Author: marketanalysis

Written By: Isha Goel | June 10 2021

The volatility of the cryptocurrency market has made for more uncertain trading decisions among retail investors. As prices continue to drop, many have begun questioning buys and sells in hopes of not losing more money while maintaining participation as to not miss out. Overall, the market has still seen significant activity and the popularity of cryptocurrency trading has led to emerging trends within the industry.

The Market Continues to Grow

In comparison to traditional asset classes, cryptocurrency has been producing considerably higher returns in recent months. As many other industries continue to recover from the COVID-19 pandemic era, this market has shown upwards of 200% in gains while Nasdaq and the S&P 500 have experienced more moderate recoveries. Even in this elusive time, it is important to look at the larger picture in determining trading positions. Based on a research report by Facts and Factors, ‘the global Cryptocurrency Market was estimated at USD 792.53 Million in 2019 and is expected to reach USD 5,190.62 Million by 2026. The global Cryptocurrency Market is expected to grow at a compound annual growth rate (CAGR) of 30% from 2019 to 2026.’

New Digital Currencies Are Up-and-Coming

In just the past three years, many new currencies have been proliferated as a result of the market’s growing popularity. While there were only 2,000 about a few years ago, now there are more than 5,000 cryptocurrencies in existence. This rapid increase has given traders the opportunity to become more comfortable with the world of crypto trading through discovering new currencies. Tezos and Cardano appear to be two of the major inventions leading this growth.

As environmental concerns center crypto conversations, Tezos is popular as ‘the pioneer of the more energy-efficient Proof of Stake design.’ This leading open-source blockchain consumes over two million times less energy than other similar frameworks like Bitcoin or Ethereum. This allows developers to prioritize innovation and the network reached more than 1.2 million contract calls between April and May, thus ‘signaling fast-growing adoption of the open-source software to power a global suite of NFT marketplaces and DeFi applications.’ The ecosystem is quickly becoming a popular choice ‘for global brands and institutions such as F1 team Red Bull Racing Honda, iconic gaming publisher Ubisoft, financial services giant Societe Generale, and more.’ Huge Brooklyn announced on June 8 that it has been named Agency of Record for the Tezos Foundation. The agency will work with the ecosystem in its brand development and marketing strategies in order to create a more engaging experience for the community, likely bringing in more retail investors. 

Cardano is the fifth-largest cryptocurrency by market capitalization and a recent rival looking to overtake both Bitcoin and Ethereum. The blockchain platform is centered around Ouroboros, ‘ a pioneering proof-of-stake protocol that immediately distinguished Cardano from previously invented cryptocurrencies that instead relied on proof-of-work protocols.’ While Bitcoin is the oldest and most well-known crypto asset and Ethereum’s compelling integrated applications have allowed it to gain significant market share, Cardano offers a multi-faceted solution: ‘It solves Bitcoin’s excessive energy usage problem while also challenging Ethereum’s captivating smart contracts.’ The proof-of-stake model means that the cryptocurrency is used as a scarce asset. Infosec’s Howard Poston further explained the model as a long-term opportunity. He said that ‘like putting money into a CD or stocks, stakers promise not to spend their money in exchange for the opportunity to create blocks and earn block rewards. The probability of being selected to create a certain block is roughly proportional to the percentage of the total stake that the user controls.’

Cryptocurrency Portfolios Should Remain Diversified

As many invest in Bitcoin as a safe haven, traders are finding new opportunities to experiment with other currencies including Ripple, Cardano, and Tezos. These altcoins are having an 18%, 165%, and 364% rate of user growth respectively.

Credit for image: Investopedia

Considering risk is key in such a volatile trading environment. By placing a larger percentage of one’s portfolio in more stable coins, traders then have more leeway to experiment with riskier investments and maintain the potential for long-run profits. If many coins perform well simultaneously, it will then lead to larger returns. Price jumps and drops will become marginally less speculative by developing a diversified portfolio with minimal correlations in order to hedge against the full market risk. 

Work Cited

Bezek, Ian. “Cardano Has Some Advantages to Ethereum; Here’s Why Crypto Investors Might Want to Own Some.” U.S. News & World Report, U.S. News & World Report, 8 June 2021, money.usnews.com/investing/cryptocurrency/articles/should-you-invest-in-cardano. 

Creative, Dotdash. “The Three Biggest Cryptocurrency Trends of 2021.” Investopedia, Investopedia, 9 Mar. 2021, www.investopedia.com/the-3-biggest-cryptocurrency-trends-of-2020-5084903. 

Facts & Factors. “At 30% CAGR, CryptoCurrency Market Cap Size Value Surges to Record $5,190.62 Million by 2026, Says Facts & Factors.” GlobeNewswire News Room, Facts & Factors, 12 Apr. 2021, www.globenewswire.com/news-release/2021/04/12/2208331/0/en/At-30-CAGR-CryptoCurrency-Market-Cap-Size-Value-Surges-to-Record-5-190-62-Million-by-2026-Says-Facts-Factors.html.

“How To Diversify Your Crypto Portfolio and Why It Matters.” Cryptonews, Cryptonews, 26 Jan. 2021, cryptonews.com/news/how-to-diversify-your-crypto-portfolio-and-why-it-matters-8442.htm.  

“Huge Brooklyn Appointed as Agency of Record to Work on Tezos.” Business Wire, 8 June 2021, www.businesswire.com/news/home/20210608006047/en/Huge-Brooklyn-Appointed-as-Agency-of-Record-to-Work-on-Tezos.

Written By: Kenichi Yamaguchi | June 3 2021

On May 28, the Texas Senate passed a new legislation regarding cryptocurrency trading and guidelines for Texan businesses to be involved in creating cryptocurrency portfolios. This legislation will now go to the Governor’s office to officially be signed into the State law. Thus, about 25 states in the country now have laws and regulations regarding cryptocurrency, marking a milestone for the blockchain industry. 

(Source: Bitcoin News)

With more people starting to find interests and enthusiasm in this new financial world, people often turn toward global crypto hotspots like Malta, South Africa, the Philippines, and even Toronto. Yet, the U.S. hasn’t established a hotspot — in other words, a place where all enthusiasts can go and gather to talk, learn, and explore the industry.

(Source: https://www.expcrypto.io/)

Earlier in April, Florida hosted one of the biggest cryptocurrency conferences in the country, and the first after the pandemic — the Miami Crypto Experience. The conference set a cornerstone in developing Miami into a crypto hub for a lot of enthusiasts and educators. Miami’s Mayor Francis Suarez has been pushing the development and utilization of cryptocurrency in the city since the beginning of this year. For instance, Miami is suggesting cryptocurrency payments in taxes, city investment funds, and other governmental funds. With the support of the government, many businesses, including retail shops, have started to establish many ways in incorporating crypto into Floridian’s daily lives. Currently, many retail companies even offer options to purchase with cryptos like Bitcoin, and many nightclubs have also started implementing prizes and incentives with virtual currency as well. 

With more and more news surface using blockchain technology — For example, the first NFT Porsche was sold at Miami Crypto Experience, Texas man buying a Lamborghini with Litecoin — all directions point at the future usage of cryptocurrency. It seems as though, ironically, many Republican politicians are more keen with the idea of cryptocurrency utilization. However, it doesn’t take long to figure out why. With current loose regulations on crypto investments, it is a huge advantage for corporations and public companies to use crypto as a virtual asset for companies’ financial loophole in tax avoidance. Even with regulations in place, many of the legislations have only justified the usage and definition of virtual assets, with no strict regulations on how to implement or regulate it. This brings many companies’ interests with eagerness to jump into crypto and find the solutions in the best financial interests for each other. For regular citizens, it is also worth watching big tycoons’ actions and movements in the industry to analyze and calculate the next steps of personal investments.

Texas might be the next “sleeping giant”. But as of right now, Miami is booming with their crypto enthusiasm, and it definitely helps when it is surrounded with beach, sunlight, booze, and cigars. Regardless, it is exciting for the industry to see the American government involved in the implementation of cryptocurrency. It is finally time to jump on the train with the rest of the world. 

Reference:

7939. “Texas Senate Passes Crypto Bill, Goes to the Governor to Be Signed into Law: Finance Magnates.” Finance Magnates | Financial and Business News, Finance Magnates, 28 May 2021, www.financemagnates.com/cryptocurrency/regulation/texas-senate-passes-crypto-bill-goes-to-the-governor-to-be-signed-into-law/.

Cormack, Rachel. “This Artist Teamed With Rick Ross to Create a Kaleidoscopic Porsche. Now the 911 and Its NFT Can Be Yours.” Robb Report, Robb Report, 26 May 2021, robbreport.com/motors/cars/rich-caliente-rick-ross-porsche-911-nft-1234615691/.

Sorkin, Andrew Ross, et al. “Miami Wants to Be the Hub for Bitcoin.” The New York Times, The New York Times, 23 Mar. 2021, www.nytimes.com/2021/03/23/business/dealbook/miami-suarez-crypto.html.

“Texas Man Buys Lamborghini in Gower with Cryptocurrency.” KQTV News, www.kq2.com/content/news/Texas-man-buys-Lamborghini-in-Gower-with-cryptocurrency–574366391.html. 

Written By: Isha Goel | June 3 2021

Cryptocurrency is once again on the upswing after the major drops in treading prices that resulted from Elon Musk tweets and the Chinese Governmental speculation. The aftermath has been messy but such a volatile market appears to be recovering with the result of two announcements this week. 

Selective Recovery From the Drop

On June 1st, Coinbase announced that Dogecoin (DOGE) would begin trading on June 3rd through its cryptocurrency platform given that there is enough liquidity. This new listing provides the opportunity for the cryptocurrency to be available to a new breed of investors. While the entire market had been on a downward trend for the majority of May, it appears that this announcement has rallied trading prices for DOGE back up past the $0.35 resistance. 

Bitcoin’s (BTC) price significantly dropped as well, from $58,000 to nearly $30,000 in the eight days to May 19. However, this cryptocurrency has not been able to make as strong of a comeback as the price narrows in. In the past day, the price has only gone up by 1% to $37,200 in comparison to DOGE, which has gone up by 18%. If BTC breaks clear above $38,000, that could indicate a larger increase in the future. As shown on the training chart below, the triangular price patterns represent the higher lows and lower highs over the past two weeks.

Credit for image: Coinbase

Kraken Takes the Opportunity

The Coinbase rival Kraken took advantage of the cryptocurrency spike and announced that starting on June 2nd, it will be allowing users to buy and trade over 50 crypto tokens on their mobile application. With Kraken sitting at the 4th largest digital currency exchange in the world by trading volume, Chief Product Officer Jeremy Welch claimed that ‘this consumer app is our first major foray into supporting wider consumer adoption in a much more simplified, easy-to-use interface.’

After having launched in Europe earlier this year, it is looking to land a larger presence in the U.S. market. The crypto exchange is in talks of raising another round of funding and before the major drop-off in May, was even considering going public in 2022 via a direct listing in a manner similar to what Coinbase had done. Kraken has positioned itself as the platform with ‘the lowest fees in the industry’ and attributes much of its success to its speedy verification and onboarding times. 

Given that cryptocurrency regulations are a major concern within the industry, Kraken has taken a different approach than Coinbase in protecting its holdings. While crypto holdings on Coinbase are FDIC insured up to $250,000 per U.S. customer, Kraken has explicitly stated that ‘while the company takes “great care to protect the assets” of clients from loss, exchanges do not qualify for deposit insurance programs, nor should they function as cryptocurrency wallets.’ The exchange is registered with the U.S. Treasury Department’s FinCEN and complies with all requirements when operating so that is not of concern for potential users. 

Work Cited

Crawley, Jamie. “Kraken Crypto Exchange Releases Mobile App in US.” CoinDesk, CoinDesk, 2 June 2021, www.coindesk.com/kraken-mobile-app-crypto-exchange-released-us. 

Godbole, Omkar. “Dogecoin Cheers Coinbase Listing as Bitcoin’s Range Play Continues.” CoinDesk, CoinDesk, 2 June 2021, www.coindesk.com/dogecoin-rallies-bitcoin-constrained. 

Jindal, Aayush. “Bitcoin, Ethereum Still Consolidate, DOGE Rallies On Coinbase News.” Cryptonews, Cryptonews, 2 June 2021, cryptonews.com/news/bitcoin-ethereum-still-consolidate-doge-rallies-on-coinbase-10540.htm.  

Sigalos, MacKenzie. “Coinbase Pro Opens up to Dogecoin after Cryptocurrency’s 6,000% Gain This Year.” CNBC, CNBC, 2 June 2021, www.cnbc.com/2021/06/01/coinbase-pro-opens-to-dogecoin-after-currencys-6000percent-gain-this-year.html. 

Sigalos, MacKenzie. “Coinbase Rival Kraken Launches Mobile App in U.S. to Capitalize on Crypto Surge.” CNBC, CNBC, 2 June 2021, www.cnbc.com/2021/06/02/kraken-launched-mobile-app-in-us-for-bitcoin-and-ethereum-purchases.html.

Written By: Isha Goel | May 27 2021

The Consensus 2021 conference is happening this week, bringing together the greatest minds to network, workshop, and converse about the cryptocurrency space and its future. Through interactions with esteemed investor Ray Dalio, CEO Cathie Wood, and others, this immersive virtual experience has prompted major takeaways in only the first two days.

CBDC Research is Being Driven by Competition

As the government is becoming more involved in private money, Federal Reserve Governor Lael Brainard said that ‘the Fed is more interested in central bank digital currencies (CBDC) than previously known.’ This is because as the presence of private money continues to grow, we must consider its impact on the global economy as a whole. Once CBDC has been issued, it is important to keep a close eye on antagonistic nations like China. At this moment, the Boston Federal Reserve and MIT Digital Currency Initiative ‘plan to publish a U.S. digital dollar white paper this summer,’ to further explore implications resulting from a rise in digitalized assets. 

We Can Expect Inflation to Decrease Over Time

While current numbers based on April’s Consumer Price Index (CPI) report show that inflation rates are sitting at 4.2%, many believe that this was expected and is not a long-term concern. Federal Chair Jerome Powell had been predicting this for months and even claimed that the ‘central bank will let the economy run hot’ as the country continues to reopen in this trying time. Brainard continuously emphasized that the high inflation rate and its economic effects would subside over time. There would be no reason to worry and this would not cause catastrophic retail consumer behavior trends in the cryptocurrency industry. 

Ray Dalio Sided with BTC

Ray Dalio, the founder of Bridgewater Associates, took a major stand on the first day of the conference. He claimed that ‘the U.S. dollar is on the verge of devaluation and could lose its position as the global reserve currency,’ due to fear of rising inflation rates and increased debt in the economy. Therefore he expects that the Federal Reserve will print more money to pay off those debts and the value of a dollar will further drop. He announced for the first time that he is a Bitcoin (BTC) holder himself and would prefer investing in it over a cash bond because ‘bitcoin’s greatest risk is its success.’ What is interesting to consider here as well is that if Bitcoin overshines gold during this inflation rout, there may be a swift ban in the future as it cuts into the government’s abilities to raise funds through bonds. 

Other Powerful Figureheads Join Dalio

In discussing important statewide efforts to attract cryptocurrency companies and projects, Wyoming Governor Mark Gordon revealed that he owns cryptocurrency as well. In hopes of having more mining occur in his state, he reminded those who were listening that ‘People often look to New York or Miami or Delaware before they look at Wyoming. But a lot of the pioneering work has been done here.’ As a way to further enable this process, the state ‘has set out some of the nation’s most favorable crypto laws, most recently a bill that would recognize decentralized autonomous organizations (DAOs, or, bits of code) as legal entities.’ He believes that it has paid off for him to be early when big names like Kraken and Ripple Labs have already opened up branches in his state. Of course, it also helped that a $60 billion broadband expansion program recently came into play as well in attracting these digital natives.

It is Now a ‘Fiduciary’ Duty to Hold Bitcoin

Many firms have been trying to buy up Bitcoin in an attempt to get cash off their balance sheets. As this asset depreciates with an increase in inflation rates, the cryptocurrency suggests more promising returns in the future. During a roundtable featuring MicroStrategy CFO Phong Le, the leader was very clear about his buy and hold mentality when he stated that ‘I’m not saying you should put all of your corporate treasury in bitcoin. But if you’re not putting any of it into bitcoin, I don’t think you’re doing your fiduciary responsibility, which is maximizing shareholder value.’ While these inflation issues were previously addressed, many firms are trying to account for the devaluation of cash in the near future to maintain their valuations. 

NFTs Have a Promising Future in All Sectors

Non-Fungible Tokens (NFT) have had an amazing year and are expected to be applicable in all sectors such as art, sports, and more. During the second day of this conference, representatives from venerable British auction house Christie’s, the president of Time Magazine, and prominent NFT collectors all came together to present the bullish case for future NFT applications. As people spend more time online, they will become more accustomed and accepting of the value of verifiable digital ownership. As NFT collector Whale Shark put it, ‘NFTs represent a very mature solution – one that takes such assets and is able to give it provenance and scarcity so that they can be treated like normal collectibles.’

Next Steps for ETH and DeFi

Ethereum (ETH) was a major topic of discussion as well and one event at the conference included an interview with Andrew Keys, the Managing Partner at Digital Asset Risk Management Advisors. His support for this cryptocurrency was prominent and he deemed three core properties that made it valuable:

1. Capital Asset: ‘Owners of ETH own a piece of fees of world’s global settlement layer.’
2. Consumable Asset: ‘ETH is a fuel, a digital commodity. For every computational step in Ethereum, a certain amount of ETH is burnt.’
3. Storage of Value Asset: ‘ETH can be freely traded or used as collateral to borrow against in digital economy.’

As a substrate to the digital economy, Ethereum can digitalize all assets, financial instruments, and legal agreements. Keys believes that ETH will surpass BTC’s market capitalization in 2022 as it becomes more widely used and accepted.

Work Cited

“Consensus by CoinDesk: May 24-27, 2021.” CoinDesk, 25 May 2021, www.coindesk.com/events/consensus-2021. 

Kalra, Jaspreet. “NFTs Are ‘Art World’s Napster’: Christie’s Auction House Exec.” CoinDesk, CoinDesk, 25 May 2021, www.coindesk.com/nfts-are-the-art-worlds-napster-says-exec-at-christies-auction-house. 

Kuhn, Daniel. “5 Big Takeaways From Day 1 at Consensus.” CoinDesk, CoinDesk, 25 May 2021, www.coindesk.com/5-big-takeaways-from-day-1-at-consensus. 

Kuhn, Daniel. “Consensus 2021: 8 Questions for Ethereum’s Andrew Keys.” CoinDesk, CoinDesk, 25 May 2021, www.coindesk.com/consensus-8-questions-ethereum-andrew-keys.

Written By: Kenichi Yamaguchi | May 27 2021

While the Americans and Europeans are busy adopting cryptocurrency into their daily lives, including places like Miami, Malta, South Africa becoming the hotspots for crypto and blockchain enthusiasts to meet up and explore, there is not a lot of publicity of the industry in Asia, specifically Eastern Asian countries like Japan, China, and South Korea. This week, we dive into these countries, amid some governmental restrictions on trading and usages, and research on what exactly is happening in these countries with their development of the cryptocurrency industry. 

(Source: nationalinterest.org)

China: Prioritizing Official Currency

Historically, there have been three bans on the usage and trading of cryptocurrency in China, with one most recently shortly after the boom of Dogecoin. Many wealthy business owners have utilized the swift transaction of cryptocurrency, with the intention of avoiding expensive transaction fees and limitations on currency exchange by the Chinese government, because of the fear of money laundering and oversea business actions. Though the government has created many sanctions and limitations towards private practices of cryptocurrency exchanging, there are many platforms, including platforms that adopt VPN technology, still available to the public in trading cryptocurrency. The People’s Bank, Chinese national bank and treasury, has adopted the idea of creating a digital currency of its own since the beginning of 2020. It has been tested in many metropolitan cities, and has now gone into public usages in the majority of the cities. The advantage of digital currency adoption in China is that the general public of Chinese citizens has been used to the fashion of mobile purchase. In fact, you could barely see the usage of cash and credit cards on the streets — everyone uses QR code payment with applications like Alipay and Wechat Pay. Chinese digital currency could be the next “big” thing, but it would take time for the rest of the world to catch up and adopt its usage as well. 

Japan: Not So Orthodox This Time 

Western countries have always admired the precision and traditional business strategies that Japanese economy uses. Even going through a complete rebuild of the economy and social systems after World War II, Japan is still one of the strongest national economies in the world, and that would not happen without the carefulness and relentless effort of Japanese businessmen’s approach to new technology. In recent years, Japan has moved from being the “most innovative”, to the “most consistent”. Surprisingly, though, Japanese economists have adopted the idea of cryptocurrency in a very early stage. However, the habit of being low-risk investors stayed in Japanese citizens’ blood. Corporate wise, many public companies and global companies have started to explore the options to outsource their assets to the cryptocurrency market. Speculations suggest that big tycoons like Sony, Mitsubishi, and Softbank have started their asset transfers a long time ago, but with little evidence.  In most cases, private traders are prone to investing in popular coins like Bitcoin, Ethereum, Litecoin, and XRP. Dogecoin, SHIBA and other internet-famous coins and tokens are almost nonexistent to the traditional trading platforms. After all, Japan is a country where the social benefits are elite and it would make more sense for them to invest in bonds and other national-sponsored investment projects with guaranteed returns. 

South Korea: Kimchi Premium Postmodern

Kimchi Premium! Many crypto enthusiasts think of this term whenever South Korea is brought into the conversation of trading. Kimchi Premium is defined as “the gap in cryptocurrency prices in South Korean exchanges compared to foreign exchanges”. Because of such an effect, in early 2021, even about 10% of the population in South Korea has bought or sold digital assets in total, many investors would only receive a profit if Bitcoin and other currencies are bought in foreign exchange sites, and then sold in South Korea. This created a huge limitation for the development of the crypto market. Because of that, Korean government signed a law into effect restricting many trading platforms and increased regulations in crypto exchanging. With the regulations in place, Kimchi Premium has slowly been stabilized, and it sparked interests in the general public in South Korea. It has a huge potential in the future market — even though Korean people are also very vigilant about investment and only have faith in Bitcoin and other “popular” coins, the incentives of low exchange rates would definitely help the Korean market to push for a bigger interest. After all, Korean Won (national currency) is the fourth largest exchange currency for Bitcoin in the world. 

Reference:

Areddy, James T. “China Creates Its Own Digital Currency, a First for Major Economy.” The Wall Street Journal, Dow Jones & Company, 5 Apr. 2021, www.wsj.com/articles/china-creates-its-own-digital-currency-a-first-for-major-economy-11617634118.

Bala, Sumathi. “China’s Latest Move to Tighten Crypto Regulation Is Not New, Says HSBC.” CNBC, CNBC, 24 May 2021, www.cnbc.com/2021/05/24/chinas-latest-move-on-crypto-regulation-nothing-new-says-hsbc-.html.

Nagata, Kazuaki. “As Cryptocurrencies Boom, Japan Looks to Finally Move on from Scandals.” The Japan Times, 10 May 2021, www.japantimes.co.jp/news/2021/05/10/business/japan-cryptocurrency-scandals/.

Rapoza, Kenneth. “What Are The Hottest Cryptocurrencies In China, Korea & Japan?” Forbes, Forbes Magazine, 7 May 2021, www.forbes.com/sites/kenrapoza/2021/05/02/what-are-the-hottest-cryptocurrencies-in-china-korea–japan/?sh=41f93fea5931.

Yamaguchi, Kenichi. “DCEP: Your Future Digital World’s Reserve Currency.” Crypto Current, 29 Apr. 2020, crypto-current.co/dcep-your-future-digital-worlds-reserve-currency/. 

Written By: Kenichi Yamaguchi | May 21 2021

On May 12, 2021, Elon Musk on twitter announced that Tesla will suspend Bitcoin payment due to its ongoing massive energy assumptions during the mining process. Elon further attached a graph from Cambridge Bitcoin Electricity Consumption Index, showing the drastic change of energy consumption after the rise of Bitcoin and  cryptocurrency these past months.

(Source: cbeci.org, Twitter)

The cryptocurrency market has always known about its wide usage of energy. Though there are speculations that Elon knew about it all along (and most likely), it is worth the time to compare the energy consumption of Bitcoin mining against other traditional cryptocurrency, and especially green energy mining.

Alex Hern, a UK Technology editor, has broken down the process of crypto mining in a very simplistic way. Essentially, mining is a lottery that is hosted every ten minutes on the entire network. A computer would consume a large amount of “useless” calculation — a proof of work — to show scarcity. If you win the “lottery”, you receive a financial prize. Or, you would receive a credential to verify a ten-minute transaction in the network. That’s where the problems come in. When you win the “prize” in Bitcoin mining, you could receive up to 6.25 bitcoins every ten minutes, or distribute it among the pool of “winners”. This is where the problem comes in. 6.25 bitcoins currently worth about 240k USD (as of May 19, 2021), but it takes about 2.5 times the energy usage per year of Apple, Amazon, Microsoft, Google, and Facebook combined, which is about 130 TWh of electricity, according to cbeci.org. To put it in a bigger perspective, it is also about the annual electricity usage of the entire country of Norway. 

Though 30% of the total energy consumption of the cryptocurrency industry is from renewable resources, crypto mining still requires roughly 61% of energy consumption by fossil fuels. This could potentially have a negative impact on the development of blockchain networks and real-life adoption of cryptocurrency in many countries. With the concern of the environment and future impacts, many developers and businesses have seeked many different ways to mine cryptocurrency in a more environmentally friendly way. 

One of the companies that spotlights its importance of usage of reusable resources in crypto mining is a Canadian company called Perpetual Industries. Perpetual specializes in innovation and implementing technology into business projects. One of the crypto-related projects of Perpetual is Green Energy Mining — GEM. The GEM project mentions that with the knowledge of environmentally friendly technology, Perpetual is currently developing a low cost, green energy solution for powering large scale block chain mining operations. These renewable and surplus energy resources would include wind, solar, natural gas, hydro and geothermal that utilize battery storage technology.

(Source: Perpetual Industries)

Specifically, Perpetual Industries also highlights its specialty, the XYO Mechanical Balancing Technology. The initial application of an XYO balancer would be reducing vibration and power consumption for operation, and upon that, Perpetual also applied a lower noise emissions, mechanical wear and tear, and optimized operational efficiency into the project. With the combination of XYO Balancing Technology and project GEM, Perpetual could be a leading company in the crypto industry in developing a more efficient way for miners both economically and environmentally. After all, without the Earth, these would all mean nothing. 

Reference:

Cambridge Bitcoin Electricity Consumption Index (CBECI), cbeci.org/.

“Green Energy Mining Systems (GEM).” Green Energy Mining for Energy Efficient Cryptocurrency Mining – Perpetual Industries www.perpetualindustries.com/gem-cryptomining.html.

“How Much Energy Does Bitcoin Actually Consume?” Harvard Business Review, 6 May 

2021, hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume.

Kolodny, Lora. “Elon Musk Says Tesla Will Stop Accepting Bitcoin for Car Purchases, Citing Environmental Concerns.” CNBC, CNBC, 13 May 2021, www.cnbc.com/2021/05/12/elon-musk-says-tesla-will-stop-accepting-bitcoin-for-car-purchases.html.

“Mechanical Balancing Technology.” XYO Balancing Technology for Low Cost Green Energy Power Solutions, www.perpetualindustries.com/xyo-balancer.html. 

Written By: Isha Goel | May 21 2021

All eyes were on Elon Musk this week as he influenced the cryptocurrency market with his substantial social media following. The CEO has sent numerous stocks soaring over the past year through a series of tweets and business announcements. This behavior has called into question the legality of his actions and while many have tried to take him down, the ultimate verdict appears to play in his favor.

His Attack on Bitcoin

On May 12th, Musk tweeted about how Tesla was terminating payments in the form of Bitcoin due to environmental concerns about fossil fuel usage. As a result, the coin’s prices dropped by 17%, roiling bitcoin futures and crashing the cryptocurrency market as a whole. The end of the tweet suggested that Tesla may move toward accepting greener digital currencies in the future instead.

Work Cited: Reuters

While Musk seems to have significant power over the price movement, the cryptocurrency market is continuing to recover from this major drop. Crypto experts that work at Ark Investment Management remain bullish on digital tokens and Bitcoin over the long term. Due to the nature of the diminishing supply, the in-demand asset has the potential to continue garnering interest from investors and provide sizeable returns.

The 180 Flip on Dogecoin

After last week’s SNL appearance, Musk caused Dogecoin prices to significantly drop when he called it a ‘hustle.’ This week he pulled quite the opposite stunt. Only hours after the crash, he announced that SpaceX would be accepting the joke coin as a form of payment, bumping up the prices. Then on May 13th, he bumped them up yet again when he posted a tweet about using their technology to improve Tesla’s transaction efficiency.

Work Cited: Reuters

Regardless, his influences are likely not the only power in play with this coin. A spike in Dogecoin prices may also be linked to Coinbase’s announcement that they would be adding this coin to their platform in as little as 6-8 weeks. With the potential to reach new trading volumes, the coin is inching its way back up to trading at higher prices again.

Legality At Play

All this talk about cryptocurrency on Twitter had consumer advocates questioning if Musk was breaking any rules. In the past, he had been accused of and charged with a $20 million settlement for securities fraud when he posted an inaccurate tweet about having secured funding to take Tesla private. The SEC ordered all of his company-related tweets to be approved by the firm before they could become public; this was the rule that these advocates were trying to attack.

His influence was evident in the public markets this week, but it appears that he did not break any rules after all. Musk’s behavior is no different from top investors like Warren Buffet or Ray Dalio and his use of social media to play this game likely kept him out of trouble this time around. After a conversation with his lawyers, they say that ‘Musk’s Wednesday tweet on Tesla’s bitcoin about-face was carefully crafted and, as such, did not appear to breach that settlement.’ Social media might just be the next big trendsetter in the cryptocurrency market.

