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Crypto Mom’s Prescient DeFi Warning: ‘People Can Lose a Lot of Money’

Decentralized finance (DeFi) has been thrust further into the spotlight in recent days, but unfortunately, it has been for all the wrong reasons. As fate would have it, BeInCrypto had the chance to speak with SEC Commissioner Hester Peirce just before the SushiSwap scandal on a range of topics, including DeFi. You can find the […]

The post Crypto Mom’s Prescient DeFi Warning: ‘People Can Lose a Lot of Money’ appeared first on BeInCrypto.

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Decentralized finance (DeFi) has been thrust further into the spotlight in recent days, but unfortunately, it has been for all the wrong reasons.

As fate would have it, BeInCrypto had the chance to speak with SEC Commissioner Hester Peirce just before the SushiSwap scandal on a range of topics, including DeFi.

You can find the first of that conversation here. In Part II, Commissioner Peirce, also known in these circles as Crypto Mom, shared her thoughts on the securities regulator’s role in governing this emerging space.

Commissioner Peirce presciently issued a warning to cryptocurrency investors, saying that a lot of people are making a lot of money. Still, they should be careful and know they can also lose a lot too.

She offered another cautionary statement from a regulator’s perspective, which was to think about how the rules apply to what you’re doing.

According to Crypto Mom, the growth that has been unfolding in DeFi is nothing short of “astounding.” The most interesting thing about DeFi, according to her, is that people are exploring the kinds of financial interactions that determine how they can set up a system in a decentralized way without intermediaries.

That is challenging to regulators. Commissioner Peirce explained:

It requires us as regulators to think about what our role is: If you have truly decentralized financial communities, are people building their own regulatory structure as part of what they’re doing in DeFi? Are smart contracts playing the role of regulators?

Indeed, there is still a cloud of uncertainty surrounding smart contract-fueled DeFi transactions in which ETH is used as collateral. Jesse Proudman, CEO of quant hedge fund Strix Leviathan, recently told the Coinscrum podcast,

This DeFi movement is the first time we’ve had all these interweaving smart contracts. And nobody really understands the risk factors there, particularly when it comes to Ethereum’s price point.

ethereumethereum

Security vs. Utility Token

One of the sticking points between the cryptocurrency community and the SEC has been the taxonomy of digital currencies. Entrepreneurs still aren’t clear on whether their project’s coin will be classified as a security or utility token by the regulator.

And while the heyday of ICOs has come and gone, new tokens are still being launched, including in the DeFi space where token issuance is on the rise. Commissioner Peirce said:

The question of ‘what is a security?’ is very much alive. A lot of people still have those questions and have their projects on hold and can’t figure out whether or not their token distribution event would be considered to be a securities offering. It’s very much a live issue for trading platforms that are trying to figure out what to trade or not to trade.

She pointed to Telegram’s canceled token sale as a case in point that the crypto industry is waiting for the SEC to act on the classification front. Telegram had to give back $1.2 billion to investors plus play a hefty fine for having an unregistered offering of its GRAM token.

On the other hand, the SEC seems to validate the use case for Telegram, based on Commissioner Peirce’s tweet below.

According to Crypto Mom, crypto projects are still trying to figure out how to do things the right way from the get-go. They want to be able to operate without having to worry about the taxonomy issue.

I think there’s a lot of work going on, not just thinking about the regulatory framework.

If the Wall Street watchdog waits too long to embrace innovation, it could come at a hefty price. Commissioner Peirce explained:

I hope that we can do a better job in the United States so that we at least have a regulatory framework that makes people comfortable innovating here. We have always been a country that has been really welcoming to innovation. Then there’s the question where trading is happening. But that’s why we should have clear rules about what you can and can’t do. Ultimately what I’m most concerned about is when I hear innovation is moving offshore because people are too uncertain about what they can do here. Also setting a project up that can’t have U.S. participation, that has become a concern.

Crypto Dad and Central Bank Digital Currencies

While China is already testing its central bank digital currency (CBDC), the e-yuan, the U.S. Federal Reserve has been left in the dust.

