Daily Archives: March 25, 2021

When the richest person in the world gives his support to a virtual currency you know it's big business.

Elon Musk has told users of an online social media app that he thinks the virtual currency, Bitcoin, is a "good thing."

His comments resulted in the value of Bitcoin rising significantly.

So much so, that a singular Bitcoin went from being worth 3,600 in March last year to more than 27,000 now.

As talk of the currency has gone global, the Bank of Singapore has suggested that the 12-year-old currency could replace gold as its store of value.

However, in October, the head of the Bank of England, Andrew Bailey, warned about the unpredictability of Bitcoin, saying it makes him, "very nervous".

With all this talk you're probably wondering - what is Bitcoin and how does it all work?

Here's everything you need to know.

What is Bitcoin?

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Bitcoin, often described as a cryptocurrency, a virtual currency or a digital currency - is a type of money that is completely virtual.

It's like an online version of cash. You can use it to buy products and services, but not many shops accept Bitcoin yet and some countries have banned it altogether.

However, some companies are beginning to buy into its growing influence.

In October last year, for example, the online payment service, PayPal, announced that it would be allowing its customers to buy and sell Bitcoin.

The physical Bitcoins you see in photos are a novelty. They would be worthless without the private codes printed inside them.

How does Bitcoin work?

A Bitcoin wallet app on a smartphone

Each Bitcoin is basically a computer file which is stored in a 'digital wallet' app on a smartphone or computer.

People can send Bitcoins (or part of one) to your digital wallet, and you can send Bitcoins to other people.

Every single transaction is recorded in a public list called the blockchain.

This makes it possible to trace the history of Bitcoins to stop people from spending coins they do not own, making copies or undo-ing transactions.

How do people get Bitcoins?

There are three main ways people get Bitcoins.

How are new Bitcoins created?

People build special computers to generate Bitcoins

In order for the Bitcoin system to work, people can make their computer process transactions for everybody.

The computers are made to work out incredibly difficult sums. Occasionally they are rewarded with a Bitcoin for the owner to keep.

People set up powerful computers just to try and get Bitcoins. This is called mining.

But the sums are becoming more and more difficult to stop too many Bitcoins being generated.

If you started mining now it could be years before you got a single Bitcoin.

You could end up spending more money on electricity for your computer than the Bitcoin would be worth.

Why are Bitcoins valuable?

Bitcoins are valuable simply because people believe they are

There are lots of things other than money which we consider valuable like gold and diamonds. The Aztecs used cocoa beans as money!

Bitcoins are valuable because people are willing to exchange them for real goods and services, and even cash.

Why do people want Bitcoins?

Some people like the fact that Bitcoin is not controlled by the government or banks.

People can also spend their Bitcoins fairly anonymously. Although all transactions are recorded, nobody would know which 'account number' was yours unless you told them.

In an online chat with social media users in January 2021, the world's richest man, Elon Musk, said he was a big supporter of Bitcoin.

He even went as far as to change his Twitter bio to "#bitcoin".

He has repeatedly shown his support to online currencies in recent years and caused major movements in their values due to his own personal wealth and influence.

This particular endorsement led to the value of Bitcoin to rise significantly.

Is it secure?

Every transaction is recorded publicly so it's very difficult to copy Bitcoins, make fake ones or spend ones you don't own.

It is possible to lose your Bitcoin wallet or delete your Bitcoins and lose them forever. There have also been thefts from websites that let you store your Bitcoins remotely.

The value of Bitcoins has gone up and down over the years since it was created in 2009 and some people don't think it's safe to turn your 'real' money into Bitcoins.

This concern was expressed by the head of The Bank of England, Andrew Bailey, in October 2020.

He said that he was "very nervous" about people using Bitcoin for payments pointing out that investors should realise its price is extremely volatile.

By this, he meant that the value could drop significantly at any moment and investors could lose a lot of money.

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Guide: What is Bitcoin and how does it work? - CBBC Newsround

Bitcoin could soar as high as $300,000 in the current bull market based on its historical patterns, according to Bobby Lee, co-founder and former CEO of crypto exchange BTCC.

However, he warned that the bubble will burst after peaking and the cryptocurrency could see declines for years.

"Bitcoin bull market cycles come every four years and this is a big one," said Lee, who is currently the chief executive of crypto wallet Ballet. "I think it could really go up to over $100,000 this summer."

Two of these "mega bull market cycles" have occurred over the last eight years, he told CNBC's "Squawk Box Asia" on Monday, pointing out that the last one was in 2017, when the price of bitcoin surged to nearly $20,000 by the year end from about $1,000 earlier that year.

