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SEC’s “Crypto Mom” demands innovation, says you can’t prosecute an algorithm

SEC Commissioner Hester Peirce spoke at the CFC 2021 virtual blockchain conference on Jan. 20, where she discussed the prospect of working with a new Biden-appointed chairman, and touched on her hopes of providing the cryptocurrency space with some “safe harbor”.

Known affectionately by cryptocurrency enthusiasts as “Crypto Mom”, Peirce addressed the changeover at the SEC that saw former chairman Jay Clayton depart his post in December. Incoming President Joe Biden has since nominated Gary Gensler for the role.

Peirce said Gensler’s appointment was not yet set in stone, but that the appointment of any new chairman brings an opportunity to approach things with a new set of eyes:

“There have been quite a few changes in the last year, and so I think a change in leadership is a good opportunity to take a look at those changes, including institutionalization. We’ve obviously seen the price of Bitcoin rise quite a bit; we’ve seen a lot of activity in the DeFi space, and I think all of these things will provide a nice framework against which a new chairman can take a fresh look at questions across the board in the crypto space.”

The SEC commissioner touched on the perennial “Sword of Damocles” that’s been hanging over the cryptocurrency space since its inception: Namely, regulation. But the goal of regulation should be to provide clarity, according to Peirce, adding that she hoped the new chairman would make sure the U.S was still conducive to innovation.

“We really need to embrace innovation, and figure out how we can set up a regulatory environment that’s conducive to innovation, which I think in our space means providing clarity. And so I think that’s something the new chairman will be faced with from day one,” said Peirce.

In February 2020, Peirce told an audience at the Blockress blockchain conference in Illinois that she thought the SEC’s “Safe Harbor” provisions should be applied to cryptocurrency launches. Currently, as Peirce explained at CFC 2021, new projects are under pressure to prove their non-security status from day one.

“If you can’t prove that your token is functional from day one, or that your network is decentralized, you may very well run into a situation where, under the securities laws, it’s treated as a securities offering,” said the commissioner.

But if Peirce’s proposal to apply Safe Harbor status to crypto launches gains traction at the SEC, it would grant projects an initial 3-year window during which regulatory liability would be ramped up gradually for the purpose of fostering innovation. Peirce said:

“And in that intervening 3 years, you would comply with disclosure orders which would supply those purchasers of tokens some information about you, the development team, and about the token economy. And it would also make sure that the anti-fraud provisions of our securities apply so that you couldn’t lie about those things.”

Peirce said her proposal got “a lot of great feedback”, although not every observer necessarily agreed at the time, with some characterizing Peirce as cutting a lone crypto-friendly figure in a world of blockchain skeptics.

However, with the impending arrival of a new SEC chairman just around the corner, Peirce has reason to be optimistic. She said:

“As a lot of people know in this space, Gary Gensler actually has a lot of knowledge about crypto as he’s been up at MIT working on a lot of these very issues. And so he’s aware of safe harbor, and it’s a conversation that, if he is confirmed as chairman, I will certainly have with him.”

Peirce was also asked about the recent announcement by the Financial Crimes Enforcement Network (FinCEN) that cryptocurrency owners with more than $10,000 in foreign accounts would soon have to report their holdings to the U.S Treasury Department. She questioned the practicality, and morality, of the FinCEN’s proposal, adding:

“We really do need to be careful when it comes to surveilling the transactions of individuals who are not suspected of any wrong-doing. Wholesale surveillance of their financial transactions is really concerning, because financial transactions are ultimately expressions of who you are as a person, what you do, what you’re buying, what you’re interested in.”

The very presence of decentralized finance would also obstruct any such attempts at financial surveillance by FinCEN. As Peirce rightly points out, it can be difficult to identify a legally culpable counterparty when that counterparty might not even be a human being.

“You might not have a physical address for the person, or a name for the person — because it might be an algorithm. When you have a smart contract, how do you actually identify a person or a physical address?” she asked rhetorically.

11 indicators that suggest Ether’s new ATH is just the beginning

With Ethereum inching its way into new all-time highs over the past 24 hours, a number of onlookers believe Ether could quickly surge through the $1,400 price range.

