Category: Bitcoin

Crypto’s positive reaction to Biden’s executive order

On By mehranmuslimiblogIn Bitcoin, Blockchain, crypto, GovernmentsLeave a comment

Although there has been a slight pullback in the crypto market since yesterday, and watching it daily is like some version of the game Snakes and Ladders/Chutes and Ladders, there has been a positive response to the Biden administrations executive order. The order “will require U.S. federal agencies to create a regulatory framework for digital assets, as well as explore a future digital dollar,” Cointelegraph reports.

For example, Coinbase surged up 10.5% at market close, and Microstrategy posted a 6.4% gain. Exchange traded funds (ETFs) also experienced a renewed positive view of crypto, with ProShares Bitcoin Strategy ETF gaining 10% and Valkyrie Bitcoin Strategy ETF closing up 10.3%.

Mining companies had some of the biggest gains following the executive order. Riot Blockchain Inc. shares shot up 11.2% and Marathon Digital Holdings Inc. were up by 13.5%.

Tom Miitchelhill comments that while the crypto market is used to volatility, “these are unusually volatile moves on traditional markets.” However, before everyone gets to excited, let’s remember that Coinbase “is still down nearly 48% from its direct listing price in April last year.” And Bitcoin, although it initially racked up a 9% price increase when details of the executive order were leaked, it then retraced its steps sometime after.

Why so much positivity about the US order? Mitchelhill says, “the executive order was considered by most investors to be if not a net positive for the crypto industry, at least a lot less bad than had been feared.”

One reason is that President Biden has positioned the rise of digital assets as, “an opportunity to reinforce American leadership in the global financial system and at the technological frontier.” And whilst nobody knows exactly what sort of regulatory measures may be expected, the general view is that the US government is being ‘constructive’. It also potentially means “that the executive order will potentially work to expand the adoption of virtual currencies within the U.S. financial system.”

US Treasury Secretary, Janet Yellen, commenting on it, said: “President Biden’s historic executive order calls for a coordinated and comprehensive approach to digital asset policy. This approach will support responsible innovation that could result in substantial benefits for the nation, consumers and businesses.”

There are of course divisions in the crypto community over it, but it will be interesting to see how this plays out and who it benefits in the long term.

Bitcoin flippens the Rouble

On By mehranmuslimiblogIn Bitcoin, crypto, GovernmentsLeave a comment

On 1st February, Russia’s central Bank reported that the country’s money supply was 65.3 trillion roubles, worth approximately $629 billion. Now that Bitcoin has broken through the $41,000 resistance point, its market cap has surpassed that of the Russian currency.

According to data from CoinMarketCap, Bitcoin’s market cap surged to $780 billion on Monday, 28th February, as the price increased by 5.7%. It now stands at over $43,000, an increase of around 13%.

It’s not difficult to see how this occurred. Due to the economic sanctions hitting Russia in response to its invasion of Ukraine, Russia’s Central Bank was forced to raise interest rates to 20%, sending the rouble into freefall. As the deeper sanctions, including the exclusion from SWIFT, hit Russian markets on Monday, the value of the rouble started its decline and has continued to lose its spending power by 30% due to inflation. 

At the same time, United States dollar-pegged stablecoin Tether witnessed a spike of over 30% in five days against the Russian rouble, and data from crypto exchange Binance shows that the rouble is undergoing inflation as the USDT/RUB trading pair — for the first time in history — crossed 105 roubles. Prior to the spike, the USDT/RUB pair maintained a comparatively steady market price below 80 roubles.

Russian and Ukrainian residents rush to crypto exchanges

Meanwhile in Russia and Ukraine, residents seem to have driven trading activity up on exchanges, possibly over concerns about the stability of their countries’ respective fiat currency. Another factor in this is Ukraine’s call for Ukraine’s cryptocurrency donations to help the government and the people. And, on the first day of the invasion, 24th February, Cointelegraph reported that the Ukraine-based crypto exchange Kuna had around $4.4 million in total trading volume of all tokens over a 24-hour period.

Crypto and NFTs come to Ukraine’s rescue

For Ukrainian citizens fleeing the country, the financial situation is perilous. As one tweeted, “My Ukrainian cards don’t work anymore, although I am safe in Kazakhstan. Crypto is the only money I still have, and today I can say without exaggeration that BTC, ETH and NFT are going to save my life while I can’t come back home.”

Prominent crypto entrepreneurs have also been active. FTX CEO Sam Bankman-Fried was one of the first to offer monetary support to FTX traders from Ukraine by giving all of them FTX $25 each.

As he said, “Do what you gotta do.”

Other support for Ukraine has come from feminist band Pussy Riot. Its new UkraineDAO immediately attracted thousands of followers on Twitter. It is collaborating with PleasrDAO, the DeFi collective, and Trippy Labs, an NFT studio. The UkraineDAO is an NFT drop of the Ukrainian flag, with tokens issued and all proceeds raised donated to organizations supporting the people of Ukraine. The minting price will be set at 0.08241991 as a tribute to Ukraine’s Declaration of Independence on Aug. 24, 1991.

With Bitcoin surging it would seem that an appetite for risk has returned to the crypto markets after a bumpy February, although it is difficult to say whether this is a short-term move or if it could herald a return the all time highs seen last year. Aside from that, it is also interesting to watch crypto’s role in this conflict and observe how that plays out.

What is a DAO and how does it work?

