to-flow model, which is calculated by dividing the current supply of the asset by the number of coins or units produced in a given period, e.g. a day, week or month. The indicator reflects the degree of scarcity or abundance of an asset. At the moment, Bitcoin is the second-scarcer asset after gold, but the cryptocurrency will exceed the metal by 2025.\n\n\n\nThe Fidelity report also discusses Bitcoin’s decentralization, which preserves people’s trust in the cryptocurrency. Transactions on blockchain are immutable, meaning that it is economically and computationally close to impossible to even try to reverse transactions and rearrange blocks.\n\nGiven that the supply side of the cryptocurrency is stable and predictable, it is the demand side that will drive prices in the future. The report reads:\n\n> “Investors believe that the next wave of awareness and adoption could be driven by external factors such as unprecedented levels of intervention by central banks and governments, record low interest rates, increasing fiat money supply, deglobalization and the potential for ensuing inflation, all of which have been accelerated by the pandemic and economic shutdown.”\n\nLegendary investor and billionaire Paul Tudor of Tudor Investment Corporation [told](https://www.cnbc.com/2020/05/11/paul-tudor-jones-calls-bitcoin-a-great-speculation-says-he-has-almost-2percent-of-his-assets-in-it.html) CNBC that Wall Street might be witnessing the historic “birthing of a store of value” through Bitcoin. He called government-backed cash “a wasting asset,” as the central banks of most countries have an “avowed goal of depreciating its value 2% per year.”\n\nThe billionaire revealed that he allocated just over 1% of his assets to Bitcoin. In May 2020, Paul Tudor and Lorenzo Giorgianni, head of research at Tudor Investment Corporation, presented the case of Bitcoin in an investor letter titled “The Great Monetary Inflation.”\n\nHis team scored financial assets based on four characteristics that define SOVs: purchasing power, trustworthiness, portability and liquidity. Tudor [hinted](https://www.institutionalinvestor.com/article/b1mmvg200ctlr0/Wall-Street-s-Crypto-Cold-War) that the price of Bitcoin should be much higher:\n\n> “Bitcoin had an overall score of nearly 60 percent of that of financial assets, but has a market cap that is 1/1,200th of that. It scores 66 percent of gold as a store of value but has a market cap that is 1/60th of gold’s outstanding value. Something appears wrong here, and my guess is it is the price of bitcoin.”\n\nThe only major concern of those skeptical about Bitcoin’s SOV status is the high volatility of the cryptocurrency. However, the crypto market is still at an emerging phase, as the Bitcoin whitepaper was released only about a decade ago. When US President Richard Nixon announced in 1971 the end of the US dollar convertibility to gold, the metal started to fluctuate wildly in the following months and years, but that doesn’t mean it wasn’t a good SOV. \n\nAll in all, Bitcoin was designed as a means of payment, but institutional investors would rather use it as an SOV. The cryptocurrency is scarce, portable, divisible, durable, and liquid – what can you expect more? We have to wait for the market to mature and experience a wider adoption worldwide and there will be even fewer critics of Bitcoin’s SOV capabilities.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"30 Sep 2020","metaTitle":"Crypto News | Is Bitcoin a Good Store of Value? | OTC Trade","metaDescription":"Is Bitcoin a good store of value? As the volatility of cryptocurrency comes into question, we take a deeper look at the value of bitcoin.","metaKeywords":"bitcoin","id":"6PgyGUFKdVOPBgSjlfwUKs"},{"title":"Congressmen Ask IRS Not to Overtax PoS Validators","image":"https://images.ctfassets.net/4x910isj0ns2/4FVnl6JAq2tWThTSkD914F/962085eaae2c884fbfcdb44b1cd3251e/income-tax-4097292_1920.jpg","description":"A group of US lawmakers, comprising members of both Republican and Democratic parties, believe that US taxpayers generating new tokens through staking should not be overtaxed by the Internal Revenue Service (IRS), according to [a letter](https://schweikert.house.gov/sites/schweikert.house.gov/files/Final%20Proof%20of%20Stake%20IRS%20Letter%207.29.20.pdf) sent by the group to the IRS at the end of July 2020. The congressmen asked the IRS that staking rewards in PoS networks be taxed when sold by validators instead of being regarded as income. \n\nThe four members of the group are Congressional Blockchain Caucus co-chairs Representatives David Schweikert, Tom Emmer (both Republicans), Bill Foster, and Darren Soto (both Democrats). The letter was addressed to IRS Commissioner Charles Retting, Chief Counsel Michael Desmond, and Assistant Secretary for Tax Policy David Kautter.\n\nThe congressmen agree that the true gains from staking should be indeed taxed, but under the current circumstances, validators are at risk of being overtaxed. The letter reads:\n\n> “It is possible the taxation of ‘staking’ rewards as income may overstate taxpayers’ actual gains from participating in this new technology. It could also result in a reporting and compliance nightmare, for taxpayers and the Service (IRS) alike.”\n\nGiven that staking protocols may generate new blocks every few minutes or hours, the IRS might treat every new unit as a taxable event. This suggests that taxpayers could, in theory, have hundreds of taxable events per year, which would indeed be a nightmare for both sides.\n\nThe IRS hasn’t decided over how or when the tokens earned through staking should be taxed. Shehan Chandrasekera, head of tax strategy at Cointracker, [told](https://www.coindesk.com/us-lawmakers-dont-want-proof-of-stake-networks-to-get-overtaxed) Coindesk that there were more positions within the IRS as to how staking rewards should be taxed. He said:\n\n> “Technically speaking, staking income is similar to rental income. This is because cryptocurrencies are treated as property. Income you get after lending property is rental income by default.”\n\nStill, staking rewards can also be regarded as interest. But it would be best for validators that staking rewards are treated like new property. New property is not taxed as income right away, but when it’s sold. The congressmen have the same position. They said in the letter:\n\n> “Those who help validate transactions create new blocks in the cryptocurrency blockchain and also create these new tokens. Similar to all other forms of taxpayer-created (or taxpayer-discovered) property – such as crops, mineral, livestock, artworks and even widgets off the assembly line – these tokens could be taxed when they are sold.”\n\nChandrasekera noted that this method made the most sense. However, according to him, the IRS might favor the most conservative approach in which the generated tokens could be taxed at the time when they’re received. At least, this is the IRS’ current approach regarding mining rewards.\n\nThe latest letter is one of a series of inquiries from Congress members that could be avoided if the IRS would be more explicit about cryptocurrency-related taxes. The revenue service is very dedicated to enforcing actions and investigations but has done very little to develop a comprehensive policy that would make it easy for cryptocurrency holders to comply with.\n\nInterestingly, on September 2, 2020, the same group of US lawmakers [sent](https://www.coindesk.com/lawmakers-blockchain-covid-relief) a letter to President Donald Trump and federal officials, urging the government to consider blockchain technologies in the fight against COVID-19. The group argued that blockchain could help authenticate individuals eligible for benefits, speed up supply chains, and develop a registry of medical professionals. \n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3MJ6UW2uvjD1ofEHnkWv9A/e4b77f82d55eac0e281a9109a6fc2101/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"30 Sep 2020","metaTitle":"Congressmen Ask IRS Not to Overtax PoS Validators | OTC Trade","metaDescription":"Congressmen believe that US taxpayers generating new cryptocurrency through staking should not be overtaxed by the IRS.","id":"5Cmr8gxzeEoKtq5uVNvxXE"},{"title":"What Is Proof of Stake and What Investors Should Know About It?","image":"https://images.ctfassets.net/4x910isj0ns2/6YTKoBb8P7cxqVFTdDLYNB/d9af2dead43590fc20ce26bb1880876c/Pos.jpg","description":"The interest in the Proof of Stake (PoS) consensus mechanism is increasing these days, especially thanks to [Ethereum’s transition](https://www.coindesk.com/ethereum-2-0-closer-than-ever-still-plenty-of-work-to-do) from the Proof of Work (PoW). Also, PoS blockchains enable token holders to benefit from passive income opportunities. On the other side, Bitcoin’s PoW can be profitable only for wealthy individuals and entities that can afford expensive ASIC machines.\n\nWhile the debate over which of the two is better is still ongoing, we’ll present the case for the PoS consensus mechanism, which is expected to experience a wider adoption in the future. We’d like to stress that we don’t want to minimize the attributes and contribution of the PoW, especially when it is the first and still the most trusted consensus algorithm. Despite everything, the crypto industry will bet on more scalable options, and the PoS and its variations have proven to be more flexible.\n\n## Why Do Blockchains Need a Consensus Mechanism?\n\nBlockchain – the most popular type of distributed ledger technology (DLT) – has been declared an exceptional innovation thanks to two imperative features: decentralization and immutability of records.\n\nA blockchain network, which is distributed globally, consists of so-called nodes, which are computers that store the entire history of records that is updating continually. It’s important to highlight that the nodes are all equal, i.e. there is no central authority to approve or reject transactions. Instead, all nodes update the ledger at the same time to add new transactions, and this has to be done based on a consensus mechanism. These predetermined rules of the consensus algorithm would organize the nodes in a transparent manner without undermining decentralization. In this way, the system has no single point of failure and isn’t governed by any single entity.\n\nThe blocks of any blockchain, which contain data about transactions or other operations, are always arranged chronologically. Thus, no existing block can ever be eliminated or tampered. There is only one way to update a blockchain – by adding new blocks. It is the responsibility of nodes themselves to add these new blocks based on the consensus mechanism that governs the system. The main function of this algorithm is to define which nodes can become eligible to generate new blocks – it represents a set of rules that explain how the nodes can become miners (in the case of PoW) or validators (in the case of PoS).\n\nThe consensus mechanism protects a blockchain network against malicious nodes that attempt to overpower the other nodes by triggering false transactions or distributed denial of service (DDoS) attacks.\n\n## Proof of Works vs Proof of Stake\n\nWhile the general goal of PoS and PoW is the same – to help nodes generate new blocks – the two consensus mechanisms are completely different.