Antonopoulos: Drop in Oil Prices Give US Miners a Competitive Edge

Crypto miners based in the United States will greatly benefit from the falling electricity prices worldwide, says Andreas Antonopoulos.

Bitcoin educator Andreas Antonopoulos sees the recent downturn in oil prices as a net positive for crypto miners worldwide, particularly those at the Bitmain mining facility in Texas.

In a video he posted to his YouTube channel on May 27 titled “Down the Rabbit Hole”, Antonopoulos said the falling oil prices will benefit crypto miners by providing cheaper electricity worldwide, but “not equally worldwide.” 

Miners based in the United States — which gets 36% of its energy from petroleum — and Texas in particular will reap the rewards of these cheaper costs.

One of the biggest new mining operations opened in the United States in the state of Texas and I can’t imagine that that is a coincidence… it probably had a lot to do with the fact that the U.S. had 12,000 barrels per day. It is the largest oil producer in the world because of fracking. Therefore, there may be really good opportunities for cheap power, which would suddenly make U.S.-based miners much, much more competitive and profitable.

Chinese miners also benefit

China remains a major player in the cryptocurrency mining industry. Cointelegraph has reported Chinese Bitcoin miners were responsible for as much as 66% of the global hash rate in 2019. 

Antonopoulos acknowledged that most Chinese crypto mining is completed with rigs primarily powered by coal plants — though some companies are pushing for renewable power. 

However, he said that falling oil prices would still result in financial benefits for Chinese miners. According to the Bitcoin educator, energy producers not reliant on petroleum might attempt to stay competitive by operating at a loss, resulting in cheaper electricity for miners while the price of oil is down.

Because energy and electricity is a fungible commodity, if you are connected to a coal-fired power plant and somewhere else, a gas-fired or oil-fired power plant has half the cost of energy because its oil is much cheaper, it’s going to cost less to get electricity from your coal plant…

The real competition between buyers, said Antonopoulos, is no longer determined by having the most modern mining rigs, which he says are generally fine to use for 18-24 months. Rather, it is based on “the unit cost of electricity, which is dominated in some places by the cost of oil.”

from Cointelegraph.com News https://ift.tt/3cneMKv

FXCoin Strategist: Weaker Yuan Could Lead to a Stronger Bitcoin

Yasuo Matsuda of FXCoin sees the economic sanctions on Chinese traders in the midst of the pandemic as more likely to drive them to Bitcoin.

Japanese crypto firm FXCoin’s senior strategist thinks a depreciation of the Chinese yuan may lead more traders to Bitcoin in 2020. 

FXCoin’s Yasuo Matsuda spoke to Cointelegraph Japan, saying Bitcoin (BTC) would likely be more popular among Chinese nationals facing economic sanctions due to national security laws as part of the government’s response to the COVID-19 pandemic. 

The strategist said people in China would be “frustrated with the recession of the domestic economy” and looking for an escape:

China’s strong position on legislation like the enactment of the Hong Kong national security law has been conspicuous, but the impact of the coronavirus has caused the domestic economy to fall into a recession. The incentive to move assets abroad is high, and if the legislation leads to economic sanctions from the United States, BTC will likely become even more popular.

Matsuda pointed out the yuan and BTC are not always correlated in the same direction. However, he expects that a depreciation in the yuan could invite Chinese traders to buy more Bitcoin in 2020. 

...when the yuan goes down, it incentivizes residents in China to move their assets overseas because their values decline in dollar terms. This causes further depreciation of the yuan. However, as the Chinese regulation of capital flight is very strict, some see Bitcoin as the way to go. That is why BTC functions as a flight-to-safety asset. 

The value of the yuan fell during the trade war between the United States and China in 2019, dropping sharply in May until it reached a low in September. Though it slightly rebounded in January, the yuan is at its lowest value — 0.1404 USD — in 2020, a price approaching values in 2008.

Hisashi Oki of Cointelegraph Japan contributed to this article

from Cointelegraph.com News https://ift.tt/3cizKdj

Crypto Analyst Releases Stock-to-Flow Model Indicator for BTC Bull Run

Updating its popular BTC price model, crypto analyst PlanB predicts the cryptocurrency could see a rally to $100K by 2021.

Crypto analyst PlanB released a key indicator for its stock-to-flow price prediction model which could signal a Bitcoin bull run to $100,000 by 2021 has just begun.

PlanB confirmed on Twitter on May 31 that the red dot — indicating a price increase — was now present in its stock-to-flow (S2F) model, a price prediction model for Bitcoin (BTC).

#Bitcoin S2F chart update .. RED DOT RELEASED!!! pic.twitter.com/iNTjbf9b9K

— PlanB (@100trillionUSD) May 31, 2020

The S2F model treats BTC as a commodity like gold or silver, evaluating the existing supply of the cryptocurrency against the amount mined. 

Though many have predicted BTC bullish behavior in the wake of the May 11 rewards halving, PlanB’s model marks when a run would occur with a red dot. Under this model, the chart shows a BTC price of $100,000 by the end of 2021. 

Stock-to-flow model

Cointelegraph reported in April that PlanB had used its new cross-asset S2F model — S2FX — to predict a BTC price of $288,000 by 2024. Crypto analyst Harold Christopher Burger used the same data to forecast a rally to $1 million by 2025.

The S2F mode does have its detractors. Ethereum co-founder Vitalik Buterin has expressed some reservations about stock-to-flow, calling it part of the 95% of crypto articles that are “post-hoc rationalized bullshit.”

As of this writing, BTC is priced in the $9,400s, having fallen 2% in the last 24 hours.

from Cointelegraph.com News https://ift.tt/3gEHoSP

Crypto Long & Short: The Emergence of Prime Brokers Adds Resilience but Also Risk

Coinbase, BitGo and Genesis all have strong growth trajectories and balance sheets. But with that stability comes a certain degree of centralization.

from CoinDesk https://ift.tt/36PURT3

Goldman Scandal, BTC Bull Trap Fears, How Libra Will Make Money: Hodler’s Digest, May 25–31

Goldman Sachs attacks crypto, why Bitcoin may be wandering into a bull trap, and how Libra is going to make money.

Coming every Sunday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Goldman Sachs butts heads with Bloomberg over Bitcoin

One of the world’s biggest investment banks caused a stink this week when it declared cryptocurrencies are not an asset class. In a leaked PowerPoint presentation, Goldman Sachs warned Bitcoin doesn’t provide diversification benefits, dampen volatility in a portfolio or show evidence of hedging inflation. One damning line read: “We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients.” Goldman’s view is directly at odds with Michael Bloomberg, whose financial reform plan unequivocally called BTC an asset class. As you’d expect, the crypto community reacted furiously. D-TAP Capital founder Dan Tapeiro argued Goldman Sachs was simply worried about protecting revenues, as it doesn’t make fees when a client buys BTC. Tyler Winklevoss also criticized the quality of Goldman’s research, writing: “Crypto used to be where you ended up when you couldn’t make it on Wall Street [...] Today, Wall Street is where you end up when you can’t make it in crypto.”

