Real Vision CEO Raoul Pal is predicting that crypto will be the best-performing asset class as the macro guru sees a continued rise in global liquidity. In a new edition of the former Goldman Sachs executive’s newsletter, he says cryptocurrencies are even likely to outperform what he calls Exponential Age stocks and tech company equities. […]
The post Crypto To Be One of the ‘Fastest Horses’ Amid Liquidity Expansion, Says Macro Guru Raoul Pal appeared first on The Daily Hodl.
What are the current trends in VC investment in the crypto sector, and when will the bear market finally end?
In May, Bitcoin (BTC) posted its first monthly loss since December 2022 with a negative 6.98%. However, this consolidation was not obviously driven by a change in fundamentals or the broader macroeconomic environment. The crypto market was looking for direction and liquidity in this phase before the United States Federal Reserve announced a pause on the rate hiking cycle in June.
Many indicators, such as the futures market and VC investment, point to an optimistic underlying sentiment. But while traditional markets and tech stocks were able to continue their rally in May, actual price action in the crypto market remained suppressed and took some time to spring from its woodworks.
The report is available for free on the Cointelegraph Research Terminal.
For those keen to gain a deeper understanding of the crypto space’s various sectors and their fundamental trends, Cointelegraph Research publishes a monthly Investors Insights Report that dives into venture capital, derivatives, decentralized finance (DeFi), regulation and much more.
Blue chip crypto stocks also saw a strong month posting a month-over-month return of 7%. Mining operations and other established ventures continued to benefit from the previous phase of the market’s recovery back in March. The most notable gains were again made by mining stocks. After the explosion of TeraWulf’s evaluation, Bit Digital followed suit, and its stock rose by an astonishing 77% after mining operations in Iceland were announced.
Many overleveraged mining companies had been battered throughout the bear market due to tightening credit conditions and decreasing BTC prices, which now gives competitors a chance to rapidly raise evaluations. As most now expect Bitcoin to already have hit its low for the current cycle, new mining facilities with low electricity prices and the newest hardware appear less risky to investors than other sectors of the crypto market.
Meanwhile, according to Cointelegraph Research’s Venture Capital Database, VC investment surpassed $1 billion for the first time since September 2022 last month. It rose by 34% from April, and 81 deals were recorded. This is the third consecutive uptick in VC investment, but it is unclear if this means activity will rise sustainably from bear market levels. In a greater context, inflows remain below one-fourth of bull market levels.
Historically, there have been many ways to inscribe data on the Bitcoin blockchain. For a long time, the most popular options were OP_Return scripts, which formed the backbone of Omni and Counterparty nonfungible tokens (NFTs). However, through a loophole introduced via the Taproot scripting language, the recently hyped-up Ordinals protocol permits much larger inscriptions — in theory, up to 4MB.
After the addition of fungible, so-called BRC-20 tokens to the Ordinals protocol, the Bitcoin network experienced its first significant fee spike since 2021. This was a positive for miners, who benefitted from spikes in revenue. The ratio of fee revenues to total mining revenues briefly hit its second-highest level in history at 43% on May 8. In the weeks after, it dropped to around 5%, which is still significantly elevated from levels at the start of the year.
It remains to be seen whether the recently added feature to migrate ERC-721 tokens from Ethereum to the Bitcoin blockchain can revive the hype, or if fee revenues will fade back into insignificance within the greater context of mining economics. The mining section of the Cointelegraph Research Monthly Trends report provides a monthly round-up of quantitative mining metrics and will monitor this development closely.
Cointelegraph’s Research department comprises some of the best talents in the blockchain industry. Bringing together academic rigor and filtered through practical, hard-won experience, the researchers on the team are committed to bringing the most accurate, insightful content available on the market.
Demelza Hays, Ph.D., is the director of research at Cointelegraph. Hays has compiled a team of subject matter experts from finance, economics and technology to bring the premier source for industry reports and insightful analysis to the market. The team utilizes APIs from various sources to provide accurate, useful information and analyses.
