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OKCoin said it will become the first U.S.-based crypto exchange to list Blockstack PBC’s stacks token (STX).

STX is expected to be available on OKCoin, an exchange with daily volume of around $30 million, as soon as Jan. 14, 2021, upon the completion of the Stacks Blockchain 2.0 launch, the company announced.

“After our compliance team carefully reviewed the Blockstack statement of decentralization and the PoX mechanism, we’ve concluded it has successfully transitioned from a security to a utility token, and thus OKCoin can and make STX available to U.S. users for the first time,” according to OKCoin’s chief compliance officer, Megan Monroe-Coleman, in an email to CoinDesk.

Related: Blockstack’s Stacks Tokens Could Be Tradable in US Amid New Blockchain Launch

That presumes the U.S. Securities and Exchange Commission doesn’t object to the STX transition and so OKCoin can be involved. The implication is explained in detail in a Twitter thread by Marco Santori, chief legal officer at crypto exchange Kraken.

Other than purchasing, trading and a scheduled airdrop of STX to OKCoin’s users, the listing of STX will enable OKCoin users to earn bitcoin as a reward by locking their STX on the Stacks Blockchain 2.0 network. It will be the first token to do so, said Haider Rafique, the chief marketing officer at OKCoin, in an interview with CoinDesk.

On Monday, Blockstack’s co-founder and chief executive, Muneeb Ali, outlined how STX could become a non-security, presumably with approval from the U.S. Securities and Exchange Commission (SEC), upon completion of the Stacks Blockchain 2.0 and anticipated early next year.

Read more: Blockstack’s Stacks Tokens Could Be Tradable in US Amid New Blockchain Launch

Related: SEC Makes FinHub a Stand-Alone Office

Blockstack and its platform’s utility token STX became famous in 2019 when the company launched the first SEC-approved token sale through the securities market. But with the company retreating from a central role in issuing new STX, it has made the argument the token should no longer be considered a security and thus should become tradable by investors in the U.S.

“It gives most of these decentralized protocols a framework to operate in a way that they can transition from being a security to ultimately a utility token,” Rafique said. “Blockstack has paved the way in a framework to be able to do so.”

Stepping back, Blockstack aims to rival Google with a suite of decentralized applications that don’t fall prey to the data collection conducted by the Mountain View, Calif., tech giant. Blockstack even rolled out an anti-Google branding campaign in 2019: “Can’t be evil.” To date, however, adoption has remained niche.

In the email to CoinDesk, OKCoin’s Monroe-Coleman said the legal memorandum revealed by Ali shows that retail users and investors in the U.S. can be “more confident in the legitimacy” of Blockstack’s transition from “a regulated security token to an open-source, decentralized blockchain protocol.” 

The partnership between OKCoin and Blockstack came as a result of the two companies’ shared values of building and supporting Bitcoin’s core development, said Rafique, who also worked closely with the team behind Blockstack at his previous company, crypto firm Blockchain.com.

Read more: Blockstack’s New Consensus Mechanism Creates New Use Case for Bitcoin

Version 2.0 of the Stacks blockchain will require miners on the network to post one bitcoin to mine a block, as CoinDesk previously reported. That bitcoin would then get shared with nodes maintaining a copy of the ledger.

OKCoin, founded in 2013, migrated its core business to San Francisco after a 2018 crypto crackdown by the Chinese government. The exchange has since rebranded itself as a regulatory-friendly exchange with licenses approved in countries including the U.S. and Japan. 

The exchange also launched a funding program earlier this year to support Bitcoin Core developers, whose open-source coding improves the network.

• Ripple Is Cashing Out a Third of Its Stake in Surging MoneyGram
• US Intelligence Chief Raises Concerns With SEC Over China’s Crypto Dominance: Report

Standard Chartered’s fintech investment unit, SC Ventures, and Northern Trust are to launch a U.K.-based cryptocurrency custodian for institutional clients.

• Called Zodia Custody, the new firm is currently pending approval by the U.K.’s Financial Conduct Authority under local money laundering regulations.
• Once approved, the new company will provide custody services for bitcoin and ethereum, initially, with litecoin, bitcoin cash and XRP to follow.
• These cryptocurrencies were chosen as they account for around 80% of the total assets traded on major cryptocurrency exchanges, according to a Wednesday announcement.
• “We combine the risk management, compliance, governance and security approach of a regulated financial institution with the cutting-edge innovation of crypto asset and key management technologies,” said Maxime De Guillebon, Zodia CEO.
• Singapore-based SC Ventures said the launch anticipates greater participation from institutional investors, who so far account for just 9% of crypto asset investments.
• The custody platform will target institutional cryptocurrency holders, as well as family offices and asset managers who want to invest in cryptocurrencies.
• Zodia is expected to begin operating in London in 2021.

See also: Standard Chartered, Philippines Bank Issue $187M Blockchain Bond

• Standard Chartered Bank to Launch Crypto Trading for Institutional Investors: Sources
• Standard Chartered, Philippines Bank Issue $187M Blockchain Bond
• Group Backed by ING Bank, Fidelity and Standard Chartered Releases Crypto AML Tools
• Standard Chartered to Launch Institutional Crypto Custody Solution

Welcome to another edition of Valid Points, where Will Foxley and I give a weekly update about the status and ongoing development of Ethereum 2.0. 

We’ll soon be incorporating data directly from CoinDesk’s own Eth 2.0 validator node by staking our own funds to the newly launched network. To be clear, this isn’t the start of a day-trading division at CoinDesk. All profits from running the validator will be donated to a charity of our choosing once transfers are enabled on the network. For the full overview of CoinDesk’s first-ever staking venture, click here. 

Since the epic launch of Eth 2.0 last Tuesday, there have been tons of data about its activity to decipher and analyze. Early statistics shared after the first day of launch in our previous newsletter revealed how Eth 2.0 was inundated with 66% more funds than the minimum required to secure network operations. We were also able to view in real time the progression of over 100 epochs, in which more than 3,000 blocks were processed by validators. 

Related: MyEtherWallet Now Offers In-App Staking for Ethereum 2.0

Heading into the network’s second week of live development, we’re seeing the total amount of staked ether continue to rise for the network from 66% to 141% above the original threshold of 524,288 ETH. We’re also seeing a higher number of blocks and epochs finalized on the network, which is positively impacting the amount of rewards validators accrue daily. 

We’ll take a deeper look at some of these Ethereum 2.0 metrics in our weekly Pulse Check. Then, for the New Frontiers essay, we’ll explore some of the scaling solutions to Ethereum that are being developed alongside the Eth 2.0 upgrade. 

On with the show!

One full week has passed since the launch of Ethereum 2.0 on Tuesday, December 1. 

Related: Why Ethereum and Bitcoin Are Very Different Investments

Over that time period, deposits of 32 ETH (worth roughly $19,000 at time of writing) to the network have increased an additional 40% to 1.2 million ETH. This means that roughly 1.1% of the total circulating supply of ether is locked into securing the new proof-of-stake network. These funds will be immovable until developers enable a two-way bridge between the current Ethereum blockchain and Eth 2.0.

For now, users who have deposited the minimum amount of 32 ETH to Eth 2.0 can do little else with their funds except validate. Validating on Eth 2.0 primarily consists of proposing new blocks and attesting to blocks that other validators have proposed. With each proposal and attestation, validators earn rewards that are automatically added to their staked ETH. 