$10,000 bull trap? Why Bitcoin price is now likely to pull back

Bitcoin grew in value by nearly 25% in the month of May — and now, it’s on track for a bullish monthly candle close. But wait! It might be a little too early for long-term hodlers to get excited. Cointelegraph’s Keith Wareing believes a pullback in BTC’s price is “somewhat inevitable” after such a big increase over the last eight weeks. A new downward channel has emerged on the charts that puts $9,700 as resistance, $8,700 as the midpoint level and $7,400 as support. However, he expects any dip would be short-lived “due to the increased momentum” across other indicators. According to Michaël van de Poppe, BTC needs to hold above $9,300 in a bullish scenario — and as long as that level remains support, further upward activity should be expected. There have been other interesting developments this week. Grayscale Investments is now buying 1.5 times the amount of Bitcoin being mined — adding 18,910 BTC to its crypto fund even though just 12,337 BTC has entered circulation. “There isn’t enough new supply to go around, even for just one guy,” commented Binance CEO Changpeng Zhao.

Libra will allow Facebook to spike ad prices, Zuckerberg says

We’re starting to get a few more juicy details about what Libra will look like — and how Facebook’s controversial stablecoin will make money. Mark Zuckerberg, the social network’s CEO, believes the digital currency will cause ad prices to soar. During an annual shareholder meeting, he said Libra means consumers will find it easier to make impulsive purchases — and as a result, companies will be prepared to pay more when they are bidding for advertising. Last year, Facebook earned about $69.6 billion from selling ads, representing a whopping 98% of its total income. In other news, the company is continuing to spruce up the project so it can appease regulators. Facebook’s accompanying digital wallet, Calibra, has now been rebranded as Novi. A representative told Cointelegraph that “people were getting confused” because Calibra and Libra sounded too similar — and it’s hoped that the new name will create a distinction between the two.

Tether unseats XRP as third-largest crypto, dwarfing its volume 25:1

Big news in the crypto rankings this week — Ripple’s XRP is no longer the world’s third-largest cryptocurrency by market capitalization. It has now been overtaken by Tether, the stablecoin that’s pegged to the U.S. dollar. XRP has failed to gain adoption among retail investors — and USDT’s average daily trading volume in May was 25 times higher. It’s the latest chapter in a very sad book for XRP, which has seen its market cap collapse from highs of $130 billion in January 2018 to just $9 billion today. Of course, the race is far from over. A decent bull run could help XRP regain third place and blow past its stablecoin rival, which cannot move up or down by more than a few percentage points.

Think there is only 21 million Bitcoin? Think again, says Weiss Ratings

Weiss is known for its controversial cryptocurrency posts — and now, the ratings agency has shared its latest unpopular opinion: The supply of Bitcoin is higher than 21 million. “Exchanges leverage the existing supply of any #crypto asset in much the same way banks leverage the supply of fiat money,” Weiss explained in a tweet. It recommended investors to hold their own crypto, thereby ensuring that they don’t have to put their trust in these trading platforms.

Winners and Losers

At the end of the week, Bitcoin is at $9,524.12, Ether at $235.44 and XRP at $0.20. The total market cap is at $269,068,116,779.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Celsius, Cardano and Quant. The top three altcoin losers of the week are Theta Fuel, Theta Token and BHPCoin.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis. 

Most Memorable Quotations

“The last 896 days were simply one massive re-accumulation phase before the run to 100k+ #bitcoin, and the consolidation structure will soon be broken. Are you prepared?”

Positive Crypto, analyst

“When they run an ad, somebody clicks on that ad and is now going to be more likely to buy something because they actually have a form of payment that works that’s on file; then it basically becomes worth it more for the businesses to bid higher in the ads. And what we see are higher prices for the ads overall.”

Mark Zuckerberg, Facebook CEO

“Craig Steven Wright is a liar and a fraud. He doesn’t have the keys used to sign this message ... We are all Satoshi”

Unknown actor

“In the specific case of issuer-backed stablecoins there’s lots of things that could be done but aren’t, eg. every stablecoin could be an instant cross-chain bridge!”

Vitalik Buterin, Ethereum co-founder

Prediction of the Week

Bitcoin 896-day “accumulation” will now spark $100,000 bull run — analyst

After spending almost 900 days correcting from its all-time high of $20,000, one trader believes Bitcoin is about to begin its trip to $100,000. Positive Crypto said a “massive accumulation phase” has taken place between December 2017 and now — with investors repositioning themselves and buying in. Despite wobbling around the halving and after, Bitcoin’s price has entirely erased losses from its March crash, which Positive Crypto notes formed a “higher low” compared with the peak of the bear market in December 2018. That cycle of “higher lows” itself positions the market for upside. As we’ve seen in past predictions over recent weeks, many analysts believe a bullish trend for Bitcoin will kick in over the next year or two.

FUD of the Week

Ethereum significantly less private than Bitcoin, new research shows

Transactions on the Ethereum blockchain are easier to track than those on Bitcoin’s network, according to new research. A unique feature of Ethereum is its name service, which ties addresses to human-readable “.eth” domains. The researchers were able to scrape 890 domains located on public Twitter profiles, and this was already enough to discover potentially compromising activity. About 10% of those wallets had interacted with gambling platforms, while 5% used adult services. Another problem lies in how those who use mixer services to “clean” their funds by sending them to a new address aren’t using the features properly, making identification easy.

Colombia is the ransomware capital of Latin America

A worrying new study has revealed that 30% of all ransomware attacks within Latin America have specifically targeted Colombia. The country had the same number of incidents as Peru and Mexico combined, with the report warning that the threat is “underestimated.” Small- and medium-sized businesses are the preferred targets of cybercriminals, but 83% of Colombian companies lack the response protocols necessary to handle the violation of information security policies. Phishing emails are the most common technique, and victims who click on suspect links normally end up being locked out of their devices. Up to $1.1 million in ransoms were collected over the course of 2019.

NYC hacker charged over $94 million Bitcoin-for-cards scheme

A man is facing up to 20 years in jail and $500,000 in fines for allegedly participating in a $94-million Bitcoin-for-cards scheme. Vitalii Antonenko was arrested at New York’s John F. Kennedy International Airport after arriving from Ukraine, and it is claimed he was carrying devices “that held hundreds of thousands of stolen payment card numbers.” Prosecutors say the suspect and his co-conspirators used SQL injection attacks to extract payment card data from vulnerable networks and then sold it on “online criminal marketplaces.”

Best Cointelegraph Features

The crypto enthusiast’s dream: top countries that tick all the boxes

Alongside the internet, cryptocurrencies have made the world a global village. Here’s Jinia Shawdagor’s list of countries that are ideal for crypto enthusiasts to live in.