With decades of combined experience in traditional finance, business, engineering, technology and research, the Cointelegraph Research team is perfectly positioned to put its combined talents to proper use with the latest Investor Insights Report.
The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.
Bitcoin traders always talk about BTC’s correlation with gold and equities, but how much attention should average investors pay to this discussion?
Some news sources have been fond of making comparisons between Bitcoin’s (BTC) price action and that of other assets. In particular, the two most commonly compared asset classes are gold and tech stocks.
While a correlation holds, it tends to be a big news story. Throughout much of 2022 and early 2023, for example, the “Bitcoin trades in tandem with tech stocks” narrative was prevalent. Since that correlation has broken down, however, there doesn’t seem to be much related news coverage.
Now a new narrative has taken the spotlight: that of Bitcoin’s correlation to gold. Ever since the failures of Silvergate, Signature Bank, and Silicon Valley Bank in March, both assets have rallied. Both of these narratives make sense on the surface. If Bitcoin is to be seen as a speculative asset, then it might trade similar to a tech stock. And if Bitcoin is more of a safe-haven asset, a correlation to gold seems reasonable.
It’s important to note, however, that correlations can come and go. Just because two assets share a correlation for a time doesn’t always mean they share a place in the market long-term. And when zooming out to larger timeframes, it might be possible to rule out correlations of any kind.
Let’s examine both of these correlations on a one-year basis and see if there’s any merit to them.
Year-to-date, Bitcoin has gained roughly 58%, rising from $16,600 at the start of the year to over $26,000 today. On the same timeframe, the NASDAQ has gained about 36%, rising from 11,000 to just shy of over 15,000.
Meanwhile, gold has risen by just over 7% YTD.
According to the 90-day correlation coefficient, BTC is positively correlated to gold (0.58) and negatively correlated to tech stocks (-0.65) right now. For the majority of this year, BTC has been highly correlated to both assets. At the beginning of the year, the correlation to gold was deeply negative, while the correlation to tech stocks was just below neutral.
So then, which is it? Safe-haven correlation or risk asset correlation? Or does the presence of multiple correlations point to no correlation at all? Does similar price action on a yearly basis constitute a significant relationship between two assets in the first place?
Such a discussion could get quite lengthy. These questions are best interpreted on a rhetorical basis, i.e., they imply that there could be any number of assets who share similar patterns of price action on a one-year chart.
When looking at the question in terms of percentage gains, things look more different still: gold is up 9%, while Bitcoin is up 18% and the NASDAQ 30%.
It would be great if we could glean some significance from the fact that Bitcoin has a tendency to be correlated with equities for a time now and then. But so far this year, the relationship between the two remained constant throughout the banking crisis that began in March and led to a large rally for BTC. Since then, the relationship has disappeared, as the NASDAQ had rallied to YTD highs and BTC has mostly traded sideways.
Over the past 14-years, Bitcoin has risen against the US dollar by tens of millions of percentage points. There are few asset classes that can boast similar returns. Other assets don’t carry the same degree of volatility either, making a long-standing correlation even less likely.
To date, gold has risen from $800 in early 2009 to $1,945 today, a gain of almost 150%.
The NASDAQ is up more than 10x since early 2009, or returns in excess of 1,000%. Nice gains, but a far cry from the 52,000,000% that Bitcoin returned from July 2010 to present.
The key takeaways here are:
Investors would do well to keep this in mind when interpreting markets. Banking on any specific correlation as part of a strategy could be risky, as that correlation could break at any moment.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
SEC-regulated firm INX only lists five cryptocurrencies on its platform, considering them non-securities.
Amid lawsuits against United States-based exchanges like Coinbase and Binance.US, an exec at a domestic digital asset firm has noted the legal implications of these recent enforcement actions for the industry.
