Connect with us

Cointelegraph

Bitcoin whale explains to Bloomberg why crypto volatility will decline

A prominent Bitcoin whale explains that BTC price volatility will decline as adoption grows.

Published

on

The CEO of One River Asset Management believes BTC volatility will decline as its price continues to climb.

1344 Total views

9 Total shares

Bitcoin whale explains to Bloomberg why crypto volatility will decline

Bitcoin’s (BTC) violent price swings could become a thing of the past as institutional buyers with stronger hands continue to push the asset higher, according to a prominent crypto whale.

Eric Peters, the founder and CEO of One River Asset Management, told Bloomberg Thursday that Bitcoin’s path to maturity should help stabilize its price.

“There are all kinds of reflexive dynamics in these assets that ironically will lead to less volatility the higher they go,” he said. “As the prices are going higher, you are drawing in new types of investors with stronger hands.”

One River Asset Management has accumulated over $600 million worth of BTC. The asset manager expects to own roughly $1 billion worth of Bitcoin and Ether (ETH) by the first half of this year.

Volatility has been central to Bitcoin ever since the flagship cryptocurrency launched in 2009, but the intensity of price moves has declined considerably over the years. With the exception of the March 2020 liquidity crisis, Bitcoin’s daily volatility hasn’t exceeded 10% since 2013. Since 2016, daily volatility has eclipsed 7% only a handful of times, according to Bitpremier data.

Bitcoin’s daily price volatility. Source: Bitpremier

Peters believes that institutional buyers will play an increasingly vital role in helping Bitcoin mature — and avoid the massive price swings seen in the past.

He told Bloomberg:

“Almost every big, creditable institution in the U.S. is having discussions about this.”

Goldman Sachs, a U.S. financial institution that was highly critical of Bitcoin in the past, has even conceded that the digital asset is starting to mature. However, long-term stability will depend on greater institutional adoption.

Jeff Currie, the bank’s global head of commodities research, told CNBC recently that Bitcoin still needs to attract smart-money investors to help stabilize the market.

In the short term, it doesn’t seem like institutional adoption will be enough to keep Bitcoin’s price elevated beyond $30,000, according to Guggenheim chief investment officer Scott Minerd. Despite his seemingly bearish short-term outlook, Minerd still called BTC a viable asset in the long run.

Source: https://cointelegraph.com/news/bitcoin-whale-explains-to-bloomberg-why-crypto-volatility-will-decline

Cointelegraph

A trade war misstep? China is vacating crypto battlefield to US banks

Why is China forsaking cryptocurrencies at the same time that legacy U.S. banks, long wary of crypto, appear to be discovering its virtues?

Published

on

At the same time that China has declared war on cryptocurrencies, giant American banks appear to be embracing crypto — evident the final week of July with the news that crypto firm Lukka will provide State Street Bank’s private fund’s clients with digital and crypto asset fund administration services. This follows forays into the crypto space from the likes of BNY Mellon, JPMorgan, Citigroup and Goldman Sachs among traditional bank heavyweights.

Is it too early to speak of trend and counter-trend? And if a trade war has broken out between the United States and China, as many believe, why is China turning its back on cryptocurrencies while some of the West’s largest financial institutions, long wary of crypto, appear to see fresh value in blockchain-based digital currencies?

“Yes, U.S. banks are firmly embracing Bitcoin as an investment tool,” Nik Bhatia, author of the book Layered Money: From Gold and Dollars to Bitcoin and Central Bank Digital Currencies and adjunct professor of finance and business economics at the University of Southern California, told Cointelegraph, adding, “JPMorgan and Goldman, for example, have greenlit Bitcoin investment products such as GBTC (Grayscale) for their clients.”

“We can see that banks and other financial institutions, such as JPMorgan and Citi, are starting to realize that blockchain technology is not just a passing trend,” Bobby Ong, co-founder and chief operating officer of CoinGecko, told Cointelegraph. He added that “as such, they are beginning to explore ways for them to offer cryptocurrency products to their clients.”

