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The Iranian government has reportedly issued more than 1,000 licenses for cryptocurrency mining since it began regulating the industry. A number of large mining farms have set up in the country, but high electricity tariffs have kept many small investors away.
1,000+ Licenses Granted to Miners
An official with Iran’s ICT Guild Organization, Amir Hossein Saeedi Naeini, has revealed the state of the country’s cryptocurrency mining industry, the Financial Tribune reported Friday. In an interview with Ibena publication, he said that cryptocurrency mining is a new industry but many people have been attracted to it in Iran. Noting that miners need to obtain a license, he shared:
The Ministry of Industry, Mine and Trade has issued more than 1,000 licenses for cryptocurrency mining in the country.
The official further elaborated, “Our studies show that the crypto mining industry has the potential to add $8.5 billion to the economy,” the news outlet detailed.
Major Challenge – Electricity Cost
Amir Hossein Saeedi Naeini believes that the cryptocurrency mining industry has the potential to help the Iranian economy. However, he explained that the cost of electricity is a major challenge for crypto miners in Iran. While “A number of large and industrial farming mines have been set up,” the official told the news outlet:
High electricity tariffs plus stringent regulations have made the sector less appealing for small investors.
He opined, “the operating conditions in this industry should not be such that only large capitalists enter the cryptocurrency mining market but that all miners can operate,” emphasizing that modifying the electricity rates and terms could boost the crypto mining industry and generate more revenue.
Iranian Crypto Mining Law
Iran’s cryptocurrency mining industry has been regulated since last year. The Iranian government officially recognized cryptocurrency mining as an industry in August after months of deliberation, Aljazeera reported on Aug. 4, 2019. Crypto miners must be licensed by the Ministry of Industry, Mine and Trade before beginning their operations.
The recognition of the industry followed a crackdown by various government authorities on crypto miners accused of using subsidized power. In June last year, Iran’s state television reported that the authorities seized approximately 1,000 bitcoin mining machines in two abandoned factories allegedly using government-subsidized electricity. A spokesperson for the country’s Energy Ministry said at the time that these mining machines were responsible for a 7% increase in power consumption.
“The electricity price offered to miners will be equal to the average rial price at which Iran exports its electricity to other nations, or to 70% of the average rial price at which the country ships off its natural gas,” the news outlet explained. Furthermore, the cabinet’s directive states that “Using electricity or natural gas to mine cryptocurrencies is forbidden in peak consumption times,” and calls for the ministry to set peak hours and install a grid of smart power meters. In addition, “using electricity and gas provided at household, agricultural or industrial grades is forbidden and will be met with legal action if found out,” the directive adds.
However, Amir Hossein Saeedi Naeini told Ibena that discussions are underway to set more favorable terms for crypto miners. Meanwhile, Iranian President Hassan Rouhani has been discussing creating a unified cryptocurrency for Muslim countries with leaders of other Muslim nations.
What do you think of the mining industry in Iran? Let us know in the comments section below.
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Images courtesy of Shutterstock and Ibena.
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Fresh from his dubious week in the spotlight after claiming to “lose” his BTC holdings, Schiff is still saying Bitcoin investors are blind to gold’s benefits.
CZ: We need more “negative voices”
“I think Peter is doing great to promote bitcoin. He probably does not realize that given his illogical reasoning, most people will do exactly opposite of what he says,” he wrote.
“We need more of these types of ‘negative’ voices.”
The Euro Pacific Capital hedge fund manager was already somewhat notorious for his posts attacking Bitcoin which claim gold to be superior.
Last week, however, Schiff was already undermining his credentials after blaming wallet provider Blockchain for “losing” his Bitcoin holdings worth 0.21 BTC ($1,750) he received in the form of donations in 2019. In the event, Schiff had simply confused his pin with his password.
Nonetheless, he continued to allege that Bitcoin investors were the true ignorant party for choosing cryptocurrency over the precious metal.
“Bitcoin bugs are saying I’m not qualified to give advice about Bitcoin because I don’t know the difference between a pin and a password. I know the difference now and my advice hasn’t changed,” the tweet which inspired CZ read.
“But those Bitcoin bugs still don’t know… the difference between #Bitcoin and #gold.”
Doing the opposite
CZ’s tone meanwhile resonated with other evidence of Schiff’s track record which emerged as part of the Blockchain fallout.