The era of trading cryptocurrencies as non-securities is coming to an end, according to Itai Avneri, chief operating officer at the blockchain trading firm INX. Avneri believes that a massive amount of coins offered for trading on crypto exchanges is among core reasons for legal issues.
“You cannot continue to trade cryptocurrencies as if they are not securities. Those days are over,” Avneri said in an interview with Cointelegraph on June 19. According to the COO, INX outlined this exact idea in its prospectus five years ago. “It's like we had this crystal ball in our hands,” he added.
According to data from CoinGecko, Coinbase has as many as 241 cryptocurrencies listed on its platform at the time of writing, offering a total of 530 trading pairs. After managing to compromise on an asset freeze with U.S. regulators, rival exchange Binance.US still offers 154 cryptos for trading.
In contrast to Coinbase or Binance.US, INX has only listed five cryptocurrencies since it was founded in 2017. The listed coins include Bitcoin (BTC), Ether (ETH), USD Coin (USDC), Avalanche (AVA) and Litecoin (LTC), Avneri said.
“That's it. A very limited crypto offering,” the COO stated, adding that INX chooses very carefully which cryptocurrencies it lists for trading on its platform. He also stressed that INX should not be considered as a pure crypto company because the firm is mainly focused on digitized, or tokenized, securities.
Related: Ripple case nears conclusion, but the fight for clarity must ‘continue’ — Brad Garlinghouse
Avneri added that Bitcoin is “definitely not a security,” while there is no clear definition of Ether as such:
“There is no definition for Ethereum as a security just yet. I know there are a lot of discussions around it. I know there are a lot of opinions around it and we are closely monitoring the news and we'll continue to do so. So basically, Ethereum, for now, is listed on INX.”
INX will also find a way to list ETH on its platform in case it’s deemed security one day, Avneri told Cointelegraph.
The COO also stated that INX sees opporunity in that thousands of cryptocurrencies now need to find a way to be converted into securities and listed on platforms like INX. “They need to find a way to be listed and to properly register with the SEC as securities,” Avneri stated, adding:
“I believe that this path will get clearer and clearer. And I think it's it again, it puts the industry in a very unique and I would say turning point or even a point of no return.”
The latest remarks by Avneri echo similar comments made by U.S. Securities and Exchange Commission Chair Gary Gensler. In September 2022, Gensler argued that most cryptocurrencies are securities. Prior to becoming SEC chair, Gensler also argued that more than 70% of crypto markets are not securities, including coins like Bitcoin, Ether, Litecoin, Bitcoin Cash and others.
As previously reported, INX positions itself as one of the first companies to conduct a security token offering approved by the U.S. SEC.
Magazine: Bitcoin is on a collision course with ‘Net Zero’ promises
Cathie Wood recently added to her fund’s position in Coinbase Global stock and reiterated her call for a $1 million Bitcoin price. Is this in line with analysts’ expectations?
In an interview with Bloomberg, ARK Invest CEO and CIO Cathie Wood recently discussed why her flagship fund, Ark Innovation (ARKK), is adding to its position in shares of Coinbase (COIN) after the SEC sued Binance, one of Coinbase’s biggest competitors.
ARKK purchased nearly 330,00 shares of COIN on June 6, 2023, worth about $17 million at the time, according to disclosure statements. Two other funds, Ark Fintech Innovation ETF and Ark Next Generation Internet ETF, also bought 35,700 shares, worth $1.8 million, and 53,900 shares, worth $2.8 million, respectively.
Across all three funds, ARK’s average entry price is $272.75 - $282.93, with their total position being currently valued at $1.77 billion. At the time of writing, COIN is trading at $53.90. Needless to say, the fund is deeply in the red on this trade so far.
As far as why she’s still bullish, her reasoning boils down to this: SEC enforcement will lead Coinbase to become the only game in town when it comes to cryptocurrency exchanges in the USA. Of course, this assumes that Coinbase will triumph in its own legal battles with the SEC.
