CoinDesk Crypto

Bitcoin’s price is turning bullish as ether options traders accumulate half a million of ETH options for December expiration.

• Bitcoin trading around $13,519 as of 20:00 UTC (4 p.m. ET). Gaining 2.6% over the previous 24 hours.
• Bitcoin’s 24-hour range: $13,105-$13,649
• BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

The price of bitcoin moved upward Thursday, going as high as $13,649, according to CoinDesk 20 data, and settling around $13,519 as of press time. 

Read More: Bitcoin’s Options Market Sees Just 6% Chance of $20K Before Year’s End

Related: Bitcoin Transaction Fees Rise to 28-Month High as Hashrate Drops Amid Price Rally

Often when other asset classes like stocks sell off, as they did on Wednesday, bitcoin drops. “It would not be the first time bitcoin’s price action falls in line with traditional markets as a general sell-off occurs,” said John Willock, CEO of Tritium. “However, it is also totally reasonable for BTC to experience this level of pullback.” 

Yet, on Thursday equities fared better, particularly in the United States.

• The Nikkei 225 in Asia ended the day slipping 0.37% on worries about further global coronavirus lockdowns.
• The FTSE 100 in Europe closed flat, in the red 0.02% as the U.K. government faces pressure to follow France and Germany and enact coronavirus restrictions.
• In the United States the S&P 500 ended the trading day up 1.7% as positive economic data and earnings reports boosted the index.

Read More: FTX Launches Bitcoin Pairs for Top Stocks Like Amazon, Apple and Tesla

Constantin Kogan, a partner at crypto fund-of-funds BitBull Capital, sees no reason why the world’s oldest cryptocurrency can’t go higher in the near term. “Bitcoin is heading for $13,800 resistance and 2019 all-time highs,” Kogan told CoinDesk. “It might break $13,800.”

Related: The Global Macro Case for FA Allocations to Bitcoin With Kevin Kelly

Taking a look at the bitcoin futures market, open interest has picked up, going to levels not seen since August. 

“We are almost at new highs for open interest for all BTC futures – $5.4 billion right now,” noted Jason Lau, chief operating officer for San Francisco-based cryptocurrency exchange OKCoin. “With many new positions being opened, it suggests the market is still bullish at these prices,” Lau added.

“That said, there are a considerable amount of order book ‘asks’ in the $14,000 region for bitcoin,” Lau said. “Bitcoin should close above that level on a weekly or monthly basis to confirm it is acting as support.”

Ether options in December pile up

The second-largest cryptocurrency by market capitalization, ether was up Wednesday trading around $389 and climbing 1.1% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

The amount of open interest on ether options for December expiration hit 500,000 ETH, worth $195,500,00 as of press time, as traders make bets on the dynamics of the Ethereum network.

Vishal Shah, an options trader and founder of derivatives exchange Alpha5, noted that a lot of ether options bets seem bearish. “It looks like there’s some strong ETH put buying going on into the year end mainly around the mid-low $200s,” he said. Indeed, data aggregator Genesis Volatility shows strikes amassing around the $200-$280 price points.

“I think people are buying the downside for some reason,” Shah added. “It definitely throws water on the narrative that Ethereum 2.0 would create a supply shock in Ethereum 1.0 due to the initial lock-up – perhaps it is something else, but it’s definitely hard to glean any bullish implications.”

Other markets

Digital assets on the CoinDesk 20 are mixed, mostly red Thursday. Notable winners as of 20:00 UTC (4:00 p.m. ET):

• ethereum classic
• 0x

Notable losers:

• orchid
• tezos
• stellar

Read More: The Graph Raises $12M in GRT Token Sale; Teases Mainnet Launch 

Commodities:

• Oil was down 2.8%. Price per barrel of West Texas Intermediate crude: $36.31.
• Gold was in the red 0.34% and at $1,869 as of press time.

Treasurys:

• U.S. Treasury bond yields climbed Thursday. Yields, which move in the opposite direction as price, were up most on the 10-year, jumping to 0.830 and in the green 7.3%.

Related Stories

• First Mover: Bitcoin Falls as COVID-19 Surges, ECB’s Lagarde Steps Up, US GDP Hits 33%
• Bitcoin’s Options Market Sees Just 6% Chance of $20K Before Year’s End

Cryptocurrency trading colossus Binance Holdings Limited created a corporate plan for profiting from the U.S. market while avoiding the country’s regulatory scrutiny, Forbes reported Thursday, citing a 2018 document it obtained.

• The leaked presentation outlines a “Tai Chi entity” that would funnel revenue to Binance through a web of corporations without exposing its parent to the financial regulator’s microscope, according to the Forbes article, which included a screenshot of a slide but not the entire deck.
• When asked for comment, a Binance spokesperson directed CoinDesk to tweets by exchange chief Changpeng “CZ” Zhao. He called Forbes’ reporting bunk and asserted that Binance follows all local laws, including those in the U.S. “Anyone can produce a ‘strategy document’, but it does not mean Binance follows them,” said CZ, adding that the slide deck was produced by a third party, not his company.
• U.S. affiliate Binance.US operates under a corporate structure similar to the “Tai chi” network, according to Forbes. Binance.US chief executive Catherine Cooley has long refused to discuss Binance.US’s ownership.
• Binance in June 2019 unveiled plans to launch a U.S. exchange registered with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department. The exchange updated its terms of service the following day to bar U.S. users from accessing Binance’s global hub.
• Forbes said the Tai Chi document calls for “strategic” virtual private network (VPN) usage to sidestep the Securities and Exchange Commission and New York State Department of Financial Services and warns Binance employees against working in the U.S. to mitigate “enforcement risks.” Forbes additionally claims the document contains a “detailed strategy for distracting” U.S. regulators.
• Binance used to be based in Malta, but its headquarters location has been something of a mystery for most of this year. CZ has been cagey on the matter in public appearances.

Related Stories

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• Gemini Exchange Launches Crypto Trading Against the Euro

Decentralized finance (DeFi) protocol Harvest Finance has upped its bounty from $100,000 to $1 million for information leading to the return of $24 million in siphoned funds taken in an exploit Monday.

According to the Harvest Finance Twitter and Discord account, the anonymous Harvest Finance team is offering the bounty for “tracking down” the attacker and returning the funds.