It could go down by quite a bit and that's when the bubble bursts. In the bitcoin crypto industry, we call it 'bitcoin winter' and it can last from two to three years.

Bobby Lee

founder and CEO, Ballet

With bitcoin entering 2021 at around $30,000, Lee said "even just a 10x value from that" would bring the price of the cryptocurrency to $300,000. He clarified that he was not sure if history would repeat itself.

Bitcoin has had a blockbuster 2021 so far, with the cryptocurrency breaking multiple record levels this year, and surpassing the $60,000 mark earlier in March. It last traded at $57,660.24, according to data from Coin Metrics.

Still, a "bitcoin winter" that could last for years may hit the crypto currency following its bull run, warns Lee.

"It could go down by quite a bit and that's when the bubble bursts," he said. "In the bitcoin crypto industry, we call it 'bitcoin winter' and it can last from two to three years."

Investors should be aware that bitcoin's value could fall as much as 80% to 90% of its value from the all-time peak, the entrepreneur said.

"Bitcoin is very volatile, but the rewards are risk-adjusted, I think," Lee said.

Read more here:
Bitcoin could surge to $300,000 but winter could last for years when the bubble bursts, says crypto entrepreneur - CNBC

Photographer: Andrey Rudakov/Bloomberg

Photographer: Andrey Rudakov/Bloomberg

Fidelity Investments applied to list a Bitcoin exchange-traded fund that would track the cryptocurrency using pricing from U.S.-based exchanges.

The firms Wise Orgin Bitcoin Trust would use underlying prices from exchanges that include Bitstamp, Coinbase, Gemini, itBit and Kraken, Fidelity said in a filing Wednesday with the Securities and Exchange Commission.

The application comes a month after North Americas first Bitcoin ETFs, including the Purpose Bitcoin ETF and another from Evolve Funds Group, began trading in Canada.

Several other Bitcoin ETF proposals in the U.S., including those put forth by Gemini crypto-exchange founders Cameron and Tyler Winklevoss, have failed to pass SEC muster.

The digital assets ecosystem has grown significantly in recent years, creating an even more robust marketplace for investors and accelerating demand among institutions, Fidelity said in an e-mailed statement. An increasingly wide range of investors seeking access to Bitcoin has underscored the need for a more diversified set of products offering exposure to digital assets.

With assistance by Claire Ballentine

Before it's here, it's on the Bloomberg Terminal.

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Bitcoin (BTC) ETF: Fidelity Applies for Fund That Tracks the Cryptocurrency - Bloomberg

Bitcoin is dividing opinion on Wall Street, with a rush of investment banks expressing widely divergent views on the cryptocurrency boom.

The digital currency soared 300 per cent last year, and has roughly doubled in the opening weeks of 2021, taking its value to about $60,000. With an estimated 18.7m coins in circulation, that takes the overall value of the market to roughly $1.1tn too big for investment banks to ignore.

But the extra scrutiny from professional analysts is not creating a consensus about its place in financial markets, or whether it should even have one at all.

Citigroup was one of the first big banks to explain its view. In a 108-page report released earlier this month, it said bitcoin may be optimally positioned to become the preferred currency for global trade a prospect that fired up prominent cryptocurrency bulls such as SkyBridge founder Anthony Scaramucci.

It noted concerns over capital efficiency, insurance and custody and the environmental impact of cryptocurrencies, and concluded that developments in the near term are likely to prove decisive as the currency balances at the tipping point of mainstream acceptance or a speculative implosion.

Since then, Bank of America and Morgan Stanley Wealth Management have also chimed in.

Total bitcoin returns this year are already among the highest in its short history and investors have noticed, said Bank of Americas global commodity research team. But, the report highlighted serious concerns about the environmental impact of cryptocurrencies, noting that bitcoins annual energy consumption rivals that of the Netherlands because of the energy intensive process of mining new coins.

BofA analysts also said bitcoin was not a suitable hedge against rising inflation and its supply is controlled by a small collection of accounts, dubbed whales.

Lisa Shalett, chief investment officer and head of the global investment office at Morgan Stanley Wealth Management, wrote in a report last week that cryptocurrencies are reaching the threshold of becoming an investable asset class.

She said the evolving regulatory framework, improving liquidity conditions and growing interest from institutional investors have created conditions for cryptocurrencies to become part of mainstream institutional portfolios, similar to how gold markets emerged 45 years ago.