The first day of Eth 2.0 brought an average earning of 0.00569 ETH. This is slightly higher than what we reported in our previous issue of Valid Points, which was 0.00403 ETH. (Our calculations counted the rewards earned from the first 100 epochs rather than the full 112 epochs initiated on that day.)

As explained in our first Valid Points issue, an epoch on Eth 2.0 is a cycle of time lasting roughly 6.4 minutes in which up to 32 blocks on the network can be processed. 

While on the first day only 112 epochs were initiated, the subsequent days saw more than 1,500 epochs in which more than 42,000 blocks were proposed. As a result, average daily validator income has almost doubled to 0.011 ETH/day as of Tuesday, Dec. 8. 

One final metric to highlight in today’s issue is the validator participation rate which, as of Monday, Dec. 7, is at an all-time high of 99.22%. 

This chart illustrates what percentage of eligible validators on Eth 2.0, on average, are attesting and proposing blocks. A figure as high as 99% indicates nearly all users who have staked on Eth 2.0 and passed the activation queue for entry into the network are participating in consensus. 

A high participation rate among Eth 2.0 validators comes as no surprise, given there is little else for users to do on the network. However, as network functionality broadens and the pool of validators continues to increase, we’re likely to see variations from this near-perfect figure. 

Scaling Ethereum doesn’t only come down to Eth 2.0. In fact, Eth 2.0 could fail.

Luckily, Ethereum developers know this and have solutions on the table. When you’re attempting to build a new financial system, a backup isn’t a terrible idea. 

Some are layer 2 (L2) throughput solutions like Rollups. Some depend on making the Ethereum Virtual Machine (EVM) the go-to standard for smart contract blockchains. And there’s always making incremental adjustments to the current Eth 1.x blockchain with research from Eth 2.0.

This year, however, a new proposal, EIP 1559, has taken off in developer circles and looks likely to not only be a large part of making Ethereum usable in the near term, but also an integral part of the Eth 2.0 update.

First penned by Vitalik Buterin and a few other developers in 2018, EIP 1559 will help keep the Eth 1.x network humming along while Eth 2.0 continues in development. 

It accomplishes this by addressing Ethereum’s biggest problem: fee pressure. Like Bitcoin in 2017, network fees continue to hamstring Ethereum-based projects during times of high market volatility. For example, Ethereum fees broke record highs numerous times in August and September due to demand for Ethereum blockspace from decentralized finance (DeFi) applications, sending the cost of simple payments on MetaMask into the single or double digits.

EIP 1559 changes the Ethereum fee market in two ways: Implementing a dynamic fee paid in ether and burnt to the network, plus an optional tip feature to Ethereum miners.

Called BASEFEE, the burnt fee creates a lower bound on how much it costs to transact on Ethereum. The tip allows urgent transactions to jump the queue to be processed into a block and settled on the Ethereum blockchain. Of the two, BASEFEE has garnered more attention due to the game theoretical implications of imposing a consistent fee burn over the more traditional first auction model Ethereum currently uses.

Columbia University computer scientist Tim Roughgarden recently published a report fleshing out the possible consequences from a new Ethereum fee model.

Generally, he found the two largest positives from EIP 1559 are better fee estimation and a new deflationary pressure on ether. 

Better fee estimation will make the dapp experience more slick and will lower fee variance, he said. Moreover, a new deflationary pressure on ETH through transaction burns is thought to be a positive for the long-run price implications of the digital asset. 

Not only do users have to use ETH to use the network, a little bit is destroyed forever every time they do so. For example, a Dune Analytics dashboard modeling EIP 1559 if it were already active assumes some 1.23 million ETH worth $710 million would have been burnt in the last year. (Not surprisingly, Ethereum miners are less than enthused over the proposal).

That’s a long way of saying there’s a lot more going on than just Eth 2.0.

• Introducing Valid Points: The Risks and Rewards of Staking on Eth 2.0
• Market Wrap: Bitcoin Falls to $18.1K as Correlation to Ether Picks Up

Bitwise Asset Management, a provider of cryptocurrency index funds to professional investors, announced Wednesday that its 10 Crypto Index Fund is now available to U.S. investors as a public-traded cryptocurrency index fund.

After a Form 211 for quotation of the fund’s shares were reviewed by the Financial Industry Regulatory Authority (FINRA), the Bitwise 10 Crypto Index Fund was enabled to be listed on the over-the-counter markets and trades under the ticker symbol “BITW,” the company said in a news release.

Shares of the fund will be tradable through traditional brokerage accounts and the assets will be custodied with Coinbase Custody Trust Company.

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

The fund will track the Bitwise 10 Large Cap Crypto Index, a diversified, market-cap-weighted index of the ten largest cryptocurrencies. As of Nov. 30, the fund held approximately 75% bitcoin and 13% ethereum. According to Hunter Horsley, co-founder and chief executive of Bitwise, this gives investors exposure to cryptocurrencies “without trying to pick winners or having to constantly monitor the rapid changes in the space,” 

“BITW is designed for financial advisors,” Matt Hougan, Bitwise’s chief investment officer, said in an email response to CoinDesk. “Financial advisors are eager for a safe and easy way to allocate to crypto for clients.”

The news came after the company failed its attempts to win approval from the U.S. Securities and Exchange Commission for a bitcoin-focused exchange-traded fund. 

While many exchange traded fund (ETF) efforts have focused around bitcoin only, Hougan said that having a crypto index fund gives investors exposures to other cryptocurrencies, with several having outperformed bitcoin thus far this year.

Related: Bitwise Tops $100M in Assets Under Management

Unlike an ETF, the BITW’s shares are exempt from registration with the SEC. Nonetheless, the launch of BITW will not stop the company from pursuing a bitcoin ETF, Hougan told CoinDesk. 

Bitwise had more than $100 million in assets under management as of the end of October. The company attributed the significant growth to rising demand from hedge funds, financial advisors and multifamily offices.

“Crypto is about more than bitcoin,” said Hougan. “As phenomenal an asset as bitcoin is, it is far from the best-performing asset in the Bitwise 10. In fact, it’s the sixth-best performer year-to-date.”

Bitwise will not be entering this crypto fund space without facing some established competitors. Grayscale, the oldest and largest digital currency asset manager, also offers a similar investment product, Grayscale Digital Large Cap Fund, with about $170.6 million worth of digital assets holdings, according to a public available document by Grayscale in early December (Grayscale is owned by DCG, the parent company of CoinDesk.)

Hougan clarified that Grayscale’s Digital Large Cap Fund is not an index fund because it holds a basket of five crypto assets without tracking an index. And while Grayscale’s product requires a 3% management fee, BITW is slightly cheaper at 2.5%.

S&P Dow Jones Indices, a major financial data firm, said last week that it will launch a customizable cryptocurrency indexing service amid growing interest from institutional investors in cryptocurrencies this year.

• Bitwise Bitcoin Fund Doubles to $9M as Investor Fears Grow Over Runaway Inflation
• First Mover: Bitwise Calls $50K Bitcoin Price When Market Calm Finally Breaks

Bitwise Asset Management, a provider of cryptocurrency index funds to professional investors, announced Wednesday that its 10 Crypto Index Fund is now available to U.S. investors as a public-traded cryptocurrency index fund.

After a Form 211 for quotation of the fund’s shares were reviewed by the Financial Industry Regulatory Authority (FINRA), the Bitwise 10 Crypto Index Fund was enabled to be listed on the over-the-counter markets and trades under the ticker symbol “BITW,” the company said in a news release.

