The U.S. government is using Circleâ€™s USDC to bypass Venezuelan blockades. Chainalaysis is looking to raise $100 million in fresh capital at a $1 billion valuation. Billions of dollars from institutional players are flowing into Coinbase. And VanEck found that bitcoin is less volatile than a quarter of S&P500 stocks, reigniting the case for a bitcoin ETF.
An unnamed U.S. government agency has enlisted dollar-backed stablecoin provider Circle and P2P payments startup Airtm to support Venezuelan politician Juan GuaidÃ³â€™s bid for office. The plan is to distribute relief funds to medical workers and other Venezuelan locals, bypassing restrictions set up by Venezuelan President NicolÃ¡s Maduro, who was re-elected in a 2018 election, by converting U.S. seized funds into Circleâ€™s USDC product and dispersed via Airtmâ€™s mobile phone network. â€œThis is, in a sense, a way to bypass the state-controlled banking system and just directly distribute to people,â€ Circleâ€™s Jeremy Allaire said, adding this is likely the first U.S. foreign policy objective utilizing a cryptographic stablecoin.
Chainalysis expects to raise $100 million venture capital at a $1 billion valuation in a fast-approaching Series C. Led by VC newcomer Addition with participation expected from Accel, Benchmark and Ribbit, the round could propel the blockchain analysis startup to unicorn status (a rarity for crypto). Several governments, banks, regulators and crypto firms rely on Chainalysis technology, seen in the companyâ€™s financial status: The firm increased its customer base 65% from Q3 2019 to Q3 2020. In other blockchain sleuthing news, analytics firm Coinfirm found government agents frequently leave behind â€œsubstantialâ€ amounts of forked cryptos in seized wallets. Finally, CipherTrace has filed for two patents related to sniffing out privacy-preserving monero (XMR) transactions.
The U.S. Office of the Comptroller of the Currency, a national bank regulator led by former Coinbase counsel Brian Books, has proposed a rule that would forbid banks to blacklist legal, but unsavory businesses â€“ potentially including crypto firms. Under the proposed rule, banks could deny financial services to customers only on the basis of â€œquantitative, risk-based standards established in advance,â€ not in response to political pressures. Crypto firms have long struggled to obtain or keep bank accounts in the U.S., with only a handful of friendly providers â€“ namely, Silvergate Bank, Signature Bank, and Metropolitan Commercial Bank. The proposal is open for public comment through Jan. 4.
Coinbase now custodies $20 billion in institutional assets, an exchange executive claims. Brett Tejpaul said the institutional assets business was under $6 billion when he joined the firm in April and has grown by $14 billion under his watch. Notably, Tejpaul pointed to Coinbaseâ€™s Tagomi acquisition in May as a boost. â€œIt radically transformed our ability to cater to institutional clients that want to use smart order routing and algorithmic execution,â€ he said. The veteran banker also said that adding JPMorgan Chase as its banking partner and Deloitte as its auditor has given Coinbase more compliance credibility. The firm is now measuring new capital coming in for bitcoin in the billions, Tejpaul said.
CBDCs not crypto?
China Construction Bank (CCB), the worldâ€™s second-largest bank, has suspended the upcoming listing of a $3 billion bond issuance that was intended to be tradable for bitcoin and U.S. dollars. The bank was sponsoring the issuance of the Longbond debt securities, set to be traded via the Fusang digital asset exchange. Now the program is being re-evaluated. In other news out of China, the city of Suzhou will hold the second lottery of the countryâ€™s central bank digital currency (CBDC) next month (this time with additional features like smart touch payments.) This follows on Chinaâ€™s President Xi Jinping comments at the G20 that CBDCs are to be embraced by developed nations.
- YER ORANGES:Â Sean Ono Lennon, musician and younger son of Beatles legend John Lennon, appeared on the Orange Pill Podcast on Sunday to say bitcoin is a tool for empowerment and among a few optimistic developments for â€œthe future and humanity in general.â€
- UP & RUNNING: KuCoin, the Singapore-headquartered digital asset exchange that was hacked to the tune of $281 million in September, said it has restored the deposit and withdrawal services of all tokens as of Sunday.
