Goldman Sachs plans to expand crypto options, to allow trading in Ether

Goldman Sachs, an American multinational investment bank and financial services company, is planning to allow options and futures trading in Ether, the cryptocurrency linked to the Ethereum blockchain . Ether is the second-largest cryptocurrency after Bitcoin. The bank will unveil its futures and options trading in Ether in the coming months, reported Bloomberg.

Ether would be the second cryptocurrency to be traded through Goldman. The Wall Street company had earlier this year restarted a trading desk for helping its customers deal in publicly traded futures tied to Bitcoin.

The new developments were announced by Mathew McDermott, who took charge last year as head of digital assets at Goldman Sachs. The digital assets business has grown to 17 people from four in his tenure. McDermott also revealed plans to facilitate trades of exchange-trade notes (ETNs) that tracked Bitcoin.

The multinational company has also invested in cryptocurrency-related start-ups. The bank recently invested $5 million in a company that creates and hosts blockchain nodes. In May, Goldman invested in another cryptocurrency and blockchain data provider, Coin Metrics, in a $15-million investment round.

While Bitcoin and other cryptocurrencies remain volatile, especially for a decentralised currency, cryptocurrency has seen a large uptake in 2021.

“We’ve actually seen a lot of interest from clients who are eager to trade as they find these levels as a slightly more palatable entry point,” McDermott told Bloomberg. “We see it as a cleansing exercise to reduce some of the leverage and the excess in the system, especially from a retail perspective.”

McDermott noted that many of his clients are interested in crypto, and about 10 percent are already trading in cryptocurrencies. His observations line up with the recent CNBC Millionaire survey, which showed that millennial investors were more willing to invest in digital assets like crypto and NFTs.

“Institutional adoption will continue,” he added. “Despite the material price correction, we continue to see a significant amount of interest in this space.”

 

Development bank backs El Salvador bitcoin law; says debt still in dollars

The head of the Central American Bank for Economic Integration (CABEI) said on Monday the bank will give El Salvador technical assistance to implement bitcoin as legal tender, even though it still issues debt only in dollars. El Salvador last week became the first country to pass a law making the cryptocurrency legal tender, sparking praise for the bold move in the small economy as well as concern over its discussions for a deal with the International Monetary Fund.

CABEI’s executive president, Dante Mossi, said the move would offer Salvadorans many opportunities, including lowering the cost for relatives abroad to send remittances.

”We’re very optimistic,” he told a virtual news conference, speaking from Honduras. Mossi added the bank will work with El Salvador’s finance ministry and central bank to select a team to work on the implementation.

When asked if CABEI would accept payments in bitcoin, Mossi noted the bank at present deals only in dollars.

Also Read: IMF sees legal, economic issues with El Salvador bitcoin move

”All of the bank’s debt is still denominated in dollars,” he said. El Salvador has said it will still accept dollars, and that bitcoin use will be by choice and tied to the dollar exchange rate. Mossi also called on El Salvador’s government to develop a regulatory framework to control who is using bitcoin and prevent ”bad actors” who take advantage of the system’s anonymity.

Crypto sees second week of outflows; ether posts record outflows: CoinShares

Cryptocurrency investment products and funds saw outflows for a second straight week, with ether posting record outflows as institutional investors took a step back, data from digital asset manager CoinShares showed on Monday. Total crypto ouflows hit USD 21 million for the week ending June 11. Since mid-May, total outflows reached USD 267 million, representing 0.6 percent of total assets under management (AUM).

Ether, the token used in the Ethereum blockchain, posted its largest outflow last week of USD 12.7 million, data showed. The token has been one of the strongest performers this year. But CoinShares said ether inflows last week were mixed, ”implying mixed opinions among investors.”

Ether was last up 1 percent on the day at USD 2,536. Since hitting a record USD 4,380.64 on May 12, ether has fallen 40 percent. The outflows in bitcoin cooled last week to USD 10 million, significantly lower than the previous record week of USD 141 million, CoinShares data showed. Trading activity in bitcoin products rose 43 percent from the previous week.

Bitcoin rose above USD 40,000 on Monday following tweets from Tesla boss Elon Musk, who said Tesla sold the currency but may resume transactions using it. It was last up 1.8 percent at USD 39,686.

While bitcoin is currently trading 36 percent below its 11-year exponential trend, Dan Morehead, co-chief investment officer at Pantera Capital, said in his Blockchain Letter on Monday that investors should resist the urge to close positions and instead go the other way if they have the emotional and financial resources to do so.

”Bitcoin generally goes way up…Anyone that has held bitcoin for 3.25 years has made money,” said Morehead.

