Category: Bitcoin

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Bitcoin Bitcoin Mining Markets

Bitcoin Mining Stocks Have Been Hammered in 2022

Bitcoin mining stocks have seen a sharp decrease in value with the price of Bitcoin (BTC) and the wider crypto market going down in parallel. Mining stocks have especially suffered due to more businesses holding the asset on their balance sheets and the lack of a significant hashrate increase.

As the cryptocurrency market continues on a sharp downtrend, Bitcoin mining stocks have followed. Even though they fared very well in 2021, they’ve taken a bigger knock than the cryptos in 2022. While the digital asset itself was recording losses close to 30 percent, bitcoin mining stocks have taken what amounts to a double hit, with more than 60 percent losses in some cases:

According to Jaran Mellerud, an analyst at Arcane Research, data from the beginning of the year shows the top five Bitcoin mining stocks by market cap have all been halved. Riot – one of the hardest hit by the slump – is down 65 per cent year-to-date (YTD), but is still trading one per cent in the green (which can’t be said for the others).

Mining stocks trading in the red. Source: Arcane Research

Additionally, when looking at the top 10 mining companies, the one down the least had lost 41 per cent, a testament to the devastation of the niche. Most of these companies have not grown their hashrate as fast as investors were hoping and this has impacted them significantly. As it stands, 90 per cent of BTC has been mined and the hashrate is at an all-time high.

How are Mining Stocks Affected by BTC Price Drops?

As the price of bitcoin continues to drop, cryptocurrency mining stocks also lose out. One of the major reasons is because many tech and other companies now hold bitcoin on their balance sheets through an exchange traded fund (ETF). Any decrease in price leads to lower revenue for these companies.

Usually, when the BTC price falls, the global hashrate also decreases, but this has not been the case this year. The combination of rising global hashrate and a falling BTC price has led to less BTC mined for these companies and a lower USD denominated value of their mined BTC.

Jaran Mellerud, analyst, Arcane Research

A good example of this is MicroStrategy, which has large amounts of the mined token on its balance sheets that can be used as a proxy by investors who do not want to directly hold bitcoin in their portfolios: 

Source: Bloomberg

According to Steven McClurg, chief investment officer of Valkyrie Investments, “The correlation between the two asset classes has grown more pronounced in recent months because the number of publicly traded companies involved in blockchain and digital assets continues to grow, and is not likely to reverse course.”

As bitcoin finds its way into organisations (both listed and not), the price of bitcoin will influence their balance sheets. In the case of Nasdaq and tech stocks, both are seeing red crypto fall under their umbrella.

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Banking Bitcoin Crypto News Ethereum Trading

Brazil’s Largest Digital Bank Nubank Launches BTC and ETH Trading

Nubank, Brazil’s biggest digital bank by market volume, now allows customers to buy and sell bitcoin and ethereum on its Paxos-supported trading platform, as per a May 11 announcement.

The fintech will allocate one percent of its equity to bitcoin through its parent company, Nu Holdings Inc, which is listed on the New York Stock Exchange. Nubank said the move seeks to “strengthen the company’s conviction in the current and future potential of bitcoin in disrupting financial services”.

Deal Gives BTC Exposure to Warren Buffett

Nubank’s treasury allocation to bitcoin gives indirect BTC exposure to old-school investor and Bitcoin critic Warren Buffett, chairman and CEO of Berkshire Hathaway. The US holding company reportedly invested US$500 million in Nubank in June 2021, acquired 30 million shares for another $250 million as it went public in December, and recently doubled-down with a $1 billion investment in Brazilian fintech.

According to Paxos, users will be able to buy and sell crypto with Brazilian reals, but initially won’t be able to withdraw or deposit crypto. Until now, Nubank allowed users to invest in crypto only through exchange-traded funds available through its investment unit, NuInvest.

Brazil Experiencing Major Crypto Adoption Growth

Last month, Brazil edged closer to a regulatory framework for cryptocurrencies and along with neighbouring South American country Peru is looking to introduce a CBDC this year. And in March, Coinbase was reportedly on the verge of closing a deal to acquire 2TM, owner of Mercado Bitcoin, Brazil’s largest cryptocurrency exchange.

There is no doubt that crypto is a growing trend in Latin America, one that we have been following closely and believe will have a transformational impact on the region. Yet the trading experience is still very niche as customers either lack information to feel confident to enter this new market or just get frustrated by complex experiences.

David Vélez, CEO and co-founder, Nubank

In general, Brazil is experiencing major crypto adoption growth. Between January and November of 2021, locals reportedly traded US$11.4 billion in stablecoins, almost triple the amount traded the previous year.