Wood explained that she sees a difference in the accusations being brought against the two exchanges. While both are facing lawsuits by the SEC over the alleged trading and staking of unregistered securities, Binance may also be facing more serious charges.
Binance CEO Changpeng Zhao, or CZ for short, was faced with a civil enforcement action filed by the US regulator for derivatives in March. The action alleged that CZ and three of the exchanges affiliates violated the Commodity Exchange Act (CEA) and several CFTC regulations.
These types of allegations “have nothing to do with Coinbase,” according to Wood. Therefore, she believes that Coinbase will survive the storm and emerge victorious, with its biggest competitor out of the picture.
It’s hard to say whether or not Wood’s conviction on COIN can be considered well-justified. While some analysts share her view, others do not. The analyst consensus on the stock is a Hold rating with an average price target of $58.49, or roughly 12% to the upside from current levels.
Several notable analysts have come forward with more bullish price targets of $70, including John Todaro and Atlantic Equities.
The RSI is perfectly neutral at a reading of 49.7, suggesting no decisive direction for COIN at this time.
It could be possible that COIN is the best and, soon-to-be only, option when it comes to US-based cryptocurrency exchanges. But this alone may or may not lead to share price appreciation.
When evaluating the future prospects of an equity, most analysts tend not to look at one factor in isolation. Basing an investment thesis on the sole premise that a company’s competitors may be doomed can lead analysts to ignore other, and perhaps even more important, factors.
It’s worth repeating that Coinbase is also facing a lawsuit from the SEC regarding the trading and staking of unregistered securities. This could eventually lead to the exchange being deemed to have participated in illegal activities.
But perhaps even more concerning than SEC enforcement actions is the allegation that Coinbase may have invested in projects it planned to list on the exchange before they became available to the public.
After Coinbase CEO Brian Armstrong spoke with The Wall Street Journal on June 10, rumors have been circulating that the company may have done just that. In the interview, Armstrong gave no adequate answer to a question concerning whether or not Coinbase invests in tokens listed on the platform.
It’s no secret that almost every single time a new token gets listed on Coinbase, the price tanks.
If this was, in fact, due to an orchestrated pump-and-dump, it could constitute a financial crime of epic proportions.
The question is: does any potential evidence exist for such a serious accusation?
Well, yes and no.
Looking at Coinbase Venture’s portfolio, it does appear that as many as 30 projects that appeared in the company’s investment portfolio were also listed on the exchange. However, Coinbase Ventures claims that they do not “coordinate with review and listings teams,” and are “run and staffed separately from the main business.”
Factcheck: @brian_armstrong dodged the question on whether @Coinbase invests in tokens on the platform.
— Pledditor (@Pledditor) June 10, 2023
I went through Coinbase Venture's entire portfolio, and found that these 30 projects were both part of their investment portfolio, as well as traded on @Coinbase exchange https://t.co/UCqy6kGpvK pic.twitter.com/ltPlhAh74x
While this does not necessarily mean that Coinbase used its exchange as a giant pump-and-dump scheme, it may point to one more thing for financial authorities to consider investigating. Needless to say, news of such an investigation would probably not bode well for the share price of COIN.
Related: SEC asks for more time to respond to Coinbase call for crypto clarity
In her conversation with Bloomberg, Cathie Wood reiterated her view that “Bitcoin is a hedge against inflation.” Yet she also noted that she sees deflation as a substantial risk going forward. Despite this, she remains bullish on the Bitcoin price,holding firm to her 1 million USD target.
Bitcoin experienced a golden cross back in February, with the 50-day EMA moving above the 200-day EMA. Volumes have been declining, along with the Chaikin Money Flow, suggesting the potential for sideways trading for the time being.
Even in a deflationary environment, Bitcoin can still outperform due to it being “an antidote to counterparty risk in the traditional financial system,” according to Wood.
