Tag: Cryptocurrency

More than 90% of stablecoin transactions aren’t from real users, study finds

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

More than 90% of stablecoin transaction volumes aren’t coming from genuine users, according to a new metric co-developed by Visa Inc., suggesting such crypto tokens may be far away from becoming a commonly used means of payment.

The dashboard from Visa and Allium Labs is designed to strip out transactions initiated by bots and large-scale traders to isolate those made by real people. Out of about $2.2 trillion in total transactions in April, just $149 billion originated from “organic payments activity,” according to Visa.

Visa’s finding challenges stablecoin proponents’ argument that the tokens, pegged to an asset like the dollar, are poised to revolutionize the $150 trillion payments industry. PayPal Inc. and Stripe Inc. are among the fintech giants making inroads into stablecoins, with Stripe co-founder John Collison in April citing “technical improvements” for being bullish on the tokens.

Read more: Stripe Brings Back Crypto Payments on Platform With Stablecoins

“It says that stablecoins are still in a very nascent moment in their evolution as a payment instrument,” Pranav Sood, executive general manager for EMEA at payments platform Airwallex, said of the data. “That’s not to say that they don’t have long-term potential, because I think they do. But the short-term and the mid-term focus needs to be on making sure that existing rails work much better.”

Tracking the “real” value of crypto activity using blockchain data has always been a challenge. Data provider Glassnode has estimated that the record $3 trillion of total market circulation assigned to digital tokens at the peak of the 2021 bull market was actually closer to $875 billion.

With stablecoins, transactions can often be double-counted depending on the platform users are transferring funds to. For example, converting $100 of Circle Internet Financial Ltd.’s USDC to PayPal’s PYUSD on the decentralized exchange Uniswap would result in $200 of total stablecoin volume being recorded on-chain, said Cuy Sheffield, Visa’s head of crypto.

Visa itself, which handled more than $12 trillion worth of transactions last year, is among companies that could stand to lose out should stablecoins become a generally accepted means of payment.

The total value of all stablecoins in circulation could reach $2.8 trillion by 2028, analysts at Bernstein predicted last year. That would be an almost 18-fold increase from their combined circulation now. Because transactions using such tokens are instantaneous and almost without cost, many in the crypto industry argue that they’re perfectly suited for disrupting the payments sector.

PayPal launched its PYUSD stablecoin last year, seeking a solution for instant and lower-cost transfers within its wider payment infrastructure. Stripe said on April 25 it’s allowing merchants using its platform to accept stablecoins for online transactions.

Even so, Airwallex has seen tepid demand from its customers for stablecoin-based payments solutions as many still don’t regard the technology as user-friendly enough, according to Sood.

“It’s a really significant barrier to overcome,” he said. “It’s important to remember that in the US, people are still using checks to pay for somewhere between 40% and 60% of business payments, which gives you a sense of where the market really is in terms of technological adoption.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Binance founder Changpeng Zhao sentenced to four months in prison

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Changpeng Zhao, the former chief executive of Binance, was sentenced on Tuesday to four months in prison after pleading guilty to violating U.S. laws against money laundering at the world’s largest cryptocurrency exchange.

Once considered the most powerful crypto industry figure, Zhao, known as “CZ,” is the second major crypto boss to be sentenced to prison.

The sentence imposed by U.S. District Judge Richard Jones in Seattle was significantly shorter than the three years sought by prosecutors, and below the maximum 1-1/2 years recommended under federal guidelines.

It was also much lighter than the 25 years behind bars that Sam Bankman-Fried received in March for stealing $8 billion from customers of his now-bankrupt FTX exchange. Bankman-Fried is appealing his conviction and sentence.

Still, prosecutors cheered the outcome of what had been a years-long investigation into Binance and Zhao, a billionaire who had been living beyond U.S. reach in the United Arab Emirates.