Shares of the fund will be tradable through traditional brokerage accounts and the assets will be custodied with Coinbase Custody Trust Company.

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

The fund will track the Bitwise 10 Large Cap Crypto Index, a diversified, market-cap-weighted index of the ten largest cryptocurrencies. As of Nov. 30, the fund held approximately 75% bitcoin and 13% ethereum. According to Hunter Horsley, co-founder and chief executive of Bitwise, this gives investors exposure to cryptocurrencies “without trying to pick winners or having to constantly monitor the rapid changes in the space,” 

“BITW is designed for financial advisors,” Matt Hougan, Bitwise’s chief investment officer, said in an email response to CoinDesk. “Financial advisors are eager for a safe and easy way to allocate to crypto for clients.”

The news came after the company failed its attempts to win approval from the U.S. Securities and Exchange Commission for a bitcoin-focused exchange-traded fund. 

While many exchange traded fund (ETF) efforts have focused around bitcoin only, Hougan said that having a crypto index fund gives investors exposures to other cryptocurrencies, with several having outperformed bitcoin thus far this year.

Related: Bitwise Tops $100M in Assets Under Management

Unlike an ETF, the BITW’s shares are exempt from registration with the SEC. Nonetheless, the launch of BITW will not stop the company from pursuing a bitcoin ETF, Hougan told CoinDesk. 

Bitwise had more than $100 million in assets under management as of the end of October. The company attributed the significant growth to rising demand from hedge funds, financial advisors and multifamily offices.

“Crypto is about more than bitcoin,” said Hougan. “As phenomenal an asset as bitcoin is, it is far from the best-performing asset in the Bitwise 10. In fact, it’s the sixth-best performer year-to-date.”

Bitwise will not be entering this crypto fund space without facing some established competitors. Grayscale, the oldest and largest digital currency asset manager, also offers a similar investment product, Grayscale Digital Large Cap Fund, with about $170.6 million worth of digital assets holdings, according to a public available document by Grayscale in early December (Grayscale is owned by DCG, the parent company of CoinDesk.)

Hougan clarified that Grayscale’s Digital Large Cap Fund is not an index fund because it holds a basket of five crypto assets without tracking an index. And while Grayscale’s product requires a 3% management fee, BITW is slightly cheaper at 2.5%.

S&P Dow Jones Indices, a major financial data firm, said last week that it will launch a customizable cryptocurrency indexing service amid growing interest from institutional investors in cryptocurrencies this year.

• Bitwise Bitcoin Fund Doubles to $9M as Investor Fears Grow Over Runaway Inflation
• First Mover: Bitwise Calls $50K Bitcoin Price When Market Calm Finally Breaks

Bitcoin’s options market has flipped bearish for the short term, as demand rises for ways to hedge against further sell-offs in the spot market. 

The top cryptocurrency by market value fell to $17,640 earlier Wednesday, the lowest since Nov. 29. Prices later rebounded somewhat and bitcoin was last seen changing hands near $18,300, according to CoinDesk 20 data. 

Prices have declined by $1,000 in the past 24 hours, taking out crucial technical levels and triggering fears of a deeper decline in the short run. That’s evident from the increased demand for put options highlighted by a positive turn on the one-week put-call skew. 

Related: Bridgewater’s Ray Dalio Softens Stance on Bitcoin, Says It Has Place in Investors’ Portfolios

The gauge measuring the value of short-dated puts relative to calls has risen from -0.20% to 15% in the past 24 hours, according to data source Skew. Essentially, short-dated puts are now drawing higher demand (or prices) than calls. The one-month put-call skew has also recovered from -21% to -7%, again reflecting a pick up in the hedging demand for puts. 

The majority of the activity has been concentrated in $17,000 puts, and $15,000 puts expiring this month.

“Over 300 contracts of $17,000 put with a notional value of more than $5 million have been traded on Deribit since midnight UTC,” said Shaun Fernando, head of risk and product at Deribit, the biggest crypto options exchange by volume and open interest. 

According to Matthew Dibb, CEO of Stack Funds, put options at $15,000 and $16,000 strikes have also seen increased purchases over the past week. “Investors appear to be hedging before the year is out,” he said. 

Related: Bitcoin Price Drops $1,000 in Worst Sell-Off in a Week

However, the three- and six-month skews remain strongly in the negative territory, implying a bullish longer-term outlook. 

Technical charts, too, indicate scope for an extension of the pullback from bitcoin’s recently reached record price of $19,920. 

According to Ray Youssef, CEO of peer-to-peer marketplace Paxful, $18,500 was a key support level, and its violation has opened the doors for further declines to $17,300. 

Bitcoin’s move below $18,500 has marked a downside break of the triangle pattern as seen on the daily chart. The 14-day relative strength index is now on the verge of crossing into a bearish territory below 50.

Downside may be limited to $16,000 – a level bitcoin nearly tested on Nov. 27, before turning higher to reached a record high of $19,920 on Dec. 1. “We believe there is strong support that should hold around $16,000, and if so, it sustains its bullish uptrend,” Dibb said. 

Bitcoin has seen several pullbacks of more than 20% during previous bull runs that didn’t break the upwards trend. At the current price of $18,200, bitcoin is down just 9% from the recent high of $19,920. 

According to market analyst Joseph Young, the current bull run is different from the one seen three years ago. While the cryptocurrency could see more protracted periods of consolidation and decent pullbacks, “that just makes bitcoin more healthy in the longer run,” he tweeted. 

That said, the market may be shaken if there is negative news about the financial health of the business intelligence company Microstrategy, which has adopted bitcoin as a reserve asset.

Bitcoin’s price slide of the past 24 hours has happened alongside a decision from Citi to lower the recommendation on MicroStrategy to “sell” from “neutral”. An analyst cited CEO Michael Saylor’s “disproportionate focus” on bitcoin as a potentially troubling trend for the business intelligence company.

“The concerns are that MicroStrategy’s recent foray into digital asset space will raise questions from regulators about its purchasing spree and also, some shareholders may voice their discontent about the move,” Denis Vinokourov, head of research at the London-based prime brokerage Bequant, told CoinDesk. “If indeed the company’s underlying position is much less rosy and the company’s financial health comes into question, it is the bitcoin holding that will be forced to be sold.”

Also read: Citi Analyst Chides Saylor’s Bitcoin Focus, Cuts MicroStrategy to ‘Sell’

• Market Wrap: Bitcoin Steadies at $18.7K; Big Ether Options Position Around $1,120 Isn’t Bullish
• Bitcoin Dissidents: Those Who Need It Most

The British arm of the U.S. cryptocurrency exchange Coinbase saw a sharp downturn in business in 2019, with annual profits dropping by nearly a quarter year on year as a result.

• In a filing with the U.K.’s business registrar Companies House on Tuesday, Coinbase UK reported turnover of €94.8 million ($114.9 million) in 2019, down 38% from €153 million ($185.6 million) in 2018.
• The turnover is derived from its cryptocurrency exchange service and debit card service, per the filing.
• Coinbase UK reported after-tax profits of €5.1 million ($6.2 million) in 2019, down by 22.5% from €6.6 million ($7.9 million) the year before. Numbers have been rounded off.
• According to the filing, Coinbase had no U.K. staff incurring costs in 2019 or the previous year, suggesting the local exchange operation is run entirely from its California headquarters.
• Despite the drop in turnover, the aggregate value of customer funds held in wallets was €1.493 billion ($1.81 billion) at the close of 2019, up significantly from €741 million ($898.5 million) on Dec. 31, 2018.
• The exchange said it will continue to monitor the UK’s departure from the European Union, the so-called Brexit, which will have an impact on the digital exchange’s operational structure.

