European crypto firm Bitstamp brought an additional insurance policy via a global marketplace to help secure the digital assets of its users. The insurance policy comes via Lloyd’s of London.
On Thursday, the crime insurance policy became available to the users. It safeguards the offline storage accounts or cold wallets against direct loss and theft. The deal will be arranged by the Llyod’s of London and underwritten by UK crypto specialist broker Paragon International Insurance Brokers and Woodruff-Sawyer & Co.
Traditional institutions typically stay away from cryptocurrency and related products. However, Llyod’s of London, one of the oldest insurance agencies in the world, is working to provide digital asset insurance to the users. Insurance is typically scarce for digital assets held at custodian exchanges. However, the insurance agencies are gradually opening up to the possibility of providing cold storage to the users.
Crypto wallets have been soft targets for hackers who want to access a centralized single point of failure which makes them prone to security issues.
Bitstamp is already providing crypto insurance to its users. It stores 98% of its digital assets with BitGo’s cold storage facilities. This helps prevent against hacks, loss of keys, and insider theft by employees. BitGo provides up to $100 million covers for crypto assets held in their accounts. With the new insurance policy, Bitstamp will be able to provide an extra layer of protection that provides better protection to users in crime-related cases like a loss in transit, loss caused by computer fraud, fund transfer related frauds, employee theft, loss of on-premise assets, and loss related to legal fees and expenses.
Global head of business development at Bitstamp, Miha Grcar commented on the insurance and said, “Introducing an additional crime insurance policy allows us to expand coverage to the assets held at Bitstamp and to protect our customers in a large array of scenarios they may find themselves in.”
BitGo is offering multi-signature technology wallets to users which have become popular among crypto exchanges who demand enterprise-grade custody services.
The OKEx Drama Exposes a Weakness in Crypto Market Infrastructure
This week saw more exchange drama rock the crypto markets.
OKEx, one of the industry’s largest crypto-fiat exchanges, suspended all cryptocurrency withdrawals, saying one of the exchange’s key holders has “been out of touch” with the exchange because they are “currently cooperating with a public security bureau in investigations.”
Coming hard on the heels of the BitMEX indictments from a couple of weeks ago, this surely will focus the market’s attention on the security of the withdrawal protocols of large exchanges.
At the time, concerns surfaced that withdrawals might be halted from BitMEX, one of the largest derivatives exchanges in the industry. The withdrawal protocol needed a certain number of authorized signatures, and one of the authorized signatories had been arrested. The concerns turned out to be unfounded, withdrawals continued without a hitch, but the possibility, combined now with OKEx’s reality, highlights how unique crypto asset market infrastructure is.
Traditional market-infrastructure businesses are not exempt from regulatory risk. But in traditional markets, customers don’t deposit their funds directly on exchanges; they do so via brokers. Even if a broker were to go bankrupt, for instance, segregation of funds means the broker’s bank could return funds to clients.
Crypto markets don’t work that way. Brokers are not yet a feature, and customer funds are usually held by the exchange platform. When it comes to crypto holdings, there isn’t even a bank that can take over at the behest of the authorities to return funds.
This also highlights the irony that an industry born with a decentralized ethos is dominated by centralized businesses, with centralized vulnerabilities. While exchanges often have multi-sig protocols in place (which allowed BitMEX’s withdrawals to proceed even when one signatory was unavailable), it appears that not all do.
And while traditional markets have participants operating in lightly regulated jurisdictions, these businesses do not dominate their market segment, as they do in crypto.
Chinese media also reported that the detention of Xu was the result of an investor dispute over forced liquidations, a systems crash and OKEx’s handling of the situation. The company has claimed it is not aware of such a problem.
What’s more, the corporate structure of OKEx is frustratingly confusing – Xu is also the founder of OKCoin which is based in China, as well as the CEO of OK Group, and, according to his LinkedIn profile, he’s based in San Francisco. Some reports say Xu was not detained by the police, that he had asked for their protection. Others say he was detained two weeks ago, and has not been since. OKEx maintains that Xu no longer represents the firm, which was spun out from OK Group earlier this year. This then leaves unexplained the suspension of withdrawals.
By the time you read this, more news will probably have emerged to clarify the legal situation and the withdrawal schedule. Or perhaps we’ll be even more confused. Meanwhile, the company insists customer funds are safe.
This situation highlights both the relative immaturity of crypto markets as well as how far they’ve come. It reminds us that the markets are still immature, in that on many systemic platforms there are still relatively few customer protections in place. The market is still largely retail, which has fueled the growth of platforms that do not meet the rigorous compliance and accountability requirements of institutional investors.