\n\nThe PoW is the first consensus algorithm used by a blockchain. The entity behind the pseudonym Satoshi Nakamoto presented Bitcoin in late 2008, but the concept of PoW [came in the 90s](https://link.springer.com/chapter/10.1007%2F978-0-387-35568-9_18) and was used to fight against junk mail, spams, and DDoS attacks. \n\nIn a nutshell, in a PoW blockchain, the nodes that seek to generate new blocks are called miners. Their goal is to get a reward in exchange for their effort – and in the case of Bitcoin, the effort is really considerable. The node that wants to become a miner and win the right to create the next block has to solve a complex mathematical puzzle which relates to the cryptographic value (hash) of the previous block. It cannot guess the result, so it has to employ more computing power – also called hash power – than competing nodes to solve the puzzle. Since the competition is fierce, miners use more and more sophisticated and expensive machines to have an edge on the rest.\n\nThe puzzle is meant to make it difficult for candidate miners to figure out the hash. Meanwhile, the rest of the nodes can verify the work conducted by the miner, hence the proof of work.\n\nBesides ensuring the decentralization and security of a blockchain network, the PoW mechanism also enables its deflationary model. In the case of Bitcoin, the maximum supply of coins is capped at 21 million. Until we reach that figure, the new coins are generated exclusively as rewards for miners.\n\nWhile Bitcoin’s PoW is really efficient at maintaining a high degree of security, it requires massive amounts of energy, given the high competition and the computing power involved. The website [Digiconomist](https://digiconomist.net/bitcoin-energy-consumption) displays the annual energy consumption to run Bitcoin.\n\nElsewhere, the PoS mechanism operates in a different way. The first PoS-based blockchain project came to address Bitcoin’s weaknesses, such as energy consumption and scalability. The algorithm was first [mentioned](https://bitcointalk.org/index.php?topic=27787.0) in 2011 on Bitcointalk. It was first adopted in 2012 by Peercoin, a project that mixed both consensus mechanisms.\n\nUnlike in PoW, there are no miners in a PoS-based blockchain, since all tokens are already created from the beginning. Instead, the validation process in a PoS network is referred to as ‘forging,’ while the nodes that create the new blocks are called validators. If a node wants to take part in the block creation process, it doesn’t need to spend on electricity or buy expensive hardware. Instead, it has to put the native token at stake – a process called staking. For this, the validator is rewarded in the native token as well.\n\nThe rules of PoS blockchains differ from case to case, but in general, nodes that seek to become validators have to lock up a minimum amount of tokens in a digital wallet. If you want to stake your tokens, you are not allowed to touch the funds during the process. Next, you will have to agree with other validators on which transactions must be included into the next block. It is similar to a game of guessing – it is like anticipating which block will be picked next by the protocol. If your block is selected, you’ll receive a proportion of the transaction fees, depending on your stake size. The more tokens you put at stake, the higher the potential reward.\n\nNevertheless, validators that try to cheat the network by letting in invalid transactions may lose part of their stake or all of it.\n\nHere are the main differences between PoS and PoW:\n\n- __Approach__ – in PoW blockchains, the circulating supply is gradually increasing due to miners, who compete for the new coins that come as rewards. Elsewhere, PoS networks don’t employ any puzzle as the tokens are created from the beginning. The validators are picked based on their stake.\n- __Energy Consumption__ – PoW blockchains require a lot of electricity and computing power, which doesn’t bode well in light of the pollution challenges. PoS is energy-efficient.\n- __Security__ – generally, PoW blockchains are considered to be more secure, especially considering that Bitcoin is the oldest cryptocurrency out there and hasn’t ever been tampered. Still, security depends very much on the level of adoption. The [recent 51% attack](https://blog.bitquery.io/attacker-stole-807k-etc-in-ethereum-classic-51-attack) on Ethereum Classic (ETC) demonstrates that even PoW algorithms are vulnerable. Elsewhere, PoS blockchains can be manipulated by those who can afford to buy the majority of tokens.\n- __Centralization__ – both systems are meant to encourage decentralization. Still, most blockchains that employ either of the two algorithms are controlled collectively by institutional entities that can invest in mining equipment or staking.\n- __Scalability__ – PoS blockchains are way more scalable, as they can have higher transaction throughput. This is the main reason why PoS was designed in the first place.\n\nAll in all, energy efficiency and scalability are the main factors that are driving many blockchain projects towards PoS or its variations like Delegated Proof of Stake (DPoS). Most of the DeFi projects, which are booming right now, are based on PoS protocols. Elsewhere, Ethereum itself is about to fork and move from PoW to fully adopt PoS. This shows that blockhains have been matured and need to handle much higher throughput, potentially thousands of transactions per second.\n\n## How Can Investors Benefit from PoS Blockchains?\n\nThose who are interested in alternative ways to earn a passive income should definitely look into PoS tokens. As for the size of potential rewards, it differs from case to case. Each blockchain network has its own rules on calculating staking rewards. PoS blockchain might take into account the following factors when deciding the rewards:\n\n- How many tokens the validator is staking;\n- For how long the validator has been stating the tokens;\n- How many tokens are staked in total;\n- The inflation rate of the token;\n\nOther blockchains have a simpler rewarding scheme and offer a fixed percentage.\n\nTo increase the chances of being rewarded, potential validators are gathering together in staking pools the same as miners form mining pools. A staking pool comprises token holders merging their resource to boost their probability of validating blocks and receiving rewards for doing so. The staking pool members share the rewards proportionally to their contributions.\n\nUnfortunately, many online services that brand themselves as staking pools are cheating contributors or share smaller rewards. If you want to take part in a staking pool, you should do some research and pick reliable services.\n\nOTCTrade.com is pleased to inform you that it will also provide staking services. This will be a great opportunity for investors who seek to earn generous returns.\n\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3KE1bbmwxCEWutch0Ep5tR/1cdfd5dfd21d54b4375a50153b30eec3/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"31 Aug 2020","metaTitle":"Crypto News | What You Need to Know About Proof of Stake | OTC Trade","metaDescription":"What is proof of stake? In this article, we explore everything an investor in cryptocurrency needs to know about proof of stake.. ","id":"222Wqp7oH4dEoHQblfTnhg"},{"title":"Whats The Fuss About Decentralized Finance (DeFi)?","image":"https://images.ctfassets.net/4x910isj0ns2/2D9uLfRYn9yglIlKByvfAu/92ec12d3740f37e33b6704df6e289021/image_3_.jpg","description":"The cryptocurrency space has experienced several major intra-industry trends that have shaped the eventual direction of the market. In 2017, we had the ICO (initial coin offering) frenzy. Then we saw the rise of stablecoins, security tokens, and decentralized applications (dApps).\n\nToday, despite the damaging effect of the coronavirus pandemic (or thanks to it), the crypto industry is hosting yet another wave of hype, at this time revolving around Decentralized Finance (DeFi). I bet many of you have heard this term and intuit its vague interpretation. However, you still don’t understand precisely what DeFi is about, do you?\n\n## What is DeFi, Really?\n\nTo put it simply, DeFi is a movement or trend that encourages the use of decentralized, blockchain-based networks and open-source software to host all types of financial products and services, including traditional ones – think about the issuance of money, payments, lending, trading, insurance, over-the-counter (OTC) trading, asset management, staking, and financial data, among others. In other words, it’s like moving banking services to blockchain and let the community manage those instead of governments and financial regulators.\n\nThe DeFi ecosystem comprises financial applications built on blockchain infrastructures. The financial dApps are developed on top of trustless networks like public blockchains and other peer-to-peer (P2P) systems.\n\nAt the current stage, the DeFi movement relies very much on Ethereum, which provides an open network that can be easily accessed by everyone. The key feature of Ethereum is the smart contract, which allows the development of dApps. For those unfamiliar, smart contracts are programs running on a blockchain network that can execute automatically when predetermined conditions are met. Thus, there is no need for a third-party like the bank or regulator to authorize transactions, sales, lending contracts, or any other financial deals between two or more parties.\n\nEthereum smart contracts are the engine of dApps. They allow developers to create advanced features and functionalities. DApps can employ isolated or a series of smart contracts to automate processes.\n\nEven though the proponents of DeFi solutions are often encouraging the same financial services that any bank provides, there are several key differences. First and foremost, the operations of DeFi projects and their rules are incorporated in the code or smart contract rather than being managed by institutions. There is little or no human involvement at all. The code or the smart contract is transparent and visible to anyone. Also, DeFi applications have no geographical boundaries, unlike banking services.\n\nAs of 2020, DeFi tokens are outperforming Bitcoin and any other altcoin. Some economists argue that DeFi will continue to play a key role in the financial sector, grabbing an important share of the traditional market. People will love DeFi applications because all they need to access the services is a smartphone. This is an enormous opportunity to expand the global economy, especially when the pandemic has greatly affected the markets.\n\nAt the moment, we can distinguish three key trends within the DeFi space:\n\n- Developing monetary banking services, such as issuing stablecoins.\n- Offering P2P lending and borrowing services on blockchain.\n- Creating advanced financial instruments such as tokenization platforms, decentralized exchanges, derivatives and predictions markets.\n\n## How Fast Is DeFi Growing?\n\nVery fast. According to [DeFi Pulse data](https://defipulse.com/), as of mid-August 2020, the total value locked in DeFi projects is worth almost $5 billion. At the beginning of July, that number was below $2 billion. A year ago, when DeFi Pulse started to publish its data, there was less than $300 million locked in DeFi networks. This resembles an exponential growth that already attracts a lot of investors, including institutional ones.\n\nUsers of DeFi services often have to lock some of their cryptocurrency funds, such as Ethereum, Bitcoin, or USDT as collateral in order to use the services. Judging by the dynamic of these locked funds, we can argue that DeFi is the fastest-growing sector within the crypto space.