See also: Coinbase to Support Spark Token Airdrop to XRP Holders

• Coinbase to Support Spark Token Airdrop to XRP Holders
• USDC Stablecoin Issuer Centre Hires Wall Street Veteran David Puth as CEO
• Coinbase Brokered MicroStrategy’s $425M Bitcoin Purchase, Exchange Says
• Bitcoin Entrepreneur May Bail Out Ailing UK Soccer Club

Another big bank edging closer to a crypto custody offering, Netherlands-based ING, spoke publicly for the first time this week about about its preliminary trials with digital assets.

Speaking at the Singapore Fintech Festival, Tuesday, ING blockchain lead Herve Francois discussed the work done so far with Pyctor, a custody and post-trade infrastructure for crypto assets that was included in this year’s cohort of the Financial Conduct Authority’s regulatory sandbox in the U.K.  

Pyctor, a collaborative effort between ING, ABN AMRO, BNP Paribas Securities Services, Citibank, Invesco, Societe Generale, State Street, UBS and others, is designed to make banks feel comfortable handling crypto. The project involves layers of security such as multi-party computation (MPC) and hardware security module (HSM) technology, and is also decentralized, according to Francois.

Related: How BitGo Is Getting Into the Events Business

“The Pyctor Network of Financial Institutions increases security of the custodied digital assets and removes single points of failure. These principles were the core design choices when designing relevant pilots with our partners,” he said.

ING is also focused on cryptocurrency from an anti-money laundering (AML) perspective, as one of the founding members of the TRP (Travel Rule Protocol), which includes Standard Chartered and Fidelity Digital Assets.

Prior to joining the FCA sandbox in July 2020, Pyctor conducted a first pilot alongside firms such as DLA, Piper, R3 Tata Consultancy Services and Securosys. This involved two asset managers serviced by their respective custodian, who transferred a token on Ethereum‘s testnet, representing a digitally native bond issued by Societe Generale’s digital assets initiative, Forge.

The transaction validated Pyctor’s secure custody and asset transfer decentralized operating model, Francois said.

Related: SBI Teams Up With Swiss SIX Exchange to Offer Institutional Crypto Services in Singapore

See also: ING’s Chief Economist Predicts Central Bank Digital Currencies in 2-3 Years

Within the comfort of the FCA regulatory sandbox, Pyctor conducted another pilot around its token issuance and management operating model. In this case, a smart contract involved in the token issuance on the Ethereum blockchain was operated from Pyctor private network, Francois explained.

“It was done in a decentralized manner using MPC and the newly issued tokens were safeguarded by a custodian of the Pyctor ecosystem,” François told CoinDesk via email. “The transaction was processed on the Ethereum mainnet, validating assumptions about the viability of using public blockchains.”

• Singapore’s National Research Foundation Invests $9M in Blockchain Innovation
• Jack Ma’s Ant Group, 3 Other Digital Banks Get OK to Operate in Singapore

Ray Dalio, the founder of the world’s largest hedge fund, Bridgewater Associates, has offered a more positive stance on bitcoin than in comments that made headlines last month.

In a Reddit Ask Me Anything (AMA) on Tuesday, Dalio said he thought bitcoin and other cryptocurrencies had “established themselves” over the last 10 years and were interesting “gold-like asset alternatives.”

The billionaire hedge-fund manager also noted that cryptocurrencies share similarities and differences to gold and various “limited-supply, mobile (unlike real estate) storeholds of wealth.”

Related: Bitcoin Price Drops $1,000 in Worst Sell-Off in a Week

Bitcoin “could serve as a diversifier to gold and other such storehold of wealth assets,” said Dalio. “The main thing is to have some of these type of assets … including stocks, in one’s portfolio and to diversify among them.”

Dalio comments are a deviation from a month ago when he said there are three main problems with bitcoin and other cryptocurrencies: a lack of venues accepting digital assets as payment, price volatility and the potential for governments to “outlaw” them.

During the AMA, Dalio also said, when comparing bitcoin to gold, he had a “strong preference” for assets which central banks will want to hold and use to exchange value.

See also: Bridgewater’s Dalio: ‘I’d Love to Be Corrected’ on Bitcoin. Twitter Obliges

• Market Wrap: Bitcoin Steadies at $18.7K; Big Ether Options Position Around $1,120 Isn’t Bullish
• Bitcoin Dissidents: Those Who Need It Most
• Bitcoin News Roundup for Dec. 8, 2020

Greenfield One, an early stage crypto venture firm based in Berlin, has secured its first major backers for a second fund, including an investment from Bertelsmann, a private German multinational.

Bertelsmann is a media company with a vast portfolio, including the largest publisher of books in the English-speaking world, Penguin Random House, as well as music publisher BMG.

The Berlin-based fund may be appealing to older companies because it is regulated by the German regulator, the Federal Financial Supervisory Authority (BaFin).

Related: Rebranded Libra Still a ‘Wolf in Sheep’s Clothing’: German Finance Minister

“BaFin provides regulatory clarity and a safe haven for an institutional product like ours,” Sebastian Blum, one of Greenfield’s founders, told CoinDesk in an email, adding:

“We have deliberately decided to structure all of our funds as an on-shore product to provide a high level of clarity and comfort for investors with no exposure to crypto yet. This caused additional scrutiny and complexity in fund formation on our end, but we believe that this turns out to be helpful in the long-run.”

Founded in 2018 by Blum and Jascha Samadi, Greenfield has already made many blockchain investments under the auspices of its first fund, including in NEAR, Spacemesh, Arweave and Dapper Labs.

The firm has several smart-contract blockchains in its portfolio that could run decentralized finance applications – if existing projects start to migrate beyond Ethereum. “There seems to be a trend emerging with existing Ethereum applications moving over to other ecosystems, which is something we are excited about even though we remain long term bullish on Ethereum,” Blum wrote.

Related: Boerse Stuttgart Group Says Its Crypto Trading App Has Hit €1B Volume in 2020

Read more: Audius, the ‘Decentralized Spotify,’ Is Moving Part of Its Service to Solana Blockchain

Previously, the company released a report on the state of governance across blockchain projects of all kinds.

“For now, Greenfield One invests in the fundamentals of Web 3.0: The fund focuses on crypto networks and developer teams that use blockchain-based technology to create the infrastructure for Web 3.0 as a fundamental asset layer on the internet,” according to a circular released by the company.

Bertelsmann did not reply to a request for comment from CoinDesk, but an in-house spokesperson did confirm the investment via email.

The new fund has also already closed investments from a major European family office known as Lennertz & Co., which invested in its prior fund. Greenfield declined to disclose the size of its first fund.

Lennertz’s managing director, Philipp Lennertz, said in a press release, “Crypto and Blockchain have an enormous potential and have long left its infancy behind. Now it is the time to create the core architecture for Web 3.0.”

