CoinDesk Crypto

Major markets are in the red today, including bitcoin. Ether options traders have favored calls over the past month.

• Bitcoin trading around $13,184 as of 20:00 UTC (4 p.m. ET). Slipping 3.6% over the previous 24 hours.
• Bitcoin’s 24-hour range: $12,894-$13,831
• BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.

The price of bitcoin slipped Wednesday, going as low as $12,894 around 14:00 UTC (10 a.m. ET), according to CoinDesk 20 data. Prices have picked up a bit since then, at $13,184 as of press time. 

Read More: Bitcoin Price Slips Below $13K as Stocks Slide

Related: Putting Pressure on Bitcoin’s Lightning Network Vulnerabilities Will Strengthen It

Katie Stockton, a technical analyst for research firm Fairlead Strategies, said Wednesday was a “risk-off” day where investors were shedding what they consider higher-risk assets, including cryptocurrencies. “Bitcoin is seeing a retracement of its strong up move as risk assets trade off sharply,” Stockton told CoinDesk. Risk assets, which include global equities, slipped Wednesday.

• The Nikkei 225 in Asia closed in the red 0.30% as surging coronavirus infections and uncertainty surrounding the U.S. presidential election weighed on the index.
• The FTSE 100 ended the day down 2.5% as new lockdown restrictions in Europe caused investors to punch the sell button.
• In the United States the S&P 500 fell 2.9% as increasing coronavirus cases around the world caused concerns about the global economy’s overall health.

Bitcoin’s strong move up Tuesday approached 2019’s high before losing steam. Stockton said that despite Wednesday’s respite, bitcoin still has a strong chance to pass 2019’s price zenith. “The recent breakout above the August high lends a bullish intermediate-term bias,” she added. “Uncertainty is taking its toll on the markets, but we think it will be short-lived.”

Neil Van Huis, director of institutional trading at liquidity provider Blockfills, noted bitcoin’s mining hashrate has dropped to levels not seen since June. Older, inefficient machines are being turned off, which he sees as a huge opportunity to invest in newer mining rigs at these price levels.

“This is good for mining companies,” Van Huis said. “It also comes at a time when prices are rising. With that comes more investment into the space like JPMorgan and PayPal. That should, in my opinion, keep prices bullish, especially now that we cleared that $12,000-$12,500 hurdle for a bit.” 

Related: First Mover: Bitcoin’s Latest Rally Proving Irresistible as Bitwise Assets Top $100M

Read More: JPMorgan’s ‘JPM Coin’ Is Live, Execs Say

In the futures market, Denis Vinokourov, head of research at digital asset prime broker Bequant, noted the rise of institutional interest on CME, which surpassed $800 million in open interest Tuesday. “Futures contracts trading at a premium to spot prices even as the October CME expiry is fast approaching this Friday,” he said.

Guy Hirsch, U.S. managing director at multi-asset brokerage eToro, said unpredictable global market fundamentals are actually a good thing for bitcoin. “The election outcome might produce a shift from a pro-business administration into an administration that is much more skeptical about free markets” just as COVID-19 cases hit record levels, he added. “[W]e could be in for a long winter that may see bitcoin potentially challenge its previous record high set back in 2017,” Hirsch told CoinDesk.

Ether options skew towards calls

Ether, the second-largest cryptocurrency by market capitalization, was up in Wednesday trading around $384 and slipping 5.6% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

The ether options market has been more favorable towards calls than puts recently. Derivatives exchange Deribit, which is by far the largest ether options venue, has seen 55% calls versus 44% puts the past month, according to data aggregator Genesis Volatility. 

Calls are bullish bets in the direction of the underlying assets (in this case, ether) while puts are bearish bets.

Greg Magadini, Genesis Volatility’s CEO, doesn’t see this data as necessarily providing clear direction on ether’s price, but does indicate where liquidity is pooling. 

“Seeing more activity on the call side indicates that the call legs have the most liquidity and active participation,” Magadini said. “This is useful for traders to know when structuring less liquid multi-legged trades.”

Other markets

Digital assets on the CoinDesk 20 are mostly red Wednesday. One notable winner as of 20:00 UTC (4:00 p.m. ET):

• bitcoin cash (BCH) + 2.6%

Notable losers:

• 0x – 8.3%
• chainlink – 5.9%
• orchid – 5.7%

Read More: Hxro, FTX Target Retail Crypto Traders With Simplified Options Product

Commodities:

• Oil was down 4.3%. Price per barrel of West Texas Intermediate crude: $37.26.
• Gold was in the red 1.6% and at $1,877 as of press time.

Treasurys:

• U.S. Treasury bond yields were mixed, almost flat on Wednesday. Yields, which move in the opposite direction as price, were up most on the 10-year bond, jumping to 0.773 and climbing 0.44%.

Related Stories

• Bitwise Tops $100M in Assets Under Management
• Bitcoin Price Slips Below $13K as Stocks Slide

Student loan and financial services provider SoFi’s application to establish a new national bank was granted conditional approval by the Office of the Comptroller of the Currency (OCC), opening the door for the new bank to custody cryptocurrencies.

• In an announcement Wednesday, the OCC said the preliminary approval is conditional pending a thorough evaluation of all information available.
• SoFi Digital Assets, a unit of SoFi, last year was granted a money transmission license as well as a BitLicense by the New York Department of Financial Services, allowing the unit to to provide buy and sell services for bitcoin, bitcoin cash, ethereum, ethereum classic, litecoin and Stellar lumens to New York residents. 
• SoFi’s conditional approval comes after the OCC published two key crypto guidance letters, the first allowing banks to custody cryptocurrencies and a second clarifying treatment of stablecoin issuers, published two months later.

Related Stories

• Figure’s Mike Cagney: How to Build a Business in Blockchain
• Online Lender SoFi Gets NY BitLicense, Clearing Way to Offer Crypto Trading
• Online Lender SoFi to Launch Bitcoin and Ethereum Trading Next Week
• Online Loan Platform SoFi Will Offer Crypto Trading Through Coinbase

Blockchain pioneer Caitlin Long is now the CEO of her own special purpose depository institution (SPDI) in Wyoming. 

Avanti Financial’s banking charter was approved unanimously by the Wyoming State Banking Board on Wednesday, becoming the second newly chartered bank in the state in 2020 after Kraken Financial earned approval last month.

Avanti, like Kraken, now has to jump through a few hoops – like raising more capital – before it can be granted a certificate of authority to operate.

Related: JPMorgan Invites Banks and Fintechs to Build on Its Revamped Blockchain Network

“Kraken definitely captured attention, but now that there’s a second one chartered it’s no longer a one-off situation and a trend is in motion,” Long told CoinDesk in an email.

Along with the charter approval, the banking board approved Avanti’s future issuance of Avit, a programmable electronic currency that’s redeemable at par with a U.S. dollar. The Avit is not a security token, meaning it is not a digital representation of an investment that’s expected to generate returns.

The Avit will be issued initially on Bitcoin sidechain Liquid and then on Ethereum, Long said. 

Read more: Unpacking the Avit, Avanti Bank’s New Digital Asset Being Built With Blockstream

Related: Why Wyoming’s Governor Supports the State’s Crypto Banking Law

The bank has previously raised $5 million in an angel round and brought on a C-suite of five executives from the traditional banking and digital asset industries, including Bitcoin Core developer Bryan Bishop.

Related Stories

• Silvergate Bank Sees 40% Increase in Deposits From Digital Currency Customers
• Eyeing EU Banks, Hex Trust Teams With SIA on Crypto Custody

India-based DefiDollar has raised $1.2 million in a seed round led by Divergence Ventures, Standard Crypto and Accomplice. The goal: to build an index for hedging the risks associated with different types of stablecoins.

DefiDollar believes users need to diversify risks through a stablecoin aggregator. Take, for example, the censorship risks associated with stablecoins like USDC and USDT that are fiat-backed and issued by known entities. Conversely, crypto-collateralized stablecoins like dai may face smart-contract risks and tend to see slight fluctuations in price that make them less stable than they may sound.

That’s where DefiDollar and its “metastable” DUSD token comes in.

Related: The Graph Raises $12M in GRT Token Sale; Teases Mainnet Launch in 30-60 Days

“It’s an insurance layer over existing avenues in DeFi,” co-founder Siddhartha Jain told CoinDesk. “There are a lot of different risks that are present in the ecosystem, the same sort of risks which banks pose because the issuing entity is centralized or probably has blacklisting mechanisms.” 

Born of the ETHGlobal HackMoney hackathon in May 2020, DefiDollar launched into a live product on the Ethereum mainnet in six months and currently handles $3 million in volume, Jain said. DUSD is collateralized by Curve Finance LP tokens, according to the project’s documentation.

The company recently announced a governance token, DFD, that will be distributed through a liquidity mining scheme referred to as Initial Liquidity Mining Offering (ILMO). The DFD ILMO is set to go live this week. 

Read more: Origin Debuts OUSD, a Stablecoin That Works Like a Savings Account

Related: Ethereum, Dark Forests and the Limits of Transparency

“Other projects usually do their liquidity mining based on ETH or another stablecoin,” said co-founder Arpit Agarwal. DefiDollar users can use the project’s native stablecoin, DUSD, to generate DFD rewards. 

Unlike other token launches, users can claim this initial supply by depositing DUSD and then play a three-day waiting game for the token to launch in full. 

DefiDollar co-founders told CoinDesk that after this timeframe, they expect there to be a significant amount of liquidity on the staked tokens when DFD officially launches next week. 

Related Stories

• This Paradigm-Backed Startup Is Offering DeFi’s First ‘T-Bill’
• India Will Soon Have Crypto ‘Banking’ at 22 Physical Locations

Cambodia’s blockchain-based payments platform – the digital currency-like system Cambodian central bankers call Bakong – went live on Wednesday, according to the country’s central bank.

• Bakong’s launch grants Cambodians a state-sanctioned platform for conducting instant mobile payments, with QR codes and phone numbers connecting digital wallets over a blockchain.
• The National Bank of Cambodia hosts Bakong atop the Hyperledger Iroha blockchain designed by Japanese technology company Soramitsu.
• Unlike most central bank digital currency projects, Bakong does not involve digitally native money; it is entirely fiat-backed. Users can make payments backed by their dollar or riel reserves.
• Cambodia sees Bakong as a critical step in modernizing its payment system and de-dollarizing its economy.
• Project-lead Serey Chea, an assistant governor at the central bank, also claimed Wednesday that Bakong’s e-payments would help prevent the spread of COVID-19.

See also: Cambodia’s Project Bakong and the Future of Payments

Related Stories

• IBM-R3 Pact Shows Tech Trumps Tribe in Enterprise Blockchain
• Blockchain Can Give $1.7T Boost to Global Economy by 2030: PwC Report
• Bitcoin News Roundup for June 22, 2020
• Cambodia Plots a Dollar-Free Future With Blockchain-Based Payments: White Paper

Bitcoin was lower, pausing a powerful rally that has seen the largest cryptocurrency jump 25% in October to the highest levels since June 2019. Traditional financial-media outlets like Bloomberg News were writing about it. 

Prices appeared to hit resistance just below $13,900, close to last year’s high. But analysts said that if the level is breached, there appear to be few brake points before the 11-year-old cryptocurrency ascends to $14,000 or beyond. 

“Between the levels of $14,000 and $20,000, there is insufficient price data to single out any specific points of resistance,” Mati Greenspan, founder of the foreign-exchange and cryptocurrency research firm Quantum Economics, told subscribers in a newsletter. 

Related: Putting Pressure on Bitcoin’s Lightning Network Vulnerabilities Will Strengthen It

In traditional markets, European stocks dropped to a five-month low and U.S. equity futures were declining, amid investor concerns about rising coronavirus case loads. Gold weakened 0.4% to $1,900 an ounce. 

Market Moves

Bitcoin‘s recent rally as U.S. stocks floundered has simply widened the cryptocurrency’s outperformance compared with traditional markets. As more investors tune in, the expanding gap could become a self-reinforcing trend. 

Following Tuesday’s price surge to a new 2020 high around $13,700, bitcoin is now up 90% year-to-date. That puts the cryptocurrency well on pace to exceed last year’s 94% gain.

It’s also far ahead of the Standard & Poor’s 500 Index of large U.S. stocks, where a recent slide has trimmed the year-to-date gains to just 5%, after a 27% rise in 2019. 

