CoinDesk Crypto

Crypto custodian BitGo is moving into the prime brokerage space, announcing a fully integrated suite of services Wednesday to serve institutional traders.

The services will be offered by BitGo Prime, a new entity that will be headed by Nick Carmi, BitGo’s head of financial services. Carmi joined the firm last year after stints at various banks and other financial institutions.

BitGo Prime has already launched crypto lending services, and plans to expand these as well as build liquidity on its platform this year.

Related: Coinbase Buys Tagomi as ‘Foundation’ of Institutional Trading Arm

BitGo CEO Mike Belshe told CoinDesk said building a prime brokerage in the crypto space is a difficult undertaking, at least in part because the overall infrastructure is still relatively young. In his view, a true prime brokerage begins with regulated custody, followed by lending and borrowing services.

He said the company’s recent acquisition of tax management provider Lumina might have been “the biggest part” of its prime brokerage announcement.

See Also: BitGo Cements Hold on Institutional Market With Lumina Acquisition

“They had already had some elements of trade but it fits in well with the portfolio views that we’re doing,” he said. “We’re trying to shift the overall product focus from like ‘here’s our wallets,’ … [to] more about like ‘what’s your overall portfolio?’”

Related: Crypto Custodian Anchorage Teases Growth Plan With 2 Executive Hires

BitGo Prime offers trading on a fully non-disclosed basis, he said, meaning that while BitGo knows who its clients are through its know-your-customer/anti-money laundering measures, the outside world is not privy to which companies are conducting a given trade.

Carmi said the services are targeted to institutional investors already familiar with the prime brokerage model.

“You can trade right now out of your cold storage,” Carmi said. “Operational security is there, operation controls are there, it’s an insured wallet, right, to be protected and nobody knows whether it’s you buying or you selling because all they see in the market is BitGo buying.”

Bridging finance

The company has been building out the brokerage for a few years, Carmi told CoinDesk. The current phase of BitGo Prime’s rollout enables trading, and the new entity is looking to aggregate pricing from “multiple reputable counterparties, market makers and exchanges.”

While Carmi said these market makers are “big names,” he said he wasn’t currently able to name them publicly.

Belshe said the company’s next task would be attracting more financially conservative clients. This should happen as the company builds out its infrastructure and regulations around the space improve.

“I think traditionally we’ve had the problem of you’ve got this separation of crypto on this side and you know traditional assets on this side and never too shall meet,” he said. “I think we are starting to see some good signs that there’s going to be crossover.” 

Interest from the traditional asset side has been picking up, Belshe said. Investor Paul Tudor Jones’ recent announcement that he was hedging using bitcoin was “huge for the industry.”

“I guarantee you that every hedge fund manager if they weren’t already allocated some way in crypto they’re looking at it now,” he said. 

See Also: BitGo Acquires Harbor in Surprise Expansion Beyond Crypto Custody

JPMorgan banking exchanges Gemini and Coinbase are another positive sign for the industry, and BitGo itself has heard from investment banks recently, he said. (Belshe said he could not name the banks.)

BitGo isn’t the only company sensing this interest: Genesis Trading (a subsidiary of CoinDesk parent company DCG), Bequant and Coinbase all recently announced their own intentions to offer prime brokerage services. In the cases of Genesis and Coinbase, the moves come after the acquisitions of crypto custodian Vo1t and Tagomi, respectively.

And while Belshe cautioned that “it’s going to take a long time” to bring conservative clients into the space, current events are raising interest in bitcoin as a hedge, he said, referencing the economic fallout from the COVID-19 pandemic.

“We’re in a place of massive uncertainty,” he said. “35 million, maybe 40 million unemployed here in the U.S., we don’t know how long this is going to go on and I don’t we’ve been printing at the federal level across the globe at [these] levels, we’ve just literally never ever seen before.”

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Bitcoin traders should keep an eye on the ongoing slide in the yuan, analysts say.

That’s because, historically, the cryptocurrency looks to have put in a positive performance during bouts of weakness in the Chinese currency.

The yuan (CNY) fell to 7.1613 per U.S. dollar earlier on Tuesday to hit the lowest level since early September and taking its cumulative month-to-date and year-to-date losses to 1.4% and 2.85%, respectively. 

Related: Goldman Sachs: Cryptocurrencies ‘Are Not an Asset Class’

The decline to eight-month lows could be associated with concerns about the U.S. response to China’s proposed security law for Hong Kong and the resulting haven demand for the greenback. U.S. Sen. Marco Rubio (R-Fla.) put out a tweet late Tuesday stating the U.S. would impose sanctions on China if the nation presses forward with implementing the controversial Hong Kong bill. 

“If China’s CNY continues to weaken against USD, then we could have a 2015 and 2016 repeat, where BTC strength coincided with yuan weakness,” tweeted Chris Burniske, partner at venture capital firm Placeholder.

The above chart shows bitcoin and USD/CNY moving in tandem in 2015 and 2016. 

In August 2015, the People’s Bank of China (China’s central bank) surprised markets by devaluing CNY by 3.5%. The Chinese currency ended 2015 with an over 5.5% loss against the dollar, while bitcoin gained 34%. 

Related: Bitcoin Transaction Fees Decline as Network Congestion Eases

Another wave of yuan devaluation rocked financial markets in early 2016 and the currency ended that year with a 7% loss. Again, bitcoin rallied by nearly 125%. 

So there appears to have been a correlation between the two assets in 2015 and 2016. However, correlation does not necessarily imply causation, meaning there may or may not be a cause and effect relationship between the two. 

Read more: Chinese Government Advisers Propose Regional Stablecoin for 4 Asian Countries

Some analysts have long argued that CNY depreciation leads to increased flow of money into bitcoin from China. 

For instance, CNY fell below 7 per dollar for the first time in 10 years on Aug. 5, 2019, amid the U.S.-China trade war. On that day, bitcoin rallied by 7% and the uptick began an hour before the yuan dropped below the key level. As a result, some observers, including prominent analyst Alex Kruger, wondered whether bitcoin had front-run the slide. 

“Last year we witnessed flows from CNY to BTC during the trade tariff saga,” Matthew Dibb, co-founder of Stack, a provider of cryptocurrency trackers and index funds, told CoinDesk Wednesday. 

Skeptics, however, would counter that claim by saying the uptick seen on Aug. 5 was short-lived and the cryptocurrency suffered sharp losses in the following four months despite the yuan’s continued decline to new multi-year lows near 7.20 per dollar. 

Essentially, the positive correlation between USD/CNY and bitcoin did not hold ground in the second half of the last year. Furthermore, both bitcoin and the yuan suffered losses in 2018.

It could be argued the yuan slide seen in 2015 and 2016 merely coincided with the uptick in bitcoin, which was fueled by the bullish frenzy surrounding the cryptocurrency’s second mining-reward halving, which took place in July 2016. 

Nevertheless, it may be worth keeping a close eye on the ongoing CNY slide as the narrative that yuan depreciation leads to increased outflows from China is still quite strong. Further, in the crypto markets, bullish narratives have a tendency to become self-fulfilling prophecies, as evidenced by bitcoin’s pre-halving rally. 

Bitcoin a macro asset

In addition, bitcoin may be more sensitive to developments in the yuan market this time round, with the cryptocurrency now a macro asset class this year following an increase in institutional participation. 

“It’s no longer possible to analyze the crypto market without analyzing the rest of the macro markets,” Messari analysts said in their Tuesday’s newsletter. “The 2020 recession officially marks the beginning of bitcoin as a macro asset class. For retail investors and institutional investors, crypto isn’t the only asset class in their portfolio. Therefore, it’s crucial to look at crypto from a portfolio allocation perspective.” 

Indeed, legendary fund managers like Paul Tudor Jones II have recently thrown their weight behind bitcoin, seeing it as a hedge against inflation.

“Bitcoin reminds me of gold when I first got into the business in 1976,” Jones said. Gold, a precious metal with limited supply, tends to gain value during bouts of fiat currency devaluation. 

Bullish macros?

Some analysts expect CNY to slide further on escalating U.S.-China tensions and power gains in the cryptocurrency.

“As the USA and other countries retaliate against China’s proposed security law, our expectation is to see a continued depreciation of the yuan, while BTC could benefit once again as a local and liquid safe-haven asset alternative,” said Dibb. 

Read more: Number of Bitcoins on Crypto Exchanges Hits 18-Month Low

Meanwhile, Phillip Gillespie, CEO of B2C2 Japan, told CoinDesk he is personally bullish on bitcoin due to the combination of excess money printing by central banks and pick up in geopolitical risks.