Grayscale, the largest digital currency manager, raised its AUM to USD 33.04 billion last week, from USD 30.3 billion the previous week. CoinShares, the second-biggest digital asset manager, saw AUM slip to USD 3.8 billion, from nearly USD 4 billion the week before.

Cryptocurrency Prices on June 15: Bitcoin surges 4%, reaches highest level since May; altcoins follow

Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on motherboard in this illustration picture
Binance bitcoin hacking
1. Bitcoin: $40,470, 24-hour change: 4.11 percent, 7-day change: 25.31 percent
2. Ether: $2,585, 24-hour change: 4.11 percent, 7-day change: 5.88 percent
3. Tether: $1.00, 24-hour change: 0.06 percent, 7-day change: -0.06 percent
4. Binance Coin: $372, 24-hour change: 3.25 percent, 7-day change: 11.61 percent
5. Cardano: $1.57, 24-hour change: 2.28 percent, 7-day change: 5.97 percent
6. Dogecoin: $0.3266, 24-hour change: 1.37 percent, 7-day change: 1.77 percent
7. XRP: $0.8865, 24-hour change: 1.71 percent, 7-day change: 6.09 percent
8. Polkadot: $25.20, 24-hour change: 16.03 percent, 7-day change: 21.08 percent
9. USD Coin: $1.00, 24-hour change: 0.04 percent, 7-day change: -0.03 percent
10. Uniswap: $24.33, 24-hour change: 6.85 percent, 7-day change: 5.53 percent

Almost 50% millennial millionaires have large share of wealth invested in crypto, NFTs: Survey

A new survey has found that 47 percent of young millionaires have more than 25 percent of their wealth in cryptocurrencies. According to the CNBC Millionaire Survey, more than 33 percent of millionaire investors belonging to the millennial generation have over half their wealth in cryptocurrency.

As many as 750 investors with at least $1 million in investible assets were surveyed by CNBC and the Spectrem Group in April and May. Bitcoin had hit its peak price of $64,829.14 during that period before it fell off rapidly at the beginning of May. 

The meteoric price rise and slough-off were both attributed to market factors, especially after announcements from Elon Musk regarding Bitcoin’s validity as payment for Tesla cars.

The survey reflected a growing generational gap especially when it comes to new asset classes like non-fungible tokens (NFTs) and cryptocurrencies. Younger investors managed to leverage rising trends in crypto and other digital asset classes to increase their wealth monumentally while older investors remained sceptical, the survey found.

Nearly 83 percent of the respondents had no wealth in crypto assets and only 10 percent had more than one-tenth of their wealth invested in cryptocurrencies and none of these belonged to the older generations.

“The younger investors jumped on it early when it was not as well known,” George Walper, president of Spectrem Group told CNBC. “The younger investors were more intellectually engaged with the idea even though it was new. Older investors and the boomers were largely saying ‘Is this legit?,” Walper added.

It is not just cryptocurrencies where the generational gap creates investment disparities. Digital assets like non-fungible tokens also suffer a similar fate. Most of the investors said, they don’t know what NFTs are, and 33 percent responded that NFTs are an “overhyped fad”. At the same time, more than 66 percent of millennial millionaires said NFTs “are the next big thing”.

Nearly half of millionaire millennials surveyed own NFTs and 40 percent say they don’t currently own an NFT but have “considered” it. That compares with 98 percent of baby boomer millionaires who say they don’t own any NFTs and aren’t considering it.

Bitcoin’s Taproot upgrade promises greater transaction privacy, efficiency

Bitcoin, the world’s most valued cryptocurrency, has got its biggest upgrade in four years. The upgrade, called Taproot, is set to take effect in November this year, according to a CNBC report. Unlike the 2017 upgrade ‘SegWit’, which caused a “civil war” of sorts among miners because of the contentious ideological divide, Taproot has universal support from miners.

In a tweet, Alejandro De La Torre, vice president at Hong Kong-headquartered major mining pool Poolin, said, “Taproot has locked-in… Excellent work miners. Congratulations bitcoiners. Bitcoin protocol upgrade now set to activate in November.”

Here’s all you need to know about the upgrade:

What will the upgrade change

Bitcoin currently uses the “Elliptic Curve Digital Signature Algorithm,” which is created from the private key which controls a Bitcoin wallet and ensures that bitcoin can only be spent by the rightful owner, which means greater privacy. Taproot will switch over to something known as Schnorr signatures, which essentially makes multi-signature transactions unreadable, according to Torre.

The new upgrade will make smart contracts cheaper and smaller in terms of space they take up on the blockchain. Taproot will introduce Merkel branching (MAST) — a feature that improves the efficiency and privacy of revealing spending conditions.