Commissioner Peirce pointed to one familiar face who is out there making the case for a U.S. CBDC — her crypto counterpart and former CFTC chairman Chris Giancarlo, also known as Crypto Dad.

Crypto Dad is out there pushing the idea of a digital dollar. There has been work going on in the private sector and the Fed has talked about it, too. One beautiful thing about being an SEC regulator is that a digital dollar is far outside of my purview. Lots of different countries are experimenting with central bank digital currencies, and it is inevitable that people in the United States will too.

Meanwhile, with regulation in the cryptocurrency industry moving at a snail’s pace, the emergence of the COVID-19 pandemic didn’t help on the competitive front.

If there’s an asset class that’s been as volatile as bitcoin, it’s equities. But that doesn’t mean crypto is no longer on the SEC’s radar. Commissioner Peirce stated:

I think a lot of the attention got diverted by the pandemic and by the related effect in the market and the broader economy. And so we had to do things like issue temporary relief. We were getting lots of questions about working from home. We as an agency are working from home, by and large. We also have a very active rule-making calendar that has nothing to do with crypto, just normal market rules. And so yes, there’s a lot going on. That said, in proportion to the size of the crypto market, I would say that we do devote quite a few resources to the industry and to thinking about the novel issues it raises.

Perhaps when bitcoin moves closer to mainstream adoption, the SEC will send in the cavalry.

Source: https://beincrypto.com/crypto-moms-prescient-defi-warning-people-can-lose-a-lot-of-money/

Blockchain

Three reasons why Cardano is going on this price trajectory

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Rising trade volume across spot and derivatives exchanges have supported Cardano’s ongoing price rally over the past few weeks and months. The altcoin, at the time of writing, was trading at the $2.32-level, with the crypto gaining by 20% in 24 hours to touch one ATH after the other. The aforementioned hike in price and trade volume were evidenced by the increase in market capitalization as well.

Thanks to the aforementioned factors, Cardano is now ranked third among the market’s top-10 altcoins, based on data from CoinMarketCap.

What’s more, based on the attached chart, currently there is more ADA staked than in the past 30 days. In fact, it is at nearly half a million. With 100% of its HODLers profitable at the press time price level, ADA’s rally is likely to be a long one, especially with the altcoin’s staking rewards data offering a similar conclusion. With a relatively high percentage of ADA staked, a direct relationship has emerged between staked ADA and ADA’s price.

While the current on-chain sentiment is slightly bearish, the net network growth stood at a positive 5%. Further, while there has been a slow drop in large transactions, that could mean that more retail traders are buying ADA v. HODLers and institutions. Unless trade volume drops and cascading sell-offs occur, the price is likely to hold at its current price level.

In the case of Cardano, the concentration by large HODLers has remained largely below 30% and this is key to its ongoing rally. Top memecoins and altcoins that are rallying like DOGE, LINK, BNB, and ETH, among others, have a high concentration by large traders. This is essential to supporting the price at its key levels.

$80 billion worth of large transactions have transpired over the past week and the inflows are anticipated to increase even more. Less than 15% HODLers have held ADA for over 12 months, despite YTD gains of over 500%. And, ADA’s HODLers are lower in numbers than expected. Ergo, the short-term ROI could be the key reason for the short HODLing duration.

Based on data from Messari, the ROI over the past week was nearly 40%.

Why Cardano's price rally is a long one

ADA short-term ROI || Source: Messari

In the past year, the ROI was over 700%. This is a relatively high gain for HODLers, despite several dips.

ADA’s latest developments and the increasing demand in the second phase of the altseason make it one of the hottest altcoins to buy and HODL. In fact, one can argue that ADA continues to remain undervalued at the press time price level.


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Source: https://ambcrypto.com/three-reasons-why-cardano-is-going-on-this-price-trajectory

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Blockchain

Data shows the ‘Bitcoin price drops ahead of CME expiries’ claim is a myth

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Historically, activity surrounding the Bitcoin (BTC) monthly futures and options expiry has been blamed for weakening bullish momentum. A few studies from 2019 found a 2.3% average drop in BTC price 40 hours before the CME futures settlement date. 