Yet this also reminds us of how far crypto markets have come in terms of resilience and adaptability. The bitcoin (BTC) price initially fell just over 2% on the news, less than the almost 4% drop on the back of the BitMEX indictment news on Oct. 1. As I type, it shows signs of holding steady in the $11,300-$11,350 range.
Looking forward, developments like this will accelerate a trend that has already started: the growing interest on the part of centralized exchanges (not just in the crypto industry) in decentralized applications. Earlier this week, at our Invest: Ethereum event, Binance founder CZ repeated that he sees decentralized finance, or DeFi, as a complement rather than a competitor to the more traditional structure.
Indeed, the price of $UNI, the token of the decentralized liquidity provider Uniswap initially fell on the shock of the news but then rebounded almost 15% as investors started thinking through the potential impact.
Meanwhile, tokens issued by more centralized crypto exchanges such as Binance (BNB) and FTX (FTT) fell by 5% and 3% respectively, and at time of writing have yet to rebound.
It’s not often you get to watch market infrastructure dynamics shift before your very eyes. But, as we say in our industry, a year in crypto is like 10 years in traditional finance.
We had our first Ethereum-focused event this week, which brought together investors, analysts and builders from all corners of the industry to discuss the second-largest crypto ecosystem by market cap, and its upcoming technology change.
I hosted a panel of crypto market-infrastructure leaders to talk about the financial off-chain aspects of Ethereum – its markets, traded products, investors and outlook. We didn’t have time to go into all that I would have liked, but here are some of the key takeaways:
Bitcoin (BTC) is still the main crypto asset on-ramp for investors, as it is the most liquid and has the greatest number of venues and trading opportunities. Yet according to Michael Sonnenshein, managing director of Grayscale Investments, a growing number of traditional investors are attracted by the potential of decentralized finance and Ethereum’s value proposition as a platform for innovative market applications. ETH is becoming an on-ramp.
The growth in ETH investors can be seen in the number of addresses with a non-zero balance, which is up almost 40% since the beginning of the year.
Many investors cite volatility as a barrier to crypto asset investment. Some regulators use it as an excuse to limit access for retail investors who may face unexpected risk. Indeed, crypto assets are more volatile than most traditional assets – but that is more a feature than a bug.
Both Sonnenshein and Thomas Chippas, CEO of crypto asset platform ErisX, pointed out that their client bases represent a wide variety of investment strategies, including risk arbitrage trades. This is no doubt a feature across the market, as traders and quant funds search for greater volatility than they can find in traditional markets since, harnessed well, it can provide superior returns. The growth of liquidity in the crypto derivatives market, both in volumes and in range of products and maturities, shows that hedging strategies are becoming more sophisticated, which enables return-enhancing volatility trades.
The “great wall of institutional money” that some crypto market commentators were breathlessly awaiting a couple of years ago did not materialize. But that does not mean “the institutions” aren’t already here.
All three panelists acknowledge that crypto markets are still largely retail, but that institutional investors are playing an increasing role in liquidity and in shaping the development of market infrastructure.
Also this week, PricewaterhouseCoopers (PwC) released a report that shows that over $1.1 billion of institutional money flowed into the industry in the form of venture capital investments. And JPMorgan published an investment note on bitcoin for its institutional clients.
Overall, the event highlighted that the crypto asset ecosystem is about so much more than bitcoin. While that may be the largest and most liquid cryptocurrency, the innovation, building and emerging structure around other crypto assets such as ETH is bound to attract attention of a broader range of investors – not just those who want to diversify their crypto holdings (ETH has outperformed bitcoin so far this year, +194% vs +60%), but also those who take the time to understand the value proposition of alternative assets as individual opportunities.
In other words, investors will increasingly come to realize that crypto assets are much more than an alternative asset group. They are a collection of compelling ideas that respond to unusual market dynamics to create a unique opportunity to witness not only the birth of a new type of value exchange, but also the emergence of new valuation techniques and portfolio strategies.
As if proof were needed that crypto markets can move fast, the healthy outperformance shown in the chart below was reduced in a matter of minutes when crypto exchange OKEx announced an indefinite suspension of withdrawals (which might have been restored by the time you read this).
With that price dip, which was relatively muted compared to what it would have been a year ago, say, we still have markets moving in a steady band, awaiting further signs of vaccine/stimulus optimism, or pandemic/recession/inflation pessimism.