In his capacity as Nubank boss, Vélez is clearly intent on demystifying crypto trading for the average Brazilian bank customer.

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Bitcoin Crypto News Economics Markets

Bitcoin Sinks Below $29k, its Lowest Level Since 2020

Bitcoin has continued its dramatic descent, falling below US$29,000 to its lowest point since December 2020. It’s currently hovering around that $29,000k support level, with everyone wondering which way it’s going next.

BTC/AUD price chart. Source: CoinMarketCap

The US Consumer Price Index (CPI) figures were published on May 11 and the knock-on effect saw Bitcoin piercing the $30,000 support at US$28,170. April’s annual CPI figure is 8.3 percent, down 0.2 percent from the previous month, yet the update sent Bitcoin into a frenzy, its price falling from US$31,700 to $28,170 in as little as 20 minutes, followed closely by a rebound to approximately $31,600:

When In Doubt, Zoom Out

It’s easy to focus on the current dip in price, but if we zoom out further on the timeline we can see the trajectory is still moving upwards overall.

Source: Twitter
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Australia Bitcoin ETFs Ethereum

Australia’s First Bitcoin and Ethereum ETFs Go Live

Today marks a historic day for the Australian investment landscape as retail and institutional investors are now able to invest in the newly launched Bitcoin and Ethereum exchange traded funds (ETFs) listed on Cboe Australia (“Cboe”):

Off the Ground, Despite False Starts

For market participants, the road to Australia’s first spot-based crypto ETF has been a long and, at times, painful journey. Some two weeks ago, regulators gave the green light but within days the launch was delayed due to an issue relating to the prime dealer.

With that out of the way and more ETFs likely on the horizon, Australians now have a choice to invest directly in three ETFs through two providers, becoming only the eighth country to do so.

21 Shares will offer both an ETH and BTC ETF, whereas Cosmos will list only an ETH ETF, at least for now. Each of the ETFs will hold the crypto assets offshore in cold storage, and track the spot price of each in Australian dollars.

The news elicited much excitement, with some indicating that they expected significant capital inflows:

ETF Securities chairman Graham Tuckwell, who earlier criticised regulators for dragging their heels, commented: “Today is an exciting day for our team, a culmination of months of hard work to bring these ETFs to the Australian market. EBTC and EETH are true firsts for Australia, and we are excited to be launching with Cboe Australia.”

ETF Securities head of distribution Kanish Chugh recognised that while current market conditions were not ideal, they did provide a good entry point for new investors:

Australian investor interest in cryptocurrencies has not waned in recent months even as we have seen underperformance, and with Bitcoin’s recent sell-off as well, it may present an opportunity for investors who have been looking for attractive entry points into this new asset class.

Kanish Chugh, head of distribution, ETF Securities

Cboe Australia CEO Vic Jokovic expressed delight at the “breakthrough products”, saying they paved the way for “more Australians to expose their portfolios to cryptocurrency in a regulated manner”.

Although the caveat “not your keys, not your coins” holds true, the listings provide clear evidence of growing mainstream adoption, a trend that is only likely to accelerate.

Zero Chance of BTC Going to Zero

One wonders how local fund managers such as Hamish Douglass have taken the news, particularly since he thinks bitcoin will go to zero. Australian podcaster Mission Bitcoin suggests that those who believe it will be worth zero are simply not paying attention:

Given Bitcoin’s fundamentals and increased role in the global economic landscape, it’s difficult to disagree with that sentiment.

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Bitcoin Cryptocurrencies Ethereum

Bitcoin and Ethereum Now Down More Than 50% from All-Time Highs

The market has shed some blood this month, with the father and mother of all cryptos, Bitcoin (BTC) and Ethereum (ETH), down more than 50 percent from last year’s all-time highs.

Biggest Crypto Market Sell-Off Since March 2020

In what is the biggest market sell-off since March 2020, the crypto market has been hit with massive outflows following the lead of the US stock market, which also plummeted after the US Federal Reserve moved to raise interest rates by 50 basis points.

Bitcoin is currently trading at US$31,259, an 8 percent drop in the past five weeks. The second-largest cryptocurrency, Ethereum (ETH), has followed Bitcoin in its massive sell-off. As per data from CoinMarketCap, ETH has also more than halved its price, currently trading at US$2,354.