The Taproot upgrade, according to experts, will bring greater transaction privacy and efficiency. Significantly, the upgrade will also unlock the potential for smart contracts — a salient feature which eliminates middlemen from transactions.

Currently, all Bitcoins have a script (conditions) which dictates how it can be used in the next transaction. For instance, a script may allow the Bitcoin owner to use them only after a certain date or a certain block height. These conditions are not publicly visible and only the owner of the Bitcoin knows them. When the coins are spent, the individual is supposed to reveal the whole script — including the conditions that were met and the ones which weren’t. This makes the transaction data heavy and less private.

With Taproot bringing in the MAST technology, only those conditions will need to be revealed that are met. The others will remain hidden. This will make transactions more private and less data heavy, according to Bitcoin Magazine.

The wait till November

This time, the miners are taking time to reduce the likelihood of anything going wrong during the upgrade. Jason Deane, an analyst at Quantum Economic, while speaking to CNBC, said, “Upgrade processes are carefully tested, retested, and vetted, again and again, over very long periods of time, prior to being deployed.”

In 2013, when an upgrade had gone wrong, Bitcoin was temporarily split in half. Experts say that to avoid a repeat of what happened eight years ago, “we have these extremely long lead times”.

Explained: What is monero? Why some cybercriminals prefer it over Bitcoin?

Cybercriminals, who believed that cryptocurrency transactions would save them from scrutiny and legal crackdown, got a rude shock when the US’ Federal Bureau of Investigation (FBI) successfully recovered $2.3 million in bitcoin ransom paid by Colonial Pipeline.

Bitcoin seizures are rare, but authorities have stepped up their expertise in tracking the flow of digital money as ransomware has become a growing national security threat.

Bitcoin’s public ledger, which records all token transactions in its history, is visible to everyone and makes it easier to track the transactions and transactors. Therefore, cryptocurrencies like dash, zcash, and monero that have additional built-in anonymity, are now attracting more cybercriminals. 

In fact, monero has now become the most preferred mode of cryptocurrency for ransomware criminals, according to a CNBC report

What is monero?

Monero was released in 2014 by a consortium of developers, many of whom chose to remain anonymous. They claimed that “privacy and anonymity” are the digital currency’s most important aspects. Monero was tagged as a “privacy-centric cryptocurrency project that aims to obfuscate the linkability of transactions across source, quantity, and destination”. 

Riccardo Spagni was the lead maintainer of monero until he stepped down in late 2019. 

Monero operates on its own blockchain, which hides virtually all transaction details, including the identity of the sender and recipient, as well as the transaction amount. This facilitates cybercriminals in reaching greater levels of freedom through different mechanisms that track cypto transactions.

“On the bitcoin blockchain, you can see what wallet address transacted, how many bitcoins, where it came from, where it’s going. With monero, the blockchain obfuscates the wallet address, the amount of the transactions, who the counter-party was, which is pretty much exactly what the bad actors want,” Fred Thiel, ex-chairman of Ultimaco, a Europe based cryptocurrency company, told CNBC.

In 2021, Monero climbed the charts by over 250 percent in just four months.

Monero also received an anonymous donation of $500,000 last week. A report explaining what would be done with this donation is expected this month.

What doesn’t work for monero?

Monero faces a series of hurdles in its path to becoming a mainstream cryptocurrency. Many regulated exchanges have chosen not to list it due to regulatory concerns, thus making it less liquid than other cryptocurrencies. This translates to cybercriminals facing difficulty in getting directly paid in this currency.

The digital currency could also be more vulnerable to regulation at its on-and-off-ramps, which is the bridge between fiat cash and crypto tokens, according to the CNBC report. Thiel opines that Monero might face a shut-down in the near future. Any exchange that lists it could also risk losing its licence.

Bitcoin rises 9.8% to $39,035

Bitcoin surged 9.8 percent to USD 39,035.47 on Sunday, adding USD 3,492.71 to its previous close. Bitcoin, the world’s biggest and best-known cryptocurrency, is up 40.7 percent from the year’s low of USD 27,734 on Jan. 4.

Ether, the coin linked to the ethereum blockchain network, surged 7 percent to USD 2,532.77 on Sunday, adding USD 165.77 to its previous close.

Tesla Inc Chief Executive Officer Elon Musk tweeted on Sunday that the electric carmaker will resume allowing bitcoin transactions when miners who verify transactions use more renewable energy. Musk has been a major promoter of cryptocurrencies but has turned critical of bitcoin since suspending Tesla plans to take it in payment for cars, owing to concerns that the computers used to ”mine” it use too much energy.