Given that 3 of the 4 largest bank failures in US history have occurred in the last 3 months, she could have a point.
The next Bitcoin halving event is less than one year away. Investors are currently in the “accumulation” phase of the cycle, as seen in the graph below.
Will the next cycle top see Cathie Wood’s $1 million price prediction come to fruition?
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Cointelegraph analyst and writer Marcel Pechman explains why the cryptocurrency market has been falling behind the stock market after the Fed’s hawkish stance.
Macro Markets, hosted by crypto analyst Marcel Pechman, airs every Friday on the Cointelegraph Markets & Research YouTube channel and explains complex concepts in layperson’s terms, focusing on the cause and effect of traditional financial events on day-to-day crypto activity.
Episode 13 of Cointelegraph’s Macro Markets begins by exploring why the United States Federal Reserve’s latest move has been pinned on the stock market rally. According to Cointelegraph analyst Marcel Pechman, part of the market was doubtful that the Fed would continue to sustain interest rates above 5% for the remainder of 2023 as the risks of an economic recession increase, but apparently, they were wrong.
Pechman states that the U.S. government signaled it is not afraid of unemployment and weaker corporate earnings as long as inflation is controlled. Therefore, the most probable reasons for the U.S. stock market rally were the risk of the Fed raising interest rates — which did not materialize — and the recent macroeconomic data, which came in at 4% inflation and 1.6% retail sales growth.
Meanwhile, according to Pechman, the crypto regulatory environment is definitively unfavorable, and the two biggest risks for the U.S. dollar have dissipated: the debt ceiling and out-of-control inflation. Thus, considering the weak real estate sector, investors seem correct to pick the stock market as their preferred instrument in the coming months.
The next part of the show discusses the European Central Bank (ECB) raising interest rates for the eighth successive time. For Pechman, it became clear that the ECB hasn’t been as hawkish as the U.S. Federal Reserve and is now playing catch-up on its 3.5% basic interest rate.
Pechman explains how credit default swaps work and shows the distortion between U.S. and European countries’ risk according to markets’ pricing. His conclusion? Perhaps the U.S. dollar will hold its dominant reserve status for longer than expected. However, the odds are not looking great for the euro, as the region has already entered a technical recession after two successive quarters of negative growth.
If you want exclusive and valuable content from leading crypto analysts and experts, subscribe to the Cointelegraph Markets & Research YouTube channel, and join us on Macro Markets every Friday.
Armstrong was selling shares under a plan set up in August that sometimes made him money and other times not; the June 5 sale was still good timing.
Coinbase CEO and co-founder Brian Armstrong sold company shares the day before the United States Securities and Exchange Commission (SEC) filed a complaint against the exchange for securities law violations. The transaction caused a minor stir in the Twitter cryptoverse, as Armstrong avoided a sharp loss by doing so.
SEC records show that Armstrong sold 29,730 shares of the company on June 5, the day before the SEC suit. Coinbase’s share price plummeted the day of the suit, with an initial dip of 20%.
Armstrong has been selling Coinbase stock regularly since November. He has made the trades under a 10b5-1 plan adopted in August, which determines the timing and size of transactions in advance.
CoinBase CEO Brian Armstrong dumped 29,730 shares on June 5th, just a day before the SEC lawsuit was made public, and shares tanked 20%.
— WhaleWire (@WhaleWire) June 8, 2023
This should be illegal. ♂️
A comparison of Coinbase’s stock price with Armstrong’s trade dates shows that his trades were not always profitable. Thus, the trade could have been set up before the news of the SEC action was known to Armstrong. The SEC, on the other hand, could have been aware of Armstrong’s trading algorithm.
Armstrong had reportedly lost 11.8% of his net worth the day after the SEC action against Coinbase, bringing his personal wealth down to $2.2 billion. Armstrong has been ranked by Forbes as the 1,409th richest person in the world.