\n\nMakerDAO, a blockchain-based lending system fueled by several stablecoins, like Dai, accounts for over 30% of the DeFi sector, with more than $1.2 billion in value locked into MakerDAO.\n\nAs for the total market capitalization of DeFi projects, it is about to hit $12 billion soon, according to data from [defimarketcap.io](https://defimarketcap.io/). \n\nMany DeFi projects are attracting both [institutional](https://cointelegraph.com/news/institutional-investors-are-turning-their-attention-to-decentralized-finance) and retail investors thanks to their “yield farming” mechanism, which allows token holders to generate passive income. Yield farming, also known as liquidity mining, is a key incentive mechanism used by DeFi protocols to attract liquidity. To achieve this, DeFi projects issue so-called governance tokens, which give holders governance rights. In exchange, governance token holders are bringing liquidity to the network by locking in part of their crypto funds, like stablecoins, Ethereum or Bitcoin.\n\nThe total number of locked Ethereum surged to a record in July, according to a [ConsenSys report](https://f.hubspotusercontent10.net/hubfs/4795067/ConsenSys%20Q2%202020%20DeFi%20Report.pdf) discussing the DeFi performance in the second quarter of 2020:\n\n\n\nWe can also analyze the growth rate of the DeFi sector from another perspective. Most DeFi-related tokens have outperformed Bitcoin, potentially giving the start to the so-called altcoin season, as we explained in a [previous article](https://www.otctrade.com/blog/is-the-altcoin-season-here). Here are the returns of the most successful DeFi tokens compared to Bitcoin (blue line):\n\n\n\nWhile Bitcoin is up over 60% year-to-date (YTD), which is great, some DeFi tokens have increased in price by multiple times during the same period. Since most DeFi projects are based on Ethereum, the fresh hype bodes well for the second-largest cryptocurrency too, helping it to double in price since January.\n\nChris Burniske, partner at venture capital firm Placeholder, [tweeted](https://twitter.com/cburniske/status/1272532591674089472):\n\n> “If you think DeFi will have a smaller impact on ETH than ICOs, you aren't paying attention. The ICO boom showcased Ethereum's ability to perform one financial service: early-stage capital formation. DeFi will showcase Ethereum's ability to perform all financial services.”\n\nHowever, the best-performing major token is LINK, which fuels the Chainlink project. As you can see in the chart, LINK has surged over 2,200% YTD. As of mid-August, it is the fifth-largest cryptocurrency by market cap, after Bitcoin, Ethereum, Ripple, and USDT. It was on the 18th place at the beginning of the year.\n\nAs we previously explained, Chainlink is a decentralized oracle network that enables the secure exchange of blockchain data, which allows smart contracts to reach their full potential. Businesses and individuals that choose to run Chainlink nodes, known as oracles, feed data from the outside world into the Chainlink’s smart contracts, and that empowers multiple DeFi applications. To become an oracle, each node has to stake a certain amount of LINK. Oracles are rewarded with LINK for sharing relevant data, though they can also be penalized for any inaccurate information. While Chainlink is not necessarily a DeFi project per se, it directly benefits from the movement.\n\nOther successful DeFi projects are Compound (which is often considered responsible for stimulating the DeFi frenzy in June), Aave, Synthetix network, Elrond, and Kyber Network, among others.\n\n## DeFi Challenges\n\nWhile crypto enthusiasts are dreaming of a decentralized financial market, there are still many challenges to overcome, especially in terms of security and on the regulatory side. Applications that are 100% decentralized are often unwelcomed by regulators, who are concerned about fraudulent transactions and money laundering.\n\nAt the moment, only custodial wallets can be easily supervised thanks to their standard KYC/AML procedures.\n\nJulian Sawyer, head of Europe at crypto exchange Gemini, told Decrypt that it would be difficult for DeFi projects to build the trust it requires to go mainstream without developing bridges to traditional institutions and working with regulators. He [said](https://decrypt.co/36617/is-ethereums-defi-boom-sustainable-in-the-long-term):\n\n> “While the banking and finance system is not perfect, it works for consumers, retailers, corporations and governments because it is underpinned by standards, processes, and controls that everyone can trust.”\n\nHowever, traditional institutions shouldn’t ignore the DeFi boom as well. Tech giant IBM is helping financial institutions capitalize on the new DeFi trend. Nitin Gaur, director of IBM financial services and digital assets, told Cointelegraph that banks should make an effort to understand and even embrace DeFi space. Otherwise, the emerging sector might disrupt their entire business model at some point. Gaur [explained](https://cointelegraph.com/news/ibm-executive-reveals-plans-to-help-banks-capitalize-on-defi):\n\n> “I think that the financial institutions should understand it because it has the potential to eventually sort of take over and subside the business elements of existing business models. And that's one reason why a bank should do it.”\n\nAs for the sustainability of the DeFi boom, it is likely that some projects would eventually fail, but it’s too early to label this growing industry as a bubble. The total market capitalization of DeFi is still infinitesimal compared to the entire cryptocurrency market.\n\nThe DeFi space must address several major risks, including security risks such as system failure, hacking, and in some cases, regulatory compliance.\n\nFor example, in March, a hacker [managed to steal](https://blog.coinbase.com/around-the-block-analysis-on-the-bzx-attack-defi-vulnerabilities-the-state-of-debit-cards-in-1289f7f77137) ETH worth thousands of USD by attacking the bZx protocol. BZx is a DeFi platform that offers tokenized borrow/lend and margin trading services.\n\nRichard Ma, co-founder and CEO of blockchain security startup Quantstamp, [revealed](https://cointelegraph.com/news/security-is-the-biggest-challenge-for-defis-continued-growth-says-exe) that $26 million worth of funds were stolen from DeFi platforms in 2020 alone. He stressed that security remained a challenge.\n\nStill, DeFi is at an emerging stage, so there is nothing unusual about experiencing major challenges. Every fast-growing market is facing problems that can eventually stimulate it and make it more resilient. The key thing to consider is that DeFi has a robust framework and an incredible potential to transform the financial world as we know it.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/6HC9qN9KlhDdCLEJUlfKhu/f4f12832fb4d62c62643ad5f01684e42/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"21 Aug 2020","metaTitle":"Crypto News | What's the Fuss About DeFi? | OTC Trade ","metaDescription":"Dive into DeFi, decentrailized finance, and learn why it's creating another wave of hype in the crypto world. ","metaKeywords":"DeFi\ndecentralized finance","id":"2whhZEh1tuQIrvdKgTvP3w"},{"title":"MicroStrategy Becomes First Public Company to Buy Bitcoin for Capital Allocation, Invests $250M","image":"https://images.ctfassets.net/4x910isj0ns2/rVHNkARA2RSr1bDwSuG6H/9de565b28358ce9a864e951584130640/bitcoin-2007912_1920.jpg","description":"MicroStrategy, which brands itself as the largest independent publicly-traded business intelligence company, announced on August 11, 2020, that it had purchased 21,454 Bitcoin worth about $250 million, including fees and expenses. The purchase was part of the company’s capital allocation strategy, which was announced when it released the Q2 results at the end of July.\n\nSo far, MicroStrategy, which is listed on Nasdaq with the ticker MSTR, is the only publicly-traded company that decided to buy Bitcoin as part of its capital allocation strategy.\n\nMicroStrategy CEO and co-founder Michael J. Saylor [commented](https://www.microstrategy.com/us/company/press/microstrategy-adopts-bitcoin-as-primary-treasury-reserve-asset):\n\n> “Our investment in Bitcoin is part of our new capital allocation strategy, which seeks to maximize long-term value for our shareholders. This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”\n\nHe added that MicroStrategy regarded Bitcoin as a legitimate investment asset that can be superior to fiat money. Thus, there is nothing unusual about the company’s move to make the cryptocurrency the principal holding in its treasury reserve strategy.\n\nFor those unfamiliar, capital allocation is a process in which the company distributes its financial resources to increase its efficiency in the long-term, maximize profits, and ensure financial stability. The decisions regarding the capital allocation strategy are made by the company’s CEO, board, and management.\n\nThe stock price of MicroStrategy surged 15% following the announcement – from $124 to $142. At the time of writing as of mid-August, the stock price is fluctuating at around $146.6, suggesting that investors welcomed the company’s plan to use Bitcoin for hedging against inflation.\n\n\n\nWhile MicroStrategy hasn’t revealed how it had purchased over 21,000 Bitcoin, it is very likely that the company used the services of an over-the-counter (OTC) trading desk, given that such large transactions are usually carried out on OTC platforms. Still, a company spokesperson [told](https://www.theblockcrypto.com/linked/74534/microstrategy-becomes-first-listed-company-to-buy-bitcoin) The Block: “We don't share the logistics involved in making our BTC transactions.”\n\n## Bitcoin Can Be a Great Hedge Against Devaluing Fiat Currencies\n\nSaylor revealed that the company had spent months assessing the best investment options for the capital allocation strategy. The inclination towards Bitcoin was influenced by a confluence of macro factors that have to do with the economic landscape which, according to Saylor, is generating risks for the company’s treasury program. He cited the economic crisis caused by the COVID-19 pandemic, unprecedented stimulus promoted by governments and central banks, and global political and economic uncertainty. As per Saylor, these factors might have a depreciating effect on the long-term value of fiat currencies and many other traditional assets.\n\nMicroStrategy distinguished several properties of Bitcoin that made it the ideal investment option for hedging against inflation and also generating a higher return compared to other assets.\n\nSaylor stated:\n\n> “We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility, and community ethos of Bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value.”\n\nHe pointed out that Bitcoin is digital gold. It is harder, faster, stronger, and smarter than any money that has preceded it.\n\nIndeed, more and more investors are regarded Bitcoin as a refuge against inflation. In a previous article, we [reported](https://www.otctrade.com/blog/btc,-gold-rallying-amid-failing-global-economy,-dovish-stance) how the cryptocurrency was rallying along with gold, with some major investment banks even picking Bitcoin over the metal.