A $50 million flash loan from Uniswap was used Monday on Harvest Finance to sway the price of USDC and USDT pools. Harvest Finance’s pricing feeds – based on Curve Finances stablecoin pools in this case – were manipulated by the flash loan leading to traders suffering large amounts of “impermanent loss” (where token prices change momentarily against investors).

Related: ‘Flash Loans’ Have Made Their Way to Manipulating Protocol Elections

The exploit led to the project’s total value under lock (TVL) dropping 70% from $1 billion to $296 million, according to DeFi Pulse.

Read more: Harvest Finance: $24M Attack Triggers $570M ‘Bank Run’ in Latest DeFi Exploit

The Harvest Finance team implied it knew the identity of the attacker who is “well-known in the crypto community” and who left “a significant amount of personally identifiable information,” according to the project’s Discord.
Harvest Finance did not return questions for comment.

The anonymous developer team is currently administering returning $2.5 million in stablecoins given back to the developer contract. The team is also weighing releasing an IOU reserve pool that extracts value from the protocol to reimburse haircut traders, according to announcements in the project’s Discord channel.

Related Stories

• All-In on DeFi: Why the Days of Centralized Exchanges Are Numbered
• Huobi Beefs Up Venture Arm With Former DragonFly Partner Leading DeFi Investments
• The Graph Raises $12M in GRT Token Sale; Teases Mainnet Launch in 30-60 Days

Flash loans can be used for more than just siphoning funds out of poorly put-together decentralized finance (DeFi) protocols.

That’s one lesson investors can learn from Israel-based startup BProtocol’s manipulation of flash loans to sway election results on DeFi legacy project MakerDAO earlier this week.

According to the MakerDAO community forum, on October 26, BProtocol borrowed 13,000 MKR tokens worth some $7 million through a flash loan from derivatives platform dYdX swapped for MKR on lending platform Aave. Voting with the flash-loaned MKR tokens enabled BProtocol to speed up desired election results for its project built on MakerDAO.

Related: All-In on DeFi: Why the Days of Centralized Exchanges Are Numbered

The “attack” was less an attack than yet another unexpected consequence of flash loans, a crypto-first product that made its debut in early 2020 with DeFi platform Aave.

Read more: Everything You Ever Wanted to Know About the DeFi ‘Flash Loan’ Attack

Flash loans enable an in-the-know trader to amass mad leverage behind a trade by providing a temporary loan that must execute and settle in one block space. Here – and perhaps for the first time – BProtocol borrowed millions of MKR tokens to sway a protocol election and hand back the money in one block.

Other DeFi degens have used flash loans to perform what is commonly known as an oracle attack. In these situations a project’s funds are at risk due to poor project infrastructure – typically, shoddy pricing feeds. This happened last Sunday with $1 billion protocol Harvest Finance, which had prices for its stablecoin pools swayed by a flash loan, resulting in a haircut for Harvest traders.

Flash votes

The ability to use flash loans to exploit governance events is fairly new, however. Holders of MakerDAO’s governance token typically decide how the platform changes. 

Related: Huobi Beefs Up Venture Arm With Former DragonFly Partner Leading DeFi Investments

But here BProtocol showed that if there are enough MKR tokens up for borrowing on DeFi markets, a flash loan can be used by just about anyone to sway Maker’s election results. All someone needs to do is wait to be last in line at the ballot and drop in the borrowed tokens, BProtocol CEO Eitan Katchka said in a WhatsApp call.

Katchka added he thinks the Maker Foundation was aware of the unlocked door BProtocol went through with its flash loan, and that the outcome of the vote would have likely been the same.

He said the team had been waiting extra days to be whitelisted for using MakerDAO’s pricing oracles and had become “curious” after months of studying Maker’s infrastructure to see if the flash loan was possible. So they decided to play a bit.

Read more: MakerDAO’s Embrace of Centralized Stablecoins Offers Risks and Rewards

Now MakerDAO community members and the Maker Foundation are considering options for “disincentivizing large MKR Holders from providing MKR Liquidity on Lending Platforms and AMM Platforms” until MakerDAO can blacklist votes using flash loans, according to the MakerDAO forum. 

In lieu of comment, the Maker Foundation pointed CoinDesk to a community forum discussion from October 6 on limiting the use of flash loans for governance procedures.

Related Stories

• The Graph Raises $12M in GRT Token Sale; Teases Mainnet Launch in 30-60 Days
• DefiDollar Raises $1.2M to Be the Risk-Insured Stablecoin Layer for DeFi

Decentralized music app Audius announced Thursday it will migrate its content management system over to Solana’s high-speed blockchain from an Ethereum sidechain operated by the POA Network that runs on a set of trusted validators.

Audius occupies a similar space to popular music players like Pandora or Spotify, but it allows artists to set their own terms. It also lets other developers make use of its underlying content. Audius reports strong recent growth in users, currently boasting 800,000 active users and over 150,000 tracks available for streaming.  

Due to high gas fees and slow block times on Ethereum, it appears to be porting season in the dapp space. We previously reported on Terra, Kin and USDC moving onto Solana. Similarly, the automated market maker and pooled assets manager Balancer has been incentivizing efforts to help it offer services on other networks, such as Oasis and NEAR. 

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

In an announcement shared with CoinDesk in advance, the Audius team wrote:

“Given our need to utilize a high-performance blockchain today, Solana’s growing set of 182 validators (as of this writing) combined with a battle-tested architecture gives our community the confidence that Audius’s catalog can scale at ease, a crucial component of our path to mainstream adoption.”

Notably, when Kin announced its move to Solana in June, it also announced an incentive arrangement with Solana that would unlock grants of SOL tokens for each million users Kin brought in over a 24-month period.

Audius CEO Roneil Rumburg declined to disclose the exact arrangement with Solana, stating that it was primarily a technical consideration. However, he wrote to CoinDesk in an email, “There’s an agreement between the two teams that involves technical support, deliverables for support, and incentives. … Solana will help Audius have the best user experience possible.”

Related: Ocean v3 Brings Wave of Data Monetization Tools to Ethereum

Audius node operators and artists use the AUDIO token to stake, allowing for different functions on the network. Staking and governance functionality will remain on Ethereum.

However, the higher-throughput needs required by actually hosting, finding and streaming music will port over to Solana, which boasts extremely low transaction fees and millisecond block times. Audius expects the migration to happen in three phases, wrapping up in the second quarter of 2021. 