“This was an epic day,” U.S. Attorney Tessa Gorman told reporters outside the courthouse. “Incarceration was critical in this case and we’re pleased with the result.”

Before handing down the sentence, Jones faulted Zhao for making Binance’s growth and profitability a higher priority than complying with U.S. laws.

“You had the wherewithal, the finance capabilities, and the people power to make sure that every single regulation had to be complied with, and so you failed at that opportunity,” he said.

Zhao, 47, did not visibly react upon hearing his sentence.

He wore a navy blue suit and tie in the courtroom, with his mother and several other family members in attendance. Defense lawyers had requested probation.

“‘Crime pays’ is the message sent today,” Dennis Kelleher, head of the financial reform advocacy group Better Markets, wrote in an email, noting Zhao will still get to keep his vast wealth.

‘I’m sorry’

Prosecutors said Binance employed a “Wild West” model that welcomed criminals, and did not report more than 100,000 suspicious transactions with designated terrorist groups including Hamas, al-Qaeda and Islamic State.

They also said Zhao’s exchange supported the sale of child sexual abuse materials and received a large portion of ransomware proceeds.

Binance agreed to a $4.32 billion penalty, and Zhao paid a $50 million criminal fine plus $50 million to the U.S. Commodity Futures Trading Commission.

“I’m sorry,” Zhao told the judge before being sentenced.

“I believe the first step of taking responsibility is to fully recognize the mistakes. Here I failed to implement an adequate anti-money laundering program … I realize now the seriousness of that mistake.”

Much of Binance’s misconduct, including its weak money laundering controls, was first reported by Reuters.

Zhao will surrender voluntarily to serve his sentence, most likely at a detention center near Seattle-Tacoma International Airport.

“Not prioritizing compliance is a few shades below criminal intent. It’s bad, but it’s below the usual requirement of specific intent” that would justify a years-long sentence, said Robert Frenchman, a lawyer specializing in white-collar crime.

But given the scale of Binance’s violations and the massive fines imposed, he should not have expected probation or home detention, Frenchman added.

Not a monster

Prosecutors had told the judge a tough sentence would send a clear signal to other would-be criminals.

“We are not suggesting that Mr. Zhao is Sam Bankman-Fried or that he is a monster,” prosecutor Kevin Mosley said.

But Zhao’s conduct, he said, “wasn’t a mistake. This wasn’t a regulatory ‘oops.'”

Zhao stepped down as Binance’s chief in November, when he and the exchange he founded in 2017 admitted to evading money-laundering requirements under the Bank Secrecy Act.

In seeking probation, defense lawyers said others who admitted to similar wrongdoing, including BitMEX founder Arthur Hayes, were not locked up.

Zhao “wanted to make a difference in the world,” but made mistakes, defense lawyer Mark Bartlett said.

Jones said the three-year sentence requested by prosecutors was inappropriate because they did not show that Zhao knew in advance about illegal activity.

“It’s always the case the government asks for more than they think they’ll get,” said Frenchman. “Going that much above guidelines for a pleader is unusually aggressive.”

Several other crypto moguls are also in the crosshairs of U.S. authorities after the collapse of crypto prices in 2022 exposed fraud and misconduct across the industry.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin recovers after briefly plunging below $60,000 amid global concerns over Iran-Israel conflict

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The cryptocurrency market witnessed a significant downturn on Friday, April 19, with Bitcoin declining below the $60,000 mark amid heightened concerns over geopolitical instability.

Reports of an Israeli missile strike on Iran triggered a rush out of risky assets, sending shockwaves through digital currency markets.

Bitcoin experienced a sharp decline of more than 5.5%, tumbling to $59,961, while Ether, the second-largest cryptocurrency by market capitalisation, mirrored the trend with a similar percentage drop, falling below the $3,000 threshold to $2,895.

The cryptocurrency market dropped suddenly as the US dollar gained strength, making the sell-off in cryptocurrencies worse.