- DOMAIN BREACH: Cryptocurrency trading platform liquid.com and crypto mining firm NiceHash were two of at least six firms that had control of their domains briefly transferred to malicious actors last week after employees at GoDaddy, the worldâ€™s largest domain registrar, were tricked by fraudsters.
- YOU GOTTA BE GERKIN ME?! Popular decentralized finance protocol Pickle Finance was hacked on Saturday, draining $19.7 million in DAI, a decentralized stablecoin pegged to the U.S. dollar, from Pickleâ€™s latest arbitraging smart contract.
- MOVING IMAGE: A programmable painting of Ethereum co-creator Vitalik Buterin set records this weekend when â€œEthBoyâ€ sold for 260 ETH (ETH, +12.69%). The painting utilizes new cryptographic tooling to refashion itself everyday based on a bevy of market and community data.
Some BTC traders may have become overleveraged during the recent rally above $18,000, according to one key metric. The average level of the â€œfunding rateâ€ across major exchanges has risen sharply from 0.023% to a five-month high of 0.087% in the past 48 hours, according to data source Glassnode. The funding rate reflects the cost of holding long positions â€“ measured by the premium derivative plays pay over spot prices. A higher number indicates excessively bullish, and therefore overbought, conditions. In such situations, a pullback or consolidation can trigger an unwinding of longs, leading to a deeper drop and a pick up in price volatility.
XRP, the native asset of the XRP ledger, is riding 16-month highs. On Saturday the third-largest crypto by market cap climbed to $0.437564, the highest price since July 2019, according to the CoinDesk 20. It has continued to rise, with minor contractions, since. Now above the $0.50 level, XRP has appreciated over 120% since the start of the year.
Volatility, market data and ETFs
A new analysis from VanEck, a major investment management firm, found that bitcoin is less volatile than the S&Pâ€™s benchmark stock index.
The report, published Nov. 20, compared BTC to the companies listed on the S&P 500, finding the cryptocurrency was less volatile than 22% of these stocks over the past three months.
â€œHistorically, bitcoin has been discussed in the news and among investors as a nascent and volatile asset outside of the traditional stock and capital markets,â€ the report reads. VanEck attributed this volatility to bitcoinâ€™s relatively small total market size, regulatory blockers and limited participation from traditional asset managers.
But bitcoinâ€™s volatility is not an aberration, as over the 90-day period measured ending Nov. 13 some 112 stocks experienced as much or more price volatility. Further, over the past year, 29% of S&P stocks were more volatile than bitcoin.
As CoinDesk Director of Research Noelle Acheson noted in a September newsletter, volatility is frequently and erroneously conflated with risk.
â€œVolatility is a metric, a number, a measurement. Risk is an ambiguous concept,â€ she writes, adding that volatility can be an attractive attribute for a well-weighted portfolio.
In Achesonâ€™s analysis, she found bitcoin volatility is often correlated with the assetâ€™s price direction: That is, when the price comes down, so usually does the volatility.
In comparison, the CBOE Volatility Index (VIX), which measures the S&P 500 implied volatility, tends to move inversely to the S&P 500. â€œThe average 60-day correlation between the two for the month of August was -0.84, an almost perfect negative association. Using bitcoinâ€™s 30-day realized volatility as a proxy for a bitcoin VIX, we get an average 60-day correlation for August of 0.45. A very different scenario,â€ she found.
Whatâ€™s more, bitcoinâ€™s volatility is more measurable than traditional markets, as the crypto trades 24/7 freely across the world. More data points means more data to analyze.
Itâ€™s for these reasons, bitcoinâ€™s similar volatility and market information, that many feel comfortable for agitating for a BTC exchange-traded fund. As reported, U.S. regulators have been hesitant to accept crypto ETF products, often citing a lack of cohesive market data.
But a sober look at the real market conditions may point the other way.
VanEck ends its report saying: â€œWhile there are no U.S. bitcoin exchange-traded funds (ETFs) available today, we believe such products may show similar volatility characteristics â€“ based on the comparison above â€“ as many stocks in well-known indices and ETFs, such as the S&P 500 and related products.â€