The Audius app is available on iOS and Android app stores and on the web. The company behind the platform has raised $9.8 million to date, according to Rumburg, over two rounds. The first in 2018 was led by General Catalyst and Lightspeed; the second in 2020 was led by Multicoin and Blockchange.

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The executive director of Stanford’s Future of Digital Currency Initiative, Lawrence Rufrano, is facing federal wire fraud charges following a disability benefits fraud investigation by his former employer, the Federal Reserve.

• Prosecutors allege Rufrano hid employment at two law firms, three companies and a university while also collecting long-term disability benefits from the Federal Reserve System for five years after departing due to a “purported” mental illness.
• CoinDesk found at least two of Rufrano’s jobs intersected with cryptocurrency and the blockchain ecosystem. He directed Stanford’s digital currency group and also advised Factom, a now-defunct protocol development firm. Rufrano is also listed as an adviser to Christopher Giancarlo’s Digital Dollar Project.
• The Stanford Future of Digital Currency Initiative researches “all forms” of digital currency with the aim of standardizing their technicals and engaging government stakeholders, according to its current website. It boasts Ripple and IBM as corporate sponsors. Rufrano last appears as its executive director in an Oct. 25 cached version of the website.
• Rufrano also led the Stanford School of Engineering’s Advanced Financial Technologies Lab. He managed that AI-focused program’s relationships with banks and fund managers, according to the criminal complaint.
• Stanford did not immediately return questions regarding its ties to Rufrano.
• An Oct. 21 criminal complaint suggests Rufrano also assisted an unnamed law firm on matters related to blockchain and initial coin offerings. He received over $18,000 a month for advising that firm on fintech, the complaint said.
• Rufrano was released Wednesday on a $25,000 bond.

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• Major Meeting of Central Banks Produces Same Old ‘Evaluating’ CBDCs Refrain
• IMF, World Bank, G20 Countries to Create Central Bank Digital Currency Rules
• Federal Reserve, 6 Other Central Banks Set Out Core Digital Currency Principles

The cost of doing transactions on bitcoin is surging while the network suffers its worst congestion in nearly three years.

As of Wednesday, the mean fee per transaction, or the average transaction cost, was 0.00086764 BTC, the highest since June 2018, according to data source Glassnode. In dollar terms, the average transaction fee was $11.66. 

Average fees in bitcoin terms have increased by 573% in the past 12 days alongside the cryptocurrency’s price rally from $11,200 to $13,800.  

Related: The Global Macro Case for FA Allocations to Bitcoin With Kevin Kelly

“Bitcoin mempool [memory pool] is back in focus in the wake of rising transaction volumes, causing congestion in the network and consequently driving fees higher,” Denis Vinokourov, head of research at the London-based prime brokerage Bequant, told CoinDesk. 

Mempool is the collection of unconfirmed transactions. When bitcoin transactions are executed, they are first sent to the mempool, where they wait for approval by miners. Bitcoin miners can process only 1 megabyte (MB) worth of transactions per block mined roughly every 10 minutes. 

When the blockchain experiences a rise in traffic, it causes delays and a backlog of transactions. As demand outstrips supply, miners increase their revenue by prioritizing transactions with higher fees. That, in turn, forces other users to offer higher fees to avoid long waiting times. 

Network congestion is usually seen during price rallies. As noted earlier, bitcoin has chalked out a significant rise over the past 12 days. During that time frame, network congestion, as measured by the total number of unconfirmed transactions in the mempool, worsened by 1,800%.

Related: First Mover: Bitcoin Falls as COVID-19 Surges, ECB’s Lagarde Steps Up, US GDP Hits 33%

As of Tuesday, there were 121,340 unconfirmed transactions in the mempool with a total block size of 66.8 MB. According to data source blockchain.com, that’s the highest level since the bull market frenzy of December 2018.

Hashrate drop contributes to congestion

The recent slide in bitcoin’s hashrate looks to have played a big role in causing network congestion along with a general price-driven pickup in activity. In other words, the mining power dedicated to approving transactions and mining blocks has gone down amid the price rally, boosting waiting times and network congestion. 

The seven-day moving average of bitcoin’s hashrate has declined from 146 exahashes per second (EH/s) to 120 EH/s.

In other words, the mining power available to approving transactions and mining blocks has gone down amid the price rally, boosting waiting times and network congestion.

With the end of the rainy season in China’s Sichuan province, a mining hub, some miners may be shifting to other areas with cheap hydroelectricity sources, causing a drop in the hashrate.

Related Stories

• Bitcoin’s Options Market Sees Just 6% Chance of $20K Before Year’s End
• FTX Launches Bitcoin Pairs for Top Stocks Like Amazon, Apple and Tesla

FTX is now offering a tokenized way to trade fractions of stocks. Coinbase predicts its consumer-directed debit card to hit shelves next year. Caitlin Long’s Avanti bank is in line to become the second “crypto bank.”

Top shelf

Fractional offering
You can now trade high-demand stocks like Tesla, Apple and Amazon, represented by tokens, on the FTX derivatives exchange. Through its fractional stocks offering, 12 equity and cryptocurrency pairs will be offered, allowing users to trade tokenized fractions of stocks (seemingly up to half a stock at a time) against bitcoin and stablecoins, CoinDesk’s Sebastian Sinclair reports. The product is conducted in partnership with capital markets solutions provider Digital Assets AG and investment firm CM Equity. FTX calls it a “first of its kind” product.

Coinbase card
Coinbase’s debit card is coming to U.S. consumers sometime next year. Active for nearly a year in the U.K. and European Union, the card will become available in all U.S. states except Hawaii. Any cryptocurrencies that Coinbase supports in the U.S. (and that users hold in their accounts) can be spent through the debit card – with rewards paid in lumens or bitcoin. The card is issued by South Dakota-based MetaBank and powered by payments platform Marqeta, though users will manage it directly through their Coinbase accounts, according to CoinDesk banking whisperer Nathan DiCamillo.