However, Bitcoin recovered the losses to trade above $64,000 level on Friday after reports suggested limited damage from an Israeli strike on Iranian military targets, according to Coindesk.

According to ABC News, Israeli missiles targeted a site in Iran, as confirmed by a US official, escalating tensions following a recent drone strike by Iran on Israel.

The geopolitical turmoil intensified further with reports from Iran’s Fars news agency of an explosion heard at the airport in the city of Isfahan.

The news of military actions between Iran and Israel has reignited concerns among investors, prompting a flight to safety and triggering a sell-off in riskier assets, including cryptocurrencies.

The volatile nature of digital currencies has once again come to the forefront as geopolitical events continue to put influence on market sentiment and prices. As investors closely monitor developments in the Middle East, the cryptocurrency market remains under pressure, with uncertainties looming over its short-term outlook.

Analysts anticipate heightened volatility in the coming days as geopolitical tensions continue to unfold, underscoring the interconnectedness between global events and digital asset prices.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bhutan to upgrade Bitcoin mining in Himalayas as ‘halving’ looms

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Bhutan’s investment arm and Bitdeer Technologies Group are planning to ramp up their Bitcoin mining operation to help offset the revenue impact of an upcoming event known as the halving.

The partnership between Druk Holding & Investments and Nasdaq-listed crypto mining firm Bitdeer aims to invest in boosting Bhutan’s mining capacity sixfold through the introduction of cutting-edge hardware.

The planned upgrades will increase the Himalayan kingdom’s mining capacity by 500 megawatts by the first half of 2025, Matt Linghui Kong, chief business officer at Bitdeer, said in an interview. That would bring Bhutan’s total capacity to 600 megawatts.

The capital will be drawn from a $500 million fund that the pair began raising in May last year, when they unveiled plans to leverage Bhutan’s abundant hydroelectric power for Bitcoin mining. Kong said he expects to close the fund by July.

Reduced Rewards

Bitcoin miners operate power-hungry computers that secure the blockchain, earning new tokens as a reward. These rewards are programmed to be cut in half every four years, part of the process of capping the total supply of the original cryptocurrency at 21 million coins.

The upcoming halving in April will see mining rewards slashed from 6.25 to 3.125 coins per block.

DHI and Bitdeer said they are confident they can maintain operational efficiency even if the price of Bitcoin declines post-halving. Bitdeer has one of the lowest costs per Bitcoin mined in the industry at $20,000 per coin, Kong said.

Some miners went bankrupt during the crypto rout of 2022, when a combination of soaring energy costs and Bitcoin’s price falling below $16,000 proved a stern test of the sector’s durability.

Bitcoin Rally
The 140% Bitcoin rally over the past 12 months brought much needed relief to firms that survived, which are once again splashing cash on hardware upgrades and capacity expansion. The digital asset was trading at $68,581 as of 7 a.m. in Sydney on Friday.

Computing costs are rising due to a surge in Bitcoin’s mining difficulty, a measure of how much computing power is needed to add a new block to the network. Network difficulty has hit record highs ahead of the halving, offsetting some of the gains from the price rally’.

Ujjwal Deep Dahal, chief executive officer at DHI, said the nation’s 500-megawatt boost “will be built on Bitdeer’s latest hardware to lower costs and improve computing power.”

Singapore-based Bitdeer, controlled by Chinese entrepreneur Jihan Wu, is one of the top crypto miners by compute power globally and runs one of the largest facilities in Texas.

Sandwiched between China and India, Bhutan has long sought to diversify its hydropower-reliant economy. DHI, which manages the government’s diverse investments, sees blockchain technology as a core part of efforts to build “an innovation ecosystem for a startup economy.” The investment outfit has been experimenting with asset tokenization and is also building out “Bhutanverse,” a metaverse project.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ITR filing: How to report cryptocurrency income in income tax return

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Income Tax Return (ITR) filing is compulsory for individuals earning a specified amount of income in a year. However, there is confusion among taxpayers on how the earnings from investments in cryptocurrencies such as bitcoins, and Ethereum should be disclosed in the ITR.

