Category: Bitcoin

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Bitcoin Crypto News ETFs

ProShares Launches First Short Bitcoin ETF

ProShares, a global exchange-traded fund (ETF) provider, has launched an ETF enabling investors to bet against bitcoin, otherwise known as “going short”:

Profiting Off Bitcoin’s Decline

The ProShares Short Bitcoin Strategy ETF, scheduled to commence trading under ticker symbol BITI on June 22 on the New York Stock Exchange, enables investors to “short sell” bitcoin.

Unlike most investments which speculate on the price appreciating, short selling involves the opposite – betting that the asset in question will decline. In a statement, ProShares CEO Michael Sapir commented that conditions were ripe for the product:

As recent times have shown, Bitcoin can drop in value. BITI affords investors who believe that the price of Bitcoin will drop with an opportunity to potentially profit or to hedge their cryptocurrency holdings.

Michael Sapir, ProShares CEO

BITI purports to deliver the inverse of the performance of the S&P CME Bitcoin Futures Index, and it will obtain exposure through Bitcoin futures contracts.

The launch is rather timely, given bitcoin’s recent unprecedented decline below 2017’s previous all-time high. Since November last year, the overall cryptocurrency market has shed US$2 trillion from its market capitalisation, peaking at US$2.9 trillion and currently hovering around US$900 million.

Bitcoin 1 month performance (USD). Source: Coinbase

SEC Drags its Heels on Spot Bitcoin ETF

Despite other jurisdictions such as Canada and Australia having multiple spot bitcoin ETFs, as the world’s largest financial market the US is yet to get one of its own. The US regulator, the Security and Exchange Commission (SEC), has repeatedly denied spot bitcoin ETFs, citing “market manipulation” as one of several reasons for failing to approve one.

Remarkably, investors in the US now have the option to invest in bitcoin futures, as well as bet against bitcoin, but they still cannot invest in an ETF tracking its price:

Commentators on Twitter appeared baffled by the decision, describing it as “intentional”, with others saying it was unequivocally clear that the SEC had an agenda:

The news comes in as Grayscale remains committed to converting its Grayscale Bitcoin Trust into an ETF, and just yesterday, Bloomberg reported that Anthony Scaramucci’s SkyBridge was scheduled to file for a spot bitcoin ETF this week.

Pressure is mounting on the SEC. How much longer can it continue to deny a spot bitcoin ETF? The longer the situation persists, the more difficult it is to argue that its decision-making isn’t political.

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Bitcoin Crypto News Ethereum Markets

BTC Crashes Below 2017’s Previous All-Time High, Hitting $17,500

For the first time since December 2020, bitcoin dropped below US$20,000 as crypto markets tumbled this past weekend amid US$600 million being liquidated within 24 hours.

Despite some panicking, others took a more sanguine approach:

Macro-Led Meltdown

Unlike prior cycles, bitcoin is well and truly integrated within the broader global macroeconomy. Against a backdrop of US inflation hitting a 40-year high, coupled with an aggressive rates rise by the Fed, all risk assets were inevitably going to feel the pain.

With the market in full fear mode, dialled up in part thanks to Celsius halting withdrawals, the broader crypto market was already well-poised for a breakdown. Fear, coupled with the sector’s affinity for leverage, and suddenly you had a situation where bitcoin and crypto fell off a cliff.

ETH dropped below US$950 and BTC broke the previous cycle’s all-time high, collapsing to US$17,500. All over Twitter, commentators spoke how it was now official that “all models are broken”:

Some even took to ridiculing Bitcoin’s laser-eyed chief protagonist, Michael Saylor:

Slight Recovery

As bitcoin slid below US$19,000, commentators were left wondering when the carnage would end. Glassnode’s on-chain analyst Checkmate highlighted bitcoin’s difficulty regression model being priced at US$17,600, that being the cost to mine BTC, as a possible bottom.

Not long after, BTC bounced off the difficulty regression model, providing some temporary relief:

BTC has since regained some of the losses, clawing its way back up above US$20,000, however it remains almost 25 percent down over the past week.