BTC chart. Source: Messari
ETH chart. Source: Messari

Thirty-day exchange flows are now almost back to neutral after this week’s sell-off, as shared by market analyst Sam Rule:

Things started to get worse for the market after Terra’s Luna Foundation Guard (LFG) sold more than US$750 million, disguised as an OTC (over-the-counter) loan to trading firms:

El Salvador Buys the Dip Again

While the crypto community doesn’t seem to be bullish on the current market, El Salvador’s president, Nayib Bukele, is encouraging people to buy as long as we have the dip. Bukele recently announced that his government had bought 500 BTC at an average price of US$30k per coin, worth approximately US$15.5 million at that time:

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Australia Bitcoin Blockchain Crypto News

Australian University to Launch a ‘Green Cryptocurrency’ Research Lab

Australia’s Royal Melbourne Institute of Technology (RMIT) has successfully launched its Green Cryptocurrency Laboratory. Co-founded with the CloudTech Group, a leader in FinTech and blockchain technology, the lab will focus on reducing the carbon footprint of crypto.

Magi and Sam: RMIT Swanston Academic Building, Melbourne https://magiandsam.blogspot.com/2013/06/rmit-swanston-academic-building.html
RMIT partners with CloudTech to create the Green Crypto Laboratory, launched on May 6.

Researching ‘Green Crypto’

The May 6 event was hosted by Professor Zahir Tari, who has been named the lab’s director. RMIT is the world’s No 2 leading blockchain university and home of the Blockchain Innovation Hub. The Hub’s partnership with CloudTech aims to find answers to the increasing carbon footprint crypto technology is developing.

https://www.rmit.edu.au/contact/staff-contacts/academic-staff/t/tari-zahir

You might be shocked to learn that [blockchain technology] consumes more electricity to maintain the Bitcoin network each year than a medium-sized European country like Finland.

Professor Zahir Tari, joint director, RMIT Green Crypto Lab

The first project for the lab will be to develop Green Bitcoin, which will be a blockchain network based on PoST as the “underlying consensus mechanism”.

RMIT Making Crypto Waves

RMIT’s Blockchain Innovation Hub has been at the forefront of crypto development in Australia. In April it submitted a proposal to help the Melbourne portside precinct recover from the pandemic via the Docklands DAO. And, in October 2021, the university urged the Australian government to reform capital gains tax on crypto, stating that “reform will offer clarity for taxpayers and confidence in the tax system as a whole”.

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Bitcoin Crypto News Terra TerraUSD

UST Stablecoin Loses Peg, LUNA Drops 56% in a Day

Terra USD (UST), the world’s largest and most controversial algorithmic stablecoin, lost its peg to the US dollar this past weekend which has continued into the week, causing LUNA to tumble by as much as 56 percent in a day.

LUNA US dollar price (7 days). Source: CoinMarketCap

UST Tokenomics Explained

UST relies on LUNA to keep its price pegged to the US dollar via a set of on-chain mint and burn mechanisms. In brief, it works as follows:

Terra maintains UST’s peg of USD through an elastic monetary policy enabled by its dual, UST-LUNA token model. When the value of a unit of UST is above the USD peg, users are incentivised to burn LUNA and mint UST. When the value of a unit of UST is below the USD peg, users are incentivised to burn UST and mint LUNA. During times of UST contraction, LUNA valuation decreases, and during times of expansion, it increases. LUNA is the variable counterpart to UST. By modulating supply, LUNA’s valuation increases as the demand for UST increases.

Terra burn/mint mechanism, Messar

What Happened?

The de-pegging appeared to commence shortly after a series of significant withdrawals on the Anchor Protocol, a lending market offering high yields to users who deposit UST:

Over the period, Anchor’s total UST deposits reduced by 17 percent from US$14 billion down to US$11.2 billion:

In addition, a large amount of UST was also withdrawn from Curve, a decentralised finance (DeFi) protocol allowing users to swap between stablecoins. There was also evidence of a single wallet dumping US$85 million of UST on ETH and US$108 million on Binance:

The initial depeg was seemingly defended by Jump Capital, who earlier this year bailed out victims of the US$320 million Wormhole exploit. However it didn’t stop there as overnight, UST’s peg continued its freefall, reaching as low as 0.73 to the US dollar on Binance at the time of publication.

In response, the Luna Foundation Guard has deployed some of its BTC and UST reserves, although it claims that it hasn’t been sold but rather lent to market makers:

There are a lot of moving parts to this story and the saga is clearly far from over. We’re seeing UST undergo a massive crisis of confidence and at this stage it’s too soon to tell whether it will recover. Current signs are ominous and if UST fails, it’s likely to spread contagion throughout the broader stablecoin market.

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Bitcoin Markets

Bitcoin Falls Below $30K for the First Time Since July 2021

After declining more than 15 percent over the past week, the value of Bitcoin has slipped below US$30,000 for the first time since July 2021 – creating a new market cap of US$588 billion, down from US$900 billion.  

Interest Rate Rise to Blame

The drop, likely a result of the US Federal Reserve’s announcement to increase interest rates by 50 basis points, has undone the brief rebound period Bitcoin experienced after January’s dip.

Bitcoin’s outflow from the week prior has been the highest since June 2021, totalling over US$133 million. This seemed to be the result of institutional investors pulling their assets from the Bitcoin ETF, thus pushing BTC down 50 percent from its 2021 all-time high and causing panic globally:

However, the panic isn’t all doom and gloom, with experts suggesting the industry bubble is finally ready to pop and that there is room for optimism in the reboot. Crypto is prone to macroeconomic shock, and these strong crashes and booms are nothing the industry hasn’t encountered before.

Crypto Market Plunge

Bitcoin isn’t the only player in the industry that’s seen large decreases in value since January’s stock market sell-off. Last month saw US$250 billion wiped from the crypto market as a whole, due to leveraged liquidations and market fear. At the time Bitcoin dropped below US$40,000, and the overall crypto market tumble marked the industry’s worst day of trade since March 2020.

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Bitcoin Dogecoin Ethereum Fashion Litecoin Metaverse NFTs Payments Shiba Inu

Gucci to Begin Accepting Bitcoin in Some Stores

Luxury high-end international fashion brand Gucci is set to accept various cryptocurrencies including Bitcoin, Ether, and even Dogecoin in some of its stores in North America.

Gucci will start accepting cryptos in five of its stores across the US later this month. The locations are New York City (Wooster Street), Los Angeles (Rodeo Drive), Miami (Design District), Atlanta (Phipps Plaza), and Las Vegas (The Shops at Crystals).

The stores will accept include Bitcoin, Bitcoin Cash, Ethereum, Wrapped Bitcoin, Litecoin, Dogecoin, Shiba Inu, and five stablecoins that are pegged to the US dollar.

Crypto Provides an ‘Enhanced Customer Experience’

According to Marco Bizzarri, president and CEO of Gucci, the brand is “always looking to embrace new technologies when they can provide an enhanced experience for our customers”. He added:

Now that we are able to integrate cryptocurrencies within our payment system, it is a natural evolution for those customers who would like to have this option available to them.

Marco Bizzarri, president and CEO, Gucci

Gucci has been active in the Web3 and NFT space and recently established a Web3-focused team and released a couple of NFTs. The brand is also extending its crypto efforts to the metaverse where it is developing digital real estate in the decentralised blockchain game The Sandbox. Further, Gucci is building a virtual “Gucci Vault” for Gucci-themed NFTs.

More and More Companies Accept Crypto Payments

Gucci joins a raft of companies that accept crypto as payment. Last year, Crypto News Australia reported that a real estate company in Los Angeles would allow its tenants to rent properties with Bitcoin, starting with the Grove shopping centre and other LA properties.

Many companies in Australia are also accepting cryptocurrencies as payments. You can now order a custom-built PC, buy dog food, design a custom home, get solar power and pay for almost everything in Bitcoin.

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Australia Bitcoin

Australian ‘Legalise Cannabis Party’ Turns to BTC for Support

Historically, commercial and political organisations associated with cannabis have found themselves debanked or otherwise denied financial services. Bitcoin fixes this, which presumably is one of the reasons Australia’s Legalise Cannabis Party (LCP) has turned to it for support in the current federal election campaign.

LCP on a Clear Mission

One of the clear benefits of a single-issue political party is its focus and transparency. The LCP is one such example whose priority is unequivocal – for the law to be amended so cannabis is treated like alcohol and tobacco.

LCP policy points. Source: Legalise.org.au

According to its website, the LCP encourages the reader to consider the “Grape Theory”:

Treat Cannabis like grapes, grow as many grapes as you want, no licence, make as many of those grapes as you want into wine, no licence, share that wine with your friends and family, no licence, HOWEVER the moment you want to sell some of that wine you require a licence, show quality control and safety for human consumption, and pay the appropriate fees.

Legalise Cannabis Party, LCP website

Tyler Green, the aptly named representative for South Australia, commented:

It’s time to align with other jurisdictions that are enjoying the fruits of this ‘budding’ industry.

Tyler Green, LCSA representative

Bitcoin Enters Politics

In an effort to drive the party forward, the LCP has asked supporters to donate BTC:

According to Tyler Green, the LCP’s hallmark features are “freedom of determination, freedom of choice and bodily autonomy”. To that extent, its ethos would appear to align with Bitcoin, which above all represents individual sovereignty and freedom.

Aside from a political party turning to Bitcoin for donations, we’re increasingly seeing it become a single issue for voters. By some estimates, there are 40 million BTC holders in the US alone. With such powerful incentives in place, it wouldn’t be surprising to see increased numbers of political candidates being forced to take a position on Bitcoin, one way or another.