Bitcoin a ‘Potential Store of Value’ That’s Very Volatile: Fidelity Digital Assets Head

Investors are hoping bitcoin becomes a “store of value” but the largest cryptocurrency is still very volatile, Tom Jessop, head of Fidelity Digital Assets (FDAS), said during the Reuters Global Investment Outlook Summit 2020 on Thursday. 

“We use the words ‘potential store of value’ as bitcoin is still extremely volatile, and by any standard perhaps would not achieve the mantle of a true store of value,” said Jessop, whose company, a unit of Fidelity Investments, offers cryptocurrency trading and custody services for financial firms and corporations. His remarks were reported by Reuters

Jessop added that while bitcoin’s volatility prevents it from acting as a reliable way to store value, “aspirationally” it could be one, and “that’s one of the reasons why so many investors are now thinking about this space constructively.”

Currently, low trading volumes seem to have kept bitcoin hovering around $19,000 after touching its all-time high of $19,850 last week.

While sharp price movements in a market can often scare investors because volatility gets conflated with risk, what’s unique about bitcoin’s volatility is that unlike the volatility index (VIX) for the S&P 500, bitcoin’s VIX  tends to be positively correlated with the asset’s price. 

In an October report regarding bitcoin’s market cap, FDAS noted that due to bitcoin’s uncorrelated nature the crypto’s market cap has ample space to grow. 

“In a world where benchmark interest rates globally are near, at or below zero, the opportunity cost of not allocating to bitcoin is higher,” the report noted. 

Ethereum is a Hot Topic Following 2.0 Launch; Will This Boost Its Uptrend?

Altcoin Price

Ethereum is a Hot Topic Following 2.0 Launch; Will This Boost Its Uptrend?


  • Ethereum and the entire crypto market have pushed higher overnight, which comes as Bitcoin gears up for another test of its all-time highs
  • This push higher has allowed ETH to gain what appears to be a strong foothold within the lower-$600 region
  • Any rejection or downturn seen by Bitcoin, however, could cause Ethereum’s price to plunge in tandem and once again lose this coveted level
  • Data regarding the sentiment and social activity surrounding ETH seems to indicate that the cryptocurrency is drumming up major attention
  • This has come about due to the recent deployment of ETH 2.0’s Beacon Chain, but will this hype be enough to boost its uptrend?

Ethereum has been closely tracking Bitcoin’s price action as of late, which means that it may continue consolidating below its recently set highs of $620 until BTC can break above its all-time highs.

One recent event that could prove to be a catalyst for ETH is the launch of Ethereum 2.0. This has created a lot of hype surrounding the blockchain and may continue doing so in the mid-term.

An analytics firm explained in a recent tweet that since the launch began, discussions of Ethereum have surged, which could be a bullish sign.

Ethereum’s Price Nears 2020 Highs as Bitcoin Moves to Test $19,800 

At the time of writing, Ethereum is trading up just under 3% at its current price of $613. This marks a notable surge from where it was just one week ago when its price plunged below $600 and reeled all the way to $490.

The support at these lows was quite intense and helped slow its descent. It bottomed around the same time as Bitcoin, which reached lows of $16,400.

Social Data Suggests Hype for ETH is Building 

One trend that could ultimately bolster Ethereum’s price action and help fuel a parabolic rally is the mounting hype surrounding ETH 2.0.

Santiment – an on-chain analytics firm – spoke about this in a recent tweet, noting that discussions surrounding ETH have been surging as of late.

“Our data indicates that Ethereum is the asset seeing the biggest uptick in discussion rate, as ETH 2.0 Beacon chain went live. Discussions on buying have also been spiking as BTC has polarized traders during this range pattern from $18.8k & 19.3k.”

Ethereum

Image Courtesy of Santiment.

If this hype translates into heightened buying and trading activity, it could seriously bolster Ethereum’s mid-term outlook.

Featured image from Unsplash.
Price data from TradingView.

SEC Makes FinHub a Stand-Alone Office

The U.S. Securities and Exchange Commission’s (SEC) fintech hub is getting an upgrade.

Strategic Hub for Innovation and Financial Technology, or FinHub for short, will become a stand-alone office with Senior Advisor for Digital Assets Valerie A. Szczepanik continuing at the helm. Szczepanik will now report directly to the SEC commissioner under a reorganization announced Thursday.

FinHub has played prominently in the SEC’s crypto strategy since its 2018 formation. Now a permanent fixture of the regulator’s hierarchy, FinHub is poised to take on an even more expansive role. SEC said the shift “strengthens” its ability to adapt to ever-changing financial markets.

“Our action to establish FinHub as stand-alone office furthers our commitment to facilitate the introduction of new technologies for the benefit of investors and the efficiency and resiliency of our markets,” said Commissioner Jay Clayton in a press statement.