BTC weekly performance. Source: Coinbase

ETH has similarly recovered somewhat, following in BTC’s steps, and at the time of writing was trading at just over US$1,100, close to 24 percent down on the week:

Ethereum weekly performance. Source: Coinbase

For long-term holders with high levels of conviction, now may be as good a time as ever to gain exposure. However, the market remains riddled with fear, suggesting that few are likely to dive in. Market psychology is indeed a strange thing …

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Crypto market fear and greed index. Source: @BitcoinFear
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Bitcoin Crypto News Ethereum Markets

Crypto Spiral Halted as US Fed Increases Rate for First Time in 28 Years

The US Federal Reserve (Fed) has raised interest rates by 75 basis points, the biggest rate hike since 1994, as part of an ongoing effort to tackle soaring inflation.

Aggressive Rate Hike to Curb Inflation

This past week saw crypto markets plummet in the face of US inflation hitting its highest level in 40 years. With a Federal Open Market Committee (FOMC) meeting scheduled for later in the week, commentators speculated that the record 8.6 percent inflation print would likely force the Fed to aggressively raise rates. And it turns out, they were correct.

At a meeting of the FOMC, members took the decision to raise rates by 0.75 percent to 1.75 percent, with Fed chair Jerome Powell commenting:

Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common.

Jerome Powell, Fed chair

Powell added, though, that he expects the July meeting to see an increase of 50 or 75 basis points too, though any decisions would be made “meeting by meeting”. Continuing, he said: “We [Fed] want to see progress. Inflation can’t go down until it flattens out. If we don’t see progress, that could cause us to react. Soon enough, we will be seeing some progress.”

While there were references to soaring energy costs amid the Ukraine/Russia conflict and lockdown-induced supply chain woes out of China, no mention was made of the impact of a 50 percent increase in broad money supply since 2020.

Going forward, FOMC members indicated a much stronger path of rate increases to help the Fed arrest inflation and achieve a 2 percent target which, according to its statement, it is “strongly committed” to.

Crypto Market Rallies Briefly in Response

Crypto markets arguably had a sense of impending doom going into June 15’s FOMC meeting, expecting the worst. Surprisingly however, it appears as if the bad news were already priced in as the digital asset market rose more than 10 percent on news of the Fed’s increased rate:

Crypto market capitalisation. Source: CoinGecko

Ethereum rose from US$1,075 to US$1,240, compared to bitcoin which saw an increase of over 10 percent from a low of close to US$20,000 up over US$22,500.

The gains have, however, been trimmed back a touch, and bitcoin is currently exchanging hands at US$22,100.

For all the talk of “uncorrelated assets” and a “supercycle”, 2022 has shown that the digital asset market is intrinsically tied to the broader macro environment. Conditions remain uncertain for now and, therefore, continued volatility ought to be anticipated.

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Bitcoin Crypto News Markets

Rare On-Chain Metric Demonstrates We’re in the ‘Darkest Phase of the Bear’

In its latest report, on-chain analytics firm Glassnode indicates that after closing negative for 10 out of the prior 11 weeks, Bitcoin has entered unchartered bear territory, triggering a rare metric last seen in March 2020:

Headwinds Aplenty

The report notes that Bitcoin and digital assets are facing significant losses, hitting multi-year lows following the latest US CPI print which surprised to the upside.

Coupled with an inverted yielded curve, a strengthening dollar and a negative macro outlook, Bitcoin appears to be languishing in “the darkest phase of the bear”. Unlike prior cycles, Bitcoin is now unquestionably tied to the broader macroeconomic environment.

Notwithstanding, both “Shrimps” (less than 1 BTC) and “Whales” (more than 10k BTC) have continued to accumulate at these oversold levels, despite plenty of evidence that even long-term holders are capitulating:

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“Shrimps” buy nearly 50% of the new coin issuance since early November.
Source: Glassnode

A Meeting With the Cost Basis

With bitcoin trading in the US$20,000-23,000 range, it has reached “Realised Price”, one of the most important on-chain metrics. In short, this metric tracks the average price of every coin in the supply, valued at the time it was last spent on-chain.