At our Invest: Ethereum Economy event this week, our Chief Content Officer Michael Casey chatted to Heath Tarbert, chairman of the U.S. Commodity Futures Trading Commission (CFTC), about the regulator’s view on Ethereum and its asset, ether (ETH). TAKEAWAY: What stuck out from the conversation was how much thought Chairman Tarbert has put into Ethereum and its potential applications, as well as the upcoming technology shift to Ethereum 2.0. Among the takeaways to keep an eye on:
A report by PwC shows that dollar amount of crypto M&A deals in H1 2020 exceeded the amount for all of 2019. Also, the average size of private equity investments grew from $4.8 million in 2019 to $6.4 million in the first half of 2020. TAKEAWAY: Not only is the report illuminating in terms of the number of deals done – where the deals are concentrated is also interesting. The uptick in deals involving crypto asset exchanges and trading companies reveals a growing interest in crypto asset market infrastructure, which signals that institutional investors expect institutional investors to show even more interest in the industry.
Investment bank JPMorgan issued a research note on bitcoin that stressed the “vote of confidence” from Square’s recent treasury purchase of $50 million worth of BTC, and the payments company’s growing revenue from crypto asset sales. TAKEAWAY: The analysts seem to be focusing more on demographic sentiment and corporate precedent than fundamental valuations, which is itself a notable shift from other investment bank-sponsored reports. Could it be that traditional finance is finally getting that fundamentals are not the only value drivers?
Institutional asset manager Stone Ridge Holdings Group has purchased 10,000 BTC as a “primary treasury reserve asset,” which it is holding with its crypto subsidiary NYDIG. TAKEAWAY: This adds to the list of non-crypto companies using bitcoin as a hedge against inflation and dollar debasement. Emphasizing the vote of confidence in the ecosystem that this represents is NYDIG’s new $50 million funding round, backed by Fintech Collective, Bessemer Venture Partners and Ribbit Capital.
Bitcoin’s hashrate (an indicator of how much computing power is dedicated to maintaining the Bitcoin network) rose to a record high this week. TAKEAWAY: Remember the Bitcoin halving, just five months ago, when the miner subsidy of new bitcoin was cut by 50% and some predicted that mining would become unprofitable for many? This would then theoretically weaken the network’s security by centralizing mining power in the hands of a few large pools that could enjoy economies of scale. Well, rather than dwindle, it continues to climb. This shows that mining costs are coming down largely due to lower energy prices and more efficient machines. It also shows that the network’s security depends on more factors than just the bitcoin price (which determines the value of the miner subsidies) – technological changes also matter.
Top 5 cryptocurrencies to watch this week: BTC, XLM, CRO, BNB, LTC
Traders are accumulating Bitcoin on dips and a break above $11,600 could resume the uptrend to $12,000.
Data from Skew shows Bitcoin’s (BTC) spot volume on LMAX Digital, an exchange that mainly caters to institutions, has overtaken retail-oriented exchanges. This signals that institutional investors could be building up positions as they expect the price to move higher in the future.
Along with spot purchases, institutional investors’ participation in the derivatives market has also increased. Data from Arcane Research shows that a record number of investors are taking delivery of Bitcoin from the Bakkt Bitcoin exchange.
Another metric that can be useful for traders is volatility. Bitcoin options data shows that the implied volatility of at the money options has dropped to a 16-month low. This suggests that traders do not expect a large down move in the near future, hence, they are not willing to pay a greater amount to hedge their positions.
Although data suggests that institutional investors are positioned for an upside move, retail traders should keep a close watch on the price action and take large bets only after a trending move starts.
Let’s study the charts of the top-5 cryptocurrencies that could start a trending move next week.
Bitcoin (BTC) has been holding above the 20-day exponential moving average ($11,137) for the past few days. The buyers purchased the dip to the $11,165 support on Oct. 20, which suggests accumulation at lower levels.
If the bulls can push the price above the downtrend line, the BTC/USD pair could retest the $11,719 resistance. A breakout of this level may resume the up-move with the first target at $12,000 and then $12,460.
Both the short-term and the long-term moving averages are sloping up and the relative strength index is above 61. This suggests that the bulls are in control.
This positive view will be invalidated if the pair turns down from the downtrend line and plummets below the 20-day EMA. Such a move could pull the price down to the next support at $10,500.
The 4-hour chart has formed a bearish descending triangle pattern that will complete on a breakdown and close (UTC time) below $11,165. This bearish setup has a pattern target of $10,611.
However, if the bulls can propel the price above the downtrend line, the bearish pattern will be invalidated. Such a move could attract short covering by the bears, resulting in a rally to $12,000.
The gradually upsloping 20-EMA and the RSI in the positive territory suggests a minor advantage to the bulls.
