[{"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","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","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","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","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"}]