• Private German Bank to Launch Cryptocurrency Fund
• German Finance Minister Says He Does Not Support Private Cryptos: Report

Google Pay and Walmart’s PhonePe continue to dominate the digital payments sector in India built on the country’s United Payments Interface (UPI), a shared payments infrastructure initiated by the state and joined by 200 Indian banks. 

According to data released by UPI’s governing body, the National Payments Corporation of India (NPCI), Google Pay accounted for about 45% of UPI’s transaction volume and PhonePe came in second with little over 41% of the pie for November. 

Developed by the NPCI and regulated by the Indian central bank, the Reserve Bank of India, UPI enables both digital payments and peer-to-peer inter bank transfers. Launched in 2016, the network also clocked over 2 billion transactions last month, up from 1.2 billion transactions in November 2019. According to central bank data, the overall transaction count for digital payments in India stands at over 34 billion for the current fiscal year. 

Related: India Plans to Tax Income From Bitcoin Investments: Report

While the list of payment services using the UPI network also features other prominent names in the sector including Paytm Payments Bank, AmazonPay and Whatsapp Pay, their growth seems to have been sluggish so far. Facebook’s Whatsapp received approval in June to roll out payments services in India after a two-year long testing phase, but has managed to capture only about 0.31% of the market share so far.  

The UPI-based digital payments network is visibly dominated by the top three platforms, which account for over 93% of transactional volume. In an apparent move to counter such market dominance, the NPCI announced in November that no single app would be allowed to account for over 30% of UPI transactions on a rolling basis. The cap is supposed to go into effect starting January 2021, but local reports indicate there is little clarity on how the NPCI plans to enforce it. 

Touted as one of India’s leading fintech success stories, the UPI network is one of the few examples where the state has  led  innovation in financial services.

• Google Searches for ‘Bitcoin Price’ Hit 18-Month High
• Libra Plans Dollar-Pegged Stablecoin Launch in January 2021: Report
• In India, a Clash of Digital Innovation and Internet Censorship

Bitcoin has fallen precipitously in the past few hours and is testing a key level of psychological support near $18,000.

At around 06:00 UTC on Dec. 8, the price of the world’s first cryptocurrency fell to around $18,031 from $18,770. It subsequently retraced slightly to $18,200 by press time, according to CoinDesk’s bitcoin price index.

The last time bitcoin experienced a similar drop was on Dec. 1 after the bellwether cryptocurrency reached an all-time high of around $19,920, per the BPI.

Related: Market Wrap: Bitcoin Steadies at $18.7K; Big Ether Options Position Around $1,120 Isn’t Bullish

According to Ki Young Ju, CEO of CryptoQuant, the availability of sizable amounts of bitcoin on exchanges provided by large holders – “whales,” as they are often called – contributed to the price drop.

“When it comes to short-term price prediction, I think the most important data is supply and demand, said Ki Young Ju, CEO of CryptoQuant. “I think this plummet was started from bitcoin…whales who wanted to keep their bitcoin on exchanges making them readily available for sell orders.”

Others see recent buyers taking their winnings out of the market. Lucas Huang, head of growth at decentralized exchange Tokenlon, noted that from a retail trading perspective, “an 80% increase in bitcoin price over only two months might be a profit too tempting not to take.”

Meanwhile, another signal may be coming from how Wall Street views the prospects of one particularly large buyer in recent months. Tyler Radke, an analyst at Citibank, downgraded his recommendation on business intelligence firm Microstrategy to “sell” from “neutral,” flagging to investors bitcoin euphoria might be overextended.

Related: Bitcoin Dissidents: Those Who Need It Most

Not everyone is bearish on bitcoin. “Bitcoin’s latest move down is a rest stop on the way to $30k levels by mid-2021,” said investor Jehan Chu, co-founder of Kenetic Capital. “Experienced bitcoin investors are well accustomed to these drops and understand them as opportunities to buy the dip. Longer term, we can expect these moves to become less frequent as institutional funds continue surging into the market and the volatility declines further.”

Yet in the near term for technical analysts, the latest price action for bitcoin represents a continuing narrative of lower highs on the daily chart. That signals weakening buyer interest in the midst of increasing daily sell volume.

Should buyers fail to push prices above $18,600, a likely spell of further downside may break out as the short-term trend flips from bullish to bearish.

Other notable cryptocurrencies are also suffering, including ether, XRP and litecoin. Those three are down between 7% and 9% in the past 24 hours as well. In fact, all 17 free-floating cryptopcurrencies besides bitcoin in the CoinDesk 20 have dropped between 6% and 12% in the past day.

Meanwhile traditional markets have held steady on the day with the Dow Jones Industrial Average closing 0.35% in the green and the S&P 500 index up around 0.28% on the day.

See also: Standard Chartered Bank to Launch Crypto Trading for Institutional Investors: Sources

• Bitcoin News Roundup for Dec. 8, 2020
• First Mover: Wells Fargo Bitcoin Briefing Could Signal Bull Run Intact

Trading app Robinhood has chosen Goldman Sachs to lead the way for an initial stock offering which could come in 2021 and value the trading app firm at more than $20 billion, people familiar with the matter told the N.Y. Post.

• The company was valued in its last funding round in September at $11.7 billion, showing how the platform has grown during the pandemic and among millennials, the Post said.
• Neither Goldman nor Robinhood declined to comment, the newspaper said.

The story is developing and will be updated as more information is known.

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• Goldman Sachs Expects Digital Yuan to Reach 1B Users Within 10 Years
• Robinhood Gearing Up for Potential IPO in Early 2021: Report

Volume doldrums and December sluggishness caused bitcoin to slip steadily below $19,000; ether options above spot are highest at $1,120 strike price.

• Bitcoin (BTC) trading around $18,705 as of 21:00 UTC (4 p.m. ET). Slipping 1.7% over the previous 24 hours.
• Bitcoin’s 24-hour range: $18,629-$19,299 (CoinDesk 20)
• BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.

The price of bitcoin took a tumble again Tuesday, following Monday’s move lower. At around 06:00 UTC (1 a.m. ET), traders started to sell, which culminated in the price going as low as $18,629, according to CoinDesk 20 data. The price recovered somewhat and was at $18,705 as of press time. 

Read More: Bitcoin Drops 2% as European Stocks See Losses on Brexit Concerns

Related: Bitcoin Dissidents: Those Who Need It Most

“Short-term momentum has fallen off,” noted Katie Stockton, a technical analyst for Fairlead Strategies. “Our overbought/oversold measures support another two to three weeks of consolidation before the uptrend resumes.” 

Momentum, in the form of volume, is much lower this week so far than the previous week. Exchanges tracked by CoinDesk 20 experienced under $1 billion in daily average spot activity so far this week. 

Some uncertainty in the traditional markets may be seeping into the cryptocurrency ecosystem, noted Joel Edgerton, chief operating officer of exchange BitFlyer. “There is no clear market direction short term with the stimulus discussions in (the U.S.) Congress as positive and increased regulatory focus as negative,” Edgerton told CoinDesk. 

Global equity performances Tuesday are looking meek at best:

• Asia’s Nikkei 225 ended the day slipping 0.30% as Japanese investors were in wait-and-see mode on a possible U.S. stimulus package.
• Europe’s FTSE 100 closed flat, in the green 0.05% as traders stayed cautious due to the uncertainty of ongoing Brexit talks.
• In the United States the S&P gained 0.40% on the news drugmaker Pfizer is starting to ship out its coronavirus vaccine.