Ethereum network use hits a new all-time high — will ETH price follow?

Interaction with the Ethereum network recently hit an all-time high, but as António Madeira explains, the increase in gas usage may pose problems for the cryptocurrency network.

Indian banks still cryptophobic despite no banking prohibition

Even though banks are not prohibited from providing accounts to crypto traders, financial institutions in India are still hostile toward crypto. Mohammed Danish looks at the legal resources available to Indian crypto users and businesses if they face cryptophobia.

from Cointelegraph.com News https://ift.tt/2yQ7e57

Trading Bitcoin Vs. BTC Futures — Which Is Best for You?

A growing number of crypto exchanges are offering futures trading for Bitcoin and altcoins, can retail investors capitalize on this powerful instrument?

There’s an increasing number of exchanges offering futures contracts trading. So far there’s Binance, FTX, Bitfinex, Bybit, and Kraken, to name just a few. Volumes are also picking up across the board and it appears that retail traders are growing more interested in experimenting with these complex instruments. 

As recently reported by Cointelegraph, there are multiple benefits to using futures trading. Traders using them can hedge and maintain peace of mind during periods of high volatility. Futures contracts can be used to reduce risk and leverage bets when the appropriate strategies are deployed.

Professional traders frequently utilize futures contracts for better positioning on both sides of the market. In this article we will introduce the basic mechanics behind the instrument, their hidden costs, and some of the trading strategies professional traders regularly use to capitalize on its benefits.

What is a futures contract?

Simply put, a futures contract is an agreement to buy or sell an asset at a later date for a predetermined price. It is known as a derivative instrument because its value relies on an underlying asset. 

Futures contracts were initially associated with hard commodities such as gold, oil, and seeds. Those instruments allowed producers (farmers and miners) to better manage their financial risk by creating the possibility of locking in prices upfront. 

On the other hand, an airline company can hedge its fuel cost, which is a win-win for both parties.

The buyer, also known as long, hopes for a price increase on the underlying asset. The futures contract seller, or short, is betting on a price retraction to make a profit. 

Another allure of the futures contract is that it allows one to decrease their stake without holding stablecoins or fiat deposits on exchanges. A buyer could increase their position during bank holidays or a cash restrainment period. 

Cryptocurrency miners also benefit from utilizing the instrument by hedging future revenues and reducing cash flow uncertainties. There are countless cases for professionals to trade futures contracts, and even retail traders can benefit from their use.

Futures in comparison to spot and margin trading

Every futures trade needs a buyer and a seller for the same size and maturity. There is just no way there could be a more substantial short (or long) position. Such constant equilibrium is a big difference from margin trading, where traders need to borrow the asset to use leverage.

Spot means settlement happens at the same time as the trade since the buyer gets cryptocurrency, while the seller receives fiat or stablecoin (or another asset) as soon as the trade takes place. In the futures markets, both sides will deposit some margin, so no one initially receives anything from it.

It’s important to note that futures trading does not happen in the same order book as spot trading. Its price can, and usually will, vary from spot exchanges. Even if one trades at Binance Futures, the futures price will fluctuate from spot prices in the exchange’s regular market.

Reasons for fluctuation between spot and futures pricing

As mentioned earlier, when selling through the spot market the order is settled immediately. By opting to sell future contracts, the seller is postponing this settlement, and will sometimes demand more (or less) money depending on market conditions.

But there’s a catch. To prevent market manipulation, margin calculation does not take into account a contract's trading price. Derivative exchanges usually create indexes, also known as ‘fair price’, which are calculated by the average price of spot exchanges.

In doing this, exchanges offering futures contracts reduce the incentives for anyone attempting to manipulate its price. The underlying fair price of the asset will be used to determine if a position is using too much margin and thereby should be forcefully closed.

Understanding the basic mechanics of a futures contract

It is possible to sell (short) a futures contract and repurchase the same amount later on, netting any exposure. The trick here is the margin deposited by both parties for the trade to happen. 

When the market moves up, the margin is moved from the seller (short) to the buyer (long). That is automatic and happens every second as it is calculated based on the “fair price”.

Let’s consider a scenario where one deposited 100 USDT at Binance Futures. This investor might be willing to buy (long) 1,000 USDT worth of Bitcoin (BTC) futures using 10x leverage. 

Such a buyer cannot withdraw future contracts, nor transfer them to regular Binance exchange. This is because a Bitcoin futures contract is not the same thing as an actual Bitcoin.

Binance Futures trading. Source: Binance

As shown in the futures example above, a 0.114 BTC order - worth $1,000 - would only cost this investor $49.87. This ‘cost’ refers to the initial margin required to hold such a position. A larger collateral will be necessary if the underlying Bitcoin price (fair price) starts to move down.

Both sides of the trade must deposit margin, although it will differ for each pending market conditions. There’s an implicit cost to carry those perpetual contracts. Most traded cryptocurrency futures contracts never expire, so in theory, an investor might never need to close the position.

The advantage futures have over trading spot

Even if the buyer has $1,000 to spend, one could use their own money for other short-term trades. For example, $200 could be assigned as margin for the 0.114 BTC position, while the remaining $800 buys leveraged positions on altcoins.

Some traders don’t feel comfortable in having large sums deposited on exchanges. Leverage trades can reduce market exposure, giving one the ability to sell their spot market position in smaller tranches afterward.

Degenerate gamblers can also benefit by making small deposits each day, or week. This strategy puts a hard limit on their losses while providing a decent upside for amounts as low as $50.

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

from Cointelegraph.com News https://ift.tt/2zPOMdj

Advancing Policy: Regulator and Industry Coordination Key to Swift Implementation

The art of enacting legislation in a timely fashion requires strong cooperation between regulators and industry officials.

“Coming together is a beginning, staying together is progress, and working together is success” — the words of Henry Ford give expression to the spirit of collaboration that defines human progress. His ethos around unity extends to many societal strands, including endeavors of profit, community initiatives and far-reaching government policies. When navigating uncharted territory, such as the handling of technological innovation from a regulatory perspective, different stakeholder groups must resist the urge to remain siloed in their strategies and lean into Ford’s vision for shared success.

The art of enacting legislation requires strong cooperation and delicate management of stakeholder interests, with external forces invariably impacting implementation efforts. We must prioritize substance over speed, as opposed to rushed policy action that doesn’t thoroughly take into consideration the needs of industry, relevant sector groups or citizens. The variables that can be controlled by regulators, however, should be. 

Absorbing industry insights from the very beginning of a protracted formulation process can pave shortcuts to success. By aligning objectives and working together with industry representatives, regulators have the best chance of crafting legislation in a smooth and decisive manner, setting the wheels in motion for sustainable growth. Of course, a lot of the above rhetoric is only as powerful as the anecdotal evidence that captures the benefits of such an approach. 