Analyst: XRP Likely to Explode to $0.75 as Market-Wide Momentum Returns

XRP has been facing some intense turbulence throughout the past few weeks, but the cryptocurrency is now facing some intense consolidation as analysts await more insights into where the rest of the market will trend in the days and weeks ahead.

The resistance that the cryptocurrency faces within the mid-to-upper $0.60 region is quite intense and may continue hampering its price action in the near-term.

Until there’s a second wave of buying pressure that causes “legacy altcoins” like XRP to rally higher, the cryptocurrency may continue extending this bout of sideways trading,

One trader explained in a recent tweet that he is watching for the cryptocurrency to see some massive momentum in the near-term, noting that the upcoming airdrop that XRP holders will receive could spark further momentum.

This airdrop is widely looked upon as the impetus of this entire rally that the cryptocurrency has seen, with the recent break above its multi-year range highs at $0.30 also sparking the momentum.

If the aforementioned trader’s upside target comes to fruition, then the cryptocurrency will likely revisit its recent highs in the mid-$0.70 region in the days ahead.

XRP Continues Consolidating as Bout of Sideways Trading Persists

At the time of writing, XRP is trading down marginally at its current price of $0.63. This is around where it has been trading throughout the past few days.

The resistance just above where it is currently trading is significant and has slowed its ascent on multiple occasions throughout the past few days and weeks.

If it can regain its momentum and push higher in the near-term, there’s a strong possibility that the cryptocurrency will start the second leg of its parabolic journey higher.

Here’s Where Analysts Think It May Trend Next

One trader explained in a recent tweet that he is expecting XRP to rally higher in the days and weeks ahead as the highly anticipated airdrop approaches.

This airdrop – which will be sent to XRP holders – is widely thought to be what helped sparked this entire move higher, which means that it could continue being a bullish catalyst.

He believes that a move up towards the $0.70 region is imminent in the near-term.

“XRP: Pretty sure this does something freaky leading up to airdrop. Still a complete shitter though.”

XRP

Image Courtesy of Loma. Source: XRPUSD on TradingView.

Where the entire market trends in the mid-term will depend entirely upon the rest of the market, as any strength or weakness amongst Bitcoin and Ethereum will sway XRP’s price action.

Featured image from Unsplash.
Charts from TradingView.

Billionaire Paul Tudor Jones: Bitcoin Is Undervalued Relative to Stocks and Gold

On Thursday (December 3), with Bitcoin consolidating around $19,400, legendary billionaire macro investor Paul Tudor Jones II (aka “PTJ”), explained why he believes that Bitcoin is currently undervalued.

PTJ, who is the Founder and the Chief Investment Officer (CIO) of asset management firm Tudor Investment Corporation (aka “Tudor”), made his comments regarding Bitcoin during an interview earlier today with Yahoo Finance correspondent Julia La Roche.

La Roche started this segment of the interview by asking PTJ what he thinks about cryptocurrencies in the context of his portfolio.

PTJ replied:

“Again, I’m not an expert on Bitcoin by any stretch. It’s just what the market cap of $500 billion… it’s the wrong market cap in a world where you’ve got $9 trillion worth of equity market cap and God knows how many trillions of fiat currency etc… so it’s the wrong market cap for instance relative to gold, which is eight or nine trillion [dollars].

‘Bitcoin reminds me so much of the internet stocks of 1999 because the internet was in its infancy. No-one knew how to value it because of the world of possibility that lay ahead. What you can be certain of is that probably 20 years from now our kids and grandkids, whatever, all of us, will be using some type of digital currency.

“Digital currency will be will be used by every sovereign. They may have their own digital currency, whatever. They’ll be very very very commonplace at that point in time. Cash may be gone, and so in that world, where does Bitcoin fit in as well as some of the other cryptocurrencies?… I don’t know. I’m not smart enough to figure that out.

“I think Bitcoin if I really had to kind of guess what the future is going, to be it’s going to be a lot like the metals complex, where you have precious crypto… that might be Bitcoin, it’s the first crypto…

“Because of its finite supply, that might be the precious crypto. Then you’re going to have transactional cryptocurrencies along with the sovereigns, and they may be more like the industrial metals, so where you have gold as a precious metal… you may have precious crypto and you may have industrial crypto…

“So, what I do know is that it’s no way possible today to know what the next ten or twenty years are going to be like, and I know that if I had to take a position on it, I’m going to take the brand name, which is Bitcoin. I’m going to assume that it’s the wrong price for the possibilities it has, and I’m going to assume that the path forward from here is north.”

Back in early May, PTJ made some very bullish comments about Bitcoin (as an inflation hedge) in the investment letter (“Market Outlook — Macro Perspective”) sent out to clients of the $22 billion macro hedge fund “BVI Global Fund”, which is managed by his asset management firm Tudor Investment.