But what’s with China? Since the beginning of summer, it has taken steps to curb — if not outright ban — cryptocurrency mining and trading. Do China’s financial guardians know something that U.S. bank leaders don’t?

“China doesn’t like crypto. It’s not a sovereign currency, and it’s beyond the Chinese government’s control,” Raymond Yeung, author of China’s Trump Card: Cryptocurrency and its Game-Changing Role in Sino-US Trade, told Cointelegraph, adding, “Even if it’s mined in China, it’s still not administered by them — it’s bypassing the PBoC (People’s Bank of China). That’s not acceptable.”

“China is a state that wants to keep everything under its control,” agreed Ong, adding, “This can be seen from the recent crackdown on tech firms and even private education firms.” Bitcoin’s decentralized structure gives Chinese authorities fits, he suggested, and they would much prefer to create something that they can manage, like their digital yuan, which is in the process of being rolled out.

It doesn’t help that Bitcoin (BTC) mining uses so much energy and contributes to global warming, either, Yeung further explained. China has pledged to achieve carbon neutrality before 2060, and its “emissions target is real.” The government is already imposing emissions restrictions on the country’s steel industry, and it just introduced a national emissions trading scheme. Bhatia added, “China does not want Bitcoin miners hogging their [energy] grid.”

Has China made an error of judgement?

If a trade war is indeed underway between the U.S. and China, hasn’t China miscalculated, though, by shutting down BTC mining operations, especially since North American miners are only too happy to take over China’s role as the world’s crypto mining center?

“It might very well be a huge blunder, as hash rate that comes offline is very hard to get back,” Bhatia said, adding, “That hash power has likely left China forever.”

“I think it’s difficult to say what China’s goals are in this particular situation,” commented Ong. He added, “They are aggressively trying to introduce the digital yuan as the de facto currency in the country and as a proxy to reduce the world’s reliance on the U.S. dollar.” As a result, when it comes to the core objective, this may not be a bad move: “It is in line with their goals of pushing for a centralized currency that is completely traceable by the government.”

There may be some nuances with regard to Bitcoin mining, too. The People’s Republic of China could be using the mining crackdown to drive down the price of Bitcoin so the state can purchase more BTC at a cheaper price, Bhatia suggested, further explaining to Cointelegraph:

“They might not care about mining rewards anymore. They could be trying to acquire billions worth of Bitcoin and using the mining ban as misdirection. They could also be using the coal-mining ban as proof that China is serious about climate change in order to receive a more favorable standing on the global scene.”

Others agreed that China might have a hidden agenda. The “crackdown on Chinese miners might mean that they are offloading coin into a thin market and taking us lower,” according to Ben Sebley, chief growth officer of crypto firm BCB Group.

Blockchain, but not crypto

Yeung, on the other hand, believes that China is serious about washing its hands of Bitcoin and other cryptocurrencies, but that doesn’t mean it is necessarily forsaking crypto’s underlying blockchain technology.

“The government is willing to sacrifice BTC or Ether,” Yeung told Cointelegraph, “but they don’t want to sacrifice blockchain technology.” There is still a lot going on in China in terms of blockchain technology development. “The government treasures the technology, but not crypto itself.”

Moreover, as the government has stated, “crypto is a source of financial risk,” said Yeung, adding further, “They want to control crypto, but they can’t. But they can still embrace blockchain technology, which they believe will improve productivity and spur economic growth.”

Related: Death knell for Chinese crypto miners? Rigs on the move after gov’t crackdown

Meanwhile, U.S. banks are acting like crypto’s summer swoon never happened. “The growth in popularity of digital assets is showing no signs of a slowdown,” said Nadine Chakar, head of State Street Digital, adding that State Street “is committed to continuing to build out the necessary infrastructure to further develop our digital assets servicing models.”

“There is growing acceptance of Bitcoin’s role in being a hedge on the current fear of currency debasement,” Ong told Cointelegraph. “After the announcement of an unexpected hike in the inflation rate” — U.S. inflation skied 5.4% in June, the fastest rate in 13 years — “many people are considering alternative ways to preserve their wealth, and Bitcoin is starting to become a viable alternative.” Banks are in the business of offering financial services, and as the demand to hold cryptocurrencies rises, it is not surprising that they are eager to enter the industry, he added.