Related: ARK Invest buys Coinbase shares the same day SEC serves lawsuit
Dataroma statistics show that, among the company’s executives, only board members Tobias Lutke and Fred Ehrsam have purchased Coinbase stock in the last year. Armstrong and Ehrsam were defendants in a complaint filed by a Coinbase shareholder in May that alleged they and other Coinbase backers sold shares in a public offering in April 2021 before unfavorable financial information was disclosed and the share price fell by 37%.
Magazine: Cryptocurrency trading addiction: What to look out for and how it is treated
Traders are testing the theory that artificial intelligence can outperform humanity in the stock market. 27,000 investors have placed a total of $17,522,634 at time of publishing into a new ChatGPT-based investment platform from the copy trading firm Autopilot. The GPT Portfolio AI is designed to analyze 10,000 news articles on a weekly basis to […]
The post 27,000 Traders Bet $17,500,000 on ChatGPT AI Stock Picks, Chasing 500% Returns appeared first on The Daily Hodl.
A prominent crypto analytics firm says that Bitcoin (BTC) and Ethereum (ETH) fees are plummeting as the speculative frenzy around digital assets loses steam. New data from market intelligence platform IntoTheBlock reveals that the total fees associated with the crypto king and the leading smart contract platform have dropped 32% and 24.4% this week, respectively. […]
The post Bitcoin (BTC) and Ethereum (ETH) Fees Plummet As Speculative Frenzy Cools, According to Crypto Analytics Firm appeared first on The Daily Hodl.
Bitcoin price could drop to $20,000 in Q3 amid mounting worries about a potential cash liquidity crisis led by the U.S. Treasury Department.
Bitcoin (BTC) stares at potential losses heading into the third-quarter of 2023 after U.S. lawmakers will likely reach an agreement on raising the debt ceiling.
Raising the debt ceiling means the U.S. Treasury could issue new bonds to raise cash to meet its previous obligations.
As a result, the cash pile at the Treasury General Account could increase from $95 billion in May to $550 billion by June and to $600 billion in the three months afterward, according to the department's recent estimates.
Ari Bergmann, the founder of risk management firm Penso Advisors, estimates that the Treasury will cross $1 trillion by the end of Q3, 2023.
“My bigger concern is that when the debt-limit gets resolved — and I think it will — you are going to have a very, very deep and sudden drain of liquidity,” said Bergmann, adding:
“This is not something that’s very obvious, but it’s something that’s very real. And we’ve seen before that such a drop in liquidity really does negatively affect risk markets, such as equities and credit.”
In other words, the cash available to buy riskier assets like stocks, Bitcoin and cryptocurrencies will all likely experience downward price pressure at some point after the debt ceiling is raised.
Bloomberg adds:
Estimated at well over $1 trillion by the end of the third quarter, the supply burst would quickly drain liquidity from the banking sector, raise short-term funding rates and tighten the screws on the US economy just as it’s on the cusp of recession. By Bank of America Corp.’s estimate it would have the same economic impact as a quarter-point interest-rate hike.
Such macroeconomic hurdles could prevent Bitcoin from reclaiming its yearly highs of over $30,000 in the coming months, says independent market analyst Income Sharks.
"We most likely range between 20k to 30k and even get an altseason," the analyst noted, adding:
"New money isn't coming in; it's all just rotating [...] Unless we get a new narrative or Stocks to find a way to rally, it's looking more likely that the U.S. elections in 2024 will be the next big catalyst.
BTC price chart technicals meanwhile show BTC/USD consolidating below its 50-day exponential moving average (50-day EMA; the red wave), near $27,650.
Failure to decisively breakout above this important resistance area will increase the chances of a pullback.
Traders should then watch for a possible correction toward the 200-day EMA near $25,000 — the next major support area, particularly if the Fed hikes by 25 basis points in June.
Related: Bitcoin, gold and the debt ceiling — Does something have to give?
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