In relative terms, successfully establishing a framework that sets out clear principles to encompass an evolving sector is a result of shared ambition. When it became clear that long-term distributed ledger technology innovation was on the horizon, the gears began to turn within Gibraltar’s business, academic and political circles to get a jump start on the rest of the world. 

A task force was created to bring a vision of DLT regulation to life that provided the desired levels of security and assurance for regulators, while also being cognizant of the conditions needed to help DLT projects get off the ground. Industry representation in this task force ensured that collectively, we steered the regulation in the right direction, providing a steady road to market for quality blockchain projects. 

While collaboration between industry and government is the bedrock to the successful implementation of new regulatory policies, this approach can be applied to legislative renewal efforts. Earlier this year, Gibraltar’s Legislative Reform Program provided another example of a coordinated approach between key stakeholders to make compliance easier within an existing body of legislation. 

While legacy legislation must be respected, opportunities for legislative renovation should be seized, facilitating a confluence of regulatory and industry discussion. It might not have to lead to a complete overhaul of regulation, but it sets the table for legislative assessment, enabling a wider discussion on the benefits and roadblocks associated with a particular policy or framework from an industry perspective.

Recently, France’s Financial Markets Authority, or AMF, called for a regulatory sandbox to be created to study the impact of security tokens in the European Union — a move that would provide regulatory latitude to loosen constraints for certain security token projects. This illustrates how misalignment between existing legislation and new innovations can be problematic but also demonstrates how regulators can be enablers of innovation by easing legislative restrictions for transitional, temporary phases of exploration. 

When it comes to DLT exploration and blockchain-powered financial instruments, a certain degree of regulatory wriggle room is required to support the development of new solutions without regulatory reprimands. A sandbox, as proposed by the AMF, would act as a microcosm of how new technological innovations and financial solutions can be nurtured by regulators in a safe environment, complete with industry and regulatory oversight.

To echo the sentiment of Henry Ford, the coming together of regulators and industry figures is a positive and necessary preliminary step, the maintenance of this open dialogue is progress, but the tangible outcomes stemming from collaboration and coordination is the true mark of success. In times of economic uncertainty, this vision takes on a more pronounced significance and reminds us that our collective efforts yield greater returns for broader society.

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

Albert Isola is Gibraltar’s minister for digital and financial services with the primary responsibility of raising Gibraltar’s profile as a well-regulated financial services center, leading the way in DLT and online gaming regulation. Minister Isola previously served as Gibraltar’s minister for commerce where he played a central role in spearheading Gibraltar’s purpose-built DLT regulatory framework, which was introduced in January 2018 for firms using blockchain to store or transfer value.

from Cointelegraph.com News https://ift.tt/2MdlsjC

Top 5 Cryptocurrencies to Watch This Week: BTC, BNB, XLM, XMR, TRX

The altcoin market capitalization has steadily risen over the past few days, suggesting that the short-term price action has shifted away from Bitcoin.

Although the Bitcoin (BTC) halving generated a lot of interest proceeding the event, it has failed to kickstart a trending move after completion of the event. This suggests in hindsight that the event was priced in. 

However, the top-ranked cryptocurrency on CoinMarketCap has not given up much ground following the event, which suggests that traders who purchased before halving are confident that the path of least resistance is to the upside.

Crypto market data daily view. Source: Coin360

While Bitcoin has been consolidating in the past few days, the action has shifted to altcoins whose market capitalization has risen from about $77 billion on May 11 to $94 billion at press time. 

Investors are now wondering if altcoins can continue their strong run while Bitcoin takes a breather, or will the action again shift back to Bitcoin? 

Let’s find out by analyzing the charts to see which major cryptocurrencies could offer trading opportunities in the next few days.

BTC/USD

Bitcoin (BTC) has formed a symmetrical triangle pattern, which suggests that the bulls and the bears are digesting the sharp rally from the lows. With three touches on the resistance line of the triangle and two touches on the support line (marked via ellipses on the chart), the formation is complete.

BTC-USD daily chart. Source: Tradingview

If the bulls can propel the BTC/USD pair above the triangle, the next leg of the uptrend is likely to continue. Although the pattern target of this setup is $11,778, the bears are likely to defend the $10,500 levels aggressively.

However, if the bulls can push the price above $10,500, it will complete the breakout of a large symmetrical triangle. This move could signal the possible start of a new long-term uptrend. 

The bullish view will be invalidated if the price turns down from the current levels or from $10,000 and breaks below the support line of the symmetrical triangle. A break below $8,130.58 could signal the start of a possible downtrend.

BTC-USD 4-hour chart. Source: Tradingview

The 4-hour chart shows that the bears are aggressively defending the resistance line of the symmetrical triangle. They have been mounting a stiff resistance in the $9,800-$10,000 zone. 

However, if the pair turns around from the current levels or from $9,400, another attempt to breakout of the triangle is likely. The traders can wait for the price to close (UTC time) above the triangle before buying.

The stop-loss for the trade can be kept at $9,400 because if the bears drag the price back into the triangle, it will suggest that the breakout was a bear trap. 

If the pair breaks below $9,400, a drop to the support line of the triangle is likely. A strong bounce off this level could also offer a buying opportunity.

BNB/USD

Binance Coin (BNB) has reached the overhead resistance at $18.1377, which is acting as a stiff resistance. However, if the bulls can push the price above the resistance, a rally to $21.7628 is possible.  

BNB-USD daily chart. Source: Tradingview

Both moving averages have started to turn up and the relative strength index is in the positive territory, which suggests that bulls have the upper hand. 

Even if the 8th-ranked cryptocurrency on CoinMarketCap turns down from the current levels, it is likely to find support at the trendline. A bounce off the trendline will increase the possibility of a break above $18.1377 as it will suggest that the bulls are buying the dips aggressively.

This bullish view will be invalidated if the bears sink the price below the trendline. Below this support, a drop to $15.7218 and then to $14 is likely. The bulls are likely to defend $14 aggressively as it has not been broken since April 30.  

BNB-USD 4-hour chart. Source: Tradingview

The bulls had pushed the price above the overhead resistance of $18.1377 but they could not sustain the breakout. This suggests that the bears are not willing to give up without a fight.

If the bears sink the BNB/USD pair below the 20-simple moving average, the short-term momentum will weaken.

On the other hand, if the pair bounces off the current levels, the bulls will make another attempt to scale the price above $18.1377. Traders can buy on a close (UTC time) above $18.1377 with a stop-loss below the 50-SMA. The stops can be trailed higher as the price moves northwards.

Another possible buying opportunity will open up after the price rebounds off the trendline support. The stop-loss for this trade can be kept just below the trendline.

XLM/USD

Stellar Lumens (XLM) resumed its uptrend after breaking out of the symmetrical triangle on May 30. Both moving averages have started to slope up and the RSI has risen above 60 levels, which suggests that bulls have the upper hand.   