Related: First Mover: Bitcoin Falls as COVID-19 Surges, ECB’s Lagarde Steps Up, US GDP Hits 33%

Avast ye? No, avanti!
Speaking of banks: Blockchain pioneer Caitlin Long is now the CEO of her own special purpose depository institution (SPDI) in Wyoming. Avanti Financial’s banking charter was approved unanimously by the Wyoming State Banking Board on Wednesday, becoming the second newly chartered bank in the state in 2020. Kraken Financial earned approval last month, beating Long – who helped design the state’s rules – to the draw. Avanti is now in the process of raising fresh capital, adding to a $5 million angel round, before it can be granted a certificate of authority to operate, DiCamillo said.

Token sale
The Graph, a data-indexing protocol used by many popular decentralized finance (DeFi) applications, has raised $12 million in a public sale of its native GRT token, CoinDesk’s Zack Seward reports. With approximately 4,500 buyers, the sale used in-house technology to distribute some 400 million GRT tokens. “What we’re excited about with the sale is getting GRT tokens in the hands of indexers, curators and delegators that are going to be participating in the decentralized network,” The Graph co-founder Yaniv Tal said. The firm previously raised $5 million in a private token sale involving Coinbase Ventures and a $2.5 million seed round led by Multicoin Capital.

Four-digit growth
Publicly traded digital-asset brokerage Voyager Digital saw revenue increase 1,159% (from $87,318 to $1.1 million) in the fiscal year ended June 30, 2020. CoinDesk’s Omkar Godbole also reports, customer assets jumped by 1,959% to $35 million. Stephen Ehrlich, Voyager CEO, said increasing adoption of digital assets has helped the company extend its growth momentum. Up next? Revenue is expected to have risen to $2 million in the July-September period while the firm looks to obtain a virtual currency license, or “BitLicense,” this year.

Quick bites

• The chief of Canada’s central bank has said its national “digital dollar” initiative is progressing past the experimental phase. (CoinDesk)
• Investors are rattled by the latest COVID-19 prognostications, with bitcoin’s price rally possibly on pause. (First Mover/CoinDesk)
• New York’s top financial regulator wants firms, including crypto miners, to look closer at climate change risks. “DFS is developing a strategy for integrating climate-related risks into its supervisory mandate,” a new note reads. (CoinDesk)
• An Algorand-based micro equity exchange has launched a token tracking top tech stocks including Microsoft, Apple, Tesla, Twitter, Amazon, Netflix and Google. (Modern Consensus)
• A group used a flash loan attack to ensure its proposed governance vote on the Maker protocol went through. Maker is now asking for MKR governance token holders not to put them on trading platforms to mitigate the possibility of a similar attack. (Decrypt)

Market intel

Bloody chance 
Traders are betting bitcoin won’t cross its 2017 high-water mark of $20,000 by year’s end. According to data source Skew, there’s a 6% probability of bitcoin trading above the historical 2017 all-time high. “Bitcoin’s price has rallied from $3,867 to $13,800 over the past 7½ months. However, while prices have risen by over 250%, the chances of bitcoin reaching record highs by the end of the year have seen what appears to be a marginal rise from 4% to 6%. The probability peaked at 8% in July,” CoinDesk’s Omkar Godbole reports. 

At stake

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

Tokens rising (Happy Halloween)
Following the pop of initial coin offering bubble that began in 2017 and tapered off in 2018, many looked at token offerings skeptically. Although a more democratic way to raise funds, this novel blockchain-based fundraising mechanism ran into a host of problems: many were potentially unregistered securities sales for projects not-yet built and unlikely to gain traction.

In 2018, Satis Group released a report detailing that approximately 78% of ICOs were Identified Scams, or projects that “did not have/had no intention of fulfilling project development duties with the funds, and/or was deemed by the community (message boards, website or other online information) to be a scam.”

A similar overview from Boston College largely backed up these claims.

That’s why in 2020 it’s surprising to see token sales are on the up and up, although with a few notable changes. This past summer, Leigh Cuen reported that “token sales are back.”

“Unlike 2017, today the norm is for token sales to be conducted through an exchange, whether it’s CoinList, Gate.io or Binance,” she wrote. Additionally, projects now lean into controlled distribution. Unlike the original ETH sale in 2015, and the 2017 copycats that followed, many token founders now prefer ongoing sales with controlled distribution – meaning geofencing regions (like the U.S.) where investments may prove to be an issue.

Halfway through the past year Ava Labs’s Avalanche blockchain raised roughly $42 million in a public token sale. Polkadot, one of the largest blockchains, raised $43 million in a private sale days later. And NEAR, another layer 1, brought in $30 million. Then there’s Dapper Labs, which closed an $18 million token sale in early October

Notably, all these projects had already raised significant venture funding, often conducting a private sale, before turning around to publicly list their tokens on a gated platform that manages know-your-customer information and compliance.

The Graph is the latest project to join the trend of high-value public token sales to close this year. Following a similar set of stringent rules and capital caps, The Graph is different in choosing to use in-house technologies – rather than the suite of hosting platforms.

The verdicts out on what, if anything, will buck the trend. But for now, it’s safe to say, token sales are back.

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Users of cryptocurrency custody platform Casa can now purchase bitcoin on the platform using their bank accounts. 

The platform announced on Thursday it is rolling out the service for its U.S. customers, and the bought BTC would be directly deposited into a user’s wallet. Casa said users can buy a maximum of $20,000 worth of bitcoin per month using this service, with a fee of 0.99% on every purchase.

• According to Casa CEO Nick Neuman, the BTC is bought via partner platform Wyre. He said that because all BTC purchased with Casa is being sent on-chain directly to users’ wallets, every purchase also includes a mining fee. 
• A mining fee is also levied by crypto exchanges, generally at the point when users transfer their digital assets to their own wallets. 

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Alex Pack, a former managing partner at crypto investment firm Dragonfly Capital, has joined Huobi Group as a corporate investment advisor to help the firm behind the world’s top centralized exchange by derivatives trading volumes to invest in decentralized finance, of DeFi.

“When I left DragonFly earlier this year, Huobi was also ramping up its internationalization efforts and its corporate investment practice,” Pack told CoinDesk in an interview. “I thought Huobi has the potential to be one of the most impactful companies in crypto. When I was approached by my old friends there to help them, I thought it was a no-brainer.”

Pack’s new role at Huobi will largely focus on expanding Huobi’s stakes in DeFi projects in Western countries, after Huobi’s newly launched venture investment arm began pouring money into DeFi projects in Asia. He told CoinDesk he and Huobi are willing to spend up to “tens of millions of dollars” funds to support new DeFi projects.