Related: Bitcoin News Roundup for Dec. 8, 2020

Read More: SBI-SIX Exchange Partnership Offers Singapore Institutional Crypto Services 

“I think we might see bitcoin stay below $19,000 for a couple more weeks as investors take their profits and start to relax before Christmas,” said Michael Gord, chief executive officer for crypto trading firm Global Digital Assets. “I expect to see a surge in demand as enterprises and institutions have new budgets for 2021 and need to decide where to deploy” them. 

Some traders are also clearly putting some of their bitcoin holdings into ether. This can be seen by the daily trend in the spot ETH/BTC pair, which continues to be bullish, according to technical analysis standards, after reverting in late November. In other words, some traders are selling BTC to buy ETH.

“A resurgence in looking for alpha across other tokens is likely preventing bitcoin from making further gains as capital is being deployed elsewhere,” noted Denis Vinokourov, head of research at crypto brokerage Bequant. 

“Historically the holidays have seen [a] market decline as investors take profits and take time off from the market,” added Global Digital Asset’s chief operating officer, Zachary Friedman. “The sideways trending market may also see a surge in alt coins.”

The second-largest cryptocurrency by market capitalization, ether (ETH), was down Tuesday trading around $563 and slipping 4% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

Traders have amassed options at the strike price of $1,120 per 1 ETH. That level now has the highest amount of open interest on strikes above current spot price. However, 60% of strikes are still to the downside of spot, according to data from Skew.

What’s more, the big position at the $1,120 strike isn’t necessarily a bullish one.

“We can see that takers – retail or public investors – are actually net short far out-of-the-money calls at $1,120 ETH,” said Greg Magadini, chief executive officer of data aggregator Genesis Volatility.

Using options exchange Deribit’s data, Magadini showed (in the chart) that the large position at the $1,120 strike is traders who are selling those calls short on Deribit. “Retail has been short selling,” he added.

Digital assets on the CoinDesk 20 are all red Tuesday. Notable losers as of 21:00 UTC (4:00 p.m. ET):

• omg network (OMG) – 8.3%
• algorand (ALGO) – 8.2%
• stellar (XLM) – 7.3%

Read More: Crypto Funds Have Seen Record Investment Inflow in Recent Weeks

Commodities:

• Oil was flat, up 0.02%. Price per barrel of West Texas Intermediate crude: $45.63.
• Gold was in the green 0.39% and at $1,869 as of press time.

Treasurys:

• The 10-year U.S. Treasury bond yield fell Tuesday dipping to 0.913 and in the red 0.53%.

• First Mover: Wells Fargo Bitcoin Briefing Could Signal Bull Run Intact
• Bitcoin Drops 2% as European Stocks See Losses on Brexit Concerns

One of Ethereum’s most popular software wallets, MyEtherWallet is joining other crypto businesses by giving users access to Ethereum 2.0 staking.

Through a partnership with node-hosting service Staked, MyEtherWallet now offers its browser and mobile wallet users the option to stake ETH tokens into the Ethereum 2.0 Beacon Chain deposit contract, a smart contract that lays the foundations for Ethereum’s revamped blockchain infrastructure.

MyEtherWallet “users need to stake 32 ETH to participate. Staked will run a validator node for them, making it easy for the users who don’t have the technical knowledge to participate, so no further action is required on the user’s part,” MyEtherWallet CEO Kosala Hemachandra told CoinDesk.

Related: First Mover: Wells Fargo Bitcoin Briefing Could Signal Bull Run Intact

Staking ETH for the upgrade requires an Ethereum node, so Staked hosts this node and provides software for users to manage their deposits on MyEtherWallet. Staked and MyEtherWallet claim the service is non-custodial (meaning users keep control of their keys), though similar services through exchanges like Coinbase require relinquishing custody.

These stakers will become validators in the new network, the transaction processors who will replace miners under Ethereum 2.0’s new proof-of-stake design and who are paid in ETH for their services.

To become a validator, Ethereum users must stake at least 32 ETH in the Beacon Chain deposit contract. MyEtherWallet stakers will receive validator rewards in ETH, but those rewards cannot be withdrawn at least “until phase 2 (around two years),” Hemachandra said.

The Ethereum 2.0 Beacon Chain contract went live in the first week of November. After receiving enough ETH to kick-start Phase 0 of the migration to Eth 2.0, the Beacon Chain officially launched on Dec. 1.

Related: Huobi’s HUSD Stablecoin to Run on Nervos Blockchain

Read more: Ethereum 2.0 Beacon Chain Goes Live as ‘World Computer’ Begins Long-Awaited Overhaul

Since the launch, a handful of exchanges, including Coinbase and Kraken, have announced they will allow users to stake through their exchange accounts. MyEtherWallet represents the first Ethereum wallet to open up staking to its users.

• First Mover: Why Mohamed El-Erian Might Have Held Bitcoin at $19K
• Grayscale Sees a New Group of Ethereum-First Investors

Citi analyst Tyler Radke lowered his recommendation on MicroStrategy to “sell” from “neutral,” warning investors in a Tuesday research note the company’s recent bitcoin euphoria may be overextended, according to Seeking Alpha.

Radke cited CEO Michael Saylor’s “disproportionate focus” on bitcoin as a potentially troubling trend for the business intelligence company. He also said MicroStrategy’s planned $400 million debt offering to fund additional bitcoin purchases signals “incremental risk to the story.”

Insider selling also contributed to Radke’s eyeing a $250 price target (still above his previous MSTR target of $200).

Related: MicroStrategy Plans $400M Raise; Net Proceeds Will Fund More Bitcoin Buys

Shares of MSTR were down more than 10% to $300.86 in recent trading. The shares have more than doubled since August, largely driven by Saylor’s foray into bitcoin.

• Singapore’s National Research Foundation Invests $9M in Blockchain Innovation
• MicroStrategy Buys Additional $50M in Bitcoin
• Coinbase Brokered MicroStrategy’s $425M Bitcoin Purchase, Exchange Says

Square will invest in environmentally conscious bitcoin tech. Spain’s second-largest bank is reportedly planning a leap into the digital asset industry. And large crypto funds topped a combined $15 billion AUM, as markets trade sideways. 

Greening the orangecoin
Square has announced the launch of a Bitcoin Clean Energy Investment Initiative, where it has committed $10 million to support companies working on green energy technologies within the bitcoin mining sector. Announced Tuesday, the company said it aims to become a net-zero carbon contributor for operations by 2030 and wants to help drive the adoption and efficiency of renewables within the bitcoin ecosystem. “We believe that cryptocurrency will eventually be powered completely by clean power, eliminating its carbon footprint and driving adoption of renewables globally,” said Square and Twitter CEO Jack Dorsey. “

Spain’s second-largest
BBVA, the second-largest bank in Spain, with about $840 billion in assets, is planning a crypto industry entrance by way of Switzerland, according to two sources. BBVA would not comment, but is said to be “launching its Europe-wide crypto initiative from Switzerland,” according to a close source. “There are still some compliance hurdles, but I expect [BBVA] will be live next month,” they said. BBVA is rumored to have integrated a digital asset custody solution, called SILO, and was among the first financial institutions to experiment with public and private blockchains in 2018.

