Monthly Archives: February 2021

Ether (ETH) soared to new record highs Thursday, but an overheated derivatives market may suggest higher volatility is on the way for the short term.

The second-largest cryptocurrency by market value set the new lifetime high of $1,928 soon before press time, having first breached the previous peak of $1,821.49 reached on Feb. 13 early today, according to CoinDesk 20 data.

In the derivatives market, the average level of the funding rate across major exchanges offering ether perpetuals (futures with no expiry) has risen sharply from 0.069% just short of the early January record high of 0.21%, according to data source Glassnode.

It shows the derivatives market is overleveraged, Patrick Heusser, head of trading at Swiss-based Crypto Finance AG, told CoinDesk. With this current structure, I do not feel comfortable in running a lot of long exposure.

The funding rate is calculated every eight hours and represents the cost of holding long positions. When perpetuals trade at a premium to spot price, the funding rate is positive (longs pay shorts).Hence, a very high funding rate is considered a sign of leverage being excessively skewed to the bullish side (overbought conditions) and often injects volatility into the market.

Ether: Average funding rate

In such situations, holding longs at high costs is attractive only if the bullish momentum remains strong. A pullback or consolidation can trigger an unwinding of longs, leading to a more profound price drop and a pick-up in price volatility. As of press time, ether is showing no signs of price congestion.

However, the case for a continued steep rally looks weak, with spot market volumes falling on major exchanges such as Coinbase.

Ether daily chart

With the 10-day moving average of daily volume trending south, theres a question mark on the sustainability of recent gains. A low-volume price rise is often short-lived.

That said, a pullback, if any, could be shallow and brief, as on-chain fundamentals are biased bullish.

The number of coins held on exchanges has declined by 10% to 20.77 million in the past three months, according to data source CryptoQuant.It shows investors are either taking direct custody of coins or staking them into decentralized finance protocols, creating a sell-side liquidity shortage.

Ether exchange reserves (number of balances held in exchange addresses)

In the long-run, [the] ETH rally would keep going as long as ETH holdings in all exchanges are decreasing, Ki-Young Ju, CEO of CryptoQuant, told CoinDesk.

Other metrics also paint a bullish picture. For instance, the 90-day average of active addresses on Ethereums network has increased to a new lifetime high of around 450,000, surpassing the 2017 peak, according to Glassnode.

Ethereum: 90-day average of active addresses

When theres greater usage, theres more demand for the cryptocurrency, and that drives the price up, Philip Gradwell, chief economist at the blockchain intelligence firm Chainalysis,told CoinDesk.

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Ether Looks Overleveraged as Cryptocurrency Hits New High Over $1,900 - CoinDesk

The wild ride of Bitcoin has dominatedheadlines in recent weeks. The cryptocurrencys value stands around $50,000 forone Bitcoin this week compared to about $10,000 a year ago and around $400five years ago. Bitcoin is just one of thousands of cryptocurrencies inexistence - and many of those are also surging but it has by far the highestvalue.

Since Bitcoin first appeared in 2009as the original decentralized digital currency, i.e., not controlled by banks ora government, a handful of travel companies have come to accept it as a form ofpayment.

One of the first was online travelagency CheapAir, which began accepting Bitcoin in 2013. Originally the companyused a third-party processor to convert the Bitcoins into dollars which couldthen be paid to airlines and hotels since virtually all suppliers stillrequire payment in fiat currency. Eventually, the OTA built its own processingtechnology for Bitcoin to manage the exchange itself.

CheapAir co-founder and CEO Jeff Klee says that the needto exchange the cryptocurrency is one of the roadblocks to widespread adoptionin the travel industry.

It would be much easier for everyoneif the suppliers would accept crypto. Its a bit of an ordeal when the supplierdoesnt, so we have to exchange into dollars and pay the supplier separately,he says.

Thats what makes it unattractiveto a lot of travel intermediaries. Theres a lot of infrastructure you need,training you need for your frontline agents to support it when customers call.We decided to commit to it, so we built that infrastructure and its a big partof our training.

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Even with that commitment, Klee says cryptocurrencystill accounts for just single digit percentages of CheapAirs sales. But therehave been positive aspects.

We really value and appreciate our Bitcoincustomers. They tend to be very loyal, and they tend to buy more expensiveproducts ... first-class tickets and luxury hotel accommodations, he says.

