report
Bitcoin is following its past price cycles’ movements: Glassnode
Digital Canadian dollar fails to impress despite high awareness
People who were aware of CBDCs were more reluctant to adopt the technology when compared to those who didn't know about it.
A recent public consultation on Canada’s central bank digital currency (CBDC) initiative revealed an overall negative sentiment from Canadians, confirming the Bank of Canada’s concerns around its country-wide adoption.
Through the ‘digital Canadian dollar public consultation,’ the Canadian central bank intended to identify a place for CBDCs in a world currently dominated by digital fiat payments such as credit cards. However, in a survey that amassed 89,423 responses, Canadians demanded regulations that would require merchants to accept cash as a form of payment.
Bank of Canada’s report shows that nearly 95% of the respondents either heard or were familiar with the concept of a digital Canadian dollar. While awareness stands as one of the key factors for widespread adoption, the metric doesn’t hold true for Canada.
93% of the respondents primarily make paper cash payments daily but also use credit and debit cards and other modes of online payments. In addition, just 15% of the respondents held Bitcoin (BTC) and other cryptocurrencies.
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Most respondents advised the Bank of Canada to stop researching and building the capability to issue a digital Canadian dollar. However, the public believes that their feedback will not be considered for the CBDC initiative.
Nearly all respondents preferred using existing forms of payment over CBDC. Surprisingly, people who were aware of CBDCs were more reluctant to adopt the technology when compared to those who didn't know about it.
Additionally, the small demographic of respondents who previously held crypto showed more interest in using CBDCs.
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Report suggests 6 billionaire crypto traders earned their fortunes from Bitcoin
The firm behind the “Crypto Wealth Report” said it received a spike in the number of crypto-related inquiries by millionaires in the last six months.
A report released by London-based investment migration consultancy firm Henley & Partners suggests there were more than 40,000 crypto millionaires in the world holding Bitcoin.
According to the "Crypto Wealth Report” published on Sept. 5, Henley & Partners said there were roughly 88,200 millionaires worldwide with crypto holdings, with 40,500 holding Bitcoin (BTC). The report suggested that of 182 individuals who held more than $100 million worth of crypto, 78 were Bitcoiners. In addition, six out of 22 crypto traders who held more than $1 billion “amassed their fortunes from trading Bitcoin.”
Fortunly reported there were roughly 56.1 million millionaires on Earth as of July 2023, suggesting less than 0.2% had significant crypto holdings. The CEO of Henley & Partners, Juerg Steffen, said the firm had received a spike in the number of crypto-related inquiries by millionaires in the last six months as part of efforts “to protect themselves against any potential future bans on the trading or use of cryptocurrencies in their countries” as well as “allay the risks of aggressive fiscal policies that tax digital assets at source.”
“The leadership of an increasing number of jurisdictions understand the legitimate nature of [crypto-based] wealth and have produced mechanisms for it to be stored securely, with soft infrastructure that renders it treated in the same manner as almost any other tangible or intangible asset class,” said cybersecurity specialist Ali Khan. “But there are still a number of jurisdictions that are yet to bite.”
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The report did not explicitly mention the names of the crypto millionaires and billionaires. Among those well-known in the space include Digital Currency Group founder and CEO Barry Silbert, Gemini co-founders Cameron and Tyler Winklevoss, Binance CEO Changpeng Zhao, Coinbase CEO Brian Armstrong, Ripple co-founder Chris Larsen and MicroStrategy executive chair Michael Saylor.
Amid the crypto market crash of 2022, the number of crypto wallet addresses holding the equivalent of more than $1 million dropped by roughly 80,000. Forbes reported in December 2022 that many major players in the industry lost more than $116 billion following bankruptcies of exchanges and the bear market.
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40% of crypto trading platforms are decentralized: World Federation of Exchanges
The World Federation of Exchanges noted in a report that retail demand is higher for crypto products but there's a lack awareness on investor protection.
A report from the World Federation of Exchanges (WFE) noted that 40% of the crypto trading platforms are decentralized and make use of distributed ledger technology. On the other hand, the majority, or 60%, of platforms make use of Central Limit Order Books (CLOBs), quite similar to regulated exchange platforms.