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/3MJ6UW2uvjD1ofEHnkWv9A/e4b77f82d55eac0e281a9109a6fc2101/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"18 Aug 2020","metaTitle":"MicroStrategy Buys Bitcoin for Capital Allocation | OTC Trade","metaDescription":"MicroStrategy becomes the first publicly traded company to buy bitcoin for capital allocation. The company invested $250 million. ","metaKeywords":"microstrategy\nbuy bitcoin","id":"4bq54h9Y07JlrP5aJKSJn0"},{"title":"Cryptocurrencies Will Put an End to Fiat Money, Here Is How It Will Happen","image":"https://images.ctfassets.net/4x910isj0ns2/5UUsTBvqe18mr9Dc2fLZbU/90e0967712ee09171c4fcf4019c27098/dollar-4932316_1920.jpg","description":"When the mysterious entity under pseudonym Satoshi Nakamoto presented the Bitcoin whitepaper, no-one anticipated that this new virtual currency would jump-start an entire industry and blockchain-powered currencies would replace fiat money. But that’s what seems to be happening.\n\nBelieve it or not, if you’re getting into cryptocurrencies today, you’re actually an early adopter, because it becomes clear that the national currencies as we know them will disappear sooner than everyone expects.\n\nHowever, does it mean that the upcoming form of national currencies will be decentralized and allow anonymous transactions? Not at all, because most of them will rely on permissioned blockchains – we’ll discuss this aspect later.\n\nBut first, let me show you that these daring statements are not baseless - big players of the financial world do see it coming. In a way, Bitcoin will partially achieve what Satoshi dreamed of – it will change the banking system entirely. But, as you’ll see, those at the top have been already preparing to make this transition in their favor, so don’t rush to open the champagne.\n\nAt the end of last year, Deutsche Bank released the [Imagine 2030 report](https://www.dbresearch.com/PROD/RPS_EN-PROD/PROD0000000000503196/Imagine_2030.pdf), predicting that cryptocurrencies would replace fiat money by 2030. Yes, for many, the countdown has already started.\n\nDeutsche envisions an ongoing battle between capital and labor, saying that the aging population and low labor costs would trigger more inflation, as central bankers would try to satisfy the labour force seeking a higher share of GDP. Eventually, inflation would destabilize the financial system and would force people to consider alternative currencies, including cryptocurrencies. The bank said:\n\n> “The forces that have held the current fiat system together now look fragile and they could unravel in the 2020s. If so, that will start to lead to a backlash against fiat money and demand for alternative currencies, such as gold or crypto could soar.”\n\nDeutsche’s macro strategist Marion Laboure, who is also an associate of the department of economics at Harvard University, said that cryptocurrencies used to be additions rather than substitutes to the inventory of money, but that would soon change. Crypto’s benefits, including speed, security, minimum fees, and ease of storage would propel them to the top.\n\nBut before they run the show, cryptocurrencies must overcome three main hurdles, Laboure said, citing the following targets:\n\n- Cryptos must look legitimate in the eyes of governments.\n- Cryptocurrencies must achieve price stability.\n- They must access the payment market. Thus, key stakeholders, like Apple Pay, Google Pay, Visa, Mastercard, and Amazon must integrate cryptocurrencies.\n\n> “If these challenges can be overcome, the eventual future of cash is at risk,” the report reads.\n\n## IMF Advocates Digitalization of Money\n\nDeutsche Bank is nothing more than a major player of the financial system and you may not listen to them, but what about the International Monetary Fund (IMF)? Last year, European Central Bank President Christine Lagarde, who was IMF’s Chief at the time, [hinted](https://fee.org/articles/imf-head-predicts-the-end-of-banking-and-the-triumph-of-cryptocurrency/) in a speech delivered at a Bank of England conference that the future of cryptocurrency resembles the present of the Internet itself. In other words, digital currencies will be omnipresent. She said that cryptocurrencies could challenge the monopolies of national currencies, displace central banks, and even end “the fractional banking model we know today.”\n\nNote that while Lagarde is well-known for her open-mindedness in regards to cryptos, it is not only about her personal opinion. The IMF as an organization is driving the adoption of so-called Central Bank Digital Currencies (CBDCs), which represents blockchain-based currencies issued by central banks. At the end of June 2020, the IMF [released](https://www.imf.org/en/Publications/WP/Issues/2020/06/26/A-Survey-of-Research-on-Retail-Central-Bank-Digital-Currency-49517) a survey of research on retail CBDC, i.e. central bank digital currency used by the general public rather than commercial banks only. The international fund concluded that some central banks would need to change the regulatory framework:\n\n> “Some central banks may find that their governance frameworks need amending to accommodate CBDC issuance (addressing objectives and functions, technical requirements, internal organization requirements, and arrangements for transparency and accountability). Regulatory and supervisory frameworks may also need amending to cover new roles and players.”\n\nInterestingly, the IMF cautioned the Marshall Islands when they started to develop their own cryptocurrency called [SOV](https://sov.foundation/). \n\n> “IMF Directors encouraged the authorities to be cautious about issuing a decentralized digital currency as a second legal tender and carefully consider the macroeconomic and financial stability risks. They noted that the potential benefits from revenue gains could be considerably smaller than the potential costs arising from economic, reputational, and governance risks. Directors commended the progress made in addressing correspondent banking relations risks.”\n\nThe blockchain-based unit could become a precedent by challenging the US dollar hegemony on the islands. However, the international body openly [advocated](https://www.imf.org/en/News/Articles/2018/11/13/sp111418-winds-of-change-the-case-for-new-digital-currency) CBDCs in developed countries. \n\n## If You Can’t Beat Them, Join Them: How Central Banks Are Pushing CBDCs\n\nIn the past, governments pointed the finger at cryptocurrencies, citing their volatility and associating them to criminal activities, even though [80% of USD cash](https://edition.cnn.com/2017/06/26/health/atm-dirty-cash-partner/index.html) carries cocaine. However, there is a form of digital currency that addresses the volatility issue – it’s the stablecoin. For those unfamiliar, a stablecoin is a blockchain-based cryptocurrency designed to reduce price volatility relative to a given asset, e.g., US dollar, euro or gold. Besides eliminating volatility, stablecoin issuers can also implement KYC practices to supervise all transactions.\n\nStablecoins had their own moment of glory in 2018-2019, when Tether’s USDT saw its market cap surging while other players developed new such tokens, most of which were pegged to the US dollar. In fact, USDT has managed to expand to this day. Currently, it is the fourth largest cryptocurrency by market capitalization, behind only Bitcoin, Ethereum, and Ripple. \n\nHowever, there was one particular stablecoin that got all the attention – it was Facebook’s Libra. To be more accurate, the social media giant hasn’t actually managed to launch its digital currency yet because it has faced massive pressure from governments and regulators worldwide. \n\nEven though the deployment of Libra has been delayed, the project has scared governments and financial institutions, pushing central banks to come up with their own version of digital currency – the CBDC. Governments feared that Facebook, with a 2.5 billion user base, would [threaten](https://www.ft.com/content/bf2f588e-ef63-11e9-a55a-30afa498db1b) their financial stability. \n\nAs of today, all major central bankers are experimenting with CBDCs, some of them under the guidance of the Bank for International Settlement (BIS) itself.\n\nIn August 2019, the BIS [released](https://www.bis.org/events/confresearchnetwork1909/brunnermeier_2.pdf) a paper titled “The Digitalization of Money,” in which it envisions a future where private money could prevail if not CBDCs. The document reads:\n\n> “In a digital economy, cash may effectively disappear, and payments may center around social and economic platforms rather than banks’ credit provision, weakening the traditional trans-mission channels of monetary policy. Governments may need to offer central bank digital currency (CBDC) in order to retain monetary independence.”\n\nThe introduction of CBDCs will likely accelerate during the Covid-19 pandemic. Here are some key events showing how central banks are rushing to deploy own digital currencies:\n\n- In January 2020, the European Central Bank (ECB), the Bank of England (BoE), the Bank of Japan (BoJ), the Bank of Canada (BoC), Sveriges Riksbank (central bank of Sweden), and the National Swiss Bank have [created a think tank ](https://www.bankofcanada.ca/2020/01/central-bank-working-group-cbdc/)to trial CBDCs and potentially work towards issuing sovereign digital currencies. The group is collaborating with the BIS.\n- In July 2020, the Bank of Japan, which is part of the CBDC think tank, [said](https://www.reuters.com/article/us-japan-economy-boj-cbdc/boj-creates-new-team-to-look-into-central-bank-digital-currencies-idUSKCN24L03I) that it had created a separate team to analyze CBDCs given that the narrative of a cashless society is getting more credit nowadays. The team reports directly to BoJ’s payment and settlement systems department.\n- China is [also issuing](https://www.ledgerinsights.com/china-ready-central-bank-digital-currency-cbdc/) its own version of digital currency. While it’s considered to be the most advanced nation in terms of CBDC adoption, its new digital currency doesn’t reside on a blockchain at all and is totally centralized. Commonly referred to as DCEP (from Digital Currency, Electronic Payment), the new form of currency will be backed by the People’s Bank of China’s (PBOC) deposits from commercial banks.\nIt’s worth mentioning that China has been working on the electronic payment system since 2014. It [accelerated](https://cointelegraph.com/news/chinas-cbdc-adoption-plan-puts-domestic-monetary-control-at-forefront) the development of the digital Yuan after Facebook made the headlines with Libra.\n- It doesn’t take a rocket scientist to realize that the US doesn’t want to be left behind from this major trend, even though the Federal Reserve has always had a conservative approach to matters until it experimented with quantitative easing in 2008.\nIn March, the Democrats in both the Congress and Senate [released](https://www.coindesk.com/how-a-flurry-of-digital-dollar-proposals-made-it-to-congress) draft bills for coronavirus stimulus that encouraged the use of a digital dollar.\nAt the end of June 2020, the US Senate Banking Committee held a hearing on the potential digital dollar. During the discussions, Senator Tom Cotton (R-Ark.) [reportedly](https://www.forbes.com/sites/tatianakoffman/2020/07/01/senate-moves-closer-to-digital-dollar/#2b94b54a7279) said:\n*“The U.S. needs a digital dollar…The U.S. dollar has to keep earning that place in the global payments system. It has to be better than bitcoin … it has to be better than a digital yuan.”