Spain-based OTA Destinia has beenaccepting Bitcoin since 2014. Managing director RicardoFernndez says that while it only accounts for about 2% of the platforms globalsales, offering payment in Bitcoin has enabled the site to attract a niche ofcustomers around the world that own and want to spend cryptocurrency.

But, he says, that relationshipbetween holding versus spending cryptocurrency is changing, something echoed byKlee.

Until 2020 the relation between priceof Bitcoin and number of bookings was direct - the higher price, the higherbookings. In 2020 when Bitcoin started to go crazy, the relation started to beinverse. So if price is growing, the number of bookings is decreasing because peopleare now looking at it as an investment, Fernndez says.

That hasnt been the case for Travala, an Australia-based OTA founded in 2017 that offers more than two millionaccommodations around the world and in two weeks will add tours and activities.The sites primary cryptocurrency is Bitcoin, followed by its native AVA tokenand 25 other cryptocurrency options.

Co-founder and CEO Juan Otero says Travala is processing about one million dollars worth of bookings each month and about 70% of thatis paid in cryptocurrency, for which the company has built paymenttechnology to manage the exchange and payment in fiat to suppliers.

He says broader adoption of cryptocurrencyis inevitable.

We are just at the beginning of whatwill be a true financial revolution where people will move away from fiat andinto cryptocurrencies, Otero says.

When you pay with crypto, its nearto instant, its near to free, its privacy preserving everything thatblockchain technology offers you is something you have when you usecryptocurrency to pay. Plus no added credit card fees, or waiting for a paymentto be processed or denied. All the issues and costs with traditional creditcard payments are removed when you pay with cryptocurrency.

That doesnt mean cryptocurrency is withoutrisk, cautions Thomas Helldorff, vice president for airlines and travel at Worldpayfrom FIS.

If you accept a Bitcoin as a form ofpayment, then you have to live with the risk that by the time you accept it,then you eventually convert it to your currency, that Bitcoins value mayfluctuate up or down and that may significantly erode your margin, Helldorffsays.

Travel companies with a very thin margin are not in the game of speculating with currencies.

Thomas Helldorff - Worldpay from FIS

Travel companies with a very thinmargin are not in the game of speculating with currencies.

Instead, Helldorff says he would liketo see governments or central banks issue their own digital currency, whichwould facilitate more modernized payment processing while providing thestability of being backed by fiat currency. Currently, central bank digitalcurrencies are in various stages of exploration and development in countries includingChina, Singapore and Sweden.

Governmentally backed digital currenciesare simply a digital representation of the currency that they represent. Their valuedoesnt change, Helldorff says.

And it is a digitally certifiedpayment instrument that you cant alter, you cant fake, you cant change. Thatsthe next evolution.

Helldorff says airlines and othertravel suppliers should begin preparing for this shift now developing standardsand systems to connect a digital payment type to a travel record.

We all know it takes years for thesespecifications to be endorsed by IATA, by everybody, so I think its the righttime when we are not terribly busy while we are waiting for things to get better. ...We might use some of this time to think about whats the next big paymentoptions, get prepared and maybe be the first industry to be able to cross-borderaccept those currency units, he says.

By linking central bank digitalcurrencies to a smart contract a mechanism inherent to blockchain-basedcryptocurrencies the process of payments between travelers, intermediariesand suppliers would be faster and frictionless.

Helldorff says this automationcreates a significant advantage that will eventually motivate broad adoption ofsmart contracts and distributed ledger technology by the travel industry.

With a smart contract, there are definedrules for what happens in what situation and the money just bounces around becausethere is no need for clearing and settlement, he says.

Theres no invoicing and banktransfers and checks going forth and back to make that money flow work. Thebooking, the order itself, holds the financial value or access to the financialvalue and distributes the financial value as per order and moves the moneybetween the players as the services get executed or as the contract stipulates.

"This is how I see the future of settlements happening in the airlineecosystem.

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As Bitcoin surges, will cryptocurrency become an accepted form of payment in travel? - PhocusWire

Change doesn't come fast, or often, to institutions like Christies, a British auction house founded in 1766 predating American independence. But it has come all at once to Christie's, which is accepting cryptocurrency for the first time for its first purely digital artwork.

Christies has never offered a new media artwork of this scale or importance before, Noah Davis, specialist in Post-War & Contemporary Art at Christies in New York, said in a release. Acquiring Beeples work is a unique opportunity to own an entry in the blockchain itself created by one of the worlds leading digital artists.

