One of the reasons to invest in stablecoins is their de-pegging event. When stablecoins trade below their intended peg of 1:1 with a fiat currency, short traders can turn around and exchange them for the promised parity. In that respect, stablecoins are like money market funds. Over the years, Tether, the world’s biggest stablecoin by market capitalization, has lost its peg numerous times and traded … Continue reading Shorting Tether
Along with bitcoin price, prices for Ethereum’s ether also jumped last week. Depending on your data source, the world’s second biggest cryptocurrency’s price posted weekly gains of anywhere between 13% (at Messari) to 20% (at Coinmarketcap and Coingecko). Underlying that price increase was a corresponding surge in market valuations for tokens at liquid staking derivatives (LSD) platforms. Such venues multiply trading volumes and supply by … Continue reading Staking Ether: A Risky Trade
Where does Tether get its revenues? Over the years, the stablecoin claims to have made redemptions worth billions of dollars. At the same time, it has made investments and loans worth millions of dollars to crypto ventures on the side. It has 42 employees, per LinkedIn. Where does it get the cash to manage these business activities? The company’s financials are a black box. … Continue reading Where Does Tether Get Its Revenues?
In the early days of the United States, private banks were allowed to issue money on the condition that it was backed by gold. This meant that customers could redeem their specie and notes for gold, which was considered a stable medium of exchange in an economy rife with fraudsters and hucksters issuing fake money. But a high redemption rate could eat into a bank’s … Continue reading The Tether Redemption Conundrum
Binance USD (BUSD), Binance’s stablecoin, is among the few businesses of the exchange’s sprawling operations that is regulated. It is issued by Paxos – a registered Trust company in New York that was a cryptocurrency exchange in its earlier avatar – and regulated by the New York Department of Financial Services (NYDFS). That stamp from authorities allays investor fears about BUSD reserves – deposits meant … Continue reading Notes 12/31: Binance’s BUSD: An Unstable Stablecoin
In recent months, Binance has attempted to position itself as a leader of the crypto ecosystem after FTX’s collapse. But its moves have had the opposite effect and drawn attention to problems at the world’s biggest cryptocurrency exchange by trading volume. Investors, fearful of another collapse, are pulling out their funds from the exchange, feeding speculation that it might become the next domino to fall. … Continue reading Notes 12/21: Binance’s BNB Token – 1
The big news this week has been stablecoin issuer Circle’s decision to scrap its plans for a public listing through a merger with a Special Purpose Acquisition Company (SPAC). The Securities Exchange Commission (SEC) played spoilsport to the company’s plans by withholding its approval for the deal. Circle CEO Jeremy Allaire put on a brave front and released a statement that held out hope for … Continue reading Circle’s Mounting List of Woes
The barrage of news about FTX’s collapse means that it will take time to disentangle the many narratives emerging from it. But that hasn’t stopped many people from suggesting solutions to ride out the current crisis of confidence in crypto. One of those proposals comes from Binance chief Changpeng Zhao, an instigator of the current crisis in crypto. His suggestion is for cryptocurrency exchanges to … Continue reading Can Proof of Reserves Bring Transparency to Crypto?
As a concept for collective governance, decentralized autonomous organizations (DAO) are replete with hip buzzwords and ideas. Their practical implementation, however, is clunky. The latest example is that of Ooki DAO – a margin lending platform that is being sued by the Commodities Futures Trading Commission (CFTC). The agency contends that Ooki DAO violated investment laws by offering unregistered tokens for sale. It also charges … Continue reading Reckoning With DAO Governance
Central bank digital currencies (CBDC) are becoming popular among countries. According to the Atlantic Council’s CBDC tracker, 105 countries, representing 95 percent of the world’s GDP, are developing digital versions of their national currency. Eighty-one countries were exploring the use of CBDCs in their economy last August. CBDC development accelerated in the aftermath of Russia’s invasion of Ukraine. International payment networks like SWIFT reacted swiftly … Continue reading Notes 10/4: CBDC Development, An Opening for Crypto?
At the beginning of September, bitcoin price, which has crashed by more than 60% since its high last November, was poised for further downward movement. It bucked that script. Except for a brief surge in the middle of this month, bitcoin price mostly traded sideways and stuck to a trading range of around $20,000, its price at the start of the month. As of this … Continue reading What Will October Bring for Bitcoin Markets?