U.S. banks may also have an eye on future customers. “With an influx of younger investors entering the market, they are more likely to invest in riskier and diverse asset classes,” said Ong, adding:

“Disinterest in slow-moving assets, as well as the particular rise of ‘meme stocks,’ has definitely given the U.S. banks some ideas on how to capitalize on this shift in investing methodologies.”

The fact that Bitcoin continues to avoid any scrutiny as a security or as an investment product that requires additional oversight may also factor in the U.S. banks’ calculus. “It’s a commodity and is able to avoid the SEC [regulation], which is essential,” said Bhatia.

Related: China’s crypto industry is gone? Beijing’s crackdown keeps sending shockwaves

The U.S.’s and China’s approaches to regulation are philosophically different, summarized Yeung. China’s government basically says, You need my approval for anything, while the U.S. says, If you do anything that hurts me, I will ban you. U.S. firms have more wiggle room, though. If the U.S. courts declare that BTC is a commodity, for instance, then regulators can’t ban it.

Meanwhile, if and when a younger generation turns to professional money managers, it will probably expect at least some exposure to crypto assets — which means Western banks could be entrenched in the crypto space for years to come.

Source: https://cointelegraph.com/news/a-trade-war-misstep-china-is-vacating-crypto-battlefield-to-us-banks

Continue Reading

Cointelegraph

SEC Commissioner concerned about the US lagging behind global Bitcoin ETFs

The SEC Commissioner also mentioned her concern that the U.S. regulators could be overstepping their remit by forcing the local crypto industry to play by a separate set of rules than anyone else.

Published

on

“We’re not a merit regulator, so we shouldn’t be in the business of deciding whether something is good or bad,” SEC Commissioner Hester Peirce said.

823 Total views

5 Total shares

SEC Commissioner concerned about the US lagging behind global Bitcoin ETFs

Securities and Exchange Commissioner Hester Peirce has voiced concerns over the United States lagging behind global jurisdictions in adopting cryptocurrency exchange-traded funds (ETFs).

During an online appearance at the Bitcoin (BTC) conference “The B Word,” Peirce pointed out that many other countries such as Canada have already been trading crypto ETFs, while the U.S. is still deciding whether to approve such a trading instrument. She stated:

“I would never have imagined that I would be in this situation where we would not yet have approved one and other countries are moving ahead.”

The SEC commissioner also mentioned her concern that U.S. regulators could be overstepping their remit by forcing the local crypto industry to play by a separate set of rules than everyone else.

“We’re not a merit regulator, so we shouldn’t be in the business of deciding whether something is good or bad, an investor is thinking of their entire portfolio, and sometimes we’re thinking in one-off terms of a particular product standing on its own, and we forget that people are building portfolios,” she noted.

Peirce’s latest remarks come in line with her recent criticism of U.S. crypto regulation, with the SEC commissioner last month once again urging authorities to refrain from overregulating the crypto industry. Despite calling for a softened regulatory stance on crypto, the commissioner still believes that clear crypto rules are critical for the industry to thrive without fear of breaking the law. A long-running crypto advocate, Peirce is widely referred to as “Crypto Mom” within the crypto community.

Related: Fund management firm Global X files with the SEC for a Bitcoin ETF

As previously reported, U.S. regulators have delayed multiple approvals of crypto ETFs recently after consistently postponing such decisions over the past several years. In the meantime, some countries have already approved or launched Bitcoin ETF trading, with 3iQ and CoinShares’ Bitcoin ETF going live on the Toronto Stock Exchange in April. Canadian fund managers Purpose Investments and Evolve Funds Group previously launched Bitcoin ETF trading as well.

Source: https://cointelegraph.com/news/sec-commissioner-concerned-about-the-us-lagging-behind-global-bitcoin-etfs

Continue Reading

Cointelegraph

Four North American Bitcoin miners that could benefit from the East-West shift

Bitcoin miners in North America could get a bigger slice of the hash rate pie as their Chinese competition powers down.