Our recommendation is that investors get educated and consider how and whether to get exposure to this bourgeoning asset class in their portfolio, Shalett wrote.

Others, such as Germanys Commerzbank have deemed bitcoin not worthy of analyst coverage, describing it as a purely speculative asset. French asset manager Amundi also published its first paper on cryptocurrencies on Monday, with deputy chief investment officer Vincent Mortier warning of a possibly brutal price adjustment once major regulators set out rules for the space.

Goldman Sachs restarted its digital currency trading desk in March, a month after Bank of New York Mellon announced it would offer cryptocurrency custody services to its asset management clients.

The rally in bitcoin has been supported by the growing interest from institutional investors. Some companies, prominently including Tesla, have also loaded up. US Federal Reserve chair Jay Powell, meanwhile, said at an event on Monday that crypto assets are more for speculation than for payments.

Letter in response to this article:

Trading knowhow gives big banks a crypto edge/From Alexandre Carteau, Managing Director, Institutional Crypto Trading, TradingScreen, London WC2, UK

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Wall Street banks diverge in views on bitcoin boom - Financial Times

Bridgewater Associates founder Ray Dalio joins 'Influencers with Andy Serwer' to share his thoughts on Bitcoin and cryptocurrencies.

ANDY SERWER: Bitcoin. I mean, so it's a two-part question. Is that in a bubble? Maybe three-part question. Is it dangerous? And what do you think the likelihood of the government outlawing it is? And is that even feasible?

RAY DALIO: Bitcoin has proven itself over the last 10 years. It proved it hasn't been hacked. It's by and large therefore worked on an operational basis. It has built a significant following. It is an alternative, in a sense, storehold of wealth. It's like a digital cash. And those are the pluses. Bubbles are financial assets that have imputed value. It's an asset that doesn't have intrinsic value. It has imputed value. It's whatever we think it is.

And if you look at some of the bubbles in the past, a great book is "Extraordinary Popular Delusions and the Madness of the Crowds" by Mackay, 1845 or something. But he talks about the South Sea bubble, and he talks about the Mississippi bubble and so on. It is when people love it. It's the dot com bubble and so on. And it-- that, you know-- that could be. So when you look at Bitcoin, it's a possibility. You know, it's an alternative because there aren't many such assets. There are not so many assets that might have intrinsic value that can't be messed around.

As far as the government allowing it, the history was, you know, banks always used to exist. And then, with the Bank of England, they decided that it was in their interest to have a monopoly on banking at a country. And so, what we did is every country treasures its monopoly on controlling the supply and demand. They don't want other monies to be operating or competing because things can get out of control.

So I think that it would be very likely that you will have it under a certain set of circumstances outlawed the way gold was outlawed. And you're watching that question arise in India today. India today is making the move to outlaw it, outlaw possession of it. OK, so we have to see what that means.

Now, can they do it? Now we get into the particulars. My understanding from people who are sort of in government surveillance and so on is, yes, it's a-- they can understand, they can track it. They can know who's dealing with it. I don't know. Like, I'm not an expert on that. But, you know, there's a whole way. Is it private wallets? Is it not private wallets? How do you do this, this and the other thing. I would suspect it would be very hard to hold up against that kind of action. So that's what it looks like to me.

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Good probability the U.S. will outlaw bitcoin: Ray Dalio - Yahoo Finance

Don't expect bitcoin's wild swings to relax anytime soon.

That's according to Ari Wald, head of technical analysis at Oppenheimer, who says the cryptocurrency's highly volatile action isn't going away.

"You need to be able to stomach that volatility. It's there to stay," Wald said Monday on CNBC's "Trading Nation." "With the upside reward comes a lot of volatile day-to-day and even week-to-week action."

Bitcoin fell nearly 3% on Monday after Federal Reserve Chairman Jerome Powell called cryptocurrencies primarily "speculative assets" and said the Fed was in no hurry to develop a central bank digital currency.

"Here's something that can drop 20% and still hold all of its trend lines and support levels and leave the trend undisturbed," Wald said. "Take for instance just the action last February. It made a high of about $58,000 and the next day was down to $44,000. It's really been volatile and consolidating since then."

Gina Sanchez, founder and CEO of Chantico Global and Lido Advisors' chief market strategist, agreed with Powell that the crypto is not a great store for value, but also saw a different reason for its potential drop.

"As we reopen, ... as money moves away from speculative assets, out of the riskier assets and quite frankly into goods and services spending, I think bitcoin's going to get hit," she said in the same "Trading Nation" interview.