*\nChris Giancarlo – former head of the Commodity Futures Trading Commission (CFTC) – also took part at the hearing as the head of the [Digital Dollar Project](https://www.digitaldollarproject.org/). He listed the “social and national” benefits of a digital dollar, such as speed, lower costs and financial inclusion.\nThe Digital Dollar Project is backed by Accenture and the Digital Dollar Foundation – a nonprofit led by Giancarlo himself.\nBy the end of July 2020, the Senate Banking Subcommittee on Economic Policy held a second and a third hearing touching upon the digital dollar. The title of the [third meeting](https://www.banking.senate.gov/hearings/us-china-winning-the-economic-competition) is suggestive: ‘US-China: Winning the Economic Competition.’\nIt remains to be seen how the US will deploy its digital dollar and whether it will involve the Fed at all. If the Fed loses its power over an upcoming dollar stablecoin, then we’ll experience some historical shifts. Giancarlo [told](https://www.forbes.com/sites/jasonbrett/2020/07/21/as-china-pilots-new-digital-renminbi-congress-to-hear-proposed-digital-dollar-response/#8d4f7af4fb27) Forbes:\n\n> “The digital tokenization of money is happening across the globe and will continue to accelerate whether the Federal Reserve gets involved or not.”\n\nAll in all, we are very close to receiving salaries and making routine payments in CBDCs. According to a pre-COVID [survey](https://www.bis.org/publ/bppdf/bispap107.pdf) by the BIS, 80% of central banks were exploring CBDCs. Half of those involved were only at the conceptual research phase, 40% were conducting experiments, and 10% were already trialing CBDCs. The latter group included the central banks of emerging markets only.\n\nAt the end of June 2020, the BIS found that the sentiment around CBDCs has become more bullish since the beginning of this year. This might have to do with the challenges underscored by the pandemic. The BIS measured the speeches referring to CBDCs positively or negatively.\n\n\n\nSource: https://www.bis.org/publ/arpdf/ar2020e3.pdf\n\n## Private Sector Leaders Adopt Existing Crypto-Assets\n\nWhile central banks will gradually develop different versions of CBDCs, private companies – especially those operating in payments, retail, and financial industries – are accelerating the adoption of existing cryptocurrencies, including those that rely on public blockchains.\n\nDo you remember when Marion Laboure mentioned the three key hurdles in cryptocurrency adoption? The first two ones – price stability and government endorsement – are already being overcome with the adoption of stablecoins and CBDCs. Governments in developed countries no longer regard cryptos as a major threat. Nevertheless, there is the last third challenge: as per Laboure, cryptocurrencies have to reach the payment market. This is happening right now:\n\n- In March 2020, Google Pay [integrated](https://blog.coinbase.com/you-can-now-use-coinbase-card-with-google-pay-19ef7706cfd4) the Coinbase Card. Thanks to the integration, Android users can add their Coinbase Card to Google Pay wallets and make mobile payments with their crypto balances. The option is now available in the UK and several other European countries and will expand soon. Coinbase Card users are able to pay with Bitcoin, Ether, Bitcoin Cash, Litecoin, etc. to make daily purchases. \n- At the end of June 2020, fintech giant PayPal reportedly was preparing to offer direct sales of cryptocurrencies to a portion of its client base, which counts over 325 million users. PayPal confirmed its intention to provide cryptocurrency-related services [in a letter to](https://www.ledgerinsights.com/wp-content/uploads/2020/07/F509332-2020_March_-_PayPal_response_to_EC_consultation_crypto-assets.pdf) the European Commission. The document reads:\n*“The crypto-asset industry has experienced substantial growth over the past few years. As such, Paypal is continuously monitoring and evaluating global developments in the crypto and blockchain/distributed ledger space.”*\nOn a side note, PayPal initially applied to become part of the Libra consortium but then left the project.\nNow the payment service is separately working to provide cryptocurrency solutions, and apparently [picked Paxos](https://www.coindesk.com/paypal-picks-paxos-to-supply-crypto-for-new-service-sources-say) to handle the supply of digital currencies. Speaking about Paxos, it launched Paxos Crypto Brokerage in mid-July and announced that its first customer was Revolut US. \nStill, at the time of writing, there is no official announcement from PayPal or Paxos about their rumored partnership.\nIn mid-July 2020, Mastercard [said](https://www.businesswire.com/news/home/20200720005148/en/Mastercard-Accelerates-Crypto-Card-Partner-Program-Making) it was expanding its cryptocurrency card program, encouraging crypto firms to apply to become partners. The company is making it easier for crypto card issuers to access its Accelerate program, enabling applicants to be onboarded within several weeks.\nTwo days after MasterCard’s announcement, Visa [said](https://usa.visa.com/visa-everywhere/blog/bdp/2020/07/21/advancing-our-approach-1595302085970.html) that it was advancing its approach to digital currencies. Previously, Visa [had filed for](http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PG01&p=1&u=/netahtml/PTO/srchnum.html&r=1&f=G&l=50&s1=20200151682.PGNR.) a cryptocurrency system patent whose goal is to replace physical cash. It will leverage blockchain and rely on both central banks and commercial banks.\n\nThese are only a few examples of how cryptocurrency is rapidly going mainstream today. A recent [letter](https://www.occ.gov/topics/charters-and-licensing/interpretations-and-actions/2020/int1170.pdf) released by the US Office of the Comptroller of the Currency (OCC) confirms that Federal banks can now provide crypto custody services, which hopefully will increase the pace of adoption.\n\n## The Final Battle: Private Digital Currencies Vs CBDCs\n\nYou may argue that there should be no battle whatsoever between traditional cryptocurrencies and CBDCs since both of them rely on distributed ledger technology (DLT). However, these two forms of assets are fundamentally different. While they’ll co-exist for a while, governments would likely try to promote CBDCs as better versions of digital currencies, discouraging the development of private cryptocurrencies. They already did it with Libra.\n\nFirst of all, CBDCs will reside on permissioned blockchains, which are centralized networks run by a group of entities who reach consensus between themselves. For example, if the US Fed would choose to deploy a digital dollar, the ledger would be distributed among the 12 Federal Reserve Banks and the Board of Governors. No other entity would be allowed to validate or block transactions, while digital dollar holders would not have any decision-making power. This is different from public blockchains like Bitcoin, where everyone has a say in how the network works.\n\nAnother issue is that all CBDCs will make it possible to track people’s transactions, spending habits, and even anticipate their behavior, which would be the Holy Grail for government-backed intelligence agencies (on top of [Google](https://qz.com/1145669/googles-true-origin-partly-lies-in-cia-and-nsa-research-grants-for-mass-surveillance/) and Facebook). China may integrate its digital currency system into the draconian [social credit system](https://www.wired.co.uk/article/china-social-credit-system-explained), which ranks people based on their behavior. In other words, CBDCs would pose a risk to people’s freedom. Elsewhere, private cryptocurrencies like Bitcoin enable a degree of anonymity and are not governed by anyone. \n\nCentral banks are already promoting their upcoming CBDCs as something much better than crypto assets. The Bank of England admitted that CBDCs and cryptocurrency are fundamentally different, [saying](https://www.bankofengland.co.uk/research/digital-currencies):\n\n> “Our Financial Policy Committee has assessed cryptoassets and concluded that they do not currently pose a risk to monetary or financial stability in the UK. However, cryptoassets do pose risks to investors and anyone buying cryptoassets should be prepared to lose all their money.”\n\nIn summary, the most likely scenario is that cryptocurrencies, stablecoins, and tokens issued by fintechs and enterprises will co-exist with CBDCs, though fiat money will disappear. Institutional investors who bet on public coins (like Bitcoin and Ethereum) might efficiently hedge against governments since their CBDCs will likely fail to address inflation risks. \n\nHere is how cryptocurrencies are replacing fiat money step-by-step:\n\n- Bitcoin was the starting point of the rapidly growing cryptocurrency industry. Thousands of blockchain-based coins and tokens have been created for various purposes. People have shown an increasing interest in cryptocurrencies and the underlying technology, adopting blockchain for multiple use cases. Many stablecoins and other tokens have been created specifically to be used as means of payments. \n- Central banks realized that they couldn’t stop this new trend, so they are promoting CBDCs as a better alternative. Ultimately, they will favor their digital currencies instead of fiat cash, as the former is much easier to control. Governments and central banks will cite money laundering and other risks to encourage the use of CBDCs. \n- In parallel, retail giants like Amazon and other private companies may launch their own tokens (for example, Facebook is planning Libra) or accept existing cryptocurrencies. The adoption of private cryptocurrencies would speed up the substitution of fiat money. \n- In the end, CBDCs will coexist with private cryptocurrencies while fiat currencies will lose dominance to the point where nobody will use them anymore. \n","author":"Anatol Antonovici","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"07 Aug 2020","metaTitle":"OTC Desk | Cryptocurrency Will End Fiat Money | OTC Trade","metaDescription":"Will cryptocurrency put an end to fiat money? As the structures that support fiat fall, OTC crypto trade is likely to rise.","id":"10Aw0rThfYb4S3N7lsjhs0","authorPhoto":""},{"title":"BTC, Gold Rallying Amid Failing Global Economy, Dovish Stance","image":"https://images.ctfassets.net/4x910isj0ns2/54OUQCNtlXo6RhRj9rpGac/3046ad57f27112e3017b3411a301ea9b/coin-5282271_1920.jpg","description":"At the end of July, Bitcoin broke above a key resistance line of a downtrend that started at the all-time high back in 2017. For many technical analysts, the recent rally points to a trend reversal that may push Bitcoin prices to fresh record peaks in the next few months. \n\nWhile it’s often difficult to identify relevant fundamentals backing the cryptocurrency’s moves, it seems that this time Bitcoin has leveraged its safe-haven status – the one that couldn’t save it from the mid-March collapse. The arguments for this kind of premise are even stronger considering that gold and silver – two well-known safe havens – have also rallied at the end of July.\n\nInvestors are assessing the damage caused by the COVID-19 pandemic and the lockdown rules that came with it. Besides the economic recession, the aggressive stimulus measures from governments and central bankers pushed interest rates to record lows, weighing on the purchasing power of national currencies. The USD’s world reserve currency status is shaking as investors are seeking reliable refuges.