Currently doing the rounds on Twitter is a selection of client reviews for Euro Pacific Capital, many of which claim Schiff failed to react to market movements and lost them money.
“Just stick with bonds or S&P, or if you must have international stock, then find a more reputable international stock dealer. This company is a loser, except for Peter Schiff and the brokers who work there,” one review reads.
As Cointelegraph reported, gold itself has failed to deliver for investors in 2020 already, firmly flagging while Bitcoin boomed.
Even $AMZN performance in the 2010s keeps it firmly in line with traditional investments, while Bitcoin outperforms by an order of magnitude.
Bitcoin’s (BTC) risk-return is a “different beast” compared to even the darling of the stock market of the 2000s, Amazon.
That was the conclusion drawn by one of the cryptocurrency industry’s best-known analysts and the creator of a uniquely accurate Bitcoin price model.
PlanB: Amazon “normal” compared to BTC
Uploading a chart showing BTC risk-return versus Amazon stocks, U.S. bonds, gold and the S&P 500 on Jan. 24, PlanB showed Bitcoin behaved completely differently as an investment.
Amazon’s significant losses in the year 2000, combined with its revered recovery ever since still keeps it far below Bitcoin’s risk-reward ratio.
“Bitcoin… is a different beast!” PlanB summarized, describing Amazon’s position on the chart as “much closer to normal.”
Amazon’s share price appeared to shake off revelations involving Saudi Arabia allegedly hacking CEO Jeff Bezos this week. Both $AMZN and BTC nonetheless fell over the past seven days, with the latter potentially reacting to uncertainty stemming from China.
Bitcoin risk-return vs. major investments. Source: PlanB/ Twitter
A volatile winning bet
The impressive contrast comes days after Cointelegraph reported on Bitcoin’s risk-adjusted returns outperforming every major investment offering based on a four-year investment.
Then, PlanB appeared to hint that four-year periods — the time between each reduction in the new Bitcoin supply — could continue to boost performance.
Further, cryptographer Nick Szabo added, the susceptibility of traditional instruments to react to government and central bank meddling in currency markets meant Bitcoin was a natural fit for long-term, or low-time preference, investors.
PlanB’s price model, stock-to-flow, has correctly called much of Bitcoin’s historical behavior and continues to forecast a level of $100,000 for BTC/USD in 2021.
At current levels, markets continue to conform to stock-to-flow, at $8,300 trading just below its suggested range. Before the next halving in May, $8,300 is, in fact, the average price the model says Bitcoin will trade at before moving significantly higher.
A double whammy of uncertainty in stocks and a New Year sell-off could be at the heart of BTC/USD erasing gains last week, analysts say.
Bitcoin (BTC) has shed 6% in a week thanks mainly to Chinese New Year and uncertainty over coronavirus, commentators are suggesting.
Cryptocurrency market daily overview. Source: Coin360
Stocks correlation shows Bitcoin’s “global stage”
Over the past several days, it notes, Bitcoin has in fact broadly correlated with stocks. Such behavior is reminiscent of what many perceived as a reaction to another global event — the Iran crisis — earlier this month.
“China coronavirus-driven risk-off blanketing Chinese equities… and Bitcoin. Iran correlation, now Chinese equities,” Light commented.
The analysis summarized:
“If there was ever a statement to the effect, Bitcoin has now made it to the global stage.”
Bitcoin vs. Chinese equities. Source: Light/ Twitter
Chinese New Year pressure returns
Coronavirus continues to spread beyond China, despite authorities’ attempts to contain it by imposing travel bans and boosting healthcare provision.
BTC/USD has lost just over 6% in the past seven days and at press time trading at $8,300. The virus “factor” comes at a sensitive time historically, data reveals, with Chinese New Year traditionally creating sell pressure for Bitcoin.
Compiled by trader and analyst Alex Krueger, figures circulating on Twitter show that in the run-up to the celebrations, Bitcoin returns often turn out negative.
In 2019, they averaged around -0.2% losses for the week prior, but Krueger himself appeared unperturbed by the results.
“Nothing special,” he summarized on Jan. 22.
As Cointelegraph reported, critics have protested against the theory that Bitcoin price action is directly influenced by geopolitical or other world events.
Nonetheless, issues involving China tend to impact the market conspicuously, against the backdrop of a blanket crypto trading ban imposed by Beijing in 2017. The country still accounts for the majority of Bitcoin mining activity.
On January 23, the cryptocurrency payment firm Bitpay announced it will be allowing customers to purchase digital assets using the Bitpay platform. The Atlanta-based company partnered with fiat-to-crypto payment processor Simplex to offer the crypto purchasing experience. Bitpay says the latest feature will provide an “all-in-one solution” for cryptocurrency-related activities.
Bitpay App Now Allows Crypto Purchases
Bitpay has been a leading cryptocurrency payment processor since the firm was founded in 2011 by Stephen Pair and Tony Gallippi. From 2011 until 2018, Bitpay only accepted BTC payments for invoices and settlement. However, in the spring of 2018, bitcoin cash (BCH) was added to the company’s services. Bitpay now supports BTC, BCH, ETH, and three different stablecoins. During the first month of 2020, Bitpay announced XRP integration and the coin is now live on the platform since last Tuesday.
The Atlanta firm has seen a number of changes since it began supporting new coins, and after announcing XRP support, it revealed that Bitpay users can now purchase digital assets. Bitpay app users have the ability to purchase BTC and other cryptos through the firm’s partnership with Simplex. Bitpay revealed that users can also buy the supported cryptocurrencies with a credit card without leaving the application.
The goal of adding more crypto accessibility into the Bitpay app is to “eliminate the need to navigate a cryptocurrency exchange to fund payments.” “Cryptocurrency exchanges can be intimidating for new users,” Bitpay’s co-founder and CEO Stephen Pair explained on Thursday. “The Simplex integration, however, makes the blockchain payment experience seamless.” The Bitpay executive added:
Whether converting fiat to crypto to make crypto payments or converting crypto to fiat to pay with the Bitpay card, the Bitpay app is an all-in-one solution.
Simplex has been working with a number of digital currency companies like Changelly, Xapo, Bithumb, and Binance to provide cryptocurrency purchases via credit and debit cards. The fiat-to-crypto payment processor Simplex undertakes the settlement process, credit card processing, and delivery of crypto coins. Simplex does levy a transaction fee for the processing and has a minimum transaction amount of around $10. The company’s founder and CEO Nimrod Lehavi said the firm looks forward to working with Bitpay.
“A real breakthrough in usability can only be achieved when the leading crypto payment app meets the leader in fiat infrastructure for crypto,” Lehavi explained during the announcement. “We are proud to launch this partnership with Bitpay and will work together to add more innovative solutions in the future.”
In the last few weeks, Bitpay has integrated gift card purchasing abilities for app users in the United Kingdom, while also adding the coins XRP, USDC, GUSD, and PAX. With the added stablecoins, Bitpay believes the firm can create more efficiency when settling transactions between the U.S. and Western Europe by bypassing antiquated schemes like ACH, SEPA, and bank wires. Bitpay thinks that stablecoins will shake up the payment industry and they “provide the speed of cryptocurrency with the stability of the United States Dollar.” The latest partnership with Simplex and the new coin additions indicate the Atlanta company is attempting to cast out more nets into the cryptoconomy’s enormous ocean.
What do you think about Bitpay providing people with the opportunity to purchase cryptocurrencies via the Bitpay app? Let us know what you think about this topic in the comments section below.
Disclaimer: This article is for informational purposes only. Readers should do their own due diligence before taking any actions related to the subject matter written above. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any ideas, software, concepts, content, goods or services mentioned in this article.
Image credits: Shutterstock, Bitpay Blog, Bitpay logo, Simplex Logo, Fair Use, and Pixabay.
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A new debate emerges over the nature of digital assets and if they should be treated separately from the circumstances of their offering and sale.
Earlier this week, the Chamber of Digital Commerce went ahead and filed an amicus brief for the ongoing court hearing taking place between Telegram — one of the world’s most widely used encrypted messenger services — and the United States Securities and Exchange Commission.
In its most basic sense, an amicus brief is a legal document that provides non-litigants with the right to submit their views and opinions in relation to an ongoing case for the court’s consideration. The brief was authored on behalf of the CDC by Lilya Tessler, a partner and the New York head of Sidley Austin LLP.
Similarly, another brief filed by the Blockchain Association on Jan. 21 appears to be in clear support of Telegram. The association’s brief explicitly opposes the SEC’s move to block Telegram from delivering its native crypto tokens, Grams, to the early investors who participated in its initial coin offering. As part of its central argument, the independent body states that the purchase agreements offered by Telegram were designed to fully comply with the SEC’s existing securities rules.
CDC argument in a nutshell
As part of its filing, the CDC put forth a number of arguments as to how the U.S. District Court for Southern New York should view digital assets. For example, it urged the judiciary to make a clear distinction between the term “digital asset” — the subject of an investment contract — and the securities transaction associated with it.
This is because, as things stand, there is no real clarity in regard to the following subjects:
- Whether or not an investment contract is being offered in a securities transaction
- Whether an investment contract is a commodity that can be sold in a traditional commercial transaction
Since its inception back in 2014, the Chamber for Digital Commerce — a nonprofit trade association — has been working tirelessly to promote the adoption of crypto and blockchain-based technologies all over the world.
Additionally, the principles governing the U.S.’s existing securities laws were drafted nearly a century ago, when the SEC was first established by Congress. Since then, the Securities Act of 1933 and the Securities Exchange Act of 1934 seem to have dictated much of the U.S. government’s approach to financial regulation.
Not only that, but since SEC’s inception, a number of interesting cases seeking to define the term “securities” have been tried in front of the U.S. judicial system, with the most famous example being the SEC vs. Howey Co. trial, which resulted in the creation of the Howey Test — a set of criteria that can be used to determine the purview of the SEC’s jurisdiction over securities. Gregory Klumov, founder and CEO of euro-backed stablecoin Stasis, told Cointelegraph:
“If a developer team retains certain assets and sells it to investors, it falls into the definition of security. I think that the U.S. legislation must be shaped to take into regard emerging technologies and new business models that hadn’t been present not only in the days of SEC creation but also during the judicial battles on security definitions.”
What is the CDC proposing?
Simply put, the CDC is of the opinion that digital assets should be viewed on a case-by-case basis and that newer, more recently established regulatory policies should be enacted when considering matters related to this novel asset class.
To further elaborate on the subject, Cointelegraph reached out to Anti Danilevski, CEO and founder of Kick Ecosystem. He pointed out that the CDC isn’t really pushing for a framework that would benefit them specifically, but rather for one that’s consistent among all digital assets — so as to ensure that a case like “SEC vs. Telegram” does not happen again. He further added:
“They do have suggestions as to what the SEC could do regarding the case, with the primary one being the “reasoning used by the U.S. Supreme Court in SEC v. W.J. Howey Co,” which is that an asset does not become a security “simply by virtue of being the subject of an investment contract.” Not only would this help prevent a blanket regulation over all cryptocurrencies, but it would ensure that this developing technology has the room to expand without facing regulatory pushback.”
In regard to the matter, Alexey Ermakov, the founder and CEO of crypto-centric mobile finance app Aximetria, told Cointelegraph that the Chamber of Digital Commerce’s core argument is pretty much the same as the one put forth by Telegram’s legal council.
However, it does raise questions that seem to be broader and more specific than the ones related to this case. For starters, the CDC claims that once Telegram’s native tokens (referred to as Grams) are issued, they will immediately be classified as utility tokens and thus won’t be subject to securities laws. Ermaov further added:
“The U.S. securities laws have been around for more than eight decades and they have already made the point in 2017 with the Munchee case that calling a token a ‘utility token’ does not unmake it a security.”
He then proceeded to say that the crypto market is currently undergoing a phase of evolution, which is forcing traditional crypto assets like BTC and ETH to be replaced by more modern cryptocurrencies such as Gram, Libra, Venus, etc.
“While it somehow contradicts the philosophy of blockchain and decentralization of power, for the average person it does not really matter whose currency they are using as long as they get paid. The crypto industry will continue to develop in the direction of replacing traditional financial instruments, such as loans, profitable deposits, and insurance services.”
Lastly, as part of its amicus brief, the CDC attempted to explain to the court what other regulatory agencies outside of the U.S. have done in terms of administering their local crypto markets. Most digital assets are being classified into three main categories:
- Payment tokens: used primarily as digital mediums of exchange
- Utility tokens: allow access or usage of a digital network or application
- Security tokens: financial instruments, similar to traditional equities or debts
Do token sales constitute an investment contract?
One of the core issues that the CDC has sought to discuss with the U.S. judicial system is the issue of whether a token sale can be classified as an investment contract or not. To better understand the nonprofit organization’s stance on the same matter, Cointelegraph spoke with Philip Moustakis, counsel for Seward & Kissel and an advisor of companies and individuals on SEC-enforcement matters. In his personal opinion, everything depends on the facts and circumstances regarding a sale, not whether the thing being offered and sold is a digital token:
“The CDC argues, that certain activities, not the technology, should be regulated by the appropriate regulators. The SEC takes a principles-based approach to regulation and enforcement that, generally, is technology-agnostic and looks to the economic realities of a transaction. In this respect, they seem to be on the same page. The CDC is simply trying to focus the court on the fact that there are two financial instruments involved here, not one, that is, the purchase agreement and the Grams, and they must be analyzed independently of one another.”
On the subject of the CDC claiming that not all digital assets should be regulated as securities, Moustakis believes that The SEC has never branded something a digital asset just because it is blockchain-based, adding:
“In its amicus brief, the CDC expressed its concern that orders issued by the SEC in certain settlements have not, in the CDC’s view, parsed the transactions at issue carefully enough and taken an independent look at the underlying digital assets offered.”
Lastly, he expounded on the reasons why the CDC asked the court to provide digital asset investors with all of the protections that today’s existing securities laws offer. Meanwhile, Moustakis also stressed that not all digital asset-related transactions require the protection of securities laws, and thus the Chamber was basically saying that if a token involves the offering of a security it, of course, must comply with appropriate securities laws and regulations. However, the court needs to be mindful that not all token offerings are securities offerings.
It is worth highlighting that the SEC classifies nearly every cryptocurrency, aside from Bitcoin and Ethereum, as securities. This is because, aside from those two, most cryptocurrencies have been created via an ICO, whose value directly benefits the company behind their development and from the use of which, investors can make a profit.
When it comes to utility tokens, this topic is still up for debate — as is the case with XRP, since there are grounds to say that XRP is not a security, as it doesn’t necessarily represent an investment vehicle designed for profits.
In regards to the Telegram vs. SEC case, the amicus brief filed by the Blockchain Association states that since the purchase agreements offered by Telegram were strictly limited to accredited investors — who were promised the tokens after the official launch of the company’s native blockchain network — the company did nothing wrong.
Since last year, the crypto industry has been witnessing an enormous amount of interest around stablecoins, a digital offering that presents users with all of the various advantages of cryptocurrencies while having their values pegged to a stable fiat asset such as the U.S. dollar, the euro and others.
Not only that, but many countries and mainstream multinational corporations (like JP Morgan Chase, Walmart, AirAsia, Mitsubishi Nornickel, and Tencent) are also either already using or planning to launch their very own cryptocurrencies.
Thus, in regard to how the regulatory future of the crypto market seems to be evolving, Yusaku Senga, founder of cloud computing platform Swingby Protocol, told Cointelegraph that as with many new emerging technologies, their legal foundations often tend to clash with outdated, ill-fitting legislation — thus creating gray areas in which both good and bad actors can operate:
“We should wholeheartedly embrace, and actively work on sensible legislation that helps regulate the industry and lay the groundwork for wider adoption of blockchain applications. I agree that the existing securities laws are too blunt for dealing with such a nuanced industry and we hope that these recent developments are indicative that regulators across the world are engaging with the industry in a more detailed way.”
Alexander Vinnik, the Russian-born IT specialist who spent over two years in detention in Greece, where he was arrested on a U.S. warrant, is now in Paris. The alleged BTC-e operator, suspected of laundering at least $4 billion through the now defunct crypto exchange, has been handed over to France after the Greek judiciary turned down a plea against his extradition.
From a Greek Hospital to a French
On Thursday, law enforcement officials took Alexander Vinnik from a Greek hospital away in an unknown direction, Russian news agency RIA Novosti reported. That happened right after the Council of State, the highest administrative court in Greece, published its decision to dismiss a complaint filed by Vinnik’s lawyers against his extradition to France and the United States. Ekaterina Sakellaropoulou, the court’s presiding judge until recently, was elected the first female president of Greece.
The accused was taken to the airport and eventually transported to France where he is currently in the Hotel Dieu hospital in Pairs, his Greek lawyer Zoe Konstantopoulou announced on Facebook. Last night, French authorities questioned Vinnik, reportedly against his will. He is in a deteriorating condition more than 30 days since he started his latest hunger strike, she added, quoting a French colleague. Social media commenters speculated that French authorities were in a hurry to interrogate Vinnik in order to proceed with his extradition to the U.S.
Alexander Vinnik was arrested in the Greek city of Thessaloniki in July, 2017 during a family vacation. U.S. prosecutors accuse him of illegally establishing and operating the BTC-e digital asset trading platform, through which between $4 billion and $9 billion were allegedly laundered. Vinnik is also wanted in his home country for the theft of 600,000 rubles (less than $10,000) from a defrauded entity and Russia has tried to secure his extradition to Moscow.
Paris Accuses Vinnik of Cybercrime, Extortion and Money Laundering
France filed its extradition request in June 2018, claiming Vinnik was part of an organized criminal group that specialized in extortion and money laundering. According to the documents, its members broke into the emails of 5,700 victims around the world and extorted over 20,000 BTC. The arrest warrant issued by Paris cites cybercrimes, legalization of illicit proceeds, and participation in a criminal organization. Vinnik’s defense, which includes Russian lawyer Timofei Musatov, maintains that the said crimes were conducted while the accused was in jail, that the European order has long expired, and also that Vinnik has been kept in detention without charges.
The case has become a source of international tension, with Greece finding itself under pressure to extradite Vinnik to either France and the United States or the Russian Federation. There have been four separate decisions by Greek courts for the extradition of Vinnik so far – to the U.S., France, and two for Russia. Authorities in Athens have officially notified the Russian embassy about the extradition to France. On Friday, a spokesperson for the French Ministry of Foreign Affairs declined to comment on the current situation and redirected relevant requests to the Justice Ministry. Doctors at the Hotel Dieu hospital have also refrained from statements.
A French judge is expected to preside over a hearing on Tuesday, Jan. 28, which will determine the conditions of Alexander Vinnik’s further detention, his lawyer in France, Ariane Zimra, told RIA. “Depending on the state of his health, the judge may have to hold this hearing at the hospital,” Zimra added. According to Timofei Musatov, the court can impose restraint on remand in custody only if charges are brought against the Russian citizen. Otherwise he must be released, the lawyer insisted. Vinnik’s legal team plans to file international lawsuits in his defense after he spent 30 months in jail without charges.
What are your expectations about the future developments in the Vinnik case? Share your thoughts in comments section below.
Images courtesy of Shutterstock, RIA Novosti.
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CME’s recent launch of BTC options on futures is already generating significant volume, but will it have any effect on Bitcoin’s price?
CME Group launched new Bitcoin options on Jan. 14, which was revealed by the company’s global head of equity products Tim McCourt. The introduction of crypto options by a derivatives heavyweight in CME will further uplift the institutional infrastructure supporting the asset class.
Over the long term, investors generally anticipate improvements in the infrastructure surrounding Bitcoin (BTC) to have a positive impact on the cryptocurrency market.
CME Bitcoin options is a net positive for crypto
Speaking to Cointelegraph, cryptocurrency technical analyst Eric Thies said that CME options will bring in more stability in the market over the long run. Accredited and institutional investors will have a diverse selection of vehicles to use to enter into the cryptocurrency market. That variety will strengthen the foundation that would take cryptocurrencies from an emerging to an established asset class. He said:
“I’m optimistic it’s bullish for longer-term stability and that it also signals something more significant once you compound it with several other events around the market.”
Up until mid-2019, hedge funds and institutional investors did not have sufficient infrastructure to properly invest in Bitcoin and other crypto assets. There were trusted custodians, like Coinbase and Xapo, operating independent custodial services, but other than that, services like Bakkt were non-existent.
In the long term, Thies believes that the availability of CME options will synergize with the progress of other key players in the crypto industry, in the likes of United States-based exchange Gemini. Throughout the past year, Gemini has placed heavy emphasis on compliance and securing insurance for cryptocurrency investors in the U.S. Such improvements contribute to the overall prosperity of the cryptocurrency market.
Thies explained that such developments are building up baseline assurances that any hedge fund would need before joining what was previously an incredibly volatile space, adding:
“Institutions being handed a key to an on ramping BTC during a halving year sure seems like a good recipe for fireworks for the year or so after the actual event.”
Is options volume relevant to the current cryptocurrency exchange market landscape?
An option typically works like a discounted buy order of an asset at a certain time. For instance, if a trader believes the price of Bitcoin will be at $4,000 by the end of 2020 and buys an option for it, the trader will pay a premium of around 30–40% to obtain the right to buy Bitcoin at $4,000 by that certain period.
In futures and options markets, total open interest refers to the total amount of positions open. In the futures market, it merely means the combined value of all active long and short contracts. In the options market, it means the value of all options calls combined.
In the short term, the options market is unlikely to have any significant impact on the price trend of Bitcoin. Based on data from the Skew research team, Deribit accounts for $224 million of the total BTC open interest.
By nature, the volume of the options market is not likely to surpass the volume of the futures market. As such, for short-term price movements, margin trading platforms, like BitMEX and Binance, will have a stronger effect on the price of Bitcoin.
Over time, however, Three Arrows Capital CEO Su Zhu said that the options market is expected to see record-high volumes throughout 2020: “Near-record volume on BTC options yesterday, I expect this record to be broken several times over the course of the coming year.”
It shows the confidence CME has in the Bitcoin market
CME, as a multi-billion dollar derivatives company, has no incentive to push for Bitcoin options and other investment vehicles if there simply is no traction or demand from the market. As the company’s executive Tim McCourt said, CME’s Bitcoin futures market facilitated around $270 million per day:
“We’re pleased our CME Bitcoin futures have rapidly evolved over the last two years to become one of the most liquid, listed Bitcoin derivatives products in the world, averaging nearly 6,400 contracts (equivalent to 31,850 Bitcoin) traded each day in 2019.”
31,850 BTC at the current price of $8,500 is equivalent to $270 million and that is similar to the spot volume of major exchanges in the global market.
For CME, Bitcoin futures and derivative products are established revenue streams for the company, and it indicates that there is enough demand from investors for CME to continue focusing on the cryptocurrency market. On Jan. 21, Cointelegraph reported that the CME Bitcoin options volume doubled to $5.3 million merely seven days after their launch.
How rising demand for institutional Bitcoin products plays in with BTC halving approaching
According to Alistair Milne, the chief investment officer at Atlanta Digital Currency Fund, the upcoming Bitcoin block reward halving in May 2020 is not priced into the price of Bitcoin. Google Trends data shows that search interest for the phrase “halving” has surged to November 2016 levels.
As the increase in the volume and open interest of CME’s futures and options markets show, the institutional demand for Bitcoin is already on the rise. Studies have shown that most institutional investors are not aware that the block reward halving will take place in about four months. A report from Grayscale read:
“The halving is close enough that it’s time to start talking about it more seriously, but far enough out in the future that it’s unclear whether it’s priced into the market efficiently.”
Whether the high demand for Bitcoin futures and options products throughout the past three months indicate that institutions are anticipating the halving have an impact on the price of BTC remains to be seen.
Historical data indicates that a halving does not cause an immediate price spike for BTC. Rather, in the previous two halvings, it took Bitcoin about 6–12 months for a properly extended rally to begin. That goes in line with the tendency in the crypto market to “sell the news,” which refer to investors selling cryptocurrencies following a large event like an important network upgrade or halving.
But, the argument in favor of the halving affecting the Bitcoin price in the medium term has been that any event that impacts the supply of an already scarce asset in Bitcoin can have a significant effect on the price trend of BTC.
The options market alone may not have enough volume or total open interest to sway the Bitcoin price. When it is put together with major events like halving and institutions becoming growingly aware of it, it can have a bigger effect on BTC than many anticipate.
The UK’s legendary Lancashire Cricket Club will sell tickets for all domestic and international fixtures at Emirates Old Trafford in 2020 through a blockchain-based platform.
The United Kingdom’s legendary Lancashire Cricket Club will sell tickets for all domestic and international fixtures at Emirates Old Trafford in 2020 through a blockchain-based platform.
In a news release on Jan. 24, the club revealed that it will use a blockchain-powered mobile tickets platform dubbed TIXnGO. The platform has been jointly developed with Lancashire’s ticketing service provider, SecuTis, and was successfully tested during the 2019 season.
Eliminating fake tickets
By deploying the platform, the club intends to eliminate fake tickets and track ticket distribution among their supporters. Lancashire’s head of ticketing and digital systems, Jonathon Nuttall, claimed that the club became the first in the sport to use the new blockchain secure mobile ticket technology, and added:
“During the 2019 season, over 80% of tickets bought at Emirates Old Trafford have been made online, compared to less than 50% in 2018 so it’s vitally important that we continue to improve the digital ticking technologies to ensure we make things as easy, and as enjoyable, as possible for those supporters booking with us.”
David Hornby, UK MD of SecuTix, said that “blockchain technology addresses many of the ticketing issues that both sports organisations and fans alike face. TIXnGO creates a unique, encrypted ticket for smartphones that is completely traceable, removes the risk of counterfeit tickets and simplifies the process of transferring or reselling tickets for the customer.”
Blockchain becomes more popular in sports
Blockchain has gained traction in the world of sports in recent months. Earlier in January, news broke that the National Basketball Association’s Sacramento Kings will tip off a live auction for gear with a blockchain-based app. The platform reportedly authenticates auction items, patching problems that have long bedeviled gear-hungry fans.
Last year, Italian luxury sports car brand Lamborghini began using Salesforce Blockchain to trace, certify and authenticate heritage Lamborghini cars faster and more securely using its blockchain platform.
On Jan. 23, Malta-based sports blockchain venture Chiliz revealed that it is launching a cryptocurrency exchange for sports and entertainment tokens.
Bitcoin held $8.2K, leading to an oversold bounce that produced a 3.97% gain but now the price is struggling to push through the 50-EMA as $8.5K presents resistance.
Bitcoin (BTC) bulls are attempting to start the weekend on the good foot by pushing the price to $8,500 and above.
Bitcoin daily price chart. Source: Coin360
In the past 24 hours, Bitcoin price bounced off the 200-day moving average (DMA) at $8,200 and, as suggested earlier, an oversold bounce on the shorter time frame provided traders with the opportunity to buy the dip and push the price to $8,500.
Will Bulls flip the $8,500 resistance?
At the time of writing, Bitcoin is still pinned beneath the 50-period exponential moving average (EMA) and it’s possible that the former support at $8,500 will now function as formidable resistance.
Some positives are: the 4-hour timeframe shows the moving average convergence divergence (MACD) in the midst of a bull cross and the histogram has flipped positive by printing a green candle above 0.
BTC USD 4-hour chart. Source: TradingView
The relative strength index (RSI) is also at 48 which is close to bullish territory. Traders will note, however, that the RSI has flattened and the last two 4-hour candlesticks hint that bulls are struggling to maintain momentum, the last three have notched higher lows, which is encouraging.
BTC USD daily chart. Source: TradingView
Should bulls push the price through the 50-EMA and sustain above the $8,500 to $8,650 zone, traders will look for the digital asset to notch a daily lower high above $8,790.
After this bulls will aim to secure a higher high above 9,200. Gains to $9,250 would tap the upper arm of the Bollinger Band indicator and restore the uptrend that was broken when the price dropped below the ascending trendline on Jan. 19.
$8.3K BTC price dip was “logical,” says Bollinger Bands creator
It appears that yesterday’s advice from Bollinger Band indicator creator, John Bollinger, was spot on. He advised investors to be at ease as a pullback to the Bollinger Band moving average at $8,300 was perfectly “logical” and expected. Looking back at Bitcoin’s 24-hour price action one can see this is exactly what occurred.
Veteran trader Peter Brandt is also feeling quite bullish about Bitcoin’s future price prospects. Earlier in the day, Brandt posted the above chart and tweeted that in his opinion everything will be just fine with the price of Bitcoin unless the following conditions are violated:
“Reasons to believe current correction in Bitcoin could hold
1. Retesting upper boundary of channel is normal
2. Retesting 18 DMA
3. No 3DTSR has been triggered
4. Jan 14 low remains intact
Should above items change, then more serious correction could occur
For the short-term, traders are advised to observe whether or not Bitcoin can sustain above the 50-EMA as multiple rejections and an increase in selling volume will be the first signs that the upside move is losing momentum.
Cautious traders might consider buying a break out above $8,750, which is the point where Bitcoin would secure a daily lower high and clear the high volume node of the volume profile visible range (VPVR) node at the same price.
Bitcoin weekly price chart. Source: Coin360
The overall cryptocurrency market cap now stands at $233.2 billion and Bitcoin’s dominance rate is 66.1%. As Bitcoin rallied 3.97% only a few of the top-10 altcoins posted marginal gains. Bitcoin SV (BSV) stood out with a 4.55% gain, along with EOS, which moved up 3.56%.