Published

on

Even before China finally wielded the ban hammer on crypto mining, Bitcoin (BTC) miners in North America had been building up their capacity amid efforts to gain a larger share of the global hash rate distribution. From building bigger data centers to acquiring hardware inventories, these establishments have been making concert efforts to balance the hash-power dichotomy between the Eastern and Western hemispheres.

North American Bitcoin miners often have to contend with energy usage concerns as well and some have been keen to partner with oil and gas firms, becoming buyers of last resort for flared gas. Indeed, American oil drillers and Bitcoin mining firms continue to collaborate over natural gas utilization, proving once again that the potential for Bitcoin’s thermodynamic capacity is set to be a net positive for the environment, despite the criticisms put forward against proof-of-work (PoW) mining.

With North American-based entities seemingly on the cusp of establishing a greater presence in the global Bitcoin mining matrix, here is a look at four of the largest Bitcoin miners in the region.

Riot Blockchain

In 2020, China still controlled about 65% of the global Bitcoin hash rate, according to estimates from several data sources. However, Riot Blockchain was expanding its operations with a swathe of major hardware acquisitions from leading Bitcoin miner makers like Bitmain.

In August and December 2020 alone, Riot Blockchain spent millions of dollars to acquire thousands of Antminers from Bitmain. Indeed, as reported by Cointelegraph in April, Riot Blockchain’s hashing capacity increased by 460% in 2020.

Riot Blockchain’s expanded inventory drive has continued into 2021, with the company purchasing over 42,000 Antminers from Bitmain earlier in the year. The Nasdaq-listed company also announced a $650 million purchase of a major data center located in Texas.

By acquiring the Whinstone data center in Texas, Riot Blockchain is set to own the single largest Bitcoin mining facility in the United States. The American Bitcoin mining giant is even set to expand the original capacity of the site from 750 megawatts to over 1,000 MW.

With its upscaled capacity coinciding with sweeping crackdowns in China, it is unsurprising to see Riot Blockchain enjoying greater Bitcoin mining success, as evidenced by the figures quoted in its monthly production and operations update. In April, the company reported that it mined 187 Bitcoin (worth $11.2 million at the time) the previous month.

The March 2021 BTC production figure marked an 80% increase from its Bitcoin mining total for March 2020. In its latest report in June, the company stated it mined 243 BTC, a 406% increase from its June 2020 production figure.

The June report also put Riot Blockchain’s year-to-date Bitcoin mining total at 1,167 BTC (currently worth $36.5 million). As of June 2020, the company had only mined 508 BTC meaning that this year’s production figure represents a 130% year-on-year increase.

In total, Riot Blockchain says it holds over 2,200 BTC as of the end of June, with all of the Bitcoin coming from its mining operations. Detailing the link between its recent production successes and the situation in China, the June report stated, “The exodus of Bitcoin mining from China has resulted in a downward difficulty adjustment and lower global network hash rate. As such, Riot is currently mining more Bitcoin per day than at any time in the Company’s history,” continuing:

“While it is broadly expected that many Chinese miners will eventually relocate, the company estimates that it could be quite some time before the global Bitcoin mining hash rate returns to its previous high of 180 exahash per second (“EH/s”), last observed earlier this year.”Marathon

Marathon is arguably Riot Blockchain’s main competitor in the “North American hash wars” and, like its rival, the crypto mining giant has been expanding its hardware inventory since 2020. In October, the Nevada-based Marathon Patent Group acquired 10,000 Antminer S-19 Pros from Bitmain.

Such was the size of the order that it was estimated to boost the company’s operational hash rate capacity to 2.56 EH/s, a little more than the target 2.3 EH/s for Riot Blockchain’s expansion. With the Antminer order arriving in batches for Marathon, the company seems to now be focusing on achieving “carbon neutrality” and satisfying regulatory demands.

Back in March, the company first announced plans to divert all of its current hash power to a regulatory-compliant Bitcoin mining pool by the start of May. At the time, Marathon stated that the new pool adhered to U.S. Anti-Money Laundering (AML) protocols established by America’s Office of Foreign Control.