\n\nPolitical tensions inside the US and the worsening Sino-US conflict are rubbing salt in the wound. \n\nBitcoin and gold are winners in these circumstances. The metal has initially broken above the highest level in nine years and then set the all-time high on August 3 at 1,997.00.\n\nStill, the cryptocurrency has outperformed gold both year-to-date and in July. Bitcoin hit $12,000 on August 2 and then retreated to the current level near $11,140 as of August 4.\n\n\n\nhttps://tvc-invdn-com.akamaized.net/data/tvc_2032ac182036753855888bb57f2ff32a.png\n\n## Major Investment Bank Picks Bitcoin Over Gold\n\nInterestingly, despite gold’s impressive rally that has helped it get so much closer to the psychological level of $2,000, a senior analyst at a major investment bank and asset manager said that Bitcoin would be the right choice as of now. Ari Wald, head of technical analysis at Oppenheimer, [told](https://www.cnbc.com/2020/07/28/bitcoin-prices-oppenheimer-highlights-bullish-trend-in-charts.html) CNBC:\n\n> “We’ve been recommending gold as a way to play the expansion of the [Federal Reserve’s] balance sheet. It’s actually the high momentum commodity, it ranks highest above all commodities out there in terms of momentum.”\n\nStill, Wald added:\n\n> “We do recommend sticking with it but I think it’s worthwhile to highlight bitcoin instead which isn’t as extended.”\n\nHe explained that Bitcoin’s major breakout might push it much higher, as the cryptocurrency has more room for growth until it updates the all-time high established at the end of 2017.\n\n> “Bitcoin is reversing its downtrend dating back to its 2017 peak. If you are a long-term holder, this is the type of action you’d like to see,” Wald noted.\n\n\nhttps://www.tradingview.com/x/9Zi6phT1/\n\nMeanwhile, the US dollar index, which tracks the greenback against six other fiat currencies, has dropped below 93.5, which is the lowest level since May 2018. \n\nInvestors are dumping the American currency as the Fed has no choice than to keep interest rates close to zero and continue to support the economy by injecting more cash. Besides this, the dollar cannot handle the pressure from worsening Sino-US tensions, the US election scheduled for November, and increasing fears of a second wave of the COVID-19 pandemic.\n\nQi Gao, a currency strategist at Scotiabank, [told](https://www.ft.com/content/9d9fa97c-154f-46fb-affd-51f45a0de08a) the Financial Times:\n\n> “In the coming weeks you’ll see the dollar weakening further.”\n\n## Billionaire Michael Novogratz Predicts $20K for BTC by End of Year \n\nMichael Novogratz, founder and CEO of crypto-oriented asset manager Galaxy Digital, [told](https://www.cnbc.com/2020/07/28/michael-novogratz-says-bitcoin-and-gold-will-keep-climbing-because-of-global-liquidity-pump.html) CNBC that he saw Bitcoin hitting $14,000 in the next three months. The cryptocurrency could reach $20,000 by the end of 2020. Gold would rise as well, he said, as long as the government's \"liquidity pump\" continues. He said:\n\n> “Great bubbles usually end with policy moves. It doesn't look like the Fed is going to raise rates… The liquidity story isn't going to go away. We're going to get a big stimulus.”\n\nGoldman Sachs [has recently upgraded](https://markets.businessinsider.com/news/stocks/goldman-sachs-raises-12-month-gold-forecast-2300-per-ounce-2020-7-1029437936) its outlook for gold. Now the banking giant expects the metal to surge over 20% and reach $2,300 per ounce in the next 12 months, citing concerns of USD’s weakening status as a world reserve currency.\n\nAll in all, safe-havens are getting traction amid the worst recession in decades, as the global economy has failed to demonstrate a V-shaped recovery.\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/66u1st83VbZhtmdb6XvMUh/5501db6bfbe02e3a80769f4e9323d264/001.jpg","date":"05 Aug 2020","metaTitle":"Crypto News | Bitcoin, Gold Rise During COVID-19 | OTC Trade","metaDescription":"As many industries struggle during the COVID-19 pandemic, BTC, other cryptocurrency options and gold are on the rise. ","id":"4auAtRvmfTgMfmyn6x0AHl"},{"title":"Bitcoin Price Predictions for 2020","image":"https://images.ctfassets.net/4x910isj0ns2/31hrvi6m5SYz2qzDeWDPGq/eceabc9997e7b32599dadf20e2979ea4/man-3126802_1920.jpg","description":"Probably defeating world chess champion Magnus Carlsen is easier than making an accurate prediction for the Bitcoin price, but that’s what everyone does nowadays. Nevertheless, forecasts are needed to understand the health of the market and see if crypto influencers have their feet on the ground.\n\nBitcoin has been around for only about a decade, and everything about it is so atypical that it seems it had been brought to us by sophisticated aliens or time-travelers. Obviously, valuing such an asset is challenging, and there is a lot of debate about how we should approach its valuation. Traditional economics laws provide reliable factors to consider, such supply/demand ratio, level of adoption, utility, and cost of production. \n\nHere, we’ll go through the most popular Bitcoin predictions for 2020. Even though the discrepancies are wider than black holes, we hope to get a general picture of what to expect this year. \n\nAt the time of writing, Bitcoin is trading at around $9,200 as of mid-July. The cryptocurrency has been trading between $9k and $10k since mid-May when it finally managed to return to pre-COVID levels after a shocking nosedive in March. In June, the volatility level of Bitcoin has dropped to the lowest level since October 2019, suggesting that the market has calmed down for now and is in “wait and see” mode.\n\n\nSource: [https://www.buybitcoinworldwide.com/volatility-index/](https://www.buybitcoinworldwide.com/volatility-index/)\n\nSo what will happen after Bitcoin decides to break some resistance or support level? How will the cryptocurrency meet the New Year?\n## Bitcoin – the Bear Case\nThe chances are that when you’re asked to choose between good news and bad news, you pick the latter – at least that’s what the [statistics](https://www.nationalgeographic.com/news/2013/11/131115-good-news-bad-news-diagnosis-doctors-psychology-science/) say. Well, let’s start with the bear case for the cryptocurrency.\n\nAt the end of June, Bitcoin miners transferred large amounts of their cryptocurrency directly to their wallets. Glassnode said that they noticed about 3,000 Bitcoin moving from miners to crypto exchanges.\nhttps://twitter.com/glassnode/status/1275766875121766401\n\nIt is likely that even more Bitcoin was transferred through over-the-counter (OTC) platforms. The point is that whenever miners choose to move their crypto funds to crypto exchanges, that’s a bearish signal that suggests they want to cash out – probably anticipating a decline in the price.\n\nIn the past, such large-scale transactions from miners to crypto exchanges preceded persistent downtrends, some of which triggered bear cycles. However, that doesn’t mean this time will be the same.\nAccording to Skew, which analyzes Bitcoin derivatives data, the cryptocurrency has only a 5% chance to update the all-time high by the end of December. What’s even more worrying for bulls, Skew says it has a 90% chance to trade at around $3,000 by the end of the year, suggesting a 60% price decline within the next six months.\n\n\n\nSkew explores crypto derivative exchange data to assess variables such as market sentiment, trading volume, open interest, and more.\nAs I said earlier, predicting the price of Bitcoin is not an easy job. Thus, despite Skew’s 90% probability, it doesn’t necessarily mean that we’ll see the price that low.\n## The Bullish Scenario for Bitcoin\nAt any given moment, the group of bulls and believers is way more dominant within the crypto community, even when the cryptocurrency has its bad days.\n\nFirst of all, some crypto analysts admit that we might go back to the $6,000 level, but they argue that it’s part of the bullish long-term plan, which needs a healthy correction.\nhttps://twitter.com/TheTradingTramp/status/1276433428091633665\nIn June, the [latest edition](https://cryptoresearch.report/wp-content/uploads/2020/06/Crypto-Research-Report-June-2020-ENG.pdf) of the Crypto Research Report (CRR) gave several predictions for cryptocurrencies, including Bitcoin. The 10th publication relied on a valuation model known as “equation of exchange.” CRR authors explained that this was an absolute valuation approach “inspired by Mill’s equation of exchange, later formulated by Irving Fisher.”\n\n> “In this model, the percentage of the total addressable market (TAM) can be used to estimate a crypto asset’s implied future price,” the report reads.\nBased on CRR’s model, the Bitcoin price could update the all-time high by the end of this year. Moreover, it can exceed the $300,000 level by 2025 and get closer to $400,000 by 2030.\n\n\n\nFor many, it might sound too good to be true, but there are more analysts that anticipate a rapid price surge in the coming years and a new record as early as this year.\n\nBloomberg analysts also came to the conclusion that Bitcoin might reach $20,000 by the end of December, citing a similar pattern that led to the previous ATH. The financial publication [said](https://data.bloomberglp.com/professional/sites/10/Bloomberg-Indices-Outlook_Cryptos_June-2020.pdf) in June:\n> “After 2014’s 60% decline, by the end of 2016 the crypto matched the 2013 peak. Fast forward four years and the second year after the almost 75% decline in 2018. Bitcoin will approach the record high of about $20,000 this year, in our view, if it follows 2016’s trend.”\nIt’s interesting to hear this from Bloomberg, which used to bash the cryptocurrency whenever it had a good occasion.\n\nCrypto influencer Adam Back also said that Bitcoin could hit the $300,000 level within the next five years even without the support from institutional investors. He [told](https://www.forbes.com/sites/billybambrough/2020/06/08/bitcoin-could-hit-300000-in-five-years-even-without-institutional-adoption/) Bloomberg at the beginning of June:\n> “[Bitcoin] might not require additional institutional adoption [to reach $300,000] because the current environment is causing more individuals to think about hedging [and] retaining value when there’s a lot of money printing in the world.”\n>\nIndeed, the US Federal Reserve is printing US dollars like crazy to support an economy that struggles with the coronavirus crisis. With a [reported](https://www.ft.com/content/ec10b41a-84af-4e44-ad3f-5bb86b6e1eaa) rate of $1 million per second of new money created by the Fed, every time you blink the market is quietly flooded with cash. Analysts expect that the central bank’s balance sheet [would hit](https://www.bloomberg.com/opinion/articles/2020-06-22/fed-s-balance-sheet-heads-to-10-trillion-to-support-u-s-economy) $10 trillion by the end of the year, after fluctuating at around $4 trillion as we entered the 21st century’s third decade.\n\nIn fact, the situation is so dramatic that a top economist predicts a 35% drop in the USD value. Stephen Roach, who was chief economist at Morgan Stanley, [told](https://www.cnbc.com/2020/06/15/dollar-crash-is-almost-inevitable-asia-expert-stephen-roach-warns.html) CNBC that the dollar crash is near.\nCNBC concluded:\n> “His timeline is rough — over the next year or two, maybe more. However, Roach suggests a crash virtually inevitable, and it’s a risk investors shouldn’t ignore.”\nThus, besides a potential increase in the value of Bitcoin itself, the cryptocurrency can benefit from a weaker US dollar. Moreover, if the American currency loses 35% of its value against other FX majors, people would be more interested in storing their savings in deflationary assets like Bitcoin, boosting its demand.