As the week draws to a close, we recall a sharp market pullback, new institutional investments in Bitcoin, the verdict against BTC-e’s Alexander Vinnik, and other key developments.
Bitcoin price
This week was marked by a market downturn, during which on Wednesday, December 9 Bitcoin briefly fell to around $18,000. As a result, the volume of liquidations on the futures market stood at $440 million. Another wave of correction to a December trough of around $17,500 occurred on Friday, December 11.
A similar price pullback was seen on December 1 before the asset surged to $20,000, and investors’ hopes for further gains revived toward the end of the week. On Sunday, the flagship cryptocurrency moved back above $19,000, thereby erasing earlier losses.
At the time of writing, Bitcoin was trading around $19,230, up 4.8% in the last 24 hours and 0.5% for the week.
Hourly BTC/USD chart from TradingView (Bitstamp).
According to trader and analyst Tone Vays, the ongoing lockdowns due to the coronavirus, rising dollar issuance, and institutional Bitcoin purchases create favorable ground for a further bullish rally.
“The pandemic is helping Bitcoin because more money is being printed, more people hate the government, more companies are seeking opportunities to hedge risks. Already 30% of people in the world have lost their jobs,” explained Weiss.
Earlier, Bloomberg stated that Bitcoin’s price range could be $10,000-$50,000, and its market cap could rise to $1 trillion in 2021–2022.
The top ten digital assets by market capitalization for the week look as follows:
Stablecoin market capitalization surpasses $25 billion
The total market value of the five most popular stablecoins surpassed $25 billion. This accounted for more than 4% of the total cryptocurrency market capitalization.
Tether remains the dominant stablecoin. Its market capitalization is around $20 billion, and it accounts for about 80% of the segment.
USDC is the second-most popular stablecoin, its market capitalization this week surpassed $3 billion.
The chart below shows the segment’s growth dynamics over the past few years.
Value of assets in DeFi services surpasses a record $15 billion
The total value of assets locked in DeFi services this week reached a record high above $15 billion for the first time. At the time of publication, the figure stood at $14.59 billion.
Data: DefiPulse.
Maker remains the leader, accounting for $2.66 billion or 18.22%.
The top five have remained unchanged over the last three weeks, but Uniswap slid from first to fifth — Maker is followed by WBTC, Compound, Aave and Uniswap.
Data: DefiPulse.
MicroStrategy raises $650 million for Bitcoin purchases
On Friday, December 11, the software analytics company MicroStrategy Inc. announced it had secured $650 million in debt financing for subsequent investment in Bitcoin. The amount exceeded the initially announced financing volume of $250 million.
MicroStrategy offered accredited investors convertible senior unsecured notes at 0.75% coupon. The interest is planned to be paid semi-annually, beginning in 2021. Maturity is December 15, 2025, unless the company redeems or converts the notes earlier.
Earlier in the week, due to plans to issue convertible bonds, Citi analysts lowered their recommendations on MicroStrategy Inc., after which their price fell sharply.
Additionally, the decision to invest $100 million in Bitcoin was made by MassMutual, the Massachusetts-based insurer serving 5 million clients. MassMutual has been operating since 1851 and oversees $235 billion in insurance accounts.
Bitwise opens access to index crypto fund on OTC market in the US
On Wednesday, December 9, Bitwise Asset Management listed the Bitwise 10 Crypto index fund on the OTCQX over-the-counter market. Shares trading under the ticker BITW are accessible through brokerage accounts.
By the second day after listing, BITW’s turnover surpassed that of Grayscale’s Ethereum Trust (ETHE), which also trades on OTCQX.
Previously, the instrument could only be purchased via private placement at net asset value.
The Bitwise 10 Crypto fund mirrors the Bitwise 10 Large Cap Crypto Index. The latter is a basket of the ten largest cryptocurrencies by market capitalization, rebalanced monthly after risk assessment.
As of December 1, the index is 75% Bitcoin and 13% Ethereum. The remaining 12% are distributed among XRP, Litecoin, Chainlink, Tezos and others.
Canadian Ether Fund by 3iQ raises $76.5 million in IPO
Canadian company 3iQ completed the initial public offering of The Ether Fund. The Ethereum-based fund raised $76.5 million. Securities under ticker QETH.U began trading on December 10 on the Toronto Stock Exchange.
A total of 7,240,000 Class A and Class F shares were issued. The custody of the fund’s Ethereum assets is provided by Gemini’s custodial division.
Assets under management by 3iQ exceed CAD 400 million. In October this year, on the Toronto Stock Exchange began trading 3iQ’s Bitcoin fund under ticker QBTC.
XRP price falls to two-week low ahead of Flare Network airdrop
XRP, the third-largest digital asset by market cap, declined in the night to Sunday, December 13, to below $0.50, a fresh low since late November. The drop occurred amid the upcoming Flare Network airdrop, in which XRP holders will receive Spark (FLR) tokens for free.
The XRP snapshot was taken at 00:00 UTC on Saturday, December 12. At the time, there were 23.5 billion XRP in circulation.
The hype around the Flare Network airdrop led to a sharp rise in XRP price in November, when the token briefly surged above $0.90. A day before the snapshot, the number of XRP addresses with more than 10 million tokens reached an all-time high of 339 wallets. In total, these addresses held at least $1.8 billion at the then price.
However, immediately after the snapshot XRP’s price fell sharply. While all of the top ten coins by market cap had risen in the last 24 hours, XRP at one point lost about 8% of its value. As of publication the token traded around $0.52.
Flare Network is developing solutions to bring DeFi to the XRP ecosystem by adding smart contract support. The Spark governance token will be used as collateral for asset redemption.
Alexander Vinnik sentenced to five years in prison
On Monday, December 7, a Paris court sentenced Russian national Alexander Vinnik to five years in prison and a €100,000 fine. Vinnik was suspected of laundering at least $4 billion through the BTC-e cryptocurrency exchange.
Having found him guilty of laundering the funds, the court dropped charges of extortion and creating the Locky ransomware.
Vinnik has been detained for three years. He was arrested in July 2017 in Greece at the request of US authorities.
Russia creates Committee on Digital Financial Assets and Digital Currency
On December 9, the Council of the Foundation for the Development of the Digital Economy approved the creation of the Committee for Digital Financial Assets and Digital Currency.
The new body will discuss measures to implement the law “On Digital Financial Assets (DFA)” and the cryptocurrency taxation bill, as well as further developing the regulatory framework for the crypto market.
The committee will include leaders of the Foundation for the Development of the Digital Economy, members of the Board of the Council for the Development of Foreign Trade, and leading experts from industry associations and business communities. One of the partners of the new organisation is the cryptocurrency exchange Binance.
The law “On DFA”, which defines “digital financial assets” and “digital currencies,” was passed at the end of July. It recognises cryptocurrencies as property and prohibits their use to pay for goods and services in the Russian Federation. The document will come into force on January 1, 2021.
The next day, December 10, President Vladimir Putin signed a decree, which obliges officials and candidates for relevant posts to disclose information on their digital financial assets.
Mastercard and Visa cut support for PornHub
Mastercard and Visa halted payments on the popular porn site PornHub after The New York Times published an article alleging the site hosted content involving minors. The author Nicholas Kristof urged financial companies to sever ties with the site.
Immediately after the article, PornHub announced policy changes, banning video downloads and restricting uploads. The payment systems halted payments two days after the changes.
Since 2018 PornHub has accepted payments in Verge, Horizen and Tron. In January 2020 the site added the stablecoin Tether as a payment option.
Saxo Bank: Digital yuan will trigger tectonic shifts in international financial flows
The digital version of the yuan (DCEP) on the blockchain it is projected to trigger tectonic shifts in international financial flows in 2021, opening the domestic Chinese capital market to foreign investors. This version is part of Danish Saxo Bank’s annual “Shocking Forecasts”.
“Providing foreigners with full access to Chinese capital markets will reduce the fundamental barrier that concerns foreign investors using the yuan for trade and investment: its liquidity and direct access to their investments within the country,” — Saxo Bank.
The stability of the Chinese currency, traceability and control provided by blockchain technology will virtually eliminate the risk of capital flight or illicit transfers from the country, analysts added.
Saxo Bank describes its traditional forecasts for the coming year as “unrealistic” and not reflecting the organisation’s official stance. Among other “shocking” predictions for 2021 are a relocation of Amazon’s headquarters to Cyprus and an uptick in corporate defaults due to successful COVID-19 vaccination.
Bitcoin 2020: New Horizons
Where is the best place to store Bitcoin? How can you protect yourself? How has the pandemic influenced the development of crypto assets? On December 7, ForkLog’s YouTube channel hosted the Bitcoin 2020 conference, during which we tried to answer these questions with our experts. Here are some of the views expressed:
- Cryptocurrency trading should begin with defining the investor profile
- Altcoins are best played when Bitcoin is range-bound
- In the event of a quantum computer, Bitcoin holders should hedge with its forks—Bitcoin Cash and Bitcoin Gold
- 2021 will be the year of the privacy wars
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