Ethereum’s robust fundamentals are strengthening the conviction that Ether might sail past resistance in the mid-$1,400s, with many pointing to Ethereum’s ever-growing DeFi ecosystem as the force most-likely to propel ETH into price discovery.

On Jan. 19, Spencer Noon of crypto VC fund Variant shared 11 indicators he believes suggests that a parabolic bull-run is nigh. He pointed to the fact taht more than one million unique addresses t have interacted with DeFi over the past eight months.

Unique DeFi wallets: Dune Analytics

Noon adds that monthly DEX volume is currently sitting at an all-time high of more than $30 billion, while more than $20 billion has been deposited into DeFi lending protocols — of which more than $4.5 billion has been issued as currently outstanding loans.

Looking beyond DeFi, Noon also highlights that Ethereum is the top blockchain network by daily fees generated — beating out BTC by more than 50%; the number of daily active Ether addresses has doubled in the past 12 months to reach all-time highs of 550,000; and that nearly $20 billion worth of stablecoins were minted on Ethereum over the past year.

The thread notes that more than $25 billion is currently locked in DeFi, adding that 21 decentralized finance protocols now represent at least $100 million in total value locked each. 

Despite Ethereum’s surging fundamentals, Noon notes that the number of Ether transactions valued at more than $100,000 is seven times smaller than during Jan. 2018’s highs, suggesting that “institutions still haven’t entered the game.”

On the same day, Token Terminal, an analytics platform that uses traditional financial metrics like P/E to examine crypto markets, tweeted a chart of Ethereum’s “price to sales ratio” with the caption “this time is different.”

The chart shows that Ethereum’s price relative to the fees generated by the network is reaching all-time lows — suggesting the market may be extremely undervalued. However, replies on Twitter challengede the applicability of using the metric to Ethereum, noting that Ethereum’s “sales” comprise fees that are collected by miners.

Messari also shared data indicating that the daily volume of Ethereum transactions now exceeds that of Bitcoin by 28%.

Bitcoin breakout ‘imminent’ says hedge fund as analyst targets $48K monthly close

A fresh Bitcoin (BTC) breakout is “imminent” and most likely to the upside, hedge fund Vailshire Capital Management says.

In a tweet on Jan. 19, Jeff Ross, the firm’s founder and CEO, described the outlook for BTC performance as “wildly bullish.”

Vailshire Capital ‘steadfastly long’ BTC

Using a combination of on-chain metrics and macro insight, Ross highlighted an upcoming end to the ranging and conolidation seen in the Bitcoin price this week. 

“Update on #Bitcoin technicals… Breakout imminent. Direction still undecided. Macroview: Wildly bullish. On-chain analysis: Wildly bullish,” he wrote.

“Upside move most likely. Short-term dips will be bought with strength. Vailshire Partners LP remains steadfastly long.”

His comments come as Bitcoin sentiment appears to return to “business as usual” after the holiday break, with asset management giant Grayscale making its biggest one-day BTC buy ever — around $700 million as of Tuesday.

Bitcoin mining difficulty and hash rate. Source: Digital Assets Data

As Cointelegraph reported, both network difficulty and hash rate have hit new all-time highs, and expectations are mounting that price will rise to follow suit. Ether (ETH), the largest cryptocurrency other than Bitcoin, beat its record highs from 2018 on the day.

BTC/USD chart with breakout options highlighted. Source: Jeff Ross/ Twitter/ TradingView

PlanB: All eyes on monthly close

Vailshire meanwhile is not alone in its optimism over Bitcoin’s prospects this week. In the latest update to his stock-to-flow Bitcoin price model, quant analyst PlanB eyed the possibility of BTC/USD soon passing the “point of no return.”

This, he explains, would occur should January’s monthly close be substantially higher than the current spot rate — around $48,000, for example.

In so doing, Bitcoin would cement its status within stock-to-flow’s theories, including its transition to an asset with a market cap of up to $29 trillion, as dictated by PlanB’s stock-to-flow cross-asset model (S2FX).

Bitcoin price performance relative to halvings chart. Source: PlanB/ Twitter

“A larger monthly jump to #bitcoin $48K would create a nice gap between monthly dots. These gaps usually mark the point of no return (red arrows), i.c. the phase transition to #phase5,” he commented while uploading the chart to Twitter.