Bloomberg was the first to report (on May 7) that according to this investment letter, the offering memoranda for the Tudor BVI Global Fund had been updated to disclose that Tudor Investment Corporation “may trade Bitcoin futures” for the fund and that the “initial maximum exposure guideline for purchasing Bitcoin futures” had been set to “a low single digit exposure.”

Naturally, this highly bullish thesis on Bitcoin got everyone in the crypto community very excited.

This is why CNBC’s “Squawk Box” decided to invite PTJ for an interview on May 11.

Below, we highlight the most interesting things that the Tudor CIO said about Bitcoin during this interview.

Squawk Box co-anchor Andrew Ross Sorkin asked PTJ what had changed his mind about Bitcoin (since PTJ for a long time used to be skeptical of Bitcoin). 

PTJ replied:

“Well, Covid happened, and the great monetary inflation happened, and that made me begin to think about how do you want to be positioned in your portfolio going forward.

“So, that’s really what trip my interest in Bitcoin, and you have to realize if you just think about say Bitcoin versus cash, right?

“When I think of stores of value, I think of it in four ways: purchasing power; trustworthiness; liquidity; and portability…

“When it comes to trustworthiness, Bitcoin’s 11 years old; there’s very little trust in it. We’re watching the birthing of the store value and whether that’s exceeds or not only time will tell.

“What I do know is that every day that goes by and Bitcoin survives, the trust in it will go up.

“If you take cash, on the other hand, and you think about it from a purchasing power standpoint, if you own cash in the world today, you know your central bank has the goal of depreciating its value 2% per year. So you have in essence a wasting asset in your hands.

“So, Bitcoin, I think it’s a great speculation… I’ve got just over one percent of my assets in Bitcoin, maybe it’s almost two. That seems like the right number right now.

“For me, it’s not the great cure for all the monetary ills. It’s a great speculation, that’s what I would say what Bitcoin is.”

SEC’s fintech wing leaves the nest, becoming stand-alone office

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Wrapped Bitcoin ‘Burns’ Increase as Traders Rotate Capital Out of Cooling DeFi

Wrapped Bitcoin, the bitcoin-backed token on Ethereum now worth over $2 billion, has seen an increase in burns (or “unwrappings”) by some of its largest users as the Ethereum-based decentralized finance sector continues to cool.

BitGo clients like Three Arrows Capital and Alameda Research are exchanging an increasing amount of their tokenized bitcoins minted earlier this year for real bitcoins as the bullish cryptocurrency market continues to center on bitcoin and Ethereum’s decentralized finance takes a back seat for now. 

“In general, the yield has dipped in DeFi and the increased trading on centralized exchanges directed our needs to do so,” said Lan Gu, quantitative trader at Alameda Research, in a direct message with CoinDesk. 

In the months following DeFi’s red-hot summer when bitcoins were wrapped faster than they were mined, the sector has cooled significantly and yields across various Ethereum-based protocols have subsequently dropped. 

Alameda’s WBTC burns are also partially the result of shifts in their OTC order flow and internal capital base readjustment as the price of bitcoin continues to climb, the firm told CoinDesk. 

Another catalyst for the increase in burns could be the sunsetting of liquidity rewards program for leading decentralized exchange Uniswap on Nov. 17, giving users less of an incentive to keep funds on the platform, according to Kiarash Mosayeri, Wrapped Bitcoin product manager at BitGo. Talking to CoinDesk, Mosayeri said the recent WBTC burns “were expected.”

To date, nearly 120,000 WBTC are still in circulation with over 8,000 WBTC minted in November. A record 4,300 WBTC were burned over the same period, however. Nearly 2,000 more were also burned in the first few days of December with no new minting. 

Three Arrows Capital, another prominent Wrapped Bitcoin merchant that burned over 4,000 WBTC in the past two weeks, declined to comment on why they “unwrapped” these coins. The Singapore-based trading firm has not minted new WBTC since mid October, per BitGo’s Wrapped Bitcoin orderbook. 

The market capitalization of Wrapped Bitcoin is above $2.3 billion at last check.

OKEx’s Trading Volumes and Tether Reserve Plunge on Possible User Exodus

A sharp drop in OKEx’s trading volume and stablecoin reserves – tether in particular – may reveal an ongoing exodus of its users, after the popular crypto derivatives exchange unexpectedly halted all crypto withdrawal activities for about five weeks.

Data from analytics service CryptoQuant shows that the amount of tether held in OKEx wallets have dropped to 6.69 million from 275.0 million between Nov. 25 and Dec. 1, down 97.6% in less than a week. Malta-based exchange OKEx has a large user base in China and tether, the world’s largest dollar-backed token with total assets of $19.35 billion, is one of the most popular stablecoins used by Chinese traders.

The amount of USDT reserved on OKEx over the past year.
(CryptoQuant)

At the same time, total daily trading volume on OKEx has declined significantly during the same time period – down approximately 67.7%, respectively, from Nov. 25, according to data compiled by CoinDesk. The volume of tether traded on OKEx plunged 70%.

Traders often use stablecoins as an intermediary step in order to buy riskier crypto assets. After individuals purchase stablecoins with U.S. dollars or other government-issued currencies, exchanges are usually the platform where the stablecoins go to be traded for cryptocurrencies such as bitcoin, ether or others.

The Chinese government prohibited local crypto exchanges from allowing trades between crypto assets and the Chinese yuan in 2017, but people can still trade renminbi into stablecoins through over-the-counter (OTC) desks.

Steep drops

The collapse of trading volume does not appear to be a mere lull in interest, especially considering bitcoin is near its all-time highs and other cryptocurrencies have been rallying.

The sudden and significant decline in tether in reserves on OKEx could indicate that users are transferring their stablecoins elsewhere – possibly to a different exchange or to their private cold wallets, according to analysts and traders who spoke with CoinDesk.

“[It’s] just folks withdrawing I think,” Darius Sit from Singapore-based QCP Capital told CoinDesk. “They don’t want to keep assets in OKEx.”

Chinese users’ alternatives to OKEx have also had similar problems amid a recent government crackdown on exchanges.

However, during the same time period, the tether reserve on Huobi logged a small increase, according to data from CryptoQuant, although the same metric dropped slightly on Binance. While legally based in Seychelles, Huobi also focuses on China-based customers, as does Binance, which isn’t clear on its location.

Tether reserves on OKEx, Huobi and Binance in the past year.
(CryptoQuant)

A spokesperson for OKEx said CryptoQuant’s data did not match the firm’s internal records but OKEx has yet to provide their own figures.

Nonetheless, data from blockchain analytics firm Glassnode also shows that a substantial amount of tether and other stablecoins have left the exchange in the past week.

Tether balance on OKEx in the past year.
(Glassnode)

OKEx currently supports seven stablecoins on its platform: USDT, USDC, Dai, Paxos Standard (PAX), TUSD, USDK and GUSD.

According to Glassnode data, balances of USDC and PAX on OKEx have also dropped sharply in the past week.

USDC balance on OKEx since January 2020.
(Glassnode)

Paxos Standard balance on OKEx since January 2020.
(Glassnode)

In a recent ask-me-anything (AMA) session, OKEx CEO Jay Hao said the freeze of OKEx’s crypto withdrawals was harmful for his company and as a result, trading volumes have dropped.

“We have seen an understandable decrease in trading activity on the exchange,” Hao said.

Hao did not explain why the backups of the crypto private keys could not be used during the freeze. According to OKEx, the suspension of all cryptocurrency withdrawals was due to one of its key holders being “out of touch” with the exchange after they were “cooperating with a public security bureau in investigations.”

Cryptocurrency Indexes Are Set to Launch in 2021 by S&P Dow Jones Indices

Cryptocurrency Indexes Are Set to Launch in 2021 by S&P Dow Jones Indices

S&P Dow Jones Indices has made it official: they will launch cryptocurrency indexes in 2021, becoming the latest major finance company to make its inception into the digital asset industry.

More than 550 of the top traded coins to be included in the indexes

As Reuters reported initially on December 3, 2020, such indexes will measure the performance of over 550 top traded crypto by market cap, including bitcoin, and they will use data from the New York-based company Lukka.

According to the statement issued by both companies, S&P’s clients could create customized indexes, among other benchmarking tools on cryptocurrencies. Peter Roffman, global head of Innovation and Strategy at S&P Dow Jones Indices, told Reuters:

With digital assets such as cryptocurrencies becoming a rapidly emerging asset class, the time is right for independent, reliable, and user-friendly benchmarks.

Both parties also mentioned in the joint statement that they expect cryptocurrencies to achieve the status of “mainstream investments” with the indexes’ launching in 2021.

Larger financial institutions have been flirting with the crypto sphere, such as JP Morgan, who has been showing a surprising turnaround from their view towards Bitcoin, shifting to a bullish view in the medium and long-term.

Also, payment processing giant Paypal has been taking significant steps to adopt cryptocurrencies within their portfolio, as they announced on October 21, 2020, the official support of bitcoin (BTC), ethereum (ETH), bitcoin cash (BCH), and litecoin (LTC).

During an earnings call held on November 2, 2020, PayPal’s CEO Dan Schulman revealed plans such as increased crypto-asset purchasing limits.

Another big bank shifting to a bullish view on BTC is Deutsche Bank, which argued that “more investors are starting to see it emerge as a credible asset to invest in,” where gold is used to hedge dollar risk, and inflation.

What do you think about this announcement? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons