1. Market Wrap: Ethereum Hard Fork Rally Outperforms Bitcoin
Ether is up 3% over the past 24 hours.
Ether, the second largest cryptocurrency by market capitalization, was in the spotlight on Thursday as the latest hard fork upgrade, which wasa dubbed “London,” officially activated on the Ethereum blockchain network. The upgrade contributed to bullish price action as ether rose about 5% over the past 24 hours, compared with a 3% rise in bitcoin during the same period.
Despite ETH’s rally, some analysts expect widespread institutional adoption to take a few years. Institutional interest boosted bitcoin’s investment appeal over the past year, which contributed to a crypto rally during the fourth quarter of 2020.
“I think Ethereum might flip the bitcoin market cap in the long term, but not this year,” CryptoQuant CEO Ki Young Ju, said in an interview with WuBlockchain.
“I met Goldman Sachs, Fidelity and other big institutional asset management firms in Miami a few weeks ago and they said they’re still struggling explaining what Ethereum/DeFi (decentralized finance) is to their bosses,” Ju said.
Latest prices
Cryptocurrencies:
Bitcoin (BTC) $41143, +2.83%
Ether (ETH) $2806.8, +4.11%
Traditional markets:
S&P 500: 4429, +0.6%
Gold: $1814.2, +0.21%
10-year Treasury yield closed at 1.217%, compared with 1.16% on Wednesday.
Meanwhile, some institutions remain active across the crypto market either directly or indirectly. On July 22, Fidelity Investments acquired a 7.4% stake in crypto miner Marathon Digital Holdings for about $20 million.
2. How a ‘Lazy Robot’ Might Solve a Big Problem for Crypto’s Whale Traders
It can be hard having a giant pile of crypto.
Especially if you want to trade it for a different giant pile of crypto.
Sometimes investors or organizations want to move a lot of cryptocurrency, and they would prefer to do it in a way that doesn’t have a big impact on the market. The folks at venture fund Paradigm have a new idea for addressing this issue without having to trust anyone.
3. Gensler’s Preference for Bitcoin Futures Products Is Likely Bad News for a Spot BTC ETF
The SEC chairman’s comments this week are causing issuers to readjust their expectations for the approval of a spot bitcoin ETF.
U.S. Securities and Exchange Commission Chairman Gary Gensler’s comments this week have some digital asset managers realizing that the excitement in the first half of the year for a true bitcoin (BTC, +1.08%) exchange-traded fund (ETF) may have been premature.
In remarks at the Aspen Security Forum on Tuesday, Gensler noted that he would be partial to ETFs based on bitcoin futures traded on the Chicago Mercantile Exchange (CME).
“I think his comments are pretty clear that a pure spot bitcoin ETF isn’t coming soon and that futures products would potentially be considered,” Steven McClurg, chief investment officer for Valkyrie, which has filed an application with the SEC for a bitcoin ETF. “I think it’s certainly going to direct our conversations and our product road map.”
4. What Crypto Analysts Are Saying About the Ethereum Hard Fork
“The notion of ethereum becoming a deflationary cryptocurrency in the future is now tangible, and the effects on ethereum’s valuation could be profound,” said one analyst.
Ether (ETH, +2.6%) prices rose in digital-asset markets on Thursday after the Ethereum blockchain’s “London hard fork” went live, and cryptocurrency analysts are now weighing in on the impact of the network upgrade.
At press time, ether was trading at $2,802. The world’s second-largest cryptocurrency by market capitalization is up more than $300 from its daily lows, with a 4.83% gain over the past 24 hours.
Martin Gaspar, research analyst at CrossTower:
The apparent success of the upgrade is getting priced in.
“The notion of ethereum becoming a deflationary cryptocurrency in the future is now tangible, and the effects on ethereum’s valuation could be profound.”
Alex Svanevik, co-founder & CEO at Nansen:
It will take a while, possibly even weeks, to see any real impact from the upgrade.
Currently, he is focusing on a metric that looks at the percentage of EIP 1559 transactions, which is currently very low.
“As wallets, bots, etc. start making use of the EIP 1559 features, we will know more about how this upgrade affects Ethereum long term.”
Denis Vinokourov, head of research at Synergia Capital:
“Overall, the reaction is more or less as expected. It is very rarely that ethereum benefits from any immediate upside following such network upgrades, although a bias tends to materialize over time.”
These occasions are typically well documented heading into the event, given the transparent discussions on various forums and conferences, he said.
That’s “unlike, for example, the [Federal Reserve] meeting, where slight nuances with regards to language used may have a more pronounced impact on reaction by different asset classes,” Vinokourov said.
Laurent Kssis, managing director of exchange-traded products at 21Shares AG:
Kssis sees a possibility of a short-term correction as the network stabilizes, before resuming an upward trend.
He said he can’t see a definite trend in the short term, but a relative value trade could be implemented between ether and bitcoin (BTC, +1.12%).
“With [non-fungible tokens] in full swing, we see a consolidation as demand remains strong in the [decentralized finance] segment.”
5. Senator Who Wrote Controversial Crypto Tax Rule Proposes Modest Revision
The bill excludes only proof-of-work mining, or the selling of hardware or software that gives individuals control of private keys to access digital assets.
Senators Mark Warner (D-Va.) and Rob Portman (R-Ohio) submitted a competing amendment on Thursday to an earlier amendment to the Senate infrastructure bill’s cryptocurrency provision.
The amendment, is limited in scope, excluding only proof-of-work mining, or the selling of hardware or software that permits individuals to control private keys that provide access to digital assets.
In a tweet Thursday evening, Jerry Brito, the executive director of the Washington, D.C.-based think tank Coin Center called the amendment “disastrous.” He added: “And it does nothing for software devs. Ridiculous!”
The crypto-specific provision would raise $28 billion toward $1 trillion in infrastructure improvements but has been contentious, briefly holding up the entire infrastructure bill.
Senators Ron Wyden (D-Ore.), Cynthia Lummis (R-Wyo.) and Pat Toomey (R-Penn.) proposed their amendment earlier Thursday to ensure miners, node operators, developers and other non-custodial crypto industry participants are exempt from the crypto tax reporting provision.
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August 6, 2021
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