China’s massive crackdown on cryptocurrency has caused chaos. China was a key participant in the new financial ecosystem. Beijing’s actions may be the beginning of a wider regulatory crackdown against cryptocurrencies and crypto assets worldwide. This would be a shame. Although cryptocurrencies are not without faults, the technology behind them holds great promise.
China had previously banned initial coin offerings. This is the cryptocurrency equivalent to initial public offerings of stock shares by companies. The Chinese government then took steps towards limiting the use of crypto assets and cryptocurrencies by financial institutions. This latest move is even more expansive. All domestic cryptocurrency transactions are now banned. These transactions are possible in principle without the government’s knowledge. However, few Chinese citizens and financial institutions will be willing to take the government’s ire.
Beijing’s actions show how central banks and national governments are increasingly worried about cryptocurrencies destabilizing financial systems and other adverse consequences. They have every reason to be concerned.
Bitcoin, the original cryptocurrency, was once used to fuel illicit transactions on the dark internet and is now used to facilitate ransomware attacks payoffs. In the meantime, it has been revealed that Bitcoin is not a good medium for daily transactions. It is volatile and the Bitcoin network can’t process large volumes of transactions quickly or cheaply.
Instead, Bitcoin has become a speculative digital asset that is of no intrinsic value. Its scarcity is its entire value proposition. Bitcoin is issued by a computer algorithm that has a hard limit on the number of digital coins that can be issued. This is in contrast to fiat currencies, which central banks can print at will.
Governments are concerned by the possibility that households will channel their savings into crypto assets. This could make them more vulnerable to a burst of the speculative boom. China’s government is clearly against this. This is especially true given the fact that it is currently facing criticism for trying to reduce the housing market speculative bubble, which it once supported.
Beijing was also concerned about the impact of cryptocurrencies on its control over domestic payment systems. It has taken steps to crack down on Ant Financial and other tech companies that have dominated domestic retail payments. This has made central bank money less relevant. China is also wary of stablecoins, a new cryptocurrency that maintains stable value and is backed by fiat currency stores. These stablecoins could be used to make payments in addition to the fiat currencies.
Another concern was that stablecoins and cryptocurrencies could be used to bypass restrictions on cross-border financial flows. These controls have been relaxed in recent years. The government is concerned that unregulated flows could make it more difficult to control the renminbi’s exchange rate. China attempted to curb capital outflows in 2015-16 to stop a sharp depreciation of its currency. However, Bitcoin demand from China soared during this time, as people used the cryptocurrency to escape the government’s control and take money out of China. Beijing sees cryptocurrency as a conduit for capital control evasion.
China has also taken aim at Bitcoin mining. This is a process in which huge amounts of computing power are used to validate transactions on the cryptocurrency network in return for Bitcoins. Because of its easy access to cheap energy and high-quality hardware, such mining has been a growing trend in China. This makes it the world’s largest center for this type of activity. Both the environmental impact of such mining in terms energy consumption and computer debris have been huge. The country is currently experiencing a power crisis as it attempts to reduce its dependence on nonrenewable energies. Bitcoin mining was clearly not going to be tolerated.
Despite all these flaws, blockchain technology which underpins Bitcoin may actually have many benefits. This technology has already been used in finance. The technology will soon allow for a wide range of transactions, including the purchase of a house or car without traditional intermediariessuch lawyers and real-estate brokers. The emergence of cryptocurrency has also prompted central banks to design digital variants of their fiat currencies. China has already started such trials. Japan, Sweden, and many other countries have already started such trials.
It is uncertain what the future holds for cryptocurrencies as financial assets. However, the revolution they started will make it possible to make low-cost digital payment easily accessible. If these new technologies are allowed to evolve further, they will also help expand access to basic banking services and financial services for all income levels, including those with low incomes and those who are not served by existing financial institutions.
The Chinese crackdown on cryptocurrency advocates is a lesson for them to learn. Instead of resisting regulation and oversight or claiming technology will allow the industry’s police to take control, advocates for cryptocurrency should work with regulators and governments in creating effective regulation. The industry will then benefit from increased legitimacy and stability.
I know people who see bitcoin’s price and think, “Damn, I missed that.” I’m late. They are attracted to altcoins that are cheaper, but will eventually lose their value. They believe that coins selling for less than $1 are going to be the next bitcoin. There isn’t a ‘next Bitcoin’. Bitcoin is a historical accident. It was and still is a lot like our ancestors discovering fire. Let’s look at the early internet for context.
Only a few people had internet access in the 1990s. The internet was a strange thing back then. It was a new phenomenon that few people knew about. Few people could have predicted the rise of social networking, social media and online conferencing. That’s where Bitcoin is at the moment. It is still very, very early. Because so many people don’t know about all the developments and what’s being built on Bitcoin right now, it is especially important.
Layer 2 solutions are those that build on top of Bitcoin blockchain. The Lightning Network is one such project. It now has 14,000 nodes and 68.300 payment channels. This network spans across six continents (sorry Antarctica). Layer 3 solutions are the decentralized apps being built on top the Lightning Network. The goal is to create a new peer internet. One that isn’t subject to the control or censorship of Big Tech. It realizes the original internet ethos.
We are now seeing the first glimpses of projects using the infrastructure built by companies like Impervious. These will allow people to call Lightning nodes or monetize any service that is not financed with a Lightning bank account.
We are witnessing an early stage of evolution. It’s still early days of an evolution. Bitcoin’s Layer 1 settlement layer has been the most valuable store of value. nations have adopted it as legal tender, thereby abandoning the U.S. dollars’ global dominance. The Lightning Network has been the best exchange. We now have Layer 3 decentralized apps. These are the companies of tomorrow. Bitcoin is now more rare than it really is because of the functionality that it offers.
Bitcoin is almost as popular today in terms of adoption as the internet was back in 1997. Bitcoin is growing faster than the internet. We could very well see more than one billion users in the next four years, if this trend continues.
A single bitcoin’s price movement is just noise. It doesn’t really matter at what price you buy. It doesn’t matter what price you buy. Individuals and groups that are smarter than I see the current price as a blip. We are on the way to $1,000,000 per coin by using PlanB’s’stock-to-flow_’ model. It’s like worrying about Amazon and Apple’s share prices in the 2000s that we worry about where our coins are trading now. We’re just getting started. The Lightning Network continues to be strong.
These are exciting times. It’s an honor to have witnessed the evolution of the internet from its inception to today. It’s not too late to participate in Bitcoin’s evolution.
Bitcoin and other cryptoassets can also be sold when the stock market falls sharply, as Monday’s Evergrande meltdown.
This is always surprising to people. Skeptics are quick to jump out of the woodwork, pointing sarcastically at their mistaken belief that cryptoassets should be uncorrelated. “
This is a puzzle to me.
Crypto is a risky investment, that’s what everyone agrees on. Why is it that crypto often sells at risk-off times?
It is common to say that crypto is uncorrelated. However, over any meaningful time period, the correlation between crypto-stock market is only about 0.2. This is very low. However, a lack of correlation does not mean that crypto will be able to zig and zag with the market in the short-term. This means that it will provide uncorrelated returns over months or years. It has historically done so.
People who believe that crypto will completely offset the market do not understand what drives crypto performance. There are three main factors that drive crypto returns. Understanding how these three drivers interact will help you understand why different crypto assets behave in the same way.
Driver 1: Risk-On/Risk Off Appetite
Risk appetite is the first driver of crypto returns. Cryptoassets such as bitcoin can be risky investments. Investors sell risky assets when they feel anxious. They buy when they become bullish.
This is true for all risky assets. We saw this Monday when crypto traded in line with stocks. The same effect can be seen in other areas of risk, such as the ETFs that offer disruptive technology (ARK Invest) and Cathie Wood.
Crypto can respond to both risk-on and risk-off dynamics.
Driver 2: Industry-Wide Factors
Industry-wide factors are the second driver of crypto returns. This means that news and developments impacting the entire industry or specific sectors will be important.
One example is regulation. Today, regulators in Washington and other places are discussing issues such as how to regulate stablecoins and crypto exchanges and the DeFi sector. Positive news from the regulatory front could lift the overall price of the crypto market, but concerns about excessive regulation could cause the market to fall. As the market reacts against China’s ban on crypto trading, you can see this today.