As reported by Cointelegraph in May, Marathon is planning a 300 MW carbon-neutral data center that will house 73,000 Bitcoin miners. According to the announcement at the time, the deployment of the facility will bring the company’s carbon neutrality to about 70% while taking its hash rate to 10.37 EH/s.

According to data from BTC.com, achieving a hash rate capacity of 10.37 EH/s would put Marathon number five on the current Bitcoin hash rate distribution log.

While more than 50% down from its 2021 high of $56.56, the company’s stock is still up 122.34% year-to-date as of the time of writing. With Bitcoin exchange-traded funds yet to gain approval in the United States, Bitcoin mining stocks are seen as the next best thing in terms of gaining indirect exposure to BTC.

Marathon itself is a Bitcoin holder separate from its mining interests. At the start of the year, the company bought over 4,800 BTC, valued at about $150 million at the time. New York Digital Investment Group reportedly facilitated the deal.

Hut 8

United States.-based firms are not the only major players in the North American Bitcoin mining theater, as Canadian outfit Hut 8 is also a significant name in the conversation. Once the largest publicly traded Bitcoin miner by capacity back in 2018, the Toronto-based company seems to be recovering from its previous setbacks.

In 2018, the crypto market suffered a crippling bear market as coin prices tumbled from peaks reached in December 2017 and January 2018. In May 2019, Hut 8 reported losses north of $136 million for the previous year, which also culminated in significant staff cuts.

Having waded through the crypto winter of 2018 and 2019, Hut 8 has undergone a massive upscaling of its miner hardware, announcing the purchase of over 11,000 MicroBT rigs valued at about $44 million. Based on the capacity of the MicroBT miners, Hut 8’s hash rate capacity is expected to reach 2.5 EH/s once all the machines are installed in the company’s 100 MW facility, currently under construction.

At 2.5 EH/s, Hut 8 predicts its daily Bitcoin production will jump two-fold from between 6.5 to 7.5 BTCto between 14 to 16 BTC. Such a per diem BTC mining rate may also serve to preserve Hut 8’s status as the Bitcoin miner holding the most self-mined BTC in the world.

Back in January, the Canadian Bitcoin miner estimated that its total Bitcoin holdings will reach 5,000 BTC by the start of 2022. The company also outlined plans to expand its hash rate to six EH/s by mid-2022.

Related: North American crypto miners prepare to challenge China’s dominance

Hive Blockchain

The East-West shift in Bitcoin hash rate will ultimately involve sweeping changes to the energy mix for BTC mining, with more of an emphasis on “Green Bitcoin.” For the Canadian crypto miner, green energy is a major focus point for its operations.

From Canada to Iceland, and even to Sweden, Hive Blockchain operated green-energy-powered data centers for crypto mining. Back in May, the company was reportedly forced to sell its facility in Norway, citing issues with regulators in the country.

Earlier in July, Hive acquired 3,000 MicroBT M30S miners for its facility in New Brunswick, Canada. The added hash power will reportedly be contributed to the Foundry USA Pool that already aggregates hashing potential from other major North American miners like Hut 8, Blockcap and Bitfarms, among others.

Hive’s additional 3,000 mining rigs will reportedly take the company’s hashing potential up by 0.264 EH/s to reach a total hash rate of 0.83 EH/s. The company also recently joined the ranks of publicly traded Bitcoin mining firms after securing a Nasdaq listing back in June.

Meanwhile, Gryphon Digital Mining, another U.S.-based miner, may soon be challenging the more established names in the North American BTC mining industry. The company, which claims to run on 100% renewable energy, recently purchased 7,200 Antminer S19J Pro mining rigs.

Based on the hashing capacity of the machines, Gryphon’s hash rate will approximately increase by about 0.72 EH/s. This new inventory will reportedly be installed in August and upon that time, the company will receive its ESG rating.

Source: https://cointelegraph.com/news/four-north-american-bitcoin-miners-that-could-benefit-from-the-east-west-shift

Continue Reading

Trending