The WFE report noted that there are a total of 500 crypto trading platforms offering various crypo linked products and services. The survey saw participation from several crypto platforms offering key insights into retail and institutional demands.
The report noted that many crypto platforms opted to rely on an off chain CLOB system for price oracles, quote display and order execution. These entities only use the blockchain for settlement and custody purposes This means traders do not interact directly with the DLT, which eventually helps in saving on transaction cost. In this way, the transaction fees only apply when orders are settled on the blockchain. Crypto-trading platforms with this type of arrangement are called centralized platforms (CEX).
According to the survey, retail demand for crypto-linked products and services is higher compared to institutional demand, except for custody services. Institutional giants have shown a greater requirement for crypto custody services, and demand is higher. Based on the different types of product demands by the two segments of investors, the report estimates that retail customers are less aware about the importance of investor protection.
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Talking about the liquidity and customer demand, the report found that centralized exchanged enjoy a higher trading activity despite decentralized platforms offering lower transaction fees. The report also shed light on the difference in price for same trading pairs on different platforms, leading to arbitrage opportunities. However, the WEF report claimed this type of price fluctuation highlights a potential inefficiency issue in the crypo market.
The report further found that despite most countries imposing know-your-customer requirements, both centralized and decentralized crypto trading platforms have fallen short in implementing such measures due to lack of uniform crypto regulations.
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Canadian crypto ownership declined amid tight regulations, falling prices
The biggest motivation for Canadians interested in Bitcoin is an investment — as showcased by the choice of over one-third of the 4,996 respondents in the Bank of Canada's 2022 survey.
The Bank of Canada (BOC) reported a decline in the ownership of Bitcoin (BTC) and cryptocurrencies in the country last year as neither market conditions nor regulations sided in the favor of Canadian crypto investors, according to a BOC study published last week.
The annual Bitcoin Omnibus Survey (BTCOS) conducted by the Canadian central bank showed a relapse from the massive crypto adoption witnessed in 2021.
The above graph shows that — halfway into 2022 — Bitcoin ownership in Canada declined to 9% by August. Although BTC adoption saw a slight uptick to 10% by the end of the year. However, the drop in Bitcoin ownership does not imply that investors were spreading out their investments into other cryptocurrencies. The report read:
“Investors did not appear to shift out of Bitcoin and into other cryptoassets, as we observe decreased ownership of altcoins.”
The biggest motivation for Canadians interested in Bitcoin is an investment — as showcased by the choice of over one-third of the 4,996 respondents in the BOC survey.
Most Canadians acquired their crypto holdings through mobile and web apps. Bitcoin and crypto mining became the third-most-popular method of accumulating tokens for the second consecutive year.
When it comes to the altcoin ecosystem, Dogecoin (DOGE) was the most sought-after crypto investment considering the Elon Musk-induced hype and its history of randomly skyrocketing in price. Ether (ETH), Bitcoin Cash (BCH) and Litecoin (LTC) were some of the other popular altcoins for Canadians.
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According to the BOC, the research is relevant for monitoring the two conditions that could warrant the issuance of an in-house central bank digital currency (CBDC): “if Canadians almost or do stop using cash, or if Canadians widely adopt and use private cryptocurrencies for payments.”
Hey Canada, we need your input!
— Bank of Canada (@bankofcanada) May 8, 2023
Our public consultation on a potential #DigitalCanadianDollar is now LIVE. #HaveYourSay by June 19: https://t.co/p8BdG3tQ9h pic.twitter.com/vKRoBfAngu
BOC highlighted that ecosystem collapses, along with regulatory hurdles and price depreciation contributed to the decline in crypto ownership. However, considering the government’s intent to provide regulatory clarity combined with a stable market, the crypto ownership in the region is expected to pick up as well.
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Coinbase Q2 earnings beat estimates amid Blackrock custody deal, institutional focus
The company beat estimates while non-trading revenue beat trading revenue.
New York-based crypto exchange Coinbase reported revenue in the amount of $708 million in the second quarter of 2023, despite the regulatory issues it's faced in recent months, boosted by a custody deal with Blackrock and institutional focus.
The exchange said Q2 net revenue reached $663 million, down 10% versus the same period last year, yet beating early estimates on its growing market dominance in the United States as competitors such as Binance are bogged down by regulatory trouble.