Abhinav Soomaney, founder at Cryptotax International emphasised the importance of understanding the nuances of reporting crypto earnings.

“Crypto taxation is complex due to transactions on exchange platforms, wallets, staking protocols, and P2P trading. Obtaining data from the blockchain is crucial for on-chain activity. However, there is a lack of knowledgeable professionals in this field, making specialided guidance essential for cryptocurrency taxation,” he said.

He advised investors to first prepare a comprehensive capital gain/loss report for their crypto activities.

“After preparing your capital gain/loss report for crypto activity, log into the Income Tax Portal and begin your ITR-2,” he suggested.

He outlined the steps to report crypto earnings within the ITR: “Report capital gains on Schedule VDA, along with other income from crypto. Then investors need to complete the necessary schedules, proceed to verification, and filing.”

Soomaney clarified that capital gains tax is applicable only when crypto is sold at a profit.

Holding onto tokens without selling results in an unrealised capital gain/loss, which is not taxable.

He underscored several key points for taxpayers to consider:

• No deductions are allowed for crypto investors except for acquisition cost deductions.
• Loss from digital assets cannot be set off against other income.
• Capital gains on crypto income are taxed at a flat rate of 30%, with 1% TDS paid on each transaction (except for crypto purchased with INR and crypto transferred between exchanges/wallets owned by the same individual).

Soomaney further highlighted various calculation methods available for investors, such as FIFO (First In, First Out), LIFO (Last In, First Out), and HIFO (Highest In, First Out). He suggested that HIFO might be the most beneficial for minimising taxable gains.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin tops $71,000 for the first time as rally builds steam

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Bitcoin topped $71,000 for the first time, advancing for a sixth straight day and taking this year’s rally to almost 70% on the back of massive inflows into US exchange-traded funds.

The original cryptocurrency jumped as much as 3.2% to $71,631.45 on Monday. Smaller tokens like Ether, Solana and Avalanche also advanced.

“This rally comes following a weak Asian trading session in which shorts tested the conviction of longs — it appears the longs have given a rather convincing positive answer,” said Richard Galvin, founder of Australia-based crypto-focused investment firm DACM.

Investors have poured a net almost $10 billion into a batch of new Bitcoin ETFs since they launched in the US two months ago, igniting a broad surge in crypto markets. Digital assets scored another win on Monday, as the London Stock Exchange confirmed it will accept applications for admitting Bitcoin and Ether exchange-traded notes.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin surges to all-time high, surpasses $70,000 milestone for the first time

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Bitcoin soared to an unprecedented peak on Friday, surpassing the $70,000 milestone for the first time. The surge in the leading cryptocurrency was fueled by a combination of factors, including robust investor appetite for newly introduced US spot exchange-traded crypto products and anticipation of a global decline in interest rates.

Bitcoin’s value peaked at an impressive $70,105 before experiencing a swift downturn, ultimately settling at $68,317.72 at last trading.

Billions of dollars have poured into Exchange-Traded Funds (ETFs) in recent weeks, providing significant momentum to the market. Additionally, optimism is bolstered by anticipated upgrades to the Ethereum blockchain platform, which hosts the second-largest cryptocurrency, Ether.

The forthcoming bitcoin “halving” event in April, which slows the pace of bitcoin production, further contributed to market confidence.

Challenges amidst the surge

Following Tuesday’s record high, Bitcoin experienced a sharp reversal, plunging more than 10% below the $60,000 threshold. Antoni Trenchev, co-founder of crypto lending platform Nexo, cautioned about the inherent volatility of bitcoin bull markets, predicting potential sudden downturns ranging from 10% to 20%, Reuters reported.