Not everyone was convinced. In an update on Tuesday, Cointelegraph Markets analyst filbfilb warned that the next few days would be critical if Bitcoin is to avoid bearish pressure.

BTC/USDT 3-day candle chart. Source: Twitter/@filbfilb

The reason, he said, came from repeated warning signals delivered by his Predator trading tool. 

“Predator printed its second yellow candle in the Bitcoin run-up,” he explained.

“Last one it could be ignored as the following candle was green. Three days to resolve it or it may mean a more lengthy chopsolidation/retrace IMO.”

US crypto regulations will return Bitcoin to its digital cash origins

The United States Financial Crimes Enforcement Network, or FinCEN, recently proposed a series of new regulations applying to financial institutions dealing with digital currencies, such as Bitcoin (BTC). To summarize the proposed regulations, exchanges would essentially be required to file a report with FinCEN when a customer makes a purchase in excess of $10,000, and gather Know Your Customer information any time a transaction of $3,000 or greater is conducted using a non-custodial wallet. 

This means that if a customer buys $3,000 worth of Bitcoin and withdraws it to a wallet they control, they would have to not only prove ownership of that wallet but also provide their name and physical address, along with additional identifying information.

Personally, my life stands to change very little. I’ve been living entirely off of cryptocurrency since 2015, unbanked since 2016, and have never used a centralized exchange, receiving all of my coins as compensation for goods and services. But as few live as I do, we will likely see a significant impact on how most cryptocurrency users conduct their business. I would hazard a guess that most users have interacted with a centralized platform requiring KYC.

For the rest of cryptocurrency users, the newly proposed regulations would put a significant friction point on deposits and withdrawals. At present, a user signs up to an exchange, submits KYC documents for approval, and can buy and withdraw Bitcoin to a wallet they control, including a hardware wallet for cold storage. When wishing to realize gains, they can then move the funds back onto the exchange and sell for spending money in the bank.

In the future, however, they may be required to prove ownership of the wallet to which they withdraw, including providing their physical address, and similarly, prove the origin of the funds when moving back on to an exchange. This may lead many users, including the privacy- and autonomy-conscious (of which there are many in the Bitcoin world), to seek other, less intrusive ways of using their digital funds. Making payments directly for the goods and services they desire, rather than first selling for fiat currency, avoids the headache of passing through the regulation-induced friction point every time.

The “centralized exchange closed-loop” experience Bitcoiners will wake up from

There’s a reason why relatively few people have engaged in regular transactions and purchases with Bitcoin — they haven’t needed to. The average user signs up for an exchange account, buys crypto, and may sell to realize some gains. Some of the more hardcore users may even buy a hardware wallet and transfer funds to it from an exchange, which could be an infrequent transaction of significant amounts with no real requirement for speed or particularly low fees. The basic process of buying for investment purposes, and occasionally selling to realize gains or to spend, is relatively smooth with centralized exchanges, which is why so few have ventured far out of this closed loop so far.

Many Bitcoiners have opted to stay inside this closed loop for exactly the same reason they may soon seek to exit it — avoiding friction. Sure, many will simply deal with the extra regulatory steps, but many more, particularly thought leaders and longtime community staples, will choose to stay closer to the cypherpunk ethos.

Bitcoin’s adoption ecosystem will get the push it needs

Bitcoin was born and bred for decentralized digital payments. At some point, this use case took a backseat to a digital store-of-value, and the tools necessary for it to reclaim this purpose haven’t adequately developed yet — foremost among these, of course, is scaling.

Bitcoin chose to pursue off-chain scaling solutions (Lightning Network) and on-chain transaction optimizations (SegWit). Both of these have seen lackluster development over the past several years, with SegWit transactions making up less than half of daily transactions over three years, and Lightning Network growth similarly stagnating, with very few exchanges or other major ecosystem players having integrated it at this point. As noted above, this hasn’t been that much of an issue with the current state of things.