Related: First Mover: Wells Fargo Bitcoin Briefing Could Signal Bull Run Intact

Qualified investors?
Alternative investment intermediary Vincent is seeing record interest in crypto as it launches out of beta. Between October and November, “investors looking for digital assets have grown 80%,” said Vincent co-founder Slava Rubin. Built by the team behind Indiegogo, Vincent is a kind of investment search engine, where qualified investors can browse for opportunities – actual fundraising occurs on regulated partner platforms – like regulated crypto deals from Grayscale, Republic and Cadence, among other non-crypto businesses. “Considering digital assets today represent less than 10% of the total available deal volume on Vincent, there is significant room to grow,” Rubin said. (Grayscale is a sister company to CoinDesk.)

$15B AUM
Large crypto funds are riding high, with an estimated $15 billion in assets under management (AUM), an all-time high, according to CoinShare’s data. By comparison, there was $2.57 billion in AUM at the close of 2019. CoinShares, a digital asset manager, told Reuters on Monday that large-scale cryptocurrency funds saw an inflow of $429 million last week alone. The largest-ever weekly inflow was $468 million seen three weeks ago.

Ethereum, Nervos?
Huobi, one of the “Big Three” Chinese exchanges, is tapping the public Nervos blockchain for its dollar-pegged stablecoin, HUSD, issued by Huobi-backed Stable Universal Limited. This is the first dollar-pegged stablecoin to go live on Nervos, which is sometimes called China’s answer to Ethereum. Currently, HUSD is an ERC-20 token based on the Ethereum blockchain that has its dollars in reserve by Paxos Trust Company. With this integration, it will also be on the Nervos blockchain through the sUDT technical standard, a native token standard launched by Nervos to compete with Ethereum’s ERC-20.

Privacy inoculation
Blockchain-based “immunity passports” don’t resolve core privacy concerns, according to new research from Harry Halpin. “Identity systems based on globally unique identifiers are by nature against privacy, and putting them on a blockchain does not change this fundamental dichotomy,” said Halpin, the author of the paper “Vision: A Critique of Immunity Passports and W3C Decentralized Identifiers” and the CEO of NYM, a privacy startup developing a mixnet. “In fact, putting this data on a blockchain tends to make privacy problems worse, and it’s not clear that hand-waving about zero-knowledge proofs really changes the situation.”

• BLOCK-U-SIGN? The simple reason DocuSign doesn’t use blockchain. (Quartz)
• DERIBIT DEGEN? How one bitcoin options trader turned $638,000 into $4.4 million in five weeks. (CoinDesk)
• STILL FEARED: Rebranded Libra still a “wolf in sheep’s clothing,” according to German Finance Minister. (CoinDesk)
• TOKEN TRANSMOGRIFICATION: Blockstack’s stacks tokens could be tradable in U.S. after the launch of its new Stack 2.0 blockchain. (CoinDesk)
• MACRO STRATEGY: MicroStrategy will raise an additional $400 million to fund yet more bitcoin allocations. (CoinDesk)
• ‘ABSOLUTELY INEVITABLE’: Standard Chartered CEO Bill Winters says about digital currencies adoption. (CNBC)
• TRACED FASHION: International fashion brand Desigual will employ the Marco blockchain for supply chain transparency. (CoinDesk)
• $1M NFTs: Cryptocurrency artist Murat Pak becomes the first to earn $1 million. (Decrypt)
• SIGNALING SECRECY? MobileCoin, a crypto with associations to Signal founder Moxie Marlinspike, quietly launched with trading on FTX. (CoinDesk)

Related: Blockchain Bites: $187M Blockchain Bond, $522M BTC Mining Revenue and ‘Ethereum-First’ Institutional Investors

Deja vu – 2017?
Bitcoin is facing selling pressure on Tuesday. The leading cryptocurrency dropped below $19,000, a more than 2% decline on the day, according to CoinDesk 20 data. The decline comes after multiple rejections near $19,400 in the past 48 hours, CoinDesk’s Omkar Godbole reports. Large sell orders were placed around the all-time high of $19,920, capping the upside, as traders look poised to liquidate their holdings. For instance, the balance held in “accumulation addresses,” i.e., large bags, has declined by over 4% to 2,698,719 bitcoin in the past three weeks, according to data source Glassnode.

Squaring the circle?
In the period before President-elect Joe Biden takes office, several Democrat lawmakers have come out swinging against favorable, crypto-focused guidance issued under the Trump administration. 

Most notably is the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act, introduced by U.S. Representatives Rashida Tlaib (D-Mich.), Jesús “Chuy” García (D-Ill.) and Stephen Lynch (D-Mass.) last week. 

The bill, if passed, would essentially treat stablecoin issuers as deposit holders and therefore be subject to certain banking regulations. As Blockchain Bites reported earlier, much of the crypto community has come out against the proposed legislation – with many saying it fails to understand the nature of decentralized, programmable money and would hinder the growth of an emergent industry. 

It’s a bit of a black box how a President Biden will run his administration, especially regarding financial matters. While campaigned he told rich donors, i.e., Wall Street, “nothing would fundamentally change” if he’s elected. And he has gone on to nominate or float financially lenient regulators, such as Janet Yellen, for cabinet positions. 

Yellen is on record as saying she believes the U.S. financial regulators should allow blockchain and cryptocurrency projects to develop, saying in 2015 the Federal Reserve and other regulators might have “limited authority” over digital currency systems.

That said, Circle CEO Jeremy Allaire believes the incoming administration will “ultimately be supportive of cryptocurrency because it represents a seismic shift as large as the commercial internet.” Allaire’s Circle is part of the CENTRE consortium that oversees the USDC stablecoin.

The Biden administration is “going to be focused on infrastructure changes that make America more competitive, and this is absolutely going to be a core building block in that,” Allaire said on CNBC. He did not comment on the STABLE Act directly, but noted there are moderates in office that believe in constructive approaches to regulation. 

If the economy is the biggest story in this election cycle, the growing crypto dollar sector – now over $20 billion – is hard to ignore. 

• First Mover: Why Mohamed El-Erian Might Have Held Bitcoin at $19K
• Crypto Long & Short: Why Some Investors Get Bitcoin So Wrong, and What That Says About Its Strengths

Secondary markets for bitcoin mining machines are red-hot as a surge in demand from miners has caused severe delays in order fulfillment from manufacturers.

Two of the mining industry’s largest manufacturers, Bitmain and MicroBT, are sold out of new machines until May 2021 as demand has overrun current manufacturing capacity. Scrambling for even more machines, miners are turning to secondary markets for whatever they can find. 

Bitmain’s international marketing director, Nathaniel Yu, confirmed that the company is sold out of inventory until May 2021 in an email to CoinDesk. Bitcoin’s 166% year-to-date rally is a “key driver” of surging demand for new machines, especially for Bitmain’s 19 Series, Yu said. 

Related: Square to Support Greener Bitcoin Mining as Part of Zero-Carbon Pledge

Vincent Zhang, vice president of sales for Bitmain’s leading competitor, MicroBT, declined to comment on his firm’s current inventory but noted that demand for efficient mining machines is high. 

“When the price ran up, everyone gobbled up orders,” said Kevin Zhang, vice president of business development for New York-based mining company Foundry, referring to bitcoin’s strong recovery off of a 50% intraday price crash in March. 

Producing enough new machines to meet demand is especially challenging because of the competition for mining chips, Zhang said. 

The same 7 and 8 nanometer chips that miner manufacturers need are also in high demand by other technology giants like Apple and Nvidia. When competing for supply against these firms, bitcoin mining companies are generally a lower-priority customer.

Related: Bit Digital Completes $13.9M Deal for New Mining Machines

Unable to receive new machines from manufacturers battling supply-line complications, miners are swarming to secondary markets. 

Trading activity on these otherwise much quieter markets is at or even above pre-halving levels, according to data approximations from Guzmán Pintos, co-founder of mining software company Luxor Technologies. Before the third bitcoin halving event in May, the mining subsidy was twice its current size, allowing for a larger pool of profitable market participants.

An even starker imbalance between supply and demand was drawn by Thomas Heller, chief operations officer at mining software company HASHR8, in a direct message with CoinDesk. Heller said secondary markets for mining hardware are the hottest they’ve been since late 2017 or early 2018 during the cryptocurrency market’s last peak. 

“Nobody wants to sell. Everyone wants to buy,” Pintos told CoinDesk.

Strong demand for any available machines is reflected in the high volatility and premiums of ASIC prices. For some machines, the per-unit price can “easily change 10-20% on a weekly basis,” Pintos said. 

It’s not uncommon for the upward volatility of second-hand mining machines to often exceed bitcoin’s volatility, Heller added. 

In recent months, prices for second-hand, lower generation mining machines have increased upwards of 40%-50%, according to Mason Jappa, CEO of Blockware Solutions, one of the leading mining hardware and service providers. Newer machines like the S19 Pro have seen more mild price increases of around 25% on secondary markets. 

With Bitmain and MicroBT sold out through May 2021, Jappa said, the mining hardware market has been transformed into “truly a seller’s market at this point.”

Blockware expects the current trend of strong demand and limited supply to intensify with more and more miners “scrambling to purchase machines on the secondary market with as quick as a timeline for delivery as possible,” Jappa said.

Mining conditions – not to mention the bitcoin price itself – are “very bullish at the moment,” he told CoinDesk. According to Jappa, timelines for future batches of machines from Bitmain and MicroBT will continue to be extended, and prices on secondary markets will continue to appreciate. 

• Bitcoin Miners Saw 48% Revenue Increase in November
• Hive Reports $7.4M Q2 Profit as Lower Costs More Than Offset ‘Big Spend’ on Expansion

BitGo has added capital introduction (cap intro) services, a kind of marketing activity carried out among hedge fund investors, to its suite of white-glove crypto brokerage services.

Through a series of invitation-only roundtables with hedge fund managers, BitGo Prime says it will bring together asset managers, family offices, sovereign funds, pension funds, endowments and high-net-worth individuals. Think of it as a way for BitGo, not Coinbase, to land the next MicroStrategy.

Prime brokerage, a term that means different things to different people, comprises a bundle of services including custody, lending and taking care of clearing and settlement. In the traditional financial world it’s often provided by large investment banks to hedge fund clients.

Related: Wrapped Bitcoin ‘Burns’ Increase as Traders Rotate Capital Out of Cooling DeFi

Read more: Behind ‘Prime Broker’ Buzzword Lies a Complex Strategy Game for Crypto Firms

BitGo Prime began offering crypto lending services at the end of last year, and added the ability to trade directly out of cold storage (crypto kept at an arm’s length from the internet). In April of this year, BitGo acquired Lumina, a firm that does tax reporting and portfolio accounting.

Cap intro – the concept was supposedly introduced by Morgan Stanley Prime Brokerage in 1997 to connect clients with target investors – plays a prominent role in traditional markets. BitGo is now including it for crypto – but with a twist, said  BitGo Prime CEO Nick Carmi.

“We’re adding a slightly different twist to cap intro services from a crypto perspective, using it also as a way to educate the investor community in the financial market space about crypto,” said Carmi.

Related: Digital Asset Firm Fireblocks Raises $30M to Gird for ‘Influx in Customer Demand’

BitGo is hosting its first cap intro event today, Tuesday, where three managers will present their strategies.

BitGo’s presenting managers are Pantera Capital CEO Dan Morehead, portfolio manager Delfos Machado Neto and LedgerPrime Chief Investment Officer Shiliang Tang.

Read more: Ex-Pantera Partner’s New Crypto Fund Is ‘Not for the Faint of Heart’

“We at Pantera welcome BitGo’s initiative to launch cap intro for digital assets and we were delighted to participate,” Morehead said in a statement. “This is yet another step forward in merging digital assets with the traditional financeworld and providing the education, tools and solutions institutional investors need to participate in this growing asset class.”

BitGo says it is planning more of the introductory events in the coming year.

“I think you can do a lot with these events,” said Carmi. “We plan to do them possibly on a quarterly basis. Maybe in Q1 we will invite managers in the Asia time zone and also do an event in Europe.”

• Scaramucci’s $9.2B SkyBridge ‘May Seek Exposure to Digital Assets’
• Crypto Long & Short: What We’re Getting Wrong About Druckenmiller and Bitcoin

London’s Standard Chartered bank has gathered a group of crypto exchanges for a new digital asset trading platform tailored to the institutional market, according to two sources familiar with the plan.

Standard Chartered’s crypto trading group comprises five of the biggest over-the-counter (OTC) traders and four exchanges, and will include an Ethereum-based settlement token, a well-placed source told CoinDesk.

The firms involved in the custody and trading project include LMAX and ErisX, according to the source. Also supporting the project are Switzerland-based custody provider METACO, in which Standard Chartered has invested; and U.K.-based trading technology provider Cobalt (where Standard Chartered is also an investor).

Related: Jesse Powell: Bitcoin Banker

Standard Chartered and the other firms named in the group all declined to comment.

“Standard Chartered plus five of the biggest traders in digital assets and four exchanges are about to get this new model started,” said the source. “I think the first test trade will be next month and I’d say it’ll end up involving the 10 biggest exchanges in digital.”

A settlement token used in Standard Chartered’s crypto trading platform will be based on the Ethereum ERC-20 standard, the source added.

“A lot of people were pushing to use Hyperledger, Corda, but we have specifically gone for something the native crypto community are comfortable with,” the source said. 

Related: Spain’s Second-Largest Bank Will Soon Launch Crypto Services: Sources

The system will create an institution-focused equivalent of Silvergate Bank’s exchange network (SEN), the source added.

“We are building our own token of fiat collateral and hoping that will become the equivalent of Tether, except that the tokenized collateral or money will be held in the trading bank account of a proper bank, like a Standard Chartered, a JPMorgan, a Deutsche Bank,” the source said.

(The token sounds somewhat akin to the Avit, a bank-issued digital asset from Caitlin Long’s Avanti Financial.)

Standard Chartered’s innovation arm, SC Ventures, was reported to be working on an institutional crypto custody project back in the summer. The bank is involved in multiple projects touching on crypto including an anti-money laundering (AML) solution. Speaking at a virtual event Monday, Standard Chartered CEO Bill Winters teased that an announcement was in the works.

“Standard Chartered has been working on this for a long time and is jointly working with other giants in the crypto space,” a second source involved in the build told CoinDesk. “This is extremely serious and not some proof of concept. They have passed all the checks and compliance and are bringing in some exciting names.”

Big banks who once shunned crypto are fast warming to the idea, with Spain’s second-largest lender, BBVA, said to be launching a digital asset custody and trading offering out of Switzerland early next year.

• Standard Chartered, Philippines Bank Issue $187M Blockchain Bond
• Bitcoin Derivatives Firm ErisX Adds Cash-Settled Contracts After Physically Settled Futures Fall Flat