The approval of 11 spot bitcoin ETFs by the U.S. Securities and Exchange Commission in late January marked a significant milestone for the industry, signalling a shift from the prolonged crypto winter characterized by bankruptcies and scandals.

The optimism surrounding Bitcoin’s surge has also spilled over to other digital assets, notably Ether, which has seen a remarkable increase of over 60% since the beginning of the year. Ether’s value currently stands at $3,939.84, reflecting the broader bullish sentiment in the cryptocurrency market.

Rising tide lifts crypto stocks

The positive market sentiment has extended to crypto-related stocks, with shares of Coinbase rising by 8.2% and crypto miners Riot Platforms and Marathon Digital experiencing gains of 5.1% and 9.6%, respectively, underscoring the growing investor interest in cryptocurrency-related equities.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin retreats after record-setting run that topped $69,000

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Bitcoin surged to a record for the first time in more than two years, yet the original cryptocurrency didn’t stay at its new all-time high very long as many traders appear to have taken the opportunity to book some profit.

The token jumped as much as 2.5% to $69,191.95 shortly after 10 a.m. in New York, then almost immediately reversed course in a plunge that at one point sent it 14% below the record to $59,317.16.

“Given that nearly everyone who has ever bought Bitcoin is now in profit, there are decent odds we see some amount of profit taking,” said Zaheer Ebtikar, founder of crypto fund Split Capital.

The volatile price swings on Tuesday were the latest example of the boom-or-bust nature of Bitcoin. Its recent gains had been amplified by bullish bets made in the derivatives market, where investors in the past could get leverage of as much as 100 times the size of their positions in products such as perpetual futures. With Bitcoin reversing its early gains, more than $800 million worth of bullish positions were quickly liquidated in the perpetual futures market, according to crypto data tracker Coinglass.

Bitcoin has experienced a breathtaking rebound this year amid strong demand from new US exchange-traded funds and a looming reduction in growth of the token’s supply. At its high on Tuesday, Bitcoin was up about 63% so far in 2024, outperforming global stocks and spreading optimism across the digital-asset market. ”

In an ironic twist, Bitcoin owes much of its resurgence to a regulator long-viewed as hostile to crypto: the US Securities and Exchange Commission. The SEC approved spot-Bitcoin exchange-traded funds in early January after suffering a legal defeat last year in its attempt to reject them. The move has widened the mass-market accessibility of Bitcoin, helping the crypto sector to turn the page following a bear market in 2022 and a string of subsequent bankruptcies, including the implosion of Sam Bankman-Fried’s FTX exchange.

A steady tide of money has poured into the ETFs issued by investment heavyweights including BlackRock Inc. and Fidelity Investments. The net inflow of almost $8 billion in less than two months is colliding with a looming reduction in Bitcoin’s supply growth — known as the halving — that is also stoking bullish sentiment.

“Breaking all-time highs, with the current momentum in spot ETFs as well as the upcoming halving narrative, would likely awaken true FOMO — fear of missing out — among participants currently watching markets from the sidelines,” said Stefan von Haenisch, head of trading at OSL SG Pte.

The comeback in Bitcoin that started in early 2023 has lifted the overall market value of digital assets to about $2.6 trillion. Its revival from a low in November 2022 caps a bust-to-boom cycle that left the industry it spawned irrevocably changed.

Bitcoin hit its previous peak of $68,991.85 on Nov. 10, 2021, according to data compiled by Bloomberg, powered by the monetary and fiscal stimulus that governments around the world deployed to tackle the impact of Covid-19. The rally was driven partly by crypto purists known for their mantra of “HODL,” the result of a misspelling of “hold” that’s been adopted as an acronym for “hold on for dear life.”

Reckoning in 2022

What was hailed by some as crypto’s ultimate coming-of-age moment back then instead turned out to be the start of a brutal reckoning.