El Salvador’s adoption of Bitcoin as legal tender, a year ago, was considered a watershed moment by crypto advocates hankering for more recognition for the world’s biggest cryptocurrency. The tiny Central American country is the region’s fourth biggest economy and has been a dollarized nation since 2001. Proponents of the move argued that Bitcoin adoption would unshackle its economy from American monetary policy and bring … Continue reading Is El Salvador’s Bitcoin Experiment A Failure?
Controversial stablecoin Tether’s holdings of commercial paper fell and its cash and bank deposit holdings rose, according to a “reasonable engagement report” released yesterday. The report provides a breakdown of the reserves backing tokens circulating in the market. Tether claims that its holdings of commercial paper and cash and bank deposits increased by 58% and 32% respectively. [Commercial paper is considered a risky investment because … Continue reading Tether’s Misrepresentations Continue In Its Latest Reserves Report
The fallout from the Treasury Department’s sanctions on Tornado Cash continued this week. The department’s Office of Foreign Assets Control (OFAC) claims that the crypto-mixing service, which is a decentralized application (dApp) running off Ethereum’s blockchain, was used by hackers in North Korea to launder more than $7 billion worth of cryptocurrencies. Privacy activists in crypto are decrying the sanctions as an assault on “free … Continue reading Tornado Cash Sanctions Become Rallying Cry For Crypto Privacy Activists
There was not much to cheer about in Coinbase’s first quarter earnings for 2022 yesterday. If anything, they provided more proof of the pain in crypto markets. North America’s biggest cryptocurrency exchange by trading volume reported losses and a revenue decline of more than a billion dollars in its latest earnings period. The exchange, among the pioneers of crypto industry, has previously benefitted from a … Continue reading Coinbase Reports Disappointing Earnings, Reflecting Crypto Winter
Bitcoin’s emergence as an asset class has been tumultuous. Amidst a raucous debate about its utility, the cryptocurrency’s price volatility has transfixed investors and traders looking for short-term profits. But they do not have much choice in terms investing avenues because the cryptocurrency remains largely outside the perimeters of regulation. Instead, players have crafted unique investing configurations to provide exposure to the asset class. The … Continue reading Delving Into MicroStrategy’s Bitcoin Bet
Among the limited number of bitcoin-related investments available to investors, the Grayscale Bitcoin Trust (GBTC) is the most well-known. It was the first publicly traded investment vehicle in public markets and has the biggest number of assets under management. In the last year, however, GBTC’s popularity has waned. Its shares, which traded at significant premiums to its net asset value, are trading at a discount. … Continue reading What Does The Future Hold For GBTC?
I have written about Ethereum’s expensive gas fees earlier. The fees are an important source of revenue for miners in a volatile crypto market where double-digit price swings are not uncommon. But they are not the only source of profits. The Bank of International Settlements (BIS) released a bulletin last month highlighting the need to design regulations pertaining to Miner Extractable Value (MEV) – another … Continue reading Miner Extractable Value: A Source of Profits and Future Regulation
Ethereum has ambitions to become a hub for decentralized finance (DeFi) – one where millions of users conduct sophisticated transactions using financial applications and payment systems on its network. The platform’s selling point is its decentralized and peer-to-peer design that reduces costs and transaction times. But transactions on Ethereum are time-consuming. A technical and complicated interface also ensures that users have little control over the … Continue reading An Experiment In Ethereum’s Gas Fees
UST. Celsius. Three Arrows Capital. The list of crypto’s casualties in the current downturn is growing by the day. There’s more bad news ahead. Experts say that the crypto ecosystem is due another capitulation event. “Some giant player will go to zero [soon],” Shark tank personality and crypto investor Kevin O’Leary told Coindesk recently. The chances it might be Tether, the world’s biggest stablecoin, are … Continue reading Will Tether, Crypto’s Biggest Stablecoin, Be Its Next Casualty?
After climbing to dizzy heights last year, markets are hemorrhaging value as prices plummet since the beginning of this year. Expensive assets that were worth millions of dollars as recently as last year have crashed from their earlier valuations. One of the world’s biggest financial instruments careened to a sudden and spectacular crash in less than a month, further deepening distrust of a financial system … Continue reading Can Crypto Handle A Recession?