On By mehranmuslimiblogIn Bitcoin, Blockchain, DeFiLeave a comment

A DAO (Decentralized Autonomous Organization) is defined as an organization represented by rules encoded as a transparent computer program, controlled by the organization’s members, and not influenced by a central government, or any other centralised entity. As the rules are embedded into the code, no managers are needed, thus removing any bureaucracy or hierarchy hurdles. 

In more basic terms, a DAO is also a way of organizing people globally into a movement, without their knowing each other, establishing your own rules, and making your own decisions autonomously, with all of that encoded on a blockchain.

Blockchain enables automated trusted transactions and value exchanges, but even so, internet users around the world want to organize themselves in a “Safe and effective way to work with like-minded folks, around the globe”, according to Ethereum.

Bitcoin is the original DAO

Bitcoin is the first example of a DAO. It has programmed rules, functions autonomously, and is coordinated through a consensual protocol. But it is the growth in DeFi protocols that have really shone a light on DAOs again.

Smart contracts are essential

For example, with a DAO, financial transactions and rules are recorded on a blockchain using smart contracts, thus eliminating any need for third party involvement in the transaction. The smart contract is very important because it represents the rules of the organization, and is where all information is stored. No one can edit the rules without people noticing, because DAOs are transparent and public. A DAO, unlike the current way in which we form companies by registering them and giving them legal status, needs none of that. A DAO can be structured as a general partnership.

According to Cathy Hackl at Forbes: “DAOs envision a collective organization owned and managed by its members with all of them having a voice. Many analysts and industry insiders affirm that this type of organization is coming to prominence, even potentially replacing some traditional companies.”

What DAOs are used for

So far DAOs are being used for many purposes such as investment, charity, fundraising, borrowing, or buying NFTs, all without intermediaries. For example, 3LAU is a DAO organization in the Metaverse that provides fractional ownership of NFTs, including songs. While DAOs are not exactly mainstream yet, they do seem to be picking up steam with many creators, and large brands and businesses need to keep an eye on them.

NFTs escape the crypto crash

On By mehranmuslimiblogIn Bitcoin, Ethereum, NFTsLeave a comment

DappRadar has published an interesting report on how NFTs appear to have escaped the current crypto market crash relatively unscathed. It points out that while ‘fear’ is the sentiment dominating the crypto market, the very opposite appears to be true of NFTs, or non-fungible tokens.

So, what is happening on the NFT scene that is contributing to this growth. The report first points to the celebrities and big brands that are joining it daily. Some of the celebrities have an enormous social media reach, such as Kevin Hart with +192 million followers on Twitter and Instagram. Hart and footballer Neymar Jr (+200 million followers) have publiicised their entry into the Bored Ape Yacht Club (BAYC), one of the prime NFT projects right now.

Furthermore, Twitter, perhaps the most popular social media platform across crypto and NFT enthusiasts, enabled its first web3 functionality inside the social platform a few days ago. The other social media platforms are expected to follow, and even Walmart has filed several trademarks for NFT use.

Google has also revealed that searches for ‘NFTs” have now outstripped those for ‘crypto’, another telling sign that NFTs are in the ascendance, and there is increased interest from Asia. Prior to this the market was dominated by North America and Europe, but an Asian fan club could make a massive difference.

Some NFT metrics

On their own, NFTs “produced one of the most impressive metrics we saw in the blockchain industry last year,” DappRadar says. “In total, $25B was generated by this type of asset in 2021 alone. That’s a whopping 18,414% more than the four previous years combined.”

And whilst most cryptocurrencies are struggling at the moment, it is necessary to look at Ethereum, the blockchain used by the majority of NFT projects. ETH may be facing challenges, but Ethereum was responsible for 75% of last year’s volume. For example, since December 2021, more than 53,300 UAW have connected to Ethereum NFT dapps on average per day. That’s 43% higher than the numbers seen during Q3 of last year. Furthermore, before the end of January 2022, a record 1.6M unique traders propelled Ethereum NFTs to generate more than $3.7B in sales, and were on track to break the record set in August 2021 of $4.5B.

A store of value?

According to the report, a recent floor price analysis for some essential Ethereum collections signals that NFTs behave like assets that store value. The floor of an NFT collection is the minimum asking price and represents the lowest entry barrier. According to the floor price market cap for the top 100 NFT collections, the value of NFTs has decreased by $2.4B from November and is currently estimated at $14.8B. On the other hand, despite the 50% hit to ETH, the value of the most traded collections only experience a 15% dip, showing that the category resisted the crash. 

There is a lot of positive sentiments around NFTs, much of it down to the growing fame of BAYC. In November, when BTC and ETH were showing all-time highs, the floor price at BAYC was 30 ETH. One week later the BAYC floor increased over 60% to surpass 50 ETH despite a 15% drop in ETH’s price. By the end of December, the cheapest BAYC could be purchased for 60 ETH, and it has now passed 90 ETH. By the report’s calculations, you need more than $225,000 at current ETH prices to buy the most affordable Bored Ape.

Essentially, NFTs have gradually become an asset class of their own. Although they remain tied to cryptocurrencies, NFTs are slowly creating an economy for themselves. What we are seeing now is the proverbial tip of the iceberg, but perhaps most importantly, NFTs are proving themselves as digital assets capable of storing value.

You can read the DappRadar report at https://thedefiant.io/dappradar-nft-report/