Related: All-In on DeFi: Why the Days of Centralized Exchanges Are Numbered

In his previous role at DragonFly, Pack was an early-stage investor of many significant crypto projects including DeFi protocols MakerDAO and Compound Finance. He left the crypto investment firm in April, citing “a difference in vision on the direction of the firm,” though he stayed on as a part-time venture partner. 

Huobi, along with other centralized crypto exchange giants, is rushing to reposition itself as an integral part of the exploding DeFi sector. Those semi-decentralized, blockchain-based lending and trading platforms have accumulated more than $10 billion in total value locked, most of which has occurred since the start of the second half of 2020.

Unlike Binance, the world’s largest crypto exchange by trading volumes, which has built a public decentralized blockchain to help support DeFi projects, the company behind the Huobi exchange has been focused more on incubating DeFi projects by funding, research and leveraging its established user base.

“Today there are two things: ‘CeFi’ [centralized finance] and ‘DeFi,’ in crypto parlance,” Pack said. “In the next 10 years, I think they will merge … and you will see companies that have wallets – Huobi already has a large wallet – do decentralized exchanges and decentralized versions of everything they offer. And you will see decentralized finance grow and mirror many of the aspects of centralized finance exchanges as well.”

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

“Huobi is one of the largest entities so it is in a perfect position to help this merging happen,” he added.

While current DeFi projects are still mostly centered around lending protocols and stablecoins, Pack said the particular type of DeFi projects he will initially look at are those that build synthetic assets on blockchains.

“The most interesting thing next that we are going to see are things in particular like synthetic assets, the ability to make a derivative or a synthetic version of anything: a stock, a bond, an entire fixed income space,” Pack said, “and then more products that support security, like insurance products, that makes it more trustworthy to enter into DeFi.”

Pack went quiet after he left Dragonfly Capital earlier this year. According to Pack, Huobi’s strong presence in Asia is also part of the reason why he decided to join.

“The most users and the most business model information and infrastructures are in Asia,” he said. “And yet, by far, the most interesting technology and the new frontier things are happening in the West. And I’ve always tried to be a bridge between those two areas.”

Related Stories

• DefiDollar Raises $1.2M to Be the Risk-Insured Stablecoin Layer for DeFi
• Ethereum, Dark Forests and the Limits of Transparency

Strapped for international currencies, Iran is turning to cryptocurrency to allow imports to continue to flow.

• Citing an article from The Islamic Republic News Agency (IRNA), Iran Daily reported earlier this week the country’s cabinet has amended recent legislation on digital assets to allow cryptocurrency to be used for import funding by the Central Bank of Iran (CBI).
• The amendment had been jointly proposed by the CBI and the cabinet previously.
• The change means legally mined cryptocurrency in Iran can only be exchanged if used to fund imports from other nations.
• Miners will supply the cryptocurrency directly to the CBI within an authorized limit, per IRNA’s report.
• This would be based on how much subsidized energy a miner uses, as well as instructions to be published by the Ministry of Energy.
• Cryptocurrency has become increasingly important in Iran as the nation suffers from economic woes brought by U.S. sanctions and the coronavirus pandemic.
• Mining was legalized last year, however the industry is heavily regulated by the government making it a tough jurisdiction in which to operatate.
• Iran Daily suggested that using bitcoin for import payments could help the nation avoid sanctions that impose limits on Iran’s access to the dollar.

Also read: Iran Is Ripe for Bitcoin Adoption, Even as Government Clamps Down on Mining

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• First Mover: Bitcoin Falls as COVID-19 Surges, ECB’s Lagarde Steps Up, US GDP Hits 33%
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• The ‘Everything Crash’ Is Coming? Markets Go Risk-Off as European Stocks See Worst Day in 5 Months

New York state’s financial regulator is urging firms to pay closer attention to financial risks associated with climate change.

In a letter sent to all regulated entities on Thursday, the New York Department of Financial Services (NYDFS) said that it expects firms, including virtual currency businesses, to start assessing such risks and develop possible approaches to mitigate them. The letter follows similar guidelines issued by the NYDFS for the state’s insurance providers in September. 

Noting that each rise of one degree celsius in global temperatures leads to damages worth 1.2% of the U.S. gross domestic product (GDP), the letter said reduced economic output in communities hit harder by climate change could also lead to an increase in default rates, reduced lending activity, devalued assets and losses. It added that flood risk could impact regional and community banks in particular. 

Related: What It Means if Companies Like Twitter Are ‘Systemically Important’ to Financial Regulators

Addressing virtual currency businesses, the letter stated that studies suggest the environmental impact of mining cryptocurrencies like bitcoin can be substantial. “The energy cost for mining virtual currencies is sizable compared to the value of the virtual currencies,” said the letter. 

While the letter acknowledged the exact energy consumption of bitcoin mining also depends on the geography, it added that “virtual currency firms should consider increasing transparency of the location and equipment used in bitcoin mining,” in order to add clarity about the environmental impact.  

A similar concern regarding the environmental impact of crypto mining was also raised by Heath Tarbert, chairman of the Commodity Futures Trading Commission (CFTC), during an interview at CoinDesk’s invest:ethereum economy event. “There are issues with mining, of course, so number one [is] environmental issues,” he said, speaking about Ethereum’s move to a proof-of-stake system and how that could help make Ethereum more environmentally friendly. 

Read More: The Last Word on Bitcoin’s Energy Consumption

Related: PayPal Embraces Crypto, Igniting Market as Mainstream Adoption Inches Closer

While there are pressing concerns about bitcoin’s energy consumption, it is also important to note that the environmental impact also depends on how that energy was produced. For example, China’s Sichuan region is a bitcoin mining hub but is also plush with supply of hydroelectric power. 

According to the letter, the NYDFS expects all regulated virtual currency businesses to conduct an assessment of climate change associated risks which could impact them directly or indirectly. 

The letter said organizations like banks, mortgage servicers, etc. should also designate a board member, a committee of the board, as well as a senior management function, responsible for the assessment and management of financial risks from climate change. 

Adding that the NYDFS understands climate change is likely to affect organizations differently, the regulator’s letter said each organization should take a “proportionate approach” that reflects its exposure to climate change associated financial risks. 

“DFS is developing a strategy for integrating climate-related risks into its supervisory mandate,” the letter said, indicating that mitigating climate change-associated risks is likely to stay on the regulator’s radar. 