Education is another example. For the past two weeks, I have been traveling around speaking to thousands of financial advisors and institutional investors about crypto at various conferences. This education, multiplied by the thousands of other people doing the exact same thing, has a huge industry benefit and is a long-term driver for returns. Confidence breeds knowledge.
Driver #3: Drivers who are Asset-Specific
The third driver of returns are factors that have an impact on individual cryptoassets or their use cases.
The booming interest in NFTs (or non-fungible tokens) has led to an increase in the price of ether this year. These tokens are tied to Ethereum’s network. Bitcoin’s price has not risen much due to its inability to be exposed the NFT boom.
Bitcoin’s price, by contrast, is more sensitive to central bank activity than ether’s. This is because bitcoin’s primary purpose is as digital gold.
Different cryptoassets offer different services and are targeted at various markets. The returns of each asset are affected by whether they succeed or fail, and how those markets change.
What this means for investors
Understanding how these three factors interact is crucial to understand cryptoassets performance. Crypto was highly speculative and the use cases for it were not clear. Risk-on bull runs and sell-offs were extreme as a result. On any given day, cryptoassets moved by 10% or more.
Today, asset-specific drivers and industry drivers are dominant. While there are times when market risk factors can overwhelm, such as Monday, most crypto is driven by regulatory factors and institutional adoption. When compared over time, crypto has low correlations to stocks and other markets. However, correlations can spike up to 1 in risk-off times.
Long-term, asset-specific drivers will become more dominant, or at the very least, a greater driver of returns as markets mature. This is already evident in markets where assets such as Solana are showing remarkable returns (up over 9,000% year to-date), as investors increasingly view them as an alternative to the overcrowded Ethereum Blockchain. As each cryptoasset’s unique characteristics and uses become more apparent, I expect that correlations between them will decrease. Over the long-term, there is no reason why bitcoin, which acts as digital gold, should be high correlated with Ethereum (which is the platform to DeFi, NFTs and other applications). Because they are both subject to significant industry-wide risks and appetite dynamics, it is currently. They should however have distinct returns in a stable, mature state.
Don’t let the short-term returns fool your eyes: Cryptoassets trading lower on risk-off days is just a reminder of how risky cryptoassets are. In the short-term, this risk factor could overwhelm the industry and asset specific drivers. Over the long-term, however, crypto has shown a low correlation to other assets and this lack of correlation is likely to continue.
Bitcoin is on the rise and many investors are excited about its potential. The question is, why is Bitcoin so precious? Although it is too early to know, it appears that many people are interested in Bitcoin as a way to store value. This could help to ensure more long-term success.
Some theories suggest that some Bitcoin buyers may be hedging against other investments, such as gold and equities. This is the right time to invest in Bitcoins if you are an investor who wants to diversify your portfolio by buying digital currency.
This blog will discuss three major reasons why Bitcoin is so popular.
Institutional Adoption of Bitcoin
Institutional investors are increasingly interested in Bitcoin. Two major Bitcoin ETFs (exchange traded fund) have recently been released. This has resulted in a significant increase in institutional trading and investments of Bitcoin and other crypto tokens, as well as by mutual funds, pension funds and hedge funds. You can visit CryptoEngine to start investing in bitcoins.
Cumberland Mining raised $1 billion to fund crypto. According to the firm’s founder, ‘the whole world is moving digital’ and it makes sense to invest in this space. Goldman Sachs, Citigroup and Nasdaq offer bitcoin futures contracts that allow them to trade on behalf of clients.
Two of the most widely used cryptocurrencies are Ethereum and Bitcoin. PayPal recently announced that it will accept Bitcoin for certain transactions via its Braintree Payments subsidiary.
This is a major move by one of the biggest online payment processors. It indicates a shift in the way we pay for things online. Investors may be able to buy cryptocurrency faster with their PayPal account than traditional methods such as bank transfer or credit card, which can take weeks.
This announcement, which comes on the heels of Ethereum and Bitcoin’s recent market caps, could bring in significant money for these currencies as well as big returns for investors who make their investments now before prices rise.