Related: Blockchain Bites: Bitcoin Miners’ Slim Margins, ConsenSys’ Latest CBDC Pilot, a16z’ Power Hire

Many big institutional investors, such as pension funds, are under pressure to hit annual return targets of 7%, and with stocks now faltering and bond yields close to historic lows, they’re casting about for alternatives. Bitcoin’s track record alone might be enough of a sell, but the 11-year-old cryptocurrency also represents what could be the beachhead of a brand new, state-of-the-art financial system – the digital rails, as the crypto-market ecosystem is described by some industry executives.

Then there’s the theory among many investors that bitcoin’s fixed supply makes it a useful hedge against central-bank money printing – yet another compelling narrative at a time when top authorities from the Federal Reserve to the European Central Bank and International Monetary Fund say massive stimulus is needed to keep the global economy from faltering. As highlighted in this column earlier this week, even analysts for the once-naysaying JPMorgan Chase, the biggest U.S. bank, are now opening discussing bitcoin’s potential upside.  

“Every major institution is re-looking at it right now,” Matt Hougan, chief investment officer of the cryptocurrency-focused money management firm Bitwise, told CoinDesk in a phone interview. “There’s lots of pings in my LinkedIn inbox.” The San Francisco-based firm announced Wednesday that its assets under management recently crossed above $100 million for the first time.

According to Hougan, there are a few key differences now from prior bull runs in bitcoin, such as in 2017 when the cryptocurrency’s price shot to up to about $20,000. 

There’s been a rapid explosion in the industry’s support infrastructure, from the development of regulated asset custodians to more reliable pricing feeds and more recently U.S. officials’ move to explicitly authorize banks to provide services to cryptocurrency companies. Last week’s move by PayPal to let users buy bitcoinoffers a new seal of approval from an established company along with an incentive for other big financial firms to follow suit, in order to avoid getting left behind. 

Notably, Bitwise has repeatedly failed in its years-long efforts to win approval for a bitcoin exchange-traded fund. But Hougan said his firm has found a growing and welcoming cadre of financial advisors looking to steer money into its cryptocurrency investment funds, since they’re among the few assets having any major positive impact in 2020 on clients’ portfolios.

“We’re reaping the harvest of two years of building infrastructure in this space,” Hougan said. “It’s no surprise that we’re hitting multiyear highs.” 

Digital-asset traders are so familiar with bitcoin’s infamous price swings that such bullishness can sometimes sound fawning, breathless, credulous. But right now it’s not just crypto money managers selling the story; bitcoin is getting a shot of credibility from its own market performance.

Bitcoin Watch

Bitcoin has decoupled from stocks this week. Prices narrowly missed the June 20019 high of $13,880 early Wednesday and were last seen at $13,550.

The minor pullback could be attributed to the overbought conditions signaled by the above-70 reading on the 14-day relative strength index (RSI). The 14-week RSI has also crossed above 70.

An overbought reading does not imply a bearish reversal. That said, it often yields a temporary consolidation or pullback similar to the one seen in May and July.

Dips, however, could end up recharging bulls’ engine for a stronger rally, as fundamental indicators such as market value to realized value (MVRV) Z-score, which measures market value’s deviation from realized value to assess undervalued and overvalued conditions. Right now the indicator suggests that bitcoin is far from overvalued and has plenty of room to extend the sharp rally from $3,867 to $13,800 seen over the past 7.5 months.

The MVRV Z-score, currently at 2.12, is hovering at two-year highs, according to data source Glassnode. That’s still well below the 7.0 score at which an asset is considered near a top.

All things considered, the path of least resistance for bitcoin remains to the higher side and bigger gains look likely albeit after minor consolidation.

– Omkar Godbole 

Read More: Is Bitcoin’s Rally Overstretched? This Key Indicator Says No

What’s Hot

JPMorgan invites banks and financial technology companies to build on revamped blockchain network (CoinDesk)  

Ethereum developer ConsenSys to assist French bank Societe Generale with research on central bank digital currency pilot (CoinDesk) 

MicroStrategy’s bitcoin stash now at $521M, executives planning to buy more (CoinDesk)

Proliferation of financing options for bitcoin miners drives down profit margins in increasingly crowded space (CoinDesk)  

Crypto lender BlockFi takes 5% stake in Grayscale’s $4.8B bitcoin trust (CoinDesk) (EDITOR’S NOTE: Grayscale is owned by Digital Currency Group, the parent of CoinDesk) 

Startup Yield Protocol aims to create DeFi money market (CoinDesk) 

Bitcoin’s Lightning network vulnerable to attacks via multiple routes (CoinDesk)  

Analogs The latest on the economy and traditional finance

Consumer confidence declines in three U.S. states vital for Trump re-election as economic worries increase (Reuters)

Australia’s two biggest IPOs of 2020 highlight “barbelled” global economy – coal terminal paying high dividends and high-tech software maker offering fast growth (Reuters)

Singapore central bank sees economic recovery “gradual and uneven” (Bloomberg)

Pro-democracy protests in Thailand fail to rattle country’s IPO boom (Nikkei Asian Review)

Tweet of the Day Related Stories

• Bitwise Tops $100M in Assets Under Management
• Bitcoin Price Slips Below $13K as Stocks Slide

Bitcoin’s hashrate is soaring. Ethereum incubator ConsenSys has signed on to another CBDC pilot. JPMorgan unveiled a revamped interbank transfer blockchain network that could challenge SWIFT.

Top shelf

Lower profits
Bitcoin mining profitability is at all-time lows in 2020, spurred in part by new ASIC mining machinery driving up the network’s hashrate. While bitcoin‘s hashrate has taken a dip as China’s wet season comes to an end, mining professionals predict this will only be temporary, and it has only improved profit margins so much, CoinDesk’s Colin Harper reports. According to North American Bitcoin mining company Luxor’s hashprice index, miners are extracting $0.096 for every terahash they produce, down from the roughly $1.40 miners could expect to make three years ago. 

ConsenSys CBDCs
ConsenSys will work with Societe Generale – Forge, the bank’s digital assets arm, in a central bank digital currency (CBDC) pilot. The Ethereum incubator will explore the limits of CBDC issuance and management, delivery versus payment and cross-chain interoperability, CoinDesk’s Daniel Palmer reports. Societe Generale – Forge has previously issued bonds worth millions of euros over a blockchain, with one of the initiatives being in collaboration with France’s central bank. ConsenSys was chosen in September to work with the Hong Kong Monetary Authority on a different CBDC pilot.

Related: First Mover: Bitcoin’s Latest Rally Proving Irresistible as Bitwise Assets Top $100M

GBTC whales
BlockFi has taken a 5% share of Grayscale’s $4.8 billion bitcoin trust. According to Tuesday Securities and Exchange Commission (SEC) filings, reviewed by CoinDesk’s Danny Nelson, the crypto lender now holds 24,235,578 GBTC shares. CEO Zac Prince said in a press statement BlockFi’s “significant” GBTC position will “add value” to the “marketplace for liquid and illiquid” shares. Crypto fund manager Three Arrows Capital is the only other entity with comparable GBTC holdings, having amassed over 21 million shares – some 6.26% of GBTC at the time – by June. (Grayscale and CoinDesk are both wholly owned by Digital Currency Group.)

Banking blockchain
JPMorgan is inviting 400-plus financial institutions (including 25 of the largest 50 banks) to start building on top its revamped blockchain network, Liink. Designed to connect banks in a peer-to-peer fashion and help them remove the pain points from cross-border payments, the closed source Liink is more of a “decentralized network” and less like a “central command product,” Christine Moy, head of Liink, told CoinDesk’s Ian Allison. “Think of it as the foundation of an enterprise mainnet.” The interbank transfer system is aimed as a complement of – but could be a killer to – SWIFT. 

Power hire
The one-time New York State finance regulator who shepherded the state’s BitLicense through its early days will join tech ventures fund Andreessen Horowitz (a16z) to focus on cryptocurrency companies. An a16z blog post said the fund’s new chief regulatory officer, Anthony Albanese, will focus on crypto portfolio companies in “gaming, digital storage, payment systems, social media, creative marketplaces and more.” “We’re seeing so much happening in the frontier areas like DeFi and stablecoins but also among the legacy financial services institutions from PayPal to JPMorgan,” said Katie Haun, an a16z general partner. “He’s really the perfect addition at the perfect time.”

Quick bites

• MicroStrategy is looking to add to its $521 million stash of bitcoin, the company’s president said Tuesday. The company has already seen a 22% return on its initial BTC buy. (CoinDesk)
• Australia’s largest stock exchange operator, ASX Ltd., has delayed the rollout of its blockchain-based trading platform until April 2023. Surging pandemic-led trading volumes would strain the in-development platform, it said. (CoinDesk)
• U.S. President Donald Trump’s campaign website was briefly compromised on Tuesday, as hackers looked to fleece cryptocurrency from unsuspecting supporters in the final days before the 2020 election. (CoinDesk)
• Malta, once a hub for crypto company registrations, has approved its first regulated crypto public offering: VAIOT, a blockchain and AI-powered services business. Decrypt asks whether Malta’s Initial Virtual Financial Assets Offering (IVFAO) is the new ICO.
• Messari explores how “DeFi Citadels” create and capture value. “The core of this business model is a protocol’s balance sheet, which can be defined as [total value locked]…” (paywalled)

At stake

Personhood proof
Yesterday, Paula Berman, a co-founder of Democracy Earth, and Divya Siddarth, a researcher at Microsoft’s Office of the CTO, published an essay in CoinDesk detailing an answer to a long-standing question in internet development: How do you know you’re not talking to a dog on the internet? 

Related: Blockchain Bites: JPM Coin Goes Live, Bitcoin Rallies, Stocks Falter

Explaining the concept of “proof-of-personhood,” the authors aim to outline a new model of consensus that authenticate digital identities, using actual human traits. 

Currently, authentication systems rely on algorithms or third party credentials – often provided by centralized firms like Facebook or Twitter – to provide a layer of trust. As we’ve seen by the rise of disinformation and scams, it’s shaky at best.

Further, because the current systems of identity rely on the disclosure of personal and private information to an identifier, it opens our lives to a degree of surveillance never before possible. 

“Identity is one of our most fundamental human rights. Yet, in the age of surveillance, commodification and centralization it is under threat,” they write.

Their solution, proof-of-personhood, explained for the first time as part of CoinDesk’s Internet 2030 series, outlines ways to form identities around subjective, rather than objective, metrics. “Instead of being generated and solved by computation, they are created and unlocked exclusively by the distinctive cognitive abilities of human brains,” they write.

In turn, rather than having the web as a field of exploitation, by matching real-world identities to digital ones, in ways that preserves privacy and human dignity, will “foster prosocial, community-oriented behavior, where both users and applications are significantly limited in their ability to exploit and attack each other.”

The authors also go into the areas where blockchains and other decentralized tools, as well as AI, have already failed to meet this need. If you’re interested in the idea of digital utopias, I suggest you read the entire article. 

Market intel

Overbought bitcoin?
A key indicator shows bitcoin’s recent rally is not overstretched. The “market value to realized value” (MVRV) Z-score – a measure used to assess undervalued and overvalued conditions – is showing bitcoin at lower levels than one would expect, if this were a market top, CoinDesk’s Omkar Godbole reports. Hovering at two-year highs at 2.12, bitcoin is still well below the 7.0 score at which an asset is considered overbought. “Put simply, the cryptocurrency is slightly overvalued but still has plenty of room to extend the run of gains from the low of $3,867 seen since mid-March,” Godbole writes.

Who won #CryptoTwitter? Related Stories

• First Mover: Bitcoin Surges to New 2020 High as Harvest Debacle Provides Costly DeFi Lesson
• Blockchain Bites: DeFi’s Harvest Hit, IRS’ Crypto Clarification, JPMorgan’s Buoyant Bitcoin Note

Bitcoin’s hashrate is soaring. Ethereum incubator ConsenSys has signed on to another CBDC pilot. JPMorgan unveiled a revamped interbank transfer blockchain network that could challenge SWIFT.

Top shelf

Lower profits
Bitcoin mining profitability is at all-time lows in 2020, spurred in part by new ASIC mining machinery driving up the network’s hashrate. While bitcoin‘s hashrate has taken a dip as China’s wet season comes to an end, mining professionals predict this will only be temporary, and it has only improved profit margins so much, CoinDesk’s Colin Harper reports. According to North American Bitcoin mining company Luxor’s hashprice index, miners are extracting $0.096 for every terahash they produce, down from the roughly $1.40 miners could expect to make three years ago. 

ConsenSys CBDCs
ConsenSys will work with Societe Generale – Forge, the bank’s digital assets arm, in a central bank digital currency (CBDC) pilot. The Ethereum incubator will explore the limits of CBDC issuance and management, delivery versus payment and cross-chain interoperability, CoinDesk’s Daniel Palmer reports. Societe Generale – Forge has previously issued bonds worth millions of euros over a blockchain, with one of the initiatives being in collaboration with France’s central bank. ConsenSys was chosen in September to work with the Hong Kong Monetary Authority on a different CBDC pilot.

Related: First Mover: Bitcoin’s Latest Rally Proving Irresistible as Bitwise Assets Top $100M

GBTC whales
BlockFi has taken a 5% share of Grayscale’s $4.8 billion bitcoin trust. According to Tuesday Securities and Exchange Commission (SEC) filings, reviewed by CoinDesk’s Danny Nelson, the crypto lender now holds 24,235,578 GBTC shares. CEO Zac Prince said in a press statement BlockFi’s “significant” GBTC position will “add value” to the “marketplace for liquid and illiquid” shares. Crypto fund manager Three Arrows Capital is the only other entity with comparable GBTC holdings, having amassed over 21 million shares – some 6.26% of GBTC at the time – by June. (Grayscale and CoinDesk are both wholly owned by Digital Currency Group.)

Banking blockchain
JPMorgan is inviting 400-plus financial institutions (including 25 of the largest 50 banks) to start building on top its revamped blockchain network, Liink. Designed to connect banks in a peer-to-peer fashion and help them remove the pain points from cross-border payments, the closed source Liink is more of a “decentralized network” and less like a “central command product,” Christine Moy, head of Liink, told CoinDesk’s Ian Allison. “Think of it as the foundation of an enterprise mainnet.” The interbank transfer system is aimed as a complement of – but could be a killer to – SWIFT. 

Power hire
The one-time New York State finance regulator who shepherded the state’s BitLicense through its early days will join tech ventures fund Andreessen Horowitz (a16z) to focus on cryptocurrency companies. An a16z blog post said the fund’s new chief regulatory officer, Anthony Albanese, will focus on crypto portfolio companies in “gaming, digital storage, payment systems, social media, creative marketplaces and more.” “We’re seeing so much happening in the frontier areas like DeFi and stablecoins but also among the legacy financial services institutions from PayPal to JPMorgan,” said Katie Haun, an a16z general partner. “He’s really the perfect addition at the perfect time.”

Quick bites

• MicroStrategy is looking to add to its $521 million stash of bitcoin, the company’s president said Tuesday. The company has already seen a 22% return on its initial BTC buy. (CoinDesk)
• Australia’s largest stock exchange operator, ASX Ltd., has delayed the rollout of its blockchain-based trading platform until April 2023. Surging pandemic-led trading volumes would strain the in-development platform, it said. (CoinDesk)
• U.S. President Donald Trump’s campaign website was briefly compromised on Tuesday, as hackers looked to fleece cryptocurrency from unsuspecting supporters in the final days before the 2020 election. (CoinDesk)
• Malta, once a hub for crypto company registrations, has approved its first regulated crypto public offering: VAIOT, a blockchain and AI-powered services business. Decrypt asks whether Malta’s Initial Virtual Financial Assets Offering (IVFAO) is the new ICO.
• Messari explores how “DeFi Citadels” create and capture value. “The core of this business model is a protocol’s balance sheet, which can be defined as [total value locked]…” (paywalled)

At stake

Personhood proof
Yesterday, Paula Berman, a co-founder of Democracy Earth, and Divya Siddarth, a researcher at Microsoft’s Office of the CTO, published an essay in CoinDesk detailing an answer to a long-standing question in internet development: How do you know you’re not talking to a dog on the internet? 

Related: Blockchain Bites: JPM Coin Goes Live, Bitcoin Rallies, Stocks Falter

Explaining the concept of “proof-of-personhood,” the authors aim to outline a new model of consensus that authenticate digital identities, using actual human traits. 

Currently, authentication systems rely on algorithms or third party credentials – often provided by centralized firms like Facebook or Twitter – to provide a layer of trust. As we’ve seen by the rise of disinformation and scams, it’s shaky at best.

Further, because the current systems of identity rely on the disclosure of personal and private information to an identifier, it opens our lives to a degree of surveillance never before possible. 

“Identity is one of our most fundamental human rights. Yet, in the age of surveillance, commodification and centralization it is under threat,” they write.

Their solution, proof-of-personhood, explained for the first time as part of CoinDesk’s Internet 2030 series, outlines ways to form identities around subjective, rather than objective, metrics. “Instead of being generated and solved by computation, they are created and unlocked exclusively by the distinctive cognitive abilities of human brains,” they write.

In turn, rather than having the web as a field of exploitation, by matching real-world identities to digital ones, in ways that preserves privacy and human dignity, will “foster prosocial, community-oriented behavior, where both users and applications are significantly limited in their ability to exploit and attack each other.”

The authors also go into the areas where blockchains and other decentralized tools, as well as AI, have already failed to meet this need. If you’re interested in the idea of digital utopias, I suggest you read the entire article. 

Market intel

Overbought bitcoin?
A key indicator shows bitcoin’s recent rally is not overstretched. The “market value to realized value” (MVRV) Z-score – a measure used to assess undervalued and overvalued conditions – is showing bitcoin at lower levels than one would expect, if this were a market top, CoinDesk’s Omkar Godbole reports. Hovering at two-year highs at 2.12, bitcoin is still well below the 7.0 score at which an asset is considered overbought. “Put simply, the cryptocurrency is slightly overvalued but still has plenty of room to extend the run of gains from the low of $3,867 seen since mid-March,” Godbole writes.

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Coinbase is launching its Visa debit card in the U.S. early next year.

The card will be available in all states except Hawaii and comes with a new rewards feature – 4% back in stellar or 1% back in bitcoin.

Coinbase Card has been active in the U.K. and European Union since April 2019 and currently operates in 30 countries. The card’s planned U.S. rollout comes on the heels of PayPal’s entry to the cryptocurrency sector, with the fintech giant opening bitcoin payments to its network of 26 million merchants.

Related: Coinbase Goes Down as Bitcoin Approaches 2019 Highs

American customers will be able to manage their cards directly through their Coinbase accounts. Any cryptocurrencies that Coinbase supports in the U.S. (and that a user holds in their account) can be spent through the debit card. 

“Industry trends illustrate increased consumer activity,” Coinbase spokesperson Crystal Yang said in an emailed statement. “Now Coinbase is taking mainstream adoption of crypto one step further by introducing Coinbase Card in the U.S.”

The card is issued by South Dakota-based MetaBank and powered by payments platform Marqeta. 

Stepping back, cryptocurrencies in the U.S. are treated like property, and the Internal Revenue Service (IRS) taxes their capital gains whenever they’re bought and sold. Coinbase did not respond to questions about how the company would account for U.S. tax laws with the new product.

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Gemini, the cryptocurrency exchange founded by the Winklevoss brothers, has launched trading denominated in the euro.

• In an announcement Wednesday, the company said all listed cryptocurrencies could be purchased and traded with euros.
• Euro deposits can be made via both SWIFT or SEPA transfers.
• The exchange’s pro-level platform ActiveTrader has also listed pairs for the euro against bitcoin and ethereum (as well as GBP against the same two crypto assets).
• Roughly a month ago, Gemini also added pounds sterling for the U.K. market, having recently been granted an electric money institution license.
• Over in the U.S., Gemini also recently added “shielded” zcash withdrawals, allowing users to use the privacy-enhancing cryptocurrency without disclosing their identities or the size of their transactions.

Also read: Bitstamp Names Gemini Alum Julian Sawyer as CEO

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Bitwise Asset Management, a provider of cryptocurrency index funds to professional investors, now manages over $100 million in assets.

• The level is a record for the company and comes amid rising demand from hedge funds, financial advisors and multifamily offices, according to a press release.
• The major recipient of the increased inflows has been the diversified Bitwise 10 Crypto Index Fund, which tracks bitcoin, ethereum, litecoin and other top-10 cryptocurrencies by market value.
• “We’re reaping the harvest of two years of building infrastructure in this space,” Bitwise Chief Investment Officer Matt Hougan, told CoinDesk in a phone interview. “It’s no surprise that we’re hitting multiyear highs.” 
• The surge in Bitwise’s assets under management has happened alongside an increase in institutional participation in the top cryptocurrency.
• Several public companies, including the likes of MicroStrategy and Square, have recently disclosed their bitcoin investments, providing a vote of confidence in bitcoin’s long-term value as an inflation hedge.
• “That has convinced many who were previously cautious that it’s time to reevaluate,” Bitwise Chief Executive Officer Hunter Horsley said in the press release.
• Bitwise has failed in its attempts to win approval from the U.S. Securities and Exchange Commission for a bitcoin-focused exchange-traded fund.

Read more: Bitwise Bitcoin Fund Doubles to $9M as Investor Fears Grow Over Runaway Inflation

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Bitcoin has pulled back sharply from 16-month highs reached early Wednesday alongside heightened coronavirus-induced risk aversion in global stock markets.

• At the current price of $12,980, the top cryptocurrency by market value is down over 5% on the day and 7% from the Asian session high of $13,857. That was the highest level since June 2019, according to CoinDesk’s Bitcoin Price Index.
• The cryptocurrency looked overbought and vulnerable to minor pullback early today, having rallied by over 20% this month alone.
• However, the pullback’s magnitude is likely being amplified by the losses in the global stock markets.
• Wall Street’s benchmark equity index S&P 500 is down over 2% at press time, and the pan-European Euro Stoxx 50 index has shed 4%. Meanwhile, the anti-risk sentiment is boding well for haven assets like the U.S. dollar, Japanese yen, and U.S. Treasury bonds.
• The dollar index, which tracks the greenback’s value against major currencies, is up over 0.5% at 93.50, while the U.S. 10-year yield is down nearly three basis points.
• However, gold, also a haven asset, is struggling to draw bids and is trading at $1,876, down 1.7% on the day.
• Risk appetite has weakened as the second wave of the coronavirus is accelerating across Europe and in the U.S. and threatening to derail the fragile global economic recovery.
• According to Reuters, France and Germany are preparing to reimpose economically painful lockdown restrictions.
• While the possibility of bitcoin extending losses on continued risk aversion cannot be ruled out, fundamental metrics like the market value to realized value Z-score indicate the broader trend for the cryptocurrency is bullish.

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The one-time New York State finance regulator who shepherded the state’s BitLicense through its early days will join tech ventures fund Andreessen Horowitz (a16z) to focus on cryptocurrency companies.

• An a16z blog post said the fund’s new chief regulatory officer, Anthony Albanese, will focus on crypto portfolio companies in “gaming, digital storage, payment systems, social media, creative marketplaces and more.”
• Albanese most recently led the New York Stock Exchange’s regulatory division. He had previously served as acting superintendent for the New York State Department of Financial Services during the BitLicense’s 2015 launch.
• “We’re seeing so much happening in the frontier areas like DeFi and stablecoins but also among the legacy financial services institutions from PayPal to JPMorgan,” said Katie Haun, an a16z general partner. “He’s really the perfect addition at the perfect time.”
• The Wall Street Journal reports Albanese will start at a16z in November.

See also: PayPal’s Move Is Good for Crypto Adoption but Not So Much for Profits: Morgan Stanley

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Medici Ventures has completed an $8 million equity purchase in Barbados-based Bitt, bringing it a controlling interest in the blockchain firm.

Medici’s latest investment will help it chase market opportunities around the adoption of digital currencies in developing countries, the Overstock subsidiary said in an announcement Wednesday.

“Bitt’s pioneering work in the central bank digital currency space promotes social inclusion, financial empowerment and economic growth,” said Overstock CEO and Medici Ventures President Jonathan Johnson. “It is the perfect use case for blockchain technology.”

Related: Gemini Exchange Launches Crypto Trading Against the Euro

With its controlling interest in Bitt, Medici indicated it aims to help support Bitt’s bid to accelerate central bank digital currency growth.

The equity investment follows a $4 million purchase in 2016 and another in 2018 for $3 million.

Bitt was founded in 2013 and sets out to provide the infrastructure to “support a digital financial ecosystem throughout the Caribbean.”

Last March, Bitt inked a deal with the Eastern Caribbean Central Bank to pilot a “securely minted” and issued digital version of the Eastern Caribbean dollar designed to be distributed across the region.

Related: Former BitLicense Chief to Manage Andreessen Horowitz’s Cryptocurrency Efforts

The Caribbean dollar is being designed to facilitate peer-to-peer transactions between merchants and consumers using smartphones.

Bitt will remain in Barbados following the deal, while its president, Brian Popelka, will also become the blockchain firm’s new CEO.

See also: Central Bank of Bahamas Launches Landmark ‘Sand Dollar’ Digital Currency

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A new trading product from Hxro (pronounced “hero”) and leading derivatives exchange FTX bets that retail cryptocurrency traders would play the options markets if only trading options were a simpler ordeal.

In partnership with FTX, Hxro built its product TixWix to target a “global retail audience” of would-be crypto options traders by distilling complex market data in a format familiar to anyone who uses other prediction and betting platforms for sports, politics, etc., CEO Dan Gunsberg told CoinDesk.

Hxro entered the cryptocurrency trading market in March 2019 with its gamified binary futures product MoonRekt, as CoinDesk reported, which launched to a waiting list of more than 100,000 users. Since starting the company, Hxro’s co-founders Gunsberg and Rob Levy have relied on their prior careers as traders in traditional markets to design novel products for crypto traders.

Related: Market Wrap: Bitcoin Has Light Response to OKEx While Ether Options Traders Make Beacon Bets

Their new product, announced Wednesday, leverages FTX’s back end to support an options trading interface that abstracts away the “complexities of non-linear risk factors” and “complexity around the Greeks,” Gunsberg said, referring to common measures of risk – delta, theta, gamma and rho – used by options traders.

Instead of an otherwise complicated options contract with a 5% chance of expiring at a given price, for example, TixWix serves the same trade as a simple bet with 20-to-1 odds, Levy explained.

At launch, the new product supports bitcoin and ether markets with two types of bets: Tix, a bet that the market will close above a certain price by a given date, and Wix, a bet that the price will touch a certain price at some point before a given date.

TixWix is the first instance of FTX serving as a back-end provider, CEO Sam Bankman-Fried told CoinDesk. His exchange already has experience offering with betting and prediction markets, however, with its increasingly popular U.S. presidential election markets that have seen record volumes ahead of the Nov. 3 event.

Related: Crypto Traders Bet on US Election as FTX Prediction Markets Hit Record Volumes

More broadly, TixWix is a bet by both teams on the future growth of the general cryptocurrency options market, Levy told CoinDesk. “There’s enormous upside for options trading products in crypto. Options are an extremely powerful, useful tool.”

The size of options trading in traditional markets is one reason Levy expects significant growth in crypto options. “The explosion of stock options that we’ve seen in legacy markets is about to be seen in crypto,” Levy said. “You need liquidity for that to happen, and we’re starting to see real liquidity come into crypto.”

With the crypto options market set to balloon, Hxro and FTX plan to make it easily playable even by amateur traders through “livestreaming simplified market odds” on TixWix.

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ConsenSys, a company that develops for Ethereum and funds ecosystem startups, is to help French bank Societe Generale carry out research on a central bank digital currency (CBDC).

• Announced in a blog post on Wednesday, ConsenSys will work with Societe Generale – Forge, the bank’s digital assets arm, providing technology and expertise as part of ongoing CBDC pilot efforts.
• ConsenSys will be involved in work looking at CBDC issuance and management, delivery versus payment and cross-chain interoperability.
• Societe Generale – Forge has previously issued bonds worth millions of euros over a blockchain, with one of the initiatives being in collaboration with France’s central bank.
• According to a report in September, ConsenSys was chosen to work with the Hong Kong Monetary Authority on a different CBDC pilot, looking at how blockchain might facilitate cross-border payments between commercial banks.
• The developer also acquired JPMorgan’s blockchain platform Quorum this summer – that’s the platform on which the investment bank’s JPM Coin cryptocurrency was built.
• The first commercial use of JPM Coin is expected within the week, JPMorgan executives said Tuesday.

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A historically reliable fundamental analysis indicator suggests bitcoin’s rally has scope to continue after its rapid rise to new 2020 highs, contradicting signals on the technical charts.

• While bitcoin’s “market value to realized value” (MVRV) Z-score is hovering at two-year highs at 2.12, according to data source Glassnode, that’s still well below the 7.0 score at which an asset is considered near a top.
• The MVRV Z-score measures the deviation of market value from realized value, and is used to assess undervalued and overvalued conditions.
• Put simply, the cryptocurrency is slightly overvalued but still has plenty of room to extend the run of gains from the low of $3,867 seen since mid-March.
• The indicator backs up billionaire hedge fund manager and philanthropist Paul Tudor Jones’ recent comments that bitcoin’s rally has just begun.

• Historically, an MVRV Z-score below zero has marked bear market lows, while a reading above 7 has marked major bull market tops.
• The Z-score fell below zero, indicating undervalued conditions following the March 12-13 crash, which saw prices fall as low as $3,867.
• Since then, the cryptocurrency has largely stayed on an uptrend.

Conflicting signals

• Bitcoin’s 14-week relative strength index (RSI), a popular gauge of price momentum, has crossed above 70.00 on the charts.
• According to the technical analysis (TA) theory, an above-70 figure is a sign an asset is overbought.
• The 14-day RSI, too, is flashing a similar signal.
• TA studies, however, are lagging indicators as they are based on price and relatively less reliable.
• “In a trending market, indicators such as the RSI can remain in an ‘overbought’ or ‘oversold’ state for extended periods of time,” trader and analyst Nick Cote told CoinDesk.
• Bitcoin’s current uptrend looks strong because it’s backed by increased institutional participation and expectations for mainstream adoption.
• Online payments giant PayPal recently announced support for bitcoin and other cryptocurrencies.