\n\nAnother interesting possibility is that Bitcoin will reap a portion of gold’s market share during the battle of safe havens. Supporters of this idea expect the cryptocurrency’s price to reach $50,000 very soon.\nChris Burniske, partner at Placeholder, [tweeted](https://twitter.com/cburniske/status/1272130998554238977):\n> “Why Bitcoin above $50,000? As discussed in May 2019, if BTC is half as volatile in this cycle as it was in the last, we would still expect it to cross $50K and $1 trillion in network value. $1 trillion has been a long time coming for this macro-asset.”\n> \nGold has recently reached the highest level in 9 months, but the metal might be overvalued given the buying pressure amid the crisis.\nAlso, we didn’t discuss the stock-to-flow model, which also anticipates a five-digit price in the next few years. The model, which we mentioned in a previous article (link), argued that every time Bitcoin goes through the halving event, it gets scarcer and thus increases in price to meet the demand. However, there are [many critics ](https://www.coindesk.com/why-the-stock-to-flow-bitcoin-valuation-model-is-wrong)of the S2F.\n\nAll in all, bulls are confident that Bitcoin will update the ATH soon because of the following reasons:\nMore institutional investors are interested in entering the market.\nCentral bankers’ money creation has reached massive proportions that would lead to inflation.\n- Bitcoin will compete with gold to prove it can safely store value.\n- Adoption from retail investors is also increasing.\n- There is a transfer of wealth from the older generations to Millennials and Generation Z, who are more inclined to invest in cryptocurrencies.\n- Bitcoin has become scarcer after the halving event from May.\nTo conclude, we also like to position ourselves on the bullish side, though we’d be very careful with giving specific targets. Past experience has shown that most Bitcoin predictions, especially the popular ones, have failed.\n\n*Disclaimer: \nThis communication is for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. It is not intended to provide any financial advice. Any reference to past performance, track record or experience is purely for illustrative purposes and is not indicative of future performance. Future performance is not guaranteed. All market prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. Comments or statements made herein do not necessarily reflect those of OTCTrade.com. This article may contain information that is privileged, confidential, legally privileged, and/or exempt from disclosure under applicable law. You are hereby notified that any disclosure, copying, distribution, or use of the information contained herein (including any reliance thereon) is STRICTLY PROHIBITED. Thank you.*\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/66u1st83VbZhtmdb6XvMUh/5501db6bfbe02e3a80769f4e9323d264/001.jpg","authorOverview":"Anatol is an experienced cryptocurrency journalist and analyst. He has worked for reputable crypto news outlets, including Cointelegraph, Bitconist, CryptoPotato, Cryptovest, u.today, and CCN, among others. Previously, he used to cover traditional markets, including stocks and foreign exchange, providing brokerage firms, asset managers, and other businesses with top-notch content. Anatol is easy-going and passionate about classical music.","date":"03 Jul 2020","metaTitle":"Crypto News | 2020 Bitcoin Price Predictions | OTC Trade","metaDescription":"Looking for Bitcoin price predictions? We review several 2020 predictions of how this cryptocurrency will perform","id":"2qgM2j2fgzrbMzu9ZnooMv"},{"title":"Is the Altcoin Season Here?","image":"https://images.ctfassets.net/4x910isj0ns2/7nq7cQELwmdnehwTJu59oz/92f285c6e34e1e76b45f4421e0407e85/GettyImages-951165826.jpg","description":"OTCTrade.com provides the best platform to trade Bitcoin over-the-counter, but it supports dozens of altcoins as well. Thus, it makes sense to see how non-Bitcoin cryptocurrencies are doing right now since they’re telling us about the maturity of the decade-old industry.\n\nDuring the last few weeks, several altcoins, especially those related to decentralized finance (DeFi) applications, made the headlines by experiencing massive gains. Onlookers have already announced the start of the so-called altcoin season, which refers to the market cycle in which top altcoins ascend independently from Bitcoin. However, is the long-awaited alt season here indeed?\n\nHigh-yielding altcoins are like a breath of fresh air since the market has been oversaturated with Bitcoin’s dominance. As a rule, the overwhelming majority of top altcoins, including Ethereum, Ripple, EOS or Cardano, tend to follow Bitcoin whenever it reacts to the pandemic, US-China tensions or the halving event. It denotes a certain degree of immaturity, as altcoins look incapable of generating fundamentals on their own.\n\nHowever, the recent altcoin surge versus a stagnant Bitcoin demonstrates that there are many other digital assets that should be taken seriously. It might prove that the cryptocurrency industry is not only about Bitcoin.\n\nAs of mid-July 2020, the dominance level of the largest cryptocurrency by market cap has declined to the lowest level in 12 months.\n\n\n\nDespite this, the market share of altcoins is still far from what it used to be in January 2018, when Ethereum alone accounted for over 20%.\n\n## DeFi Tokens Lead Altcoin Rally in Q2 2020\n\nNevertheless, as Bitcoin has been fluctuating between $9,000 and $10,000, altcoins have been planning the attack, especially DeFi tokens. Here are some cryptocurrencies that have been bullish and managed to increase against Bitcoin:\n\n●\t__Ethereum__ – while ETH is not the top-yielding token from this list, it is the second-largest cryptocurrency and acts as the main layer for most of the altcoins to be mentioned, since they are ERC20 tokens. From mid-May to mid-July, ETH has gained about 25% against Bitcoin. Year-to-date, ETH/BTC rose over 40%.\nInvestors are waiting for the deployment of the so-called ETH 2.0, an upgrade that will see Ethereum adopting the Proof of Stake (PoS) consensus mechanism instead of the existing Proof of Work (PoW). However, the date of the upgrade might be delayed to next year, even though co-founder Vitalik Buterin [is pushing](https://cryptobriefing.com/delays-ethereum-2-0-expect-2021-launch-vitalik-buterin-2020/) for the sooner adoption.\nMeanwhile, the Ethereum supporters are delighted that the amount of gas used on Ethereum hit a record high at the beginning of July 2020, which suggests more demand for Ethereum decentralized applications (dApps).\n\n\nsource: https://etherscan.io/chart/gasused\n\n●\t__Chainlink__ – LINK exploded over 240% against Bitcoin and over 340% against the US dollar YTD, which helped it jump to the ninth position in Coinmarketcap’s list of largest cryptocurrencies by market cap. Chainlink is a decentralized oracle network that revolves around the secure exchange of blockchain data, which helps smart contracts reach their full potential.\n\nEntities that choose to run Chainlink nodes, also called oracles, feed data from the outside world into the blockchain’s smart contracts, and that empowers various DeFi applications. To become an oracle, the node has to stake a certain amount of LINK tokens. Oracles are rewarded with LINK for their data, but can also lose it as a penalty for offering any inaccurate information.\n\nIn the last few months, Chainlink partnered with several reputable entities in the crypto space. For instance, at the beginning of July, Chainlink [was selected](https://medium.com/nexo/nexo-and-chainlink-collaborate-to-accelerate-the-adoption-of-digital-assets-e37e9ed62224) as the oracle solution provider by Nexo, a crypto lender with 800,000 users. It also partnered with Hedera Hashgraph and Matic network and was mentioned in a Google [blog post](https://cloud.google.com/blog/products/data-analytics/building-hybrid-blockchain-cloud-applications-with-ethereum-and-google-cloud). However, besides the high-profile partnerships, the LINK price has probably been driven by a FOMO (fear of missing out) effect as well.\n\n●\t__Cardano__ – Cardano’s ADA token, the sixth largest by market cap, has surged over 200% against Bitcoin since January. Cardano is about to upgrade its blockchain by adopting Shelley, whose testnet was [launched](https://decrypt.co/34079/cardano-to-release-code-for-its-much-anticipated-shelley-upgrade) on June 9. The upgrade is poised to make Cardano more decentralized and scalable. With Shelley, Cardano targets mainly DeFi and supply chain applications, though other use cases will also be welcomed.\nShelley will come with a different staking system that will reward a larger pool of investors.\n\n●\t__VeChain__ – VeChain’s VET token has increased by about 180% against Bitcoin YTD. The public blockchain enables the development of enterprise-oriented applications for real-world use cases.\nAt the end of June, assurance company DNV GL [built](https://www.prnewswire.com/news-releases/vechain-powers-dnv-gls-my-care-a-hospital-grade-infection-risk-management-solution-301084551.html) My Care based on VeChain. The application is meant to prevent coronavirus cases and is already used by cruise firm Color Line and hotel group InterContinental, among others.\nIn July, Shanghai Municipal Commission of Economy and Informatization [called](https://www.crypto-news-flash.com/vechain-recognized-by-shanghai-government-in-blockchain-report/) VeChain as one of the most innovative blockchain companies, while professional services giant Deloitte [said](https://www2.deloitte.com/content/dam/Deloitte/ie/Documents/Consulting/Blockchain-Trends-2020-report.pdf) that it was safer and more scalable than Ethereum.\n\n●\t__DeFi Tokens__ – besides the well-established altcoins that have been around since the ICO frenzy, there are newer tokens that have generated even higher returns. They have formed a separate group commonly referred to as DeFi tokens since their underlying blockchains were created for DeFi applications. Some of the DeFi cryptocurrencies – including Kyber Network (KNC), Synthetix Network Token (SNX), Compound (COMP), Aave (LEND), and Elrond (ERD) – have surged by multiple times in June-July alone, making their place in the top 100 coins.\n\nDeFi is the merger of traditional banking services, such as lending, with decentralized networks powered by blockchain. While the concept is not new, there is fresh hype around these coins, especially for the so-called liquidity mining, which is an incentive program established by several new DeFi protocols to attract network users and thus ensure liquidity.\nThe rapid growth in the price of these tokens has been driven by protocol upgrades, partnership announcements, mainstream adoption, and a big dose of FOMO.\n\nThus, KNC and ERD have surged by over 580% against Bitcoin YTD, while LEND jumped over 800% versus the oldest cryptocurrency during the same period.\nHere is the YTD performance of large-cap altcoins mentioned in this article, excluding DeFi tokens, in pair with Bitcoin:\n\n\n\nEthereum (light blue) has shown some moderate growth, but its advancement against Bitcoin is important for the altcoin market in general. You can notice that most of the gains came in the June-July period, which might represent the start of a true altcoin season indeed. Now here is what happens when we add the DeFi tokens:\n\n\n\nAs you can see, the YTD return of KNC and LEND exceeds the average yield of the first group of altcoins, but their aggregate market capitalization cannot compare to that of Ethereum alone.