According to Glassnode, Realised Price (currently US$23,430) is “rarely visited by spot prices outside the deepest and latest stages of bear markets”. The last time we saw this metric reached was in March 2020, and at the end of the 2018 bear market where the market was in aggregate holding an unrealised loss:

BTC price and Realised Price. Source: Glassnode

Less than a week ago, Crypto News Australia reported that 2 percent of short-term bitcoin holders were in profit. Now, with the latest crypto collapse, that figure is zero. At the time of writing, bitcoin was trading at US$21,500, well below the Realised Price.

For investors with a long-term horizon who have been sitting on the fence waiting for an opportunity to get in – now may as good an opportunity as ever. While some metrics suggest we may be bottoming out, it’s equally likely there may be more pain on the horizon.

Either way, buckle up, it’s likely to be a bumpy ride – at least for the foreseeable future.

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Bitcoin Crypto News Ethereum Market Analysis Markets

Crypto Markets Shed $100 Billion Amid Highest US CPI Print in 40 Years

Bitcoin and other cryptocurrencies took a major tumble this past weekend, accelerating into the week, following the release of the latest official US inflation data which revealed the fastest annual increase since December 1981:

Consumer Price Index (CPI) Up 8.6%

According to the US Bureau of Labor Statistics, CPI rose 8.6 percent for the 12 months through to May, the largest increase in over 40 years.

The index, long deemed unreliable by hard money advocates, purports to track the movement of a broad range of goods and services in an economy, including food, shelter and energy.

Among the largest increases were energy (34 percent), used cars and trucks (16 percent), and food (10 percent). However, few in the crypto community believe official CPI figures, with most suggesting that in reality it ought to be in the double-digits:

It’s well documented that the definition of CPI has changed over time, always resulting in a reduction in CPI (quite conveniently).

ShadowStats.com tracks the original definition used in the 1970s and, applying it to today, suggests an 18 percent increase:

Investors Flee Crypto on Inflation Fears

In theory, the higher inflation rises, the more likely that the Federal Reserve will hike interest rates. And if that does indeed come to pass, all risk assets (including crypto) tend to get sold off as investors flee to relative safe haven assets such as bonds.

As news broke on June 10 of the highest US inflation levels in 40 years, investors expressed fears that it could trigger more aggressive action by the Federal Reserve. And then just yesterday, news emerged that Fed officials were contemplating a 0.75 percent increase, up from the 0.5 percent expected by the market.

Almost immediately, all risk assets saw dramatic outflows, with the crypto sector being hit especially hard:

Crypto heatmap for performance over past seven days. Source: Cryptorank.io

Among the top ten cryptocurrencies, ETH was down over 36 percent, BNB by 25 percent and BTC by 29 percent.

As liquidations continued, the crypto market sank below US$1 trillion for the first time since early 2021.

At the time of writing, the total market capitalisation had slipped to US$933 billion, down from its all-time high of US$2.95 trillion reached in November 2021. Meanwhile, BTC is now trading at US$22,265, with ETH exchanging hands at US$1,440.

This latest sell-off is starting to make May’s downturn look trivial in comparison, and by all accounts there is still some way to go before we hit bottom. One thing is, however, certain – macro and crypto are officially intrinsically linked. Crypto can no longer be said to be uncorrelated with the broader macroeconomic environment, as was the case in years gone by.

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Bitcoin Crypto News

Jack Dorsey Releases ‘Web5’ Based on the Bitcoin Blockchain

TBD, a Bitcoin-focused business unit of Jack Dorsey’s company, Block, has launched “Web5”, or what it calls an “extra decentralised web platform”. Its goal? To decentralise data storage and put users back in control of their identity:

RIP Web3

Dorsey, who has previously called Web3 a “centralised venture capital playground“, clearly has a very different conception of what it means to be decentralised and took to Twitter to express his enthusiasm for the new project:

TBD Lead at Block, Mike Brock, confirmed that Web5 would be nothing like Web3:

This was received favourably by macro investor and renowned Bitcoiner Lyn Alden, who commented:

So, providing actual utility, without unnecessary seigniorage to benefit token VCs while using exit liquidity on retail like web3?