“I expect serious anti-Chinese rhetoric in the coming days/weeks/months as [U.S. President Donald] Trump tries to use nationalism/protectionism and anger towards China as a major catalyst for support,” said Gillespie, while adding that we would soon find out whether there’s a positive correlation between USD/CNY and bitcoin returns.  

Bitcoin holds steady

While the expectations may be bullish, so far, the cryptocurrency has not been able to gather upside momentum. 

At press time, the cryptocurrency is trading near $8,930, representing a 0.29% drop on the day. The short-term technical outlook has turned bearish following Sunday’s break below an ascending trendline connecting the March 13 and April 21 lows. 

While Clem Chambers, founder and CEO of financial markets website ADVFN.com, believes the premise for bitcoin strength amid the yuan’s weakness may be valid, he’s concerned liquidity coming into bitcoin will remain low in China for some time due to coronavirus outbreak.

“I think BTC might have its new short-term range in place, but we will have to wait [a few weeks] till the second virus wave … if there is one, and that seems likely, to gauge what happens next,” said Chambers.

Related Stories

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Bitcoin traders should keep an eye on the ongoing slide in the yuan, analysts say.

That’s because, historically, the cryptocurrency looks to have put in a positive performance during bouts of weakness in the Chinese currency.

The yuan (CNY) fell to 7.1613 per U.S. dollar earlier on Tuesday to hit the lowest level since early September and taking its cumulative month-to-date and year-to-date losses to 1.4% and 2.85%, respectively. 

Related: Number of Bitcoins on Crypto Exchanges Hits 18-Month Low

The decline to eight-month lows could be associated with concerns about the U.S. response to China’s proposed security law for Hong Kong and the resulting haven demand for the greenback. Senator Marco Rubio put out a tweet late Tuesday, stating that the U.S. would impose sanctions on China if the nation presses forward with implementing the controversial Hong Kong bill. 

“If China’s CNY continues to weaken against USD, then we could have a 2015 and 2016 repeat, where BTC strength coincided with yuan weakness,” tweeted Chris Burniske, partner at venture capital firm Placeholder.

The above chart shows bitcoin and USD/CNY moving in tandem in 2015 and 2016. 

In August 2015, the People’s Bank of China (China’s central bank) surprised markets by devaluing CNY by 3.5%. The Chinese currency ended 2015 with an over 5.5% loss against the dollar, while bitcoin gained 34%. 

Related: First Mover: EOS Has Still to Prove Itself After Spiraling Down This Past Year

Another wave of yuan devaluation rocked financial markets in early 2016 and the currency ended that year with a 7% loss. Again, bitcoin rallied by nearly 125%. 

So, there appears to have been a correlation between the two assets in 2015 and 2016. However, correlation does not necessarily imply causation, meaning there may or may not be a cause and effect relationship between the two. 

Some analysts have long argued that CNY depreciation leads to increased flow of money into bitcoin from China. 

For instance, CNY fell below 7 per dollar for the first time in 10 years on Aug. 5, 2019, amid the U.S.-China trade war. On that day, bitcoin rallied by 7% and the uptick began an hour before the yuan dropped below the key level. As a result, some observers, including prominent analyst Alex Kruger, wondered whether bitcoin had front-run the slide. 

“Last year we witnessed flows from CNY to BTC during the trade tariff saga,” Matthew Dibb, co-founder of Stack, a provider of cryptocurrency trackers and index funds, told CoinDesk Wednesday. 

Skeptics, however, would counter that claim by stating that the uptick seen on Aug. 5 was short-lived and the cryptocurrency suffered sharp losses in the following four months despite the yuan’s continued decline to new multi-year lows near 7.20 per dollar. 

Essentially, the positive correlation between USD/CNY and bitcoin did not hold ground in the second half of the last year. Furthermore, both bitcoin and the yuan suffered losses in 2018.

It could be argued that the Yuan slide seen in 2015 and 2016 merely coincided with the uptick in bitcoin, which was fueled by the bullish frenzy surrounding the cryptocurrency’s second mining reward halving, which took place in July 2016. 

Nevertheless, it may be worth keeping a close eye on the ongoing CNY slide as the narrative that yuan depreciation leads to increased outflows from China is still quite strong. Further, in the crypto markets, bullish narratives have a tendency to become self-fulfilling prophecies, as evidenced by bitcoin’s pre-halving rally. 

Bitcoin a macro asset

In addition, bitcoin may be more sensitive to developments in the yuan market this time round, with the cryptocurrency now a macro asset class this year following an increase in institutional participation. 

“It’s no longer possible to analyze the crypto market without analyzing the rest of the macro markets,” Messari analysts said in their Tuesday’s newsletter. “The 2020 recession officially marks the beginning of Bitcoin as a macro asset class. For retail investors and institutional investors, crypto isn’t the only asset class in their portfolio. Therefore, it’s crucial to look at crypto from a portfolio allocation perspective.” 

Indeed, legendary fund managers like Paul Tudor Jones have recently thrown their weight behind bitcoin, calling it a hedge against inflation.

“Bitcoin reminds me of gold when I first got into the business in 1976,” Jones said. Gold, a precious metal with limited supply, tends to gain value during bouts of fiat currency devaluation. 

Bullish macros?

Some analysts expect CNY to slide further on escalating U.S.-China tensions and power gains in the cryptocurrency.

“As the USA and other countries retaliate against China’s proposed security law, our expectation is to see a continued depreciation of the yuan, while BTC could benefit once again as a local and liquid safe-haven asset alternative,” said Dibb. 

Meanwhile, Phillip Gillespie, CEO of B2C2 Japan, told CoinDesk that he is personally bullish on bitcoin due to the combination of excess money printing by central banks and pick up in geopolitical risks.

“I expect serious anti-Chinese rhetoric in the coming days/weeks/months as Trump tries to use nationalism/protectionism and anger towards China as a major catalyst for support,” said Gillespie, while adding that we would soon find out whether there’s a positive correlation between USD/CNY and bitcoin returns.  

Bitcoin holds steady

While the expectations may be bullish, so far, the cryptocurrency has not been able to gather upside momentum. 

At press time, the cryptocurrency is trading near $8,930, representing a 0.29% drop on the day. The short-term technical outlook has turned bearish following Sunday’s break below an ascending trendline connecting the March 13 and April 21 lows. 

While Clem Chambers, founder, and CEO of financial markets website ADVFN.com, believes the premise for bitcoin strength amid the yuan’s weakness may be valid, he’s concerned that liquidity coming into bitcoin will remain low in China for some time due to coronavirus outbreak.

“I think BTC might have its new short-term range in place, but we will have to wait [a few weeks] till the second virus wave … if there is one, and that seems likely, to gauge what happens next,” said Chambers.

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The largest commercial port operator in India has teamed up with blockchain-based logistics platform TradeLens in an effort to digitize its supply chains.

Adani Ports and Special Economic Zone Ltd. (APSEZ) joined the shipping-focused platform – jointly founded by IBM and Maersk in 2018 – to shore up its processes after issues became apparent during the coronavirus crisis.

“During the pandemic, we realized the price of not digitizing the industry,” said an unnamed logistics industry official, as reported by The Hindu on Wednesday. “There will be a mindset change now and more firms will adopt technology.”

Related: India’s Central Bank Removes Lingering Confusion Over Banking for Crypto Firms

TradeLens will integrate cargo handling facilities run by APSEZ around India onto its platform. These include ports in Gujarat, Odisha, Chennai, Andhra Pradesh and Goa, as well as one under construction at Vizhinjam, Kerala.

The move aims to reduce the time needed for manually processing administrative tasks through digital procedures supported by blockchain technology. In effect, the initiative seeks to modernize supply chain management systems that have proven costly, laborious and prone to error.

See also: PwC Australia, Port of Brisbane Unveil Blockchain Supply Chain Pilot

It’s not the first time a major port operator has adopted the IBM-Maersk platform. In August 2019, the Customs Department of Thailand adopted TradeLens as part of the country’s Thailand 4.0 policy. The largest port in Oman, Salalah, became a member of the shipping project as part of its digital transformation efforts in January.

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Brazilian retail firm Via Varejo has scooped up Boston-based fintech startup Airfox for an undisclosed sum.

The acquisition comes as part of plans by Via Varejo to provide financial services to millions of Brazilians who lack the means to obtain traditional bank accounts, according to a statement released Friday.

The two firms already have a relationship. In June 2019, they launched banQi, a mobile digital banking app in partnership with Mastercard. The app enables customers to use money in their banQi accounts to pay for goods and services in their communities, as well as online and anywhere globally where Mastercard is accepted.

Related: Brazil Regulator Votes to Continue Probe Into Banks’ Rejection of Crypto Firms

See also: Solana Blockchain Adds Korean Stablecoin Terra for Better Payments

Victor Santos, CEO and co-founder at Airfox, told CoinDesk that Airfox’s intention is to provide free bank accounts with “superior services.” As more people bank with the firm, the more affordable credit and adjacent financial services become, he said.