Soon after touching its high in 2021, Bitcoin — and wider crypto markets — began a precipitous descent as central banks turned hawkish to fight runaway inflation. By the end of 2021, Bitcoin’s price had tumbled by almost a third from its peak.

The bear market exposed widespread fraud and reckless risk-taking among many of crypto’s key players, embodied by the implosion of the TerraUSD stablecoin and the collapse of Bankman-Fried’s FTX exchange and related companies. Binance, the largest digital-asset exchange, and its founder Changpeng “CZ” Zhao also came under increased regulatory scrutiny.

Bankman-Fried and Zhao are now awaiting sentencing in the US on criminal charges. TerraUSD creator Do Kwon, who was imprisoned in Montenegro last year for traveling with a fake passport, is fighting extradition to the US, where he’s wanted on fraud charges.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin surpasses $60,000 as demand from ETFs triggers bull run

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

At the heart of the rally that is pushing Bitcoin toward a record high is a simple tenet of economics: Supply and demand.

The surge in demand for the cryptocurrency that’s resulting from new exchange-traded funds is vastly outstripping the amount of Bitcoin that long-time holders are willing to sell. That’s what lit the match that has set the crypto market on fire, with fuel being added from traders chasing the upward momentum, covering short positions and loading up on leveraged bets that the bull run will continue.

It all culminated in a wild session for the cryptocurrency market on Wednesday, with Bitcoin jumping as much as 13% to $63,968 — its first trip above $60,000 since November 2021 — before it pared gains as a surge in traffic triggered trading outages and displays of $0 balances for users of Coinbase, the largest US digital-asset exchange.

Bitcoin has jumped about 40% already this year, triggered mostly by the successful launch of US exchange-traded funds holding the coins which have attracted more than $6 billion since they began trading on January 11. Bitcoin last traded at $60,000 in November 2021, after reaching an all-time high of almost $69,000 earlier that same month.

“It’s pretty nuts,” said Ryan Kim, head of derivatives at digital-asset prime brokerage FalconX.

At the heart of the rally that is pushing Bitcoin toward a record high is a simple tenet of economics: Supply and demand.
The surge in demand for the cryptocurrency that’s resulting from new exchange-traded funds is vastly outstripping the amount of Bitcoin that long-time holders are willing to sell. That’s what lit the match that has set the crypto market on fire, with fuel being added from traders chasing the upward momentum, covering short positions and loading up on leveraged bets that the bull run will continue.

It all culminated in a wild session for the cryptocurrency market on Wednesday, with Bitcoin jumping as much as 13% to $63,968 — its first trip above $60,000 since November 2021 — before it pared gains as a surge in traffic triggered trading outages and displays of $0 balances for users of Coinbase, the largest US digital-asset exchange.

Bitcoin has jumped about 40% already this year, triggered mostly by the successful launch of US exchange-traded funds holding the coins which have attracted more than $6 billion since they began trading Jan. 11. Bitcoin last traded at $60,000 in November 2021, after reaching an all-time high of almost $69,000 earlier that same month.

“It’s pretty nuts,” said Ryan Kim, head of derivatives at digital-asset prime brokerage FalconX.

“We are starting to see a pretty clear FOMO kind of rally,” said Zaheer Ebtikar, founder of crypto fund Split Capital. “More and more people are just convinced to buy.”

Bitcoin’s trading volume surged to more than $79 billion, or by almost 60% in the past 24 hours, according to data from CoinMarketCap.com. As the original cryptocurrency went higher and higher, Coinbase Global Inc. began experiencing what CEO Brian Armstrong referred to on the social-media platform X as a “LARGE surge of traffic.” The exchange reported that some users were experiencing errors when attempting to buy or sell and that some may see a zero balance in their accounts. “Your assets are safe,” Coinbase said on its website, later adding that activity had begun to normalize.

The intense rally has Bitcoin on pace for its biggest monthly gain since December 2020, when the digital token jumped 50% to around $9,600.