Lyn Alden, Lyn Alden Investment Strategy

Why Web5?

According to TBD’s website, Web5 enables developers to focus on enhancing user experience, while simultaneously enabling users to retain ownership of their data and identity.

TBD Web5 presentation. Source: TBD

To do this, they have leveraged Bitcoin and other decentralised technologies. According to the presentation published by TBD, the concept of Web5 is based on three pillars:

  1. decentralised identifiers (DIDs) – provide authentication and data routing;
  2. verified credentials (VCs) – special formats and data models for cryptographic representation and verification of assertions; and
  3. decentralised web nodes (DWNs) – store data and relay messages exchanged between applications and protocols.

The developers explained that DIDs are generated by users and are not stored by centralised providers or other third parties. Further, the ION layer 2 network can be used as the protocol for the VC. Finally, DWNs will allow ecosystem participants to store and transmit encrypted or clear messages and data.

TBD believes that this will provide an opportunity to create many decentralised applications and protocols based on them:

The combination of DID and DWN creates a secure messaging network that can replace single-purpose protocols (encrypted messaging, photo sharing, and so on) with universal standards for all types of semantic data exchange.

TBD presentation

Consumer and Business Applications Will Drive Adoption

At this stage in the technology adoption curve, most retail investors are likely to find the concept of Web3 confusing, let alone Web5, which on its face appears equally, if not more complex. And who could blame them?

In the end, as was the case for Web2, it’s the consumer and business applications that ultimately drive protocol or technology adoption.

Is Web5 viable? That remains unclear. However, given the quality of leadership and track record of those behind it, not to mention the calibre of those supporting it, investors would be well advised to, at the very least, sit up and take notice:

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Bitcoin Crypto News

Short-Term BTC Holders Underwater with Only 2.2% in Profit: Glassnode Report

In its latest report, on-chain analytics company Glassnode has revealed that the vast majority of short-term bitcoin holders are in the red, with only 2.2 percent in profit.

Long-Term Holders Dominate

In its report, Glassnode indicated that virtually all short-term holders (STH), or those who have held bitcoin for a period of fewer than 155 days, are underwater. By comparison, just under 56 percent of long-term holders (LTH) are in profit.

While most appear to believe that bitcoin is in the midst of a macro bear market, Glassnode commented that LTHs remained the primary beneficiaries of current market conditions, holding 90 percent of profit, relative to just 10 percent attributable to STHs.

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Long-term and short-term holder supply profit/loss. Source: Glassnode

Interestingly, this trend has played out repeatedly in prior bear markets where STHs (most often speculators) are flushed from the market and, as a result, end up holding few coins. LTHs, by contrast, continue to accumulate and dominate circulating supply. According to Glassnode, this trend is caused by two parallel events, namely:

Phase A: Short-Term Holders who purchased near the top are immediately plunged into a loss, reducing their overall Supply in Profit.

Phase B: Long-Term Holder accumulation persists during the bear, despite prices pushing their newly acquired coins into an unrealised loss.

Glassnode report

As a result, Glassnode adds that “STHs have essentially reached a near-peak pain threshold, with almost no unrealised profits held while LTHs [are] dominating the remaining profitable supply”.

The news comes just weeks after bitcoin experienced a record eight consecutive weeks in the red, resulting in crypto’s flagship asset sinking to price levels below US$30,000, last seen in 2020.

Green Shoots

Against a backdrop of monetary tightening and a broader macro risk-off sentiment, bitcoin has endured a rather difficult time since hitting its all-time high of US$69,000 in November last year.

As of last month, bitcoin had declined 50 percent from its previous high, albeit less than the vast majority of other cryptocurrencies. At times like these, Bitcoiners would do well to visit other metrics to assess the overall health of the network – and two metrics stand out in particular.

The first relates to BTC addresses with balances exceeding 0.01 (US$30). This recently hit an all-time high, suggesting that new retail investors continue to enter the market, despite current market conditions.

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BTC addresses exceeding 0.01. Source: Glassnode

The other relates to Bitcoin’s hashrate – the amount of computing and process power being contributed to the network through mining. It recently hit an all-time high of 240 exahashes per second, which, roughly speaking, provides an illustration of the network’s overall security and robustness.

BTC Hashrate. Source: Coinwarz

These insights, together with HODLing data suggesting that over 60 percent of BTC hasn’t moved in a year, give the impression that despite languishing price action, Bitcoin remains in good shape, all things considered.

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Australia Bitcoin Crypto News Payments

Gold Coast Mayor Open to Rates Being Paid in Crypto

In a clear signal to younger ratepayers, former businessman and current mayor of Australia’s City of Gold Coast, Tom Tate, has suggested that in the future the municipality may consider the possibility of rates being paid with cryptocurrency:

The news may be somewhat bittersweet as council prepares to deliver its annual budget, where residents are expecting a rates rise of at least four percent, the highest increase in over a decade.

Speaking to ABC News about his plans, Mayor Tate commented: “It sends a signal that we’re innovative and bring[ing] in the younger generation … [but] I’m not saying we’re doing it, I’m just saying we’re always looking at the next level.”

Welcomed by Industry

Blockchain Australia welcomed the news, with its chair Adam Poulton saying that crypto was “just another form of money” with an exchange rate linked to the Australian dollar. In outlining the mechanics, he added that with a “little bit of software, some applications, you can accept bitcoin as payment”.

Speaking to a possible implementation, Poulton commented:

They can choose to receive that bitcoin and hold it themselves, or they can actually exchange that bitcoin into Australian dollars, referencing that exchange rate, and have those Australian dollars turn up in their bank account.

Adam Poulton, chair, Blockchain Australia

However, he did add that, given the innate volatility of the asset class, “the council would need to look at [its] risk appetite”, adding “the last thing they’d want to do is accept A$2,000 worth of rates, hold it in bitcoin and for the bitcoin price to halve”. In addition, “the other risk is the bitcoin could go up in value and they’ll actually have three or four thousand dollars”.

One possible solution was that council could accept 95 percent of a rates bill in Australian dollars, with the balance in crypto. In this sense, the council could hold the crypto and in the future determine what use cases it may have.

‘Education Needed’

Not everyone was entirely enthusiastic. Associate Professor Vallipuram Muthukkumarasamy from Griffith University’s School of Information and Communication Technology said that despite crypto going mainstream, it remained a “speculative investment”.

Muthukkumarasamy suggested that more research and education would be required in order for crypto to reach the point of “taking over”, as has been envisioned since 2015: “A lot of learning needs to happen and the confidence building needs to happen with that.”

Even though it has “a lot of opportunity”, he added that the practicalities of implementing it were challenging, especially when it comes to large bureaucracies such as government. It would require, in his view, a “paradigm shift”.

Whatever one’s thoughts about Mayor Tate’s plans or intentions, one thing that can’t be disputed is that he appears to be making the types of noises younger Australian ratepayers want to hear.

While controversial to some, his plans are certainly not as radical as the city of Lugano in Switzerland where bitcoin is “de facto legal tender”, or in El Salvador, where Bitcoin bonds are being issued to build an entirely new city.

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Bitcoin Crypto News Institutions

Ray Dalio Warns of 1930s-Style Currency Devaluation

Billionaire hedge fund manager and crypto advocate Ray Dalio, who claimed to own some Bitcoin, has warned about a 1930s-style currency devaluation phase in relation to goods and services, and that Bitcoin remains a valuable instrument against this scenario.

‘Cash is Trash’

During an interview with CNBC’s Squawk Box, Dalio talked about his current stance on Bitcoin, stating that he still holds a small amount of BTC on his portfolio.

Dalio went on to say that fiat currency is trash, explaining what he meant by this is that major currencies such as the euro or the yen will eventually “go down in relationship to goods and services”:

Dalio added that Bitcoin, given current economic conditions, remains a useful tool for investors looking to protect themselves against fiat hyperinflation.

Bitcoin has made a tremendous achievement over the last 11 years … I think the Bitcoin people get too preoccupied with it … the gold bugs get too preoccupied with it, and … you have to look at the broader set of assets that serve that purpose.

Ray Dalio, hedge fund manager and crypto advocate

However, Dalio wasn’t always a Bitcoin advocate. He changed his mind back in 2020 when the Covid-19 pandemic started bruising global economies, and he now considers BTC a store of value.

The New ‘Digital Gold’

Given the economic scenario that has been developing in the past few years in the US, more American hedge fund billionaires and institutional investors have turned their eyes to cryptocurrencies as the new “digital gold”.

While Dalio holds a “small amount” of BTC, another hedge fund manager, Bill Miller, isn’t quite as diversified. Crypto News Australia reported in January that Miller had gone big on his BTC investment, with half of his portfolio now tied up in the flagship cryptocurrency.

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Bitcoin Crypto News Regulation Stablecoins

Crypto Updates from the World Economic Forum Conference

Despite previous displays of disdain for the sector, cryptocurrencies have featured prominently in this year’s edition of the World Economic Forum’s (WEF) annual meeting in Davos, Switzerland.

Crypto, Blockchain and a Meeting of the Global Elite

It’s that magical time of year when the world’s political and corporate elite congregate at the WEF’s annual meeting to “shape the future”, according its founder, Klaus Schwab.

Since the last conference in 2020 (the 2021 meeting was deferred due to Covid), crypto has gone mainstream and become an institutional asset class. Unlike years gone by, Davos 2022 has been a veritable crypto-fest with advocates making sure their voice is heard.

Five years ago, we were the only crypto company on Promenade; look at it now.

Sandra Ro, CEO, Global Blockchain Business Council

As attendees alighted from their private planes, they could hardly miss the cacophony of crypto messaging:

CoinDesk - Unknown
Polkadot signage featured prominently nearby. Source: Yahoo

Remarkably, even NFTs featured at the conference:

Hot Button Topics

Given the recent LUNA/UST meltdown, several sessions were held in relation to the safety and regulation of stablecoins.

Representatives from both Circle (USDC) and Ripple (XRP) were present at a panel discussing remittances and digital money entitled “Remittance for Recovery: A New Era of Digital Money”.

CoinDesk - Unknown
Sara Pantuliano, Asif Saleh, Ripple CEO Brad Garlinghouse and Circle CEO Jeremy Allaire discuss remittances. Source: Coindesk

According to Circle CEO Jeremy Allaire, the idea of cross-border remittances will in time disappear:

We don’t think about cross-border emails. We don’t think about having a cross-border web browsing session, it’s absurd to think about that. And I believe we’re on the cusp of that with money. And I think when it comes to remittances, I believe the concept of a remittance will also disappear.

Jeremy Allaire, CEO, Circle

On a WEF congress main stage, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), downplayed the idea of cryptocurrencies such as bitcoin as money, adding that “a prerequisite for something that would be money is to be a stable store of value”.

Presumably, Georgieva would view stores of value along a spectrum, given the US dollar’s decline since the establishment of the Federal Reserve:

Visualizing the Purchasing Power of the Dollar Over the Last Century
Devaluation of US dollar since 1913. Source: Howmuch

Call for Consumer Education in the Wake of Terra Meltdown

The international lender also commented on the recent Terra collapse, suggesting that regulators should do more in the way of education to make consumers aware of the risks.

Earlier this year, the IMF recommended a common framework for central bank digital currencies (CBDCs) and crypto. Central bankers in attendance at Davos concurred, saying that good design was “crucial” to the success of retail CBDCs.

Overall, it’s evident that the industry has made dramatic strides in the recent past. Even mainstream finance is coming to the realisation that crypto, in one form or another, is here to stay.