XLM-USD daily chart. Source: Tradingview 

The bears might defend $0.076994 aggressively but if the bulls can push the price above this level, the uptrend is likely to pick up momentum. The target objective of a breakout of the triangle is $0.0875.

As the 12th-ranked cryptocurrency on CoinMarketCap had turned down from close to $0.088 levels on three previous occasions (marked as ellipses on the chart), this level is likely to again act as a major barrier.

This bullish view will be invalidated if the altcoin turns down from the current levels and breaks below the support line of the ascending channel. Below the channel, the trend could turn in favor of the bears.

XLM-USD 4-hour chart. Source: Tradingview 

On the 4-hour chart, both moving averages are sloping up and the RSI is in the positive territory. This suggests that bulls are in command. A breakout of $0.076994 is likely to attract further buying. 

Therefore, traders can buy on a breakout and close (UTC time) above $0.076994. The initial stop-loss for the trade can be kept at $0.070. The stops can be trailed higher as the price moves up.

However, if the bears can drag the price below the 10-exponential moving average, a drop to the 20-SMA is possible. If this support also gives way, a drop to the support line of the symmetrical triangle is possible. 

XMR/USD

Monero (XMR) has reached the critical overhead resistance of $68.4175. The price had turned down from close to this level twice before, hence, this level is likely to act as a major barrier.

XMR-USD daily chart. Source: Tradingview

If the bulls can drive the price above $68.4175, the 16th-ranked cryptocurrency on CoinMarketCap is likely to pick up momentum and could rally to the next resistance at $86.2384.

Conversely, if the digital asset reverses direction from the current levels, a drop to the moving averages and below it to the trendline is possible. If the bulls buy the dip to the trendline aggressively, it will increase the possibility of a break above $68.4175.

However, if the bears sink the price below the trendline, a drop to $51-$54 zone is possible. Below this zone, a new downtrend is possible. 

XMR-USD 4-hour chart. Source: Tradingview

Although bulls pushed the XMR/USD pair above $68.4175, they could not sustain the breakout. This suggests that bears are defending the resistance aggressively. However, the pair has held the 20-SMA, which suggests that the bulls are buying the dips.

Both moving averages are sloping up and the RSI is in the positive territory indicating that the bulls have the upper hand. Therefore, traders can buy on a breakout and close (UTC time) above $68.4175 with a stop-loss at $65.

The momentum will weaken if the pair breaks and sustains below the 20-SMA. A break below $65 can drag the pair to the trendline. A strong bounce off the trendline can also offer a buying opportunity. 

TRX/USD

Tron (TRX) broke out of the critical overhead resistance of $0.0167242, which is a huge positive because between April 29-May 9 the bulls had repeatedly failed to do so.  

TRX-USD daily chart. Source: Tradingview

If the bulls can sustain the 17th-ranked cryptocurrency on CoinMarketCap above $0.0167242, the momentum is likely to pick up. The first target to watch out for is $0.0183655 and then $0.0213539.

Conversely, if the bears sink and sustain the price below $0.0167242, a drop to the trendline is likely. A strong bounce off the trendline could lead to one more attempt by the bulls to resume the up move.

The trend will turn in favor of the bears on a break below the trendline. If this support gives way, a drop to $0.0128935 is possible.    

TRX-USD 4-hour chart. Source: Tradingview

The 4-hour chart shows that the bulls propelled the price above the overhead resistance of $0.0167242 but the bears are not ready to give up without a fight.

Currently, the bears have dragged the TRX/USD pair back below the breakout level. If the price sustains below $0.0166, a drop to the moving averages is possible. 

Both moving averages are sloping up and the RSI is close to the overbought zone, which suggests that bulls are in command. Therefore, the bulls are likely to buy the dip to the moving averages. Traders might consider buying at $0.0173 or purchasing on a rebound off the moving averages. 

A break below the moving averages could result in a drop to the trendline which can also offer another buying opportunity. Long positions can be avoided on a break below the trendline.  

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

The market data is provided by the HitBTC exchange.

from Cointelegraph.com News https://ift.tt/2yMG7rA

John McAfee Calls His Own 1$M Bitcoin Price Prediction 'Nonsense'

John McAfee dismissed his earlier prediction of future Bitcoin price, telling people to "wake up."

John McAfee, an eccentric cryptocurrency advocate and British-American entrepreneur, in a tweet called his own previous prediction of Bitcoin price hitting $1 million a total “nonsense” adding that people who believed his “absurd” forecast should “wake up”. 

McAfee used the whole North America continent GDP as a comparison reference to explain why his call was just a joke, stating that: 

“If Bitcoin ever hit $1 mil, it's market cap would be greater than the GDP of the entire North American Continent.”

McAfee moved on from Bitcoin 

In his recent tweet, McAfee labeled Bitcoin as “the most crippled” crypto technology. This is not his first time to diminish the first cryptocurrency. Earlier this year, he described Bitcoin as “ancient” tech and his prediction on the price going to $1 million was simply his trick to lure new users into the space.

McAfee recently introduced his own privacy-focused cryptocurrency called Ghost and he’s convinced that both his coin and another new cryptocurrency called HEX could potentially lure new people into crypto more efficiently than the Bitcoin ever could.

As Cointelegraph reported recently, McAfee admitted his privacy-oriented project Ghost “copy-pasted” from open-source anonymity coin PIVX.

from Cointelegraph.com News https://ift.tt/3gy7h6C

For the Blockchain Industry, the COVID-19 Clock Is Ticking

The crypto industry has the best historical moment to change the discourse about crypto and its reputation into a successful innovative tech sector.

Blockchains reached a feverish level of hype following the ICO mania of 2017.

Peddled as the panacea to the world’s ills, many of such promises ill-intentioned, initial coin offerings raised enormous sums of funds within minutes as the public’s focus shifted to the wild world of cryptocurrencies. Once the hype faded, the emerging narrative surrounded enterprise blockchains and the vast potential of the nascent technology to lead businesses into the next generation of the internet.

However, much of the original vision of blockchain technology and crypto was lost amid the hysteria. Consortium-backed chains, enterprise blockchain research projects and delegated proof-of-stake networks were supposed to be ushered in as “next-generation platforms,” but they stumbled — and in Steem’s case, an ugly fallout is ongoing.

2020 appeared like it would be a markedly different year, though. Startups understood the path forward was about crafting platforms around the major crypto protocols to extract value from them — not bootstrapping entire networks. Easing user-interface dilemmas hindering mainstream adoption became one of the foremost concerns; decentralized finance on the Ethereum network blossomed; and a flourishing ecosystem of derivatives instruments and institutional tools embraced Bitcoin (BTC).

Then COVID-19 hit.

While everyone toiled away at home under the duress of a global pandemic, financial markets fell off a cliff; the Fed and Treasury Department stepped in with unprecedented relief; and the topic du jour became speculation about the looming fallout of a catastrophic event. The narrative of enterprise blockchains faded into the background.