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Canada-based blockchain infrastructure provider Figment has completed another multi-million dollar funding round.

• Announced Thursday, the startup said it raised $2.5 million in an additional funding round led by Bonfire Ventures with participation from FJ Labs, XDL Capital Group and BKCM, among others.
• “This new round of capital will enable Figment to continue to invest in our best-in-class blockchain staking, governance and developer tools,” Figment’s CEO Lorien Gabel said in a statement.
• The funding follows a pre-seed round of $1 million in 2018 and a seed round in 2019 bringing in $1.5 million, also with participation from Bonfire, XDL and FJ Labs.
• Gabel said the company believes in an internet where people control and profit from their own data, rather than “large data monopolies and governments” – an objective Figment is working to achieve.
• The company provides infrastructure and tools for networks such as Cosmos, Polkadot, Celo and Skale, as well as offering what it calls “institutional grade” staking services on over 30 blockchains.

See also: Predictions Platform Polymarket Raises $4M From Polychain, Naval Ravikant and More

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Bitcoin was lower for a second day, even as traditional markets showed signs of stabilization following Wednesday’s sell-off. 

Cryptocurrency analysts looked for solace in bitcoin‘s October-to-date return, still at an impressive 22%, during a month when the Standard & Poor’s 500 Index of U.S. stocks has declined by 2.7%.

“The sell-off in equities and gold due to rising COVID infections and restrictive lockdowns had only a limited impact on the digital asset,” Lennard Neo, head of research for the cryptocurrency-focused firm Stack Funds, wrote Thursday in a report. 

Related: Iran Amends Law to Allow Imports to Be Funded With Cryptocurrency

In traditional markets, European stocks rose as traders awaited a decision from the European Central Bank, headed by President Christine Lagarde, on whether further monetary support is needed amid a resurgence in coronavirus cases. 

U.S. equity futures pointed toward a higher open, as a key government report showed that the world’s largest economy grew at a 33% pace in the third quarter – a somewhat context-less data point that’s likely to do little beyond serving as an easy talking point for President Donald Trump’s reelection campaign. 

Market moves

Just as bitcoin bulls were starting to salivate over the cryptocurrency’s powerful rally over the past week toward $14,000, a sell-off in traditional markets has dragged prices back down.

Investors globally were rattled by reports of a resurgence in coronavirus cases. German Chancellor Angela Merkel announced the country would implement tough new business restrictions, and French President Emmanuel Macron announced plans to impose a national lockdown. 

Related: The Global Macro Case for FA Allocations to Bitcoin With Kevin Kelly

Such restrictions could crimp economic growth, theoretically a deflationary development, which could reduce demand for bitcoin in the short term as a hedge against higher consumer prices. There’s also the possibility that some investors, seeing further turmoil ahead, decided to bulk up on cash. One of the easiest things to sell is bitcoin, which is still up 84% year-to-date, even after Wednesday’s sell-off.  

“It seems the pressure was too much,” Mati Greenspan, founder of the foreign-exchange and cryptocurrency research firm Quantum Economics, told clients Wednesday. 

As detailed in First Mover on Wednesday, analysts relying on price-chart patterns have identified few points of resistance along bitcoin’s path from the hitherto rarely breached $14,000 psychological level to the all-time-high around $20,000, reached in 2017.   

According to Greenspan, “$14,000 is a huge psychological barrier, and I would be delightedly flabbergasted if we were able to pass through it without first seeing a significant pullback.”

And as reported Thursday by CoinDesk’s Omkar Godbole, bitcoin options traders are assigning a low probability that the cryptocurrency will end 2020 above $20,000.

The implied chances of prices above that level currently stand around 6%, according to the cryptocurrency data firm Skew. 

“A below-10% probability of record highs by the year end means the market is unconcerned with that outcome,” Vishal Shah, an options trader and founder of Polychain Capital-backed derivatives exchange Alpha5 told Godbole in a Telegram chat.  

Despite the sincerest wishes of bitcoin bulls, it would take a rally of more than 60% in the next eight weeks for prices to set a new record. It wouldn’t be unprecedented: There have been eight times in the 11-year old cryptocurrency’s recorded history where prices have rallied more than 50% or more in a two-month span. 

It could be that traders are just being realistic. 

“The options market is seemingly not getting carried away with the recent strong price momentum,” Sui Chung, CEO of CF Benchmarks, said in a statement to CoinDesk. “If we extrapolate bitcoin’s price action and volatility of the past 90 days till December expiry, then bitcoin appears set to end the year between $14,000 to $15,000.”

Read More: Bitcoin’s Options Market Sees Just 6% Chance of $20K Before Year’s End

Bitcoin watch

Bitcoin’s price rally has paused, with the top cryptocurrency by market value near $13,100, having reached 16-month highs above $13,800 during Wednesday’s Asian trading hours.

Investors are rotating money out of stocks and into safe havens like the U.S. dollar and Treasurys on concerns that Germany and France’s new lockdown restrictions would torpedo Eurozone’s fragile economic recovery.

Not just bitcoin, but almost every asset denominated in U.S. dollars has taken a beating in the past 24 hours or so. Markets saw similar but more violent action in March when recession fears triggered a global dash for cash.

Should the virus figures continue to rise, risk aversion will likely intensify, fueling a more profound decline in the cryptocurrency. However, it’s possible investors could buy the dips, with rising institutional adoption boosting the cryptocurrency’s long-term prospects.

Besides, stock markets will likely stabilize, helping bitcoin regain poise if the ECB announces more monetary stimulus later Thursday. While the central bank is expected to maintain the status quo, it could lay the groundwork for additional stimulus in December. Earlier this month, Goldman Sachs said the central bank could boost its pandemic bond-buying program by 400 billion euros ($470 billion) in December to counter deflationary pressures.

From a technical analysis standpoint, the immediate bias will remain bullish as long as prices are held above $12,500. On the higher side, the June 2019 high of $13,880 is the level to beat for the bulls.

– Omkar Godbole 

Token watch

Bitcoin (BTC): Winklevosses’ Gemini cryptocurrency exchange allows purchasing and trading with euros. 

Ripple (XRP): San Francisco-based payments firm plans to invest in blockchain money-transfer app MoneyTap, a joint venture with Japan’s SBI Holdings. 

Crypto.com Coin (CRO): Cryptocurrency-focused credit-card lender expands in Latin American market, hires former Visa exec Filomena Ruffa as general manager.

What’s hot

Fidelity’s digital-asset division expands crypto custody service to Asia (CoinDesk)

Blockchain pioneer Caitlin Long’s Avanti wins approval from Wyoming regulators for new banking charter (CoinDesk) 

Bank of Canada Governor Macklem says digital currency initiative is progressing beyond proof-of-concept stage toward launchable product (CoinDesk) 

FTX crypto exchange launches bitcoin pairs for tokenized versions of top stocks Amazon, Apple, Tesla (CoinDesk) 

Coinbase crypto exchange to launch Visa debit card in U.S. early next year (CoinDesk) 

Former regulator who oversaw New York State’s BitLicense development and more recently led New York Stock Exchange’s regulatory division will now join crypto-friendly venture-capital firm Andreesen Horowitz (CoinDesk) 

Analogs The latest on the economy and traditional finance

Federal Reserve might be running low on ammunition to juice market and the economy (CNBC)

Jack Dorsey, Twitter CEO who also oversees payments-firm-turned-cryptocurrency-investor Square, grilled by U.S. Senator Ted Cruz over tweet platform’s content controls (WSJ)  

Lenders now telling U.S. mall owners to pay up on past-due mortgage bills (WSJ)   

Chinese Communist Party set to detail 15-year economic growth plan (Bloomberg) 

Tweet of the Day Related Stories

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The cryptocurrency-focused arm of financial services giant Fidelity Investments is teaming up with Singapore-based Stack Funds to cater to the growing demand for cryptocurrencies in Asia.

A new partnership will bring Stack’s regional clients access to the secure custody services provided by Fidelity Digital Assets, according to a Bloomberg report Thursday.

All assets secured through Stack will be subject to monthly audits and will be insured, the firm said.

Related: Cambodia Central Bank Launches Bakong Blockchain Payments System

“We are pleased to utilize the custody services of Fidelity as we see a large uptick in demand for digital assets from traditional investors across Asia,” Matthew Dibb, Stack Funds’ co-founder and chief operating officer told CoinDesk in a direct message.

The surge in demand for cryptocurrencies from Asia-based high-net-worth individuals and family offices is accompanied by increased institutional participation in bitcoin.

Several public companies, including the likes of MicroStrategy and Square, have recently disclosed their bitcoin investments, piquing interest in cryptocurrencies.

“There is now a critical need for platforms that have a deep understanding of what local and regional investors are looking for,” Christopher Tyrer, head of Fidelity Digital Assets Europe said in a statement.

Related: Fidelity Report Says Bitcoin’s Market Cap is ‘Drop in the Bucket’ of Potential

Fidelity Investments launched its digital assets arm in late 2018 and was linked to a passively managed bitcoin fund for wealthy investors that launched in August this year.

Also read: Fidelity Report Says Bitcoin’s Market Cap is ‘Drop in the Bucket’ of Potential

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Publicly traded digital-asset brokerage Voyager Digital (VYGR/VYGVF) registered four-digit revenue growth in the fiscal year ended June 30, 2020.

In an announcement Thursday, the Canada-based firm said revenue rose to roughly $1.1 million, marking a 1,159% rise from the previous fiscal year’s tally of $87,318.

Other figures for the same period are also impressive: customer assets jumped by 1,959% to $35 million, while the total of brokerage accounts were up 750% at 86,000.

Related: Voyager Agrees to Buy LGO Markets and Merge 2 Firms’ Tokens

In its bid to boost growth, the firm formed new partnerships with leading trading platforms including Market Rebellion, LLC, Sterling Trading Tech and RoundlyX, and acquired Ethos Universal Wallet and Circle Invest’s trading app.

“We achieved strong revenue and account growth during fiscal 2020,” Stephen Ehrlich, co-founder, and CEO of Voyager said, adding that increasing adoption of digital assets has helped the company extend the growth momentum into the first quarter of fiscal year 2021.

Revenue is expected to have risen to $2 million in the July-September period – up 200% from the preceding quarter’s $700,000.

The company said it plans to obtain a virtual currency license, or “BitLicense,” from the New York State Department of Financial Services (NYSDFS) during the 2020 calendar year.

Related: Voyager CEO Says Revenue Growth Accelerates 8-Fold as DeFi Trading Surges

However, unlike several other public firms, Voyager has no plans to invest its treasury funds in cryptocurrencies, Ehlrich told CoinDesk last month.

“Our investors want us to be that agency broker,” Ehrlich said at the time. “They want us to be the one that executes the trade in microseconds for customers, not making bets on coins one way or another.”

Also read: Voyager CEO Says Revenue Growth Accelerates 8-Fold as DeFi Trading Surges

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The chief of Canada’s central bank has said its national digital currency initiative is progressing past the experimental phase.

In an interview with Reuters published Thursday, Bank of Canada (BoC) Governor Tiff Macklem said his institution is working with G7 member states on its plans for a central bank digital currency (CBDC).

The digital dollar project, he said, is now moving beyond the proof-of-concept stage and closer to a launchable product. However, the governor deflated expectations saying he thought there isn’t a need for one “right now.”

Related: Overstock’s Medici Ventures Invests $8M in Blockchain Firm Bitt

Even so, Macklem shared concerns about being outpaced by other countries, adding that his institution wants to make sure it’s prepared for a CBDC launch if it chooses to head in that direction.

“If another country has [a CBDC] and we don’t, that could certainly create some problems,” Macklem said. “We certainly wouldn’t want to be surprised by some other country.”

G7 members should share information on their CBDC plans and timelines, he added.

The G7 includes some of the world’s largest developed nations – Canada, France, Germany, Italy, Japan, the U.K, and the U.S. – as member states, which generally act in unison to address global economic issues.

Related: Ethereum Developer ConsenSys to Assist French Bank With CBDC Pilot

Some nations outside the Group of Seven have already taken the lead when it comes to digitizing their fiat currencies.

China is already conducting public experiments with its digital yuan, signaling a launch may not be far off. The Bahamas became the first nation to take a CBDC into circulation this month, rolling out its “sand dollar” to increase financial access to underserved communities.

Macklem also said a “globally coordinated” strategy from the member states was required in order to keep digital currencies out of the hands of criminals.

See also: FSB Recommends Stablecoin (Libra) Safeguards as G7 Continues Blockade

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While bitcoin’s rally over the past month has revived talks of its price reaching new record highs above $20,000 by the end of the year, the cryptocurrency’s options market continues to assign a very low probability of that scenario playing out. 

At press time, bitcoin was seeing a 6% probability of bitcoin trading above the historical 2017 all-time high of $20,000 by the end of December, according to data source Skew. 

“A below-10% probability of record highs by the year end means the market is unconcerned with that outcome,” Vishal Shah, an options trader and founder of Polychain Capital-backed derivatives exchange Alpha5 told CoinDesk in a Telegram chat. 

Related: FTX Launches Bitcoin Pairs for Top Stocks Like Amazon, Apple and Tesla

An option is a derivative that gives the purchaser the right but not the obligation to buy or sell the underlying asset at a specific price on or before a particular date. A call option gives its owner the right to buy something while a put option gives the right to sell. 

Option probabilities are calculated using the Black-Scholes formula based on critical metrics such as call options’ prices, strike prices, the price of the underlying asset and the “risk-free” interest rate on investments as U.S. Treasurys and the time to maturation. 

Market underpricing record high probability?

Bitcoin’s price has rallied from $3,867 to $13,800 over the past 7½ months. However, while prices have risen by over 250%, the chances of bitcoin reaching record highs by the end of the year have seen what appears to be a marginal rise from 4% to 6%. The probability peaked at 8% in July. 

As such, one may conclude the options market is underpricing the possibility of prices rising to $20,000 before Dec. 31. 

Related: Market Wrap: Bitcoin Slips to $12.8K; Ether Options Traders Prefer Calls

However, that’s not necessarily the case because bitcoin now has just eight weeks to chart a 50% rally to $20,000. Back in March, bitcoin had three quarters – nine months – to challenge record highs. As the time to expiration decreases, the probability of prices rising beyond a particular level declines. 

Read more: Bitcoin Options Volume on CME Jumps 300% as Traders Take Bullish Bets

Besides, bitcoin has appreciated by 50% or more in two months only eight times in its 10-year history, and three out of the eight bi-monthly 50% price rallies have happened during the bull market frenzy of 2017. 

Considering the decline in the time left for December expiry and bitcoin’s historical price action, the options market may appear rational in pricing a 6% probability of the cryptocurrency reaching lifetime highs by the end of December. 

“The options market is seemingly not getting carried away with the recent strong price momentum,” Sui Chung, CEO of CF Benchmarks, said in a statement to CoinDesk. Chung added that, “if we extrapolate bitcoin’s price action and volatility of the past 90 days till December expiry, then bitcoin appears set to end the year between $14,000 to $15,000.”

The options market currently sees a 40% probability of prices trading above $14,000 by the end of the year. 

Some traders may argue the options market is overpricing the odds of bitcoin rising above $20,000. That’s because the three-month implied volatility (IV), or investors’ expectations of how volatile prices could be over the next quarter, is hovering well above the three-month realized volatility (RV), or price deviations, seen over the past quarter. 

Currently, three-month IV is seen at 3.2%, and the RV is hovering at 2.5%. Option market probabilities have a positive correlation with implied volatility. 

Looking ahead, the odds of prices setting a new record high this year would rise if the cryptocurrency charts a quick move above the June 2019 high of $13,880. According to technical charts, there is very little resistance between $13,880 and $20,000.

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Crypto derivatives exchange FTX has launched a novel way to trade the world’s most popular stocks.

Announced Thursday, users of the exchange are now able to register to trade on over 12 equity and cryptocurrency pairs via the platform’s fractional stocks offering in what FTX is calling a “first of its kind” product.

The additions mean users can begin trading high demand stocks like Tesla, Apple, and Amazon, represented by tokens, against bitcoin, stablecoins, and more.

Related: Bitcoin’s Options Market Sees Just 6% Chance of $20K Before Year’s End

“These products demonstrate a powerful future, in which assets are digitized and traders have unlimited creative potential to express their beliefs about the markets,” FTX CEO Sam Bankman-Fried said.

To facilitate liquidity, the tokens represent a fraction of one share, meaning traders will be able to trade half of a share at a time if they want, Bankman-Fried told CoinDesk via Telegram.

The offering is being conducted in partnership with capital markets solutions provider Digital Assets AG and investment firm CM Equity.

“These fractional stock products reflect the reality that today’s traders are industry and sector spanning and want trading opportunities that fully match their interests and mindset,” the CEO said. 

Related: Market Wrap: Bitcoin Slips to $12.8K; Ether Options Traders Prefer Calls

Traders in the U.S. and FTX’s other restricted jurisdictions will not be eligible to trade the products.

Also on Thursday, FTX announced the release of TixWix – a product targeting retail customers in the world of options trading – in partnership with blockchain gaming platform HXRO.

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

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Ripple plans to invest in MoneyTap, the blockchain payments firm birthed through a joint venture between the San Francisco-based startup and Japan’s SBI Holdings, the companies announced Wednesday.

• The value of the investment has not been announced yet, CoinDesk Japan reported.
• MoneyTap, a blockchain money-transfer app launched through a joint venture between SBI and Ripple called SBI Ripple Asia, went live in 2018. Like Venmo, the app allows users to send and receive money with their telephone numbers or QR codes.
• MoneyTap uses Ripple’s global financial settlements network RippleNet to provide the payment services, which include peer-to-peer transfers, overseas remittances and corporate payments.
• Delays, high costs, uncertainties and opacity in processing international remittances are prompting hundreds of financial institutions to adopt blockchain solutions like Ripple Net, which directly connects the remittance bank and receiving bank while sharing information through a distributed ledger.
• “The high interbank fees in Japan have not been corrected for more than 40 years, and it is a special situation internationally,” SBI said in a statement, adding the blockchain app could help reduce transfer fees in remittance payments.
• In addition to SBI Holdings, MoneyTap is supported by a number of Japanese financial institutions including Sumitomo SBI Net Bank, Daiwa Securities Group Headquarters, Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Ashikaga Bank, Ogaki Kyoritsu Bank and Seven Bank.
• Resona, one of the three Japanese banks that first signed up for the project in 2018, dropped out in April 2019 without providing any reason for the departure. 

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