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The auction house is accepting payment in the cryptocurrency Ether, hosted on the open-source blockchain Ethereum, via a digital wallet transfer although not for the buyer's premium (the fee you pay for winning the bid, in addition to the bid).

I almost look at it now like Im a political cartoonist, Mike Winkelmann, known online as Beeple, said about the work, which is a compilation of digital pieces one created each day for 5,000 days. Except instead of doing sketches, Im using the most advanced 3D tools to make comments on current events, almost in real-time.

Beeple, who has created digital artwork for everyone from Ariana Grande to deadmau5, has 1.8 million followers on Instagram, where he posted the first installation in the series on May 1, 2007, a picture of his Uncle Jim, nicknamed Uber Jay.

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"I probably would have spent more time on this, had I known it would eventually be part of a piece auctioned by Christies," he told the auction house.

There's another from the morning his first child was born, a bad bout of food poisoning and even one inspired by the fly that landed on former vice president Mike Pence's head during a debate last year.

The winning bidder won't be taking it home with them, at least not in the traditional way. The digital work will be sent using blockchain technology, which will use a non-fungible token encrypted with the artists unforgeable signature a unique identifier for the original. The starting bid is at $100, but if you don't have the cryptocurrency to afford the work, you can still see it online, with the rest of the plebeians.

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Christie's becomes first major auction house to sell cryptocurrency-based artwork | TheHill - The Hill

In this photo illustration, visual representations of the digital cryptocurrency, Bitcoin are arranged on January 4, 2021 in Katwijk, Netherlands.

Yuriko Nakao | Getty Images

GUANGZHOU, China Bitcoin could rise to $1 million over the long term to become a reserve currency for the world, according to one asset manager.

But JPMorgan warned of risks ahead as the cryptocurrency continues to rally.

Anthony Pompliano, co-founder and partner at Morgan Creek Digital Assets, said bitcoin could hit $500,000 by the end of the decade. It could eventually reach $1 million per coin, he added, without giving a timeline.

"I think that bitcoin will eventually rise to become the global reserve currency. I think bitcoin will eventually be much much larger than the gold market cap," he said during the latest episode of CNBC's "Beyond the Valley" podcast.

Meanwhile, global central banks have been easing monetary policy such as lowering interest rates and buying assets through the so-called quantitative easing program to help cushion the blow to economies hit by the coronavirus pandemic.

"There were trillions of dollars that were printed and injected into the economy and everyone from individuals to financial institutions and corporations ran around the world looking for the best way to protect their purchasing power, they ultimately decided it was bitcoin," Pompliano said as he discussed what was behind bitcoin's surge.

(Bitcoin) will eventually take that seat at the kingdom of being that global reserve currency of the internet generation.

Anthony Pompliano

Morgan Creek Digital Assets

The bitcoin bull's prediction that bitcoin could hit $1 million is based on a few factors including the scarcity of the cryptocurrency which has a cap of 21 million coins, as well as the decentralized nature of the technology.

There is no central authority like a central bank that controls bitcoin.

Instead, the so-called bitcoin network is made up of miners who process transactions. These miners operate a vast array of specialized computers required to carry out the bitcoin mining process.

As there are many different miners, no single entity can control the network. And because the computers they use are often very powerful machines, bitcoin proponents claim the network is one of the strongest computer networks in the world.

"As more and more people come into the market, there is more liquidity. As there is more liquidity, there is more utility. As there's more utility, there's more stability in the price you get kind of this evolution," Pompliano said.

"If you think about that internet economy, there is no native currency (bitcoin) will eventually take that seat at the kingdom of being that global reserve currency of the internet generation."

In January, JPMorgan released a note to clients putting a "theoretical" long term price target on bitcoin of $146,000 as bitcoin begins to compete with gold.

Gold is broadly accepted as a "safe haven" asset where investors flock to in times of political strife or financial market turmoil. Bitcoin is now beginning to develop such a reputation.

"Bitcoin is competing with traditional gold, bitcoin is a form of digital gold," Nikolaos Panigirtzoglou, global markets strategist at JPMorgan, told CNBC's "Beyond the Valley."

He said that the value of gold held by the private sector, solely for the purpose of investment, is around $2.7 trillion. For bitcoin's market cap to reach that, it would need to hit a price of around $146,000.

But there are caveats, the biggest one being the volatility in bitcoin's price. The digital coin is known for wild swings in price. Panigirtzoglou said bitcoin is "five times more volatility than gold."