Work Cited

DeCambre, Mark. “Dogecoin Is Coming to Crypto Platform Coinbase in 2 Months, Says CEO.” MarketWatch, MarketWatch, 13 May 2021, www.marketwatch.com/story/dogecoin-is-coming-to-crypto-platform-coinbase-in-2-months-says-ceo-116 20944181.

Katanga Johnson, Chris Prentice. “Analysis: How Murky Legal Rules Allow Tesla’s Musk to Keep Moving Markets.” Reuters, Thomson Reuters, 14 May 2021, www.reuters.com/business/legal/how-murky-legal-rules-allow-teslas-musk-keep-moving-markets-2021-0 5-14/.

Reynolds, Kevin. “Coinbase to Add Dogecoin in the Next 6-8 Weeks.” CoinDesk, CoinDesk, 14 May 2021, www.coindesk.com/coinbase-to-add-dogecoin-in-the-next-6-8-weeks.

Staff, Ibd. “Stock Market Rally Struggles With Inflation Spike; Tesla Sales Fall, Elon Musk Turns On Bitcoin As Coinbase Reports.” Investor’s Business Daily, 14 May 2021, www.investors.com/news/stocks-market-rally-struggles-with-inflation-fears-tesla-sales-elon-musk-turns-o n-bitcoin-coinbase-reports/.

Unsted, Sam. Bloomberg.com, Bloomberg, 12 May 2021, www.bloomberg.com/news/newsletters/2021-05-13/stock-markets-today-inflation-jitters-elon-musk-bitco in-vaccines-fishing.

Written By: Isha Goel | May 5 2021

This week’s superstar cryptocurrency dabbles between Ethereum Classic (ETC) and Dogecoin (DOGE) as speculative traders have taken the reigns and are pumping them to the moon. The bull frenzy within the cryptocurrency market has rallied Bitcoin (BTC) and Ethereum (ETH) over the last year but this week proved significant for tokens like ETC as well. 

Forgotten Token Picking Up 

Momentum from the potential growth of decentralized finance caused ETH to quadruple and BTC to double, while ETC had only gained 26% in the past year. All that changed this week with a record performance in its four-year history when prices nearly tripled between May 2nd and May 7th. This token was created from a hard fork of the Ethereum blockchain and analysts in the digital-asset class believe there is still potential for ‘almost-left-to-dead cryptocurrency projects that were created during the last big bull market in 2017.’ It appears that the DOGE frenzy may be spilling over to ETC. 

Credit for image: Coinbase 

SNL May Make or Break DOGE 

Speaking of DOGE, buyers have been pumping the stock in anticipation of Saturday night. Elon Musk is scheduled to appear on Saturday Night Live this weekend and has a history of tweeting in favor of this cryptocurrency. A mention on Saturday’s show would potentially cause exponential price movement and several tease videos of Musk on the streets of NYC discussing crypto have instilled hope in these speculative buyers. It may present an opportunity for DOGE to finally break the elusive $1 barrier. 

Others erring on the more cautious side of the discussion do not believe this will actually affect the price though, or at least not immediately. They are skeptical again DOGE hitting $1 by May 10 simply because there appears to be a higher chance of a payout if one correctly bets against a mention. On May 7th, the coin fluctuated between 56¢ and 64¢ in a holding pattern in anticipation of the show the following night.

The Frenzy Has Potential to Continue For A While 

Between all the frenzy, the overall cryptocurrency market is seeing a step back from informed bets as traders continue learning more about the market through experience. Ki Young Ju, the chief executive of CrytoQuant, says that ‘It’s a crazy, irrational market right now,’ and that it may be a way to preemptively hedge against the inflation caused by the coronavirus-prompted monetary stimulus. While BTC’s rally was primarily insinuated by institutional investors in North America, ETC’s gains are more attributed to retail investors in both the West and the East similar to DOGE. Now ranked 16th by market value, ETC increased by 128% in just the first 5 days of May, outrunning the performance of DOGE, which rallied by 90% to 0.69 and set a new record early May 5th. 

Credit for image: Coinbase 

The CEO of The TIE, Joshua Frank provided interesting social media analytical insights that may have contributed to the price movement as well. He noticed that ETC was ‘trading at more than a 50% premium on U.S.-based, retail-focused crypto trading platforms including Robinhood and Coinbase, compared with prices at roughly the same time on other native cryptocurrency exchanges such as Binance.’ This suggests that there is a rising demand from American retail investors and explains the large spread in price that institutional investors likely were not capable of producing. Moreover, the increased volume of ETC tweets indicates that ‘a mass market’ could be behind the outperformance. Analysts have expressed concern that a pump will eventually result in a dump and that ‘investors will get burned at some point,’ but until then, there is potential for continued profits for retail investors. 

Work Cited 

Godbole, Omkar. “Ethereum Classic Hits All-Time High Price, Beats Dogecoin.” CoinDesk, CoinDesk, 5 May 2021, www.coindesk.com/ethereum-classic-surges-record-high-outperforming-dogecoin. 

Hackett, Robert. “Saturday Night Could Make or Break Dogecoin.” Fortune, Fortune, 7 May 2021, fortune.com/2021/05/06/dogecoin-price-stock-buy-doge-elon-musk-snl-saturday-night-live/. 

Morris, Chris. “Will Elon Musk’s SNL Appearance Help Dogecoin Break $1?” Yahoo! Finance, Yahoo!, 7 May 2021, finance.yahoo.com/news/elon-musk-snl-appearance-help-155730588.html.

Shen, Muyao. “Ethereum Classic’s ‘Irrational’ Price Tripling Bears Hallmark of Dogecoin Frenzy.” CoinDesk, CoinDesk, 7 May 2021, www.coindesk.com/ethereum-classic-tripling-price-dogecoin. 

Sriram, Samyuktha. “’I Know Where The DOGE Money Is Going Next,’ Says Grayscale CEO As Ethereum Classic, Bitcoin Diamond Skyrocket.” Benzinga, 7 May 2021, 

www.benzinga.com/markets/cryptocurrency/21/05/21009414/i-know-where-the-doge-money-is-going-ne xt-says-grayscale-ceo-as-ethereum-classic-bitcoin-d.