Bitcoin has more than tripled in value since the start of last year, climbing back from a 64% plunge in 2022, in a remarkable comeback from a series of crypto-industry scandals and bankruptcies that had raised questions about the viability of digital assets.

Digital tokens are jumping even though investors have pared back expectations for looser monetary policy this year, evidenced by a rise in US Treasury yields. Bitcoin has outperformed traditional assets like stocks and gold in 2024.

“This reversal is all the more impressive in the light of central banks signaling they intend to keep rates high a while longer, eroding the theory that the next crypto bull would be driven by dropping interest rates,” said Michael Safai, co-founder at quantitative trading firm Dexterity Capital.

The massive inflows into Bitcoin ETFs have prompted some industry watchers to warn of a looming supply squeeze as new coins from miners can’t keep up with demand. Some 80% of Bitcoin’s supply hasn’t changed hands in the past six months, potentially exacerbating the squeeze and adding to the upward price pressure, analysts have said.

The nine new spot ETFs have more than 300,000 Bitcoin, or seven times the amount of new coins mined since Jan. 11. After the halving, expected in late April, the number of new coins mined daily will decline to 450 from 900 currently. If this demand stays constant, with supply of new coins cut in half, advocates are predicting that the price has room to rally.

“All of this combined makes for a supply and demand imbalance,” said Dan Slavin, founder of Chainview Capital, a crypto hedge fund. “More demand than supply means price higher, and with BTC price volatility, price higher doesn’t mean 10%, it means a whole lot more.”

The speed of the rally has some observers warning that it leaves investors susceptible to the boom and bust cycles that have become emblematic of crypto.

“This move has been very sharp, leverage is very high at the moment, as implied by derivatives basis and funding rates, so I would not be surprised by a sharp correction” or 20% or more, said Jaime Baeza, founder at crypto hedge fund AnB Investments. “Nonetheless I would not be shorting into this rally while it continues to move at this pace.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin breaks from recent range to set more than two-year high

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Bitcoin rose to the highest in more than two years, climbing above $54,000, amid growing optimism that persistent investor demand through exchange-traded funds will drive the price of the largest cryptocurrency back to record levels.

“Bitcoin continues its ascent, supported by strong ETF inflows,” said Spencer Hallarn, global head of over-the-counter trading at crypto investment firm GSR.

The original digital currency increased as much as 5.2% to $54,438 after trading in a narrow range for more than a week. It last traded at this level in December 2021, and reached an all-time high of almost $69,000 the prior month.

Investors have poured more than $5 billion into nine ETFs that began trading last month. That figure takes into account the $7.4 billion that has been withdrawn during the same period from the Grayscale Bitcoin Trust, which was converted from a trust.

“Bitcoin is approaching new yearly highs off the back of increased spot demand and momentum traders taking positions off the back of a breakout after a week of consolidation,” said Chris Newhouse, a DeFi analyst at Cumberland Labs. “Interestingly enough, liquidations are not too excessive for the current price action, and shorts who were liquidated were quickly replaced with leveraged longs.”

The open interest, or the number of outstanding contracts, for perpetual Bitcoin futures has seen a noticeable increase, Newhouse said. At the same time, short positions have been forced to be closed in the latest rally. That may be the result of fresh long positions in the market, he said.

Adding to the optimism around Bitcoin was another large purchase of the tokens by MicroStrategy Inc. The enterprise software firm, which has made buying Bitcoin as part of its corporate strategy, said Monday that it purchased another 3,000 or so of the cryptocurrency tokens this month for $155.4 million. It owns about $10 billion in Bitcoin.

Shares of MicroStrategy jumped around 14%, while other crypto-relate stocks also rallied. Coinbase Global rose 14% and Bitcoin miner Marathon Digital jumped almost 20%.

Other cryptocurrencies followed suit, with tokens for Solana and Poly each rising more than 5%. Ether, the second-biggest digial asset, gained about 2%.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow