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Stablecoin holdings on crypto exchanges hit a new all-time high

Stablecoin allocations on cryptocurrency exchanges have hit a new all-time high, surpassing $4.7 billion on Jan. 28.

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Stablecoins like Tether are flooding crypto exchanges again, potentially pointing at another upward move on crypto markets.

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Stablecoin holdings on crypto exchanges hit a new all-time high

Amid renewed bullish action on cryptocurrency markets, stablecoins like Tether (USDT) are flooding exchanges to hit a new historical high in terms of allocation.

According to market data provider CryptoQuant, stablecoin holdings on global crypto exchanges broke a new all-time high on Jan. 28, surpassing $4.7 billion.

This amount makes up a significant part of the total stablecoin market capitalization, which is estimated at around $35.2 billion at the time of writing, according to data from CoinGecko. The total trading volume of all stablecoins is now evaluated at around $111 billion, with Tether (USDT) alone making up $103 billion of these volumes.

Source: CryptoQuant

Alongside stablecoins’ holdings on crypto exchanges hitting a new all-time high, the amount of inflow stablecoin transactions also appears to be growing at the time of writing. On Jan. 28, the number of inflow stablecoin transactions amounted to nearly 33,000 transactions, up from 30,000 transactions on Jan. 27.

Massive stablecoin inflows are often regarded as a short-term catalyst for Bitcoin, suggesting that sidelined capital is moving back into BTC. Specifically, fiat-pegged stablecoins like USDT are becoming an increasingly useful tool for traders to make deposits on crypto exchanges, allowing them to easily buy and sell millions of dollars worth of Bitcoin. As such, growing stablecoin allocations on crypto exchanges may be associated with increasing buying power.

As previously reported by Cointelegraph, the start of Bitcoin’s rally in October 2020 was driven by growing stablecoins’ inflows onto exchanges.

At publishing time, there is a notable upward trend on crypto markets, with the majority of the top-10 coins by market cap posting significant growth and Bitcoin returning above $32,000.

Source: https://cointelegraph.com/news/stablecoin-holdings-on-crypto-exchanges-hit-a-new-all-time-high

Cointelegraph

Ethereum market cap hits $337 billion, surpassing Nestle, P&G and Roche

The value of the Ethereum network soared above major companies like Nestle and P&G after its market cap hit a new high at $337 billion.

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Ether (ETH) price has rallied more than 200% in 2021, resulting in a massive $337 billion market capitalization. This impressive figure pushed the value of the Ethereum network ahead of the total market cap of major companies like Procter & Gamble’s ($326 billion) and PayPal’s $308 billion.

The market cap figure is achieved by multiplying the last trade price by the total outstanding number of coins, regardless of whether they’ve been moved. Therefore, it seldomly reflects the average price where most investors transacted.

For investors from traditional finance, ‘value’ is assessed by comparing multiples and valuations. These are often calculated in the form of earnings, sales, and market share, and attempting to apply these same ‘value’ metrics to cryptocurrencies with multiple use cases creates uncertainty and discomfort.

Ether is a multi-faceted asset that is difficult to evaluate

There is not a bullet-proof metric available to assess how Ether’s value stacks against its potential. The cryptocurrency might simultaneously act as a digital store of value while also functioning as the token required to access the Ethereum network.

Ether market cap, in USD billion. Source: TradingView

Therefore, one must consider the coins deposited on exchanges or the percentage effectively changing hands when comparing different asset classes. The existence of regulated derivatives markets allow institutional investors to bet against the asset’s price, and it is another factor that should be accounted for.

Largest global assets’ ranking by market capitalization. Source: Infinite Market Cap

While the merits of comparing the market cap of different asset classes side-by-side is debatable, the metric essentially works the same way for commodities, stocks, and mutual funds.

According to data from Infinite Market Cap, Ether recently surpassed the market cap of Nestle, Procter & Gamble, PayPal, and Roche.

The American multinational consumer goods company P&G was founded in 1837 and holds a diversified brand portfolio, including personal health, consumer care, and hygiene. With 100,000 employees worldwide, the conglomerate posted a $13 billion net income in 2020.

On the other hand, Ethereum has 2,320 average monthly developers, according to the Electric Capital’ Developer Report’. Although it is not a secular company, its decentralized applications (dApps) handle over 100,000 daily active addresses. Even more impressive is the $12 billion daily transfer and transactions on the Ethereum network. These numbers alone are outstanding even for an S&P 500 company.

Stocks have their own risks, which can’t be ignored

Comparing a 183-year company that is heavily dependent on production and distribution to a technology-based protocol is unlikely to uncover many similarities. However, equity investors enjoy the fruits of dividends, and while some will argue that Ether could be staked for a return, there are more significant risks involved.

Investors staking in the ETH 2.0 contract have the options of becoming a full validator or joining a pool but their coins could be lost due to malicious activity or by failing to validate network transactions. Similar risks emerge when lending Ether via centralized services and decentralized protocols.

On the other hand, listed companies can create new shares to benefit from excessive valuations or increase their cash position.

Tax changes, operational liabilities, and regulatory changes are other risks that stockholders sometimes face. For example, Roche was recently challenged for $4.5 billion from the government for deceiving the CDC, according to a lawsuit unsealed in September 2019.

Decentralized protocols are virtually free of these perils, and perhaps this justifies their sky-high valuations.

Considering the risks described above, investors might conclude that holding Ether is less risky than buying stocks. At least it is possible to self-custody, making the asset less dependent on third parties and unauthorized transactions.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Therefore, one must consider the coins deposited on exchanges or the percentage effectively changing hands when comparing different asset classes. The existence of regulated derivatives markets allow institutional investors to bet against the asset’s price, and it is another factor that should be accounted for.

Source: https://cointelegraph.com/news/ethereum-market-cap-hits-337-billion-surpassing-nestle-p-g-and-roche

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Cointelegraph

Discovering financial literacy: Crypto leads retail investment charge

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Momentum trading driven by retail investors seems to have taken on a new life since the onset of the global standstill occasioned by the ongoing coronavirus pandemic. Where celebrity challenges used to dominate viral trends on social media, issues relating to personal finance and investments seem to be as popular these days.

This increasing interest in the financial markets from workaday folks has also spread to the crypto space as digital currencies posted sharp price recoveries from the slumps that characterized the Black Thursday crash of March 12, 2020.

While interest is palpable, some gatekeepers question whether the new generation of retail investors is sufficiently knowledgeable to be investing in risky assets. But has the management of personal finances and investing become a new fashionable trend?

COVID-19: Challenge and opportunity

Trading apps like Robinhood and Coinbase have recently become the most downloaded on Apple’s App Store, ahead of popular social media services such as TikTok and Instagram. Given the sway held by social media over popular culture in the last decade, investment apps seeing the most downloads could point to a pivot in interests especially among the younger demographic.

According to a survey published by U.S. investment giant Charles Schwab, 15% of the current retail investors in America began investing in 2020. Indeed, the United States brokerage industry is estimated to have added 10 million new clients in 2020, with retail trading app Robinhood accounting for over 60% of the total figure.

The retail investment boom in 2020 can be attributed to two factors: market volatility and coronavirus lockdowns. With the global economy virtually on standstill, governments sought to stimulate growth and recovery by significant cash infusions in the form of stimulus packages.

According to the Charles Schwab survey, Millennials and Generation Z constitute the majority of the newbie investor class created in 2020. Indeed, Millennials accounted for over half the number of participants who said they got into the asset market amid the onset of the COVID-19 pandemic. Jonathan Craig, senior executive vice president and head of investor services at Charles Schwab, told Cointelegraph:

“We’ve seen tremendous growth and engagement among individual investors over the past year as a result of lower trading costs, new products and services aimed at greater ease and accessibility, and the investing opportunities presented by market volatility.”

Perhaps fearful of inflation and monetary debasement, more retail investors appear keen to secure suitable hedges against economic uncertainty. In a conversation with Cointelegraph, Jay Hao, CEO of crypto exchange giant OKEx, identified the COVID-19 pandemic as a significant trigger for the current retail investment surge, adding:

“The pandemic has probably sped up crypto adoption due to the Federal Reserve massively pumping money into the market over last year to save the U.S. economy. […] With more platforms having granted retail investors direct access to invest in equities, we are seeing a democratization of the investment space and more power in the hands of the people.”

The coronavirus continues to have a significant impact on personal finances ranging from salary cuts to furloughs or even outright job losses. Thus, it is perhaps unsurprising to see more people becoming incentivized to build emergency income sources outside the traditional 9-to-5 structure.

Throwing crypto into the mix

As previously stated, Robinhood accounted for over 60% of the new investors added by U.S. brokerages in 2020. This figure puts the retail trading platform in a suitable position to determine newbie investment trends within the last year.

According to a blog post on the company’s website earlier in April, the trading platform declared that its customers were leading the vanguard of the demographic change in the financial markets. In the aforementioned Charles Schwab survey, the investment giant called this new investor class “Generation Investor,” or Gen I.

Gen I has a median age of 35 years, which once again positions Millennials and Gen Z at the heart of this investment demographic shift. Numerous surveys have also put this particular age range as being the most interested in cryptocurrencies, as Hao put it:

“Cryptocurrency is probably one of the first financial instruments that has drawn attention from millennials, who have the capability to further vitalize the market. From popular TikTok accounts to memetic crypto marketing, these communities and their sophistication in producing action bring on a new scene of user-behavior to altcoins.”

Earlier in April, crypto exchange OKEx published a joint research study with blockchain analytics service Catallact showing the impact of retail interest in the crypto market. According to the report, retail activity in the Bitcoin (BTC) market outpaced that of institutional players in Q1 2021.

Such is the growth in retail cryptocurrency trading activity that Robinhood has reported that 9.5 million customers traded crypto on its platform in Q1 2021 alone. This figure represents a sixfold increase in the number of customers recorded by the company in Q4 2020.

Other investment and payment services have also begun onboarding crypto clients to take advantage of the current retail trading hype. The likes of Venmo and PayPal have broken from previously anti-crypto stances to adopt friendlier dispositions to digital currencies amid the potential for massive revenue streams.

Outside the U.S., a resurgence in retail crypto trading has significantly impacted South Korea’s financial markets. Firms invested in cryptocurrency exchanges are experiencing massive stock price growths. K Bank, the major banker for Upbit — one of South Korea’s largest crypto exchanges — has enjoyed a sharp reversal of fortunes. The bank has recovered from the $89 million in losses recorded in 2019 to be within a year of possibly pursuing a public listing.

What about financial literacy?

In February, Thailand’s finance minister Arkhom Termpittayapaisith bemoaned the surge of speculative crypto investment among retail traders in the country. At the time, the government official warned that the trend could have dire implications for the country’s capital market.

Thailand’s finance minister is not alone in espousing such sentiments as similar remarks have emerged from government officials and financial regulators across the world. In January 2021, the United Kingdom’s Financial Conduct Authority warned that crypto investors were liable to lose all their money owing to the high level of risk in the market.

Apart from volatility and other well-worn anti-crypto rhetoric, issuers of these cryptocurrency crash portents often point to the presumed ignorance of retail investors about the intricacies of the investment market. Indeed, Thailand’s Securities and Exchange Commission came under significant backlash from the Thai crypto community when it sought to introduce investor qualification requirements for cryptocurrency investments back in February.

Hong Kong is also another jurisdiction looking to limit retail involvement in crypto trading amid reports of a blanket ban. Like the Thai proposal, Hong Kong regulators are looking to enact a minimum income threshold for cryptocurrency investments, which could disqualify up to 93% of the city’s population.

There is perhaps no better scale for examining financial literacy arguments than the GameStop saga from earlier in the year. A horde of retail investors leveraged the power of social media engagement to counter shorting of GME stock.

Save for regulatory paternalism that saw stock market gatekeepers unfairly favoring the hedge funds on the losing side, the retail traders on r/Wallstreetbets may probably have run the naked shorters to the ground. It could be argued that the GameStop drama proved financial literacy is not the issue for retail traders but rather the undemocratized nature of the legacy financial system.

The Charles Schwab survey offers a glimpse of the extent to which newbie investors are going in terms of financial education and advice. In its published report on the poll, the investment firm revealed that about 94% of investors are keen to access more information and tools to conduct their own research.

Commenting on the investment mindset of newbie investors, Andrew D’Anna, senior vice-president at the company’s retail client experience division, stated: “Now that they’ve dipped their toes into investing, Gen I is eager to keep learning and evolving its strategies to successfully build wealth for the long-term.”

According to D’Anna, the company’s survey offers proof that Gen I investors are not all about short-term risk-taking for huge gains. Instead, the emerging generational change in the financial markets led by Millennials and Gen Z are keen to acquire guidance and education to make informed decisions.

Trading apps like Robinhood and Coinbase have recently become the most downloaded on Apple’s App Store, ahead of popular social media services such as TikTok and Instagram. Given the sway held by social media over popular culture in the last decade, investment apps seeing the most downloads could point to a pivot in interests especially among the younger demographic.

Source: https://cointelegraph.com/news/discovering-financial-literacy-crypto-leads-retail-investment-charge

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PayPal-owned Venmo launches cryptocurrency trading

In the latest milestone in crypto adoption, popular payments app Venmo integrates cryptocurrency trading for its 70+ million users.

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Venmo is following in the footsteps of its rival, Square’s Cash App, by introducing cryptocurrency trading.

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PayPal-owned Venmo launches cryptocurrency trading

Payments app Square made headlines — and dollars — when it integrated Bitcoin trading into its mobile platform back during the crypto bull market of winter 2017.

Now, rival payments firm Venmo, owned by PayPal, is following suit by launching cryptocurrency trading for four major coins: Bitcoin (BTC), Ether (ETH), Litceoin (LTC) and Bitcoin Cash (BCH).

Beginning on Tuesday and set to be widely available within the new few weeks, Venmo’s 70 million+ customers will be able to buy, hold and sell crypto directly within the Venmo app. The launch is offering users access to in-app guides to help them to better navigate the cryptocurrency trading space and will encourage them to share their cryptocurrency experiences via the Venmo feed.

Venmo users will be able to buy as little as $1 worth of cryptocurrency and can use either funds from their Venmo balance or from a linked bank account or debit card to buy and sell their holdings.

Over 30% of Venmo customers have already begun to purchase cryptocurrency or equities, according to the company’s research into 2020 customer behavior. Of these, 20% began their purchase during the COVID-19 pandemic, suggesting that the public health and concurrent economic crisis has accelerated trends in digitization and experimentation with new financial technologies.

Support for cryptocurrency on Venmo is facilitated through a partnership with Paxos Trust Company, a regulated provider of crypto products such as its stablecoin and other services. Venmo owner PayPal is also the holder of a conditional Bitlicense from the exacting New York State Department of Financial Services. Conditional licensees, such as PayPal, are required to pair off with firms that have already been granted full-blown licenses — as, in this case, has Paxos.

Just under a week ago, PayPal CEO Dan Schulman hinted at developments underway since the payments giant first went live with its crypto offering in the United States in November of last year. Schulman said that PayPal aims to support the use of crypto for everyday transactions and to tap into smart contracts and other, more expansive features of blockchain technology. He also pitched the company’s vision of leveraging crypto for the attainment of a more “inclusive economy,” in which “things will be done much differently than today.”

Source: https://cointelegraph.com/news/paypal-owned-venmo-launches-cryptocurrency-trading

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