Big banks in the crypto space

On By mehranmuslimiblogIn Banks, Bitcoin, cryptoLeave a comment

It was inevitable that banks would be unable to resist entering the cryptocurrency space, and more of the biggest US banks are in it than you might think. So, who exactly is taking such a ‘risk’, as the US banking regulator put it?

It seems that Bank of New York Mellon was the first to enter the fray in February 2021 with its offer of holding, transferring and issuing Bitcoin for asset management clients. The clients will be able to store BTC and ETH in BNY Mellon wallets, which have been created in partnership with Fireblocks. The service hasn’t launched yet, but is expected this year.

Bancorp’s Bitcoin custody service went live in October 2021, with NYDIG, a Bitcoin company, acting as sub-custodian for the bank. And State Street Corp said in March this year that it intends to offer crypto custody services in partnership with infrastructure platform Copper.co. This, according to the bank, is subject to regulatory approval.

Deutsche Bank is planning to develop a service to hold and trade crypto for institutional investors, and has already completed a proof of concept, although it is keeping this move very quiet indeed. Similarly, BNP Paribas has also completed a proof of concept with wallet provider Curv. The plan is to develop a secure method to transfer tokenised securities.

Wealth Management Clients

Banks have been rushing to offer their wealth management clients exposure to crypto, starting back in 2021. Morgan Stanley is the pack leader, according to CNBC. It reported in March this year that Morgan Stanley is enabling access to three Bitcoin funds for clients with at least $2 million in assets held at the bank.

JPMorgan Chase is allowing its financial advisers to accept buy/sell orders for five crypto products from its wealth management clients, and Wells Fargo has been offering something similar since 2021. Indeed, both JPMorgan and Wells Fargo have registered private Bitcoin funds with NYDIG.

Citigroup now has a digital assets group, and Goldman Sachs is offering wealthy clients access to an Ethereum fund via Galaxy Digital.

Trading and Research

You will find the same names in trading. Goldman rebooted its crypto trading desk in March 2021, and in March this year became the first US bank to carry out an over-the-counter crypto trade in partnership with Galaxy Digital.

The big banks are also putting a lot of money into research, particularly Bank of America, Citicorp and Morgan Stanley, with all of them creating new departments and opening up new job roles.

And there you have it – big banks aren’t really as crypto-averse as you might have thought.

2021: the year crypto ownership surged worldwide

On By mehranmuslimiblogIn cryptoLeave a comment

Gemini, a cryptocurrency exchange founded by the Winklevoss brothers, has polled about 30,000 respondents in 20 countries between November 2021 and February 2022, and the results show that the number of cryptocurrency owners has massively increased last year, with nearly half of all owners worldwide buying crypto for the first time in 2021.

The company released the survey findings as part of its “2022 Global State of Crypto” report this week. According to the survey, crypto adoption surged in countries like India, Brazil and Hong Kong during 2021, the year when more than half of those surveyed started buying it. These new investors amounted to 54% in India, and 51% in both Brazil and Hong Kong.

Crypto activity was also mounting elsewhere. Latin America (LATAM) and the Asia Pacific (APAC) respondents were also actively buying crypto in 2021, with 46% of respondents in LATAM and 45% in APAC purchasing their first crypto in 2021. And in the USA, 44% of respondents started buying in 2021, and 40% in Europe.

Interestingly, the Gemini report also found that Indonesia and Brazil were leading the way in terms of the share of cryptocurrency investors among the general population. For example, 41% of respondents both in Brazil and Indonesia reported owning crypto, compared to just 20% in the United States, 18% in Australia and 17% in Europe.

Ownership rates are also high in other countries and regions, such as he United Arab Emirates, Singapore and Israel. In the UAE, 35% of respondents own crypto, 30% in Singapore and 28% in Israel. One of the countries with the lowest percentage of ownership amongst the general population is Denmark with a mere 15%. France and Germany have 16% and 17% respectively. Indeed, most of the European countries, including Ireland and the UK hover around the 15-20% mark.

The report also cited the uncertainty over crypto regulation and lack of education as two of the biggest impediments to the mass adoption of crypto. Of those who don’t own any crypto, 39% of respondents in APAC, 37% in LATAM, and 36% in Europe said that there was legal uncertainty around crypto, and 30% of respondents in the Middle East, 24% in the Asia Pacific and 23% in Latin America said that crypto tax reporting kept them away from investing in the sector.