“We can use data from [banQi users] smartphone and behavior within our app to assess credit and give credit digitally. This is something traditional banks struggle with,” according to Santos.

Airfox, which employs around 35 staff, will retain its Boston headquarters and will serve as a “fintech innovation hub.”

Related: JPMorgan Bank Takes on Coinbase, Gemini as Its First Crypto Exchange Customers

Airfox suffered a setback in 2018 after it was ordered to comply and register its initial coin offering (ICO)with the Securities and Exchange Commission (SEC).

In order to settle charges that the regulator previously contended were a breach of securities rules, Airfox agreed to refund investors, file periodic reports to the SEC and pay $250,000 after it was revealed it had raised $15 million through its ICO sale.

See also: Binance-Backed Crypto Payments App Launches as Race for Africa Heats Up

Looking to a brighter future, Santos explained that the acquisition by Via Vajero would bring benefits to the Boston-based fintech.

According to a recent study by Brazilian research firm, Locomotiva Institute, around 45 million Brazilians do not have a bank account or are considered unbanked in a population totaling 209 million people.

“We can have structural advantages of using Via Varejo resources, retail locations, customers, credit and financial service portfolio to accelerate our product and strategy,” he said.

“Airfox is unique with this partnership because we are the only digital bank in the country with access to 1,000+ retail stores from ViaVarejo that almost function as a branch for our users to go in,” Santos said.

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A senior figure at the International Monetary Fund (IMF) believes a digital currency backed by a central bank would open the door to much greater innovation in retail payments.

Tommaso Mancini-Griffoli, the IMF’s deputy division chief in the Monetary and Capital Markets Department, said synthetic CBDCs – digital currencies backed by the liabilities of a central bank, but issued with the aid of a private entity – could provide citizens with a reliable means of payment that simultaneously leverage some of the key competitive advantages of the private sector.

A synthetic CBDC as outlined by Mancini-Griffoli is pretty much a public-private partnership. The idea is a licensed eMoney provider stores client funds in a central bank and, in return, receives a central bank liability they can package however they see fit into a publicly tradeable stablecoin that remains fully-backed by central bank reserves.

Related: Bank of England: No Compromise on Our Principles for Any Future CBDC

Speaking Tuesday morning on The Money Movement, Circle CEO Jeremy Allaire’s new Youtube series, Mancini-Griffoli argued the key benefit offered by a synthetic CBDC, compared to a traditional CBDC – namely, where the central bank is responsible for the entire running of a digital currency – was that it made space for innovation.

Synthetic CBDCs – focusing on retail payments – enable central banks to promote monetary innovation within the confines of a safe and well-regulated environment, he said. In contrast, the traditional idea of a CBDC – which had pretty much “gone out of the door” in Mancini-Griffoli’s opinion – could become “very costly and very risky to the central bank, and it may deter innovation.”

“This public-private partnership [of a synthetic CBDC] is intended to conserve the competitive advantages of the private sector: to interface with clients and innovate, and the comparative advantage of the central bank: to regulate and provide trust,” he said.

See also: Central Banks Mull Creating a CBDC, but Not on a Blockchain: Survey

Related: How the COVID-19 Crisis Revived the Digital Dollar Debate

Other central banks have also mooted the possibility of a role for private companies. The Bank of England (BoE) has suggested there could be areas where a private entity would be far better placed to offer its own monetary solution for customers, as opposed to the central bank itself jumping in.

Even China, a major critic of the Facebook-planned Libra initiative, has carved out a role for a select group of private entities, the Agricultural Bank of China, say, as well as Alibaba and Tencent, to help in the issuance of its own digital yuan to Chinese citizens.

But the key aspect of a synthetic CBDC, so far as the IMF sees it, is that it delegates most of the fundamental functions of a CBDC to the private sector.

At the IMF-Swiss National Bank Conference in May 2019, Tobias Adrian, the IMF’s director of the Monetary and Capital Markets Department – Mancini-Griffoli’s boss – said a notable advantage of a synthetic CBDC was it allowed the central bank to focus only on areas where it offers tangible value: namely, regulatory oversight and settlement.

By offering liabilities wholesale, all other functions that the private sector traditionally excels at, such as customer management, client screening, even the tech design of the CBDC itself, can effectively be outsourced, Adrian added.

In fact, there would be nothing to stop, under the IMF’s interpretation, multiple private companies all issuing digital currencies that are all backed by the same central bank liabilities, and effectively compete with one another.

See also: Sweden’s Central Bank Finally Embraces DLT, but Only in Simulation Mode

Still, there remain some unanswered questions. Chief among them is what the relationship between the public and private sector will ultimately look like. As Mancini-Griffoli highlighted: would a central bank ensure private entities undertake proper due diligence on clients, and would they provide input on what the tech design of the token itself would look like?

It remains hazy on “where do you draw the line of what the public sector does and what the private sector does,” he said.

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The equities markets far outpaced cryptocurrencies Tuesday on optimism that economic restrictions put in place to help slow the spread of the coronavirus are easing.

Bitcoin (BTC) poked its head above the $9,000 level briefly during morning trading in New York but fell to below $8,700 on selling. As of 20:35 UTC (4:35 p.m. ET), bitcoin was trading at $8,846, a loss of 1% over 24 hours.  The largest cryptocurrency by market cap is currently trading below its 10-day and 50-day technical indicator moving averages, a signal of bearish sentiment. 

“Bitcoin failed to break higher and has been bouncing off support in the $8,700 region,” said Max Boonen, CEO of cryptocurrency liquidity provider B2C2.

Related: Bitcoin Bounce Stalls at $9K Amid 2% Rise in S&P 500 Futures

While bitcoin has been trending lower, Tuesday’s big winners are stocks.

The Nikkei 225 in Asia closed trading up 2.2%, with the index hitting a three-month high as Japan ended its pandemic-induced state of emergency measures. The FTSE Eurotop 100 index of Europe’s largest public companies by market cap was also in the green, although up less than a percent. The gain was also attributed to the easing of lockdowns in Europe. 

Read More: Paul Tudor Jones: Bitcoin Is Now the Macro Big Bet

In the U.S. the S&P 500 climbed 1.2% on the day, up 4% for the past month. 

Related: Zcash’s First Halving May Solve Its Inflation Problem

“It’s probably the case that stocks are moving upward in response to increased reopening of the economy, which Wall Street may be taking as a positive sign,” said Danny Kim, head of revenue for exchange aggregator SFOX. “Bitcoin’s minor downward movement, on the other hand, probably has more to do with a loss of momentum than anything else.” 

Since starting the first week of May in tandem, bitcoin and the S&P 500 have been going in opposite directions.

“Bitcoin is not demonstrating correlation to the equity markets at present, given a lot of the smart money is still sitting in stablecoins, particularly tether,” said Chris Thomas, head of digital assets at Swissquote Bank. Indeed, stablecoins are on the rise and tether is leading the way with a $9 billion market capitalization, according to its transparency page. The blockchain-based assets, pegged to the U.S. dollar, are helpful for traders to move balances quickly across different exchange platforms.

There is some looming concern bitcoin’s price will keep sliding downward due to changes in mining economics since the May 11 bitcoin halving. The once-in-four-year event for the Bitcoin network dropped daily new bitcoin generated to reward miners from roughly 1,800 to 900 BTC. At Tuesday’s bitcoin prices, that 900 BTC translates to around $8 million per day. 

Read More: Iranian President Calls for National Crypto Mining Strategy

Miners will have to sell a lot of that bitcoin for cash, according to Swissquote’s Thomas. “Chinese miners who are still running are barely profitable running old technology. They are surviving due to extremely cheap hydro electricity through the Chinese wet season, but will need to continue selling most of their monthly bitcoin gains to pay their operations expenses,” he said. “This will also start weighing on the market.”

Chinese miners make up about 65% of the total bitcoin mining power, according to data provided by pools and collected by the Cambridge Centre for Alternative Finance.

Despite a lower crypto outlook, B2C2’s Boonen says his firm has seen professional traders pick up bitcoin at these prices, possibly because they see a value play. “Against the trend, we have seen light buying of BTC and selling of ETH across our franchise since the weekend,” he told CoinDesk. 

Other markets

Digital assets on CoinDesk’s big board are mostly in the red Tuesday. Ether (ETH), the second-largest cryptocurrency by market capitalization, lost 2.2% in 24 hours as of 20:35 UTC (4:35 p.m. ET). 

