1. Market Wrap: Ethereum Keeps Burning and Price Is Hot
The largest cryptocurrency by market value was trading close to its highest level in more than two months
Bitcoin’s price rose Friday, back above $46,000 after dipping as low as $43,800 the prior day.
The largest cryptocurrency by market value was trading close to its highest level in more than two months, sitting on a 60% year-to-date gain after rallying from a low around $29,000 as recently as June.
A key threshold is the 200-day moving average of the price, currently around $45,000.
“The 200-day moving average is pivotal in the day trader’s mind,” Matt Blom, head of trading for the digital-asset firm Eqonex, wrote in his daily newsletter. “A deeper dip to $40,900 will signal that the market is shaping up to form a new trading range, with $41,000 and $46,000 as the key levels.”
Latest prices
Cryptocurrencies:
Bitcoin (BTC) $46,847, +4.83%
Ether (ETH) $3,224.2, +5.66%
Traditional markets:
S&P 500: 4468.1, +0.2%
Gold: $1778.3, +1.46%
10-year Treasury yield closed at 1.294%, compared with 1.369% on Thursday
2. Money Reimagined: A Turning Point for Crypto
Even as crypto lost a battle over taxes in Congress this week, it felt like a victory, says CoinDesk’s chief content officer.
When the “Conversation” section in last Friday’s newsletter covered the swirling congressional debate over the crypto provision in the U.S. Senate infrastructure bill, it was already a big story. But what happened over the next three days took it to a new level. Officially, the debate ended in a loss for the crypto community, but as this week’s column points out, it actually played out as a positive watershed moment in the technology’s public profile.
As the column highlights, the legislative battle captured a new-versus-old struggle. That’s also the core theme of this week’s podcast episode, whose news hook is the 50th anniversary of one of the most important and most underappreciated events of the second half of the 20th century: the removal of the dollar’s peg to gold on Aug. 15, 1971. With Cornell economic professor Eswar Prasad and CoinDesk podcast managing editor Adam B. Levine as our guests, Sheila Warren and I dig into the legacy of that event and how it frames the coming digital currency war.
3. Cardano Jumps on Signals Smart Contracts Coming Next Month
The plan to add smart contracts next month could defy skeptics who have bet that the functionality wouldn’t come anytime soon.
Cardano jumped past $2 for the first time in nearly three months as the blockchain’s chief developer announced a September release date for the planned “Alonzo” upgrade — a move that would usher in smart-contract functionality and thus address what critics have described as one of the network’s most glaring deficiencies.
Smart-contract functionality would allow Cardano to incorporate more applications including so-called decentralized finance (DeFi) platforms that allow for automated cryptocurrency lending and trading. The improvement could put the network in a better position to challenge Ethereum, currently the leader among blockchains with smart-contract functionality.
The ADA price reached $2.08 at 9:05 UTC Friday, the highest since mid-May, when ADA was trading at $2.31 at its all-time high. Over the past 24 hours, it’s up 16%. The recent price rally has pushed cardano’s market capitalization to about $65 billion, vying with binance coin (BNB) and tether (USDT) for the №3 rank among all cryptocurrencies by market value after №1 bitcoin (BTC) and №2 ether (ETH).
Nigel Hemsley, head of delivery for Cardano, said in a video released by developer Input Output Friday that the platform would launch the Alonzo upgrade on “Monday, Sept. 12,” though a quick glance at the calendar shows that the date falls on a Sunday this year. The developer later tweeted again saying that the platform targeted simply “Sept. 12” for the upgrade.
Started by Ethereum co-founder Charles Hoskinson, Cardano is a blockchain that aims to compete with Ethereum and other decentralized application platforms but as an avowedly more scalable, secure and efficient alternative.
4. 50 Years After Bretton Woods, the US Dollar’s Throne Is in Play
The greenback’s share of world reserves is dropping steadily. The euro, yuan and bitcoin are all in the running to pick up the slack.
This Sunday, Aug. 15, will be the 50th anniversary of the end of the Bretton Woods currency system. After World War II, major nations essentially agreed to peg their currencies to a gold-backed dollar. But by 1971, faith in the U.S. dollar was eroding, forcing President Richard Nixon to end the dollar’s convertibility to gold. This ushered in the current status quo of relatively free-floating “fiat” currencies.
That long-ago decision still has major implications today. Over the past few months, massive coronavirus pandemic relief spending in the U.S. has triggered worries that faith in the dollar’s soundness could be shaken again as it was 50 years ago. The dollar’s share of central bank balance sheets is still a dominant 59%, but has been slowly declining — threatening to take with it a number of economic and political advantages.
To better understand the road ahead, I’ve been examining the viability of various currencies as central bank reserves, including the euro, the Japanese yen and the Chinese yuan, as well as bitcoin (BTC, +5.67%) or other digital instruments. That analysis will be published soon, but I wanted to hit on a few highlights of what I learned talking to currency experts.
First, despite high anxiety about the yuan’s rising influence, China faces a deep, possibly unsolvable conflict between its global currency ambitions and its domestic economic agenda: The Chinese Communist Party maintains tight currency controls to encourage domestic investment, but a reserve currency must be freely tradable.
Between that conundrum and the inconsistency of Chinese regulation, experts are generally skeptical that the yuan can climb much in the global reserve rankings anytime soon. Japan, meanwhile, doesn’t sell enough debt abroad for its bonds to take up a large share of global reserves.
Among current options, the euro seems to be the most serious competitor to the dollar, thanks to the large eurozone economy behind it and the relatively open and responsible management of the European Central Bank. A major recent step that makes this more plausible was the ECB’s decision to issue eurozone-wide bonds to fund pandemic relief programs.
That’s ironic given that rising global debt levels are also a pillar of the case for central banks to hold bitcoin as part of their reserves. The coronavirus has fueled a massive surge in global debt, which as of earlier this year stood at 365% of global GDP.
If the world were a single country, that ratio would be a five-alarm fire — especially because so much of it is held by central banks of the countries that issued the debt, which economists including Eswar Prasad argue amounts to money printing. The case for individuals to hold bitcoin rests on the idea that central banks are inevitably tempted to debase their currency through this sort of inflationary policy.
5. These North American Bitcoin Firms Mined 59% More Bitcoin in July
Growth in North American mining is just one of the things driving a return of a bullish mood across the industry.
On this episode of “The Breakdown:”
Bitcoin mining bump
Coinbase’s massive Q2 earnings and more institutional news
Crypto tax companies popping up
North American bitcoin mining companies saw a significant increase from the previous month. Contributing to this increase is the downward difficulty adjustment, a built-in and automatic Bitcoin feature that incentivizes more miners to join the network. The adjustment came after China’s crackdown on their miners and a subsequent drop in hashrate. Is this mining success bullish for bitcoin?
Coinbase’s Q2 earnings report revealed a successful quarter with a bigger portion of trading volume attributed to institutional over retail. Additionally, ethereum surpassed bitcoin in trading volume for the first time. Will these trends continue?
With regulatory pressure on the horizon, several new crypto tax companies are being formed (and venture capital-backed) to fill the gap. Crypto presents new complexities for reporting and the tax implications of the U.S. infrastructure bill are imminent. Will these companies be able to find a solution when it’s tax time?
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August 14, 2021
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