Economy

Blockchain Bites: Will Bitcoin See ‘Reflexive’ Purchases After Tesla?

5 Mins read

 

Sound bites

Nic Carter argued that comparing Bitcoin’s energy consumption to that of Visa is missing the forest for trees. Bitcoin is not just a payment network, but a self-contained money system that offers its own unit of account, advocated live on CoinDesk TV.

“First Carrier” is a summary of the best global market, business and regulatory news stories impacting digital assets. Catch it at 9:00 every day of the week.

Three trends

1. Tesla’s $ 1.5 billion bitcoin gambling may have a long queue. Bitcoin saw record one-day growth after Tesla replaced part of its US dollar treasury with cryptocurrency. Bitcoin rose by more than $ 8,000, setting a new ceiling above $ 48,000 earlier today. The rally made bitcoin more valuable than all but the world’s seven public companies, with an estimated market value of $ 834.2 billion.

  • Verifying the possibility of bitcoin as an inflation protection from a Fortune 500 company can increase the “return” investment of other large companies. CoinDesk’s Omkar Godbole says, “ ‘Mirroring’ is the theory that a positive feedback loop between expectations and economic fundamentals can lead to a significant price rally.
  • GSR trader John Kramer said the market is currently priced according to the possibility of allocating other heavyweights to Bitcoin. Stack Funds co-founder and COO Matthew Dibb said that calls for Bitcoin’s future price increased in the range of $ 56,000 to $ 72,000.

But this is not just bitcoin. Ether, the native currency of the Ethereum blockchain, broke a record $ 1,824.59 in early trading on Tuesday, pushing its market capitalization above $ 200 billion.

  • Yesterday, the highly anticipated ETH futures of the Chicago Mercantile Exchange (CME) went live. Approximately 400 contracts were bought and sold. CME generally equates to corporate participation.
  • Godbole, Ether’s pump too supply problems in stock exchanges. Liquidity dried up as investors continued to take direct possession of their coins or move them to highly efficient DeFi vehicles. The trend has gained momentum in recent months as the amount of ETH held in exchanges has dropped 8% in the last 4.5 weeks alone.
  • An increase in the price of ether is typically combined with increased “gas” charges, the price paid to applications in the decentralized network. CoinDesk’s Muyao Shen reports alternative application-oriented blockchains Cardano and Polkadot It benefits from the rising costs of Ethereum – becoming the fourth and fifth most valuable crypto assets, with its own local assets ADA and DOT respectively.

2. Former banks are paying attention to the cryptocurrency industry. An investment analyst added New York-based Signature Bank to JPMorgan’s “focus list”, a list of recommended investment products, and said the blockchain-friendly bank is “positioned to drive the crypto wave”.

  • Meanwhile, SCB 10X, the venture capital arm of Siam Commercial Bank, said it has launched a new $ 50 million fund to invest in blockchain startups through the eyes of DeFi. SCB 10X had previously invested in Ripple and BlockFi. Separately, Singapore-based Spartan Group announced a $ 50 million venture fund for DeFi.
  • On the crypto-domestic front, market maker Apifiny has announced plans to go public at the end of 2021.
  • Elsewhere, Binance-backed, yet-to-be-launched DeFi platform Xend Finance is gaining voice over its ambitious goal of bringing high-interest savings opportunities to Africa. The platform will allow credit unions and cooperatives to earn interest on deposits by converting them into stablecoins.

3. Open systems are politically neutral, this point might attract attention. According to the United Nations calculation, North Korea financed its wartime base through cryptocurrency attacks, including nuclear and ballistic missile programs.

  • In a report sent to members of the UN Security Council on Monday, North Korea-linked criminals attacked financial institutions and crypto exchanges between November 2019 and the same month a year later, gaining $ 316.4 million worth of cryptocurrency. The nation is said to launder these stolen funds through over-the-counter brokers in China to acquire fiat currencies such as the U.S. dollar.
  • The Financial Action Task Force (FATF) has drafted rules that can prevent money laundering and terrorist financing, most notably the “Travel Rule”, which increases reporting requirements for currency and wallet providers. The crypto derivatives exchange BitMEX recently published its best practices framework for storing this information.

In danger

What to do with all that money?
Tesla’s investment in bitcoin is a big change moment for the cryptocurrency industry. After the hugely exaggerated auto company announced its $ 1.5 billion purchase of bitcoin, the obvious (and unknown) question was “who’s next?”

As a matter of fact, US companies are sitting on a large cash treasury. Non-financial firms had stocks, according to Moody’s Investors Service $ 2.1 trillion last June. While companies can pay off debt, invest in US Treasury bills, and even go on an M&A frenzy, there is a certain rationale for holding a war chest:

Obviously, cash provides excellent insurance in times of increased uncertainty. “It provides the ability to finance critical projects and strategically compete in product markets, isolating firms from risks in the financial markets,” wrote Kristine W. Hankins and Mitchell Petersen, finance professors at the University of Kentucky and Kellogg School of Management. At Harvard Business Review.

Crypto heads, including former vice president OCC Brian Brookswould deny some of these claims, especially in the midst of a period of intense monetary expansion. Just yesterday, Brooks said that Bitcoin could be a more stable source of value. He stated that the US money supply increased by 25% in 2020.

Even if you’re not an inflation catastrophe, this speed of money creation certainly raises questions about what to do with all that corporate money. This was a question that the Royal Bank of Canada had implicitly asked yesterday while focusing on the Tesla phenomenon.

According to analysts in the brokerage division of Canada’s largest bank, apple You should consider crypto. With a market value of $ 2.3 trillion, Apple is among the most valuable companies in the world. It also stands on close to $ 200 billion in cash.

RBC analysts He said it would be a natural move for the company to revive its own crypto exchange. The firm currently provides payment and digital wallet services, has a reliable reputation and a research department that can overcome the challenges of knowing your longstanding customer (KYC).

Also, analysts estimate that a crypto exchange could bring in $ 40 billion a year. (This is estimated by Square’s estimation from bitcoin revenues, and about 15% of Apple’s current 1.5 billion upload base will play with the new feature.)

“If Apple goes this way, the US will probably get the most crypto assets from a global perspective,” analysts wrote.

In fact, increased competition among crypto exchanges can be welcomed. Yesterday, the increase in the number of users following Tesla news caused interruptions in some of the leading exchanges.

While the crypto infrastructure has improved significantly since the last bull market – large organizations could be against billion-dollar bitcoin transactions without a significant market disruption. Castle Island Ventures partner Nic Carter It was noted this morning on CoinDesk TV – there is still work to be done.

While commenting on yesterday’s currency cuts, eToro Managing Director Guy Hirsch The mentioned fiat-crypto trading brings liquidity and settlement risks between banks and exchanges.

The risks are less serious for “pure” crypto-to-crypto exchanges, Hirsch said.

Maybe there is a lesson out there for companies sitting in dollar stocks?

Quick bites

  • Binance drops the libel case against Forbes. (CoinDesk)
  • Decrypt enters Web 3.0 with its IPFS structure. (Decrypt)
  • Nik De is breaking new and old in the latest global crypto editions. (CoinDesk Newsletters)
  • An easy-to-digest explanation of the ERC-20 indicator standard. (CoinDesk)
  • ETH futures premium. (Trustnodes)
  • Blockfolio apologized after distributing racist posts through its cryptocurrency portfolio and news app. (CoinDesk)
  • Ten scams common in the crypto world in 2021. (DeFi.cx)

Who won the Crypto Twitter?

 

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