\n\n## The Final Note \nSo, is this the much-awaited altcoin season? The charts would support an affirmative answer, but there are many skeptics that point to the dominance of Bitcoin, which is still very high above 60%. Moreover, they say that DeFi might be a temporary pump and that these tokens could deflate soon.\n\nInterestingly, there is an altcoin season index, and according to it, we’re still not there.\n\n\nSource: https://www.blockchaincenter.net/altcoin-season-index/\n\nHowever, the tendency is obvious – altcoins are departing from Bitcoin and following their own path. This might be a sign that the cryptocurrency market is maturing and doesn’t rely on a single coin.\n\n\n\n\n*Disclaimer: \nThis communication is for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. It is not intended to provide any financial advice. Any reference to past performance, track record or experience is purely for illustrative purposes and is not indicative of future performance. Future performance is not guaranteed. All market prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. Comments or statements made herein do not necessarily reflect those of OTCTrade.com. This article may contain information that is privileged, confidential, legally privileged, and/or exempt from disclosure under applicable law. You are hereby notified that any disclosure, copying, distribution, or use of the information contained herein (including any reliance thereon) is STRICTLY PROHIBITED. Thank you.*\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/66u1st83VbZhtmdb6XvMUh/5501db6bfbe02e3a80769f4e9323d264/001.jpg","date":"03 Jul 2020","metaTitle":"Crypto News | Is the Altcoin Season Here? | OTC Trade","metaDescription":"As a whitelabel OTC desk, OTCtrade.com can be used for altcoins as well as bitcoin. Recently, altcoins saw massive gains. ","id":"2eXgsh64r5yQIc01pTl59j"},{"title":"4 Trends in Crypto OTC Trading in 2020","image":"https://images.ctfassets.net/4x910isj0ns2/6kKc68fjMwrP3r3CbTQnGq/a112ac5dcd43248cf58c343302d001eb/bitcoin-4728496_1920.jpg","description":"2020 is an exciting year for the cryptocurrency market, full of sensational headlines. Part of the bustle has been caused by external factors like the unexpected coronavirus pandemic, while the other part has to do with major shifts within the market itself.\n\nAs we see it, crypto over-the-counter (OTC) trading is rising like a phoenix from all this chaos. The chances are that OTC trading is the biggest trend right now, very similar to what initial coin offerings (ICOs) were in 2017. However, if ICOs have been compromised by an incalculable number of scams, OTC trading is definitely here to stay.\n\nSo why is crypto OTC trading becoming so relevant these days? We figured out four main distinguishable factors that are either causes or effects of this phenomenon. Here they are:\n\n## #1 - Bitcoin Consolidates Safe Haven Status\n\nThe global economic crisis caused by the COVID-19 pandemic has turned everything upside down, with many politicians already anticipating a [“new normal](https://www.afr.com/world/europe/bracing-for-covid-19-s-second-wave-the-global-shift-to-a-new-normal-20200702-p558ki).” These difficult circumstances have forced investors to think about reliable safe-haven assets. While gold is one of the main options sought by traditional investors, Bitcoin is another top asset that can preserve value in the long run. Its deflationary model and indestructibility make it the right candidate for the list of must-have assets.\n\nIt’s true: Bitcoin followed the stock markets in mid-March when it crashed to the lowest level in over 12 months. However, that despair was a temporary shock triggered by institutional investors who rushed to exit the markets in an effort to cash out. Once the smoke clears, the same institutions will include Bitcoin in their portfolios again.\n\nThe cryptocurrency has already recovered the greatest part of previous losses as of June 2020.\n\nInvestors expect national currencies to lose value due to the inflationary pressure caused by unlimited quantitative easing encouraged by the US Fed, the European Central Bank (ECB), and the Bank of England (BoE), among others.\n\nThe Fed’s printing machine is working day and night as it buys government treasuries and [even corporate bonds](https://www.cnbc.com/2020/06/29/the-fed-is-buying-some-of-the-biggest-companies-bonds-raising-questions-over-why.html), which is unprecedented. The central bank’s balance sheet spiked to a record $7 trillion from about $4 trillion at the beginning of the year.\n\n\n\nSource: https://fred.stlouisfed.org/series/WALCL\n\nIn light of this, many institutional investors are turning to deflationary assets like Bitcoin, and the OTC market is the first choice as they’re looking for liquidity.\n\n## #2 - Bitcoin Halving\n\nBitcoin halving, also referred to as halvening, was a big event that put the cryptocurrency into the spotlight in the first half of the year. It took place on May 11, when the block reward for Bitcoin miners was automatically reduced from 12.5 BTC to 6.25 BTC, as stipulated in the Satoshi Nakamoto’s protocol.\n\nThe hype over halving is fed by expectations that Bitcoin will surge in the coming months or years to update the all-time high. Promoters of these ideas monitor the cryptocurrency’s behavior in the context of previous halving events. On a side note, the halving occurs every three or four years.\n\nSpecifically, Bitcoin bulls are citing the stock-to-flow (S2F) model [proposed](https://medium.com/@100trillionUSD/bitcoin-stock-to-flow-cross-asset-model-50d260feed12) by an analyst nicknamed PlanB. He argues that the cryptocurrency accurately follows this model borrowed from the commodities market.\n\nIn the case of Bitcoin, the S2F ratio is calculated by dividing the current supply by the number of coins produced in a given period, i.e. a day, week or month. The gauge reflects the degree of scarcity or abundance of an asset – the higher the ratio, the scarcer the asset.\n\n\n\nSource: https://digitalik.net/btc/ \n\nThe point is that the S2F ratio increases drastically after each halving, given that Bitcoin supply growth is slowing down as miners’ block reward reduces. Consequently, the BTC price somehow proportionately follows the increase in S2F ratio.\n\nThis bullishness encouraged many institutional investors to buy Bitcoin before and after halving, which boosted the trading volumes in OTC environments.\n\n## #3 - Increased Interest from Institutional Investors\n\nAnother big trend in the OTC crypto market is that more institutional investors are turning their attention to Bitcoin and some altcoins, which is more like an effect of the mentioned circumstances.\n\nAt the beginning of June 2020, brokerage giant Fidelity [released](https://www.fidelitydigitalassets.com/bin-public/060_www_fidelity_com/documents/FDAS/institutional-investor-study.pdf) a survey that showed that more than a third of institutional investors in the US and Europe own cryptocurrencies, with Bitcoin being the most popular crypto asset.\n\nIn the US alone, 27% of institutional investors confirmed that they held crypto assets, up from 22% in 2019. In Europe, 45% of firms admitted they held crypto assets.\n\nMore importantly, 80% of the surveyed institutions said that they found cryptocurrency appealing.\n\nMeanwhile, Grayscale Bitcoin Trust (GBTC), an investment vehicle backed with Bitcoin, has accelerated its growth over the last few months. Given that 90% of GBTC investors are high net worth individuals (HNWIs) and institutions like hedge funds, it proves an increased interest from their side.\n\nAt the end of June, Grayscale bought more Bitcoin than miners could produce during the same period. At this rate, the fund will own over 3.3% of BTC by the end of 2020.\n\nhttps://twitter.com/kerooke/status/1276251991698792464\n\nOther institutional-oriented funds are experiencing the same trend.\n\nLennard Neo of Stack Funds [told](https://cointelegraph.com/news/crypto-funds-in-demand-institutions-see-bitcoin-as-alternative-hedge) Cointelegraph at the end of May 2020:\n\n> “Similar to Grayscale, Stack has seen an uptick in investors’ interest — almost double that figures of pre-crash in March — in Bitcoin [...] I would not say they are ‘gobbling up BTC’ blindly but cautiously seeking traditional structured solutions that they are familiar with before making an investment.”\n\nBesides relying on crypto-oriented investment vehicles, institutional investors prefer to buy Bitcoin directly. Needless to say, they operate with large trades, which aren’t feasible with regular crypto exchanges. That’s why they’re turning to OTC platforms like OTCTrade.com.\n\n## #4 - More Regular Crypto Exchanges Turning to OTC Trading\n\nAnother trend that is a direct effect of all factors described above is the fact that regular crypto exchanges are in a rush to launch OTC trading venues.\n\nFinally, they have realized the power of peer-to-peer (P2P) interactions.\n\nIn the last two months alone, several crypto exchanges and other businesses introduced proprietary OTC trading platforms.\n\nIn April, Japanese cryptocurrency exchange Coincheck, which suffered the largest crypto hacking attack so far, [launched](https://www.coindesk.com/coincheck-launches-otc-crypto-trading-for-institutions) an OTC cryptocurrency trading service aimed at larger clients.\n\nIn mid-May, CoinFlip, which provides Bitcoin ATMs in the US, [launched](https://micky.com.au/coinflip-launches-its-new-otc-crypto-trading-platform/) CoinFlip Preferred – an OTC crypto trading platform that accepts lower minimum transaction sizes.\n\nA week later, ErisX, a crypto exchange backed by behemoth TD Ameritrade, [announced](https://coingape.com/td-ameritrade-backed-exchange-introduces-otc-crypto-spot-and-futures-platform/) the launch of crypto OTC operations aimed at HNWIs and institutions.\n\nBinance.US, the American branch of global crypto exchange Binance, also [launched](https://cointelegraph.com/news/binanceus-launches-otc-trading-platform) an OTC crypto platform in May.\n\nThis trend actually started in 2019, when Binance, Bittrex, Poloniex, and Coinbase developed or expanded their OTC trading services.\n\nWhile the crypto OTC space has become even more competitive, we firmly believe that OTCTrade.com is the platform of choice among institutional investors thanks to its unmatched security, $5 million insurance, blazing speed, and intuitive interface.\n\n[BOOK A DEMO](https://www.otctrade.com/ \"Book a Demo\")\n\nTo read more updates from OTCTrade.com, follow us on [Medium](https://medium.com/@otc_trade) and our social media channels, including [Twitter](https://twitter.com/OTCTrade_com), [Facebook](https://www.facebook.com/otctradellc), and [LinkedIn](https://www.linkedin.com/company/otc-trade-llc/). \n \n","author":"Anatol Antonovici","authorPhoto":"https://images.ctfassets.net/4x910isj0ns2/66u1st83VbZhtmdb6XvMUh/5501db6bfbe02e3a80769f4e9323d264/001.jpg","date":"02 Jul 2020","metaTitle":"4 Trends in Crypto OTC Trading in 2020 | OTC Trade","metaDescription":"What are the major Crypto OTC Trading trends of 2020? Here's what to look for in a sensational year for crypto.","metaKeywords":"blog, news, trading, bitcoin","id":"67c763F2UyQBX3VGBz2BC9"}]