Connect with us

Blockchain

What Happens When Bitcoin [BTC] Enters “Price Discovery Mode”?

Republished by Plato

Published

on

advertisement


Currently, at $18,727, Bitcoin (BTC) is looking for one final push above its all-time high of $20,000. However, this year’s rally is backed by major institutional participation with some big players in the financial space pouring millions of dollars into this digital gold.

Advertisement

StormGain

With the rising institutional participation, financial giants have started working out Bitcoin investment instruments that cater to the institutional demands. Some of the regulated financial giants like CME and Bakkt are already offering to trade for the Bitcoin futures. On the other hand, there’s enough work going around introducing Bitcoin ETFs in the market.

But for all these investment products to exist in the market, it is important to understand the price discovery mechanism for the asset class. Let’s take a look at what does Bitcoin Price Discovery means in reality.

Understanding the Bitcoin Price Discovery Mechanism

The price discovery mechanism basically means deriving the price of an asset within a market based on the buyer and seller interactions. The Bitcoin Price Discovery means setting up a spot price for Bitcoin (BTC) trading which depends on a number of tangible and intangible factors.

Apart from the classic economic principles of demand and supply, there are a number of factors that come into the picture of the BTC price discovery. This can include factors like the flow of information among crypto markets, exchanges, as well as the interactions with the traditional markets. As we saw this year, the global economic condition and uncertainties also have a considerable weightage on the price discovery.

Advertisement

Cryptocoincoach

As said, at the core of the Bitcoin Price Discovery is the most important demand and supply factor. Also, the Bitcoin Price Discovery depends largely on the futures and options market. Traders in this market have better information and judgment to take the desired action. In the case of any external information or news affecting market conditions or the economy, the actions taken by the speculative traders feed new information in the derivatives market which further drives the price movements.

The Bitcoin futures and options market plays a key role in the Bitcoin price discovery since they are the first ones to react as the transaction costs are much low here as compared to the spot markets. Thus, they include the element of future prediction about what is likely to happen.

Factors That Play A Key Role in the Bitcoin Price Discovery

As we all know Bitcoin works completely on a decentralized blockchain network and there’s no regulatory body governing it, unlike other asset classes. Bitcoin, and cryptocurrencies in general, is a very volatile asset and has been the subject of major price manipulations in the past.

Interestingly, although Bitcoin’s decentralized blockchain shields it from any external tampering or attacks, a number of exchanges where BTC trade are still centralized. Over the last few years, we have often heard things like massive exchanges with millions of dollars worth BTCs getting stolen and unaccounted for. Moreover, as most of the exchanges are not regulated, it hinders the accuracy in determining the BTC price value.

In order to determine the Bitcoin spot prices, the BTC price on the top-ten exchanges considered to be trustworthy is monitored. Usually, the BTC price movement is then monitored against other base fiat currencies like USD, EUR, GBP, KRW and JPY, or stablecoins like Tether (USDT).

Bitcoin Price Discovery has remained a tough task for a long-time. But as more regulated exchanges and marketplaces are coming into the picture, the scenario is improving. The institutional participation in BTC is likely to push further the demand for investment vehicles like Bitcoin ETFs and others.

Since such products only operate through regulated platforms, it will help to curb BTC’s price volatility and unpredictable behavior. During a panel discussion last year at Invest: ASIA in Singapore, Lennix Lai, financial market director at OKEx told Coindesk:

“If you can only buy or sell particular underlying tokens of bitcoin and you don’t have the capability to short, basically speculate in another direction, then the market would be a lot more volatile because it would be entirely driven by sentiment.”

“For example, you can view bitcoin as being much more volatile before CME Futures were introduced … so we should have more financial instruments like options to assist further in the price discovery process in relation to volatility.”

The recent participation from hedge funds, veteran investors, institutions, and other big players will bring more clarity to this concept of Bitcoin Price Discovery as the market matures.


To keep track of DeFi updates in real time, check out our DeFi news feed Here.

WorldMarkets

Author: Bhushan Akolkar




Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

Source: https://coingape.com/what-is-bitcoin-btc-price-discovery/

Blockchain

Bitcoin: Temporary Correction or No ATH This Year? The Crypto Weekly Market Update

Republished by Plato

Published

on

Bitcoin has a way of surprising people. This week was no exception. A few days ago, almost everyone believed that the cryptocurrency is inevitably headed to a new all-time high. And how could they not? BTC was trading at a few hundred USD below the record from back in 2017. Unfortunately, things took a turn for the worst.

Yesterday was undoubtedly a bad day for bitcoin as it plunged a total of around $3,000 in less than 24 hours. From a high of about $19,500 down to $16,200, the bears poked and showed their faces. The entire market lost around $80 billion of its capitalization as altcoins actually had it worst.

During the market dive, Bitcoin’s dominance actually increased, showing that not only altcoins failed to hold their ground, but they dropped harder than BTC. Since then, there has been a slight recovery and at the time of this writing, the primary cryptocurrency is trading at around $17,000.

The move was seemingly propelled by the news that US regulators might seek to require identity verification from crypto wallet providers. Coinbase’s CEO, Brian Armstrong, commented on the matter, expressing his worries that if the new rules are implemented, they would be rather harmful to the users and the industry, in general.

At the same time, the popular cryptocurrency exchange OKEx opened withdrawals for the first time since they were shut down around a month ago, which might have prompted users to cash out the profits that they have been sitting on. In fact, CryptoPotato reported that around $500 million were withdrawn from the exchange as the crash started to take place.

In any case, the results are here, and it remains particularly interesting to see where will bitcoin go from here.

Market Data

Market Cap: $512B | 24H Vol: 181B | BTC Dominance: 62%

BTC: $17,132 (-7.98%) | ETH: $516.86 (+1.71%) | XRP: $0.56 (+74.08%)

Bitcoin Worth $500 Million Withdrawn From OKEx as Users Look for Other Alternative. Data shows that users withdrew a total of 29,300 BTC from the popular cryptocurrency exchange OKEx right after it resumed full functionality. This happened just as bitcoin plunged $3,000 in a matter of 24 hours. The exchange also resumed the withdrawals a day earlier than announced and during the Chinese trading hours.

Bitcoin Black Friday 2020: The Sales You Better Not Miss. It’s the end of November, and with this comes the long-anticipated shopping season. For many, this is a time to enjoy massive sales. We’ve taken the liberty of listing a few sales within the cryptocurrency field that aficionados might find interesting.

Facebook’s Libra Could Reportedly Arrive in January 2021 in a Scaled-Down Version. Libra, Facebook’s long-awaited cryptocurrency project, might be set to launch in early 2021. However, the version that’s potentially hitting the market is scaled-down and specifically intended to abide by the regulations of Switzerland’s FINMA.

Research Suggests Satoshi Nakamoto Launched Bitcoin From London. New research shows that activities associated with Satoshi Nakamoto from 2008 and 2010 might have taken place in London when Bitcoin’s network went live. This brings the experts a step closer to identifying who’s behind the legendary pseudonym.

6 Possible Reasons For Bitcoin’s $3,000 Daily Price Crash. Bitcoin went through a massive crash two days ago when it lost around $3,000 of its value in a sudden red candle. These are six reasons for which this may have happened and a brief outline of what might be next to come.

Coinbase CEO Fears Rumored Regulations Proposed By The Trump Administration. Brian Armstrong, the CEO of the leading US-based cryptocurrency exchange Coinabse, has said that he’s worried about the rumored regulations concerning third-party wallet providers having to identify their users. He said that this might harm users and the entire ecosystem.

Charts

This week we have a chart analysis of Bitcoin, Ethereum, Ripple, Chainlink, and Stellar Lumens – click here for the full price analysis.

SPECIAL OFFER (Sponsored)
Binance Futures 50 USDT FREE Voucher: Use this link to register & get 10% off fees and 50 USDT when trading 500 USDT (limited offer).

PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO35 code to get 35% free bonus on any deposit up to 1 BTC.

Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.

You Might Also Like:


Source: https://cryptopotato.com/bitcoin-temporary-correction-or-no-ath-this-year-the-crypto-weekly-market-update/

Continue Reading

Blockchain

Ripple Plans To Cash Out 33% Of Its MoneyGram Stake With A Significant Profit

Republished by Plato

Published

on

  • The San Francisco-based payment protocol has filed a document on Friday with the US Securities and Exchange Commission (SEC). It reads that Ripple Labs has entered into an agreement with MoneyGram, which entitles Ripple to sell up to 4,000,000 shares of common stock.
  • Ripple’s option to sell these shares will expire “upon the earliest of March 31st, 2021, the time at which the maximum amount shall have been sold, or the occurrence of certain other customary events affecting the issuer.” 
  • CryptoPotato reported last year that Ripple and MoneyGram announced a strategic partnership. The initial term of the agreement was for two years. Ripple had agreed to provide a capital commitment amounting to $50 million in exchange for equity through the two-year period.
  • As per the SEC filing, Ripple owns 6.22 million shares of the giant money transfer company (or 8.6% of shares outstanding). However, the blockchain company has a warrant to buy up to another 5.95 million shares, amounting to a total equity position of 12.2 million shares or 17% of MoneyGram’s shares outstanding).
  • With the initial investment in 2019, Ripple purchased the MoneyGram shares at 4.10 per stock, which was a significant premium to the market price. 
  • Nevertheless, MoneyGram’s stocks (MGI) have surged in 2020, closing Friday’s session at $7.42. As such, Ripple can cash out with an 80% profit, despite the initial premium.
SPECIAL OFFER (Sponsored)
Binance Futures 50 USDT FREE Voucher: Use this link to register & get 10% off fees and 50 USDT when trading 500 USDT (limited offer).

PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO35 code to get 35% free bonus on any deposit up to 1 BTC.

You Might Also Like:


Source: https://cryptopotato.com/ripple-plans-to-cash-out-33-of-its-moneygram-stake-with-a-significant-profit/

Continue Reading

Blockchain

South Korea To Postpone Previously Planned Crypto Income Tax

Republished by Plato

Published

on

Lawmakers in Korea are planning to postpone a recently considered tax on crypto assets profits. Reports say the tax rule delay will be about three months – instead of October 2021, January 2022.

The New Crypto Income Tax Rule To Wait Until January 2022

According to a recent media report, the South Korean congress plans to put off the recently considered cryptocurrency income tax rule. A planning and finance committee of the National Assembly has issued a report, which proposes the necessity of implementing the crypto income tax rule from at least 2022.

A few months ago, in July, a report stated that South Korea’s Minister of Finance and Economy believes that the country should come up with a tax on cryptocurrency trading and investing. Back then, he added that South Korea has been in discussion with other countries about introducing a new digital law.

In July 2020, the country’s Ministry of Economy and Finance amended its tax code, where it included the plan for charging residents a 20% tax on gains from cryptocurrency trading, which are worth more than 2.5 million Korean won (about $2,000).

Lawmakers in the National Assembly are to approve the Government’s plan, which was to carry into effect the cryptocurrency income tax rule from October 2021.

Reason For The Delay – Time Is Tight

As per the media report, the reason for the postponement of the crypto tax law is based on some concerns, raised by local crypto exchanges. They have claimed the lack of time to build their proper tax reporting system and infrastructure, needful for the process to begin.

The so-called “Specific Financial Information Act” would be enforced from March next year, so crypto exchanges have to complete the necessary reporting system by September 2021 for verifying their real names of deposit withdrawal accounts.