The key to bitcoin's volatility converging with gold is institutional adoption, the JPMorgan strategist said.

"The faster the pace of institutional adoption, the quicker that convergence in volatility will take place," he said.

Still, there are risks ahead for the current rally. While it has been driven by institutional investors, retail participation has also been high.

"The biggest risk is that the flow impulse we've seen over the past months slows materially from here," Panigirtzoglou said.

"In particular when the economies reopen, people go back to the office, they have less time to trade at home, and as a result some of that, retail flow impulse slows from here," he added.

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Bitcoin at $1 million? Some analysts are bullish but others warn of risks ahead - CNBC

The recent rally in Bitcoins price is often attributed to institutional buying support, with many publically traded companies adding the digital asset to their balance sheets Tesla being the one that grabbed the maximum eyeballs.

However, Bitcoin and blockchains story begins more than a decade ago when the cryptocurrency was first released by an anonymous person or group of people known only as Satoshi Nakamoto.

Regardless of whether you think cryptocurrencies like Bitcoin are in a bubble or not, the underlying technology called blockchain that powers them is objectively groundbreaking.

The iGaming industry was one of the early adopters of Blockchain and cryptocurrency. In this article, we take an in-depth look at blockchain and cryptocurrency, how they are used in the iGaming industry, and where they might be heading in the future.

A blockchain is a database where information is stored in different blocks and chained together via cryptography methods.

Bitcoin introduced blockchain to create a decentralized network that could operate trustlessly. You do not need a third-party to validate a transaction between two parties; instead, the transaction is validated through a decentralized consensus-building process known as mining.

In the case of Bitcoin, there is no single entity keeping track of the entire blockchain database. Instead, it is maintained by a massive network of miners who validate new blocks by competing against each other to win rewards.

Cryptography techniques are used to protect the system and enable the competitive mining process, which is why Bitcoin is called a crypto currency.

Since the database is decentralized and validated by a large number of computers worldwide, it is not possible to alter previous transactions recorded in the ledger because to do that, the majority of miners will have to agree to change the transaction in the history of the ledger; this removes a central point of failure and makes the ledger immutable.

Additionally, since the entire blockchain data is available to the public, every Bitcoin transaction in history can be viewed by anyone, providing transparency since all the information is publicly available.

As people kept researching blockchain technology over time, several developments have been made like smart contracts, which allow you to run applications on a decentralized network using Blockchain. Private centralized blockchains also became possible as an excellent way to store data and prevent the chances of fraud securely.

It is important to note that blockchain technology and cryptocurrencies overlap but are not the same thing. For example, blockchains are also used to improve Supply-Chain Communications and Proof-of-Provenance, which has nothing to do with Bitcoin or any other cryptocurrency.

In 2018, it was estimated that 50% of all Bitcoin transactions were related to online gambling. One of the earliest gambling websites that used cryptocurrency was SatoshiDICE, where players could use Bitcoin to bet on a game of Dice. The company was eventually sold to an unknown buyer in 2013 for 126,315 BTC (worth $11.5 million at the time).

Today, blockchain is used for many purposes in the iGaming industry other than just for processing payments. Here are some functional areas where blockchain can help iGaming companies:

Additionally, gaming regulators may also start using Blockchain technology in their licensing procedures to ensure better compliance and bring more transparency.

The entire platform runs using a smart contract, which means the whole process is decentralized, and no centrally controlled entity stores the funds. It also leads to lower commission costs for the operator and faster transaction speed.

Additionally, white-label solutions for sports betting like Bethereum bring the benefits of using a blockchain to sports betting.

One of the significant benefits of using cryptocurrency payments is that it allows people to deposit money quickly, mainly if the online casino is located offshore and doesnt support any convenient traditional payment option for the player.

In countries with an unregulated online casino industry like India, many highly-ranked online casinos allow payments to be processed via cryptocurrency.

However, given the nature of cryptocurrency, it is likely that cryptocurrency would be regulated if not outright banned in the emerging markets. Ironically, these markets stand to gain the most from cryptocurrency payments as international transactions usually carry a hefty fee and take a long time to be processed.

Regardless, it is pretty clear that blockchain and cryptocurrency will play a much more significant role in the iGaming industry over the years to come.

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How Blockchain and Cryptocurrency Became a Vital Part of the iGaming Industry - Dazeinfo