However, when the average user gets direct exposure to the Bitcoin network as it functions today, they’re in for a rude awakening that will either prompt them to disengage entirely or will place pressure on wallets and service providers to prioritize SegWit and Lightning. In a free market, which the cryptoverse largely is, consumer demand drives innovation to meet its needs. If enough Bitcoiners start demanding that Bitcoin work seamlessly for small and efficient transactions (beyond simply posting about it on Twitter), the market will seriously push for the ecosystem to develop to meet its needs.

Hungry competitors line up to take over the digital cash role

Of course, Bitcoin is far from alone in the competition for cryptocurrency for direct purchases. Since its transition to a more digital gold-focused role starting in 2016 or 2017, quite a few hungry competitors have emerged. In the forefront of people’s minds are, naturally, the main Bitcoin forks, Bitcoin Cash (BCH) and Bitcoin SV (BSV). Both have pursued an on-chain scaling approach and have the capacity to field a large number of transactions cheaply, but neither has achieved a compelling enough differentiator yet to fully take over Bitcoin’s share of the payments market. 

Bitcoin Cash has the clear advantage in terms of integrations into valuable services such as Purse.io but lost significant momentum due to repeated forks, each one taking with it a portion of the community and mindshare. Bitcoin SV has quite a few innovations going for it, including social media platforms and rudimentary human-readable username systems. But with a market ranking firmly outside of the top 10 and with far fewer major integrations than Bitcoin Cash, there’s certainly an uphill battle ahead. Additionally, the mark of Craig Wright has soured the project in the eyes of much of the greater cryptoverse, making partnerships and publicity difficult.

Litecoin (LTC) presents an interesting case as the longest-running payments-focused Bitcoin alternative, but so far, it has not yet managed to come into its own. From 2014 to 2017, its transaction volume trended downward, only to rebound significantly as Bitcoin’s scaling issues began to arise. Since then, it has served as a testnet for Bitcoin of sorts, as well as an off-chain scaling solution. Litecoin’s own scaling path seems to be uncertain, as its own Lightning Network implementation found even less success than Bitcoin’s, while its current 4x on-chain capacity compared to Bitcoin still leaves plenty of growing room. Will Litecoin remain as a substitute until Bitcoin or another project evolves to fully take the payments lead, or will this be the opportunity it needs to take over the digital cash role? Either way, its fate seems to be inexorably tied with that of Bitcoin.

The dark horse in this division may very well be Dash, whose name is literally an abbreviation of “digital cash” and has competed for this use case longer than any other alternative except Litecoin. And despite steady growth in transaction numbers, regardless of a bull or bear market, it has largely gotten lost in an increasingly crowded field of payments coins, some with crypto celebrity backers, especially after the realignment from a privacy focus to an everyday payments focus.

Unlike its competitors, however, Dash has spent years working on quite a few real improvements to the payments experience, including instant transaction settlement and anti-51% attack protection, making a Dash transaction arguably more secure in seconds than what its competitors could achieve in minutes or even hours — an experience that’s particularly useful for in-person retail payments. This, combined with the recent release onto testnet of the long-awaited “Evolution” upgrade, which not only provides human-readable usernames and contact lists but also fully-decentralized digital identities, could make 2021 an interesting year for the crypto payments space. It remains to be seen whether the combination of instant payments with protocol-level ease of use will be enough to catch the attention of an industry with a notoriously short attention span.

The new U.S. regulations regarding non-custodial wallets may push more cryptocurrency users to skip the exchanges altogether and use their coins to directly buy and sell goods and services. Will this be enough to push Bitcoin to reclaim its peer-to-peer digital cash purpose by finally getting scaling solutions, such as the Lightning Network, developed enough so that they’re easily usable by the average person? Or will one of its children choose this time to shine, taking over the payments space while Bitcoin holds down the investment use case?

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Joël Valenzuela is a veteran independent journalist and podcaster, living unbanked off of cryptocurrency since 2016. He previously worked for the Dash decentralized autonomous organization and now primarily writes and podcasts for the Digital Cash Network on the LBRY decentralized content platform.

Biden team announces pick to lead SEC

President-elect Biden’s team recently unveiled additional folks it plans on nominating for various positions after the inauguration on Wednesday. 

One key pick is Gary Gensler as Chairman of the Securities and Exchange Commission, or SEC, according to a statement from Biden’s transition team on Monday. On Jan. 12, Reuters reported on anonymous sourcing forecasting Gensler as Biden’s choice. Today’s statement from the Biden team confirms the President-elect’s expected choice.