The crypto exchange’s impressive performance was also attributed to the strong crypto price cycle last quarter where the likes of Bitcoin and other altcoins posted new yearly highs.
Early estimates from the Zacks Consensus Estimate put crypto exchange’s earnings at $643.4 million, a 20.4% decline from the past year during the same time. Another report from Messari suggested that for the first time, Coinbase's non-trading revenue may exceed its trading revenue.
According to Coinbase, the predictions were correct. Non-trading revenue for Q2 2023 reached $335.4 million against transaction revenue of $327.1 million for the quarter.
Tristan Greene contributed to the story.
This is a developing story, and further information will be added as it becomes available.
Meta Q2 earnings: Reality Labs losses top $7.7B year to date
Meanwhile, Meta's metaverse-building business has racked up around $21 billion in losses since the start of 2022.
Meta's metaverse-related losses topped $3.74 billion over the second quarter with the Big Tech player spending $7.7 billion on its virtual reality business so far in 2023.
Its second-quarter 2023 results released on July 26 saw Meta report an 11% revenue gain compared to the same quarter last year, totaling $31.9 billion.
Its metaverse-focused Reality Labs revenue topped $276 million, its lowest in two years and a nearly 40% drop compared to Q2 2022.
On an earnings call, Meta's financial chief Susan Li said Reality Labs' revenue drop was due to lower sales of its Quest 2 virtual reality (VR) headset. The department's expenses were up 23% to $4.0 billion partly caused by a growth in staffing costs.
Reality Labs' operating losses are set to increase through 2023, Meta said. It cited VR-related product development efforts and further investments in its metaverse as the reason for the losses extending.
On the call, Meta chief Mark Zuckerberg said the firm is focusing on artificial intelligence "in the near term and the metaverse over the longer term."
He reiterated Meta is "fully committed" to its metaverse alongside its AI investments and said the two areas are "overlapping and complementary."
He added its AI model Llama is being used to build a number of products that will help users "create worlds and the avatars and objects that inhabit them as well" and said he would share more later in the year.
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Meta's stock price jumped on the earnings and is up over 7% in after-hours trading to around $320 according to Google Finance data. Meta shares have gained nearly 140% year-to-date but are still off from their September 2021 all-time high of over $378.
Zuckerberg mentioned its July 6 launched platform Threads was “seeing more people coming back daily than I’d expected” and said Meta was focused firstly on Threads user retention, then growth and would later focus on monetizing the platform.
The comments come the same day as a July 26 report from data analytics firm Similarweb that claimed Threads users have declined 60% from launch.
Threads peaked at 49 million daily active users on July 7 but fell to 12.6 million daily active users by July 23 with users spending less than five minutes a day on the app over the past week.
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Crypto VC funding tumbles as economic uncertainty scares off investors
June rejected the three-month trend of rising venture capital investment into crypto, though that’s not necessarily a bearish signal.
The month of June closed out with a 29.73% decrease in venture capital investments, with just $779.32 million raised in 62 individual deals, according to data from the Cointelegraph Research Venture Capital Database. While the United States Federal Reserve halted interest rate hikes in June, the macroeconomic climate remains unchanged due to geopolitical uncertainties and continued efforts to tame inflation across the globe. As the data shows, investors remained cautious and in risk-off mode in June, with the growth trend of the previous three months coming to a halt.
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However, that is not necessarily a bearish signal, as the overall trend for 2023 is still upward. Plus, the recent batch of Bitcoin exchange-traded fund (ETF) applications from the likes of BlackRock, VanEck, WisdomTree and Fidelity as well as Ripple’s legal victory over the Securities and Exchange Commission have helped brighten the mood. The crypto market instantly reacted to those positive events, but VC investments are always a lagging indicator, as institutions tend to be more inert and cautious. It is also important to note that VC activity may be tempered by the uncertainty of overall global economic conditions.
Blockchain infrastructure still dominant
The Cointelegraph Research Venture Capital Database reveals that the breakdown of deals in June didn’t drastically change and that the investment focus of VCs remained relatively stable. Blockchain infrastructure still led the market with 20 individual deals and over $493 million in funding.