Bitcoin has climbed more than 840% since the March bottom.

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Bitcoin volatility is here to stay, top technician warns - CNBC

NEW YORK, March 24, 2021 /PRNewswire/ -- NYDIG, a leading provider of technology and investment solutions for Bitcoin, today announced that, effective immediately, the total expense ratio for NYDIG funds that provide passive access to Bitcoin will be reduced to 0.30% of net asset value per year. The new pricing applies to all existing and forthcoming private and public funds managed by NYDIG, and represents NYDIG's third fee reduction in the last year.

NYDIG's new pricing structure is 50-75% lower than comparable passive bitcoin access products available to investors and, critically, 0.30% represents the true total expense ratio of the fund, including a Big-4 audit and legal, custody, and accountingfees. While some funds may pass through these costs and obscure the true cost of ownership behind lower "headline" management fees, NYDIG continues to lead the market in delivering the most transparent, most simple, and most secure access to bitcoin, at the lowest total cost.

The firm also announced today that all fund platform partners, including Morgan Stanley's wealth management platform, can benefit from this lower cost. This includes financial advisors, registered investment advisors (RIAs), and broker-dealer platforms. The news follows NYDIG's launch, in partnership with FS Investments, on Morgan Stanley's wealth management platform last week.

"We are grateful for our growth, and our proprietary vertically-integrated platform delivers unmatched economies of scale that we can pass on to our clients. As an asset manager ourselves, we take our responsibility to the investors and advisors we work with very seriously, and always seek to help our partners meet their own fiduciary or Reg BI obligations," said Robert Gutmann, Co-founder and CEO of NYDIG. "With the best people, the best products, and the best price, NYDIG continues to cement its position as the premier provider of Bitcoin solutions."

Ross Stevens, Founder and Executive Chairman of NYDIG, continued, "Industry-leading ease of bitcoin access is consistent with our mission of Financial Security for All. Expenses matter, and this will not be our last fee reduction. Further, as bitcoin's sound money advantages are more widely understood, I believe it is only a matter of time until U.S. dollar depreciation causes bitcoin's market cap to surpass that of gold, so it is fittingly symbolic that NYDIG has now made the total cost of bitcoin access 25% lower than the total cost of gold access.2 Our announcement today is good for our investors, good for our partners, good for NYDIG, and good for bitcoin."

1NYDIG's funds have the lowest total expenses among fund managers that we are aware of with funds that invest solely in bitcoin.

2The leading investment vehicle for gold is GLD, the SPDR Gold Trust, which has a total expense ratio of 0.40%

ContactConor SheaEdelman[emailprotected]

About NYDIG

NYDIG provides Bitcoin investment and technology solutions to insurers, banks, corporations, and institutions. The firm and its products meet the industry's highest regulatory, audit, and governance standards. Learn more at nydig.com, or connect on LinkedIn and Twitter.

NYDIG, NYDIG, and NEW YORK DIGITAL INVESTMENT GROUP are registered trademarks of New York Digital Investment Group LLC. All rights reserved.

SOURCE NYDIG

https://nydig.com/

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NYDIG Cuts Total Cost of Bitcoin Access to 0.30% - PRNewswire

Blockchain.com, a London-based firm that provides a variety of cryptocurrency services to retail and institutional clients, raised $300 million in a deal that highlights venture capitals growing willingness to jump back into the bitcoin frenzy.

The investment round gave the company a $5.2 billion valuation and was led by DST Global, Lightspeed Venture Partners and VY Capital. It comes just one month after the company raised $120 million in a funding round that valued it at $3 billion.

Blockchain.com has 31 million verified users across 200 countries and 70 million digital wallets, or software used to store bitcoins. The firm offers retail trading and a range of services for professional investors like credit, structured products, trading and custody. Between debt and equity, the company has raised $1.5 billion since its inception in 2011, according to Chief Executive Peter Smith.

It is a significant amount for a crypto company. The latest capital raise is the third-largest in the industrys short history, according to research firm CB Insights. In 2018, Bitmain Technologies raised $400 million. Earlier this year, BlockFi raised $350 million and in 2020, Bakkt raised $300 million.

Capital raising also stagnated over the past few years as bitcoins price fell from its 2017 highs and remained down. After raising $4.5 billion in 2018, deals have declined to $2.7 billion in 2020. Their re-emergence this year, with three of the six largest to date coming in 2021, is spurring hopes that private investors are returning.

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Blockchain.com Raises $300 Million as Investors Find Other Ways Into Bitcoin - The Wall Street Journal