The Impact Of Bitcoin Halving on Its Price
Bitcoin’s public ledger is updated with transaction records by Bitcoin mining. Bitcoin is not like other currencies that are printed by central banks or backed by governments. Instead, it relies on individuals and businesses who use specialized computers to solve complex mathematical problems.
To release new Bitcoins into circulation, these miners perform energy-intensive computations. The Bitcoin protocol states that miners will receive a half-off reward every four years until 21 million Bitcoins have been mined. This is known as a Bitcoin halves.
The inflation rate for bitcoins is reduced by the bitcoin halving. This encourages long-term investments in Bitcoins rather than short-term trading and speculation. This event causes less supply, but the demand for bitcoins remains constant or increases until equilibrium is restored. The demand for Bitcoins is increased by halving its value, which in turn increases its popularity.
Accelerate will plant 3,450 trees per $1 million CA (788,200 US) of investment in The Accelerate Carbon Negative Bitcoin ETF (TSX.ABTC). Accelerate projects that each tree planted will capture 1,000 tons of carbon dioxide.
According to Accelerate’s website, the company plans to sequester ‘over 100 percent of the carbon dioxide emissions estimated to be attributable bitcoin transactions to which ABTC is indirectly exposed.
This year, Bitcoin has been criticized for its environmental impact. Bitcoin consumes approximately 116 trillion watts annually, which is 0.5% of all the world’s electricity.
Accelerate hopes that it can tap into the expanding market for ESG (environmental. social. and governance) investment products. Accelerate, which plants trees, offers tangible environmental offsets that are more tangible than ESG funds. Many of these ESG funds also buy carbon credits.
H3M Environmental Ltd. has been listed as the fund’s Environmental Advisor. This will be responsible for the ABTC’s decarbonisation efforts, including tree planting.
The fund won’t hold Bitcoin, but will provide investors exposure to Bitcoin performance via Bitcoin futures contracts that are traded on the Chicago Mercantile Exchange.
ABTC will trade on Tuesday at the Toronto Stock Exchange. There is a 0.69% management fee. As the principal portfolio manager, Julian Klymochko (President, Director, CEO, and CIO at Accelerate) will be responsible for managing and advising the fund.
In February, Canada launched the Purpose Bitcoin ETF (TSX.BTCC.B), its first Bitcoin ETF. The Purpose Bitcoin Exchange Trade Fund (TSX:BTCC.B) is physically backed. This means that the fund can hold Bitcoin directly. Since its inception, the fund has managed an impressive $1.1 trillion.
A man from Ohio who ran a cryptocurrency laundering company has pleaded guilty in federal court to money laundering conspiracy.
Larry Dean Harmon, 38 years old, from Akron, Ohio, confessed Tuesday to operating ‘Helix,’ which is a Darknet Bitcoin mixer. Harmon also pleaded guilty to the charges and agreed to forfeit over 4,400 bitcoin, which is worth more than $200,000,000 at Wednesday’s market price.
Harmon could face a maximum sentence of 20 years imprisonment, a $500,000 fine or twice the amount of the property in the scheme, and a term of supervised freedom of no more than three years. Harmon also faces mandatory restitution.
Customers who purchased ‘Helix’ between 2014 and 2017 were permitted to send bitcoin to individuals in a manner that concealed the’source or ‘owner of the bitcoin.
Harmon also operated ‘Grams’, a Darknet search engine that customers used to conceal their transactions from law enforcement. Helix promoted ‘Grams’ to both new and old users.
Harmon disclosed that he had worked with many Darknet markets, including AlphaBay and Evolution, Cloud 9 and other companies to provide customers with bitcoin money-laundering services. Helix processed over 350,000 bitcoin for customers, which was worth more than $300 million at the time. Darknet markets accounted for the majority of bitcoins.
Harmon also stated that he collaborated with Darknet service administrators and Darknet operators to launder bitcoins derived from drug-trafficking crimes.
Assistant Attorney General Kenneth A. stated that Harmon was being held accountable. This has prevented illegal money laundering by these criminal enterprises. Polite Jr., of the Justice Department’s Criminal Division released a press release.