As CryptoPotato reported, South Korea announced the planning of the crypto income tax in June this year. The Asian country went through some different views on how and whether it should tax profits from cryptocurrency. Firstly, at the beginning of 2020, the Ministry of Economy and Finance did not consider that digital asset trading gains as taxable income. A month later, another local report said the Ministry believes that the nation could start label cryptocurrency trading profits as “other income.”

SPECIAL OFFER (Sponsored)
Binance Futures 50 USDT FREE Voucher: Use this link to register & get 10% off fees and 50 USDT when trading 500 USDT (limited offer).

PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO35 code to get 35% free bonus on any deposit up to 1 BTC.

You Might Also Like:


Source: https://cryptopotato.com/south-korea-to-postpone-previously-planned-crypto-income-tax/

Continue Reading
Blockchain5 days ago

Ethereum 2.0 All Set For December 1st Launch As ETH Rallies Past $600

Blockchain5 days ago

Blockchain-based voting systems have potential despite security concerns

Blockchain5 days ago

Bithumb Temporarily Shuts Down Some Offices As Korea Faces Another Possible COVID-19 Outbreak

Blockchain4 days ago

6,700 investors lock $10.5M in Oasis Network’s token-drop

Blockchain2 days ago

Five Reasons Ethereum Has Entered a New Bull Market

Blockchain5 days ago

Billion-Dollar SBI Japan Launches “Reliable” Interest on Bitcoin Deposits

Blockchain4 days ago

Bithumb Temporarily Shuts Down Some Offices As Korea Faces Another Possible COVID-19 Outbreak

Blockchain3 days ago

Five Reasons Ethereum Has Entered a New Bull Market

Blockchain5 days ago

TRONADZ – The First Decentralized AdNetwork

Blockchain5 days ago

Bitcoin SV, Cosmos, BAT Price Analysis: 24 November

Blockchain5 days ago

Too Many Active Bitcoin Whales On Coinbase Suggest Price Is Likely To Go Down Soon – CryptoQuant CEO Warns

Blockchain3 days ago

ViaBTC launches new cloud mining service with BTC and ETH contracts available

Blockchain5 days ago

IDEX Announces Multi-Chain Solution and Expands to Polkadot and Binance Smart Chain

Blockchain5 days ago

3 reasons why Bitcoin price faces a major hurdle at $20,000

Blockchain5 days ago

The Ripple Effect: 5 Key Factors Behind The 100% XRP Surge

Blockchain5 days ago

Bitcoin Bullish Run Buoyed By Positive Sentiments from Institutions

Blockchain4 days ago

Stellar Lumens doubles in price following upgrade

Blockchain4 days ago

IDEX Announces Multi-Chain Solution and Expands to Polkadot and Binance Smart Chain

Blockchain4 days ago

Bitcoin’s Lagging Correlation with Gold Could Push Price to $25K: Analyst

Blockchain4 days ago

Analysts Eye New Top of $74,000 as Bitcoin Comes Within 3% of ATH

Blockchain4 days ago

IDEX Announces Multi-Chain Solution and Expands to Polkadot and Binance Smart Chain

Blockchain3 days ago

Coinsquare exchange adds new board members

Blockchain2 days ago

Bitcoin Indicator Reaches Historical Extreme: Price Sheds Two Thirds Upon Reversal

Blockchain5 days ago

Win Big With King Billy Casino’s 50,000 EUR Prize Pool

Blockchain5 days ago

IDEX Announces Multi-Chain Solution and Expands to Polkadot and Binance Smart Chain

Blockchain5 days ago

IDEX Announces Multi-Chain Solution and Expands to Polkadot and Binance Smart Chain

Blockchain5 days ago

Bithumb Temporarily Shuts Down Some Offices As Korea Faces Another Possible COVID-19 Outbreak

Blockchain4 days ago

IDEX Announces Multi-Chain Solution and Expands to Polkadot and Binance Smart Chain

Blockchain4 days ago

Kraken Daily Market Report for November 24 2020

Blockchain4 days ago

TA: Ethereum Weakens Below $600: Why 100 SMA Could Trigger Fresh Increase

Trending