• The overbought signal does not imply a bearish reversal, but may yield a minor pullback or consolidation similar to those seen in May and August.
• “For bitcoin, institutionalization is the primary driver for growth in this next bull market. As such, it’s better to observe on-chain metrics,” Cote said.
• At press time, bitcoin is trading lower near $13,520, having narrowly missed breaching the June 2019 high of $13,880 during the Asian trading hours.
• Disclosure: The author holds small positions in bitcoin and litecoin.

Also read: Bitcoin Hits 16-Month High Despite Sell-Off in Global Stocks

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Australia’s largest stock exchange operator, ASX Ltd., has once more opted to delay the rollout of its in-development blockchain-based trading platform.

• As reported by Reuters on Wednesday, the operator of the Australian Securities Exchange said it was eyeing a new date of April 2023 due to higher levels of demand than expected.
• “The industry … requested substantially more post-trade processing capacity than what had been contemplated pre-COVID-19,” the operator said in Reuters’ report.
• ASX said there had been “extreme increases” in trading volumes on stock exchange during the “most volatile period of the pandemic in March.”
• The distributed ledger technology (DLT)-based system is intended to replace the ageing Clearing House Electronic Subregister System (CHESS), and is intended to provide a range of benefits including making settlements on the exchange much faster.
• ASX Ltd has pushed back the release of its new systems on multiple occasions including in September 2018 and this year where it again cited the COVID-19 crisis.
• At the start of October, Australia’s central bank and securities regulator had called on ASX to launch the DLT system as soon as safely possible.

See also: Australia’s Central Bank Tells ASX to Push On With Delayed DLT Trading Platform

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U.S. President Donald Trump’s campaign website was briefly compromised on Tuesday, as hackers looked to fleece cryptocurrency from unsuspecting supporters in the final days before the 2020 election.

• The attack, which lasted less than 30 minutes, saw the website defaced with messages claiming the hackers had compromising information on Trump and his family.
• As reported by The New York Times, the hackers were soliciting donations in the monero cryptocurrency due to privacy enhancing properties that make it hard to trace.
• The cybercriminals said they had compromised “multiple devices” giving them access to the “most internal and secret conversations” of the president and his inner circle.
• Onlookers were given a choice: they could either donate Monero to a wallet that prompted the hackers to “share the data” or another wallet asking them to keep it private.
• Trump’s administration was accused without evidence of participating in the spread of COVID-19 and collaborating with “foreign actors manipulating the 2020 elections.”
• The New York Times also reported the website takeover and subsequent solicitation of crypto donations appeared to be a variation on the common crypto “giveaway” scam.
• Such scams ask people to send money to a particular address with the false promise of doubling or returning a victim’s funds.
• Similar attacks hit major accounts on Twitter back in July, including that of Joe Biden.
• The source of the attack is unclear, but an investigation is currently underway by U.S. law enforcement.
• The incident comes as the U.S. presidential election campaign between incumbent Donald Trump and former Vice President Joe Biden enters its last week.
• Biden is far ahead of Trump when it comes to donations, according to another NYT article.

See also: Election 2020: What’s at Stake for the Crypto Industry

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“Think of it as the foundation of an enterprise mainnet.” 

That’s how Christine Moy, head of JPMorgan’s newly rebranded Liink banking network, described its aspirations towards decentralization in the realm of big business.

The revamped Liink, which is based on a fork of Ethereum, is more of a “decentralized network,” said Moy, and less like a “central command product.” As such, Liink now invites its 400-plus financial institutions (including 25 of the largest 50 banks) to start building on top of the platform. 

Related: JPMorgan Launches JPM Coin: Welcome to the Private Currency Era

“Liink participants have the ability to build applications on the network, and in doing so are able to spotlight their local expertise with global reach,” said Moy. “If a Liink participant has specific expertise around payments in a particular region or currency, for example, it has the opportunity to build an application and deploy it on Liink to make it available to the network.”

Read more: JPMorgan’s ‘JPM Coin’ Is Live, Execs Say

Formerly known as the drably named Interbank Information Network, Liink was designed to connect banks in a peer-to-peer fashion and help them remove the pain points from cross-border payments and other functions.

While Liink is not open-source like Quorum or, say, R3’s Corda network, JPMorgan is encouraging collaboration within the network and also expanding it beyond banks. 

Related: JPMorgan’s ‘JPM Coin’ Is Live, Execs Say

“The focus has been on building a peer-to-peer network for cross-border payments, thus the original name, Interbank Information Network, but we are now also incorporating corporates and fintechs into the Liink ecosystem as well,” said Moy.

JPM’s next step?

JPMorgan, which is famous in the blockchain world for creating the Ethereum-based Quorum network, released a flurry of news Tuesday, the headline being that its wholesale banking digital currency JPM Coin is now live. But also that all Quorum-based services now fall under the new Onyx brand. 

“Liink as a new brand comes at a pivotal time, as we look to re-architect how money, information and assets move across the globe,” Umar Farooq, CEO of Onyx, said in a statement.

On the subject of JPM Coin complementing the Liink network, Moy said: 

“The Liink network is live for peer-to-peer information transfer. JPM Coin is obviously value transfer. As part of the broader Onyx organization, we are focused on a coherent client product experience.” 

It’s a lingering question: How might JPMorgan’s various blockchain services be combined into a greater sum than their parts? JPMorgan declined to comment further. 

As well as rebranding, Liink introduces a couple of new features: Confirm, which allows for the validation of account information prior to initiating a payment, and Format, which helps ensure a payment message accurately conforms to country- and currency-specific requirements.

The Confirm application matches data requesters, looking to validate account owners and FX particulars, with data responders, who are incentivized to help because they can earn a cut of fees for validating that information.

“This is a blockchain-based, multi-party network so you have the ability to get a response from multiple different banks on the network, or for that matter tech companies,” said Moy. “Enabling our Liink participants to potentially create new revenue streams, we think, is a differentiator from other offerings where a central party controls the flow.”

All told, it looks like JPM’s Liink is shaping up to be a potential SWIFT killer.

“Liink’s original use cases were modeled by JPMorgan for banks,” said Moy. “We’ve paid special attention to some of the specific mechanisms of how we would design this application as a result,” she said, adding:

“The aim is not to replace SWIFT but rather to complement it.”

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