Written By: Isha Goel | May 5 2021

This week proved strong for both Bitcoin (BTC) and Ethereum (ETH) as prices were up significantly. As of 4 PM EST on April 30th, Bitcoin was trading at around $56,996 and Ethereum was trading at around $2,786. 

Bitcoin Options Expire 

Analysts believe that this stark push in Bitcoin’s market price was a result of the $4.2B options expiration that pushed the price up 7.5% over the previous 24 hours. Steve Ehrlich, CEO at Voyager Digital, mentioned that ‘historically, there have been price dips in the days leading up to a bitcoin options expiry, only for it to rebound after’ and this trend is once again present looking at Bitcoin’s hourly price chart since April 27. Due to the fact that Bitcoin was not moving how many derivative traders expected, the options expiration likely caused them to return to the spot market on Friday. 

Credit for image: Coinbase 

While this bullishness around Bitcoin was a result of the rebound, many do not remain confident that it will hold at the $60,000 mark. Market data aggregated by Skew presents the notion that for options expiring May 21st, ‘there’s only a 38% chance Bitcoin will reach $60,000 on that date, with a 53% probability of $56,000 and a 74% probability of BTC over $50,000.’ Nonetheless, BTC’s positive momentum resulted in upward price movement for the previous 24 hours for other altcoins as well such as XLM and LINK. This is because traders remain bullish with crypto assets overall and are confident in their growth as opposed to selling them off to buy more into Bitcoin. 

Ethereum Rides Bitcoin’s Wave 

The second-largest cryptocurrency by market capitalization is Ether, a technology aimed at expanding blockchain to decentralized applications in a way that Bitcoin has not been able to achieve. This coin peaked in early 2018 but was dragged down from nearly $1,200 to under $100 as the rising market crashed. Over the last 12 months, it has gained traction to hit a series of all-time highs because of a resurgent Bitcoin. Analysts are claiming that ‘a ride to $5,000 is imminent.’

While Ethereum made significant gains during the week, it did not appear to do as well as Bitcoin on Friday. The two coins have been very correlated thus far but there is talk amongst the crypto community that Ethereum may be decoupling from Bitcoin. The CIO of QCP Capital, Darius Sit, noted that many sold ETH into BTC and that it was simply some mean reversion. After speculation, this abnormal decoupling was likely a temporary condition and ultimately not statistically significant in the long run. 

Credit for image: Coinbase 

From bull markets to significant crashes overnight, the cryptocurrency market has not always had the best track record of being steady. That said, Bitcoin and Ethereum along with other altcoins have emerged as a new asset class with commendable returns in the last few years. As this asset class becomes more legitimized and accepted, there is most definitely a future for these altcoins and a bullish trend with an opportunity for promising returns. 

Work Cited 

Cawrey, Daniel. “Market Wrap: Bitcoin Hits $57K After $4.2B Options Expirations; Ether Steadies at $2.7K.” CoinDesk, CoinDesk, 30 Apr. 2021, 

www.coindesk.com/market-wrap-bitcoin-57k-expirations-ether-steadies. 

Cointelegraph. “Ethereum News by Cointelegraph.” Cointelegraph, Cointelegraph, 1 Jan. 2020, cointelegraph.com/tags/ethereum. 

Reiff, Nathan. “Where Is the Cryptocurrency Industry Headed in 2021?” Investopedia, Investopedia, 30 Dec. 2020, www.investopedia.com/where-are-cryptocurrencies-headed-2019-4580342. 

Swigunski, Mike. “How Cryptocurrency Will Transform The Future Business Forever.” Forbes, Forbes Magazine, 22 Apr. 2021, 

www.forbes.com/sites/mikeswigunski/2021/04/17/how-cryptocurrency-will-transform-the-future-business -forever/?sh=5289ec344368. 

“What’s Going on with Ethereum? The Cryptocurrency Vastly Outpacing Bitcoin’s Growth.” The Independent, Independent Digital News and Media, 30 Apr. 2021, 

www.independent.co.uk/life-style/gadgets-and-tech/ethereum-price-latest-prediction-2021-b1839777.html

Written By: Dustin Damron | October 25, 2020 

‘A New Bretton Woods Moment’

Just 10 days ago, to the chagrin of governments around the world who have ceaselessly and almost carelessly printed an endless supply of money, the International Monetary Fund (IMF) released a speech that appears to have mostly gone unmentioned by the mainstream media.  The crypto community however, whom I have colloquially dubbed the ‘Bitcoin Bubbas’ and ‘cryptosphere’, have been abuzz by this news.  It is as if they have likened the IMF’s news to a call to arms – a rallying cry for the need to adopt cryptocurrencies as means to fight ineffective fiscal and monetary policies that are implemented by governments world-wide. 

Invoking policies from John Maynard Keynes – a British economist who would later become a director of the Bank of England, and whom also published many economic works detailing how governments could mitigate the adverse effects of economic recessions and depressions through the use of fiscal and monetary policies (Encyclopaedia Britannica, 1998) – Mrs. Kristalina Georgieva, a Managing Director of the IMF, twice mentioned Keynes and a ‘new Bretton Woods moment’ (Kristalina Georgieva, 2020).  It is important to note that Keynes played an integral role in negotiations at Bretton Woods.  Moreover, it should be mentioned that Keynes’ policies are still widely discussed today in economic circles around the world.

Bretton Woods, NH circa 1944

If you are unfamiliar with Bretton Woods, let us take a moment to review some key information that may help us understand the significance of the IMF’s recent speech.  Bretton Woods refers to the ‘Bretton Woods Agreement’ or ‘Bretton Woods System’ in which delegates from 44 countries around the world met in Bretton Woods, New Hampshire to negotiate an agreement to improve international economic cooperation and growth, as well as to establish a new foreign exchange system that could stop countries from devaluing others’ currencies (Chen, 2020).  

The agreement also resulted in the U.S. dollar becoming the world reserve currency, created the ‘Gold Standard’ to peg the value of one dollar to $35/oz. of gold, and created the International Monetary Fund as well as the World Bank (Siripurapu, 2020).  