More immediate concerns like digital privacy, the convoluted (and never-ending) inflation vs. deflation argument, safe haven asset speculation and the interference of a novel virus took the stage.

The narrative timetable has accelerated, and hopefully, we’ve learned more than we did following 2017’s meteoric run.

The importance of privacy

The future of privacy and its role are being departed especially as we grapple with a series of developments emanating from the COVID-19 situation.

For example, former United States Treasury Secretary, Lawrence Summers, unabashedly declared that he thinks there is already too much financial privacy in the world. Naturally, that raised outcries among a mostly libertarian-leaning crypto audience. But it was the culmination of several developments flying under the radar as mainstream headlines mostly were laden with fear and hysteria during March. The government quietly unveiled the hyper-polarizing EARN IT bill into the legislative debate, seeking to undermine encryption that doesn’t bend to government approval. Apple and Google jointly created a COVID-19 exposure-tracing Bluetooth app that made everyone uneasy. And the concept of a digital dollar was introduced to U.S. Congress.

Crises are often a convenient veil for unpopular legislation, but the grassroots response to all of the above was encouraging, to say the least. Whether it’s Facebook’s privacy indiscretions, creepy online ads or the privacy movement bolstered by crypto proponents, it’s evident that people are increasingly placing a premium on privacy.

Financial privacy remains one of the critical frontiers for preserving privacy. When all kinds of personal data are commingled under one roof, those servers become appealing targets for hackers, even in the crypto space — e.g., BlockFi. Blindly allowing the infiltration of total transparency into financial matters is not only concerning but it’s outright dangerous.

Digital currencies owned by governments represent the culmination of the decades-long foray into digital surveillance. Unsurprisingly, pushback against them in the U.S. has been strong among proponents of privacy, with the implications of a cashless society widely regarded as firmly entrenching the government’s position to censor and control financial railways.

COVID-19 induced many unforeseen developments, but one of the most distinct was its acceleration of the timetable toward a digital dollar and weakened financial privacy. Hopefully, coming out of the other side of this crisis, projects focusing on advanced cryptographic primitives — e.g., zk-SNARKS, sMPCS, etc. — will have a renewed vigor among their supporters.

And maybe, just maybe, that urgency can translate to the mainstream before it’s too late.

Enterprise blockchains are looking for staying power

Recent reporting has detailed the conundrum with many permissioned — i.e., enterprise — blockchains. Competing companies simply don’t want to join a network primarily controlled by a competitor, especially one without privacy. Collaborations have become the norm, but are such endeavors really leveraging the potential of blockchain technology? Or are they just wielding a semi-centralized database for some marginal improvements in whatever the value proposition is?

Those are questions that are hard to answer right now and have the market for enterprise blockchains grasping for some form of staying power. They need a killer app or will fade away.

Some projects may have discovered the necessary killer app, though. And such projects face an arduous task moving forward, however. Not only do many crypto industry proponents disagree entirely with the notion of permissioned blockchains but their staying power has yet to be proved. The path of abandoned enterprise chains, such as supply chain management projects, is a dark mark that will need to be whitewashed before any meaningful adoption is fully realized either.

Stablecoins lead the way

Probably the most obvious development of the crypto and blockchain industry under the mountain of COVID-19 headlines is the rise of stablecoins. Ascending past the $10-billion market cap, stablecoins have been vociferously debated as eurodollar analogs, the natural progression of platforms like Ethereum functioning as a monetary sovereign, and as speculative fuel for institutions investing in Bitcoin.

Naturally, we need to ask ourselves: Are crypto dollars mutualistic or parasitic to their host networks? Otherwise, we can focus on the more general narrative of the explosion in stablecoin growth in recent months — it’s a microcosm of the immersion of legacy finance aspects into public blockchains.

Platforms like MakerDAO are, in reality, analogous to central banks with discretionary monetary policy for maintaining a stablecoin. DeFi lending has been blurring the lines between centralized and decentralized, and an alternative financial system of options, perp swaps, hash rate futures and other financial instruments have been thriving. Crypto dollars play a vital role in how many of those instruments are collateralized.

Crypto dollars have even swallowed the bulk of transactions on Ethereum. So, what gives? Well, a virus-induced pandemic may have accelerated the timetable for stablecoin adoption, just like it did with the privacy debate. Pair that with a growing thirst for crypto derivatives, institutional intrigue and an uncertain macroeconomic backdrop, and the conventional financial world are transitioning to public blockchains out of urgency.

The implications of the blockchain and crypto lessons learned from COVID-19 are still amorphous and are only in their early stages. But COVID-19 threw a wrench into virtually everything as the world came to a standstill — even the wild world of crypto. As we pass the halfway mark of one of the most fascinating years in recent memory, it’s worthwhile to take account of just how much narratives have shifted since the novel coronavirus took the world by storm. 

Enterprise blockchains may be stumbling; stablecoins may be rising; but what’s evident is that crypto has only been gaining traction, and permissionless stapled to privacy is at the heart of the intrigue ushering in a new generation of users. The COVID-19 pandemic just accelerated the focus on those narratives, making it the most opportune moment in history for the cryptocurrency industry to shift its reputation into a successful, innovative tech sector within the finance industry.

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

Andrew Rossow is a millennial attorney, law professor, entrepreneur, writer and speaker on privacy, cybersecurity, AI, AR/VR, blockchain and digital currencies. He has written for many outlets and contributed to cybersecurity and technology publications. Utilizing his millennial background to its fullest potential, Rossow provides a well-rounded perspective on social media crime, technology and privacy implications.

from Cointelegraph.com News https://ift.tt/2TSNxRG

Crypto Funds in Demand, Institutions See Bitcoin as Alternative Hedge

Grayscale Investments has been gobbling up Bitcoin in recent months, and most of its investors are institutions — but other funds are doing it, too.

While the theater world has Waiting for Godot, the crypto sphere has its own drama: Waiting for the Institutional Investor. Recently, there have been some promising sightings. Grayscale Investments has been buying up Bitcoin (BTC) at a great rate in recent months. 

Indeed, since the May 11–12 rewards halving event, the fund has been accumulating BTC at a rate equivalent to 150% of all the new Bitcoin mined, Cointelegraph reported on Thursday. The firm now has $3.2 billion in assets under management, or AUM, in its Grayscale Bitcoin Trust. Significantly, more than 90% of new inflows are from institutional players, according to the company.

Grayscale may not be alone in attracting institutional attention. Eric Ervin, the president and CEO of Blockforce Capital, an asset management firm that operates in the crypto space, told Cointelegraph: “We are seeing more institutional interest. I think this would be true regardless of the halving or the QE taking place, even more so given the unprecedented fiscal and monetary global stimulus.” 

Lennard Neo, the head of research at Stack Funds, told Cointelegraph that institutional investors have been looking for alternative solutions not just to provide returns but also to protect their existing portfolio from further downside risks, explaining:

“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.”