“Gary Gensler served as chairman of the U.S. Commodity Futures Trading Commission from 2009 to 2014,” the statement said. Coming immediately after the financial crisis, Gensler’s term at the CFTC saw him enforcing the provisions of the nascent Dodd-Frank Act in commodities markets. 

Formal nomination will have to wait until Biden actually takes office, and will further need confirmation from the U.S. Senate. January run-off elections in Georgia, however, secured the Senate for the Democrats. 

Gensler also taught classes on blockchain and crypto at MIT. Having someone knowledgeable on the crypto and blockchain industry leading the SEC could pave the way for educated regulation and guidelines. The SEC has been critical for its role in regulating the initial coin offering market, which has quieted down significantly since the commission began treating many ICOs as unregistered public securities offerings

Former Canadian prime minister names Bitcoin as possible reserve currency

Stephen Harper, who served as prime minister of Canada for nine years, says there may be a place for Bitcoin and central bank digital currencies as part of a basket of reserve currencies to replace the dollar.

In an interview with investment service Cambridge House’s Jay Martin at the Vancouver Resource Investment Conference today, Harper said the possibility of the U.S. dollar being replaced could only come from a large currency like the Euro or Chinese yuan. He expressed his doubts either of them would be a viable alternative currency given the long-term uncertainty over the value of the Euro and the “arbitrary measures” the Chinese government would take regarding the value of the yuan:

“It’s hard to see what the alternative is to the U.S. dollar as the world’s major reserve currency. Other than gold, Bitcoin, a whole basket of things […] I think you’ll see the number of things that people use as reserves will expand, but the U.S. dollar will still be the bulk of it.”

The former prime minister added that he thought central bank digital currencies, or CBDCs, were to some degree “inevitable” but would likely be subject to monetary policy around the world. Harper said he was concerned about central banks becoming “kind of a general banker” rather than just a financial monitor, something that could affect the rollout of any CBDC:

“Ultimately, if you have a digital currency and the purpose of the central bank is to control inflation and create a stable currency and priceability, then digital currency is just kind of an evolution of the marketplace,” said Harper. “But if it’s part of a series of what I think are wild experiments as to the role of central banking, then it worries me a lot.”

Harper served as the prime minister of Canada from 2006 until 2015.  Crypto and blockchain adoption in the country has expanding significantly since his departure, with Canada getting its first regulated crypto exchange in September. According to Timothy Lane, the deputy governor of the Bank of Canada, the bank is also moving along in its development of a CBDC.

Decred co-founder explains the possible effects of a CBDC takeover

Over the course of 2020, numerous countries across the globe raced toward their own digital versions of their currencies, known as central bank digital currencies, or CBDCs. The crypto industry still has its selling points, however, even if most countries launched CBDCs, according to Jake Yocom-Piatt, co-founder of crypto project Decred.

“I expect many nation states will create their own CBDCs in the not-so-distant future, but there is a key differentiator between CBDCs and cryptocurrencies,” Yocom-Piatt told Cointelegraph. “Cryptocurrencies, e.g. Bitcoin and Decred, are fundamentally fairer systems than fiat currencies, so while CBDCs may adopt many cryptocurrency features, they cannot compete on fairness.”

Last year, China led the way in terms of CBDC development pace, while the United States took a slower approach. Recent developments indicate an increased sense of importance around CBDC development in the U.S. CBDCs will likely represent digital versions of countries’ dollars, although many details remain in flux at this stage.

As mentioned by Yocom-Piatt, crypto assets pose different core frameworks, depending on the asset and its makeup. Bitcoin (BTC), for example, remains untied to national currencies and borders, run by computer code and miners. 

“Based on cryptocurrencies being demonstrably fairer with deterministic issuance schedules and self-custodied assets, I expect them to be relatively unaffected by CBDCs, which are just digital fiat,” Yocom-Piatt said.

Stablecoins, on the other hand, might logically feel more effect from a CBDC-run world, as their main purpose is to represent fiat in digital form, on the blockchain, pegged to specific value. The future of crypto-native stablecoins could still depend on the upcoming specifications of CBDCs though.