Decentralized finance (DeFi) won back some ground with 20 deals and over $144 million invested. Surprisingly, Web3 was less popular for venture capitalists in June, with about $107 million over 18 deals. Centralized finance (CeFi) and nonfungible tokens (NFTs) again closed out the list with about $32 million and $2 million of investment and one and three individual rounds, respectively.
The largest deal in June was Islamic Coin’s (ISLM) $200 million raise from Alpha Blue Ocean’s ABO Digital. The project aims to create a digital financial instrument for Muslims around the globe, and its total funding has surpassed $400 million. Far behind Islamic Coin was the $43 million Gensyn deal led by a16z Crypto with participation from CoinFund, Canonical Crypto and others. Gensyn is a blockchain-based artificial intelligence project connecting buyers and sellers of compute power.
Another entry on the list is Mythical Games, which raised $37 million in Series C deal led by Scytale Digital with participation from ARK Invest, Animoca Brands and others. The funds will be used to launch a new marketplace and pursue other revenue-generating initiatives. Bitpanda Pro, meanwhile, closed a Series A round for $33 million led by Peter Thiel’s Valar Ventures and rebranded to One Trading. The round will help expand its reach to professional traders and institutions throughout Europe.
While March, April and May saw VCs increase their capital inflows into the blockchain space, the trend was rejected in June, signaling that more uncertainty may lie ahead. However, slight deviations month-to-month are less important than the overall trend, which is steadily rising. With the spot ETF fillings and Ripple-SEC lawsuit yet to impact the crypto venture capital market, July and August are expected to offer indications of which will have greater weight — general macroeconomic conditions or crypto market hype events.
To keep on top of VC activity, follow the Cointelegraph Research VC Database, which is updated weekly and tracks over 6,000 deals from 2012 through the present day.
Bitcoin miners hedging with recent sell-offs – Bitfinex report
All-time high hashrates and mining difficulty indicates that miners are bullish on Bitcoin, while recent sell-offs could be a means to hedge positions.
Bitcoin (BTC) mining companies are employing derisking strategies by offloading Bitcoin to exchanges, according to a market report from Bitfinex.
The cryptocurrency trading platform’s latest newsletter addresses the Bitcoin mining sector at length, highlighting a recent surge in miners selling large volumes of BTC to exchanges. This has led to a corresponding increase in value of shares in Bitcoin mining companies as institutional interest in BTC picks up in 2023.
The report notes that Poolin has accounted for the highest amount of BTC sold to the market in recent weeks. Bitfinex analysts also note that the Bitcoin mining difficult recently hit an all-time high, which it labels as an indicator of “robustness and miner confidence”:
“Miners are clearly bullish on Bitcoin as they commit more resources to mining, hence triggering the mining difficulty, but they are hedging their position, hence the despatch of more Bitcoin to exchanges.
The report goes on to suggest that miners are hedging positions on derivatives exchanges, with 70,000 BTC in 30-day cumulative volume transferred in the first week of July 2023.
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While miners historically transfer BTC to exchanges using derivatives as a hedge for large spot positions, the report labels the high volumes as uncharacteristic:
"A transfer to exchanges on this scale is extremely rare and potentially showcases new miner behaviour.”
Bitfinex also cited data from Glassnode that indicated that Poolin has been responsible for a large portion of this activity, with the BTC mining pool offloading BTC to Binance.
The analysts note that several plausible reasons could be behind recent mining behaviour. This could include hedging activities in the derivatives market, carrying out over-the-counter orders or transferring funds through exchanges for other reasons.
The increase in mining difficulty is also indicative of new mining power being added to the Bitcoin network. Analysts suggest that this is seen as a sign of increased network health, as well as increased confidence in the profitability of mining, either by increased BTC prices or improved hardware.
“Thus, miners are at a peculiar situation where they are rapidly increasing their mining potential as the Bitcoin halving inches closer whilst simultaneously hedging their exposure to an extent which is higher and more cautious than previous cycles.”
The report also suggests that on-chain Bitcoin movements reflect a transfer of supply from long-term holders to short-term holders. This investor behavior is said to be commonly seen in bull market conditions, as new market traders look for quick profits while long-term holders capitalize on increased prices.
Cointelegraph has reached out to a handful of mining companies and pools to ascertain why Bitcoin outflows from miners have increased over the past month. As recently reported, miners sent over $128 million in revenue to exchanges at the end of June 2023.
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