Paul Cappelli, a portfolio manager at Galaxy Fund Management, told Cointelegraph: “We’re seeing increased interest from multiple levels of investors — wealth channels, independent RIAs and institutions.” The recent BTC halving came at an interesting time — amid the COVID-19 outbreak and the growing unease about quantitative easing. He noted: “It clearly demonstrated BTC’s scarcity and future supply reduction as concerns deepened around unprecedented stimulus by the Fed with the CARES Act.”

Goldman Sachs raises doubts

Not all are knocking at Bitcoin’s door, though. In a May 27 presentation to investors, Goldman Sachs, the storied investment bank, listed five reasons why cryptocurrencies are not an asset class, which included Bitcoin, noting: “While hedge funds may find trading cryptocurrencies appealing because of their high volatility, that allure does not constitute a viable investment rationale.”

Crypto’s denizens reacted combatively. Referencing the quality of Goldman Sachs’ recent Bitcoin research, Gemini’s Tyler Winklevoss declared in a tweet: “Today, Wall Street is where you end up when you can’t make it in crypto” — and he followed up on May 28 with: “Day after Goldman Sachs says don’t buy bitcoin, bitcoin is up +$500.” Mati Greenspan of Quantum Economics wrote in his May 27 newsletter: “Regardless of what Goldman Sachs sell-side analysts have to say, it’s quite clear that institutional interest has been picking up lately.”

On the matter of investment suitability, a recent Bitwise Asset Management research report made the case for adding Bitcoin to a diversified portfolio of stocks and bonds, noting that on average, “a 2.5% allocation to bitcoin would have boosted the three-year cumulative return of a traditional 60% equity/40% bond portfolio by an astonishing 15.9 percentage points.” 

Overwhelming the market?

In the roughly two-week period since the BTC rewards halving, which reduced miners’ block reward from 12.5 BTC to 6.25 BTC, 12,337 Bitcoin were mined as reported by researcher Kevin Rooke on May 27. During that same period, Grayscale’s Bitcoin Trust purchased 18,910 Bitcoin — about 1.5 BTC for every Bitcoin created. This has raised some questions about the overall BTC supply.

Binance CEO Changpeng Zhao commented on Rooke’s findings in a tweet: “There isn’t enough new supply to go around, even for just one guy [i.e., Grayscale].” Greenspan, for his part, told Cointelegraph: “It seems like institutional players are gradually becoming a much larger part of this small market.” Might they overwhelm the market? “Whales have always been an issue,” he opined.

As noted, Grayscale Investments reported $3.2 billion in AUM in late May. To put this in context, the total AUM of crypto hedge funds globally increased to over $2 billion in 2019 from $1 billion the previous year, according to the 2020 PricewaterhouseCoopers–Elwood Crypto Hedge Fund Report. Most crypto hedge funds trade Bitcoin (97%), followed by Ethereum (67%), with the vast majority of investors in crypto hedge funds (90%) being either family offices (48%) or high-net-worth individuals (42%).

This is an imperfect comparison, though, because the PwC–Elwood report only tracked hedge funds and excluded crypto index funds — including passive/tracker funds like Grayscale’s, which basically track the price of BTC. As PwC’s Global Crypto Leader Henri Arslanian told Cointelegraph, it “goes up or down solely based on the price of BTC and not due to the skills or activities of the fund manager.” It also excluded crypto venture capital funds that make equity investments in crypto firms. Still, the comparison suggests something of the magnitude of Grayscale’s BTC commitment.

When contacted by the Cointelegraph, Grayscale Investments declined to provide any specific details about its recent BTC buying spree, or why other institutional investors might be snapping up BTC. “We’re not going to talk about momentum following the halving until mid-July when we’ll publish our Q2 numbers,” a spokesperson said.

But Michael Sonnenshein, the managing director of Grayscale Investments, told Cointelegraph that investors have typically tried to shield their portfolios from market shocks or during times of uncertainty with fiat currencies, government bonds and gold: 

“All three are facing issues this time around. Bitcoin has emerged as an alternative hedge, operating independently of the dramatic monetary policies enacted by central banks.”

Other Factors

The halving is the most dramatic and immediate recent BTC event, but industry sources mostly cited other reasons for the recent institutional attentiveness. Stimulus packages, like the $3-trillion coronavirus relief package passed by the United States House of Representatives on May 15 — and attendant fear of inflation — is chief among their concerns. David Lawant, a research analyst at Bitwise Asset Management, told Cointelegraph:

“In our view, institutional interest was on the rise since the beginning of the year, but it really took off after the unprecedented government response to the COVID-19 crisis.” 

Neo cited rising geopolitical tensions, like those between the U.S. and China, which have put “further stress on an already weakened economy, and in turn, increased Bitcoin’s appeal.” Arslanian told Cointelegraph: 

“We are continuing to see increased interest from institutional investors. But more than the halving, it’s the availability of institutional-grade offerings, from regulated crypto funds products to regulated custody and many offerings that are making this possible.”

The participation of hedge fund icons like Paul Tudor Jones has to be factored in as well. Jones’ recent letter “making the case for Bitcoin as his preferred hedge against what he calls ‘the great monetary inflation’ has significantly reduced career risk for many of his peers considering an allocation to Bitcoin,” Lawant told Cointelegraph. In a May investment report, Cappelli wrote: 

“Not only has institutional infrastructure progressed, but as the world changes important players are entering the space. The most successful hedge fund of all time, Renaissance Technologies, recently announced their intention to trade bitcoin futures.” 

Attracting notice

Lawant believes that: “In the lenses of mainstream investors, I think that 2020 is the year in which Bitcoin moved from being a venture capital bet to a macro hedge.” 

What’s more, the halving event had some impact, too, as Arslanian believes that more attention has been brought to how Bitcoin works, adding: “The fact that this happened as the world is going through record quantitative easing from central banks also brought attention on how money is created and the role that it plays in society.” People who were otherwise ignoring this asset class are now starting to take notice, added Ervin. He continued: 

“Like any disruptive technology or asset class, first the explorers and pioneers, then slowly more people enter, before finally the technology ‘crosses the chasm’ and reaches mainstream adoption and investment. I would say we are in the very early days.” 

To summarize, global unemployment has been soaring, and economic stimulus is clearly on the minds of governments and central banks. The European Commission’s recently proposed $826-billion virus recovery plan was just the latest instance. Quantitative easing may be necessary under these unique circumstances, but it set off inflation alarm bells among some institutional investors. 

Related: Crypto and Fiat Currencies Are Worlds Apart, Here Are the Reasons Why

The halving event may not have persuaded financial institutions to invest in Bitcoin, but it did remind them, once again, that BTC, unlike fiat currencies, has a fixed supply (21 million BTC). Given the world’s inflation anxieties, is it surprising that institutional players might throw some hedge fund money Bitcoin’s way?

from Cointelegraph.com News https://ift.tt/2ZRvr66

Conquering Decentralized Finance: Enter the Custodians

As decentralized finance becomes a principal focus for both investors and companies alike, custodians will ease their entry, making DeFi the future of finance.