It may be safe to conclude that Bretton Woods was among the most defining points in world-wide economic and monetary policy.

Deciphering the IMF’s Message

Now, let us take a look at why the IMF’s ‘new Bretton Woods moment’ is so important; what could it mean?  For starters, if the Bretton Woods Agreement was such a defining moment in economic and monetary policies around the world, what does it say when a managing director of the IMF is calling the situation that the world is currently facing ‘a new Bretton Woods moment?’  One might assume that the IMF is calling for the establishment of a new world reserve currency, or a revaluation of the dollar so that it is once again pegged to the value of gold.  Perhaps the IMF wants to create a new international bank aimed at improving global liquidity, reducing national debts, or any other number of functions that a bank with the IMF’s stature would possess.  And these would be reasonable assumptions based on what we know resulted from the 1944 Bretton Woods ‘moment.’  But, without understanding each of the individual components that made up the Bretton Woods Agreement, it may be too difficult to determine how to properly interpret the IMF’s message.  However, in all likelihood we can reasonably expect our debt to continue to accumulate until decisive action is taken to resolve the current global economic crisis which has been exacerbated by COVID-19.

So, we are left to speculate about the many implications that a ‘new Bretton Woods moment’ could have on economies around the world and how it may impact us as individuals.  

Reserve Currency Status, Debt and Designation

Data shows that the U.S. is now the largest debtor nation in the world, whereas China is now the largest creditor nation in the world (World Bank, Central Bank of the Republic of China, 2020).  This is in stark contrast to a time when the U.S. was the largest creditor nation in the world, earning it a designation as the right to provide the world with its currency as a reserve currency.  

Credit for image: https://www.cfr.org/backgrounder/dollar-worlds-currency

Historically, it seems that each time a nation has gone from being a creditor nation to that of a debtor nation, there has been a ‘passing of the buck’ where a new nation gains the right to have its currency serve as the reserve currency of the world.  The below image is a depiction of the length of time that each nation has held the world reserve currency status.  Following that image is another that shows the progression on a map.

Credit for image: Business Insider (Roche, 2014)

Google Maps: Numbering depicts progression of reserve currency status holders before U.S.

Could this mean that China’s yuan will become the new de facto world reserve currency after the U.S. loses its ability to provide credit to the world?  It is entirely possible (Business Insider; Roche, 2014).  However, it is generally believed that the dollar will continue to remain the most important reserve currency for the next several decades.  Moreover, some economists believe that  “the dollar playing a smaller global role is nothing to fear, and that it would in fact benefit the United States,” (Siripurapu, 2020) going so far as to state, “Absent a catastrophic U.S. policy error, I would expect the dollar to remain the most important reserve currency for the next several decades.” – Brad W. Setser, CFR Senior Fellow

Are Cryptocurrencies and the Blockchain the Answer?

Finally, we arrive at what the ‘cryptosphere’ deems to be a case for Bitcoin and cryptocurrencies.  The general consensus seems to be that cryptocurrencies and the blockchain will allow for a more transparent nature of how monies are allocated and spent.  There is an argument that cryptocurrencies and the blockchain will do for banking what the internet did for information sharing.  The supporting commentary goes like this – because the nature of cryptocurrencies and the blockchain are decentralized, and inflationary rates are instead deflationary and built into the code for every cryptocurrency – gone are the days of monetary manipulation polices such as quantitative easing and adjusting inflation rates.

But how does all of this equate to a need for cryptocurrencies to solve this ‘new Bretton Woods moment?’  Well, cryptocurrencies open up markets to the world.  They are indiscriminate, interchangeable, and have the capacity to be transferred in mere minutes, often in only a matter of just seconds, across borders around the world and without the need for intermediaries like a bank.  The ability to print, or mint, additional supply is fully incumbent upon the particular coin but typically does not exist due to the nature of establishing the maximum supply requirement when creating the cryptocurrency.  Providing additional liquidity to the cryptocurrencies market comes in the form of equities and securities from traditional markets that are sold for fiat currency and exchanged for cryptocurrency.  This design defeats the Federal Reserve’s ability print unlimited amounts of money and alter monetary policy according to their likening. 

Imagine a world where your savings are not devalued by runaway inflation rates that offset any interest you have accumulated.  Imagine having the ability to easily loan your money by creating a contract on the blockchain that only executes when all conditions are met, not at the behest of a broker or loan officer – who, by the way, charge additional fees for their involvement.  Imagine the time and money you can save by executing a transfer of funds on the blockchain, where transaction fees are literally pennies and settlement time is completed in minutes, rather than days, and the entire process takes only a few moments and can be done on your mobile device.  Imagine having the ability to create and submit an improvement proposal (for the functionality of any cryptocurrency and its blockchain) for all users to vote on, without the need to send a helpless plea to your representative in Congress.  Well, I am asking you to imagine the world of the blockchain and cryptocurrencies.  It sounds, to me, like the beginning to a solution for complications that have plagued our fiscal and monetary issues of former times.

Disclaimer: The views, thoughts, and opinions expressed here are solely those of the author in his private capacity and do not necessarily represent the views of Crescent City Capital.

References

Encyclopaedia Britannica. (1998, July 20). John Maynard Keynes. Retrieved October 24, 2020, from https://www.britannica.com/biography/John-Maynard-Keynes 

Chen, J. (2020, August 28). Bretton Woods Agreement and System: An Overview. Retrieved October 24, 2020, from https://www.investopedia.com/terms/b/brettonwoodsagreement.asp 

Siripurapu, A. (2020, September 29). The Dollar: The World’s Currency. Retrieved October 24, 2020, from https://www.cfr.org/backgrounder/dollar-worlds-currency 

Kristalina Georgieva, I. (2020, October 15). A New Bretton Woods Moment. Retrieved October 24, 2020, from https://www.imf.org/en/News/Articles/2020/10/15/sp101520-a-new-bretton-woods-moment 

Roche, C. (2014, June 11). Why The US Dollar Will Eventually Stop Being The World’s Reserve Currency. Retrieved October 25, 2020, from https://www.businessinsider.com/why-the-us-dollar-will-eventually-stop-being-the-worlds-reserve-currency-2014-6