Polite stated that the Justice Department will continue to work with law enforcement and regulatory partners to pursue enforcement actions to identify those who use illicit means to gain financial gain and those who use Darknet to conceal their criminal activities.
In a press release, Acting U.S. attorney Channing D. Philips for the District of Columbia stated that “Darknet markets” and dealers selling opioids and other illegal drugs are a growing problem.
They may hide their identities or launder millions of dollars through Helix technologies. Phillips said that the department and its law enforcement partners would shine a light upon their activities, dismantle any infrastructure these criminal markets depend on, and prosecute those responsible.
At this time, no trial date has been set.
Bitcoinmania is back and prices have risen 50% in the last week. How can you trade it? Bitcoin is volatile, both on the upside and down, and it also doesn’t offer a steady income stream.
Options are a great way to generate income. We also get exposure to blockchain technology.
Coinbase (COINWe could also look into options income strategies for that stock.
Another, perhaps less volatile way, would be to trade covered calls on the Amplify Transformational Data Sharing ETF ( BLOK).
Although this exchange traded fund can still be volatile, it should be less volatile than Bitcoin or some crypto stocks.
BLOK includes stocks of companies involved in the development and use of blockchain technologies such as PayPal (PYPL),Square (SQ), Marathon Digital (MARA (Nvidia (NVDA).
Let’s take a look at what a covered call trade might look like on BLOK.
How to Trade Bitcoin: Building The Covered Call
A 100 share purchase of BLOK would run around $5,100.
Monday’s trading price for a September-expiration 55 call option was $1.55 per share. This generated $155 in premium per contract.
The call option can be sold for a total of 3.13%, which is equivalent to around 30% annually.
The trade also has upside potential by selling the call out-of-the money.
If BLOK closes higher than 55 on the expiration day, the shares will be called out at 55. The trader will make a total profit $555 (gain from the shares purchased at 51 per share plus the $155 option bonus). This is a 10.9% return.
The downside to trading this Bitcoin-linked ETF, however, is the possibility that it could drop. This could result in a loss of any profits from selling the call.
Remember that options can be risky and investors could lose all of their investment.
This article is not intended to be a trading recommendation but an educational tool. Always do your research and consult your financial advisor before you make any investment decisions. He is a specialist in income trading with options. He is conservative in his approach and believes patience is key to trading success. Follow him on Twitter @OptiontradinIQ
Non-crypto users may be familiar with the term “bitcoin”, while Polygon and Matic are yet to become viral in all senses of the word. It is easy to see why Indians believe in foreign cryptocurrency more than they do their own.
Bitcoin is one of the oldest and most popular virtual currencies. Bitcoin is widely used to bypass currency controls not only in China but also in Greece and other countries. Bitcoin is very popular in India. The volume of rupee trading in Bitcoin has exploded this year, with more than 2,500 Indians trading bitcoins every day.
Interest in bitcoin has exploded since the November 8 demonetization of 86% Indian currency. According to some estimates, rupee-denominated Bitcoin trades generate the third largest volumes of bitcoin transactions after the Yen and the dollar. As trading volumes increased, bitcoin prices shot through the roof. Bitcoin was trading at $429 per currency in January 2016. It reached $4,969 in February 2016.
The virtual currency was created to facilitate transactions between people who didn’t know each other. There is no oversight from central banks or governments. Each bitcoin is made up of unique computer codes. Each bitcoin can be divided into fractions, and each fraction is identified with unique codes.
In honor of its creator, the smallest fraction is called the “Satoshi”. A combination of private and public keys can identify each coin and its owner. The coin is identified by the public key, which everyone knows. Only the owners have access to the private key, which allows them to identify themselves. Or, to put it another way: owners are the owners because of their private key.
The Details of Matic, Polygon
Polygon – An Indian origin network, Polygon was created by Jaynti Kanani (Sandeep Nailwal), Anurag Arjun (Mihilo Bjelic) The startup is located in Mumbai. Polygon, which is described as “Ethereum’s Internet of Blockchains”, is emerging as a viable option for a few exceptional projects. Ethereum 2.0 is still in development. Because of its high throughput and low gas costs, it has been popularized by developers and clients.
Bitcoin is more popular than Matic (Polygon).
This idea of “going with the trends” is the basis of the whole concept of cryptocurrency’s growing popularity. The majority of cryptocurrency buyers follow the trend. In an interview, Sandeep Nailwal (previously Matic), Co-Founder and COO at Mark Cuban-backed Polygon, stated that most of the crypto community still invests in speculative assets.
This is why so many people are buying Bitcoin. Polygon is a platform that is technology-driven and has a solid infrastructure. It focuses on expanding the ecosystem of blockchain developers. Polygon, Ethereum and similar tech-centric goods have been preferred by people who understand crypto technology and consider it a long-term investment option. Bitcoin’s popularity is due to its accessibility to trading platforms, the lack of understanding by people about crypto technology, as well as endorsements from famous figures.
Ironically, given CEO Jamie Dimon’s long-standing distrust of the industry and JPM organ’s alleged role in making it the first major US bank to offer all wealth-management clients access to cryptocurrency funds , JPM organ is reportedly the first US bank to do so.
JP Morgan’s $630billion wealth management division now allows advisors to accept orders to purchase and sell five cryptocurrency products. These include Grayscale’s Bitcoin Trust and Bitcoin Cash Trust, Ethereum Trust and Ethereum Classic products and Osprey Funds’ Bitcoin Trust. According to an internal memo obtained from Business Insider, the policy change was effective July 19.
All JPMorgan clients are subject to the new policy, which includes self-directed clients who use the Chase trading app, wealthy clients of JPMorgan Advisors and the highest tier of private bank clients. Clients must request to trade crypto, and advisors cannot recommend crypto products.
JPM previously only allowed private clients to invest in a bitcoin fund that was actively managed. Crypto firm NYDIG provided custody services.
JPMorgan clients now have greater access to crypto products. This is especially true after bitcoin reached its record-breaking price of $65,654 in April 2021. The market has declined since then – bitcoin trades at $32,263 at the time of writing – but there is still strong retail demand to gain exposure to volatile assets as a store-of value or portfolio diversifier. Mary Callahan Erdoes, JPMorgan’s asset and wealth-management chief, told Bloomberg in July that many of the bank’s clients want to invest in digital currencies.
Watchers will be watching to see if any other Wall Street banks offer limited crypto exposure to selected clients. Morgan Stanley offered clients with assets of at least $2,000,000 access to three bitcoin-exposed funds in March. Goldman Sachs started offering crypto futures trading in June to institutional clients.
At the time of publication, Osprey, Grayscale and JP Morgan had not responded to requests for comment.
United States city Jackson, Tennessee continues to explore cryptocurrencies and is now accepting Bitcoin ( BTC) as property tax payments.
Scott Conger , Jackson Mayor, announced that the city’s Blockchain Task Force had launched a study to determine how Bitcoin could be used to receive property taxes payments.
The blockchain group will also examine how employees can dollar-cost average Bitcoin or buy smaller amounts over a regular time period. The best strategy to accumulate Bitcoin is dollar-cost averaging Bitcoin purchase, multiple research confirmed.
Conger had previously taken to Twitter to criticize the U.S. Dollar devaluation and ongoing inflation, saying that Bitcoin was the “only solution”.
Why accept inflation? 6.3% in two years. In my lifetime, 172.8%. Each year, our dollar is worth less. There is no rebound.
This is the only solution. #Bitcoin
Mayor Scott Conger (@MayorConger).July 16, 2021
This announcement updates Jackson’s larger crypto-related plans, which Conger announced in April. The city is actively looking at ways to pay its employees in cryptocurrency. This includes adopting Bitcoin mining operations, and adding BTC to the city’s balance sheets. Conger suggested previously that payments could also be made in Ether (ETH) or Litecoin( LTC) by the city.
As previously reported, Conger followed the lead of Miami Mayor Francis Suarez who was pushing for the adoption of tax and salary payments made in Bitcoin. Conger is also well-known for his adoption of ‘laser eyes’, a part the flash mob that supports Bitcoin’s potential rise to $100,000. According to data compiled by CoinGecko, Bitcoin trades at $31,732, a 2.5% drop over the last 24 hours.