The future of finance is decentralized. Striving to facilitate that prognosis, decentralized finance — or DeFi — is quickly shaping into an alluring prospect for investors and companies alike. Looking to harness this decentralized ideal, rivals to the Ethereum-centric sector are feeling the fear of missing out and leveraging their own blockchains in order to gain dominance. Reaching an early climax this year, DeFi breached $1 billion in locked assets. For the Ethereum ecosystem, this stood as a significant boon, drastically increasing its value proposition — and leading competitors to turn their heads.

With the Ethereum ecosystem intrinsically linked to DeFi, it has become the number one pit stop for developers of decentralized apps. As such, Ethereum boasts some of the best and brightest. Spotting this success, Ethereum’s rivals are entering the fray. While this indicates the DeFi sector is set to grow even further, it also means investors will require a multichain solution.

Blockchain envy

A white paper released by Binance last month detailed the creation of a new blockchain. Dubbed the "Binance Smart Chain," the venture aims to bestow upon the firm the ability to create smart contracts. Deployed adjacent to the existing Binance Chain, the smart chain will also support the Ethereum Virtual Machine, bringing the interoperability and programmability of the EVM to the Binance Chain. This, in theory, will make it much easier for developers to simply hop over to Binance.

Binance isn't alone in this endeavor. Other centralized exchanges, including Huobi and OKEx, have aired their plans for individual blockchain ecosystems. Following in Binance Chain's stead in 2019, both OKEx and Huobi unveiled plans for their own chains.

Arguably, these exchanges and their new blockchains are making a play for the DeFi sector, and it's easy to understand why. Crypto-centric companies generally accept that the future of finance is decentralized. However, many presently operate within regional and centralized platforms, exposing themselves to the single points of failure the industry was designed to elude. Exchanges now recognize that they need a global stage to reduce risk and open up liquidity. DeFi is this global stage — and exchanges know it.

This race to the top will inevitably nurture far more innovation within the distinct ecosystems, as well as infinite opportunity and choice for investors. However, it’ll also mean far more administration, leaving traders to navigate between separate blockchain ecosystems.

Another factor comes in the form of Ethereum's domination of DeFi and the development of Ethereum 2.0, which will provide new scaling solutions and extra space for its DeFi ecosystem to continue to grow. But while most DeFi-based protocols developed today all demand Ether (ETH), for Binance and its contemporaries, it's a contest of which can create the speediest, most efficient chain to attract the greatest number of developers and users.

Moreover, as Ethereum's DeFi sector grows, so too does utility for Ether. Its rivals have caught on to this and now want the equivalent, with their own chain and their own tokens — all in an effort to capture market dominance.

Guardians of DeFi

Given the breadth and measure of the companies behind these blockchain ventures, it's fair to say that each one will be successful — in its own unique way. This, in turn, will likely generate new participants to join the DeFi fray, thus creating a network effect in which DeFi becomes the new standard. However, with so many DeFi ecosystems in conflict, the cost of operating is bound to increase as users begin to work across separate chains. This will also impact the user experience, as investors will need to juggle between wallets and interfaces, which brings us to the issue of compatibility.

In the cryptocurrency space, we observe a fair degree of incompatibility problems, especially between wallets and blockchains. At present, while several DeFi-primed wallet solutions exist, not all offer multichain support. More to the point, however, none offer custodial services.

Now with more companies entering the DeFi ecosystem in the hopes of maximizing earnings potential and growing their investments, ensuring the safe custody of private keys across multiple chains will become more than a headache — especially if users practice self custody.

While Ethereum makes the buying and exchange process slightly more manageable through atomic swaps, routing Bitcoin (BTC) via Ethereum or Binance Chain becomes much more troublesome. Solutions do exist, and others are in the making, but they're still in their infancy.

Under present circumstances, however, managing tokens in a decentralized way via several protocols is exceptionally challenging. This will only get more complicated as distinct blockchain ecosystems expand.

Much like exchanges, some custodians are starting to realize the significance of decentralized finance. Though even for these entities, the compatibility problem remains. Fortunately, via bespoke solutions such as re-signing technology, real-time independent custodians can act as a mediator between DeFi and traditional finance, allowing users to safely store a multitude of cryptocurrencies and transact with them via any blockchain ecosystem.

The onus isn't solely on multichain support either. As DeFi and cryptocurrency in general look to become more established within the financial industry, they'll garner further scrutiny, particularly when it comes to security. This is especially true for institutional and accredited players, and getting these investors on side is essential if the industry is to reach a new standard.

As touched upon, current custody solutions in DeFi are confined to self custody, single-user options. This stands as a significant barrier to adoption, especially for institutional investors. Without a third-party independent custodian, investors enter the DeFi sector completely unguarded, unregulated and uninsured. Moreover, they lack the essential amenities provided by custodians, including insurance, price and margin call alerts, multisignature accounts and whitelists.

This is one of the critical roles custodians can play, be it in the nascent DeFi sector or the broader crypto industry. They add integral elements of control. These include multisig accounts, which enable several account holders — i.e, multiple employees or even a couple — to sign transactions. Businesses may also opt for multisig controls where more than one user is required to sign a transaction to ensure managing fiduciary and holding risks. Other controls such as whitelists and blacklists help prevent the misappropriation of funds and filter out undesired or unofficial addresses. And alerts can help track performance and inform of a change in asset price, as well as notify on margin obligations to avoid positions being liquidated.

By providing these added layers of utility and security along with effective private-key storage, custodians enable a safe route to access DeFi and digital assets overall for both individual and institutional investors. This is especially true as regulatory compliance becomes a focal point. Not only can custodians provide Know Your Customer and Anti-Money Laundering certainty within DeFi's regulatory gray area, but they can also endow insurance offerings, accounting for one of the most pressing concerns of almost every investor.

There is also increasing individual and institutional investor demand for staking and governance features built directly into wallet and on-exchange accounts. Custodians need to think about the end user and how to make their digital assets work best for them while they are in custody, as securely and easily as possible.

Forward-thinking custodians may look to integrate the most prevalent DeFi protocols directly into the user interface. By enabling notifications and DeFi portfolio tracking tools to assess holdings, trades and stats — as well as to compare rates between different protocols — custodians can enhance the overall user experience.

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

Alex Batlin is the founder and CEO of Trustology, an award-winning international FinTech company focused on providing institutional investors and the wider crypto ecosystem with state-of-the-art, insured custodial wallet solutions to securely manage on-chain and on-exchange crypto assets in real time. Alex is an entrepreneur with extensive banking and blockchain leadership and development experience, previously at BNY Mellon, UBS and JPMorgan Chase.

from Cointelegraph.com News https://ift.tt/2TW5JK3