Stellar Lumens (XLM) broke below the 200-day simple moving average ($0.077) on Sep. 21 but the bears could not capitalize on this move and sink the price below $0.066841. This shows buying by the bulls at lower levels.
The XLM/USD pair has formed an ascending channel and the bulls are attempting to push the price above the overhead resistance at $0.084584. Although the bears defended the overhead resistance on Oct. 17, the bulls have not given up much ground.
If the pair stays above the moving averages, the buyers will make one more attempt to drive the price above $0.084584. If they succeed, the pair could start a new uptrend that may rally to $0.10.
The gradually upsloping moving averages and the RSI in the positive zone suggest that the bulls have the upper hand.
The pair had broken above the channel but the bulls could not clear the hurdle at $0.084584. However, on the downside, the bears have not been able to drag the price below the 38.2% Fibonacci retracement level of $0.079239.
This suggests that the bulls will again try to thrust the price above the overhead resistance. If they succeed, a rally to $0.091042 will be on the cards.
Contrary to this assumption, if the bears sink the price below the 20-EMA, a drop to $0.076546 is possible. A break below this level could result in a decline to the support line of the channel.
The descending triangle completed on Oct. 14 when Crypto.com Coin (CRO) plummeted and closed (UTC time) below the $0.144743 support. This bearish setup has a target objective of $0.10607.
However, the bulls might attempt to defend the 200-day SMA at $0.121. A bounce off this level could retest the breakdown level at $0.144743. In a downtrend, traders sell on rallies to the 20-day EMA ($0.144) as the path of least resistance is to the downside.
Hence, if the CRO/USD pair turns down from the 20-day EMA, it will suggest that the sentiment is bearish. The sellers will then again try to sink the price below the 200-day SMA. If they succeed, the decline could extend to $0.10607.
The 20-day EMA is sloping down and the RSI has plummeted deep into the oversold territory, which suggests that the advantage is with the bears. However, a relief rally cannot be ruled out in the short-term.
The RSI on the 4-hour chart has also plunged deep into the oversold territory. This suggests panic selling and usually, after such a round of such intense selling, a minor pullback occurs.
Any relief rally is likely to face selling at the 20-EMA as bears will try to consolidate their advantage.
This bearish view will be invalidated if the pair rises and sustains above the breakdown level of $0.144743. Until then, every rally is likely to be viewed as a selling opportunity.
Binance Coin (BNB) turned down from $31.9798 on Oct. 16 but the bulls purchased the dip to the immediate support at $29.5646. This suggests that the previous resistance level has now flipped to support.
The upsloping 20-day EMA ($29.06) and the RSI above 61 indicates that bulls have the upper hand. The 200-day SMA ($19.95) has also started to turn up, which suggests that the long-term trend is also tilting in favor of the bulls.
If the buyers can thrust the BNB/USD pair above the $32– $33.3888 resistance zone, the momentum could pick up and a retest of the all-time highs will be on the cards.
Contrary to this assumption, if the bears sink and sustain the pair below the 20-day EMA, it will signal weakness.
The bears are defending the $31–$32 zone aggressively. The flattened 20-EMA and the RSI just above the midpoint suggests a balance between supply and demand.
This balance will tilt in favor of the bears if they can sink and sustain the price below $29.5646. If this support cracks, a drop to $28 and then to $26 is possible.
Conversely, if the bulls propel the price above the overhead resistance zone, it will signal the resumption of the uptrend.
Litecoin (LTC) is attempting to form an inverse head and shoulders pattern that will complete on a breakout and close (UTC time) above $51.50. The flat moving averages and the RSI below the midpoint suggest a balance between supply and demand.
However, the long tails on the candlesticks on Oct. 2 and Oct.16 show that the bulls are buying the dips to the trendline. If the bulls can push the price above the moving averages, the LTC/USD pair could again rise to $51.50.
A breakout and close (UTC time) above this level could start a new uptrend. The pattern target of the reversal setup is $61.50.
This bullish view will be invalidated if the bears sink the pair below the trendline. Such a move could keep the pair range-bound for a few more days.
The 4-hour chart shows that the rebound off the trendline is struggling to sustain above $47.7845. This suggests that buying dries up at higher levels. The 20-EMA is sloping down and the RSI is in the negative zone.
Therefore, the bears may take one more shot at breaking the trendline support. If they manage to do that, the pair could drop to $42.
Conversely, if the bulls can sustain the price above $47.7845, a move to $50 and then to $51.50 is likely.
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.
The post Top 5 cryptocurrencies to watch this week: BTC, XLM, CRO, BNB, LTC appeared first on BTC Ethereum Crypto Currency Blog.
Author: By TeamMMG