However, as Cointelegraph reported in June 2020, the effect faded away. While 2020 seems to have rejected the potential negative impact of CME expiries, so far, the current year appears to validate the theory. Bitcoin’s price has been suppressed ahead of futures and options expiry in the first three months of 2021.

Bitcoin performance before and after CME expiry, USD. Source: TradingView

Some investors and traders have pointed out that Bitcoin’s incredible rally after the recent futures and options expiry dates has become a trend.

BTC has effectively rallied in the days following the expiry, but expanding this analysis uncovers a less-than-satisfactory trend.

Three consecutive events don’t prove a trend

The past 13 months have been nothing short of spectacular for Bitcoin, as the cryptocurrency posted 788% gains. August 2020 turned out to be the worst month, as BTC presented a 7.5% negative performance. Thus, choosing random starting points within the month will likely show a similar positive trend.

For example, if one uses the “last quarter” moon phase as a proxy, the odds that a rally takes place after each event are very high.

Bitcoin performance after “Last Quarter” moon, USD. Source: TradingView

As depicted above, indeed, Bitcoin rallied after five out of the last six instances. The only conclusion might be that positive trends are the norm rather than the exception during bull runs.

Although there might be some explanation to the reason behind Bitcoin’s end-of-the-month underperformance, these are only hypotheses.

While market makers and arbitrage desks could benefit from suppressing the price after a rally, other forces, including leverage futures longs and call option holders, would balance that out.

Bitcoin price did not drop in three of the last seven expiries

Therefore, it makes sense to analyze the potential price suppression ahead of the expiry instead of looking for explanations for a rally during a bull market.

Bitcoin performance before and after CME expiry in 2020, USD. Source: TradingView

Both October and December 2020 expiries failed to present any negative pressure ahead of such dates. Meanwhile, the 12% positive performance on the five days that preceded the most recent April 30 expiry also puts a big question mark on how meaningful the CME event really is.

Considering there hasn’t been a price decrease ahead of monthly futures and options expiries in three of the last seven instances, this evidence should put a nail in the coffin of the unfounded myth.

As mentioned earlier, trying to develop theories on why sellers acted more aggressively on specific dates is unlikely to yield results.

As shown above, Bitcoin’s price failed to underperform in three out of the last seven expiries. A 57% success rate should not define a trend when a positive performance after a specific date has been proven common during a bull run.

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.

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Source: https://cointelegraph.com/news/data-shows-the-bitcoin-price-drops-ahead-of-cme-expiries-claim-is-a-myth

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Bitcoin still on track to $100K despite growing risks, says strategic investor Lyn Alden

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Strategic investor Lyn Alden is convinced Bitcoin has still the potential to reach $100K in the current bull cycle — despite growing uncertainty and increasing volatility. 

“We are seeing a lot of froth throughout the industry”, she said, referring to the latest rally in a number of meme coins such as Doge.

“Those are kind of warning signs for the cycle”, she added.

Alden said that with the bull run slowing down and growing risks of a correction, it makes sense for some investors to take some money off the table and put it into some other assets.

“For people who would have trouble with drawdowns or periods of volatility, it can make sense to rebalance”.

Overall, Alden’s position remains bullish given her confidence in the strong fundamentals of the Bitcoin network:

“I have a pretty high conviction on it. And so I’m fine with maintaining a pretty large position.”

Despite a number of altcoins outperforming Bitcoin this year, she doesn’t think Bitcoin is anywhere near losing its leading position in the crypto market. Most altcoins, she pointed out, didn’t manage to sustain the same degree of growth throughout multiple business cycles.

“ I’d be more concerned if I saw protocols that chip into Bitcoin’s market dominance in one cycle and then chip even more into it in the next market cycle”.

Don’t miss the full interview on our YouTube channel and don’t forget to subscribe!

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cointelegraph.com/news/bitcoin-still-on-track-to-100k-despite-growing-risks-says-strategic-investor-lyn-alden

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