Where would you mint an NFT?

On By mehranmuslimiblogIn Ethereum, NFTs, SolanaLeave a comment

Ethereum is the largest ecosystem of the DeFi (decentralized finance) sector, so it’s no surprise that this is where you’ll find the majority of NFTs being minted. Ethereum also takes the lead with a much bigger pool of buyers and sellers, which is why Ethereum-based OpenSea, a very popular NFT marketplace, is often the first stop for many NFT producers, because that’s where they potentially get more exposure and people willing to buy or place bids on their NFTs. 

Ethereum’s data architecture and security components are the reason why so many developers are building on top of its blockchain. But there are some ‘cons’ to the network. Rather frequently, the network suffers a major transaction backlog, which leads to an enormous spike in transaction fees, and this limits the number of users who can afford to mint NFTs. On the other hand, whilst paying elevated gas fees can be a crippling experience sometimes, the upside is there’s more money flowing in Ethereum, so the flipping ceiling is way higher.

The move to Solana

In response to this, NFT creators and collectors look to alternative blockchains with higher throughput, scalability, and lower gas fees. So far, Solana seems to be Ethereum’s most serious competitor, due to the fact that it’s a high-performance blockchain that leverages different cryptographic mechanisms to scale its network.

But it is still chasing Ethereum. Data from CryptoSlam shows that Ethereum has had a whopping selling volume of over $1.8 billion in the last 30 days, compared to $120 million from Solana-based marketplaces. Plus, the most popular NFT collections in the market exist on the Ethereum blockchain, i.e. Bored Apes and CryptoPunks.

But Solana takes the lead in terms of technology, functionality, and versatility. It uses a consensus mechanism called Proof-of-History, which leverages a set of protocols to execute transactions with high throughput. Its transaction fees are less than one dollar, and there appears to be some migration to Solana amongst NFT projects and collectors in order to benefit from the scalability and cheap transaction fees. It also appears that Solana is becoming the preferred blockchain for more general and utility-focused NFTs.

In conclusion, whilst Ethereum still has the major market share, Solana’s share is growing. In fact, Solana’s user base has been growing at a much faster pace since the beginning of 2022, and even JP Morgan believes it could overtake Ethereum in the long term.

Bitcoin rises again

On By mehranmuslimiblogIn Altcoins, Bitcoin, cryptoLeave a comment

It’s a good week for Bitcoin and altcoins. Finally, there has been a reversal of fortunes and the bears have retreated, at least for the moment. What sparked the about turn of the bearish trend that has dominated the market since the beginning of the year?

The world’s largest cryptocurrency by market capitalization is up 15% over the past week, although it has been outshone a little by Ethereum (up 16%) and Solana (up 25%) over the same period of time. This is not bad news for Bitcoin, as the rise in the altcoin sector shows that an appetite for risk has returned.

According to Coindesk, “the recent rally in bitcoin can be explained by new token accumulation, which is unique to the crypto market.” This refers to the purchase of more than 27,000 BTC worth roughly $1.3 billion by the Luna Foundation Guard (LFG). It promised that it would add BTC as an additional layer of security for UST, which is Terra’s decentralized dollar-pegged stablecoin.

Lucas Otumuro, head of research at IntoTheBlock, a crypto data company, told Coindesk that he believes there “appears to be a synergy between Bitcoin and the Terra ecosystem.” He went on to say, “UST benefits from having additional backing and bitcoin benefits not just from the buying pressure, but also from having a stable medium of exchange backed by BTC.”

But there is more to Bitcoin’s rebound than the purchase by LFG. The recent price bounce appears to be driven by demand in the spot market, which typically occurs around market turning points. There has been a rise in spot BTC volume versus futures volume, and an uptick in bitcoin trading volume across major exchanges. What we need to watch out for is a sudden capitulation to a sell-off. At this moment, an increase in buy volume versus sell volume could determine if the price rally has staying power. Thankfully, according to data from CryptoQuant there is a slight increase in the buy/sell volume ratio over the past week, which indicates bullish sentiment among Bitcoin traders.

We may see some corrections as the week progresses and Bitcoin aims to get past $48,000, but for now we are happy enough to enjoy Bitcoin’s fightback.