“Depending on what actions you can perform with your CBDC assets, it could make stablecoins mostly obsolete,” the Decred co-founder noted. “If there are too many restrictions on CBDC assets, stablecoins may compete on a flexibility front.”

Stablecoins, such as USDT and USDC, function on the blockchain and allow for a bevvy of transactions and storage accommodations. USDC in particular saw a notable amount of usage within the decentralized finance, or DeFi sector of crypto in 2020.

Algorithmic asset experiments continue to entice traders & developers

As the team behind Morph.Finance can attest, developing an algorithmic stablecoin project can be every bit as frustrating and thrilling as investing in one. 

While algorithmic assets have retreated from mid-December marketcap highs, the space has nonetheless continued to attract intrepid investors and developers aiming to position themselves at the forefront of a new financial vertical — though it remains an open question if such projects will ever achieve stability.

Largely formed in the mold of defunct 2018 project Basis, algorithmic assets are designed to automatically adjust the total circulating supply of a token based on preset conditions, such as time or price. While they’re ostensibly intended to hew to a peg, such as the US dollar, containing and mitigating volatility has proven to be a notoriously difficult problem to solve.

So far these assets have remained somewhat on the fringe of decentralized finance (DeFi), with the top three projects — Empty Set Dollar, Frax, and Dynamic Set Dollar — accounting for just half a billion in marketcap between them, per Coingecko. Yet traders keep lining up to take spins at the rebase casino, and there’s ongoing development into new products like BadgerDAO’s forthcoming DIGG — a synthetic asset meant to track the price of Bitcoin. It remains new, exciting, and largely unexplored territory.

A more stable stablecoin

In an interview with Cointelegraph, the anonymous developers of Morph.Finance — formerly Dynamic.Supply — recounted their story trying to build a sustainable project in the space, a story with just as many ups and downs as an algo stablecoin chart.

“Dynamic.Supply was a simple Basis fork with modified variables, which launched in early January,” said the team. “We tried to limit whale/bot accumulation by capping the maximum number of tokens per TX during the first hour of launch, but this was unsuccessful.”

The team explained that deep-pocketed ‘whale’ traders hoovered the tokens shortly after launch, and proceeded game the rebase parameters in their favor.

“There was no lockup on the boardroom initially, which opened us up to yield sniping, where users would buy and deposit large amounts of DSTR right before the end of an epoch, collect the rewards, then market dump everything before repeating a few hours later.”

The manipulation discouraged early community members and even some of the developers. Others, however, remained undaunted.

New features, new problems

As is often the case in startup stories, the obstacles led to ingenuity. In the case of Morph, the ingenuity came in the form of a Zapper contract allowing algorithmic stablecoin liquidity providers to quickly switch between other project pools to theirs. 

In the short term it bolstered liquidity, but in the long term it might also allow Morph to “introduce a market-wide LP zapper system that benefits all farms” — an innovation that could buoy the whole space.

But even the new on-ramps to the weren’t enough to stabilize the peg.

“Liquidity significantly improved, however our tokenomics were working against us,” the team said. “Emission of DST and DSTR were both far too fast, leaving us with insufficient time to get new arbitrage mechanics rolled out.”

In order to combat their overaggressive token emissions, the team deployed new contracts, rebranded, and asked the community to transfer their tokens — a process that led to significant griping about gas fees in social channels, as well as no small amount of anxiety that the team might be planning an elaborate rugpull.

Twitter trader @CryptoSpider1 was among those who held his stake through the migration to the new contracts, and said in a statement to Cointelegraph that “rugpull” risks are a part of being on the emerging frontier of the space.

“High risk = high reward, and the dev has shown he/she has no interest in rugpulling but creating something interesting that challenges the current model,” he said.

Next steps

As of 8 pm EST today, just a few weeks after launching as “Dynamic.Supply,” the project has reopened liquidity pools, completing Morph’s “metamorphosis” — converting DST and DSTR tokens to Morph Coin (MORC) and Morph Tracker (MORT), along with the new name, website, and emission rate. 

The Zapper feature — the first of what Morph hopes will be a series of contributions to the space — has also been carried over from the old brand.