The biggest losers in 24-hour trading were ethereum classic (ETC) down 2%, stellar (XLM) slipping 1.4% and iota (IOTA) in the red 1.3%. The few winners on the day include lisk (LSK) gaining 4%, qtum (QTUM) in the green 1% and nem (XEM) climbing less than a percent. All price changes were as of 20:35 UTC (4:35 p.m. ET) Tuesday.

In the commodities sector, oil is up 1%, with the price for a barrel of crude at $34.21 as of press time. Gold experienced heavy selling early in the session, with the yellow metal slipping less than a percent on the day to $1,710 at the close of New York trading. 

Read More: Bitcoin Could Get a Boost From Central Bank Digital Currencies

U.S. Treasury bonds were mixed Tuesday. Yields, which move in the opposite direction as price, were up most on the 30-year, climbing 4.6%.

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Polkadot is now live following the launch of its first “chain candidate” (CC1).

Announced Tuesday, the genesis block of the blockchain-of-blockchains has been mined, according to a blog post from Web3 Foundation, Polkadot’s lead developer. 

“This first stage of Polkadot CC1 provides two key things: Claims & attestation and staking,” Polkadot co-founder Gavin Wood wrote in another post. In other words, Polkadot’s governance parameters are being walked out for the first time with limited functionality.

Related: Parity’s Gavin Wood Takes a Swipe at Ethereum

Wood hinted at the impending soft-launch of the interoperability project earlier this month at the Ready Layer One conference.

Read more: ‘Very Near Launch’: Polkadot Founder Gavin Wood Details Network Rollout

An alternative vision for hosting decentralized applications (dapps), Wood began the development of Polkadot in late 2016. Wood also co-founded Ethereum – including writing the network’s yellow paper and its programming language, Solidity – before becoming disenfranchised with that blockchain’s progression toward a Proof-of-Stake (PoS) consensus algorithm (an overhaul commonly referred to as Eth 2.0). 

“Polkadot CC1 is freshly born; beginning its ‘life’ at 17:36:21, Zug time,” Wood wrote. “We’re now at block #400, with Grandpa and Babe chugging along quite happily. So far so good.”

Related: ‘Very Near Launch’: Polkadot Founder Gavin Wood Details Network Rollout

Polkadot will first launch under a Proof-of-Authority (PoA) consensus algorithm controlled by the Web3 Foundation. The network will test out various “Sudo” modules in the same manner as Polkadot’s experimental Kusama network did in 2019 until a chain candidate is selected.

Read more: Web3’s Gavin Wood Launches Kusama Network to Test Polkadot Protocol

Polkadot will then transition to a PoS consensus algorithm with disbursements of the network’s DOT token, the blog states. Following the network’s $145 million token sale in 2017, the Web3 Foundation has prioritized building out integrations with its Substrate custom blockchain protocol along with “parachain” connections to other blockchains such as Chainlink and the Shyft Network.

Read more: Polkadot to Use Chainlink Oracles for Interoperability Network

“Polkadot is, in many respects, the biggest bet in this ecosystem against chain maximalism,” Wood said in a video interview published today. “Even if there were one perfect chain, I don’t think it would stay perfect for very long. I would argue that it’s really not such a good plan to be so focused on backing one winner above all others.”

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We’re happy to be back after a recharging long weekend. Let’s get to the news.

India’s central bank has clarified its crypto stance, Tencent is looking to invest in “emerging technologies” including blockchain and Facebook’s digital wallet subsidiary announced a rebranding and new details.

You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here. 

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Related: To See Libra’s Potential, Look at the Philippines, Not the US

Libra’s New Face
A statement announcing the rebranding of Facebook subsidiary Calibra to Novi also reveals details of the anticipated wallet product. The Novi wallet will operate as a standalone app, as well as provide interoperability with Facebook’s social messaging apps Messenger and WhatsApp, to make transactions as “easy as sending a message.” Novi customers will need to be verified using a government-issued ID. The wallet will initially be rolled out to a limited number of countries, though the release date still remains unclear.

‘No Such Prohibitions’
India’s central bank has clarified the nation’s new crypto policy, months after the Indian Supreme Court lifted restrictions on banking crypto clients. Commercial banks can indeed provide banking services to traders and firms dealing in cryptocurrencies. “As on date, no such prohibition exists,” the Reserve Bank of India said on May 22. The statement came in response to a query filed by BV Harish, co-founder of the cryptocurrency exchange Unocoin.

Signed Transactions
More than 100 addresses Craig Wright – the self-proclaimed inventor of Bitcoin currently being sued for half of his supposed multi-billion dollar stash of the cryptocurrency – claimed to be his were used to sign a message calling Wright a “fraud” and making it plain that he does not in fact own or control them. The Bitcoin addresses were inadvertently entered into the public record in the ongoing case against Wright. 

Challenging Amazon
In a bid to attract users beyond the cryptoverse, Halsey Minor’s VideoCoin platform will launch Wednesday with fiat payment options. VideoCoin decentralizes the hosting and streaming of video, paying out a native token to participants in the network. “A company like Fox is never going to go to an exchange and buy volatile tokens. You kind of have to be in the crypto world to use crypto projects – and we are trying to break that barrier down,” Minor said. 

Related: First Mover: Bitcoin Could Get a Boost From Central Bank Digital Currencies

Tencent’s Investments
Tencent is investing 500 billion yuan ($70 billion) into “new infrastructure” based on emerging technologies including AI, cloud computing and blockchain over the next five years. The investments are aimed at recovering losses accrued during the coronavirus crisis and “further cement virus containment success,” Tencent’s senior executive vice president Dowson Tong told Guangming Daily.

Bitcoin 401(k)
Bitwage has unveiled a trial of a bitcoin 401(k) plan. The pension plan is supported by crypto exchange Gemini, the custodian service Kingdom Trust, as well as the established pension provider, Leading Retirement Solutions, who keep records for the 401(k) plan with the Department of Labor and the Internal Revenue Service (IRS). 

Trading Currents
Thailand is teaming up with a blockchain firm Power Ledger to encourage peer-to-peer trading of renewable energy. “Blockchain-enabled transactive energy solutions including peer-to-peer (P2P) energy trading, virtual power plants as well as renewable energy certificates and carbon credits trading will be the key to establishing economically viable renewable energy markets,” said the startup’s co-founder, Jemma Green, and help the nation hit its 25% renewable energy target by 2037.

Strategic Investment
India’s largest cryptocurrency exchange, CoinDCX, has secured a $2.5 million strategic investment led by Polychain Capital with support from Coinbase Ventures. The investment will reinforce the exchange’s efforts to drive cryptocurrency adoption in the country after a major legal victory in March.

Telegram Throws in the Towel
Telegram is no longer challenging the Securities and Exchange Commission’s ban on its blockchain token project in the courtroom. On Friday, the company filed an agreement for dismissal without prejudice of a previous appeal challenging the SEC’s prohibition of distributing gram tokens to U.S. investors. 

Supporting Steem?
Binance is forced to “technically” support last week’s hard fork of the Steem blockchain, according to the crypto exchange’s CEO. In a statement on Binance’s official blog Sunday, CEO Changpeng “CZ” Zhao said the exchange is “very much against zeroing other people’s assets on the blockchain,” but to not support it would mean that Binance users would not be able to withdraw their steem tokens.

Louisiana Licensing 
The Louisiana State Senate is about to consider a bill to regulate and license virtual currency businesses. If passed, the legislation would establish Louisiana’s first crypto licensing regime. Crypto businesses would have to apply with the state’s Office of Financial Institutions (OFI), fork over executives’ fingerprints, subject their “experience, character and general fitness” to investigation – and perhaps the business premises as well – and pay a nonrefundable registration fee, among other requirements.

Market Intel

Digitization Boost
Messari analysts wrote a report arguing the “coming digitization of money,” including the launch of CBDCs, could provide a “secular tailwind” for bitcoin. The resilience of cryptocurrencies has catalyzed government investigation into CBDCs, which in turn expose the wider population to the mechanics of cryptocurrencies. CBDCs, “will increase people’s comfort with and understanding of cryptocurrencies, get more people creating and using cryptocurrency wallets, and provide on-ramps into decentralized cryptocurrencies like bitcoin,” the analysts said. This insight comes from First Mover. Get it in your inbox here. 

Inflation and Price
Rewards per block mined on the zcash blockchain – launched and supported by the Electric Coin Company – are scheduled to be cut by 50% sometime in November. The privacy-centered crypto is often criticized for its high levels of inflation, though some industry experts are saying its programmatic halving could solve this problem. This case study could reveal insight about the impact inflation has on a cryptocurrency’s price. 

Fees and Transactions
Bitcoin’s average transaction fee has dropped 53% from $6.64 to $3.06 in the past five days, as the backlog of unconfirmed transactions sitting in the blockchain’s mempool has dropped 71% over the same time period. (Decrypt)

Crypto Long & Short

VC Inflows
Andreessen Horowitz (a16z) stirred up discussion last week by claiming the crypto economy is teetering on the edge of its next cycle of development, just days after it unveiled a second $515 million crypto-focused fund. CoinDesk’s Noelle Acheson looks at venture capital inflows into crypto and what a16z’s plans means for the direction of this industry. “[V]enture funding implies building, steady progress, support for the never-ending search for product-market fit and a relatively attractive profile for institutions looking for return with reasonable risk,” she said. You can sign up for Crypto Long & Short here.

Opposite Editorial

Spiritual Reflections on the Bitcoin Halving
Allen Farrington, a freelance writer, reflects on bitcoin’s third programmatic halving and what the shared event means for the future of the network and the internet. “The bitcoin halving happened at the same time for everybody because the Bitcoin protocol is the same thing for everybody. It knows no borders and no nationalities. It knows no time zones,” he said. 

What I Learned the First Time I Lost a Million Dollars
Jeff Dorman retells the tale of his gains and losses on Wall Street and what this experience means for risk management in the age of digital assets. “The ability to stay disciplined with risk management changed my career. I always knew I had the tools required to be a successful investor, and I’ve always been convinced I can make smart investments, but it took years to realize the difference between good asset managers and bad ones comes down to more than just picking good investments,” he writes. 

Who Won #CryptoTwitter?

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Crypto derivatives platform ErisX said Tuesday it launched an application programming interface (API) for bitcoin, bitcoin cash, ether and litecoin block trading, allowing for bulk trades.

The API provides greater integration of the firm’s block trading facility, a service for spot and futures market crypto traders looking to strike private, high-volume deals. This applies to spot trades of at least 10 bitcoin, 100 bitcoin cash, 100 ether or 250 litecoin, and futures trades of at least 10 bitcoin contracts or 50 ether contracts, according to a Tuesday blog post.

Such orders might quickly rock those cryptos’ prices if the taker was to place them on the open market. This could trigger price volatility. 

Related: ErisX Announces Launch of First US Ether Futures Contracts

By negotiating a trade privately with other ErisX registered members, clearing and settling it through ErisX’s in-house service and then reporting it only at or soon after the fact, the parties avoid destabilizing their own trade.  

“They eliminate counterparty settlement risk while limiting market impact,” Carlos Mosquera, Benatuil, CEO of Solidus OTC said in a press statement.

Parties report their trades at the trade date or within 15 minutes of execution, the blog post said.

See Also: ErisX Announces Launch of First US Ether Futures Contracts

Related: 3 Straight Record Days Drive CME Bitcoin Futures Open Interest to All-Time High

ErisX said in a press statement that the REST API creates a “workflow that is familiar to capital markets professionals.”

“We are removing the friction and risks associated with OTC based workflows and expanding the universe of potential counterparties for our Members with a competitively priced service,” CEO Thomas Chippas said in the release. 

The feature closely follows ErisX’s May 11 launch of ether futures contracts. 

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India’s commercial banks can indeed provide banking services to traders and firms dealing in cryptocurrencies, the nation’s central bank clarified last week. 

“As on date, no such prohibition exists,” the Reserve Bank of India (RBI) said on May 22. The statement came in response to a query filed by BV Harish, co-founder of the cryptocurrency exchange Unocoin, under the Right to Information (RTI) Act.

As reported by The Economic Times on Tuesday, the RTI was filed on April 25, seeking clarification on whether banks were still prohibited from providing services to cryptocurrency traders and service providers despite a recent ruling by the Supreme Court to the contrary. 

Related: First Mover: Bitcoin Could Get a Boost From Central Bank Digital Currencies

On March 4, India’s Supreme Court quashed a Reserve Bank of India (RBI) order dating back to April, 2018, which restricted banks from providing services to entities dealing with cryptocurrencies. 

The RBI had initially planned to file a review petition challenging the Supreme Court’s verdict, as it reportedly believed that trading in virtual currencies would put the country’s banking system at risk. In the end, the central bank did not file the petition, however, neither did it clear the air on crypto trading and taxation. As a result, both banks and the crypto industry have been left in some confusion. 

“Since the Supreme Court’s decision, many crypto companies have started resuming their operations by opening up banking channels. However, many banks are still in a dilemma whether to offer their services to crypto companies or individuals since there has been no circular from the RBI ordering the lifting of the ban,” Ashish Singhal, CEO of the cryptocurrency exchange CoinSwitch.co, told CoinDesk. 

Read more: BitGo Now Providing Custody for India’s Largest Crypto Exchange

Related: Indian Crypto Exchange CoinDCX Raises $2.5M From Polychain Capital, Coinbase Ventures

Meanwhile, Nischal Shetty, founder and CEO of Mumbai-based cryptocurrency exchange WazirX, said, “while the Supreme Court ruling had made it very clear that there are no curbs on banking for crypto businesses, the RBI reply to [the] RTI filing is very much welcome. There has been confusion amongst many banks despite the Supreme Court ruling because these banks have been waiting for information from RBI.”

CoinDesk reached out to a number of prominent Indian banks in March for information on whether they would allow their customers to use credit or debit cards to fund cryptocurrency purchases. We still haven’t received any reply.

Still, exchanges seem confident that the RBI’s clarification will accelerate the growth of the cryptocurrency space in India. “Hopefully, this response can clear up the confusion for the banks and bring clarity to the crypto community in India, which has shown consistent growth since March,” said Singhal. 

Shetty said he expects all banks to start servicing crypto businesses without any restrictions. “This marks yet another positive way forward for the crypto ecosystem in India,” he said. 

Read more: Blockchain Firm Partners With Indian Government to Boost Earnings for Farmers

Some exchanges have already reported solid growth in volumes over the past two months. Mumbai-based CoinDCX, a cryptocurrency trading platform and liquidity aggregator witnessed 150% growth in daily active users in March alone, chief executive Sumit Gupta told CoinDesk.

“While some cryptocurrency businesses reportedly had trouble accessing banking support, CoinDCX and many other crypto businesses had no difficulty accessing the traditional finance sector,” Gupta added.

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In the approach to the launch of Facebook’s Libra payments ecosystem, a key subsidiary has been given a new name and a new look.

According to an announcement on Tuesday, Libra’s wallet provider Calibra has now been rebranded to Novi – a portmanteau of the Latin root words, “novus” meaning new and “via” meaning way. The first wallet product from the firm is intended to hold Libra’s various digital currencies, once the Facebook-led initiative goes live.

Novi also comes with a design revamp that is said to represent “the fluid movement of digital currencies,” but maintains an element of the Libra icon in its logo.

Related: Facebook’s Toothless Oversight Board Has Lessons for Blockchain

“While we’ve changed our name from Calibra,” Novi said in a statement, “we haven’t changed our long-term commitment to helping people around the world access affordable financial services.” Just in case you were worried about that.

See also: Libra’s Long Road From a Facebook Lab to the Global Stage: A Timeline

Novi also provided a little insight into how the product will work. The digital wallet will operate as a standalone app, as well as providing interoperability with Facebook’s social messaging apps Messenger and WhatsApp.

Aimed to make sending funds to friends or family as “easy as sending a message,” transactions with Novi will arrive instantly, according to the announcement, and will contain no “hidden charges.” Novi didn’t offer any detail on what any standard transaction fees might be.

Related: The ‘Great Lockdown’ Is Boosting Demand for Bitcoin Custody Solutions

All Novi customers will need to be verified using government-issued ID, while “fraud protections” will come baked in. The wallet will initially be rolled out to a limited number of countries.

The release date still remains unclear, but the project hopes to introduce “an early version of Novi when the Libra network is available.”

The wallet and future financial services for the project will now be operated by a new entity, Novi Financial – a Facebook subsidiary that, it said, will operate independently from the social media giant at its Menlo Park, California, headquarters.

The Libra project has suffered a series of setbacks as regulators and governments set off alarm bells over the perceived risks of the project in terms of financial crimes, some even calling it a threat to monetary sovereignty. In 2019, Facebook’s CEO, Mark Zuckerberg said his company, which leads the Libra Association, would quit if the project were released prematurely.

In the face of all the pushback, the Libra Association’s original model for its digital currency – a stablecoin pegged to a basket of fiat currencies and government bonds – was restructured in mid-April. The project will now issue a number of stablecoins based on individual national currencies in different markets.

Libra still has plans for a multi-currency stablecoin but it will be backed by the new stablecoins and not directly by fiat currencies.

There have been other issues too. In June 2019, major firms including Uber, PayPal, Visa, Stripe, MercadoLibre, Bookings.com and Mastercard were all reported to be backing Facebook’s new crypto project.

See also: Facebook Affirms Libra Commitment With 50 New Job Openings in Ireland

However, pressure from U.S. regulators and lawmakers in October prompted Visa, Mastercard and Stripe to withdraw their affiliations with Libra. It’s been adding more new members since then, though, including its first state-owned entity, Temasek. Checkout.com also joined the project last month.

Libra has notably been on a hiring spree of ex-U.S. government officials – presumably to help smooth its regulatory path to launch – having signed up two former staffers at FinCEN in recent weeks

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Employers struggling to meet the conditions set by the U.S. government’s loan program may find salvation in an unlikely place: a new bitcoin 401(k) plan from Bitwage.

Calling the product a world first, the crypto payroll company said Tuesday it had successfully trialed its bitcoin 401(k) employee pension account and would start offering the plan to companies – especially those trying to meet the 75% payroll requirement in the federal Paycheck Protection Program (PPP).

The PPP has proven to be a lifeline for U.S. businesses struggling in the coronavirus pandemic. A total of $660 billion has been lent out nationwide by the Small Business Administration (SBA). To incentivize staff retention, the program offers 100% loan forgiveness if employers spend at least 75% of funds received on payroll expenses.

Related: Blockchain Can Help UK Savers Recover $48B in Unclaimed Pensions, Says R3

Crucially, the SBA includes things such as retirement benefits in the bucket of payroll expenses, says Bitwage. It adds that devoting some of the loans into 401(k) plans can count towards hitting the crucial 75% target.

“This gives companies an opportunity to provide matching or profit sharing contributions to employee 401k accounts in order to help close the gap to receive full loan forgiveness,” Bitwise said in a press release. “Together with the PPP program, the Bitwage Bitcoin 401(k) Plan allows employers to get more out of their PPP loans, while providing their employees new and innovative investment options.”

See also: Blockchain Can Help UK Savers Recover $48B in Unclaimed Pensions, Says R3

Based in San Francisco, Bitwage wants to integrate cryptocurrencies into everyday life. Company clients can use Bitwage to offer their employees the option to have their wages paid in crypto. Although its primary focus remains on the U.S. it has set its sights on a more global clientele, offering fiat support in more than eighteen different currencies.

Related: Bitcoin IRA Is Letting Customers Lend Out Their Crypto Retirement Funds

The Bitcoin 401(k) plan is a collaboration with three other firms: crypto exchange Gemini, the custodian service Kingdom Trust, as well as the established pension provider, Leading Retirement Solutions, who keep records for the 401(k) plan with the Department of Labor and the Internal Revenue Service (IRS).

“Our vision includes integrating the Gemini trading engine directly inside of the 401(k) Plan so institutional as well as retail investors have access to the same Gemini trading tools inside of tax-incentivized retirement accounts,” Bitwage said.

Although Bitwage’s plan is geared toward employers interested in offering bitcoin, employees can also choose to gain exposure to traditional asset classes too, including equities and bonds, via its link-up with Leading Retirement Solutions.

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Bitcoin price is caught in a downdraft after a series of rallies in recent weeks that repeatedly fizzled out at the $10,000 mark. 

“There is no clear understanding where bitcoin will go,” Yuriy Mazur, head of data analytics at cryptocurrency exchange CEX.IO told CoinDesk’s Omkar Godbole. “It may either retrace back to $6,500 or reach $10,000.”

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here.

Related: India’s Central Bank Removes Lingering Confusion Over Banking for Crypto Firms

With the near-term picture cloudy, some analysts are focusing on a longer-term trend that could be surprisingly bullish for bitcoin: the emergence of digital currencies issued by central banks. 

It’s not an obvious investment thesis because bitcoin was invented to be used in an electronic peer-to-peer payment system that would be free of government control and operate outside of the traditional banking system. 

And most central bank digital currencies, or CBDCs, would, by their very nature, be issued and controlled by governments, and in many cases distributed through banks. 

But Jack Purdy and Ryan Watkins of the research firm Messari wrote last week in a report that the “coming digitization of money,” including the launch of CBDCs, could provide a “secular tailwind” for bitcoin. 

Related: Crypto Long & Short: Innovation Cycles, Crypto Venture Funds and Institutional Investors

CBDCs have gained momentum over the past year as countries consider whether to roll out digital versions of their currencies to keep up with Facebook’s proposed Libra and China’s forthcoming digital currency electronic payment, which is already in testing.

The journal Central Banking, which is supported by the Bank of International Settlements and the European Central Bank among others, found in a survey earlier this month that some 46 countries are considering CBDCs using a constrained form of distributed ledger technology. 

Federal Reserve Chair Jerome Powell told Congress in February the U.S. central bank is in the early stages of researching digital currencies, and that having a “single government currency at the heart of the financial system is something that has served us well.” 

Even so, JPMorgan said last week in a report that “there is no country with more to lose from the disruptive potential of digital currency than the United States,” as reported by Bloomberg News. “This revolves primarily around U.S. dollar hegemony.” 

The largest U.S. bank’s warning merely reinforces the urgency and significance of the efforts, and that’s what the Messari analysts were homing in on. 

“Catalyzed by bitcoin and the recognition of the benefits of blockchain technology, many countries and companies around the world have begun researching, testing and launching their own digital currencies,” the analysts wrote. 

“When these projects launch, they will have the combined effect of exposing billions of people to cryptocurrency-related technologies,” according to the report. “This will increase people’s comfort with and understanding of cryptocurrencies, get more people creating and using cryptocurrency wallets, and provide on-ramps into decentralized cryptocurrencies like bitcoin.”

So CBDCs might be used to facilitate purchases of bitcoin? That’s the idea.

Tweet of the day Bitcoin watch

BTC: Price: $8,878 (BPI) | 24-Hr High: $9,011 | 24-Hr Low: $8,672

Trend: While bitcoin has recovered from two-week lows reached on Monday, the cryptocurrency is yet to beat key resistance above $9,300.

At press time, bitcoin is changing hands near $9,000, having put in a low of $8,630, according to CoinDesk’s Bitcoin Price Index. Prices need to cross Sunday’s high of $9,310. That would invalidate the lower highs setup on the 4-hour chart and confirm an end of the pullback from $10,000 and the revival of the bullish trend. 

However, as long as prices are held under $9,310, the bearish view put forward by Sunday’s downside break of the ascending trendline connecting March 13 and April 21 lows would remain valid. 

The uptick from $8,630 to $9,000 seen in the last 24 hours lacks substance, as volumes have remained low throughout the price recovery. A low-volume bounce is often short-lived. Hence, prospects of a strong move above $9,310 look bleak. 

Besides, higher time frame charts are reporting a failed breakout. “The previous weekly candle below the long-term downtrend line support (drawn from June 2019 and February 2020 high), which locally invalidates the bullishness,” said Adrian Zduńczyk, chartered market technician and CEO of trading community The BIRB Nest. 

So another move lower toward $8,630 cannot be ruled out. A violation there would expose 78.6% Fibonacci retracement marked at 8524. “If that level is broken, it would result in tapping into range lows support $8,000-$8,100. The 50-day average at $8,300 could also offer support,” said Zduńczyk. 

However, if prices rise above $9,300 with strong volumes, a falling wedge breakout would be confirmed on the 4-hour chart. That would open the doors to a re-test of $10,000. 

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Bitcoin moved back over $9,000 earlier on Tuesday alongside signs of an improved risk appetite in the traditional markets. 

Prices rose to a high of $9,010 at 08:05 UTC, but quickly fell back below $8,900, pouring cold water over excitement generated by Monday’s 2.3% bounce from the two-week low of $8,630. 

At press time, the number one cryptocurrency by market value is changing hands near $8,860, according to CoinDesk’s Bitcoin Price Index. 

Related: Zcash’s First Halving May Solve Its Inflation Problem

Meanwhile, the futures tied to the S&P 500, Wall Street’s equity index, are reporting over 2% gains Tuesday. Major European equity indexes are flashing green, too, with the U.K.’s FTSE index leading the way with a 1.33% gain, as per Investing.com.

West Texas Intermediate (WTI) crude, North America’s oil benchmark, has so far scored a 2.4% gain on the day, while safe havens like gold, Japanese yen and the U.S. dollar are nursing losses. 

Risk sentiment seems to have been buoyed by reports of a potential coronavirus vaccine. U.S.-based biotech company Novavax said on Monday that it is beginning a phase 1 clinical trial of its COVID-19 vaccine candidate in Australia. Results are expected in July. 

Bitcoin closely tracked action in the equity markets in March and April before decoupling in the two weeks leading up to the reward halving event on May 11. With halving behind us, the cryptocurrency may again start taking cues from equities. 

Related: As Bitcoin Falls to 2-Week Lows, Small Investors Look to Be Buying

As a result, some traders may expect the cryptocurrency to chart a strong break above $9,000 during the day ahead. However, major exchanges like Bitstamp, which is included in the calculation of Bitwise’s “real” bitcoin trading volume figures, have registered low volumes during the last 24 hours. 

That may gloomy news for the bulls, as a low-volume move is often short-lived, according to technical analysis theory. Thus, the sustainability of the recovery toward $9,000 is in question. 

Further, the short-term bias looks to have turned bearish due to cryptocurrency’s recent violation of a two-month bullish trendline.

“The steep upwards trend was broken this weekend, and the BTC price crossed the line which has acted as support several times over the past month. If the downwards price action continues, the lower $8,000 area is an important support zone for the price and should see a lot of buyers coming in,” said a weekly update produced by the cryptocurrency exchange Luno and Arcane Research. 

Adrian Zdunczyk, a chartered market technician and CEO of trading community The BIRB Nest, also cited the $8,100–$8,000 area in a weekly update. Zdunczyk, however, is still bullish for long-term, as are most observers. 

Investors seem to be accumulating coins amid the price drop. On-chain data provided by blockchain intelligence firm IntoTheBlock shows the number of bitcoin addresses holding coins for over a year has reached a new record high of 19.44 million this month, toppling the previous lifetime high of 19.08 million in April. 

The metric has been on an upward trajectory for 12 months and is indicative of a strong holding sentiment.

“Record-high long-term holders not only shows the growth of bitcoin’s store-of-value use case, but it also demonstrates the fierce conviction of investors who held tight during the 50% market drop, believing it to be a reliable long-term haven against increasingly unpredictable public markets,” said Jehan Chu, co-founder, and managing partner at Hong Kong-based blockchain investment and trading firm Kenetic Capital.

There’s a general consensus in the investor community that bitcoin is a hedge against the fiscal and monetary imprudence practiced by governments and central banks over the years, and more so, recently in the efforts to combat the coronavirus-led slowdown in the global economy. 

“Investing in tech companies is no longer good enough; investors are now choosing to invest directly in the crypto infrastructure the future will run on,” Chu said.

From a technical analysis standpoint, the overall bias would once more turn bullish if and when prices rise above $10,000. The immediate bearish bias would be invalidated if the risk-on seen in traditional markets powers the cryptocurrency above $9,310.

Disclosure: The author holds no cryptocurrency at the time of writing.

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Serial entrepreneur Halsey Minor knows about mass adoption. He’s helped create technology platforms like CNET and Salesforce, to name a couple.

Announced Tuesday, Minor’s VideoCoin platform, which draws on dormant computing resources to process streamed video, is adding fiat payment rails as the project looks to move beyond the limited sphere of crypto and blockchain tokens. The network becomes commercially available starting May 27.

A broader reach is essential, says Minor, CEO of Live Planet, an immersive video startup that provides technology to VideoCoin, in order to take the fight to the market-leading Amazon Web Services (AWS). (Interestingly, Minor’s first job at Merrill Lynch saw him team up with co-worker Jeff Bezos on a publishing platform.) 

Related: Meet Red Date, the Little-Known Tech Firm Behind China’s Big Blockchain Vision

“Taking serious aim at mass adoption is surprisingly absent from the crypto industry. There are really no services you can use a credit card to perform,” said Minor. “A company like Fox is never going to go to an exchange and buy volatile tokens. You kind of have to be in the crypto world to use crypto projects – and we are trying to break that barrier down.”

That said, tokens still play a vital role on the platform. VID token holders stake them to earn a slice of the savings gained from decentralizing the work required to process online video. Indeed, VideoCoin’s private token sale raised $50 million back in May 2018, and part of this week’s platform launch (dubbed Everest) is making VideoCoin available on Bittrex, the Seattle-based crypto exchange.

Read more: CNET Founder Backs $50 Million ICO for Video Streaming

“Staking is a really good use case for tokens, but using them for payment just puts friction between you and your users,” Minor said.

Related: Two Social Networks Announce Plans to Integrate YouNow’s Props Token

VideoCoin’s new fiat capability comes courtesy of Public Mint and allows the platform to accept credit cards, ACH and wire transfers, and to send funds to anyone who has a Public Pay wallet.

Zombie servers

Stepping back, video accounts for 80% of internet traffic and every online video goes through various stages of processing, such as encoding and transcoding to suit different devices. It’s a shift that has upended the traditional broadcast model, which had basically zero distribution costs. 

It’s also where AWS is dominant and making big money from its vast network of data centers. But farming out the processing and storage requirements to hundreds of thousands of so-called “zombie servers” that do next to nothing most of the time means VideoCoin will cost firms a third of the price of Amazon, said Minor.

“As the global video business moves larger volumes of content to internet delivery, the costs of processing and delivering video have become a huge burden for major media companies,” said John Ward, executive vice president and CTO of video-streaming provider iNDEMAND. “The current [COVID-19] crisis has intensified this.”

AWS did not respond to requests for comment by publication time.

Work it

The VideoCoin platform can be accessed by developers looking to build on its infrastructure and streaming companies that can take advantage of cheaper processing, as well as hardware owners who want to earn money putting it to use (known as “workers”). It’s also open to stakers who allocate jobs to workers ensuring the best possible results, for which these token holders can earn 16% of the overall remuneration.

“Workers will get cash. They will want to build reputation with stakers so they attract more staking,” said Live Planet CTO Devadutta Ghat. “Workers get work dependent on their capacity and the amount of staking they’ve attracted.”

Read more: Meet Crypto’s New Best Friend: Fiat

Ghat said any owner of hardware, from a Raspberry Pi to a data center, can join the platform and become a worker. To illustrate the remuneration workers can expect, he said running a Raspberry Pi node or NVIDIA Jetson Nano 24/7 for a month (total cost of about a dollar) could be paid for by 15-20 minutes of video streaming.

All the workers and stakers on the platform will be visible using a block explorer soon after the Everest launch, Ghat added. 

Edgelord

Security cameras and video doorbell companies are another large and growing market, and one which Amazon Ring is capitalizing on by doing video processing at cost. “Streaming cameras have become one of the largest sources of video on the internet today, and demonstrates how dynamic the market for video processing is,” Minor said.

Read more: Bitreserve Overhauls Platform, Rebrands as ‘Uphold’

Looking back, the explosion of cloud computing, which saw Minor win big with platforms like Salesforce, is now being reversed. With the advent of 5G, things are moving back to the edge of the network, he said. 

“Everyone has done a great job of moving to the cloud,” said Minor. “But now it’s opening up all these opportunities at the edge with 5G’s low latency and high bandwidth – and with blockchain, which is sort of the ultimate edge-based technology.”

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Chinese internet giant Tencent is looking to invest heavily in new technologies like blockchain as it looks to move past the effects of the coronavirus epidemic.

The creator of popular messaging service WeChat, Tencent is investing 500 billion yuan ($70 billion) into “new infrastructure” based on emerging technologies over the next five years, as reported by Reuters.

In an interview with state media Tuesday, Dowson Tong, Tencent’s senior executive vice president, confirmed the company had also earmarked investment for sectors such as cloud computing, artificial intelligence, and cybersecurity.

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It isn’t clear how much of the $70 billion investment Tencent will ultimately set aside for blockchain, nor has it elaborated on what specifically it will be investing in.

As per Reuters, the firm has acknowledged that its cloud offerings have been hit by the coronavirus-induced economic slowdown. As the nation starts its return to normality, “Expediting the ‘new infrastructure’ strategy will help further cement virus containment success,” Tong said in a report by Guangming Daily.

See also: Inside China’s Plan to Power Global Blockchain Adoption

The news comes a month after China’s Blockchain Services Network (BSN) was rolled out for commercial use. Blockchain is a critical part of the country’s tech strategy, and the government hopes BSN will form the backbone infrastructure for services that leverage the technology all around the country.

Related: Chinese Government Advisers Propose Regional Stablecoin for 4 Asian Countries

China’s steadfast support for DLT is paying dividends, believes Haipo Yang, founder and CEO of Chinese crypto exchange CoinEx. Speaking to CoinDesk at the weekend, he explained this unambiguous approach has helped create a “good environment for blockchain technology,” improving China’s credentials as an innovation hub and leading to the emergence of a vibrant blockchain investment scene.

See also: Why China Is Banning Crypto but Is Bullish on Blockchain

Tencent has gradually increased its exposure to blockchain. At the end of last year, it launched a DLT-powered invoice system and received the green light from the Hong Kong regulator to start work on a blockchain-based virtual bank. It’s also become a member of a new national committee to help set industry standards for blockchain technology, along with several of its competitors.

With blockchain being a state-sanctioned technology in China, and with the infrastructure for a whole host of new services – the BSN – having already launched, it should really come as no surprise that Tencent has opted to set aside potentially billions of dollars for investment in the emerging technology.

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Thailand is teaming up with a blockchain firm to encourage peer-to-peer trading of renewable energy.

Announced on Monday, Thai Digital Energy Development (TDED) – a public-private joint venture – has inked a deal with blockchain energy startup Power Ledger to develop a blockchain-based digital energy business.

The deal, also in collaboration with energy suppliers in Thailand, seeks to develop solutions for peer-to-peer energy trading and environmental commodity trading, Australia-based Power Ledger said in a press release.

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Ultimately, the partners aim to assist Thailand’s drive to hit a 25% renewable energy target by 2037, as it transitions away from fossil fuels.

“Blockchain-enabled transactive energy solutions including peer-to-peer (P2P) energy trading, virtual power plants as well as renewable energy certificates and carbon credits trading will be the key to establishing economically viable renewable energy markets,” said Power Ledger’s co-founder and executive chairman, Jemma Green.

“Our partnership with TDED will allow us to accelerate our efforts to promote distributed digital energy markets in Thailand,” Green added.

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The partners will oversee the management of four “clean power” projects from renewable energy provider BCPG Group, which have been included via a sandbox project to encourage uptake of renewable energy by Thailand’s Office of Energy Regulatory Commission.

BCPG is a Bangkok-based firm dealing in solar, wind and geothermal power, with operations in Thailand, Japan, the Philippines and Indonesia. Together with a Thai electrical manufacturer under the Provincial Electricity Authority, it runs the TDED venture.

One of the first projects to come out of the Power Ledger collaboration will focus on energy and carbon management at the 12-megawatt “smart campus” at Chiang Mai University in Thailand’s north.

See also: A New York Power Plant Is Mining $50K Worth of Bitcoin a Day

Power Ledger’s “expertise in state-of-the-art technology will help materialize TDED’s goal in the development of digital energy products and services, as well as making clean energy more accessible to people.” said TDED and BCPG president Bundit Sapianchai.

Power Ledger has been working with BCPG in Thailand since 2018 when it launched a peer-to-peer energy trading trial in Bangkok.

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India’s largest cryptocurrency exchange, CoinDCX, has secured a $2.5 million strategic investment led by Polychain Capital with support from Coinbase Ventures.

The investment aims to reinforce the exchange’s efforts to drive cryptocurrency adoption in the country after a major legal victory in March. CoinDCX’s #TryCrypto campaign seeks to bring the total number of crypto users in India to 50 million.

Read more: After Court Victory, Indian Exchanges Gear Up for Crypto Trading Surge

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Specifically, the financing aims to bolster CoinDCX’s meetup events, community engagement efforts, educational programs and consumer campaigns, the company said.

“This new strategic investment into CoinDCX is a shot of confidence in our roadmap toward bringing the crypto asset class to a largely untapped Indian market. We look forward to our investors’ continued counsel,” said Sumit Gupta, CEO and co-founder of CoinDCX.

Polychain’s investment is in addition to its participation in a $3 million Series A funding round for the Mumbai-based exchange, which occurred in late March, weeks after a banking ban for cryptocurrency businesses was overturned by the country’s Supreme Court.

Read more: BitGo Now Providing Custody for India’s Largest Crypto Exchange

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Following the lifting of the banking ban in March, CoinDCX has seen a 47% growth in trading volumes and a 150% growth in daily active users. CoinDCX said it was one of the first cryptocurrency exchanges in India to integrate bank account transfers.

“As India continues to close the gap between the crypto economy and the mainstream market, CoinDCX is strongly positioned to become the leading platform that consumers in the country interact with crypto through,” said Shan Aggarwal, head of Coinbase Ventures.

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Mining reward halvings are a hot topic in the crypto markets, as they alter a cryptocurrency’s supply and often have a significant impact on prices. 

Bitcoin, the biggest cryptocurrency by market value, underwent its third halving on May 11, which reduced the reward per block mined to 6.25 bitcoin from 12.5. Bitcoin offshoots bitcoin cash and bitcoin SV also witnessed halvings in April. 

Next in line is zcash (ZEC), a privacy-focused cryptocurrency first created in 2016 that uses a proof-of-work (or mining) algorithm and encrypts user information within shielded transactions. Currently, it is the 26th largest cryptocurrency by market value, as per data source CoinMarketCap.

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Rewards per block mined on the zcash blockchain – launched and supported by the Electric Coin Company – are scheduled to be cut by 50% from the current 12.5 ZEC to 6.25 ZEC at block 1,046,400 this year.  Zcash’s first ever halving, the block subsidy reduction is expected to happen sometime in November.

High-inflation crypto

While ZEC’s supply is capped at 21 million like bitcoin, its inflation rate is significantly higher than other major cryptocurrencies. 

At press time, ZEC’s annualized inflation rate is 28.19% – the highest among major cryptocurrencies, according to data source ViewBase. Meanwhile, bitcoin’s inflation rate is 1.44. 

Zcash’s high inflation rate has long been a cause of concern among the investors and the analyst community. “If ZEC were a country, it’d have the 8th highest inflation rate worldwide at 32%,” popular analyst Josh Olszewick tweeted in December 2019. 

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The cryptocurrency was one of the worst-performers in the first nine months of 2019, largely due to its “disproportionate” supply hitting the market, tweeted economist and trader Alex Krüger in September 2019.  ZEC ended 2019 with an 88% decline, while bitcoin achieved gains of over 90%.

These concerns, however, may ease following November’s supply cut.

“After the halving, the inflation rate will effectively get cut in half from its current level, so any concerns about the inflation rate should be alleviated or be considered a non-issue,” said Connor Abendschein, a crypto research analyst at Digital Assets Data. 

Pre-halving price boost?

In recent months, the cryptocurrency has been languishing not far above all-time lows against both the U.S. dollar and bitcoin. After November’s halving, though, investors may give up on punishing ZEC for its high inflation rate and cheer the emission cut. 

“The upcoming halving could give Zcash the boost it needs to stay relevant in the high-cap ecosystem,” said Abendschein.

Further, cryptocurrencies, in general, tend to rise ahead of halvings, which are widely considered to be price-bullish events. 

For instance, litecoin, which underwent its last reward halving on Aug. 5, 2019, doubled in the first quarter of last year despite lackluster price action in bitcoin, the biggest cryptocurrency by market value and price anchor for the broader crypto market. Litecoin, the seventh-largest cryptocurrency, rose another 100% in the second quarter. 

Many observers argue that halvings create supply deficits and thus put upward pressure on prices. The belief mainly stems from the bitcoin market, which witnessed stellar bull markets in the months following its first two halvings in November 2012 and July 2016. 

The narrative has further strengthened due to bitcoin’s rise from $3,867 to $10,000 witnessed in the two months running up to its third halving earlier this month. 

Bitcoin halving a guide?

Miner selling encompassed a significant percentage of total volumes in bitcoin ahead of its first halving in late 2012. After the event, a large drop in selling pressure from miners led to a price rally.

As seen in the chart above, potential miner selling pressure as a percent of total volume fell from 135% to 67% at the 2012 halving.

Bitcoin’s price extended its pre-halving bull run by 6% from $12.75 to $13.50 in the two weeks after halving and went on to hit a record high of $260 in April 2013. 

“Some investors are looking at Zcash similarly and its first halving could bring about the largest drop in potential mining sell pressure (as a percent of total volume) compared to future halvings,” Wilson Withiam, research analyst at data provider Messari, told CoinDesk in a Telegram chat. 

Goodbye Founder’s Reward

Alongside the halving, zcash’s so-called (and not universally popular) Founder’s Reward expires in November to be replaced by a new development fund.

“Zcash was launched in 2016 with a ‘Founder’s Reward’ to be allocated over four years. Of all Zcash mining rewards, 80% was allocated to miners, about 15%  was allocated to a group of people that included investors and founders, and about 5% was available to Electric Coin Co. to fund core support functions,” according to the official blog of the Electric Coin Company.

The new fund, which was approved by the zcash community, will distribute 20% of the network’s mining rewards to infrastructure and marketing development, of which 8% would go into a third party grant program, 7% to the Electric Coin Company and 5% to the Zcash Foundation. The other 80% will go to miners.

So, November looks set to be a major month for zcash and the discussion about the halving’s potential impact on price and non-price metrics is likely to pick up the pace as we move closer to the final quarter of 2019.

So far this year, the cryptocurrency has moved pretty much in line with bitcoin and broader markets. Prices fell from $70 to $20 in the four weeks to mid-March as bitcoin as nosedived amid the coronavirus-led crash in the equity markets. The subsequent 150% price rise in bitcoin pulled up ZEC. The privacy coin recently clocked a high of $50 and was last seen changing hands at $45.

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