”When there’s confirmation of reasonable (~50 percent) clean energy usage by miners with the positive future trend, Tesla will resume allowing Bitcoin transactions,” he said in the tweet.

Why so much volatility? Cryptocurrency’s weird relationship with weekends explained

Price volatility is one of the major reasons why cryptocurrencies are criticised across the world. Late in May, HSBC, Europe’s biggest investment bank, said it has no plans to offer digital coins as an investment as they are “too volatile“.

Nothing unites cryptocurrency opponents like its volatility. But some analysts have observed an unusual trend: Cryptocurrency crashes tend to happen on weekends.

It is on Saturdays and Sundays when most of the asset classes are on holiday mode, that crypto volatility spikes.

This phenomenon has been observed in the crypto market for several years now, Stephen McKeon, a finance professor and partner at Collab+Currency, a crypto-focused investment fund told CNBC.

Liquidity requires a steady supply of both buyers and sellers. If there are fewer buyers than sellers or vice versa, transactions become harder – a situation that results in a spike or crash.

“People always tout Bitcoin as 24/7,365 liquidity, but what actually means is you have periods of very thin liquidity,” Nic Carter, partner at crypto venture firm Castle Island Ventures told Bloomberg.

“If you want to deploy $500 million Bitcoins, you probably want to do it during core banking hours,” he added.

The market’s 24/7 operation has set the stage for price swings when you least expect it. But is that it? Let’s find out.

Less trading

One of the reasons, according to what Amin Shams, professor at Ohio State University told CNBC, for weekend volatility is ‘fewer trades’.

When trading volumes are thin, price swings become magnified.

The market volumes rebound on Sunday night as Asian banks get ready to open and then US banks follow, McKeon continued.

Then there are crypto influencers like Elon Musk, his one tweet sparks an entire wave of activity that lasts for weeks.

Market structure

The Crypto market consists of scores of disconnected exchanges, that are, in effect their own islands of liquidity. All these platforms trade with their own policies due to the lack of a centralised market structure, akin to say, equity.

“If you think about the structure that makes it conducive to things that are going to be very volatile and where you are going to have big moves. That’s obviously going to be impacted by when people are trading, when people are awake, when people are watching the markets,” Greg Bunn, Chief Strategy Officer of CrossTower told Bloomberg.

Staffing issues

The reasons for describing this phenomenon are many. Some believe since market-makers are less staffed on weekends, the market reacts by rising or crashing.

According to the efficient market hypothesis, the market should expect less liquidity on the weekends, but “it is a feature of the market that has always been there and we expect that it will be a feature of the market that remains in the future,” Teddy Fusaro of Bitwise Asset Management told Bloomberg.

Margin trading

A burgeoning crypto lending adds to the volatility. Traders borrow from the exchanges to buy more coins. When the coins dip below a certain level, they must repay the debt, an event called a margin call.

But imagine traders not being able to repay the exchanges. The exchanges then sell the currency and get their money back.

These cases intensify on weekends as banks are closed during that time. With no money, traders struggle to repay the borrowed funds, triggering a sell-off.

That drops the price further, Shams said.

Market manipulation

Traders may also try to artificially manipulate the market to book profits. “There are a lot of studies that show there is (market) manipulation,” Shams told CNBC. But we don’t know the extent of manipulation.

A 2019 research showed that Tether – crypto coin tied to the US dollar – artificially inflated bitcoin and other cryptos during the 2017 crypto boom.

However, analysts have mixed views on this. “I have personally not seen any conclusive evidence that suggests manipulation,” McKeon added.

WazirX says yet to receive ED notice alleging FEMA violations

cryptocurrencies

Cryptocurrency trading platform WazirX has said that it is yet to receive the Enforcement Directorate’s show-cause notice which alleges FEMA violations.

In a statement released just a while back, WazirX has also said that it is in compliance with all applicable laws.

“We go beyond our legal obligations by following Know Your Customer (KYC) and Anti Money Laundering (AML) processes and have always provided information to law enforcement authorities whenever required,” the statement elaborates.

WazirX has also said that it can trace all users on its platform with official identity information.

Further, the trading platform has assured cooperation with the investigating agency.

“Should we receive a formal communication or notice from the ED, we’ll fully cooperate in the investigation,” the statement reads.

Earlier in the day, the Enforcement Directorate tweeted that it had issued a show-cause notice to WazirX for contravention of FEMA, 1999 for transactions involving cryptocurrencies worth Rs 2,790.74 crore.

The agency issued a statement saying that it stumbled upon the transactions of the company during an ongoing money laundering probe into the ”Chinese-owned” illegal online betting applications.