A series of shuffles, tweaks, and innovations, all from a handful of devs and intended to push the algorithmic asset space forward.

It’s an open question as to if Morph’s changes will bring their asset stability, just as a similar concerns swirl around most, if not all algorithmic asset projects. But when asked about the future of Morph and projects like it, the Morph team already had further innovations on the mind.

“Utility! Without it, Morph, and all similar projects will eventually fizzle out. That’s not what we want, we’re aiming to build a sustainable ecosystem that we hope will bring real value to our users.”

Multiple DeFi mainstays crack top 20 in long-awaited ‘Great Repricing’

Hardcore decentralized finance (DeFi) adherents woke up today to a long-awaited sight on Coingecko’s top 100 rankings by marketcap: native tokens for popular DeFi platforms Synthetix and Aave have cracked into the top 20, an event DeFi observers have heralded as “The Great Repricing.”

DeFi investors, users, and builders have long argued that the sector writ large is wildly undervalued relative to other cryptocurrency projects given DeFi’s growing userbases, cash flows from protocol fees, and soaring levels of activity compared to “zombie chain” layer-1 networks scattered throughout the top of the marketcap rankings.

If the past week is any indication, the wider market appears to have finally woken up to the incongruities. SNX and AAVE are up 40% and 74% on the week, both topping $2.3 billion by marketcap and eclipsing layer-1s such as Tezos and Tron. 

The moves follow promising developments for both projects. Aave has a proposal in the works that, if approved by governance, will alter the $370 million Safety Module to potentially create a whole new insurance product line, while Synthetix has been buoyed by the launch of a layer-2 scaling solution

What’s more, some think this could be just the start for DeFi assets as a new “alt szn” dawns.

“While this is an important milestone, it is only the beginning of a trend we’ve been talking about for a while,” said Delphi Digital partner José Macedo in an interview with Cointelegraph. “[…] In terms of where this is going, the TAM for consumer finance is $3.2T. We see the value prop for DeFi as doing to finance what the internet did to data; transforming financial primitives into “Money Legos” and creating an open ecosystem that enables permissionless innovation across the stack.” 

It’s a long-term view that could have accomplishments like reaching the top 20 by cryptocurrency rankings seem like a pittance, but Macedo warns that the road to reaching such lofty goals won’t necessarily be a smooth one:

While the general direction is clear, it’s worth remembering that you cannot have massive upside without volatility. We are undoubtedly in for a bumpy ride, with regulation looming large and DeFi being declared dead many times over.

Bitcoin bulls buy BTC’s $35K support retest as altcoins push higher

Calls for Bitcoin (BTC) to rally above $40,000 were dashed as the top cryptocurrency hit a wall of resistance which sparked a sell-off in the early trading hours. 

Data from Cointelegraph Markets and TradingView show the price of BTC fell as low as $34,368 before rebounding to its current price of $37,300.

Daily cryptocurrency market performance. Source: Coin360

It’s possible that the excitement surrounding the announcement of a $1.9 trillion stimulus bill from the incoming Biden administration quickly morphed into a buy the rumor, sell the news event as questions begin to emerge on the feasibility of parts of the bill.

BTC/USDT 4-hour chart. Source: TradingView

Bitcoin’s dip also comes after renewed criticism from global regulators as European Central Bank President Christine Lagarde recently stated that the top cryptocurrency is “totally reprehensible money laundering activity.” This was followed by an announcement on Jan. 15 that a British financial advisor has petitioned the U.K. Government and Parliament to ban cryptocurrency transactions.

Traditional markets feel the pressure

Tough words from government officials weren’t the sole cause of the downturn in the cryptocurrency market as a scan of the global financial markets shows signs of mounting pressure.

The S&P 500 and NASDAQ faced pressure from the opening bell and finishing the day down 0.72% and 0.73% respectively. The Dow managed to push back against bears to close the day up by 0.3%

A broader survey of the global markets show gold and silver closed down 1.07%, and 3.17%, while oil and the 10-year U.S. Treasury bond lost 2.93% and 3.59%.

Altcoins continue to push higher

BTC/USD daily chart. Source: Coin360

Despite increased sell pressure across the market, several altcoins showed strength. Chainlink (LINK) experienced a surge overnight and currently trades at $20.50, up 13.9% in the 24-hours. Cosmos (ATOM) has gained 21.62% and trades at $7.81.

Meanwhile, Ether (ETH) has faced the same pressures as the broader Bitcoin. At the time of writing the top-altcoin is down 4.8%% and trades for $1,172.

The overall cryptocurrency market cap now stands at $1 trillion and Bitcoin’s dominance rate is 68%.

Bitcoin slides under $35K despite Biden unveiling $1.9 trillion stimulus

Bitcoin (BTC) fell below $35,000 on Jan. 15 as renewed strength in the U.S. dollar piled pressure on the largest cryptocurrency. BTC bounced off support at $34,300 and is trading at $35,300 at the time of writing. 

BTC/USD 4-hour candle chart (Bitstamp). Source: Tradingvidw

Bitcoin heads back towards $30,000

Data from Cointelegraph Markets and TradingView showed BTC/USD hitting its lowest in over 24 hours at press time on Friday, with $34,000 so far acting as support.

The previous day saw the pair reclaim $40,000 for the briefest instant before falling back to range in a corridor which had formed at the start of the week. The latest drop reinforced the assumption that Bitcoin would continue in this corridor, which has $30,000 as support and $40,000 as a rough ceiling.

“#Bitcoin consolidating is very healthy for the market after the massive impulse move to $41,500,” Cointelegraph Markets analyst Michaël van de Poppe explained in a series of tweets.

“#Bitcoin is approaching a bounce area here as we rejected the crucial resistance around $40,000. Benefits the fact of further consolidation before continuation of the upwards momentum. Completely healthy.”

Halving analysis suggests “7X upside potential”

The fresh downturn for Bitcoin coincided with an uptick in the U.S. dollar currency index (DXY) coming on the back of President-elect Joe Biden’s $1.9 trillion coronavirus stimulus plan. Despite the gravity of this USD supply expansion, markets appeared to react favorably to the plans, leading DXY upwards at the expense of Bitcoin, to which it typically exhibits inverse correlation.

“Context: dollar is breaking out on multiple timeframes. quite a strong recovery at a multi-month support area. some argue this is bad for bitcoin, gold, and risk-on assets, hence the narrative,” Cointelegraph in-house analyst Joseph Young summarized.

BTC/USD (Bitstamp) vs. DXY (orange). Source: TradingView

Young noted that on derivatives markets, investors “buying the dip” was causing an extra headache, potentially dampening the prospects of a relief rally.

Zoom out, however, and Bitcoin was if anything underperforming compared to previous bull cycles. According to on-chain analytics resource Ecoinometrics, this left the door open for further conspicuous gains.

Bitcoin price post-halving comparison as of Jan. 15, 2021. Source: Ecoinometrics/ Twitter

“This bull market doesn’t stop at $40k,” part of a tweet with a comparative chart read.

“From the growth of the previous cycles we still have a 7x upside potential.”

Reuters: Gary Gensler, MIT blockchain professor and Obama’s CFTC chair, to head Biden SEC

President-elect Biden has finally decided on his nominee to head the Securities and Exchange Commission.

At least according to Reuters’ anonymous sourcing in a Tuesday report, Gary Gensler will be Biden’s nominee as SEC Chair. During the Obama administration, Gensler was the chairman of the Commodity Futures Trading Commission, in which capacity he was in charge of enforcing the many new provisions of the Dodd-Frank Act that followed the 2008 financial crisis.

Gensler has spent most of the Trump years at MIT, teaching courses on digital assets and blockchain. If nominated, there is little doubt that a now-Democrat-controlled Senate would be willing to confirm him. Gensler would likely be the most crypto-informed person to lead the SEC. 

Former SEC Chair Jay Clayton, who stepped down in December, was known for pursuing initial coin offerings throughout his term. It was early in his tenure that the commission released its DAO Report, its first declaration that digital assets could be securities and would, therefore, be subject to the SEC’s jurisdiction. 

Gensler has been a leader in financial policy on Biden’s transition team since shortly after Biden’s electoral win at the beginning of November. There was a great deal of speculation at the time as to Gensler’s prospective role in the coming administration, with many predicting the SEC.